ML20128H115
| ML20128H115 | |
| Person / Time | |
|---|---|
| Site: | South Texas  |
| Issue date: | 07/02/1985 |
| From: | Newman J HOUSTON LIGHTING & POWER CO., NEWMAN & HOLTZINGER |
| To: | Atomic Safety and Licensing Board Panel |
| Shared Package | |
| ML20128H111 | List: |
| References | |
| OL, NUDOCS 8507090413 | |
| Download: ML20128H115 (160) | |
Text
{{#Wiki_filter:r-UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the matter of ) OSCXETED
) USNRC HOUSTON LIGHTING & POWER ) Docket Nos. 50-498 OL COMPANY, ET AL. 50-499gg ,g (South Texas Project, Units )
1 and 2) ) 0FFICE 0# SECRt.iAro 00CMETING & SERyjg BRANCH APPLICANTS' MEMORANDUM CONCERNING THE PERMISSIBILITY OF AND NEED FOR CALLING CERTAIN ATTORNEYS FOR THE APPLICANTS AS WITNESSES In its Memorandum and Order of June 24, 1985, the Licens-ing Board directed the parties to file by this'date state-ments "concerning the permissibility and need (if any) for calling various parties' attorneys as witnesses .... This statement is filed on behalf of the Applicants, in response to the June 13, 1985, submittal by Citizens Concerned About Nuclear Power ("CCANP"), identifying certain of Appli-cants' attorneys as witnesses,1! and in response to CCANP's statement, I dated June 26, 1985, of what it expects to prove through its proposed witnesses, including these attor-neys, and its " identification of why it expects each witness to so testify."3/ 1/ "CCANP's Identification of Witnesses" (" June 13 submit-tal"). 2/ "CCANP Specification of Testimony Sought From CCANP Witnesses" ("CCANP Specification"). 3/ June 24 Order, p. 4. CCANP has, in addition, served subpoenas directing three attorney witnesses to appear and testify in this proceeding. Pursuant to the Board's June 24 Memorandum and Order, Applicants reserve the right to ask at the upcoming hearings that those subpoe-nas, as well as other subpoenas issued at the request of CCANP, be quashed or modified. 8507090413 850702 PDR ADOCK 05000498 g PDR 1
2 At'the outset, it should be emphasized that, although lawyers are not legally immune from the requirement to appear and testify, our legal system perceives that calling lawyers as witnesses is likely to produce undesirable consequences 4
- consequences inconsistent with the underlying objectives of that system. The likely consequences include the divul-genc,e of client confidences; the exposure of legal tactics, advice and strategy to persons with conflicting objectives; and the " harassment" of a client or his attorney by attempts to disqualify needed counsel from continued representation in a proceeding or to otherwise impair his ability to repre-sent his clients effectively.A/ For these reasons, there exists a general consensus among the legal profession and the adjudicators that, if at all possible, lawyers should not be called as witnesses, and the effort to call them is rarely made.5/
4/ In this proceeding the Board has already ruled the three subpoenaed attorneys will not be disqualified, in part because of the substantial hardship which dis-qualification would cause Applicants. Memorandum and Order, June 18, 1985, pp. 14-16. Nevertheless, by letter dated June 25, 1985, CCANP has given notice to the Board and the parties that it will seek " sequestra-tion of the attorneys" during part of the hearings, i.e., it will now seek what would amount to temporary or partial disqualification of those attorneys. 5/ The comparative infrequency of efforts to obtain law-yers' testimony is perhaps a testament to the breadth of agreement with Mr. Justice Jackson, who said it all as well and as succinctly as it can be said in Hickman v. Taylor, 329 U.S. 495, 517 (1947) (concurring i (. . . footnote continued on next page) [
3 This underlying attitude toward the lawyer as witness was suggested by the question posed in this Board's order of April 18, 1985, as to: "The propriety of continued repre-sentation of a party by an attorney who may have partici-pated other than as counsel in factual matters potentially at issue before an adjudicatory tribunal." The premise of the Board's question was necessarily that, when a lawyer has participated as counsel -- rendering advice, preparing for and engaging in litigation or other proceedings -- he is not a potential witness, so that the question of propriety of continued representation does not arise. Moreover, the courts and the agencies have erected substantial barriers against the comparatively infrequent efforts to call lawyers to testify. These include recogni-tion of the attorney-client privilege, aimed at protect-ing confidences which clients might impart to lawyers, and the attorney work product doctrine, conferring a privilege that protects against disclosure of trial preparation mate-rials, including mental impressions, conclusions, opinions, (. . . footnote continued) opinion): Every lawyer dislikes to take the witness stand and will do so only for grave reasons. This is partly because it is not his role; he is almost invari-ably a poor witness. But he steps out of professional character to do it. He regrets it; the profession discourages it. i
4 ' or legal theories of an attorney concerning a proceeding. In addition, courts have readily exercised their discretion-ary authority to bar duplicative or cumulative testimony so as to prevent lawyers from calling opposing counsel as witnesses unless the testimony is really necessary. In the balance of this statement, we first outline how these principles have been applied both by the NRC's Licensing and Appeal Boards and by tribunals other than the NRC. We then turn to CCANP's stated objectives in calling designated witnesses. The discussion, we submit, establishes that it is wholly inappropriate to call as witnesses the lawyers CCANP has designated for the purposes CCANP intends. I. The inappropriateness of calling counsel for a party as a witness has clearly been recognized by NRC Licensing Boards.5! Consumers Power Co. (Midland Plant, Units 1 and 2), LBP-83-53, 18 NRC 282, reconsideration denied, LBP-83-64, 6/ As might be expected in view of the general reluctance to call attorneys as witnesses in proceedings, the NRC precedents have not arisen in connection with efforts to subpoena lawyers pursuant to 10 C.F.R. 5 2.720 (1985). Rather, the precedents deal with attempts to depose attorneys pursuant to the Commission's discovery rules, 10 C.F.R. 5 2.740, eti seg. However, if the protective principles are applied even with respect to discovery, their application to appearance as a witness in a proceed-ing would be a fortiori.
5 18 NRC 766 (1983), aff'd, ALAB-764, 19 NRC 633 (1984). In Midland, subpoenas were issued, on the request of the Applicant, to four employees of the Government Account-ability Project (" GAP") who had submitted affidavits to the Commission on behalf of whistleblowers. The Applicant wanted to explore the contents of the affidavits, and in its subpoenas called for the production of certain docu-ments as well as personal testimony. Among the documents sought were those concerning communications between two intervenors in the case, on the one hand, and GAP and some of its lawyers and paralegals, on the other. On counsel's representation that all such communications were for the purpose of obtaining legal advice -- or, presum-ably, if they went from GAP to the intervenors, for the purpose of giving such advice -- the Board, whose Chairman is also Chairman in the instant proceeding, quashed the subpoenas insofar as such documents or testimony were called for. 18 NRC at 284-85. It did not even countenance the Applicant's effort to submit interrogatories to test the bona fides of the claim of an attorney-client relationship. The Board said that "[c]ounsel for Intervenors has stated that all communications between [Intervenors] and GAP were for the purpose of receiving legal advice. We accept that representation." Id. at 285 (emphasis in original). It
6 was thus enough for the Board, on the merits of the issue, that the communications were for the purpose of receiving legal advice and that counsel had so represented.1# Insofar as the Midland Board's ruling was based on privilege, it accords with the ruling of the Licensing Board in Long Island Lighting Co. (Shoreham Nuclear Power Station, Unit 1), LBP-82-82, 16 NRC 1144 (1982). The Board there said that it regarded as correct the "more widely held view
. . . that statements from an attorney to the client are privileged only if the statements reveal, either directly or indirectly, the substance of a confidential communication by the client." Id. at 1158.8/ The Board nevertheless, on in camera inspection, held privileged virtually all attor-ney-to-client communications that could fairly be regarded 7/ The Chairman stated further: .
. . . we will accept the representations of attorneys before us. We are not going to question their accuracy . . .
They are admitted to the bar and they have an obligation to tell the truth and we are going to assume that they are telling the truth unless we are told differently, unless there is signifi-cant proof . . . Docket Nos. 50-329-OM & OL, 50-330-OM & OL, Transcript
- p. 18,615 (June 29, 1983).
See also Consumers Power Co., (Midland Plant, Units
-8/ 1 and 2), LBP-83-70, 18 NRC 1094, 1098-99 (1983).
i
7 as giving legal advice or even, more broadly, " rendering legal services," on the basis of the attorney-client privi-lege. Id,. at 1170, 1172, 1175, 1176. In another order in the Midland proceeding, the Licens-ing Board agreed that the touchstone is whether legal advice is asked for and received. We stress again that Mr. Cook's affidavit, made under oath, reveals that the purpose of the meeting was, in fact, the receipt of legal advice. Even if some non-legal considerations were exchanged, so long as the meeting was devoted primarily to legal advice, the entire contents thereof are protected by the privilege. Barr Marine Products Co. v. Borg-Warner Corp., 84 F.R.D. 631, 635 (E.D. Pa. 1979); United States v. United Shoe Machinery Corp., 89 F. Supp. 357, 359 (D. Mass. 1950). LBP-83-70, 18 NRC at 1103. And, in connection with a different aspect of the Midland proceeding, the Appeal Board quoted favorably what it des-cribed as "the broad language" of Hickman, establishing the principle of protection of attorneys' work product. Consumers Power Co. (Midland Plant, Units 1 and 2), ALAB-691, 16 NRC 897, 917 (1982), aff'd, CLI-83-2, 17 NRC 69 (1983). At issue there was the Licensing Board's criticism of counsel for claiming work product protection for drafts of testimony prepared by a lawyer for a witness. The Appeal Board held that the criticism was unwarranted and indicated, though ! it did not have to decide the question, that it might well
8 have sustained the claim of protection that the Licensing Board regarded as frivolous. The sparse federal judicial precedents are to the same effect. For example, in Walker v. United Parcel Services, 87 F.R.D. 360, 361 (E.D. Pa. 1980) (an employment discrimina-tion case in which plaintiffs requested leave to depose defendant's atorney on the ground that he may have played a part in the alleged retaliation against plaintiffs), the court, applying both the attorney-client and work product privileges, denied leave to depose defendant's attorney. It found that: the proposed intrusion on defendant's right to counsel is too invasive to permit. Plaintiffs would depose counsel not only on the very subject matter of the court hearing, but on the manner of counsel's preparation for it. Short of prohibiting the deposition, it is hard to imagine how to protect UPS from revelation of its attorney's mental impressions, opinion, legal theories, or litigation strategy. Id. at 362. See also Dowd v. Calabrese, 101 F.R.D. 427 (D.D.C. 1984) (denying plaintiff's motion to depose defen-dant's attorney on ground of attorney-client privilege); Brush v. Harkins, 9 F.R.D. 681 (S.D. Mo. 1950) (quashing subpoena duces tecum requiring attorney to produce all papers regarding a certain accident on grounds of attorney-client privilege and work product doctrine).
