Defense Environment Alert

an exclusive biweekly report on defense policies for cleanup, compliance and pollution prevention

Vol. 14, No. 12’ÄîJune 13, 2006

CONSTRUCTION DELAY AT RUSSIAN CHEM DEMIL PLANT IMPERILS DOD GOALS

Construction at a U.S.-funded facility to destroy Soviet-era chemical weapons at Shchuch'ye, Russia, is behind schedule, and the delay could endanger Defense Department plans to have the plant operational by 2009, according to a May 31 Government Accountability Office (GAO) report.

The Shchuch'ye facility, located in south-central Russia, is part of Washington's Cooperative Threat Reduction(CTR) program. The effort aims to help Russia and other former Soviet countries secure and destroy weapons of mass destruction produced during the Cold War. The findings come not long after Defense Secretary Donald Rumsfeld officially announced the United States will not be able to meet the 2012 extended international treaty deadline for destroying stockpiled chemical weapons (Defense Environment Alert, April 18, p8).

GAO also questions whether Russia can meet the extended deadline. "The Russian government's destruction plan to eliminate all chemical weapons by 2012 may be unrealistic as it depends on seven destruction facilities -two have been built, two are under construction, and three have not been started," the report says.

The Pentagon's Defense Threat Reduction Agency manages the implementation of CTR programs, and the agency is using the U.S. Army Corps of Engineers as the contract manager for the Shchuch'ye project. The corps, in turn, has selected Parsons Global Services to administer subcontracts for the design and construction to Russian companies.

"Although DOD has made visible progress over the past [two] years in constructing the [Shchuch'ye plant], it continues to face numerous challenges that threaten the project's schedule and cost," the congressional auditors conclude in their report.

In particular, construction of the main weapons destruction building is delayed because bids by Russian contractors to do the work were either incomplete or "excessively high," according to the report.

The site's administration building, crucial for the eventual destruction process, is also behind schedule because one of the Russian subcontractors went bankrupt last year after it was discovered that a senior executive there had embezzled millions of dollars, the report states.

As a result, DOD's estimate to turn over the Shchuch'ye complex to the Russian government in 2009 may be "optimistic," the auditors write.

Parsons, too, is at fault for the slow progress, GAO says after reviewing the company's performance reports.

"Our analysis revealed serious discrepancies in the data, such as improper calculations and accounting errors," GAO writes. "For example, we found that from September 2005 through January 2006 Parsons' [Earned Value Management (EVM)] reports did not capture almost $29 million in actual cost for the ... project."

DOD adopted the EVM policy to provide its program managers with accurate reports about a contractor's ability to perform work on time and on budget.

By April 2006, the contractor had not set up an EVM system that provided ’Äúuseful and accurate data to DOD program managers, although the company was supposed to do so by March of 2005, the auditors write.

To ensure better management of the project's cost and schedule, auditors urge that DOD withhold a portion of Parson's award fee until the company improves its EVM reporting system, according to the GAO report.

DOD estimated in 1999 that construction at Shchuch'ye would cost $750 million, with chemical weapons destruction there beginning in 2006. In 2003, Pentagon officials altered their initial assessment, putting the cost at $1 billion, and estimating completion of the project in 2009.

In its end state, the Shchuch'ye complex will consist of approximately 100 buildings. The United States is funding the construction of almost all of the buildings, including the main destruction facility. Russia has agreed to fund a second destruction building on the site, similar in design to the U.S.-funded version. Russia will also fund the construction and operation of a utilities infrastructure - gas, water and electricity - to operate the complex.

Russia has the world's largest declared stockpile of chemical weapons, consisting of approximately 32,500metric tons of nerve agents and 7,500 metric tons of blister agents, according to the report. The latter class of agents include mustard gas and lewisite, which cause burns when they come in contact with human skin.

DOD concurred with the report's findings and recommendations, according to a May 19 letter to GAO from Dale Klein, the assistant to the secretary of defense for nuclear, chemical and biological defense programs.

 - Sebastian Sprenger