GAO

United States General Accounting Office

Report to the Chairman, Committee on 

Commerce, House of Representatives

April 2000 NUCLEAR WASTE

DOE’s Advanced 

Mixed Waste 

Treatment Project—

Uncertainties May 

Affect Performance, 

Schedule, and Price

GAO/RCED-00-106

Page 1 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

Contents

Letter 3

Appendixes Appendix I: Comments From the Department of Energy 28

Tables Table 1: Original Proposed Treatment Process and Currently 

Planned Process 12

Table 2: Comparison of Selected Schedule Milestones for the 

Project 16

Figures Figure 1: Location of DOE’s Idaho National Engineering and 

Environmental Laboratory 7

Figure 2: Mixed Waste Boxes and Drums Being Placed on an 

Asphalt Pad at INEEL 9
Page 2 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project
Page 3 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

United States General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-284385 Letr

April 28, 2000

The Honorable Thomas J. Bliley, Jr.

Chairman, Committee on Commerce

House of Representatives

Dear Mr. Chairman:

For over 50 years, the Department of Energy (DOE) has produced nuclear 

materials for weapons. As a result of that effort, large quantities of 

radiological and hazardous wastes now contaminate the nation’s nuclear 

production facilities. DOE spends over $5 billion per year through its 

environmental management program to clean up and/or ensure proper 

storage of these wastes. DOE’s Idaho National Engineering and 

Environmental Laboratory (INEEL), located in eastern Idaho, has a large 

concentration of “mixed” waste—that is, a combination of radiological 

contaminants (such as plutonium) and hazardous but nonradiological 

contaminants (such as degreasing agents or acids). This mixed waste, 

which takes such forms as contaminated paper, cloth, and other materials 

(some of it saturated with liquids), is currently stored in metal drums and 

wooden boxes in a facility intended for temporary storage. Cleaning it up is 

important to both DOE and the state of Idaho. DOE has committed to 

having this waste treated and moved out of Idaho and to a disposal facility 

no later than December 31, 2018.

To treat the mixed waste and prepare it for disposal, DOE awarded a fixedprice contract for the Advanced Mixed Waste Treatment Project to BNFL 

Inc. effective January 1997.1

 BNFL plans to construct a treatment facility at 

INEEL near where the waste is being stored. BNFL’s initial plan was to use 

the treatment facility to characterize the waste containers to determine 

their contents and radioactivity; separate the waste into different treatment 

paths; treat the waste primarily by using incineration to reduce its volume 

and stabilizing the waste by either converting it into a glass-like material or 

adding a cement-like material; package the waste; and certify it for 

shipment for off-site disposal. Stabilizing the waste in glass or cement was 

1

BNFL Inc. is the U.S. subsidiary of British Nuclear Fuels plc, a public limited company in 

the United Kingdom. The British government is the sole stockholder of British Nuclear 

Fuels plc.
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planned primarily as a backup strategy in case DOE’s off-site disposal 

location was not available, and therefore, temporary on-site storage was 

required after treatment. Treating the waste will not reduce its radioactivity 

but will prepare the waste for disposal or long-term storage. Because of the 

radioactive content of the waste, the treatment process was designed to 

require the workers to have little or no direct contact with the waste.

DOE considers the contract with BNFL to be a “privatization” contract. 

BNFL is responsible for financing the construction and start-up costs of the 

project instead of receiving cost reimbursements or progress payments to 

pay for these costs. BNFL will receive payments only after delivering items 

or services specified in the contract. Most of the contract payments will be 

for successfully treating and delivering to DOE packaged waste that meets 

all of the requirements for shipment off-site. The original contract with 

BNFL was for about $876 million (1996 dollars). With adjustments for 

inflation over the 20-year life of the contract, DOE estimates that its 

expenditures on the project will total at least $1.1 billion. Although the 

contract is a fixed-price contract, the Federal Acquisition Regulation 

allows for price adjustment if, for example, the scope of work changes 

drastically or BNFL encounters circumstances beyond its control. Given 

the potential cost of this project and concerns about DOE’s management of 

previous large cleanup projects, you asked us to assess the project’s status 

and potential uncertainties with regard to (1) successfully treating the 

waste, (2) meeting the project’s deadlines, and (3) minimizing increases in 

the contract price.

Results in Brief Changes in the technical approach have simplified the treatment of most of 

the waste, but successful treatment of almost one-fourth of the waste is 

less certain. For the bulk of the waste, these changes have brought less 

complexity to the treatment process. Instead of incinerating about 

75 percent of the waste and then putting it into a glass-like or cement-like 

form, BNFL determined that most of the waste could simply be 

mechanically compressed and then packaged. For the remaining waste that 

was to be incinerated, however, recent events have forced BNFL to 

reexamine its approach. In March 2000, in order to resolve a lawsuit over 

incinerating the waste and allow facility construction to move forward, 

DOE agreed to appoint a special panel of experts to identify possible 

alternatives to incineration. Alternatives could include trying to obtain a 

waiver from current regulations for transporting and disposing of organic 

substances or identifying another technology to treat the waste. The 

outcome of these efforts may not be known for several years. If viable 
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alternatives are not found, DOE may need to return to its plan to incinerate 

a portion of the waste or attempt to renegotiate the disposition of the waste 

with the state of Idaho.

The project is beginning to fall behind the pace needed to meet certain 

interim milestones. BNFL’s plan for starting construction, originally set for 

May 1999, is now set for May 2000 at the earliest and will be postponed 

even longer. This delay is also likely to delay the start of the facility’s 

operations, one of the interim milestones in DOE’s agreement with the 

state of Idaho, scheduled for March 2003. The main cause for the delay was 

BNFL’s overly optimistic assumption, which DOE approved, of the time 

needed for the state and the Environmental Protection Agency to review 

and approve the construction permits for the project. Changes in the 

requirements for permit applications and the search for alternatives to 

incineration also affected the permits. As of April 2000, after 2 years of 

review, the permits still have not been issued. Because of the flexibility 

built into the project’s schedule over the many years of the operational 

phase, however, it is too early to determine if any of these developments 

will affect BNFL’s ability to complete all work by 2018, the deadline agreed 

to by DOE and the state of Idaho.