9 Another reason for not allowing parties to call lawyers as witnesses is the fear of impeding the ability of counsel to prepare and present his client's case. See, e.g., In re Grand Jury Matters, 751 F.2d 13, 17 (1st Cir. 1984) (court quashed grand jury subpoenas of attorneys who were serving as defense counsel in state criminal prosecutions for same people that grand jury was investigating, principally on ground that timing of subpoenas may have affected ability of attorneys to prepare and present clients' defenses in state action).E! Finally, even if an attorney's testimony does not techni-cally fall within one of the recognized privileges, the principle that courts may exclude testimony that would be merely duplicative or cumulative of testimony already being 9/ There is also a concern that allowing one lawyer to question another will not supply factual enlightenment but only a display of fireworks. In re Arthur Trea-cher's Franchisee Litigation, 92 F.R.D. 429, 439 (E.D. Pa. 1981) (indicating that questioning of one attorney by another may result at least in the appearance of impropriety). The court there quoted with approval the opinion in Draney v. Wilson, 30 Fed. R. Serv. 2d 960, 961 (D. Ariz. 1980): The adversarial nature of litigation causes the tempers of counsel to flare all too frequently. Permitting an attor-ney on one side to become the inquisitor of an attorney on the other side carries I a strong risk that another source of fuel is being provided.
10 proffered in a proceeding has in several instances been applied by the courts to bar the testimony of attorneys when it would be unnecessary.10/ Where the testimony
- of a lawyer is involved, the exercise of authority to exclude cumulative testimony, i.e., testimony which is not necessary, ,
would appear to be particularly appropriate. In In re Arthur Treacher's, 92 F.R.D. at 438-39, for example / the court quashed a subpoena of an attorney as
" unduly broad" because the testimony sought arguably would be duplicative and cumulative (the testimony was to concern a meeting which four other individuals attended). The court also found evidence that the subpoena was motivated by a desire to harass the other party. See also Walker, 87 F.R.D.
s at 361 (in which court denied leave to depose defendant's attorney on the ground that the deposition would be "largely duplicative, lead to unnecessary further delay, and be oppres-sive to the party and to the person whose deposition is 10/ The authority of a federal court to bar such unnecessary testimony is unquestioned. "It is well established that testimony which is merely repetitious and cumula-tive of testimony already introduced may be excluded by the trial court in its discretion." Harvey v. Andrist, 754 F.2d 569, 572 (5th Cir.), cert. denied, 53 U.S.L.W. 3838 (1985), accord Meadow & Walker Drilling Co. v. Phillips Petroleum Co., 417 F.2d 378, 382 (5th Cir. 1969). 10 C.F.R. 5 2.757(a) expressly confers similar authority on presiding officers to "[1}imit the number " of witnesses whose testimony may be cumulative. . . .
11-sought");. Johnson v. University College of the University of Alabama in Birmingham, 706 F.2d 1205 (llth Cir. 1983), cert. denied 104 S.Ct. 489 (upholding, on an appeal from the amount of an award of attorney's fees, the quashing of a subpoena duces tecum requiring defendants to produce records concerning fees of defendant's counsel, on grounds not only that.the subpoena-was of questionable relevance but also that much other evidence on the subject had already been submitted).11/ These principles apparently have already been applied by the Licensing Board in this proceeding, when it said We hold in abeyance the issue of whether Mr. Newman may be a witness "necessary" for a complete record. Mr. Newman could become a necessary witness to testify to factual matters if other evidence were to lead to a reasonable inference that Mr. Newman held some unique, factual and material information not known by others involved in the replacement discus-sions. i 11/ There is also a body of law under Rule DRS-102(A) and (B) of the Code of Professional Responsibility which in essence holds that a lawyer is a necessary witness t (for purposes of considering the need for disqualifica-tion) only if he is'the only one able to testify on i a particular matter, and not if his testimony would
- be merely cumulative. See, e33., J.P. Foley & Co.
- v. Vanderbilt, 523 F.2d 1357, 1359 (2nd Cir. 1975);
Freeman v. Kulicke & Soffa Industries, 449 F. Supp. 974, 979 (E.D. Pa. 1978); Miller Electrical Construction F v. Devine Lighting Co., 421 F. Supp. 1020 (W.D. Pa. 1976); Cottonwood Estates, Inc. v. Paradise Builders, i Inc., 128 Ariz. 99, 105, 624 P.2d 296, 302 (1981). l l l
12 Memorandum and Order, June 18, 1985, p. 13.12/ In the next section we demonstrate that, on the basis of CCANP's statements of what it expects to prove through the testimony of the subpoenaed attorneys, the testimony sought is either privileged or is unnecessary and duplicative or relates to matters about which the Applicants' attorneys represent they have no knowledge. II. In CCANP's June 13 submittal, it stated in broad terms the subjects about which it planned to question Applicants' lawyers. Subsequently, in CCANP's Specification, filed in response to the Board's June 24 Order, CCANP set forth "what it intends to prove" through this testimony.1E! We now address these two statements in light of the principles discussed above. These principles call for quashing all of the subpoenas addressed to Applicants' attorneys. 12/ See also the unpublished Memorandum and Order, dated April 5, 1983, at 3, referred to in Midland, LBP-83-70, 18 NRC at 1103. There, in response to a request by intervenor for drafts of a certain report, the Board found that the report was attorney work product and would not be discoverable if the material was merely cumulative. 13/ The Board also ordered CCANP to set forth "some identifi-cation of why it expects each witness to so testify," June 24 Order at 4, presumably to determine whether the implications raised by CCANP's requests for testi-mony had any basis. Although CCANP has expressly recog-nized this direction, CCANP Specification at 1, short of simply asserting that the witnesses in question are attorneys and as such were available to give their clients advice, CCANP has failed to provide any of the identification requested by the Board.
13 A. Essentially, with regard to Mr. Newman, Mr. Axelrad and Mr. Gutterman, CCANP states that it plans to ask about
-their knowledge of the Quadrex Report, their role in its release and their representations to the Board concerning the Report. June 13 submittal at Nos. 7-9; CCANP Specifica-tion at 7-10. CCANP acknowledges that Mr. Axelrad has already represented to the Board that "while the attorneys were aware of the Quadrex Report, . . . they did not ask to see it and gave no legal advice on whether the report should be turned over to the NRC or the Board." CCANP Specification at 7. In addition, CCANP states that it expects the attor-neys to testify:
that the [ sic] were aware of the Quadrex study while underway, the final report, and the potential for 50.55(e) reports originating from Quadrex; that they never asked to see Quadrex before September 1981; that they were never approached by HL&P personnel to give an opinion on whether 50.55(e) or the McGuire rule required turning the Quadrex Report over to the NRC Staff or the ASLB. Id. at 8. Applicants' attorneys agree with this statement of the facts prior to September 1981, which are not in dispute, although it is far from apparent why these facts are material. Insofar as these facts are contained in statements to the Board, moreover, they are a matter of public record and
14 there is no need for testimony from the attorneys concerning them. See October 16, 1984 Prehearing Conference, Tr. 10843-47; CCANP Specification at 9-10. These facts also are confirmed by other witnesses who are already testifying in this proceed-ing. See, e.g., Goldberg testimony at 54-55; Oprea testimony at 12-13. The attorneys' testimony would therefore merely be duplicative or cumulative, and there is no reason for calling them as witnesses on this subject. In re Arthur Treacher's, 92 F.R.D. at 438-39; Walker, 87 F.R.D. at 361; Midland, unpublished memorandum of April 5, 1983 at 3. CCANP states that it is calling the attorneys as witnes-ses "to test the validity of their unsworn representations to the Board." CCANP Specification at 8. CCANP has made no showing, however, of anything that would lead the Board to question the validity of these representations. On the contrary, CCANP's statement of what it expects the attorneys to testify to simply confirms their representations. There is thus no basis or need to validate anything. Moreover, the Board has in the past stated that: "We will accept the representations of attorneys before us." Midland, LBP-83-53, 18 NRC at 285. Applicants submit that this policy is particu-larly appropriate in this case where the representations are independently supported. See Oprea testimony at 12; Goldberg testimony at 51.
15 Finally, CCANP states that Mr. Newman, Mr. Axelrad and Mr. Gutterman were available at all times to the Applicants for advice. CCANP Specification at 8, 9. Not only is this fact undisputed, but also it is no more than an assertion that the three are indeed lawyers for the Applicants, certainly not a basis for calling them to testify. B. CCANP requests additional testimony concerning the Quadrex Report from Mr. Newman and from Mr. Gutterman. With regard to Mr. Newman, CCANP states that it plans to question him in particular about the letters regarding Quadrex he sent to the Board and the parties and to show "through [these] representations, he sought to minimize the importance of the report and the role of Mr. Goldberg." CCANP Specifica-tion at 9. None of these matters are appropriate bases for calling Mr. Newman. His letters are matters of public record, as is the Quadrex Report, and Mr. Goldberg himself will be testifying concerning his " role." If CCANP wishes to reach conclusions from these factual matters in its ulti-mate filings with the Board it is free to do so. But no testimony from Mr. Newman would be pertinent to those facts, i.e., the content of the letters or of the Report or the role of Mr. Goldberg. CCANP's sole purpose appears to be to question Mr. Newman concerning his mental impressions, opinions or legal strategy, exactly the types of testimony
16 by lawyers that are protected.1A/ Hickman, 329 U.S. at 511-512; Walker, 87 F.R.D. at 362; see also Midland, ALAB-691, 16 NRC at 917. With regard to Mr. Gutterman, CCANP states that he ,
"had conversations with Mr. Goldberg regarding the Quadrex Report and potential 50.55(e) reports. . . ." CCANP Specification at 9. Since applicants' attorneys were aware of the report this is not surprising. Mr. Gutterman was acting as attorney for Mr. Goldberg. This is a classic situation for applying the attorney-client and work product privileges, and there is no basis for calling Mr. Gutterman as a witness.
C. CCANP also requests the testimony of unnamed attor-neys for Baker & Botts "regarding their knowledge and responses to the Quadrex Report, particularly any discussions with said HL&P witnesses [ Messrs. Jordan, Oprea, Goldberg and Frazar} or other persons regarding inclusion of information about the Quadrex Report in the prefiled testimony in Phase 1 1, amending said prefiled testimony . . . and/or including the Quadrex Report in the testimony given during 14/ As to testimony concerning Mr. Newman's alleged " discus-sions with the representatives for CCANP at the time the Quadrex Report was delivered to CCANP," CCANP Speci-fication at 8, although CCANP is obviously fully con-versant with whatever it has in mind it has failed to identify and show its relevance. Particularly since the conversation -- whatever its content -- took place after the Report was provided to the Board and parties, it can scarcely justify calling Applicants' counsel.
