Energy Daily

May 8, 2001

Dingell Questions DOE On No-Bid Contract For USEC At Portsmouth

By George Lobsenz

A senior House Democrat is questioning the legality of an Energy Department plan to bypass competitive bidding so it can hand USEC Inc. a major contract for cleaning out the Portsmouth uranium enrichment plant and placing it in cold stand-by.

Rep. John Dingell of Michigan, ranking Democrat on the House Energy and Commerce Committee, told Energy Secretary Spencer Abraham in a May 1 letter that the effort to give USEC a "sole-source" contract may violate federal procurement laws that require that big government contracts be put out for bid.

Under law, DOE and all other federal agencies must issue a written justification explaining why they are not seeking competitive bids on major contracts. In general, federal law-and DOE-favor competitive bidding as likely to produce the lowest prices for the government.

USEC appears to be in line to get the cold stand-by contract because it currently is leasing the Portsmouth plant near Piketon, Ohio. However, the Maryland-based company recently announced it is ending uranium enrichment operations at the plant because they are no longer economic, and it plans to relinquish its lease June 1.

DOE officials have told congressional aides that the sole-source contract is needed so DOE can keep USEC on site and meet a tight schedule for placing Portsmouth in cold stand-by. Such a contract also would meet Bush administration promises to provide new employment to Portsmouth workers facing layoffs due to the end of enrichment operations.

President Bush promised to aid Portsmouth workers during the presidential election campaign. In addition, the administration says putting Portsmouth in cold stand-by will bolster the nation's energy security by ensuring there is a backup enrichment facility to serve the U.S. nuclear power industry. Currently, the only active U.S. enrichment facility is operated at Paducah, Ky., by USEC, also under a lease from DOE.

In his letter to Abraham, Dingell said he understood the need for a short-term sole-source arrangement so DOE could get the cold stand-by work under way. But he said the contract apparently under consideration for USEC could exceed $50 million and last two years, with more extensions possible. Altogether, he said the cold standby work could cost $200 million plus $20 million a year after that to maintain the plant.

"I certainly understand that the department has been required to respond quickly to the administration's decision to place Portsmouth in cold stand-by," Dingell said.

"However, the necessity of this work does not mandate non-competitive-and possibly illegal-long-term government contracts without proper justification."

DOE officials did not respond to inquiries about Dingell's letter.

Sole-source contracts generally are supposed to go to contractors with special skills or technology that makes them uniquely suited to do a particular job for the government.

However, aides to Dingell say USEC appears to have no particular expertise in plant cleanup and decommissioning, and could even subcontract the work if granted the cold stand-by contract.

The aides said the main reason DOE was looking to hire USEC was because it was the current leaseholder for Portsmouth.

"DOE officials apparently think that an expiring real property lease can be used as a shell to sole-source a completely different scope of work and avoid receiving competitive bids for millions of dollars of government-funded work," said a Dingell staff analysis. "The size of the proposed [lease] 'amendment' alone and the total change of work scope should have alerted the department to proceed with caution under the federal acquisition regulations."

DOE has run into controversy in the past on sole-source contracts. In 1996, it granted BNFL Inc. a large sole-source contract to clean up uranium enrichment facilities at its Oak Ridge, Tenn., site-over the complaints of competing firms that wanted to bid. Since that contract was awarded, BNFL has encountered cost overruns and technical problems.

Copyright 2001 King Communications Group
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