Despite some opportunities to reduce the $876 million contract price, 

including an $18 million reduction that occurred in January 2000, other 

uncertainties make it likely that the contract price will increase in the 

future. The $18 million price reduction occurred after BNFL simplified the 

technology for treating most of the waste and, therefore, did not have to 

stabilize it before shipping it out of state. Other savings are possible if 

alternatives to privately financing the project are pursued, but DOE does 

not intend to assume more of the risk by assisting with financing. BNFL 

officials are reporting difficulty in the efforts to obtain private financing. An 

option available to DOE is to help finance the project and negotiate for a 

corresponding reduction in the contract price. Regarding potential price 

increases, two main uncertainties exist. First, BNFL may be able to obtain 

additional payments for the costs associated with the delays in starting 

construction of the treatment facility. DOE has estimated that delaying 

construction until May 2000 could increase the contract price by about 

$44 million. But because the start of construction will be delayed beyond 

May 2000, the price increase could be even greater. Second, the costs 

associated with searching for an alternative to incinerating about onefourth of the waste may also affect the contract price. DOE said that 

activities that BNFL could be involved in, such as exploring regulatory 

waivers and identifying alternative treatment technologies, could be 
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outside the current scope of work in the contract and thus could trigger the 

need for an equitable adjustment to the price.

Background DOE’s Idaho National Engineering and Environmental Laboratory is 

situated in southeast Idaho on about 900 square miles of the eastern Snake 

River plain (see fig. 1). 
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Figure 1: Location of DOE’s Idaho National Engineering and Environmental Laboratory

Source: DOE’s Idaho Operations Office.

Yellowstone

National Park

Grand

Teton

Nat'l

Park

Jackson

UTAH

WYOMING

IDAHO

MONTANA

IDAHO

North

Blackfoot

Idaho Falls

Pocatello

Rexburg

St. Anthony

Arco

Dubois

INEEL

INEEL

93 26

26

20

Craters of

the Moon

Wilderness

Area

Sun Valley

Carey

93

Salmon

20

West Yellowstone

26

American Falls

Twin

Falls

28 22

33

20

Grays Lake

American Falls Reservoir

Bear

Lake

Palisades Reservoir

S nake River

Snake River

Blackfoot

Reservoir

Little Lost Ri ve

B

r

i g Lost River

20

Malad City

15

86

15

15

15

Bellevue

Shoshone

75

93

Bi g W oo d Rvi er

Burley

84

84

Miles

Kilometers

0 25 50

0

Approximate scale

National Forest areas

Birch Creek

40 80

Craters of the Moon

National Monument

NEVADA

Bitterroot Range

Lost River Range

Lemhi Range
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Since the early 1970s, DOE has been storing transuranic waste2 at the 

INEEL site. Most of this waste was shipped from DOE’s Rocky Flats site in 

Colorado. About 95 percent of the transuranic waste is classified as mixed 

waste because it also contains chemically hazardous materials that are 

regulated under the Resource Conservation and Recovery Act.3

 Some of the 

waste also contains polychlorinated biphenyls (PCB), which are regulated 

under the Toxic Substances Control Act.4

 The mixed waste is stored in 

metal drums and wooden boxes that are stacked on asphalt pads in an 

enclosed building in the Radioactive Waste Management Complex. The 

drums and boxes are covered with tarps, plywood, and soil. The quantity of 

waste totals about 65,000 cubic meters—an amount that would cover an 

entire football field to a height of almost 48 feet, or about as high as a 

four-story building. The drums and boxes have a 20-year design life and are 

not intended for permanent storage. Figure 2 shows the drums and boxes 

being placed on the pads prior to being covered and enclosed within a 

building.

2

Transuranic waste contains man-made radioactive elements with atomic numbers higher 

than uranium, such as plutonium.

3

Under the Resource Conservation and Recovery Act of 1976, as amended, a facility that 

treats, stores, or disposes of hazardous waste must obtain a permit from the Environmental 

Protection Agency or a state authorized by the Environmental Protection Agency to 

establish its own program. The permit sets out, among other things, the detailed conditions 

under which the facility may operate. In Idaho, the act is implemented by the state 

Department of Environmental Quality.

4

The Toxic Substances Control Act, enacted in 1976, authorizes the Environmental 

Protection Agency to regulate all chemicals that present an unreasonable risk of injury to 

health or the environment. The act includes a provision that specifically required the 

Environmental Protection Agency to issue a rule governing PCB disposal. Under the rule, 

incineration is one of the principal disposal methods for PCBs, and approval from the 

Environmental Protection Agency is required before incineration can occur.
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Figure 2: Mixed Waste Boxes and Drums Being Placed on an Asphalt Pad at INEEL

Source: BNFL’s project files.

In October 1995, DOE and the state of Idaho agreed that DOE would ship 

the transuranic waste stored at INEEL to a location outside of Idaho no 

later than December 2018.5

 The agreement also specified interim deadlines, 

including having a contract for a mixed waste treatment facility by June 

1997, completing construction of the facility by December 2002, and 

beginning operation of the facility by March 2003. The agreement noted 

that the start of construction was contingent on the state’s approving any 

necessary permits. Under the agreement, if DOE failed to meet these 

interim milestones, the state of Idaho could take action to stop additional 

shipments of spent nuclear fuel from entering the state until the milestones 

have been achieved. 