17 the hearings in Phase I." June 13 submittal at No. 10. CCANP clarifies in its later Specification, at 10, that it is not certain whether Mr. Axelrad's statements apply to the Baker & Botts attorneys and that it expects that at least one of the Baker & Botts attorneys was fully aware of the Quadrex Report. CCANP offers no basis for this expectation. In any event, the prefiled testimony of the HL&P witnesses did not mention the Quadrex Report and no testimony concerning it was otherwise received in Phase I. Even if unnamed Baker
& Botts lawyers were aware of the report and took it into account in connection with preparation of the testimony, any discussions that they might have had concerning the possibility of referring to the report in the testimony would be obvious examples of communications that are protec-ted by the attorney-client privilege. Shoreham, LBP-82-82, 16 NRC at 1158; see also Midland, LBP-83-70, 18 NRC at 1098-
- 99. Testimony on such discussions could well reveal communi-cations from the client intended to be in confidence and seeking legal advice and assistance, and so should be barred.
Walker, 87 F.R.D. at 361, 362; Dowd; Midland, LBP-83-53, 18 NRC at 284-85. In any event, regardless of the lawyers' role in testimony preparation, it is the witnesses' testimony which is involved l
v , a e a e l sk 18 and those witnesses will testify in Phase II. It would be wholly', improper.also to require the attorneys to testify, 3 for their work' in connection with preparation of the testimony would clearly be protected by the work product privilege. Hickman; Midland, ALAB-691, 16 NRC at 916-917. t D. Finally, CCANP has requested the testimony of Mr. j Newman "regarding his failure to inform the Board about the . . . review of B&R's services undertaken by HL&P and the decision by HL&P to remove B&R." CCANP Specification t, 1 at 9. However, the reasons Applicants did not notify the ( , l Board of any thoughts of replacing Brown & Root prior to their actual decision to replace the company in September are fully set forth in Mr. Oprea's testimony (at 8-11, 14-16) and in Mr. Goldberg's' testimony (at 56-58), so that testi-mony from Mr. Newman would only be cumulative.
/ To the extent that CCANP hopes to elicit from Mr. Newman some unrevealed, litigating strategy that it believes was l
j in his mind during the time when B&R's services were being reviewed, the Board has already stated that it perceived no "' manipulation' efforts by Applicants' counsel." Board Order of June 18, 1985, at 34. In any event, whatever Mr. l Newman thought at the time is clearly barred by Hickman and the Licensing Board decisions already cited. CCANP I' itself as much as acknowledges this fact in saying that it expects Mr. Newman to testify that this matter is one 5
- of 7 confidentiality." CCANP Specification at 9.
f 6 9
19 III. In the foregoing we have demonstrated that each discrete matter which CCANP states it wishes to establish through the attorneys' testimony is protected by the attorney-client or work product privileges, is duplicative and unnecessary, or is already established or conceded. Even more importantly, viewed as a whole, essentially what emerges from CCANP's requests for the attorneys' testimony is an effort to inquire into their mental impressions and legal strategies and their confidential relationship with their clients - an objective wholly at odds with our legal system. We therefore submit that it is neither permissible nor necessary for the attor-neys to testify. Respectfully submitted, Y Of NW J ck R. Newman ( urice Axelrad lvin H. Gutterman Steven P. Frantz Donald J. Silverman 1615 L Street, N.W. Washington, D.C. 20036 Finis E. Cowan 3000 One Shell Plaza Houston, Texas 77002 l Dated: July 2, 1985 l NEWMAN & HOLTZINGER, P.C. ATTORNEYS FOR HOUSTON LIGHTING 1615 L Street, N.W. & POWER COMPANY, Project Manager Washington, D.C. 20036 of the South Texas Project acting herein on behalf of itself and BAKER & BOTTS the other Applicants, THE CITY OF 3000 One Shell Plaza SAN ANTONIO, TEXAS, acting by and Houston, Texas 77002 through the City Public Service Board of the City of San Antonio, CENTRAL POWER AND LIGHT COMPANY, and CITY OF AUSTIN, TEXAS
a UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD D3LKETED In the Matter of ) USNRC ,
)
HOUSTON LIGHTING & POWER ) COMPANY, ET AL. ) Docket qgp.,40-
"%- 9g[JIqg 97
)
(South Texas Project, Units 1 ) 0FFICE OF SELi<t fAs v and 2) ) 00CKETING & SERvlu 8 RANCH CERTIFICATE OF SERVICE I hereby certify that a copy of the Applicants' letter to the Atomic Safety and Licensing Board dated July 2, 1985 (including Attachments A and B),*/ and " Applicants' Memorandum Concerning The Permissibility of and Need for Calling Certain Attorneys for the Applicants as Witnesses," have been served on the following individuals and entities by hand delivery, deposit with air courier or deposit in the United States mail, first class, postage prepaid as designated, on this 2d day of July, 1985.
- Charles Bechhoefer, Esq. (Hand Del.)
- Brian Berwick, Esq. (Air Courier)
Chairman, Administrative Judge Assistant Attorney General Atomic Safety and Licensing for the State of Texas Board Environmental Protection U. S. Nuclear Regulatory Commission Division Washington, D.C. 20555 P. O. Box 12548, Capitol Station Austin, TX 78711
*Dr. James C. Lamb, III (Mail)
Administrative Judge Kim Eastman, Co-coordinator (Mail) 313 Woodhaven Road Barbara A. Miller Chapel Hill, NC 27514 Pat Coy Citizens Concerned About
- Frederick J. Shon (Hand Del.) Nuclear Power Administrative Judge 5106 Casa Oro Atomic Safety and Licensing Board San Antonio, TX 78233 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Lanny Alan Sinkin (Mail) 3022 Porter St., N.W., #304 Mrs. Peggy Buchorn (Mail) Washington, D.C. 20008 Executive Director Citizens for Equitable
- Ray Goldstein, Esq. (Air Courier)
Utilities, Inc. Gray, Allison & Becker Route 1, Box 1684 1001 Vaughn Building Brazoria, TX 77422 807 Brazos Austin, Texas 78701-2553
*/ Documents listed in Attachment A provided to individuals designated.
)
- ~ *0reste Russ Pirfo, Esq. (Hand Del.)
Robert G. Perlis, Esq. Office of the Executive Legal Director U.S. Nuclear Regulatory Commission Washington, D.C. 20555 ,. Atomic Safety and Licensing Board (Mail) U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Atomic Safety and Licensing Appeal Board (Mail) U.S. Nuclear Regulatory Commission Washington, D.C. 20555
- Docketing and Service Section (Mail)
Office of the Secretary U.S. Nuclear Regulatory Commission Washington, D.C. 20555
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Excerpts Responsive to Board's Request ! 1
$ Prin Alt. Other STP M/C
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caA Rancock 0930 27 April 81 o villita Assembly Bldg. SA Posten von Rosenberg Soruce San Antonio Hardt CPL Borchelt Goldberg Jordan ILP Oprea Proj. Barker Ex. 1 Sign in 2 Agenda - Jess' 3 - Barker's [0938] Poston re lun. at 4 Seasons Ex. 4 Barker re Status Overview 3/29/81 Il' Engr 1 73.8 2 24. T 66.8
- re "Pewer Block" - means 5 buildings only.
Goldberg said product. low because engrs couldn't provide work
" '- re more layeffs w/in 2 wks.
re new site Mgr, Thompson we're making 1/4 of engr progress we had planned. (Hancock - how could they miss so far?) not enough engr. supervision.
- 1000 engrs but not enough good engr agrs.
(Gold /Poston re Quadrex - review session May 7) gp*u*** ,ge,,
- EVAC design sheky - B&R concedes P[0 [,"*, *e^werkNuc. design * * ? - maybe (radiologicaloverly conservative shielding)
[10:00] RL asked if on Level III yet Gcid - said Yes on constr 7
- engr.
[lf 01] Barker (cent'd) Ex. 5 Engr Progress-1 e Hardt - how many pecple does BR need? Goldberg 2 dezen Spruce - is B.R. pJtting best men on non-cost plus jobs? Gold re subbing out some engr wk (as followup of Apr 10 meeting - dises. re B&R getting people) Pcston - couldn't this drift on for years? Geld - I don't think so ,- if we . can't see (solution-) (progre s s ) in 3 mos, shouldn't wait
,a* do? longer. .
(disc. here re B&R's disc. w/ Black & veatch) Barker - hope more formalized recom. from BR to ELP in next 30 days Gold - BR has EOS. is talking to W & 7 - ma3er agt, prcElam & BR weak in " s1056
; DEPOSITION EXHIBli 00464
Excerpts Responsive to Board's Request
-1 Poston - if BR sen. agt keeps coming back w/ nom. of ineffectives - are you talking to right people?
R.L. if they don't do it soon, can't do it D.J. again explained il on discs w/F hase screen *****P** I ***#I*
- importance of success soon to BR & ( lit coule destroy T's career.
s David expressed appree for Don's handling of Apr 10 meeting, called by B&R, work since & report [11:00) i4. 9 - Constr t compl. Unit 2 10 1 PB 11 2* [1105 End) End t complete prev. est 278 mill 11105) Bar r Cash Flow - (in Nov.) Ge** Ex 12 - 374 million for '81
"" (will put variance analysis in mail)
Berchelt - hew could you poss spend 100 mill more when can't get engr to do constr wk planned (Barker ans re 600 angrs
- Nov CF based en !- '-? vs. 900 now ?? - ELP had to be satisfied?)
- why not lay off contr force Goldberg - felt to cut back BR engr CF now woulc be disastrous
- Barker - ?
!.---y Ex 13 - B&R CF comparisen (made by B&R) Beme Cfc + 78 Mill! 21 to 100: 7 spruce raised o re
. whether we audit to see charges correct?
Gcidberg '79 baseline est sorely under estimated magnitude of pipe supports Borch - livid re non-pref. g3y of B&R. Prob can't solve prob. except by repl. d:in't Freehan they
- Back to where we were know 2 yrs ago - kick B&R off ,
David didn't want this to be part of records (until [ blank]?)
?
Barker Ex [ blank) re Owners' cost Goldberg - we won't disc. CF: 11120) Barker - Ex. 127 Pro] Manpower 3/28 Gold - in last 12 mes have turned over 600 engrs Pek=rny asked if this typical for engr ces in Bousten?
