Defense Environment Alert 06/15/04

Defense Environment Alert

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

Vol. 12, No. 12--June 15, 2004

DOD-ORDERED AUDIT PROBES PUEBLO FACILITY'S ACCELERATION PLANS

At the behest of the Pentagon's top acquisition official, DOD's inspector general (IG) is auditing the growth in scope of the chemical demilitarization project at the Army's Pueblo, CO, facility, and how influential the facility's contractor has been in determining the size of the project. But environmentalists say the program at Pueblo is being investigated and chastised by the acquisition office "for doing what they were told to do" - accelerate destruction of chemical weapons.

"I am concerned with the growth in scope of the project, and by the amount of discretion that may have been ceded to the contractor to determine the project requirements," Acting DOD Acquisition, Technology & Logistics Under Secretary Michael W. Wynne says in a May 14 memorandum to the IG requesting the audit. Wynne cites significant growth from the original estimate for the project, compared to the current plan. The plant staff level rose from 587 to 1,100, the processing area from 95,000 square feet to 240,000 square feet, and the cost from $1.6 billion to possibly hundreds of millions of dollars more, he says.

"Based on the changes in scope to include the increased contractor staffing levels and the space requirements for the chemical disposal processing facility, we question the reasonableness of the project life cycle costs." The memo is available on InsideEPA. com. See page 2 for details.

The Assembled Chemical Weapons Alternatives (ACWA) program is overseeing the design, construction and operation of a chemical weapons neutralization pilot plant to destroy the chemical munitions stored at Pueblo. DOD officials backed neutralization over the Army's baseline incineration method two years ago, and awarded Bechtel National Inc. the contract.

Wynne asks the IG to address any deficiencies in the acquisition process for the plant, particularly "[w]hether the government's contractual relationship with the systems contractor has contributed to the growth in the life cycle cost of this facility," the handling of the public affairs contract, whether the use of an accelerated contract approach has effectively controlled cost increases, whether the use of a performance-based contract has been an impetus to build a larger facility, "[w]hether this contracting approach may have operated to eliminate Department-approved acceleration efforts," and the reasons for the increase in staff levels and processing area.

But Craig Williams, director of the citizens coalition Chemical Weapons Working Group, is calling the audit request a "witch hunt" and an attack on the ACWA program, saying Wynne's letter seems to be "almost accusatory." If the contract has to be re-bid due to the audit, it could delay the program by a couple years, he says.

At the direction of DOD's acquisition office - the same office now requesting the audit - ACWA proposed an accelerated destruction plan for Pueblo that looked to perform certain tasks simultaneously, rather than sequentially. The acquisition decision memorandum (ADM) signed by Wynne's predecessor, E.C. "Pete" Aldridge, on July 16, 2002, endorsed neutralization followed by biotreatment and called for expedited disposal of the stockpile due to national security concerns. And a DOD record of decision similarly called for acceleration, Williams says.

When ACWA produced the acceleration plans, the DOD acquisition office gave no feedback, so ACWA executed the plans, he says. But now the program is being investigated for following orders, he contends. Williams believes it is "not appropriate" for the acquisition office to essentially set new policy, through the audit request, contrary to the ADM.

DOD overseers of the chemical weapons program expressly questioned acceleration plans late last year, and asked ACWA to submit other options for the design of the destruction facility. "While we directed accelerated destruction of the Pueblo chemical weapon stockpile, current information indicates the emerging design concept is not executable," wrote Dale Klein, an assistant to the secretary of defense on nuclear and chemical and biological defense programs, in a Dec. 22, 2003, letter. Even though it asked for acceleration, DOD has an issue with the affordability of the plant, an ACWA source says. Facing cost overruns at other facilities, DOD proposed distributing nearly all of the planned funding for Pueblo in fiscal year 2005 to other sites (Defense Environment Alert, Feb. 10, p4).

Williams believes ACWA's success is being penalized, noting the speed with which the program has been moving in the permitting process, compared to the incineration plants in other states. He says DOD, expecting a slower process, may have thought the Pueblo program would not need the funding so soon.

But a DOD spokeswoman in response to questions submitted by Defense Environment Alert says that acceleration options that the program first considered, such as a quicker contract award and expedited permitting process, "were intended to lower cost, schedule, manpower, and processing facility size." Some of these have done this, while others could not be implemented.

DOD's acquisition office concedes it never signed off on the acceleration design plans for Pueblo, but that the growth in scope was detected during a standard program review and DOD then analyzed "design concept variants to determine the viability of more cost effective options that do not sacrifice safety or schedule," the response says.

DOD contends it did not expect to see a larger facility, more workers and higher costs under an accelerated plan. But the ADM from July 2002 talks of endorsing potential increases due to acceleration. "Acceleration options approved during the current Defense Planning Guidance Review that require additional funding will also be programmed in the FY 04-09 Army Budget Estimate Submission," the directive reads.

The main design change now being examined is to go from three processing lines down to two, the ACWA source says. That would obviously lengthen the schedule, but lower upfront capital costs for construction, the source says. The program will take several more months to determine the cost and schedule impact of adopting such design changes, the source says. The audit request grew out of this re-analysis, the source says.

The source says ACWA is complying with all requests and working with the IG to resolve any issues. The questioning, however, has not halted the initial work that is taking place for the plant's development, the source says.

Williams says that while acceleration will cost more upfront, it would cut down other costs, including storage and operational time. DOD's push to abandon acceleration is to get short-term justification in a fiscal year or two in order to try to save dollars, with no long-term vision of what the objective is, he says.

And a Sierra Club source says the increases in project cost under acceleration are small when compared to the decreases in storage costs and other risks if acceleration is not applied.