5

The October 16, 1995, agreement between the state of Idaho, the Department of the Navy, 

and DOE settled the case of Public Service Co. of Colorado v. Batt. In the Batt case, the 9th 

Circuit Court of Appeals strictly limited shipments of spent nuclear fuel to INEEL, finding 

that DOE’s environmental analysis was inadequate to support additional spent fuel 

shipments to the site. The consent agreement allowed more spent fuel to be sent to INEEL, 

provided that all transuranic waste at INEEL would be treated and removed from the state 

before December 2015, or December 2018 at the latest. Consistent with the agreement, both 

DOE and the Navy continue to ship spent nuclear fuel to INEEL.
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In January 1996, DOE issued a request for proposals for the treatment of 

65,000 cubic meters of transuranic and other mixed wastes. DOE specified 

performance requirements for the treatment process, including treating 

waste to meet current regulatory standards and reducing the volume of 

waste, and left the choice of technology to the bidders. After reviewing 

proposals from four companies, DOE awarded a fixed-price contract to 

BNFL, effective January 1997, to provide waste treatment services. The 

contract included milestones agreed to with the state of Idaho for 

completing construction, beginning waste treatment operations, and 

completing waste treatment operations. The total contract price was 

$876,093,000 and included three project phases: 

• Phase I—designing, licensing, and permitting activities, and ensuring 

environmental compliance: This phase was to last from January 1997 

through January 2000. The firm fixed-price amount of $16.3 million 

available for this phase was to be paid for deliverables, such as the 

project management plan and various construction permits issued by 

state and federal regulators.

• Phase II—constructing the facility, installing equipment, and testing all

systems to ensure the facility is ready to begin operations: Phase II was 

to start in January 2000 and to be completed by March 2003. DOE 

intends to make no payments to BNFL during phase II for expenses 

incurred during this phase. Instead, DOE will reimburse BNFL for the 

$569.4 million associated with this phase as the waste is treated in phase 

III.

• Phase III—treating 65,000 cubic meters of mixed waste: Phase III was 

expected to last from March 2003 through December 2015, but to end no 

later than December 2018. The contract provided for payment of 

$4,468 per cubic meter of treated waste, or a total of $290.4 million. In 

addition, for the first 25,000 cubic meters of treated waste, BNFL was 

also to receive $22,776 per cubic meter to recover the costs of phase II.
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Because of the length of the contract—from its effective date in January 

1997 until at least 2015—two contract provisions were added to recognize 

changing costs over time. First, the contract contains a provision for an 

annual price adjustment that is to be applied only to the first 25,000 cubic 

meters of waste processed. The contract’s unit price of $4,468 will be 

adjusted annually based on an employment cost index from the Bureau of 

Labor Statistics.6

 This price adjustment was first applied in calendar year 

1997. According to DOE’s estimate, adjustments for inflation over the life of 

the contract, including this annual price adjustment, will increase the total 

expenditures on the contract to about $1.1 billion by 2018. The second type 

of price adjustment will come into effect after BNFL treats the first 

25,000 cubic meters of waste. While treating the remaining 40,000 cubic 

meters of waste, BNFL can request a new unit price every 5 years by 

submitting its current costs and proposed new unit prices to DOE. This 

second price adjustment is not automatic, but will be negotiated between 

DOE and BNFL. Because this would be a negotiated price adjustment 

based on future operating costs, DOE has not estimated the impact of this 

provision on the contract price.7

The contract also required that BNFL reduce the volume of waste by at 

least 65 percent to save on transportation costs and future storage costs. 

Finally, the contract had a list of assumptions that were considered 

material to contract performance—for example, that any project-related 

litigation will not affect the schedule or work activities and that the 

proposed construction site will not be contaminated with radioactive or 

hazardous materials. Any changes to these assumptions that are outside of 

BNFL’s control can form the basis for a request to DOE for an adjustment of 

the contract price.

6

The annual price adjustment applies only to the $4,468 unit price for treated waste and does 

not apply to the $22,776 per cubic meter that recovers the costs of phase II. The employment 

cost index measures changes in compensation costs, which include wages, salaries, and the 

cost of employee benefits. The contract is adjusted based on changes to the “Employment 

Cost Index, Wages and Salaries, All Private Industry Workers (Labor).”

7

The contract also calls for BNFL to conduct “decontamination and decommissioning” 

activities after the waste is processed. At the time the contract was awarded, the price of 

this activity was not determined because it was not expected to occur until about 2018. 

However, in its fiscal year 2000 budget request, DOE estimated the cost at $22.7 million. In 

addition, DOE estimated the cost of infrastructure and other support for the project at 

$72.2 million.
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A Changed Approach 

Simplifies the 

Treatment of Most 

Waste but Makes the 

Successful Treatment 

of Some Waste Less 

Certain 

Between the effective date of the contract in January 1997 and March 2000, 

major changes have been made to the project’s technical approach. For the 

bulk of the waste, these changes have brought less complexity to the 

treatment process. In March 2000, however, to resolve a pending lawsuit 

over the treatment process for about one-fourth of the waste and allow 

facility construction to move forward, DOE agreed to examine alternative 

approaches—all relatively unproven—for this portion of the waste. The 

outcome of this action may not be known for several years. If viable 

alternatives are not found, DOE may need to return to its plan to incinerate 

a portion of the waste or attempt to renegotiate disposition of the waste 

with the state of Idaho.

Since the contract took effect in January 1997, significant changes have 

been made to the technical approach for treating the waste. Table 1 shows 

the treatment process originally proposed in September 1996 and the 

process as currently designed.

Table 1: Original Proposed Treatment Process and Currently Planned Process

Source: BNFL’s project documentation.

Original proposal 

(September 1996)

Currently planned process 

(March 2000)

Retrieve the waste from storage; 

characterize and sort the waste 

Same

Incinerate about 75 percent of the waste to 

meet treatment requirements and achieve 

volume reduction

For about 22 percent of the waste, postpone 

treatment and study alternatives to meeting 

treatment requirements by means other 

than incineration (through new technology 

or a waiver from existing regulations) 

Compress the other 78 percent of the waste 

to meet volume reduction requirements in 

the contract

Process the incinerated material into glass 

logs in containers to stabilize it for 

permanent disposal

For the 25 percent of the waste not 

incinerated, add a cement-like substance 

(grout) to the containers to stabilize the 

waste for permanent disposal

No course of action in place for the waste 

still under study

Place compressed waste into containers for 

permanent disposal off-site

Certify the waste containers for shipment to 

off-site disposal

Same
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Several factors have led to the changes in the design of the treatment 

process:

• First, based on its review of the inventory records of the stored waste 

and further clarification from DOE personnel at Rocky Flats, BNFL 

determined that much of the waste could be classified as “debris” under 

the regulations of the Environmental Protection Agency. The regulations 

define debris as certain solid particles larger than 60 millimeters in size 

and provide that the debris does not have to be incinerated before 

disposal. Determining that much of the waste on this project met the 

definition of debris enabled BNFL to reduce the amount of waste to be 

incinerated from about 75 percent to about 22 percent. BNFL retained 

incineration as the proposed approach for about 22 percent of the 

materials because incineration (1) will treat waste to meet the 

requirements at DOE’s disposal site in New Mexico and (2) is specified 

in the regulations for destroying the PCBs found within the specific 

waste forms at INEEL. 