- G.O. - BR has only 1 nue 3cb ..
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- .....d., ... ene h eareer (disc pcten t SiOSS 4/10 here rethat charge P:eper's E* P S appreve (wculdn't r e -- - t -- -l 0046fi 111~5 Geld cited d$'ff! 'ilcEu:a-Es hate w' equities & :nt rates (B.:. nas ne plan se a.elacrate)
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'. Houston Lighting & Power Company l \ l OFFICE MEMOR ANDUM To South Texas Project Nuclear File June 3, 1981 from D. D. Jordan Subject At 8 a.m. on Wednesday, June 3,1981, Mr. Tom Feehan met in my office to discuss the status of Brown & Root's organization and the recruit-ing efforts to fill critical positions on the South Texas Project. Mr. Feehan seemed to be encouraged with their progress and indicated that there was a possibility that Gibbs & Hill might assume some portions of the engineering on Unit 2. He said a Letter of Intent with Gibbs a Hill had been prepared and that he was concerned that Houston Lighting & Power Company would require several days to agree to the addition of Gibbs & Hill. I indicated that there should be no delay on our part if in fact Brown & Root had communicated their plans to us during the formation period but that if they had developed this program in a vacuum without our knowledge or input, it would obviously require us some time to become acquainted with the plan.
I have later determined that the problem of time with Gibbs & Hill does exist because Brown & Root did not communicate any of their proposals prior to their Letter of Intent to Houston Lighting & Power Company. There are material questions relative to the engineering controls since Brown & Root intended to allow Gibbs & Hill to engineer Unit 2 using totally different control system than they used to engineer Unit 1. While this might be expedient for the engineering schedule, it certainly would be a future difficulty in attempting to operate and make alterations to each unit of the next 30 years. This and other difficulties are each to be resolved. During the conversation, Mr. Feehan said he was concerned with the attitude of our partners and the potential politics on the South Texas Project; and he asked if it would be advantageous to South Texas if Brown & Root removed themselves as architect / engineer and contractor. I told him we had not yet made such a decision and that it would not be necessary for this to happen if in fact Brown & Root would begin to show some positive results on South Texas. Mr. Feehan was told again that the prime difficulty on the Project is the failure of Brown & Root to place experienced people in lead positions in spite of the fact that we have continually requested that this be done , for the last three years. The current effort being made by Brown & Root to finally comply with this request is very late; and in our opinion, is still not as strong as it should be. For example, we have little confidence that this Project can advance satisfactorily under the direction of Bill Rice who has never had any experience with nuclear engineering or construction prior to his recent assignment to oversee this work. I DDJ:sh
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Excerpts Responsive to Board's Request
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$2 could dothis[ Jess felt should somee B&R, in whole or in part g r,
[2:25 End] [2:25] Disc. re salt's freedom (none-subserv To Rice) von Ros - re repl. B&R as engr. G - there are firms internsted
- unique lic prob. - has never been done.
- will have to be done carefully von R - would B&R agree to let "B" bring in 34 & work in didn,t under R&R7 97 , ,g g.s in it for them?
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& Maint.
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(. F8b7bf.fengr." Now go from 22 to 103 in 7 mos? l Borchelt moved that addnl 79 not be auth until parties know what 79 is for
- Barker - not prepared today might be toscrrow aft.
Are you, Barker, happy with this 79 mill
- answered re 1306 people
+ consultants
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- happy? (Barker - No, and won't be as long as working w/ B&R)
[2:46 Ind] Barker re CF (contd) l explained had auth, each element Borchelt felt M/C should cut off l pay to B&R l
~~~
i ' j I raised We discussed 9.3.6.3 I point of " Review & act upon PM's ree order i ..a concerning eer cap exp budget" 81113 552 of 579 Meme ofc. is July to Dec. l t2:55 rno L 00474 25 29 T5
l Excerpts Responsive to Board's Request Further disggther Exh 6 ___ _ costs (Poston) or budget to 12/31/01 (CT & 7) (p 41 May 30) Range & Muench noted March no report. (3-1181 Borch withdrew motion we cannot allow this kind of crap to go on
- go to Feehan & fire B&R
[3:03 End} GO sugg. going to C50s tomorrow Borchelt objected
- not a prob for CEOs
- is prob for N/C Borch feels - only reason CEOs CEO partic has been got into proj was ineffective because because M/C wasn't M/C has not given them doing its job.
- 18 ** "66 wIdts A to get principals? together
& pursue (what?)
GO left , [3:10 End] (3:10) Barker III Import Items / Action N.R.C. - Achieving (?) credibility Cited several examples of disputes where Proj has won. . NCRs - show cause, Am Br. etc. Jim Thompson & Al Smith age wking w/ILP people to work off these liabilities. I e ,f Change ident. program '73 '79 1'( Gold. '78~'81
** *1 Vender control program
- heard report this acrning that looking good - should be cleared up by and of yr.
Cable Trsy Supports - Rave it licked - have to , pump out of appeline EL&P to take over -g.dg. M "O stepping up & taking over. Adminis - telephone copiers have not spent data processing our money - pickups well Geophysical (See Bert's me=o of 7/22 to oprea) Cut ord of\ ( Sarker gecommends nonF allow. No sentiment to develop ( rein $ection, etc.) Dut of order , Santunent seemed to be to stonewall Barker reed Fred McGuire's meme Berch - Let 'em sue! 811.14 (Rugeleys, e.g.) (3:34 End) 00475
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LAW QFFICES l LOWENSTEIN, NEWMAN, RErs & AXELBAD 1 1028 CON N ECTICUT AVEN UE, N. W. i moirst LowtNavgiN WAS HIN GTON, D. C. 20 03 6 saCm m. NewMaN wanoto F. stis mava Cr aarkmao 202 862-8400 mAtwLetN w. swca J. A 0cu m N #GMT, sm. MtCM&CL A. Sautt a CoWSLASG GmEEN DavlO G POWELL C.SEEGOmvSanNES
&NNE W. COTTINGMaM C@ CERT M. CULP Fttra G. FLVNN CTEvtN P FeaNY FIEDgnsC S. Gear 46 VIN M. GUTT g m M AN David a masmeN ooNALos...Lven AN September 8, 1981 PRIVILEGED AND CONFIDENTIAL Mr. George W. Oprea, Jr.
Executive Vice President Houston Lighting & Power Company Houston, Texas 77002
Dear George:
Enclosed is a first draft of a report documenting our efforts over the past six weeks in regard to obtaining a replacement contractor for architect-engineering and con-struction management services at STP. I have prepared a Recommendations section and have taken a stab at a quantitative evaluation, the form of which is in Attachment 2. I used a point scale of 1, 2 and 3, with "one" being the best. I thought it best, however, that you be able to consider your conclusions l without the influence of this amateur's ranking. l I look forward to seeing you on Thursday. Since el , 1 l Jack . Newman l JRN:so j Enclosure / cc (w/ encl.): Messrs. Goldberg, Th1Ntsh, Cowan & Schwarz (
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rio's.5. September 8, 1981 i SOUTH TEXAS PROJECT REPORT ON CONTRACTOR REPLACEMENT INTRODUCTION This report outlines the steps which have been taken to study the possible replacement of Brown & Root as architect-engineer and construction manager for the South Texas Project. Reasons are set forth why these steps should be taken now. This report describes the method used to obtain and to analyze the proposals by prospective replacement contractors and, finally, recommends a course of action. I. Background 3 Performance by Brown & Root (B&R) on the South Texas Project (STP) has been a matter of increasing concern. The most visible problems have been in B&R's actual construction activities, including related quality assurance functions, culminating in the issuance by the Nuclear Re,gu-latory Commission (NRC) of a Show Cause Order last year. Although improvements in these areas during the past year -- as confirmed by both HL&P and NRC -- indicate that B&R can properly continue those functions, there are continuing serious problems with respect to B&R's ability to complete engineering and to manage construction effectively.
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The problems encountered by B&R in engineering and ; construction management derive from its extremely limited , ' experience in nuclear projects; its lack of sophisticated 1 management controls to ensure proper coordination between engineering and construction, as well as proper scheduling and sequencing of construction operations; lack of seasoned personnel in the nuclear field; and B&R's inability to ' gather an appropriate management team for a project of this magnitude and complexity. The difficulties with the engineer-ing to date are reflected both in the Quadrex report and in other reviews conducted of individual systems. The diffi-culties in construction management are evidenced by continuing delays and changes in scope, only some of which can be ascribed to evolving regulatory requirements. We have concluded that B&R lacks the necessary depth to perform its engineering and construction management tasks in an orderly, timely and cost effective manner, and that the prospects for improvement are poor owing to B&R's limited experience in nuclear projects and its inability to make the' ] necessary improvements to date. Thus, retaining B&R to per-form such functions wou'ld, in our judgment, result in very significant delays in completing the project. We have further concluded that it is feasible and desirable to replace B&R with a contractor with extensive nuclear experience in engineering and construction management
f v b a while continuing B&R's responsibility as constructor. The availability of the new contractor's experienced personnel will enable design and engineering of STP to progress at a faster rate and to better support the construction effort at STP. In addition, the new contractor will greatly bolster construction management by strengthening the scheduling and Reten-planning functions currently being performed by B&R. tion of B&R as the constructor will provide continuity at the job site and facilitate B&R's cooperation in the A-E/ con-structor management takeover, which is essential. The balance of this memorandum summarizes the intensive study we have conducted during the past six weeks of the alternatives available to HL&P and its partners in the South Texas Project. II. Alternatives Examined There are basically four components in the management of a large nuclear power project. They include: project architect-management (the function executed by HL&P for STP); and construction. engineering services; construction management; Brown & Root has conducted the latter three functions at the STP. We have examined the possibility of terminating all of We concluded, for B&R's activities under the STP contract. the reasons mentioned above, that B&R must be relieved of
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_4_ i_J did 10 architect-engineering and construction management services as quickly as possible, consistent with licensing require-ments. We believe, however, that B&R can continue construc-tion work under the direction of a new contractor for engineer-ing and construction management. This also allows some face-saving for B&R which may be of great importance because, as discussed below, their cooperation is essential in order to have a smooth transition -- which is important, not only to the success of the project but also for licensing reasons. III. Study and Action by Management There are about seven architect-engineers in the United States who have experience in the nuclear power field. They include: United Engineers and Constructors (UE&C); Sargent
& Lundy; Burns and Roe; Gilbert Associates; Gibbs & Hill; Ebasco: Stone & Webster; and Bechtel Power Corporation.
