Project Management Institute

Redeploying Hanford's metalworking equipment

For the first time since the beginning of the Cold War, nuclear weapons manufacturing equipment and facilities have been redeployed to a community commercial metalworking company. This accomplishment resulted from economic transition initiatives by the U.S. Department of Energy and a special project team committed to “reinventing” government. Project management strategies developed for working inside the nuclear bureaucracy and reinventing government were key to this accomplishment.

Background

In 1989, the DOE ceased plutonium production at its Hanford Site in Richland, Washington. Under a tri-party agreement among the DOE, the Environmental Protection Agency, and the State of Washington, the primary mission at the Hanford Site became environmental restoration. In parallel with this mission, the DOE and Westinghouse Hanford Company, as the management and operations contractor for Hanford, have joined in a far-sighted mission to reduce the economic impact on the local community that will result when the clean-up mission is complete and the DOE work force is reduced. The project to sell a 4,000-ton Sutton metal extrusion press and to lease the “313” Building in which it was housed to Kaiser Aluminum & Chemical Corporation, referred to as the Hanford Metalworking Equipment Project, was a key first step in diversifying the local economy.

Westinghouse Hanford had operated the 313 Building and the Sutton extrusion press from 1989 to 1993 as a research and development facility for advanced metalworking projects. In this role, the facility contributed to many commercial R&D efforts, but these did not cover operating costs, therefore alternative roles were sought. In 1993, the need for funding led to the creation of a team comprising Westinghouse Hanford, DOE, and the City of Richland, with its mission the redeployment of the Hanford Metalworking Equipment to bring commercial manufacturing jobs to the region. A plan to sell the equipment was submitted for Congressional review and, without objection, the offer for sale was advertised in early 1994. On May 25, 1994, Kaiser Aluminum was announced as the winning bidder, with its bid contingent on leasing the nuclear facility that housed the equipment within 90 days. Establishing a multi-organizational team and developing a project strategy were instrumental in meeting this short time line.

Project Strategy

For four years, redeployment of the Hanford Metalworking Equipment was an effort led by a champion. This champion pushed the concepts through the system, seeking help along the way. This approach proved very successful, as laws were being tested for the first time, and a slow pace built a strong commitment to sale of the Hanford Metalworking Equipment, both in DOE and the community.

The lease aspect of the sale agreement required a new management style. Past attempts to lease nuclear facilities had failed, and the 313 Building would require extensive clean-up before it could be used commercially. A project team management approach evolved with members from DOE, Westinghouse Hanford, the City of Richland, and Kaiser Aluminum & Chemical Corporation.

To maintain momentum, the champion became the project manager for sale of the Hanford Metalworking Equipment. A separate project manager was named for the lease project to prepare and lease the nuclear facility. Jointly, the project managers decided to make the short timeline an asset to:

  • Maintain a sense of urgency to complete the project quickly and avoid losing the political momentum
  • Involve those having approval authority on the team to control work scope
  • Identify critical and long lead-time issues at the team kickoff meeting
  • Combined the resources of all the parties (DOE, Westinghouse Hanford, City of Richland, and Kaiser) on the team to be more efficient
  • Foster the understanding that the final deal had to benefit all parties—a win-win approach
  • Minimize documentation to cover key issues only
  • Give full authority and responsibility for the project to the project managers.

A two-day kickoff meeting establishing roles and responsibilities and defining work scope was the initial team building effort. To prevent “groupthink,” one team member was assigned the role of devil's advocate to keep project managers alert to problems. Part of the strategy was to force most conflicts into the first week of the project and forge a united team capable of addressing the challenges posed by the project.

Challenges

The team faced three kinds of challenges growing out of Hanford's history as a government-owned plutonium production facility, each of which was addressed during the various phases of the project.

For almost 50 years, the production of plutonium for the U.S. nuclear weapons program had fostered a culture of intense security and a high degree of concern for safety that left a legacy of detailed control procedures. Commercial companies touring the metalworking facility in 1990 had to pass armed guards to enter the 313 Building. Security, safety, and other procedures had not anticipated economic transition of equipment or facilities—thus the need to reinvent government at every level. Regulatory and congressional authority for the transition had to be sought, and new processes and procedures had to be developed as the effort progressed.

Sutton extrusion press sold for community use

Sutton extrusion press sold for community use.

The facility posed several environmental challenges. Because the facility is located on the edge of a clean-up site on the National Priorities List established by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), there was concern that the lessee would become liable for a portion of the billion-dollar clean-up costs. The only way to reduce this potential liability was through contractual protection by the U.S. Government. Environmental regulation required that the carcinogenic PCB lighting throughout the building be either stabilized or removed. Characterization and clean-up was chosen to ensure the safety of both the workers and the public. Radioactive materials in and around the facility included stored low-level waste and uranium in the floor cracks and ventilation system. Low-level waste had to be sent to the Low-Level Waste Disposal Facility; the uranium could be addressed by employee training, stabilization, sealing or removal. A combination of sealing and removal was chosen as the safest approach for commercial operations.

The diversity of the stakeholders presented funding problems. The concept of cost sharing among the organizations had to be developed up front. All parties were to supply resources, expertise, and funding for portions of the project. The difficult cost sharing negotiations focused the team at the outset on the win-win approach to ensure all parties a payoff. The U.S. Government's revenues and savings totaled $2.4 million; the City of Richland sold 25 acres of land and will benefit from property taxes; and Kaiser Aluminum gained a world-class specialty extrusion facility.

The champion phase focused on cultural change, and the project phase concentrated on environmental mitigation and funding.

