While Clinch River Breeder Reactor Steam Generator Contract Could Not Have Been Terminated for Default, Many Aspects Are Questionable

GAO reviewed several components of the Clinch River Breeder Reactor (CRBR), the Nation's first liquid metal fast breeder reactor demonstration plant. GAO was asked to determine whether the contract for the steam generator should be terminated for default because of significant cost and timeframe overruns.

GAO found that there was no basis to support termination of the contract for default. Even if such a basis existed, the Department of Energy (DOE) could not take such an action because it was not a party to the contract. Instead, DOE contracted with Westinghouse Electric Company for the CRBR nuclear steam supply system. Westinghouse contracted General Electric (GE) for this system; and GE contracted with Atomics International (AI) for the steam generation. The contract specifies that it may be terminated only for the convenience of the Government. GE could have terminated the steam generator contract for default only if the contractor failed to perform according to that contract. However, AI was working toward a moving target because project participants were continually directing changes to the contract technical specifications. Furthermore, the allowable cost and schedule impacts of many early specification changes are still unresolved. Therefore, DOE and GE were not in a position to measure AI performance on a cost or schedule basis. DOE directed Westinghouse to terminate the steam generator contract for the convenience of the Government and to request new proposals for the steam generators. GAO found several unusual aspects concerning the Energy Research and Development Administration's role in the selection of AI to develop and supply the CRBR steam generator. Federal procurement regulations did not apply to the award of this contract because it was actually awarded by a subcontractor. However, competition is essential to procurement policies.