Although the projects of Ebasco, Stone & Webster (S&W) and Bechtel have not been uniformly successful, they are, in our judgment, the only firms with the resources necessary to assume architect-engineering and construction management responsibilities for a job of this magnitude. The others e
m .rt- F. E = lack the' necessary human resources, technical sophistication and experience to step into a job of this size and complexity. Informal contacts were made with Ebasco, Stone & Webster and Bechtel to determine their interest in undertaking this work. In addition, an expression of interest was solic-ited from Westinghouse. These contacts established that all four companies were interested in the project. On July 24, 1981, a Request for Proposals (RFP) was dispatched to them. The RFP sought information on the resources available in each company to undertake a two-part process involving, first, an assessment and " bench marking" of construction and engineering work done to date; and, second, completion of engineering, construction and startup of the STP units. Those submitting proposals were asked to identify key personnel, as well as total corporate resources, available to support the STP. In addition, the companies were asked to identify any licensing l questions associated with the assumption of responsibilities by them, as well as their flexibility in accommodating con-straints imposed by licensing considerations. A copy of the 4 RFP is included as Attachment 1. Each organization submitted a lengthy proposal which 1 described its approach to the tasks outlined in the RFP, its relevant experience and resumes of key individuals to fill
! each major slot. Each company also identified the major features of its commercial offer,in the form of general terms
and conditions relating to compensation and responsibility for defective work, as well as assumption of responsibility for work performed by B&R. The Westinghouse offer, which was submitted in partner-ship with Gilbert Associ,ates, contemplated complete assumption of responsibilities for the project, including project manage-ment. In essence, Westinghouse proposes a " turnkey job," which was n6t solicited by the RFP. Moreover, the proposal contained unrealistic commercial terms and raised extremely serious licensing questions. Accordingly, the proposal was non-responsive and not further evaluated. The proposals submitted by Ebasco, S&W and Bechtel were evaluated in. detail by Messrs. Oprea, Goldberg and Newman. f Upon completion of their independent reviews, they met to exchange reactions, concerns and questions regarding each proposal. These matters were discussed in letters sent to each candidate. At the same time, arrangements were made to visit each company at its home offices in order to allow each an opportunity to elaborate on its proposal, to answer 1 questions identified in the letters and to arrange inter-views with key personnel proposed for major positions. Messrs. Oprea, Goldberg and Newman visited each con-tractor, starting with Ebasco (August 24-25) , and followed by Stone & Webster (August 31-September 1) and Bechtel f 2 l l i l l l
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The meetings were extremely helpful in assessing the capability of each organization, as well as its understanding of the tasks involved in undertaking the South Texas Project. IV. Criteria for Evaluation and Overview of Proposals The following nine criteria, each of which are dis-in evaluating the cussed in detail below, were utilized / proposals: (1) Dedicated Resources, (2) Pool of Corporate Resources, (3) Prior Experience, (4) Understanding the Transition Process, (5) Management Systems, (6) Takeover Experience, (7) Flexibility, (8) Commercial Considerations, and (9) Licensing. 1 (1) Dedicated Resources The most essential aspect of the evaluation is i the commitment of skilled, seasoned people in key posit ons such as project manager, manager of engineering, construction
*/
Another important consideration, the operating style and approach of each contractor, is discussed in the following Section V.
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E lli;t . ^. if Y'UkMz. manager, cost and scheduling manager, records management, and quality assurance. Each organization offered its share of extremely capable people and all indicated a willingness to accept a " key man" provision which would preclude reassignment of certain individuals without the prior consent of HL&P. Although Ebasco offered the services of several very impressive people, the dedicated technical resources of S&W and Bechtel are significantly greater. As between the two, S&W has an edge in view of its commitment to assign to the project Mr. V. A. Suziedelis, Executive Vice President of S&W. Stone & Webster indicated that Mr. Suziedelis would be available to devote 60-70 percent of his time to the STP for a period of at least one year, giving up all other respon-sibilities except those associated with his position as a senior officer and director of the corporation. Bechtel's senior representative (Project Manager) is performing similar work at another major nuclear job. He appears to be an able person but has not held positions of great visi-bility in the Bechtel organization. Although there are different strengths and weaknesses in each organization, the dedicated personnel in S&W and Bechtel project teams are comparable and appear to have the " chemistry" necessary to succeed.
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_9_ (2) Pool of Corporate Resources The total human resources of each organization is an important factor in making a selection. The project, as it stands, is formidable; however, the results of the ' critical, comprehensive review of the engineering and con-struction work performed by B&R (which would be the first job of the new contractor) may indicate a need for even larger numbers of people and a greater diversity of technical talent than now foreseen. Ebasco is unacceptably " thin" because, among other things, of its commitment to the Allens Creek Project. Bechtel Power Corporation with more than 22,000 engineers, is almost twice the size of Stone & Webster and probably has a greater diversity of talent. (3) Prior Experience Bechtel has, by far, engineered and built more nuclear power facilities in the U.S. (about 60) than either S&W (25) or Ebasco (13). (4) Understanding the Transition Process Stone & Webster conveyed a surer understanding of the tasks involved in taking over a project from another In engineer / constructor than either Bechtel or Ebasco. particular, S&W demonstrated a better " feel" for the task involved in statusing the engineering and construction work l performed to date, and the need for systematic analysis of such work prior to the release of further engineering and
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somewhat superficial; they appear to understand the elements of the transition process, but had not given the matter the careful thought and analysis demonstrated by S&W. As discussed further below, Ebasco demonstrated the least appreciation of the complexity of the transition process. (.5 ) Management Systems All three organizations utilize sophisticated management systems for evaluating job progress and controlling cost and schedule. S&W, however, offered a unique "extr.T." S&W is a leader among A-Es in the development of reference nuclear power plants (RNPP). One of its RNPPs is " mated" Accordingly, to an NSSS of the type incorporated in STP. S&W has, in being, a Work Breakdown Structure (WBS) which identifies the specific tasks to be accomplished in a series of discrete job " packages." Although S&W would have to do some adaptation of its WBS, it has a distinct
" leg up" on the process, and probably could proceed more
! quickly and with greater certainty to assess the progress i of STP and proceed in an orderly fashion to release further l engineering and construction work. (6) Takeover Experience Each of the candidates purported to have some experience in "taking over" projects from other A-Es. l l l
/ p 3 p. ? f V J ;"4 ja L Q%he 1 Altnough Ebasco had actually taken over A-E and constructor responsibilities on a nuclear power project in Mexico, the experience is not really on point because Ebasco was not required to undertake a prolonged interface with the dis-charged contractor; nor was the transition under the jurisdiction of the U. S. Nuclear Regulatory Commission. Neither S&W nor Bechtel had any true " takeover" experience. (7) Flexibility Both Bechtel and Ebasco indicated that they could alter their respective approaches and personnel assignments to meet the requirements of the STP as circumstances develop. Stone & Webster appeared to be less flexible, particularly in connection with personnel assignments. It was suggested, for example, at our meeting that S&W consider a person other than the individual designated in the proposal for Project Manager. S&W nevertheless pressed for its initial choice. Flexibility is regarded as an important factor because review of B&R's work, as well as licensing conditions, may require a shift of resources and changes in functional responsibilities. (8) Commercial Considerations Commercial arrangements were only briefly touched upon. Bechtel appeared to be the most forthcoming of the candidates by offering a fixed fee of $12 million, together l
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with,an incentive package which would provide up to an { additional $15 million in fee. Bechtel agreed to accept ) financial responsibility for defects in its workmanship up to $10'million. Stone & Webster initially offered a " cost plus percentage of4 cost" contract, but then modified its proposal by offering a fixed fee of $24 million (adjustable for escalation and scope changes) with earned incentives expressed as a percentage of estimated costs and further incentives (in the sole discretion of HL&P) based on S&W's performance. S&W would, however, limit its liability for defective workman-ship to $3 million per unit.
- i Ebasco's proposal, likewise, initially contemplated
'7 a " cost plus percentage of cost" contract for Phase B activ-
'I ities. A fixed fee of approximately $1 million was offered to cover a very brief Phase A effort. Ebasco has now furnished a proposal incorporating a fixed fee of $ __ million and an opportunity to earn $ __ million in incentive fees. Ebasco's proposal with respect to penalties for defective workmanship is not clear at this time.
In general, commercial considerations in a job of this type are secondary. We believe that, in the course of negotiations, all candidates can be " brought around" to a set of commercial arrangements of approximate parity.
- P. 1;}) (9) Licensing Stone & Webster had clearly given more consideration to licensing questions than either Bechtel or Ebasco. S&W understood the potential necessity for a construction permit amendment and offered intelligent suggestions for meeting regulatory problems. Although less developed, Ebasco also reflected an understanding of licensing considerations associated with the transition to a new contractor, although its thinking was less developed than S&W. Bechtel was some-what shallow in explaining its view of licensing matters, but this may be attributable to the fact that the chief licensing engineer it proposes to use on the STP was not available for discussion at the time of our meeting. A subsequent tele-phone conversation with the licensing engineer confirmed our impression that licensing requirements can only be evaluated after further discussions with NRC. V. Operating Style and Approach of Each Contractor Each organization brought a different approach to the takeover of the STP job. Ebasco proposed a " blitzkrieg" evaluation over a period of four weeks by very senior people in order to perform a preliminary baseline evaluation of the progress on the STP. We are skeptical about this approach because none of the senior level personnel involved in the
,. -- r i'.s j
..a t' g b - c i.;ib Is's'is evaluation have responsibilities thereaf ter for doing the job. Presumably, Ebasco would continue the baseline evalu-ation af ter it moved into Phase B but, in general, the Ebasco suggestion is somewhat naive; it fails to reflect the complexity involved in the transition from job evalu-ation and baselining to production activities.
Stone & Webster did net propose any change in staff between Phases "A" and "B." The same people charged with responsibility for assessing the project will also have responsibility for future engineering and construction. After an initial period of 4-6 weeks, S&W proposes an
" intensive planning session" with HL&P to review the status of the job and planning future work. S&W suggested the possibility of several and " intensive planning sessions" over a period of about 6 months in order to establish priorities for verification activities, new engineering and further construction. Although S&W would assign personnel to Houston, the job would be controlled in virtually every important aspect from its Boston headquarters.
