Department of Energy halts $17B nuclear facility construction

Dive Brief:

A federal appeals court ruled that the Department of Energy can move forward with its plans to stop construction of a $17 billion plutonium and uranium fuel factory at its Savannah River Site in Aiken, South Carolina, The State reported. The latest cost projections have the mixed oxide, or MOX, facility at three times the original budget, and the DOE has made claims previously of a substandard quality of construction.
According to a letter obtained by The State, the department sent a termination notice to contractor CB&I Areva MOX Services, which was contracted by the DOE's National Nuclear Security Administration to design, build and maintain the facility. The department reportedly informed the prime contractor that its contract is terminated immediately and that the shutdown of operations — securing existing buildings and the construction site — will now begin. As many as 900 workers could be laid off with 60 days' notice, but the DOE has indicated that there are other positions at the site that workers could potentially fill.
Local and state officials promised to fight the closure, but, if their efforts fail, the DOE could build a plant that makes pits for atomic weapons. According to a construction update from CB&I Areva MOX at the beginning of the year, crews had placed more than 90% of structural concrete; installed almost 95% of rebar; constructed 12 of 16 support buildings and installed 106 tons of pipe.

Dive Insight:

Bechtel received much better news in September when Georgia Power announced that it would continue with construction of a $25 billion nuclear plant expansion despite more than $2 billion in cost overruns.

Construction projects in the nuclear sector require high levels of expertise, but contractors who can provide those services in a safe and successful manner will likely find it to be a lucrative niche. And nuclear-related projects are often in areas where there is not much development, giving local contractors and their employees a chance at steady employment.

Late last month, DOE announced that it was looking for contractors to provide about $4 billion to $6 billion of work at its Hanford site, a decommissioned nuclear plutonium production site in Richland, Washington. The work includes general services but also construction work like upgrading infrastructure and utilities. The department requires that 40% of the contract value be subcontracted and that 50% of those contracts go to local businesses.