BFN, Bribery, Browns Ferry Nuclear, canisters, casks, contractor debarment, corruption, dry cask storage, fraud, Government Contracts, High Level Nuclear Waste, Holtec, Holtec International, India, Kickbacks, Krishna Singh, MPC, NAC, New Jersey, Norcross, NRC exemption, OIG, reracking, Sequoyah, spent fuel pad, Spent Nuclear Fuel, Symonds, tornados, Trump, Trump Norcross, TVA, TVA Browns Ferry, US Department of Justice, US DOJ, US NRC, USA, USTB
Comment By Jul 30 2018, at 11:59 PM ET, ID: NRC-2018-0052-0058 on Holtec’s proposed spent nuclear fuel facility in New Mexico: https://www.regulations.gov/docket?D=NRC-2018-0052
Sixty-six spent fuel casks are visible on Google Earth at Browns Ferry Nuclear Power Station – date unknown. However, in 2013 they only had 45 spent fuel casks: http://pbadupws.nrc.gov/docs/ML1428/ML14281A023.pdf. Note that they sit outside on what is essentially a parking lot, even though tornados with winds as high as 210 mph (EF5) have passed near the site, winds that even sucked up pavement.
In 2001 TVA got the contract for sixteen (16) Browns Ferry Spent Nuclear Fuel Canister-Casks. A contract to design and construct a spent nuclear fuel dry cask storage system was given to Holtec in November 2001 by the TVA. As can be seen above, that essentially means a concrete parking lot. In Feburary of 2002, a TVA Manager (J. Symonds) responsible for the Browns Ferry spent fuel storage system, received an apparent bribe-kickback from Holtec for over $54,000. In August of 2007, Symonds was fined and put on probation for lying about the affair. In 2006, a nuclear waste cask system competitor to Holtec complained about “unreasonably restricted competition,” at Browns Ferry-TVA. GAO ruled against the competitor, in November of 2007, even though the John Symonds case was known. The TVA finally debarred Holtec International, Inc., in November of 2010, “based on the results of a criminal investigation conducted by the OIG. Because of our recommendation, TVA created a formal suspension and debarment process and proceeded to debar Holtec for 60 days. Holtec agreed to pay a $2 million administrative fee and submit to independent monitoring of its operations for one year….” https://oig.tva.gov/reports/semi50.pdf
Even though the initial Holtec contract appears likely to have been based on bribery with the kickback paid after the contract was received, Holtec continues to provide its (substandard) spent nuclear fuel canister-cask system to TVA and will eventually provide 288 MPCs (canisters) and overpacks to be placed on the storage pads (concrete parking lots) at the Browns Ferry site.
In 2000 TVA contracted with Holtec for twenty (20) Hi-Storm 100 spent nuclear fuel canister-cask systems for Sequoyah Nuclear Power Station, as well as reracking the spent fuel pools for TVA’s Sequoyah and Browns Ferry nuclear Power Stations. In 2001, TVA extended its contract with Holtec and added sixteen (16) more spent fuel canister-casks for Browns Ferry. A $20 million five (5) year contract to provide eight (8) High-Storm 100 spent fuel cask systems to Browns Ferry, appears to be part of this. Additionally eight (8) more were to be delivered in 2008.