Bechtel proposes to have the STP administered by its We Los Angeles Power Division, through its Houston office. expressed concern that the movement of a large number of people to the Houston office (about 250) would almost double the size of that office and thereby create significant administrative problems. In addition, we noted that the l i I
.~g
- - O We also Houston office had no prior nuclear experience.
l expressed concern to Bechtel that its proposed Project "A" did not carry Manager and Engineering Manager for Phase "B." Bechtel indicated that an appropriate over to Phase provision would be made for an orderly transition between We remain concerned, however, personnel in each phase. that the administrative problems involved in establishing a large nuclear office in Houston could be extremely disruptive in the crucial early months of the work. This matter should be discussed further with Bechtel, if they are to get the assig nment. The foregoing is a subjective analysis of each proposal from several vantage points. In general, Ebasco appears to lag considerably behind Bechtel and S&W in the competition. In particular, we have significant concern regarding Ebasco's as well as document control and records management systems, the experience of certain of its key individuals. The competition is extremely close between Bechtel and Stone & Webster appears to offer, at the Stone & Webster. outset, a stronger team with closer involvement by high level management. Bechtel, on the other hand, has fielded a good hich can team and, more importantly, has enormous resources w be called upon to accommodate presently unforeseen requirements
. . .i- :: t
- 0YY
- A serious concern, however, is whether access to the con-
+
siderable resources of the Bechtel organization can be achieved through a fledgling Houston office. An attempt at a quantitative, objective evaluation is incorporated in Attachment 2 to this report. It would show slightly ahead of in the competition with Ebasco trailing substantially. VI. Timetables All of the prospective candidates seemed ready to start work almost immediately. Ebasco believes that it can release new drawings within 3 months while a review goes on of other existing drawings, specifications and designs. Ebasco projects a period of 6 months in order to establish a realistic formal schedule and cost estimate. Ebasco would plan to submit a transition program within one month af ter contract award, and complete the task of assessing and verifying B&R's work within 8 months. Ebasco would be prepared to assume construction management functions within 3-6 months after J contract award. Stone & Webster, as noted above, contemplates an initial evaluation period of 4-6 weeks, followed by an intensive planning session and similar intensive planning sessions over a period of about 6 months. S&W would plan to have a good schedule and cost estimate within 10 months
, - . - - . . . . , - - . , . .,., ..- . .._.- . n - ..-.n.. , , . . - . , . . , . , - - . . , . , .
- T; .. Mr 4'.y b['S [#a IEy after contract award, and a projected schedule for the first year of work by December, 1981. S&W plans to assume con-struction management functions almost immediately af ter contract award on a phased basis. Their proposed schedule indicates that substantially all construction management responsibility could be assumed within 6 months after contract award.
Bechtel would plan to assume construction management functions about 4 weeks after contract award, and progres-sively increasing its construction management activities over a period of about six months. Bechtel projects that it will be 9 months after contract award before a definitive cost and schedule can be produced. Bechtel and Stone & Webster contemplate a staff of about one thousand at the peak of work activity. Ebasco indicates that it could perform the job with a staff of 350. VII. Licensing and Other Internal Considerations Replacement of a contractor for architect-engineering and construction management is unprecedented in NRC experience. It is unclear whether a construction permit amendment will be required. If an amendment is required, there may be a need for a prior notice and hearing. / The process of implementing
*/ Whether or not an amendment is needed, the replace-
~
ment of B&R will undoubtedly have to be considered in the current operating license hearing and compli-cations may thus arise as to the timing of the take-over of responsibilities by the new contractor.
P.' T
. . ^:
i! f.r P j l the decision to replace Brown & Root in A-E and construction management functions may be heavily influenced by licensing matters. We have informed two key officials in the NRC Staf f regarding our consideration of releasing Brown & Root from all A-E and construction management functions. It is necessary, however, to have more definitive discussions with the NRC Staff and, especially, its legal arm to deter-mine the nature of any licensing hurdles. An early decision is, therefore, very important; until the action is taken, we are effectively precluded from meaningful discussions with the NRC Staff, and cannot complete plans for the changeover. In addition, word is leaking through several sources that this change is being contemplated. This, of course, could introduce a good deal of instability in STP activities. A decision at an early date is also important so that Brown
& Root can be approached in a way conducive to gaining its cooperation in an orderly transition. All proposals stressed the importance of this cooperation.
VIII. Recommendation i I
* *
- l l
i
' Attachments (2)
I 1 l
Attcchment 1 July 24, 1981 Page 1 of 5 , l RDREST EDR PEOPO%L I. _ Scope of Work A. General: You are invited to sukit a proposal for the take-over and performance of the remaining engineering, design, and construction management work of the project.' Included'in this is the need to review the existing engineering, design,and construction work to verify confomance with applicable regulatory, code, and sound industry practices and bench-mark their status. Changes would be required to be made to the ccrnpleted encineering, design,and construction, where appropriate. B. Detailed: Also included in the work scope are the following activities wttich the successful contractor would be responsible to perform.
- 1. Preparation of procurernent specifications
- 2. Preparation of erection specifications
- 3. Preparation of purchase requisitions and orders
- 4. Preparation of licensing reports, answers to inquiries, and amendments
- 5. Secure and maintain ASE III Design "N" stamp
- 6. Participate in monthly project status review meetings
- 7. Planning, scheduling, and cost control of Engineering and Construction
- 8. Training of client and contractor personnel
- 9. Review of supplier design drawings and procedures
- 10. Review of construction contractor programs and procedures
- 11. Achinistration of construction subcontracts
- 12. Development and maintenance of a docunent control and records management systen
- 13. Institute a monthly change control system. Provide ti:nely reports to the utility identifying potential changes and their estimated impact on project costs and schedule.
C. Responsibility:
'Ihe firm selected to ccrplete the project would be responsible to perform those engineering and constnetion management services necessary to secure the requisite ASVI certifications, as well as satisfy licensing and I & E requirements.
July 24, 1981 RtgTST FOR PROPOSAI.
~
Construction work is currently planned to retain the responsibility of the existing contractor. This could change at a later date in the event it is deterrdned that such a chance would be in the best interests of the project. __ D. Quality Assurance: Engineering, Design, and Construction work will be performed under the
" Engineers" QA Procram, which will have to satisfy the QA ccredtments set forth in the SAR.
II. Conduct Of Work It is envisioned that the reqaired work will be done in two phases. A. Phase "A" work consists of those activities dealing with review of the existing engineering, desian, and construction activities and their associated records to ben: Wark project status. Also included in Phase "A" is the preparation of a project ocripletion oost and schedule forecast. B. Phase "B" work consists of resmption of productive engineering,"B" desicn, work and construction activities. It is anticipated that the Phase "A" work provided can be initiated prior to the ccrpletion of Phase the requisite licensing ratters associated with this change of Engineer ed Construction Manager have been resolved with the Nuclear Regulatory Ccrrdssion. It C. All work, irrespective of phase, is to be executed with dispatch. is essential, therefore, that the project be staffed prcrptly with qualified and seasoned professionals in sufficient nu-bers to acccrplish the required work. I III. Proposal Recuirements A. Schedule of Sukittal - within ten (10) working days upon receipt of this request. Based on receipt by afternoon of July 24, 1981, proposal due in Houston by 0800 AM, August 10, 1981. Award and start of work is , anticipated on or before Septerber 4, 1981. Protosal Content B. The proposal, as a rdnirs, should address those elements specified belcw. Any other areas not listed and which are believed to be sig-nificant, should be addressed as well.
- 1. oroanization - Identify your plan for staffing the project for conduct of each phase of work. Provide organization charts, names of all key merbers of the managerient team (down to
- " Principal Engineer" and " Construction Supervisor" levels),
and provide up-to-date resunes for each. Identify against each IT S10ULD BE named individual their date of availability. NCTED THAT "ORGANIZATICE" IS 1.IKELY 'IO BE 'INE EST IMPORTA ELDELT IN DDCIDING WHO S10ULD FINISH THE PR17ECT.
t July 24, 1981
.1EDLTSr 70R PPOPOSAL
- 2. Iceistics - Identify for each phase of work what portion of your organization will be working where. Particular atten-tion should be paid to the follwing locations:
- a. Houston
- b. Job Site
- c. Hane Office
- d. Other
- 3. Mxius Operandi - Identify your plan for carrying out the impor-tant elements of work. This should include, but not be limited to,the following:
- a. Review of SAR ocrrdtments
- b. Review and statusing of engineering calculations
- c. Review and statusing of engineering specifications and other technical reference doc e ts
- d. Review and statusing of engineered and bulk material procurement
- e. Review and statusing engineering drawing develo;rnent including " hold" status and " design change notices"
- f. Review and statusing open non-conformance reports (NCR's)
- g. Establis'dng required changes to the project docment control and records management program
- h. Review and statusing construction
- 1. Identification of unresolved field change requests (FCR's) to engineering for corrective action
- j. Review adequacy of the project material control pro- ,
gram 1
- k. Develo;rnent of a licensing strategy and plan to pre-pare a C.P. amendment and attend a conference with the NRC in order to address the following: ;
' (1) A/E's technical qualifications ' (2) A/E's QA Program (3) Interface between old and new engineering (methodology and analyses) (4) Interface of A/E's QA Program with re mstructor's QC activities (5) Retraining of constructor to A/E's QA Program requirements (6) Changes to existing SAR carritments (7) Cnanges to existing design criteria (8) Interface between A/E's QA Program and that of the utility i
. July 24, 1981 RD?UEST IDF P10POSAL
- 1. Identification of construction related activities to con-
"A" and required manning resources tinue during Phase
- m. Review of construction facilities and equi;rnent. Identify needs for job capletion
- n. Review, selection, and assimilation, where prudent, of current Engineer's human resources (both engineering, QC, and Construction Managenent personnel)
- 4. Preliminary Scheduling - Provide preliminary CPM style network schedules featuring the key work elements associated with the job takeover, execution, and completion. (Current estimated project status is as follows:)
Unit Engineering Construction 70% 50% 1 20% 15% 2 65% 45%
'Ittal:
- 5. Mr: loading - Provide a preliminary manloading for engineering, design, and construction management activities reflected on the networks provided in response to "4" above.
- 6. Final Schedule and Cost Estimate - Identify how many months; frcrn contract award to prepare an official project cost and detailed schedule.
- 7. Identify what Engineering and Construction Management syste*s, if any, will be utilized for rhe work reraining to be done.
- 8. Contractual - For each type and phase of work, identify A what matrix-forms of contracting would you reccrmnd be utilized.
type response should be provided along the following guidelines: Phase A Phase B Engineering Design Construction Manage ent Quality Assurance Maxinun use of ltrp sun or incentive type contracting is en-couraged. Describe your position with respect to financial responsibility fcr defects in engineering and/or construction in existing work discovered after you have ccrpleted your review of, and accepted, such work.
- 9. Otr;ensation - Provide your schedule of costs, markups, and fees for each type and phase of work based on the contractual options reca mended in response to "8" above.
Identify what financial liability you are willing to accept "B" work. for rework caused by your failure to properly execute Phase 4
July 24, 1981 IdQCr FOR PROPOE
- 10. Special Decerience Identify any power plant related experience gained frtra assning engineering and/or construction responsibilities frcrn another organization.