• Second, melting or grouting the waste became unnecessary because a 

disposal site became available that did not require this step as a 

condition for receiving the waste. When the contract was initially 

awarded, BNFL and DOE thought that converting the waste to a glass or 

cement form would be necessary mainly because the availability of such 

a site was uncertain. If the treated waste could not be sent off-site for 

disposal, it would have to meet other land disposal requirements, which 

included using the glass or cement material. However, DOE’s disposal 

site for transuranic waste opened in New Mexico in March 1999. 

Because the New Mexico facility has other disposal safeguards, material 

sent there does not have to undergo this treatment.8

For the most part, these changes in the proposed approach have resulted in 

a less technically complex treatment process that primarily involves 

compressing the waste to reduce its volume. BNFL has experience with 

compressing plutonium-contaminated waste at other nuclear facilities, 

including its Sellafield site in the United Kingdom. The simplified approach 

also increases the likelihood that the treatment facility can operate 

successfully for the 12 to 16 years necessary to treat the waste.

8

A small amount of waste may still have to be mixed with cement to meet criteria for 

transport or to meet land disposal requirements.
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For about one-fourth of the waste, however, recent events will likely 

complicate the treatment approach. In March 2000, DOE settled a lawsuit 

brought by outside groups over BNFL’s plans to incinerate part of the 

waste.9

 Currently, incineration is the only proven technology and approved 

method for destroying PCBs in mixed waste. PCBs and other organic 

substances in the mixed waste must be destroyed to satisfy the 

requirements for transporting the waste and to meet the waste acceptance 

criteria at DOE’s disposal site in New Mexico.

Under the agreement to settle the lawsuit, the incineration component of 

the treatment process was put on hold. This will allow a major portion of 

the project to move forward but also means that for about 22 percent of the 

waste, including waste contaminated with PCBs, no treatment plan is in 

place. DOE agreed to pursue alternatives to incineration by exploring both 

alternative technologies and potential waivers of regulatory requirements. 

To identify alternative treatment processes, DOE agreed to appoint a panel 

of independent scientific experts.10 The panel’s report to the Secretary of 

Energy is due in December 2000. DOE is also evaluating regulatory options 

that, if accepted, could reduce the amount of waste that needs to be 

incinerated to about 3 percent. These options include less restrictive 

requirements for packaging and transporting the waste and disposing of the 

PCBs without treatment.

Treatment alternatives to incineration may be difficult to develop, and DOE 

is unsure whether this effort will be successful. According to the DOE 

Environmental Management program waste management scientist 

responsible for oversight of the Idaho project, there is a chemical treatment 

process that can destroy PCBs. However, this alternative technology has 

not been used or demonstrated on transuranic mixed waste. Before this 

alternative process could be used to treat transuranic mixed waste, 

additional research and development would be required. He said that DOE 

would need to demonstrate through a pilot project that the chemical 

9

In September 1999, two plaintiff groups—Keep Yellowstone Nuclear Free and the 

Environmental Defense Institute—filed suit in U.S. District Court in Wyoming requesting an 

injunction against the construction of the incinerator. The complaint alleged that DOE’s 

environmental impact statement on the project was deficient. The plaintiffs alleged that 

DOE failed to study the likely impacts of the airborne pollutants from the project’s 

incinerator on areas in Wyoming that the plaintiffs believe would be affected. 

10Under the settlement agreement, DOE also agreed to pay $150,000 to the plaintiffs to cover 

attorney and expert witness fees and other costs associated with the lawsuit.
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treatment process could be used on transuranic waste and then obtain 

approval from the Environmental Protection Agency to use the process.

As for the option of obtaining waivers to allow packaging, transporting, and 

disposing of the waste containing PCBs and other organic substances 

without treatment, DOE’s decision on packaging options is expected in 

May 2000. The timing of decisions on transporting and disposing of the 

waste without further treatment is unknown. DOE also said that disposal 

without treatment would require the modification of the mixed waste 

disposal permit issued by the state of New Mexico. 

If DOE is not successful in either developing new technology or obtaining 

the regulatory waivers, DOE may need to proceed with plans to incinerate 

the waste. Under those circumstances, the plaintiffs in the lawsuit have 

reserved the right to reinstate the lawsuit challenging use of the 

incinerator. At that point, if incineration is not an option for DOE, it may 

need to attempt to renegotiate disposition of the waste with the state of 

Idaho.

Interim Project 

Milestones Are Likely 

to Slip, but the Effect 

on the Final 

Completion Date Is 

Unclear

Although the project is still in its early stages and construction has not 

started, completion of the earliest steps is already about 3 months behind 

the milestones in the contract and about 1 year behind the schedule 

included in BNFL’s original project management plan. Additional delays are 

likely to occur while the permit applications are modified to eliminate 

incineration from the treatment process. BNFL underestimated the time 

required to obtain construction permits from state and federal regulators, 

and subsequent milestones for starting construction and for starting 

treatment operations are also in jeopardy. The flexibility built into the 

operational phase of the project should absorb some of these delays, but it 

is too early in the project to determine if BNFL can treat and remove all 

waste by the agreed-upon milestone of December 31, 2018. 

