B-160157, NOV. 1, 1966

B-160157, NOV. 1, 1966

TO CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

ON SEPTEMBER 21, 1966, WE RECEIVED FROM THE COMMISSION'S OFFICE OF GENERAL COUNSEL CERTAIN DOCUMENTS RELATING TO A PROPOSED SETTLEMENT BETWEEN THE COMMISSION AND THE BLAW-KNOX COMPANY UNDER CONTRACT NO. AT/36- 1/-77.

THE BLAW-KNOX COMPANY WAS ENGAGED AS THE ARCHITECT-ENGINEER FOR PROPOSED ALTERATIONS TO THE REACTOR PLANT FACILITIES AT SHIPPING PORT, PENNSYLVANIA, WHICH WERE NECESSARY TO PERMIT OPERATION OF PWR, CORE 2, STEAM GENERATORS AT 150 MEGOWATTS (ELECTRICAL) AS COMPARED TO THE 68 MEGOWATT CAPACITY OF THE GENERATORS PREVIOUSLY INSTALLED. THE BLAW KNOX COMPANY WAS REQUIRED AS A PART OF ITS UNDERTAKING TO ANALYZE THE EXISTING STRUCTURES AND TO RECOMMEND ANY CHANGES REQUIRED TO INSURE ADEQUATE PERFORMANCE DURING CORE 2 OPERATIONS. THE NEW U-TUBE STEAM GENERATORS AND TWO NEW STRAIGHT-TUBE STEAM GENERATORS WERE INSTALLED BY ANOTHER CONTRACTOR IN ACCORDANCE WITH DRAWINGS PREPARED BY THE BLAW- KNOX COMPANY.

IN NOVEMBER 1964, WHILE FILLING THE NEW STEAM GENERATORS WITH WATER, A FAILURE OF THE JOINT OF ONE OF THE U-TUBE GENERATOR SUPPORTS WAS DISCOVERED AND CABLES WERE USED TO PREVENT DAMAGE TO THE GENERATOR AND ASSOCIATED PIPING. UPON INVESTIGATION, IT WAS FOUND THAT THE FAILED JOINT DID NOT MEET THE APPLICABLE STEEL CODE REQUIREMENTS AND THAT OTHER STRUCTURAL MEMBERS OF THE SUPPORTS FOR THE TWO U-TUBE GENERATORS DID NOT MEET THE STEEL CODE REQUIREMENTS. SIMILAR DEFICIENCIES WERE FOUND IN CERTAIN OF THE SUPPORTS FOR THE TWO STRAIGHT-TUBE GENERATORS WHICH HAD BEEN DESIGNED BY THE BLAW-KNOX COMPANY. THE MAJOR PORTIONS OF THE SUPPORTS FOR THE FOUR NEW STEAM GENERATORS WERE REPLACED WITH NEW AND STRONGER SUPPORT STRUCTURES, AND BACKUP SUPPORTS WERE ALSO INSTALLED SO THAT, IN THE EVENT OF A SUPPORT FAILURE DURING OPERATION, THE STEAM GENERATOR WOULD NOT FALL MORE THAN A FEW INCHES AND WOULD NOT CAUSE RUPTURE TO THE PRIMARY PIPING.

THE COMMISSION CONSIDERED THAT THE BLAW-KNOX COMPANY IS LIABLE FOR THE EXCESS COST INVOLVED IN REPLACEMENT OF THE STEAM GENERATOR SUPPORTS AND FOR DAMAGES INCIDENT TO THE DELAY OF APPROXIMATELY THREE MONTHS IN THE SHIPPING PORT PROGRAM. DURING NEGOTIATIONS WITH THE COMPANY, THE COMMISSION DETERMINED THAT THE FIRM'S FINAL SETTLEMENT OFFER OF $650,000 WOULD BE SUFFICIENT TO COVER THE EXCESS COST OF REPLACING THE SUPPORTS FOR THE STEAM GENERATORS AND A REASONABLE ALLOWANCE TO THE GOVERNMENT AS DAMAGES FOR DELAYS IN THE SHIPPING PORT PROGRAM.

THE MATTER WAS TRANSMITTED TO US BECAUSE OF BLAW-KNOX'S REQUEST THAT IT BE FURNISHED A RELEASE FROM FURTHER LIABILITY IN CONNECTION WITH THE PROPOSED SETTLEMENT. AS WE STATED IN 21 COMP. GEN. 59, IT IS PRIMARILY THE RESPONSIBILITY OF AN ADMINISTRATIVE AGENCY OF THE GOVERNMENT TO DETERMINE THE AMOUNT OF DAMAGES RECOVERABLE BY THE UNITED STATES IN A MATTER AFFECTING ITS OPERATIONS. IT IS OUR UNDERSTANDING THAT OUR VIEWS ARE REQUESTED ONLY WITH RESPECT TO THE PROPRIETY OF THE FURNISHING SUCH A RELEASE, NOT IN CONNECTION WITH THE AMOUNT OF THE SETTLEMENT. ACCORDINGLY, WE HAVE NOT EXAMINED INTO THIS ASPECT OF THE MATTER AND EXPRESS NO OPINION THEREON.

IT WAS FURTHER STATED IN 21 COMP. GEN. 59 THAT IF A RELEASE IS REQUIRED TO EFFECT COLLECTION OF THE DAMAGES ADMINISTRATIVELY DETERMINED TO BE DUE, IT MAY PROPERLY BE EXECUTED BY THE OFFICER RECEIVING THE REMITTANCE OR BY ANY OTHER RESPONSIBLE OFFICER OF THE DEPARTMENT OR AGENCY CONCERNED. CONSEQUENTLY, SINCE THE COMMISSION HAS DETERMINED THAT THE AMOUNT OFFERED BY BLAW-KNOX REPRESENTS THE DAMAGES SUFFERED BY REASON OF THE STRUCTURAL FAILURE INVOLVED, WE PERCEIVE NO OBJECTION TO THE EXECUTION ON BEHALF OF THE COMMISSION OF A RELEASE AS REQUESTED BY BLAW-KNOX.