What was included in the $20 million for 8 spent fuel casks? If this was only the canisters and overpacks themselves, and didn’t include anything else, then this is $2.5 million each, which is significantly over the GAO maximum estimates for the canister-overpacks alone, suggesting that they may be charging the public utility (TVA) more than private ones. It may include the concrete pad-parking lot, but that cost should be insignificant. 288 x $2.5 million is $720 million dollars. $720 million in November of 2001 would be over $1 billion today. See: http://www.gao.gov/assets/670/666454.pdf. https://miningawareness.wordpress.com/2018/07/26/holtec-refused-to-make-costs-profits-available-to-us-government-but-wants-permission-to-bury-high-level-nuclear-waste-in-new-mexico-comment-deadline-july-30th-11-59-pm/ https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=720&year1=200111&year2=201806
As of November 2012, Holtec announced that it got an additional 10 year contract with TVA, which includes loading of the spent nuclear fuel. It is still unclear if they were loading before: http://web.archive.org/web/20180730014409/https://holtecinternational.com/2012/11/12/tva-awarded-10-year-fleet-wide-contract-with-tva-for-on-site-dry-storage/
“On or about February 7, 2002, Symonds knew that USTD had been directed to send that $29,212.77 check to Krohn by Holtec International (Holtec) – a company that Symonds knew as of that time (1) had contracted with TVA in November 2001 to design and construct a dry cask storage system for spent nuclear fuel rods at TVA BFN and (2) had contracted with USTB to fabricate some of the construction materials for the TVA BFN dry cask storage system. Additionally, on or about February 27, 2002, during the reporting period for his October 21, 2002 OGE Form 450-A, Symonds co-owned Krohn Enterprises, LLC with his former spouse, and on or about February 27, 2002, Krohn Enterprises, LLC, was paid $25,000 by Check No. 31970 drawn on the Mellon Bank account of USTD. That $25,000 check was deposited into the Krohn Enterprises, LLC, Heritage Bank account, and the proceeds of that check were used to pay the personal expenses of Symonds and his former spouse. On or about February 27, 2002, Symonds knew that USTB had been directed to send that $25,000 check to Krohn by Holtec – a company that Symonds knew as of that time (1) had contracted with TVA in November 2001 to design and construct a dry cask storage system for spent nuclear fuel rods at TVA BFN and (2) had contracted with USTB to fabricate some of the construction materials for the TVA BFN dry cask storage system….” https://oig.tva.gov/press/Symonds.pdf
“The OIG initiated a first in TVA history; the debarment of a contractor doing business with TVA. In October 2010, TVA debarred Holtec International, Inc., based on the results of a criminal investigation conducted by the OIG. Because of our recommendation, TVA created a formal suspension and debarment process and proceeded to debar Holtec for 60 days. Holtec agreed to pay a $2 million administrative fee and submit to independent monitoring of its operations for one year….” p. 8 , October 1, 2010 – March 31, 2011 “Semiannual Report, TVA-OIG“: https://oig.tva.gov/reports/semi50.pdf Also discussed here: https://oig.tva.gov/reports/semi59.pdf
In December of 2008, Holtec also bid for delivery of 100 spent nuclear fuel cask systems to be used after 2011. However, TVA allowed the bids to expire, possibly because of the criminal investigation of apparent bribery-kickbacks. Nonetheless, TVA reportedly contracted for 45 more Hi-Storm 100s with an option to buy 36 more, according to a Holtec news release (July 2009, as cited by Platts in 2010).
A competitor, NAC, complained about “unreasonably restricted competiton“, in March of 2006. In November 2007, “in the Matter of: NAC International, Inc., File: B-310065, Date: November 21, 2007“, GAO calls the Holtec 2000 contract “competitively awarded“, which appears false, given the apparent kickback-bribe by Holtec, which was already known by August, 2007, and likely earlier: “The TVA currently receives its dry casks for its Brown’s Ferry and Sequoyah facilities from Holtec International under a contract that was competitively awarded in 2000, and was subsequently extended beyond its original term; the contract is due to expire following deliveries in 2008. In determining how to meet its future requirements for these facilities, the TVA considered extending Holtec’s contract, but determined that “recompetition was necessary given that the original contract term has already been exceeded and that future sole source extension might allow Holtec to charge unreasonable prices.” Contracting Officer’s (CO) Statement at 3. The agency prepared and circulated a preliminary acquisition plan for its cask requirements in January 2006. Agency Report (AR), Tab 57, Presentation on Cask RFP. The TVA then conducted market research with the [deleted] companies considered to represent the potential market for dry casks: NAC, Holtec and [deleted].
As relevant here, NAC expressed concern to the TVA in March 2006 regarding potential challenges that a non-incumbent would face in providing new casks for use at the TVA facilities, as follows:
We believe there are no technical issues associated with the transition that can’t be directly solved,….