The Project Is Behind 

Schedule on Early Interim 

Milestones

Although it is still early in the project, BNFL has fallen at least 1 year 

behind interim milestone dates in its original project management plan for 

the construction and start-up of the treatment facility. According to BNFL’s 

current estimate, construction will not be complete until August 2002, and 

treatment operations will not start until November 2003. As a result, DOE 

will most likely miss the March 2003 interim milestone for the start of 

operations specified in the agreement with the state of Idaho (see table 2).
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Table 2: Comparison of Selected Schedule Milestones for the Project

a

These dates have not been reviewed or approved by DOE.

Source: BNFL’s project documentation.

DOE’s contract with BNFL specified that all construction permits would be 

issued by January 2000 and that construction would be completed by 

December 2002. However, to have more contingency time in the schedule, 

BNFL modified those dates in its original project management plan. BNFL’s 

accelerated schedule anticipated receiving the permits and starting 

construction a year earlier than DOE specified in the contract. This would 

also have allowed BNFL a full 15 months after construction was completed 

for operational testing and review.

BNFL Underestimated the 

Time Needed to Obtain 

Construction Permits

BNFL is behind its construction schedule because it underestimated, with 

DOE’s approval, the amount of time needed to obtain the permits necessary 

to begin construction. BNFL needed to obtain three key permits from state 

and federal regulators:11

• Clean Air Act permit. This permit addresses air pollution control and 

testing and limits the amount of air pollution allowed during the 

construction and operation of the facility. The state of Idaho issues this 

permit consistent with state law and the federal Clean Air Act. 

• Hazardous Waste Management Act permit. This permit addresses the 

treatment requirements for materials such as mercury and organic 

compounds such as industrial cleaning solvents. Without this permit, the 

Milestones in contract 

with BNFL (Jan. 1997)

Initial approved 

project schedule 

(Apr. 1997)

Revised approved 

project schedule 

(May 1999)

BNFL’s working 

estimate of project 

schedulea

 (Feb. 2000)

Submit permit applications None Jan. - Apr. 1998 Completed on time Completed

Permits issued Jan. 2000 Jan. - Mar. 1999 Aug. 1999 Apr. 2000

Start construction None May 1999 Sept. 1999 May 2000

Complete construction Dec. 2002 Dec. 2001 Dec. 2001 Aug. 2002

Start operations Mar. 2003 Mar. 2003 Mar. 2003 Nov. 2003

Complete project Dec. 2018 Dec. 2018 Dec. 2018 Dec. 2018

11In addition to these three key permits, the state of Idaho also required a Hazardous Waste 

Facility Siting license, which was issued in September 1997.
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facility cannot be constructed or operated. The state of Idaho also issues 

this permit consistent with state law and the federal Resource 

Conservation and Recovery Act.

• Toxic Substances Control Act permit. This permit addresses the 

treatment requirements for toxic substances such as PCBs. The 

Environmental Protection Agency issues this permit.

BNFL’s original project management plan called for obtaining all permits 

necessary to begin construction by March 1999. As a result, BNFL’s project 

schedule allowed only about 1 year after submitting the permits for the 

regulators to complete review, public comment, and issuance. BNFL 

wanted the permits to be issued by March 1999 to provide additional time 

for construction and testing activities and, therefore, to increase the 

likelihood of its meeting the project’s other interim milestone dates. Both 

BNFL and DOE acknowledged that planning to obtain the permits by 

March 1999 represented a very aggressive schedule but stated that they 

believed that it was essential to meet the interim milestones that DOE and 

the state of Idaho had agreed to in 1995 for completing construction and 

beginning waste treatment operations.

The application for the Clean Air Act permit was completed on schedule 

and submitted to the state of Idaho for review. Idaho’s review of this 

permit, including the public comment period, was completed in October 

1999, but it is unclear when the state will issue the permit. The state chose 

to wait until the public comment phase on the other two permits was 

completed before taking further action. According to state officials, this 

decision was made to ensure consistency among all three permits.12

Review of the applications for the Idaho Hazardous Waste Management 

Act13 and Toxic Substances Control Act permits is still under way. These 

two permits are being processed simultaneously since the technical issues 

are much the same. The public comment period for the two permits closed 

February 7, 2000, but regulators believed it would take at least until April 

2000 for the state and the Environmental Protection Agency to resolve the 

12In October 1999, DOE paid BNFL $2.2 million for the Clean Air Act permit even though the 

state had not issued the permit. DOE did so because it decided that the reasons for BNFL’s 

not receiving the permit as scheduled in March 1999 were outside of BNFL’s control. 

Therefore, the contract allowed for the payment, even though the permit was not issued, 

because BNFL had satisfactorily completed all of its work on the permit application.

13This state law implements the federal Resource Conservation and Recovery Act in Idaho.
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comments received. Moreover, under Idaho law, once permits are issued, 

the contractor will have to wait 30 days before starting construction to 

allow any concerned citizens to file appeals questioning the decision. Such 

appeals would be handled by the state of Idaho or the Environmental 

Protection Agency rather than by DOE, but their resolution could delay the 

project further.

State of Idaho officials said that BNFL’s original schedule for obtaining the 

permits by March 1999 was unrealistic. They said, for example, that 

although it can take between 3 and 5 years for the state to review and 

approve a hazardous waste permit, the state agreed to try to complete its 

review in about 2 years. In contrast, BNFL allowed only about 1 year in its 

schedule for the regulatory review process. Idaho officials said that before 

the project began, they were very candid with DOE and BNFL about the 

time required to obtain the permits. However, they also acknowledged that 

the permit application paperwork that BNFL submitted was of high quality 

and this helped speed up the review process. The review of the permits was 

also affected by new draft guidelines the Environmental Protection Agency 

issued in July 1998 on assessing the risks to human health and the 

environment from a project. These new requirements for identifying risks 

associated with the wastes and chemicals to be treated caused BNFL to 

rework a portion of its permit application.

BNFL’s current working estimate of the project’s schedule anticipated that 

the permits would be issued by April 2000. This is 13 months later than 

planned in BNFL’s original schedule and 3 months later than specified in 

the contract. However, the search for an alternative to incineration will also 

affect the issuance of the permits. As part of the settlement agreement, 

DOE and BNFL asked the state of Idaho and the Environmental Protection 

Agency to postpone regulatory approval of the incinerator portion of the 

permit applications.14 The impact of this change on the issuance of the 

three permits needed to start construction is currently unknown. If the 

applications for the permits need to be revised and resubmitted, this 

process could add considerably to the schedule for obtaining them. 