The Champion Phase

The champion for local commercial use of the Hanford Metalworking Equipment had been the program manager for the equipment when the production mission ended. The state-of-the-art equipment had been a backup system that was never used for nuclear production.

Hanford worker loads billet for advanced metals research

Hanford worker loads billet for advanced metals research.

The first commercialization effort was to lease the equipment under provisions of the Atomic Energy Act of 1954. This Act allowed long-term leasing of the equipment, but required that its use be nuclear energy-related. This provision reserved to the government the right to recall the equipment for future nuclear missions. Lease terms and conditions imposed even tighter restrictions, reserving the government's right to recall the equipment for any reason with only 30-days notice. Although many firms were interested in leasing the equipment and using it in Richland, uncertainty over government recall prevented their bidding on the lease proposal.

Without bidders, standard DOE process required that the equipment be sold outside the community. At the eleventh hour, the City of Richland proposed using a law never before invoked—a 1964 amendment to the Atomic Energy Community Act. This proposal was just one of many instances in which community involvement helped the sale happen. Under this amendment, DOE could sell the Hanford Metalworking Equipment to the City for local economic development.

The local DOE field office accepted the City's proposal and sent the proposal to DOE headquarters in Washington, D.C., for the Secretary of Energy's approval. The DOE review in Washington, D.C., was extensive and time consuming. One key lesson learned was the need for a champion at headquarters to push the approval process.

As one of her first actions, Hazel O’Leary, the new Secretary of DOE, approved the sale of the metalworking equipment and, as required by the law, forwarded documentation to Congress for review. On completion of its review, Congress authorized the City of Richland to resell the Hanford Metalworking Equipment to companies willing to locate in the city.

The City developed a business plan and advertised the equipment sale. Kaiser Aluminum & Chemical Corporation was the winning bidder.

The champion's drive, commitment, and never-say-die attitude were responsible for the success of this phase.

The Project Phase

Prior nuclear facility lease efforts at Hanford had failed because of lack of funding, safety and security concerns, and inability to reach agreement on environmental indemnifications. Funding for this project was provided by cost sharing. Legal authority for the lease was the Energy Reorganization Act. Though the Act had never been used for a commercial manufacturing lease, implementation orders for the Act allowed on-site approval.

Mitigation efforts centered on resolving safety and security concerns. Safety was the first major issue addressed by the project team. An environmental/safety baseline survey identified existing hazards such as PCBs, low-level fixed radioactive contamination, asbestos, and oil leaks. To ensure worker and public safety, the project decided to remove the PCBs, despite the complexity of the removal procedure. Fixed radioactive material in the floor cracks was chiseled out and removed. The ventilation system was sealed to prevent worker exposure. Asbestos pipes were stabilized and Kaiser Aluminum agreed to remove the oils under the press. Attention then focused on new hazards that would be introduced by commercial extrusion operations.

Kaiser's proposal was based on use of a 30,000-gallon propane tank to heat ovens and the facility. A hazards analysis determined that a tank explosion would affect nuclear fuel bunkers inside the nuclear complex. The technical team worked closely to determine whether electric heaters and tank placement were practical alternatives to the large propane tank. The solution reduced the hazard potential by reducing the tank size to 2,000 gallons.

Because the facility had been shut down, the heating system had not been maintained. Studies had recommended replacing it at a cost of $810,000. DOE agreed to fund the facility clean-up and Kaiser agreed to install a new heating system that would remain with the facility at the end of the lease.

The project negotiated five contracts: sale of the Hanford Metalworking Equipment by DOE to the City of Richland; resale of the equipment by the City of Richland to Kaiser; lease of the facility by DOE to Kaiser; a land option agreement between City of Richland and Kaiser; and a sign easement. Westinghouse Hanford's responsibility was to ensure that the contracts were consistent. Major stumbling blocks were environmental indemnification, insurance for a nuclear facility on a CERCLA site, and the need to keep the Hanford Metalworking Equipment in Richland.

The parties agreed to the general principles quickly, especially since the U.S. Government would indemnify Kaiser Aluminum against liability for past environmental damages to the facility. However, there were problems with the detailed contract language. At one point, 20 key players had to agree on contract language for the next session. Agreement was reached only when an outside threat occurred. Just days before the contract signing, a competitor filed a court action to prevent Kaiser from buying the HME. Within three hours, the project mobilized a team of 12 attorneys from eight firms and overturned the court action ten days later. The threat unified the team, and all internal differences and the contract language were resolved within one day.

All parties benefited: Kaiser offset DOE’s operating costs for the facility and will pay for removing the equipment at the end of the three-year lease; Kaiser received a world-class metalworking operation; the City of Richland was the big winner, with a new manufacturing plant scheduled for construction in 1997. This joint effort will bring more than 150 family-wage-rate jobs to the community.

Contracts were signed August 16, 1994—only 84 days after the establishment of the project team.

Conclusions

Every environmental restoration or closure effort should consider economic transition a priority. Everybody wins when old facilities and equipment are converted to new commercial uses. The government saves on costly demolition and the local economy expands its job base.

The Hanford approach to economic transition involves:

  • Assigning a champion to an idea in its incubator stage
  • Having the champion work the issues and foster good ideas
  • Moving the good ideas into reality by innovative project management and dedicated project teams
  • Developing support among community leaders for economic transition.

Michael J. Minette, PMP, P.E., is a principal engineer and project manager for Westinghouse Hanford Company. He has 13 years of project experience in mining, construction, labor negotiations, engineering and environmental remediation.

Gary Miller is a staff manager in the Economic Transition Center for Westinghouse Hanford Company. He has 32 years of varied scientific, engineering, and business development experience in both the private and government sectors.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network • March 1995

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