- 11. Potential Transitional Considerations If it were necessary for a transitional period that you perform your engineering function as a consultant to the utility review-ing the designs of its current Engineer prior to release to con-stniction, would such a contractual relationship be acceptable?
- 12. If you have answered "11" above in the affirmative, describe how you m uld propose to interface with the utility and its current Engineer during the transitional period.
Attachment 2 Ebasco S&W Bechtel Committed personnel Corporate resources Management systems Understanding of Verification Phase C/S Controls Document control & RMS Transition Plan QA Sophistication Licensing Sophistication Experience Contractual provisions Readiness to proceed 6
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Excerpts Responsive to Board's Request j . t.g MINUTES SPECIAL MEETING OF BOARD OF DIRECTORS BOUSTON LIGHTING & POWER COMPANY
~
r Bouston, Texas .' September 14, 1981 O 1 The Chairman stated that the purpose of this meeting was to report on the evaluation of the progress of construction at the South Texas Project. He said that management had con-cluded that Brown & Root could not complete the project within the guidelines of the contracts and other agreements and directives. He then called on Mr. Oprea to report on investi-gations that have been made with regard to employing outside assistance.
Excerpts _ Responsive to Board's_ Request ) a.u.or.co. - specicA nastAng or ovara or warscsvra - auptamoar 14, 1901 > , Pcg3 7 1 Mr. Goldberg said that his office had studied the ' possible replacement of Brown & Root as Architect-Engineers l and Construction Manager for the South Texas Project. He l then reported in detail the reasons for this study and de- i scribed the method used to identify and evaluate capabilities ) of prospective replacement Architect-Engineers. He reported , on the performance by Brown & Root on the project and out- - lined the most visible problems in their construction activi-ties. He said that there are approximately seven Architect- , Engineers in the United States who have experience in the nuclear field and that among those are Ebasco, Stone & Webster and Bechtel Power Corporation. He then handed to each member of the Board a written report on Contract Replacement at South Texas Project. He concluded his remarks by stating that, all things considered, the two most appropriate firms to be contacted for future work on the project were Stone & Webster and the Bechtel Corporation. c ELE E Mr. Jordan then commented on the areas of expertise and experience of the Bechtel Corporation and Stone & Webster and said that we would need to obtain Brown & Root's co-operation in the transition of responsibilities at the project. He said it was the recommendation of management that the Board authorize the Officers of the Company to continue ne-gotiations with Bechtel Corporation, Stone & Webster and others to serve as Construction Manager and Architect-Engineer-ing at the South Texas Project.-
. ELE E-RESOLVED, that Management of the Company be authorized to continue negotiations with Bechtel Corporation, Stone & Webster, and any other qualified firm looking toward replacement of Brown & Root as Construction Manager and Architect-Engineer on the South Texas Project and to take such action in this regard as may be deemed appropriate.
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Houston Lighting & Power Company $ h D . '- OFFICE MEMORANDUM d O t/f:,Aj 6
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To South Texas Project File September 15, 1981 # rrom D. D. ~ Jordan iubicci Meeting with Project Partners and with Mr. Tom Feehan, President of Brown,& Root 1
- The CE0's of the partners on the South Texas Project met today at 9 a.m.
to discuss whether or not some change should be made in the engineering construction management or construction of the South Texas Project. A detailed presentation was made to the group by Jerry Goldberg in which he outlined proposals from Westinghouse, Ebasco, Stone & Webster and Bechtel. The conclusion was that the Westinghouse bid was not responsive and that it offered no prospect for improvement to the project. Bids from Ebasco, -
~
Stone & Webster and Bechtel Were responsive, and all three made a dist'inct , effort to support the project with organization and experienced people. We determined that the Stone & Webster and Bechtel bids offered the most organizational strength and there was little difference in the commercial terms. It was, therefore, suggested that Houston Lighting & Power Company pu sua e contract with Bechtel to take over the engineering and construction management of the project and that Brown & Root continue to serve as the constructor. After detailed discussion, the owners unanimously agreed with the suggestion. i l I meet with Mr. Feehan in the Brown & Root offices at 3 p.m. today to inform j him of the decision made by Houston Lighting & Power Company and the owners of the project to r.emove Brown & Root .~ rom the engineering and construction i management on South Texas. Mr. Feehan had been informed on three prior l occasions that consideration was being given to replacing Brown & Root l on portions or all of the work at South Texas and was, therefore, familiar ! with the possibility that Brown & Root would be removed. The initial reaction l seemed to be one of surprise in that he really did not believ'e it would happen. He indicated that others had also had problems with the construction l of nuclear power plants and that he thought Brown & Root cold do as well as anyone else. We reviewed the history of the project, discussed the problems which have continued in engineering throughout the project's life, and the fact that Brown & Root either could not or would not respond to our request to " employ the strongest people available in the world" which was made over two years ago. I informed him that we had no confidence that Brown & Root could complete the engineering in a reasonable time
s e Houston Lighting & Power Company
' OFFICE M EMOR ANDUM To from Meeting with Project Partners and with Mr.
i Subject Tom Feehan, President 1 of Brown & Root - page 2 i frame and (hat we in effect had decided to change engineering and construction managers in order that we could get the engineering people we believe the project needs. Mr. Feehan said that he agreed they had problems in the engineering group and that if foresight was as good as hindsight, we probably should have made the change in 1974. We informed him that it would be necessary for us to make an oral statement to the licensing board through our attorney, Jack Newman, informing them that consideration was being given to reassignment . of certain responsibilities on the project. I gave - him a preliminary statement and told him that we were sensitive to the Brown & Root public image question, we needed and wanted their cooperation in the transition, and we would accept any sound changes he wished to make in the announcements as long as they were true. We discussed the contract, and he was informed that Houston Lighting & Power Company had the right, under the contract, to take the action proposed. He was also left with a' preliminary list of activities which Brown & Root was asked to participate in. These included a request to meet during the week of September 22 with our people and hopefully the new architect / engineer to discuss transition plans, to assign the necessary people in his organization to effect the transition; and to " meet with us, the new architect / engineer and the Nuclear Regulatory Comission to discuss this change. He indicated he would talk to his people about the change and would be prep,ared to discuss it with us later. DDJ:sh
Brown & Root,Inc. post orrice Box Three, Houston, Texas 77001 . A Niht-unon Compny e
/b/ / /
Nmes J. F.eken '(' a ,,,, besident end - Chief Executy. OEc , (713) 676 4361
! September 16, 1981 -
Mr. D. D. Jordan Houston Lighting & Power Co. P. O. Box 1700 Houston, TX 77001
Dear Don:
At our meeting on September 15 in my office, you advised me of HL&P's decision made that day to select a more experienced engineer-manager to replace Brown & Root for those specific portions of the STP contract. You suggested Brown & Root would remain on as constructor under this revised scheme of things and presented a schedule of events to start developing a transition plan within the next 10 days to satisfy the many demands.which will be placed on the project by such a change. Since you had not identified the selected engineer-manager yet and many other equally significant unknown aspects of such a change exist, I advised you that I would take up the proposal with the officers involved on the project. You also presented me with a press release for my comments, which I promised to give you by telephone. The reaction of the involved Brown & Root officers at the news was certainly one of abject disappointment since they had somehow never been able to officially convey to you and your officer staff the logic that went into the reforecast of the STP cost and schedule. This work resulted in proposals for manage-ment and procedural changes which are dedicated to the completion of STP in a timely and economic manner and probably at a lower cost than would be the case if a new AE is brought into the project. Ironically, many plants under the guidance of the AE's you re considering are experiencing cost and schedule difficulties, j all with good reason I'm sure. Each of our companies should be thinking of a selected team to discuss in detail the proposed transition plans and the necessary contractual revisions which would be appropriate in light of your decision. I will be in touch with you upon my return. Sincerely, RECEIVED s{ l SEP1 81961 l - W D.D.Jonn y T. J. Feenan TJF:sr _
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- 1b2: Diccussions among STP participanto Septembar 22, 1981 regarding replacement of Architect /
Engineer and Construction Manager At 9:00 a.m. on September 12, 1981 Messrs. Jordan, lOprea,Goldberg,NewmanandCowanandthewritermetinthe 25th floor conference room at Houston Lighting & Power Company to review the presentation that was to be made by HL&P during theafternoonftotheotherSTPparticipants.
- Mr. Goldberg began by presenting a series of slides
'that would be shown during the afternoon. The slides were as follows:
The first two slides compared personnel by name 3 in the eleven key slots for Bechtel, Ebasco and Stone
& Webster and the total resources of each organization and the places where different types of work would be done by each. Mr. Goldberg explained that the Westinghouse turnkey proposal was not responsive to the Company's request for proposals and, therefore, had been disregarded.
'The next slide concerned logistics.
The next slide showed proposed staffing levels at various stages of the work over the next year for each of the three organizations. Jg The takeover experience of each of the organizations was compared on the next slide. Planning, scheduling and cost estimate projections f,werenextcompared,Bechtelexpectingtocompletethis work in nine months, Stone & Webster in ten months and Ebasco in six months (again indicating, according to Mr. Goldberg, that Ebasco simply did not understand the scope of the work required). l l The final slides compared the takeover strategies of the three bidders. Each would be willing to work 7 as a consultant to HL&P during the time required to ' I phase out the existing contractor and phase in the successful bidder. Mr. Goldberg explained that the I I construction of safety-related work will cease during the transitional period and that " construction", as it is used on the slides, will consist of rework, main-tenance of equipment already delivered, etc. . og O 61001
?
Redacted for Production Pi .
'? d v
- 10 At 10:25 Mr. Newman passed out and discussed the lltinueduntil10:40." implementing actions" schedule sheet, which discussion con-r l2 Messrs. Goldberg, Newman and Oprea thereupon, at 11:00
$3 c.m. , gave their individual assessments of the relative merits of the several contractors, which assessments were as follows:
Mr. Goldberg expressed the view that if the lljCompanywerestartingfromscratchhewouldchoose Bechtel but this job is not starting from scratch. He felt that the Stone & Webster plan for sorting out the present difficulties is best and that Stone & Webster is offering the best people. He expressed the opinion that Bechtel would be better in Phase B and that a panacea would be to have Stone & Webster do Phase A and Bechtel do Phase B but that can't be done. Considering all factors, he favored Stone & Webster. Mr. Newman said that he leans toward Stone & f Webster on a close call but recognizes that the job may overtax Stone & Webster. He concluded by saying that either Bechtel or Stone & Webster was a good choice. Mr. Oprea expressed the opinion that Stone & ()s10043 fhWebsterisveryimpressivetechnicallyandthathe was concerned somewhat about Bechtel's work " packages". ' He concluded that in his opinion it was almost a tie between Bechtel and Stone & Webster but he felt that the edge had to go to Bechtel. A discussion of these views followed until noon when f[themeetingwasadjournedforlunch. i l l 1
i 8V Redacted for Production Discussions among STP participanto Septembar 22, 1981 Re
.\ regarding replacement of Architect /
Engineer and Construction Manager z At 9:00 a.m. on September , 1981 Messrs. Jordan, I8Oprea, Goldberg, Newman and Cowan and the writer met in the a l 25th floor conference room at Houston Lighting & Ppwer Company
' Mof to review the presentation that was to be made/ uring the Ofternoon to the other STP participants.