However, if the regulators are able to simply remove the incinerator 

component from the permit applications, it could take less time. According 

to state of Idaho officials, even if the more expedient approach can be used, 

it is unlikely that the permits can be approved and issued before July 2000.

14If the regulators issue permits for the entire treatment facility, including the incinerator, 

the settlement agreement will no longer be valid, and the plaintiffs may refile the claim.
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The Delay in the Start of 

Construction Affects the 

Ability to Meet Other 

Interim Milestones

Although the project has fallen behind the initial schedule for obtaining 

permits and starting construction, the dates specified in the contract for 

completing construction and starting operations have not changed. 

Therefore, the time available to complete some project activities has been 

reduced. For example, BNFL had originally planned on completing 

construction by December 2001, or 12 months earlier than the contract’s 

milestone date. This would have allowed 15 months to complete all 

operational testing and readiness reviews in time to meet the March 2003 

milestone for the start of operations. Both DOE and BNFL officials said 

that allowing 15 months for the operational testing and readiness reviews is 

prudent.

To maintain the 15 months for operational testing, given the delays that 

have occurred so far, BNFL has had to reduce the time available for 

constructing the treatment facility. The initial project schedule allowed 

31 months for constructing the treatment facility. Assuming no further 

delay beyond May 2000 for starting construction, the time available for 

constructing the facility has been reduced by 5 months to 26 months. 

According to the BNFL project manager, reducing the time available for 

construction will require BNFL to overlap construction activities, to reduce 

the contingency time available for addressing problems, and to incur higher 

construction costs if adding a third shift is necessary. He said that although 

the compressed construction schedule is necessary to preserve the 

15 months needed for operational testing, the shorter construction period 

increases the risk of not being able to complete construction or start 

operations on schedule. 

Incorporating the provisions of the agreement to eliminate the incinerator 

from the permit applications may make it even more difficult to begin 

construction in 2000. Because the construction site is in an area of the state 

that experiences severe winter weather, BNFL’s initial construction 

schedule provided for beginning the work early enough in the year—no 

later than March or April—to have the building shell enclosed by the 

beginning of severe winter weather in October or November. In that way, 

the interior construction work could proceed throughout the winter. If 

construction is delayed beyond the spring of 2000, BNFL could lose 

another construction season and further delay the start of operations.
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The Effect of Schedule 

Changes on the Project’s 

Completion Date Is 

Unknown

At this point in the project, it is too early to determine if slippage on interim 

schedule milestones will affect the December 2018 milestone for 

completing the entire project. BNFL will try to make up time after 

construction starts by overlapping activities and adding extra personnel. 

Also, because of the flexibility built into the operational phase of the 

project, BNFL said that it could slip completion of construction somewhat 

and still complete treating and disposing of the waste on or before 

December 2018. The flexibility in the operational phase of the project 

exists because the contract allows almost 16 years to complete the 

processing of the waste. Working at capacity, the treatment facility is 

designed to process about 7,000 cubic meters of waste each year, meaning 

that it could process the entire 65,000 cubic meters in less than 10 years.

However, it is difficult to predict what impact the March 2000 settlement of 

the environmental lawsuit will have on the goal of completing the project 

by December 2018. If an alternative technology is identified, it may take 

considerable time to fully test, develop, and obtain approval to use it. 

DOE’s alternative strategy of attempting to obtain regulatory waivers may 

also involve a lengthy process. It is unclear if the flexibility in the 

operational phase of the project will be sufficient to absorb these delays.

The Final Contract 

Price Is Uncertain but 

Will Likely Be Higher

Although the initial fixed-price contract with BNFL was for $876 million, 

the contract contains provisions for either decreasing or increasing the 

price to account for such things as changes in contract requirements or 

unforeseen circumstances beyond the contractor’s control.15 A price 

reduction of $18 million has already occurred because of the steps taken to 

simplify treatment of most of the waste. Other savings are unlikely to occur 

but are possible if alternatives to private financing are pursued. However, 

uncertainties in two other areas could affect BNFL’s ability to carry out the 

project as planned and could result in increases to the contract price. 

These uncertainties involve the delays in starting construction and the 

search for alternatives to incinerating a portion of the waste.

15Under the Federal Acquisition Regulation, fixed-price contracts normally allow for 

equitable adjustments to the contract price for changes that occur outside the control of the 

contractor.
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Simplified Technology 

Resulted in a Price 

Reduction

Changes in the technical approach can affect a contractor’s scope of work 

and, therefore, the contract price. When BNFL shifted to a simpler 

technology for treating the waste by eliminating from the treatment 

process the step to stabilize the waste in cement, the contract price was 

reduced. In January 2000, DOE approved a contract modification that 

reduced the contract price by $18 million. The price reduction occurred 

because the simpler technology will result in lower labor and material 

costs.

Alternative Financing, if 

Pursued, Could Reduce the 

Contract Price

It is possible that decisions on the project’s financing, if they depart from 

the initial approach, could also reduce the contract price. In its offer 

submitted in September 1996, BNFL proposed financing phase II of the 

project—construction and testing—with internal funds obtained from its 

parent company. Phase III of the project—operations—was to be financed 

with commercial debt and with revenues received from DOE for 

successfully processing the waste. However, BNFL also planned to review 

its financing options during the first 3 years of the contract to identify the 

most efficient financial arrangements, including obtaining commercial 

financing for phase II construction activities. Financing costs are 

significant—of the estimated $570 million of construction and testing costs 

in phase II of the contract, almost $300 million represents BNFL’s financing 

costs if it funds this phase from internal sources.16

At this point, BNFL is unsure if it will try to obtain commercial financing 

for the project or continue to finance the project internally. BNFL’s Senior 

Vice President said that BNFL has concluded, after discussions with the 

financial community, that commercial banks would not lend money for 

construction until all of the necessary permits had been issued, and that the 

banks would also require other changes to the contract before making 

funds available. BNFL concluded that lenders would require contract 

16Private financing is a fundamental feature of DOE’s privatization strategy for cleanup 

projects. The strategy was established in 1994 in an effort to reduce costs and improve the 

timeliness of cleanup projects. DOE expects that private financing will provide contractors 

with a greater incentive to perform because recovering their investment depends on 

performance and because outside lenders will provide third-party oversight to ensure that 

their investment is sound. For a discussion of how different financing and contracting 

strategies on DOE’s projects, such as the Advanced Mixed Waste Treatment Project, can 

affect the risks and costs to the government, see Department of Energy: Alternative 