NAC contends that the TVA has unreasonably restricted competition because only the incumbent can meet the RFP’s schedule of initial deliveries. The protester also argues that the competition is unreasonably restricted because the RFP’s provisions for submitting an alternative proposal do not allow sufficient time for submission, and because the anticipated length of the contract is too long. For the reasons discussed below, we conclude that the RFP does not inherently preclude non-incumbents from meeting its requirements, and that TVA has not otherwise limited competition in a manner that warrants sustaining the protest….” https://www.gao.gov/products/A79770
“The ISFSI at Browns Ferry comprises numerous contiguous pads that, for the purpose of the ISFSI decommissioning estimate, are considered a single pad. It is assumed that this ISFSI area will be expanded with three additional pads added to provide sufficient storage capacity. The design and capacity of the dry storage modules on the pads is based upon the Holtec HI-STORM 1OOS, and the Holtec HI-STORM FW dry cask storage systems…. TVA’s current spent fuel management plan for Browns Ferry spent fuel would result in 288 MPCs and overpacks being placed on the storage pads at the site….” https://www.nrc.gov/docs/ML1535/ML15352A046.pdf
The spent nuclear fuels casks are out on pads (parking lots) even though in the region, “A twenty-five foot section of pavement was sucked up and scattered….” by a tornado: https://www.ncdc.noaa.gov/stormevents/eventdetails.jsp?id=301811
Map Tornado EF-5 tracking south-south-east of Browns Ferry Nuclear Power Sttion.
In 2006, TVA was trying to recuperate the salary of Symonds and others from the US taxpayer for work on the Browns Ferry Spent Nuclear Fuel project. If Symonds decided based on bribery-kickbacks, how much work was involved?
“TVA calculated its costs for charge-backs of salaried staff at Sequoyah and Browns Ferry based upon the records in its Integrated Business System general ledger… To be considered “incremental,” Mr. Kiraly determined that an employee needed to work on the dry storage project for a minimum of 12 weeks, and to spend a minimum of 50% of his or her time on the dry storage project. Id. at 2146:14 to 2147:2, 2163:13 to 2164:20. Based upon these standards, Mr. Kiraly determined that two employees at Sequoyah (Charles R. Davis and Michael A. Edwards) and three employees at Browns Ferry (Robert A. Chapman, Judith B. Border, and John L. Symonds) should be treated as “incremental.” … TVA’s proofs respecting its internal charge-backs for salaried staff at Sequoyah and Browns Ferry leave much to be desired. TVA did not provide detailed hours and amounts per employee in its ledger reports… TVA did make an appropriate showing respecting the work of Messrs. Davis, Edwards, Chapman, and Symonds, and Ms. Border. The court accordingly concludes that charge-backs for these individuals are recoverable by TVA but that the remaining charge-backs are not. The court consequently allows TVA to recover charge-backs for use of salaried staff at Sequoyah and Browns Ferry of $731,442.44, but disallows charge-backs of $663,429.00…” “In the United States Court of Federal Claims No. 01-249C, (Filed: January 31, 2006), TENNESSEE VALLEY AUTHORITY, )Breach of standard contract for ) disposal of spent nuclear fuel; Plaintiff, ) damages; mitigation; Restatement ) (Second) of Contracts § 350; v. ) scope of relief available for ) sequential partial breaches UNITED STATES, ) ) Defendant. )” http://www.uscfc.uscourts.gov/sites/default/files/opinions/LETTOW.TVA013106.pdf
Slightly lengthier excerpts to give more context:
“The ISFSI at Browns Ferry comprises numerous contiguous pads that, for the purpose of the ISFSI decommissioning estimate, are considered a single pad. It is assumed that this ISFSI area will be expanded with three additional pads added to provide sufficient storage capacity. The design and capacity of the dry storage modules on the pads is based upon the Holtec HI-STORM 1 OOS, and the Holtec HI-STORM FW dry cask storage systems. The systems consist of multi-purpose canisters (MPCs), with nominal capacities of 68 and 89 fuel assemblies, respectively. The MPCs are contained within steel-lined concrete storage overpacks.
The MPCs are assumed to be transferred directly to the DOE and not returned to the station. Some of the overpacks are assumed to have residual radioactivity due to some minor level of neutron-induced activation as a result of the long-term storage of the fuel. The cost to dispose of residual radioactivity, and to verify that the remaining facility and surrounding environs meet the NRC’s radiological limits established for unrestricted use, forms the basis of the ISFSI decommissioning estimate.
