FY 2019 DOE Budget Request & Testimony

Back in February, the Department of Energy (DOE) released its Fact Sheet on the FY2019 budget request (click here for link). President Trump's budget for FY2019 requests $30.6B for DOE to advance U.S. national security and economic growth through transformative science and technology innovation that promotes affordable and reliable energy through market solutions and meets the nation's nuclear security and environmental cleanup challenges.

Energy Secretary Rick Perry, DOE Under Secretary for Science Paul Dabbar, and National Nuclear Security Administration (NNSA) Administrator Lisa Gordon-Hagerty testified before the Senate Energy-Water Appropriations Subcommittee on April 11, 2018 in support of the proposed budget. Perry appeared on his own before the House Energy and Commerce Committee on April 12, 2018.

As noted in the fact sheet, the DOE budget proposal for the fiscal year beginning Oct. 1, 2018, amounts to $30.6 billion overall, a 1.7 percent increase over the FY2017 level. However, it's $3.9 billion less than an omnibus appropriations bill Congress passed in March for FY2018.

For Perry's part, the proposal also emphasizes one of his priorities: supercomputing. The advancement of the next generation technology, he says, will provide massive improvements over previous efforts and aid national security and science and innovation. The budget plan also aims to bolster national security by providing $15.1 billion for the  NNSA, $2.2 billion above the FY2017 enacted level.

On the controversial side, the budget includes $120 million, including $30 million in defense funds, to resume licensing for the nuclear waste repository at Yucca Mountain and implement a robust interim storage program. The budget devotes $110 million for DOE to support the Nuclear Regulatory Commission (NRC) licensing proceeding for the nuclear waste repository at Yucca Mountain, including funding for technical, scientific, legal and other support. In addition, the budget includes $10 million to implement a robust interim storage program to ensure earlier acceptance of spent nuclear fuel and accelerate removal from sites in 39 states across the country.

In his testimony, Perry said, "Interim storage capability also adds flexibility to the system that will move materials from sites across the country to its ultimate disposition. By restarting the long-stalled licensing process for Yucca Mountain and committing to establishing interim storage capability for near-term acceptance of spent nuclear fuel, our budget demonstrates the administration's commitment to nuclear waste management and will help accelerate fulfillment of the federal government's obligations to address nuclear waste, enhance national security, and reduce future burdens on taxpayers. This also will increase public confidence in the safety and security of nuclear energy, thus helping nuclear energy to remain a significant contributor to the country's energy needs for generations to come."

The budget also includes $6.6 billion for Environmental Management (EM), $182 million above the FY2017 enacted level, to address its responsibilities for the cleanup and disposition of excess facilities, radioactive waste, spent nuclear fuel, and other materials resulting from five decades of nuclear weapons development and production and Government-sponsored nuclear energy research.

For Savannah River Site (SRS), the budget provides $1.7 billion. This will include the Liquid Tank Waste Management Program, completing commissioning and beginning operation of the Salt Waste Processing Facility, continued construction of the Saltstone Disposal Unit #7, a start to construction of the Saltstone Disposal Units #8/9, and support for facilities that receive and store nuclear materials. The budget for Weapons Activities also increases investments to modernize the nuclear infrastructure. For example, $27 million for a Tritium Production Capability at SRS.

Also, the administration continues to propose the termination activities for the Mixed Oxide (MOX) Fuel Fabrication Facility project and continuing to pursue the dilute and dispose option to fulfill the United States' commitment to dispose of 34 metric tons of plutonium. The $220 million in the budget for the MOX Facility will be used to continue terminating the project and to achieve an orderly and safe closure. It is expected that the scope and costs will be refined in subsequent budget requests when the termination plan for the MOX project is approved. The request also includes $59 million for the Surplus Plutonium Disposition project to support the dilute and dispose strategy.

Congress returned from its spring recess with a host of issues to address, one of those is the FY2019 appropriations bills. Appropriators will continue to hold hearings on the administration's agency budget requests to gather information as they begin drafting appropriations bills. The deadline to pass the 12 identical bills (or an omnibus) through both chambers and have them signed into law is September 30, 2018. If more time is needed Congress, would need to pass another continuing resolution to avoid a 2019 shutdown.

SRS Contract Re-bids

At the end of March, Department of Energy (DOE) announced plans to extend the Savannah River Remediation (SRR) liquid waste contract for up to another 10 months, to the end of March 2019 or earlier. The contractor's current contract lasts until May 31, under a five-month extension issued in December. This new extension will enable SRR to continue critical requirements for treatment and disposal of liquid waste at the site while DOE supports the Government Accountability Office (GAO) protest process.

The GAO upheld one of two protests in February over the $4.7 billion contract issued in October 2017 to Savannah River EcoManagement, a partnership of BWX Technologies, Bechtel National, and Honeywell. In sustaining the protest from a team comprised of AECOM and CH2M, the GAO said DOE failed to adequately verify the winning technical approach for liquid waste processing.

DOE officials met with representatives of those two teams and the third bidder, a Fluor-Westinghouse venture, to discuss a "Revised Final Proposal Revision" to their earlier contract bids and to begin the review process again. DOE could conceivably award the contract to any of the three original bidders after receiving additional information. As a result, the current contract with SRR has been extended for up to 10 months, but may end sooner if the acquisition process is completed earlier. Now, DOE is back at square one - reevaluating all the submissions for the Liquid Waste Contract, as suggested by the GAO.

In addition, the existing Savannah River Site (SRS) M&O contract with Savannah River Nuclear Solutions (SRNS) will likely be extended by one year through July 31, 2019.  SRNS has managed the nuclear weapons complex since 2008. SRNS is a partnership of Fluor, Honeywell, and Stoller Newport News Nuclear that holds the $9.5 billion current contract. The M&O draft RFP will be released when approval is granted from DOE HQ, which is expected soon, possibly in May.

Furthermore, DOE is seeking a contractor to provide Paramilitary Security Services for SRS. This contract is worth anywhere from $1 billion to $3 billion and the contractor would have to implement a safeguards and security program to meet requirements for DOE, EM, and the NNSA. The current SRS Paramilitary Security Services contract held by Centerra-SRS expires during October 2019. The paramilitary contract draft Request for Proposal (RFP) will be released upon approval from DOE HQ. This draft RFP should remain on its current schedule, which is tracking toward a June or July date.