Financing and Contracting Strategies for Cleanup Projects (GAO/RCED-98-169, May 29, 

1998).
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changes that would, among other things, (1) limit the decision-making 

authority of the DOE contracting officer to decide what payments BNFL 

would be entitled to if disagreements arise and instead establish 

predetermined performance criteria and some form of third-party dispute 

resolution, and (2) ensure that under a termination of the contract for 

convenience, the government’s payment to BNFL would include not only 

the outstanding principal, but also include interest and fees.

DOE’s Director of Contract Reform and Privatization said that DOE 

expects BNFL to finance the project from its internal sources of funds if it 

cannot obtain commercial financing. However, in the unlikely event that 

financing is not available from commercial lenders and/or BNFL’s parent 

company, and BNFL is unable to carry out the contract, DOE would have to 

take some action, such as terminating the contract or modifying the 

contract to facilitate financing of the project.17

It is unclear what approach DOE would take if BNFL could not complete 

the project as planned. DOE’s Director of Contract Reform and 

Privatization said that he cannot envision a scenario in which BNFL would 

be unable to obtain financing for the project. However, he also said that if 

BNFL could not finance the project, DOE would have the option of making 

progress payments during construction and testing or agreeing to other 

contract modifications to make financing the project more attractive to 

commercial lenders. These potential changes to the contract would also 

likely change the way that risk is allocated between the two parties since 

DOE’s cost exposure would be greater. Because BNFL’s offer was based on 

the allocation of risk between BNFL and DOE in the original proposal, any 

major changes to the contract that result in a reallocation of risk away from 

BNFL may also indicate the need for a corresponding reduction to the 

contract price.

Delays in Starting 

Construction Are Likely to 

Increase the Contract Price

Delays in starting construction of the treatment facility will likely result in 

contract price increases. DOE officials in Idaho have examined the 

possible effects on the project’s schedule because of the delays from the 

January 2000 date in obtaining permits. DOE concluded that if the start of 

construction is delayed until May 2000, as projected in BNFL’s working 

17The contract provides that it will not be considered a termination for default if project 

financing is not available from the private sector and/or the corporate parent for reasons 

outside of the control of BNFL.
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Page 23 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

estimate, the potential price increase to the government would be about 

$44 million. Major components of the price increase include the costs 

associated with paying contractor personnel during the delay and the 

financing costs. If the start of construction is delayed beyond May 2000, the 

price increase would be even greater.

DOE could have avoided at least some of the price increase associated with 

the construction delays by requiring BNFL to bid the project using a more 

realistic estimate of the time required to obtain the permits. BNFL would 

have factored the longer period for obtaining permits into the pricing of the 

contract. Although DOE may then have paid a higher initial price for the 

contract, both DOE and BNFL officials agree that the price increase likely 

would have been less than what BNFL may now request once the permits 

are finally issued and construction can begin.

DOE’s vulnerability to this potential contract price increase raises the 

question of why DOE agreed to the 2-year time frame for obtaining the 

permits. According to DOE’s project manager at the Idaho site, DOE agreed 

to the milestone date, even though it was considered a challenging date to 

meet, because the only other alternative was to try to negotiate with the 

state of Idaho to change the interim project milestone dates DOE and the 

state agreed to in 1995. He said that DOE did not think that the state would 

be willing to renegotiate the agreement even if the project’s completion 

date remained the same. DOE’s Director of Contract Reform and 

Privatization said that this situation was a good example of the trade-off 

DOE must make between making a good business decision to keep the 

contract price down and meeting its commitments to individual states, 

potentially at a higher price. He said that in this case, the commitment to 

the state took precedence over a good business decision.

The Search for an 

Alternative to Incineration 

May Affect Price

The recent decision to suspend the use of incineration for about 22 percent 

of the waste and to pursue other alternatives for meeting disposal 

requirements could also affect the contract price. According to the DOE 

contracting officer, activities that BNFL could be involved in, such as 

exploring regulatory waivers and identifying alternative treatment 

technologies, could be outside the current scope of work in the contract 

and thus could trigger the need for an equitable adjustment in the contract 

price. But DOE also believes the possibility exists that with changes in 

technology or waivers of regulatory requirements for disposal, the contract 

price could decrease. So far, it is unclear what the full scope of the changes 

to the project will be or how much they will cost.
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Page 24 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

Agency and Company 

Comments

We provided a draft of this report to DOE and BNFL for their review and 

comment. DOE said that the draft report was comprehensive and fairly 

characterized several of the uncertainties on the project. However, DOE 

believed that the draft report contained some factual inaccuracies and was 

incomplete or misleading in three respects. First, DOE said that the 

advantage of settling the lawsuit concerning the incinerator was not fully 

described in the draft report. When DOE settled the suit, the plaintiffs 

agreed not to file appeals to the construction permits. As a result, DOE 

expects that BNFL will be able to proceed with the construction of the 

facility without additional delay. We modified our report to make it clear 

that the settlement agreement could allow construction to move forward. 

Second, DOE said that the draft report overstated the potential difficulties 

of pursuing alternatives to incineration. DOE believes that there will be 

opportunities to accelerate and resequence construction and readiness 

review activities and that a treatment facility without incineration will be 

somewhat smaller, allowing construction to be completed by December 

2002. DOE also said that waste not requiring treatment could be retrieved, 

characterized, and shipped starting in March 2003 or earlier. We believe 

that our report fairly describes the difficulties associated with making the 

project fully operational by March 2003. DOE may be able to find shortcuts 

for completing some of the work, and our report recognizes this possibility. 