TVA’s current spent fuel management plan for Browns Ferry spent fuel would result in 288 MPCs and overpacks being placed on the storage pads at the site. This represents 100% of the total spent fuel projected to be generated during the currently licensed operating period. This scenario would allow the spent fuel storage pools to be emptied within approximately five and one-half years following the permanent cessation of operations….“https://www.nrc.gov/docs/ML1535/ML15352A046.pdf
“TVA seeks to recover charge-backs for its internal allocations of professional services performed by TVA’s Nuclear Corporate Engineering group ($1,813,175), Nuclear Inspection Services organization ($277,530), and Transmission Internal Services organization ($38,910). Pl’s Initial Post-Tr. Br. at 26. The government avers that none of these charge-backs should be recoverable, maintaining that the costs to TVA of the services provided by these units were fixed and not incremental to the breach. Def.’s Initial Post-Tr. Br. at 37; Tr. 2105:5 to 2107:3 (Test. of Kiraly); DX 218 Exs. 4.1, 4.2.
TVA’s Nuclear Corporate Engineering group consists of both permanent employees and staff-augmentation (temporary) employees, who are hired as TVA’s internal workload increases. Tr. 529:8-18 (Test. of Walker). In this respect, the Nuclear Corporate Engineering group operates much like the Heavy Equipment Division, adding capacity as needs increase. See supra, at 25-26. Also like the Heavy Equipment Division, Nuclear Corporate Engineering operates as a cost-recovery entity within TVA, charging organizations within TVA for their services to cover expenses without markup. Tr. 529:19-23 (Test. of Walker). Because the Nuclear Corporate Engineering group’s operations reflect a strategy of maintaining no more head count than it requires at any given time, the court will allow TVA to recover the internally allocated costs expended for the services provided by this organization. The Nuclear Corporate Engineering group charges between $52 and $56 an hour; this compares favorably with $75 to $100 an hour for external engineers. Id. at 529:8 to 530:25.
The Nuclear Inspection Services organization provides TVA’s internal quality control services. Tr. 538:17-20 (Test. of Walker). Nuclear Inspection Services has some permanent 30 staff, but TVA adjusts the level of staffing by hiring outside contractors. Id. at 538:22 to 539:1. Mr. Walker of TVA testified that Nuclear Inspection Services employs “hourly employees, meaning that they are paid only for [the] hours that they work. They’re not salaried.” Id. at 539:2-5. The majority of the Nuclear Inspection Services personnel employed by TVA on the Sequoyah and Browns Ferry Projects were contract (temporary) employees. Tr. 540:6-9 (Test. of Walker), 615:12-24 (Test. of Chapman). The court accordingly will allow TVA to recover the Nuclear Inspection Services costs allocated to the dry storage projects.
TVA’s Transmission Internal Services organization performed surveying services for the dry storage project. Pl.’s Initial Post-Tr. Br. at 28; Tr. 2105:17-19 (Test. of Kiraly). TVA’s Mr. Davis testified that many of the employees used for surveying at the dry storage projects were contractors. Tr. 333:3-22 (Test. of Davis). Again, just as with TVA’s Nuclear Corporate Engineering and Nuclear Inspection Services groups, TVA’s Transmission Internal Services organization provided surveyors on an as-needed basis, and when they were so employed, they were unavailable for other work. The court will allow TVA to recover these costs.
(b.) Charge-backs for use of salaried staff at Sequoyah and Browns Ferry.
TVA seeks to recover $1,401,283.44 in this category of labor. See Pl.’s Initial Post-Tr. Br. at 23. The government avers that $669,841 of TVA’s claimed labor costs paid to salaried employees should be non-recoverable because those costs were fixed and not incremental to the breach. Def.’s Initial Post-Tr. Br. at 35-37; Tr. 2057:18 to 2064:12 (Test. of Kiraly); DX 218A Exs. 1, 2.1, 2.1.2, 2.2, 2.2.2. TVA has stipulated that $6,412 of these labor costs should be eliminated because these costs were part of the $21,074 of excluded costs associated with the upgrade of the Auxiliary Building crane. See Def.’s Initial Post-Tr. Br. at 35 n.4; DX 218 Ex. 2.1.1. Therefore, the government requests a further reduction of $663,429.
