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WIPP contractor received $1.9M bonus after fire

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A team of discovery workers prepares to enter the site of a radiation leak at the WIPP nuclear waste repository earlier this year. (Courtesy of the U.S. Department of Energy)

A team of discovery workers prepares to enter the site of a radiation leak at the WIPP nuclear waste repository earlier this year. (Courtesy of the U.S. Department of Energy)

Copyright © 2014 Albuquerque Journal

Just five days after an underground truck fire closed the Waste Isolation Pilot Plant, the Energy Department awarded the contractor that operates the nuclear repository $1.9 million for “excellent” performance during the past year.

One radiation leak and two sharply worded accident investigation reports later slamming the same contractor for long-running safety and maintenance problems, that award now looks to some like insult atop injury.

How could there have been such a disconnect between the Department of Energy’s own assessment of its contractor’s performance and what independent investigators would find soon after?

The answer isn’t clear and neither are the consequences to the DOE’s local field office, headquarters or to operating contractor Nuclear Waste Partnership – leaving some observers asking why there haven’t been more repercussions for documented failings throughout the system.

Those failings included allowing diesel fuel engine oil to build up on the truck that caught fire and, although the investigation is still ongoing into how and why a hot reaction cracked open a drum of nuclear waste, included a laundry list of maintenance deficiencies that contributed to a small amount of radiation being released into the environment.

“Efforts to hold individuals or entities accountable remain unclear,” wrote Martin Schneider, chief executive of ExchangeMonitor Publications, in an editorial in the closely watched Weapons Complex Monitor. “No federal or contractor official has lost their job, been transferred, been moved off the WIPP contract or otherwise held accountable. No leadership has changed at the federal level. No company has lost a contract,” although the NWP did add a layer of management, bringing in Bob McQuinn to head the recovery and cleanup effort.

The remains of a salt-hauling truck that caught fire underground at WIPP, the nuclear waste repository near Carlsbad. (Courtesy of the U.S. Department of Energy)

The remains of a salt-hauling truck that caught fire underground at WIPP, the nuclear waste repository near Carlsbad. (Courtesy of the U.S. Department of Energy)

Last month, the DOE levied the only financial penalty against NWP since the February truck fire and radiation leak, according to a WIPP spokeswoman: a $2 million, or 25 percent, reduction in the nearly $8.2 million fee available in fiscal 2014, as a result of the fire.

But the contractor can earn back 50 percent of that amount for good performance or corrective actions.

“They’ve always gotten their full bonus,” said John Heaton, head of the Carlsbad mayor’s Nuclear Task Force. “The main focus of that bonus was getting waste into the facility and, in my opinion, there was very little emphasis on safety or training that will keep WIPP open 30 or 50 years.”

WIPP is the country’s only geologic repository for certain types of defense nuclear waste, which is permanently disposed of in rooms excavated from a salt bed formation near Carlsbad.

The DOE, through its Carlsbad Field Office, compensates the NWP through two channels: a performance-based incentive determined by objective criteria, primarily meeting annual waste disposal goals; and an award fee based on a subjective evaluation of the contractor’s performance.

The $1.9 million award fee granted to the NWP in February – in the days between the truck fire that ignited in the salt mine and a radiation leak from the waste disposal area that would ultimately contaminate 22 workers at low levels – represented 93 percent of the total award fee available in fiscal 2013.

A letter from the DOE’s Carlsbad Field Office, signed by Manager Joe Franco, cited the NWP’s “excellent” or “very good” performance in all four areas judged during fiscal 2013: schedule, technical, cost control and management, which, in the contract, refers to safety and maintenance but specifies no benchmarks.

That award was in addition to a $5.9 million performance-based incentive for fiscal 2013, representing 97 percent of the total incentive available.

The award fee and incentive represent potential earnings above what the DOE reimburses the NWP for the annual cost of operating WIPP, budgeted at $142 million last fiscal year and $158 million this year.

Across the nuclear weapons complex, “it’s become almost a ritual that the contractor gets its bonus no matter what,” said Edwin Lyman, senior scientist with the Union of Concerned Scientists’ global security program. “It became a standard accessory with the contract and totally nullified the idea of the performance bonus. This has been criticized for years and years. There is so little competition for management of these sites.”

The Nuclear Waste Partnership, which has run WIPP since 2012, is backed by a partnership of three parent companies that plays aggressively in the field of DOE contracting: URS Corp.; a Babcock & Wilcox Co. subsidiary; and Areva. URS and Babcock & Wilcox are publicly traded with market capitalizations over $4 billion and $3.6 billion, respectively, while Areva is majority-owned by the French government.

A predecessor company owned by URS, called Washington TRU Solutions, ran WIPP from 2000 to 2012.

The Nuclear Waste Partnership has a contract to operate WIPP through 2017, with a five-year option for renewal. WIPP has been shut down since the Feb. 5 fire and managers have indicated the facility may reopen in 2016 at the earliest.

“We should not be paying them for work they haven’t done,” said Don Hancock, a longtime WIPP observer with the Southwest Research and Information Center. “Their contract is to certify the characterization of waste elsewhere (at generator sites) and have it disposed of safely at WIPP and they failed in that.”

The Carlsbad Field Office did not respond to an interview request, but spokesman Tim Runyon provided the following statement:

“The Department is not considering revision or termination of the contract pending the results of the radiological release investigation. The federal and contractor workforce (is) working to complete recovery activities and restore the Waste Isolation Pilot Plant facility to normal operations while also implementing necessary corrective actions and ensuring the health and safety of our workers, the public and the environment.”

The NWP did not grant an interview request. McQuinn, who arrived to lead the NWP’s recovery effort in the weeks after the radiation leak, told the Journal in April that the company would be engineering “dramatic” changes to its safety culture.

“We didn’t perform and we’re going to get criticized,” he said. “I’m spending a lot of time helping my team understand that we have to change and the change will be dramatic.”

Although WIPP operated with few problems for nearly 15 years, separate accident investigation board reports on the fire and the radiation leak cited dozens of long-term safety and maintenance deficiencies, and faulted both the contractor and the DOE’s Carlsbad Field Office.

In its 187-page report on the fire, the investigation board concluded the accident was “preventable” and identified “the root cause of this accident to be NWP failure to adequately recognize and mitigate the hazard regarding a fire in the underground.”

Separately, a more than 300-page report on the first phase of its two-part investigation into the radiation leak, the board criticized the “degradation of key safety management programs and safety culture” and found a root cause of the leak “to be NWP’s and (the Carlsbad Field Office’s) management failure to fully understand, characterize and control the radiological hazard.”

Some of the issues had been previously highlighted by the Defense Nuclear Facilities Safety Board, which had, since at least 2010, sent letters to the DOE identifying flaws in WIPP’s fire protection program and maintenance practices, among other deficiencies. However, the organization exists only to inform the executive branch and has no authority for sanctions.

The Carlsbad Field Office said the NWP is implementing corrective actions identified by the investigation board in its report and noted that the DOE’s decision to reduce the fee available to the NWP does not preclude “any potential future action” related to the radiation release.

Heaton said he would like to see the contractor’s awards and incentives be linked more directly to safety and maintenance protocol.

“In the next 50 to 100 years, I doubt there will be another repository in the U.S.,” he said. “This is the only show in town. And to not maintain it in pristine condition and keep it to a high standard doesn’t make any sense.”

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