Fluor Shares in Major Nuclear Cleanup Pacts

WASHINGTON — The Energy Department, taking a major step in reforming the long-troubled program to clean up the nation’s contaminated nuclear weapons sites, awarded contracts Tuesday worth $11 billion to teams headed by Fluor Daniel Inc. and Westinghouse Corp.

Irvine-based Fluor Daniel will take over responsibility for managing the cleanup at Hanford, Wash. The sprawling complex, half the size of Rhode Island, has 11 tons of potentially unstable plutonium and 65 million gallons of radioactive sludge in leaky underground tanks.

Westinghouse will operate the cleanup at Savannah River, S.C., which has 35 million gallons of radioactive sludge and dozens of contaminated industrial structures.

The two contracts rank among the largest environmental awards in history and are the biggest yet handed out under the energy program.

The award to Fluor, amounting to $4.8 billion over five years, is also the largest single contract in the firm’s history and is a boost to the once-troubled engineering firm. Under the contract, Fluor will take over 9,000 employees in Hanford. The award is expected to have little impact on employment in Southern California.

Awarding such cleanup projects through competitive bidding is a cornerstone of the Energy Department’s efforts to improve a badly flawed and costly program to manage nuclear waste and fix the environmental damage resulting from four decades of sloppy practices in Cold War nuclear bomb production.

Energy officials also announced Tuesday that they will throw open to competition $8 billion of future work at the nuclear weapons complex at Oakridge, Tenn., and an additional $500 million of work in Mound, Ohio.

Fluor won the contract over bids submitted by teams led by Bechtel Corp. and Raytheon Corp. The contract will provide roughly $300 million in profit to Fluor and its subcontractors, if the firms meet all their performance objectives, according to Hank Hatch, president of the Fluor Daniel subsidiary operating the Hanford site.

Westinghouse went unchallenged in its bid to continue operating the site at Savannah River. Energy officials, who had hoped to see a rival bid, said competitors believed Westinghouse was too firmly entrenched.

Westinghouse maintains its grip as the largest single contractor in nuclear energy cleanup with the $6-billion, five-year contract. It started operations this year at its Savannah River vitrification plant, which is transforming radioactive sludge at the site to glass logs.

Until this year, the Energy Department had been spending more money on paper studies than on actual work to clean up contaminated sites. Critics have long charged that the agency was shoveling money out in a massive jobs program that accomplished little.

In an effort to improve the performance of private firms, the department not only put up contracts for competitive bidding, but also made profits conditional on successful completion of the work.

“Before contract reform, DOE paid for simply showing up,” Energy Secretary Hazel O’Leary said. “Not anymore. If the contractors don’t deliver on their commitments, we don’t deliver on their fee.”

The new contracts at Savannah River and Hanford alone are expected to reduce cleanup spending by about $500 million a year from earlier estimates, mainly by accelerating the pace of the environmental work, energy officials said.

Despite the improvements, taxpayers are facing a cleanup bill recently estimated by the Energy Department at $189 billion to $265 billion--easily the biggest environmental program in the world.

The job of cleaning up an estimated 9,000 radioactive production buildings, tank farms, burial pits, ponds and other sites across the nation has barely begun. So far, the Energy Department has treated about 10,000 cubic meters of radioactive waste out of a staggering 225,000 at just three major sites.

Indeed, nuclear experts warn that the United States will have to monitor and protect many of its nuclear weapons sites for centuries because of radiation hazards.

Hatch, the Fluor executive, said the cost savings and reforms at the Energy Department are shortening the time needed to clean up Hanford, but he added that he cannot foresee the day when the government could walk away from the site.

“This site will always have materials that warrant protection,” Hatch said.

When Hanford was shut down after the end of the Cold War, it had 11 tons of plutonium at its finishing plant in various forms that are potentially unstable.

Energy officials are hoping Fluor can put that material in a stable form within four years. Fluor will also be seeking to deactivate a plutonium reprocessing plant that contains large amounts of radioactive wastes by 2005.

Fluor also committed to creating 3,000 private-sector jobs, through a company-funded pool of venture capital, to help the Hanford region transition to a commercial economy as the nuclear site is closed.

Fluor’s team includes Lockheed Martin, Rust Federal Services, Kuke Engineering & Services and B&W; Federal Services. The Westinghouse team includes Bechtel National, B&W; Federal Services and BNFL.