TVA calculated its costs for charge-backs of salaried staff at Sequoyah and Browns Ferry based upon the records in its Integrated Business System general ledger. See PX 68 (Integrated Business System Transaction Reports for Sequoyah (FY 1998-2004)); PX 69 (Integrated Business System Transaction Reports for Browns Ferry (FY 1998-2004)). These ledgers set out charge-backs in terms of costs, but they did not contain a break-down by hour on an employee-by-employee basis. See Tr. 2065:10-21 (Test. of Kiraly); DX 218 at 5. The government’s expert, Mr. Kiraly, originally opined that charge-backs for all salaried personnel at Sequoyah and Browns Ferry should be eliminated on the ground that the labor involved was not “incremental.” Tr. 2058:1 to 2061:8 (Test. of Kiraly). Subsequently, TVA provided Mr. Kiraly with labor data from the Sequoyah and Browns Ferry projects on an employee-by-employee basis. Id. at 2081:14 to 2082:1. Mr. Kiraly analyzed these data to determine whether each employee should be considered “incremental” and therefore recoverable. To be considered “incremental,” Mr. Kiraly determined that an employee needed to work on the dry storage project for a minimum of 12 weeks, and to spend a minimum of 50% of his or her time on the dry storage project. Id. at 2146:14 to 2147:2, 2163:13 to 2164:20. Based upon these standards, Mr. Kiraly determined that two employees at Sequoyah (Charles R. Davis and Michael A. Edwards) and three employees at Browns Ferry (Robert A. Chapman, Judith B. Border, and John L. Symonds) should be treated as “incremental.” DX 218A Exs. 2.1.2, 2.2.2. Based upon the labor data and Integrated Business System data provided by TVA, Mr. Kiraly estimated the costs associated with these employees, and added this amount of salaried labor back to the labor category in his expert report. Id.
TVA objects to Mr. Kiraly’s criteria and methodology as arbitrary. TVA particularly contests his “50%” criterion. Pl.’s Initial Post-Trial Br. at 38-39. In this respect, the court agrees that reference to an “incremental” test is inappropriate because it does not fully reflect whether an employee was precluded from other work, and, in the same vein, use of a “50%” criterion as a surrogate is not supportable. Nonetheless, TVA’s proofs respecting its internal charge-backs for salaried staff at Sequoyah and Browns Ferry leave much to be desired. TVA did not provide detailed hours and amounts per employee in its ledger reports. TVA’s proofs also do not indicate the actual services provided by most of the pertinent salaried staff at the two facilities, nor does the evidence disclose the extent to which most of the employees were committed to the dry storage projects. By contrast, TVA did make an appropriate showing respecting the work of Messrs. Davis, Edwards, Chapman, and Symonds, and Ms. Border. The court accordingly concludes that charge-backs for these individuals are recoverable by TVA but that the remaining charge-backs are not. The court consequently allows TVA to recover charge-backs for use of 21
salaried staff at Sequoyah and Browns Ferry of $731,442.44, but disallows charge-backs of $663,429.00...” “In the United States Court of Federal Claims No. 01-249C, (Filed: January 31, 2006), TENNESSEE VALLEY AUTHORITY, ) Breach of standard contract for ) disposal of spent nuclear fuel; Plaintiff, ) damages; mitigation; Restatement ) (Second) of Contracts § 350; v. ) scope of relief available for ) sequential partial breaches UNITED STATES, ) ) Defendant. ) ” http://www.uscfc.uscourts.gov/sites/default/files/opinions/LETTOW.TVA013106.pdf
Some of the contract information based on our understanding of a (rather confusing) article by Platts Nuclear Fuel- Maureen Conley, Washington, Volume 35 / Number 22 / November 1, 2010. The article is probably confusing because, as it notes, TVA – a US government owned utility – refused to give out information on the number of casks that TVA purchased and has delivered, at least under the contract which was current at the time.
This blog post is based on the very limited information which we were able to find on this topic. However, ideally one would obtain the detailed OIG criminal investigation, etc. Since it is unavailable online, we suspect that it is unavailable, period.