Energy:

Commenting on Proposed Modifications to the Clinch River Breeder Reactor Contract

RED-76-96: Published: Mar 26, 1976. Publicly Released: Mar 26, 1976.

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GAO was requested to review a proposed modified contract among the Energy Research and Development Administration (ERDA), the Tennessee Valley Authority (TVA), and private firms for revised design, construction, and operation of the Clinch River Breeder Reactor. Under the new arrangement, ERDA would assume overall management responsibility from the corporation because of a dramatic increase in the Government's financial commitment to the project, up to about 87 percent of the total. GAO's review concentrated on the soundness of the revised contract as a means of completing the project.

Certain ambiguities of the original contract are clarified in the modified version, but GAO is concerned that integrated management procedures could lead to the illegal supervision of private individuals by Federal employees. ERDA was unable to obtain agreement as to the corporation and Federal management roles, and the possible effect of requiring design changes. The modified contract establishes a project steering committee composed of Government and corporation members to review operational decisions, with the minority on any issue retaining the right to appeal. The superiority of the board may reduce ERDA's responsibilities and lower its efficiency. The board oversees the use of utility funds and must be able to monitor the project and protect the utilities' investment, but not without restraints. Although ERDA can adjust the project schedule to allow for delays, the project, already some 15 months behind schedule, may be terminated as a result of additional delays. The Nuclear Regulatory Commission (NRC) believes a core disruptive accident is likely and should be planned for by redesigning certain safety features. About one-half of the supervisory group will be from the corporate participants, as will about two-thirds of the technical employees; all will be paid from utility funds and will not be subject to Federal personnel requirements concerning bribery, graft, or conflict of interest, although safeguards could be included in the contract.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: ERDA should negotiate with the other participants to revise the modified contract. It should state clearly the extent of the corporation's project management involvement; eliminate options permitting project termination because of delays caused by design changes; and penalize private employees involved in conflict of interest, bribery, or graft relating to the project. The project board of directors should have the opportunity to appeal steering committee decisions expeditiously, with the board bearing the burden of the appeal.

    Agency Affected:

 

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