The nuclear disaster in Japan and the abandonment of a spent fuel repository at Yucca Mountain, Nev., have prompted TVA to consider a $298 million contract for giant concrete and steel casks to store nuclear waste outside its operating plants.
TVA's board in April authorized the federal utility to contract with Holtec International, a company that makes the giant casks. The casks hold highly radioactive spent fuel after it has cooled for five years underwater inside the nuclear plants.
TVA and the Nuclear Regulatory Commission have said the casks can store spent fuel safely for 100 years or longer. TVA already has more than 681 metric tons of radioactive fuel stored in casks outside the Sequoyah and Browns Ferry nuclear plants. The utility last year was storing another 10,813 metric tons in spent-fuel pools inside the plants.
A new contract will mean some of the pool-stored wastes will be moved into as many as 157 casks, a storage method most experts agree is safer.
But until two years ago the contractor, Holtec, was barred from doing business with TVA.
A contract catch
"Some may recall that ... TVA made history by federally disbarring Holtec from receiving federal contracts," Russ Steward, vice president of TVA Supply Chain, told utility board members last month in a five-minute presentation.
It was only part of the TVA-Holtec story.
In early 2007, another cask company filed a complaint about TVA's request for proposal for provision of additional casks.
According to the U.S. Government Accountability Office, which investigated it, the complaint contended that the solicitation unduly restricted competition because the proposed schedule of initial deliveries could only be met by the incumbent contractor -- Holtec.
The GAO denied the complaint in November 2007. The agency said it could not address whether TVA reasonably could have expected a proposal from the competitor and that the protester's disagreement wasn't enough to set aside TVA's action.
But in August that year, Browns Ferry Nuclear Plant manager John Symonds pleaded guilty to making a false statement on his 2002 financial disclosure report.
The federal felony charge was based on his failure to report more than $54,000 in payments he received at the direction of Holtec.
Symonds owned Krohn Enterprises, and during February 2002 Krohn Enterprises received two checks from U.S. Tool and Die.
"At the time he received those checks, Symonds knew that U.S. Tool and Die had been directed to send those checks to Krohn Enterprises by Holtec International," the cask contractor at Browns Ferry, according to court documents.
Symonds was sentenced to two years' probation and fined $5,000. Holtec was barred from doing business with TVA.
Until December 2010.
TVA spokeswoman Barbara Martocci wrote in a statement on Dec. 13, 2010, that TVA and Holtec had agreed the day before to terminate the debarment. The agreement "restores Holtec's eligibility for new contracts with TVA and other federal agencies," Martocci wrote.
Joy Russell, director of corporate business development for Holtec, declined Friday to comment about that case or the new contract negotiations. She referred a reporter to TVA.
Checks and balances
While asking the TVA board last month to authorize a contract, Steward said Holtec agreed to appoint an independent board of directors, adopted an ethics program for its operations worldwide and placed an ethics officer in the Holtec International corporate offices.
He also said TVA and Holtec agreed on an independent monitor to oversee compliance of that administrative agreement.
"I stand before this board to tell you that Holtec today is in good standing with the federal government, in good standing with TVA, and in good standing with the market. Holtec is a market leader in dry cask storage," he said.
TVA spokesman Ray Golden said the contract with Holtec still is being negotiated.
"The contract's value may be less than the total amount approved for the award," he said.
He said the 10-year contract is expected to provide a new dry cask storage pad and up to 48 casks at Watts Bar in Spring City, Tenn., as well as up to 65 new canisters for Browns Ferry near Athens, Ala., and as many as 44 new casks for Sequoyah in Soddy-Daisy.
But TVA declined this week to release any information about the requests for proposal or any bids received. Nor would the agency confirm whether Holtec was the lowest bidder.
Golden cited "competitive reasons."
Steward told the board there were "five responsive proposals to a competitive request for a proposal."
He said they were evaluated on four criteria: "technical merit; cost volatility and the best overall cost to TVA; the contract length; and the ability to address changes in the regulatory landscape."
"After evaluations, TVA picked a clear winner on the front side. Best overall cost, best technical merit, was Holtec International," Steward told the board.
With no discussion, the board unanimously approved the recommendation to authorize the contract.