But the construction permits have not been issued, and uncertainties 

remain about how to treat up to about 22 percent of the waste. It is possible 

that DOE may have to include the incinerator in the project to successfully 

treat all of the waste. Given these delays and uncertainties, having a fully 

operational facility by the contract date of March 2003 is doubtful. In fact, 

in its comments on the draft report, DOE acknowledged that completing 

construction and operational testing in time to have the facility fully 

operational by March 2003 is questionable.

Finally, DOE said that the draft report does not adequately acknowledge 

that any project of this scale and complexity has uncertainty that can affect 

cost, schedule, and performance. We disagree and believe that our report 

fairly presents these uncertainties and their potential effects on the project.

DOE also provided several technical corrections that we incorporated as 

appropriate. DOE’s comments and our responses to specific comments are 

presented in appendix I.
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Page 25 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

BNFL’s Senior Vice President advised us that the draft report was a fair and 

reasonable representation of the status of the project. He also provided 

clarifications on BNFL’s financing strategy for the project, which we 

incorporated as appropriate. 

Scope and 

Methodology

To determine how the current project compares with the initial plans in 

terms of approach and schedule, we reviewed the proposal submitted by 

BNFL in September 1996 and subsequent documents that reflected the 

changes to the technical approach. We also reviewed the contract between 

DOE and BNFL, BNFL’s project management plans that included the 

original and approved baseline schedules, and DOE’s environmental impact 

statement and record of decision on the Advanced Mixed Waste Treatment 

Project. In addition, we interviewed officials with DOE’s Idaho Operations 

Office, BNFL in Idaho Falls, and Idaho’s Department of Environmental 

Quality. We also toured the Radioactive Waste Management Complex at the 

Idaho Falls site where the facility will be constructed.

To determine what uncertainties might affect the ability to successfully 

complete the project on time and within budget, in addition to our work on 

the changes in the technical approach and the project’s schedule, we 

reviewed contract requirements, DOE and BNFL’s reports and records on 

the permit applications, and available records pertaining to the legal 

challenge to DOE’s environmental assessment process for the incinerator. 

We also interviewed the DOE contracting officer and Advanced Mixed 

Waste Treatment Project manager at DOE’s Idaho Falls Operations Office 

and officials with DOE’s Offices of General Counsel, Contract Reform and 

Privatization, and Environmental Management. In addition, we interviewed 

officials with BNFL’s Idaho Falls project office and the Vice President 

responsible for the project. We also interviewed officials with the Idaho 

Department of Environmental Quality and the Environmental Protection 

Agency to determine the status of the permits for the project.

We performed our review from September 1999 through April 2000 in 

accordance with generally accepted government auditing standards.

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after the 

date of this report. At that time, we will send copies to the Honorable 

Bill Richardson, the Secretary of Energy. We will also make copies 

available to others on request. Please call me or Derek Stewart at 
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Page 26 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

(202) 512-3841 if you or your staff have any further questions. Major 

contributors to this report were Margaret L. Armen, Carole J. Blackwell, 

Thomas C. Perry, Stan G. Stenersen, William R. Swick, and Charles A. 

Sylvis.

Sincerely yours,

Jim Wells

Director, Energy, Resources,

and Science Issues
Page 27 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project
Page 28 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

Appendix I

Comments From the Department of Energy ApApenednxidexiIs

Note: GAO’s comments 

supplementing those in the 

report text appear at the 

end of this appendix.
Appendix I

Comments From the Department of Energy

Page 29 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

See comment 1.

See comment 2.

See comment 3.

See comment 4.

Now on p. 4.

See comment 5.
Appendix I

Comments From the Department of Energy

Page 30 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

Now on p. 4.

See comment 1.

Now on p. 4.

See comment 4.

Now on p. 5.

See comment 4.

Now on p. 5.

See comment 6.

Now on p. 11.

See comment 4.

Now on p. 12.

See comment 4.

Now on p. 13.

See comment 4.

Now on p. 14.

See comment 4.
Appendix I

Comments From the Department of Energy

Page 31 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

Now on p. 14.

See comment 4.

Now on p. 15.

See comment 4.

Now on p. 15.

See comment 4.

Now on p. 15.

See comment 4.

Now on p. 15.

See comment 7.

Now on p. 16.

See comment 4.

Now on p. 22.

See comment 4.

Now on p. 23.

See comment 4.

Now on p. 23.

See comment 8.
Appendix I

Comments From the Department of Energy

Page 32 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

Now on p. 23.

See comment 4.
Appendix I

Comments From the Department of Energy

Page 33 GAO/RCED-00-106 DOE’s Advanced Mixed Waste Treatment Project

GAO’s Comments 1. We address these comments in the Agency and Company Comments 

section of the report.

2. The draft report presented BNFL’s view that it can slip the project’s 

construction dates somewhat and still meet the December 2018 

completion date. We also stated that it is unclear if flexibility in the 

operational phase of the project will be sufficient to absorb these 

delays. Therefore, we believe the report fairly presents this uncertainty.

3. We believe the term incineration adequately describes the thermal 

desorption treatment process because thermal desorption involves 

burning substances using an indirect heat source.

4. We agree. The final report was modified to reflect this comment as 

appropriate.

5. We modified the final report to clarify that price adjustments are 

provided for in the Federal Acquisition Regulation.

6. We disagree that the $44 million reflects the upper bounding of the 

potential price increase. The $44 million estimate is based on a 3-month 

delay in the start of construction. DOE’s analysis also shows that a 

24-month delay would add about $71 million to the project. Therefore, 

we believe that the use of the term “about” is appropriate.

7. We modified the final report to clarify that additional delays will likely 

occur because of the need to modify the permit applications to remove 

the incinerator component.

8. We modified the final report to clarify that the discussion about the 

project’s schedule dates in this paragraph related to the dates in the 

contract, not to those in BNFL’s project management plan.

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