A $32 million lawsuit brought by a subcontractor at the Waste Isolation Pilot Plant alleged the company that runs the facility breached its contract to rebuild the nuclear waste repository’s air system.
Critical Applications Alliance (CAA), a Carlsbad-based joint venture between Texas-based Christensen Building Group and Kilgore Industries was hired by Nuclear Waste Partnership (NWP) in 2018 to construct the ventilation system at WIPP for $135 million, but its contract was terminated on August 31, about two years into the project.
Known as the Safety Significant Confinement Ventilation System (SSCVS), the system was intended to increase airflow in WIPP’s underground waste disposal area to allow for waste emplacement and mining operations to occur simultaneously.
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Available air at WIPP was reduced in 2014 due to an accidental radiological release that led to contamination in parts of the underground.
When completed, the SSCVS would be the largest capital project at WIPP or any other DOE facility in three decades and increase airflow from 170,000 cubic feet per minute (cfm) to 540,000 cfm.
But in its lawsuit filed on Oct. 31 in U.S. District Court in New Mexico, the subcontractor argued the project was troubled from the start, suffering from delays and frequent design changes resulting from Nuclear Waste Partnership’s inexperience in major construction projects.
Nuclear Waste Partnership Donavan Mager said the company does not comment on pending litigation.
“The Program specifically states that ‘construction should not be allowed to proceed until the design is sufficiently mature to minimize change orders,'” the lawsuit read. “No one in NWP’s upper management in Carlsbad had ever borne responsibility for seeing a construction project of this magnitude to completion.”
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WIPP ventilation system suffers from ‘inadequate’ design
The lawsuit alleged Nuclear Waste Partnership was “not prepared” to move forward with the project when it awarded the subcontract to Critical Applications Alliance in December 2018 for the work that was to be completed by Sept. 8, 2021.
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From the beginning of the work, Critical Applications Alliance argued delays were caused by Nuclear Waste Partnership’s continued changes to the project and requirements of the contract.
“Implementing procedures” instituted after the subcontract was awarded, the suit argued, were redundant of the project’s safety plan and were required before workers could enter the site which delayed the construction by more than two months.
Other breaches of the contract, the suit argued, were requirements the subcontractor be subjected to Mine Safety and Health Administration (MSHA) requirements which were allegedly not required by the contract.
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“Such imposition of extracontractual requirements became an NWP course of conduct,” read the suit. “NWP-instituted undisclosed permits and other extra contractual requirements stopped the work for days or weeks on end, breaching the Subcontract.”
Even the design of the SSCVS itself, as approved by Nuclear Waste Partnership, was inadequate, the suit argued, as it lacked “essential design elements” while specifications violated industry standards and design drawings conflicted one another.
The building’s roof panels had to be redesigned, along with its foundation and the control system that would open or close ventilation dampers, causing the work to drag on for more than a year, the suit read.
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By September 2020, about year before the project was to be completed, the subcontractor had submitted 350 requests for information (RFIs), the lawsuit read, mostly seeking clarifications for design flaws.
The contract required Nuclear Waste Partnership to respond to RFIs within five days, but the suit alleged many took weeks or months.
Many of the RFIs resulted in changes being made to the design which further delayed the project, read the suit, and increased costs.
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Per the lawsuit, design changes made by Nuclear Waste Partnership as of Aug. 31, 2020 had delayed the project by 300 days.
“Defects in the NWP-provided design quickly surfaced. Specifications violated industry standards and were unconstructable,” the suit read. “Essential design elements were missing. Drawings conflicted.”
Subcontractor blames delays on Nuclear Waste Partnership
Critical Applications Alliance also accused Nuclear Waste Partnership of failing to provide basic services as required in the contract, further delaying the work and subjecting working to uncomfortable or dangerous working conditions.
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In the subcontract, Nuclear Waste Partnership was required to provide an office trailer to Critical Applications Alliance with electricity, running water, a sewer tie in and internet access by January 2019, the suit read, but failed to do so until May 2020 – 17 months after the subcontract was executed.
The suit argued this provision was essential to completion of the work, and without an adequate trailer, employees of the subcontractor were forced to work outside and without office functions such as computer access.
“Lacking an office trailer with electricity, CAA’s jobsite personnel were forced to work outdoors in sometimes extreme temperatures. With no access to power, they could not use the trailer for basic office purposes, such as operating printers or computers,” the suit read.
“These working conditions took a toll on CAA’s onsite personnel, impacted productivity, and violated the express terms of the Subcontract.”
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By 2020, the project was more than 18 months behind schedule, the suit read, and had incurred “millions of dollars” in added costs for the subcontractor, with Nuclear Waste Partnership allegedly refusing to adequately pay back Critical Applications Alliance.
Nuclear Waste Partnership paid just 3 percent of the subcontractor’s invoice for February, 2 percent in March, and did not pay for the April, May, June or July invoices, read the suit.
The contract was terminated at the end of August.
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Critical Applications Alliance alleged it was given no reason for the termination and that Nuclear Waste Partnership still owed $12 million for unpaid invoices at the time of the termination.
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The lawsuit argued that Nuclear Waste Partnership had no right to terminate the subcontract.
“NWP’s termination for convenience was a material breach of the subcontract,” read the suit. “In addition, NWP’s failure to pay CAA’s invoices since February 2020 constituted material breaches of contract.”
The suit demanded a jury be convened to hear the case, and demanded damages no less than $32 million.
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Here’s a breakdown of the damages claimed by Critical Applciations Alliance against Nuclear Waste Partnership:
Unpaid invoices, changes and claims: $25.04 million General conditions: $350,000 Demobilization costs: $6 million Lost profits to be determined at trial.
In June, the U.S. Department of Energy announced it awarded Nuclear Waste Partnership 83 percent of its available fee, citing concerns with the SSCVS project, among other issues.
“NWP did not acquire the proper resources (i.e., the talent was lacking, either in number or skill) to effectively manage the SSCVS project (and their subcontractor),” read the report.
“Couple this with the insufficient technical analysis and the long delay in resolving the large number of engineering changes resulted in potentially significant cost overruns and/or schedule delays.”
Read the lawsuit filed by Critical Applications Alliance against Nuclear Waste Partnership:
Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.
This article originally appeared on Carlsbad Current-Argus: Carlsbad company sues WIPP for $32 million after air system subcontract terminated
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