Issues Concerning the DOE Justification for Building the Gas Centrifuge Enrichment Plant

GAO was requested to evaluate the Department of Energy's (DOE) current justification for building the new gas centrifuge enrichment plant by answering whether: (1) the new plant is needed to satisfy projected demand for DOE enrichment services; (2) the new plant will enable DOE to substantially reduce the long-range costs; and (3) the new plant is likely to improve the DOE competitive position in the world enrichment services marketplace.

GAO found that the new plant is not needed, will not necessarily enable DOE to reduce the long-range costs, and is unlikely to improve the DOE competitive position. Constructing the gas centrifuge plant on the current schedule is clearly economical considering the high demand for enrichment services and the possible failure of the advanced isotope separation technology. However, the current trend points to even further deterioration in nuclear power growth expectations. DOE currently expects to successfully develop the advanced isotope separation technology, but GAO recognizes that sudden events could cause a sharp reversal in the outlook for nuclear power. In the long run, the DOE enrichment services customers will pay for construction of the gas centrifuge plant. However, short-run budgetary impacts are significant, particularly in a period of increasing pressure to reduce the Federal budget. The budgetary options, expressed in fiscal year 1983 dollars, include: (1) continuing the project schedule; (2) terminating the project immediately; (3) slowing the project one or more years; and (4) completing only the portion now under construction. While offering budgetary savings, the option to complete only the part now under construction would increase rather than decrease the cost of DOE enrichment services.