WASTED? DOE will pay contractor $548 million for Idaho plant. (Photo courtesy of BNFL)

Cleaning up contaminated sites and troubled cleanup contracts is costing the U.S. Dept. of Energy more these days. DOE has agreed to pay BNFL Inc. up to $550 million to resolve outstanding contract issues at two former weapons production cleanup sites, just as the Bush administration has proposed cutting the agency’s fiscal 2006 cleanup budget by a nearly equal amount.

The deal was negotiated between DOE and the Fairfax, Va.-based firm’s owner, the U.K.’s Dept. of Trade and Industry. Under the settlement, DOE will pay $428 million to purchase the Advanced Mixed Waste Treatment Facility, designed and built by BNFL at the Idaho National Laboratory under a 1996 contact. BNFL financed the plant’s $570-million construction. Under the original contract, it was to recover those costs in increments as it retrieved and processed 65,000 cu meters of transuranic waste at the site. "We thought $428 million was fair reimbursement for the plant considering the cost of money over time,’’ a company spokesman says.

Another $50 million in the agreed amount was to settle $250 million in outstanding BNFL claims for both the Idaho project and a decontamination and decommissioning contract to clean up three gaseous diffusion plants at Oak Ridge National Laboratory in Tennessee. The firm can earn up to $75 million in performance incentives to meet operational milestones before the Idaho plant is turned over to DOE in May. That would bring the total to $550 million.

The BNFL agreement was announced just two days after the administration proposed budget cuts for DOE’s cleanup program. That would chop 7.8% out of last year’s $7-billion environmental management funding.

The largest cut comes out of the agency’s Hanford site in Washington state, its most contaminated former nuclear weapons site. Hanford would receive $1.8 billion for fiscal 2006, some $267 million less than last year.

Rep. Jay Inslee (D-Wash.), says the cuts are a huge problem. "We are very concerned," he says. New Energy Secretary Samuel Bodman says the budget was cut because cleanup is winding down. But contractors disagree. "The president has obviously decided that environmental management...will be used to balance the budget,’’ says one DOE contractor.

Some say the cuts are just a starting point and that Congress will see to it that some funds are restored. "There is still mileage in front of us. I hope we can recover,’’ one contractor says. But others disagree. "The administration needs the money and they found [something] they can cut that won’t backfire on them,’’ says a former DOE official.

DOE held a closed meeting with contractors to prepare them for the proposed cuts, which could reach $100 million or more to some larger players. But there are no leaks from the meeting. "They made it clear they would cut our throats if we talk about this,’’ one attendee says.