Mr. Goldberg began by presenting a series of slides i li that would be shown during the afternoon. The slides were as follows: The first two slides compared personnel by name in the eleven key slots for Bechtel, Ebasco and Stone
& Webster and the total resources of W organization and the places where different types of work would be i AmM(,
done Mr. Goldberg explained that the Westinghouse 4 turn-key proposal was not responsive to the Company's request for proposals and, therefore, 4 2 been dis- i regarded. The next slide concerned logistics.
;LI The next slide showed proposed staffing levels l
at various stages of the work over the next year for ! each of the three organizations.
*de
)l take-over experience of each of the organizations I Nwas compared on the next slide. :
Planning scheduling and cost estimate projections j b3were next compared, Bechtel expecting to complete this work in nine months, Stone & Webster in ten months and i Ebasco in six months (again indicating, according to 1 Os1ous }.
, s
~2" Redacted for Production M Mr. Goldberg, that Ebasco simply did not understand the scope of the work required).
The final slides compared the take-over. strategies of the three bidders. Each would be willing to work as ; j aconsulpnttoHL&Pduringthetimerequiredf.ophase ,
'. out the existing contractor and phase in the succassful i
bidder. Mr. Goldberg explained that the construction of safety-related work will cease during the transitional period and that " construction", as it is used on the k slides, will consist of rework, maintenancejequipment already delivered, etc. At 10:25 Mr. Newman passed out and discussed the
" implementing actions" schedule sheet, which discussion con-tinued until 10:40.
M D $199Y
Redacted for Production f
\
Goldberg Me srs. Epzan, Newman and Oprea thereupon, at 11:00
)ffo.m.,gavetheirindividualassessmentsoftherelativemerits of the several contractors which j assessments were as follows:
Mr. Goldberg expressed the view that if the Company 30were starting from scratch he would choose Bechtel but this job is not starting from scratch. He felt that the Stone & Webster plan for sorting out the present diffi-culties is best and that Stone & Webster is offering the best people. He expressed the opinion that Bechtel would be better in Phase D and that a panacea would be to have Stone & Webster do Phase A and Bechtel do Phase B but that can't be done. Considering all factors, he favored Stone & Webster. s Mr. Newman said that he leans toward Stone & Webster on a close call but recognizes that the job may overtax Stone & Webster. He concluded by saying that either t Bechtel or Stone & Webser was a good choice.
- A i Mr. Oprea expressed the opinion that Stone & Webster i lb)lis very impressive technically and that he was concerned l
somewhat about Bechtel's work " packages". He concluded i i that in his epinion it was almost a tie between Bechtel
- \
and Stone & Webster but he felt that the edge had to go to Bechtel. k h::=O: && YY??:=, ,
.33444, -
n sj; & 4.,x , 0 8 1004 f
. + . -
? .b Re: Discussions among STP participants September 22, 1981 regarding replacement of Architect /
Engineer and Construction Manager At 1:00 p.m. on September 12, 1981 the following .' representatives of the participants met to discuss this subject: City of Austin, Messrs. Hancock and Pokorny City of San Antonio, Messrs. Poston and l von Rosenberg CPL, Messrs. Range and Muench l HL&P, Messrs. Oprea, Goldberg and Jordan Messrs. Newman and Cowan and the writer were also in attendance. Mr. Jordan began the meeting by explaining that the CEOs of the participants had wanted members of the Management Committee to meet with HL&P today, prior to the meeting of the CEOs and members of the Management Committee with HL&P on September 15. Mr. Jordan offered to stay as long as the persons present wished to stay to get any questions answered. Mr. Jordan explained that Messrs. Oprea and Goldberg would describe the analysis procedure and then that he, Mr. Jordan, would explain ~ the decision HL&P had made. Mr. Oprea outlined the presentation to be made by Messrs. Goldberg, Newman and Cowan, concerning proposal analysis, licensing and contract problems, respectively. Mr. Oprea explained briefly the procedure that had been followed in request-ing proposals and also explained the meeting which he and Mr. Goldberg had recently had with Messrs. Syphert and Collins of the NRC's Region IV office in Arlington. Mr. Oprea reported that the NRC was leaning in the direction of a decision that the Quadrex report required a 55e report by HL&P on an " engineering control breakdown" under criterion 7. At 1:16 Mr. Goldberg began a discussion of the following documents which had been passed out by Mr. Oprea: Exhibit A. A page entitled "IV. Criteria for Evaluation and Overview of Proposals" Exhibit B. Request for proposals, dated July 24, 1981 (five pages) Exhibit C. August 24 letter to Bechtel Exhibit D. August 18 letter to Ebasco Exhibit E. August 21 letter to Stone & Webster 9
f 1
/,
9 At 1:20 Mr. Goldberg started the slides on resources, which slides compared.the key eleven men for each of the bidders, the total resources of the organizations and the places where each plans to do the work. Mr. Goldberg commented that there would be a
" pause" during which rework gets done and engineering gets reviewedy He commented that this is essentially what Mr.
Salterelli of Brown & Root is doing now. .' At 1:54 Mr. Goldberg began a discussion of the slide regarding takeover experience. Mr. Poston inquired what Bechtel's dirty linen consisted of, in response to which Mr. Goldberg named Calvert Cliffs and Mr. Newman named Midland. Mr. Muench commented that Shorcham was Stone & Webster's dirty linen and that the plant may never get built. At 2:04 Mr. Goldberg began a discussion of his slide regarding planning, scheduling and cost estimates. At 2:10 Mr. Goldberg presented the slide on takeover strategy by Bechtel, noting that Bechtel would initiate construc-tion management in four weeks and have full control of construction management in six weeks. Mr. Poston inquired what happens between now and the takeover of construction management. Mr. Muench commented that no safety work would be done during this period and the main problem would be to keep welders busy. Between 2:17 and 2:24 Mr. Goldberg presented and discussed the slides regarding Ebasco's and Stone & Webster's takeover strategies. At 2:24 Mr. Newman began his discussion of licensing, noting that a takeover at this point in engineering and construc-tion is unprecedented in the NRC annals of nuclear plants. Mr. Newman explained that the threshold question is whether a CP amendment will be needed and he felt there was a 70% probability that it would. If a CP amendment is required Mr. Newman felt there was a 50-50 chance that it would require a notice and hearing and possibly a year to complete such a hearing, during which the new AE could design but could not build. Mr. Newman explained that this would require a long interface with Brown & Root. The discussion at this point drifted to the possibility of the new engineer eventually having to take over the construction as well. At 2:40 Mr. Muench started a discussion of which contractors could do construction only under the national union agreement versus contractors who could work open shop. At 2:47 Hr. Cowan began a discussion of the HL&P-Brown
& Root contract, citing Section 3.4 as a basis for HL&P's legal right to do what HL&P wants to do in limiting Brown & Root's scope. Mr. Cowan said that this scope reduction program would fh b vu
- be initiated "if it's approved" (it was not clear to the writer who must approve it - NRC? HL&P? Participants?). Mr. Cowan discussed tactics for getting Brown & Root's cooperation, expressing the view that Brown & Root knows about the proposed replacement of Brown & Root as engineer but is nevertheless being cooperative in the licensing hearings. Mr. Cowan also commente upon a letter which HL&P had received from Mr. Rice ,
of Brown & Root, blaming cost increases and schedule delays on . actions that had been taken or not taken by HL&P. Mr. Cowan brought up the subject of the " tolling" agreement (which had been executed by HL&P, B&R and Halliburton at the end of 1979 to cover a two year period and which provided that neither HL&P nor Brown & Root would plead the statute of limitations during such two year period) and inquired what shape the Participants would be in if there is no extension of the
" tolling" agreement. Cowan offered his own opinion that the Participants' legal positions would be weakened but not oblit-erated. Mr. Cowan commented that the Participants can't be suing Brown & Root for 1.5 billion and also expect to get their cooperation during the transitional period.
Mr. Jordan inquired what the effect would be if suit is filed against Brown & Root and Brown & Root is replaced as the constructor (as well as being replaced as the engineer and construction manager). Mr. Newman ventured the opinion that the NRC would shut the job down. Mr. Cowan opined that the plant would never get built. Mr. Jordan discussed further the question of the hard dollar effect of Brown & Root cooperation and stated that there needed to be an understanding among the partners (about who might sue whom?). Mr. Cowan commented that we could not put the licensing case together without Brown & Root. Mr. Poston interjected that no statute of limitations runs against the municipalities, therefore there is no incentive for the municipalities to file suit at this time. Mr. Poston (at 2:58 p.m.) inquired what position HL&P i will take if B&R refuses to sign a teiling agremmont. Mr. Cowan said he would make a strong plea that suit not be filed and that the tolling agreement be allowed to die because "We couldn't recover enough in a lawsuit to offset the cost of Brown & Root non-cooperation". Mr. Range opined that Brown & Root will not sign an extension of the " tolling" agreement because they under-stand the leverage they have. Mr. Poston stated that Mr. Rice of Brown & Root has all of the details about the request for proposals, etc., such having been given by Westinghouse to Gibbs & Hill and thence by Gibbs & Hill to Mr. Rice. Mr. Rice expressed the hope to Mr. Poston two or three days ago that Brown & Root can keep a piece of the work. {f 6 Uv-
.o Mr. Hancock inquired whether there will be a problem between Brown & Root and Bechtel if the recommendation of HL&P
~
should be Bechtel. Mr. Oprea commented that the " tom-toms" have Bechtel as already having been selected. At 3:08 Mr. Muench asked for the commercial slides, whereupod Mr. Goldberg presented the Bechtel commercial proposal,
- which involved a $12 million fee, a $15 million incentive item and a $10 million penalty max. The Bechtel proposal also involved a 2.38 multiplier for manhours between 0 and three million, a 2.24 multiplier for manhours between three and four million and a 2.18 multiplier for manhours over four million. Site professionals would be billed at a multiplier of 1.82.
Mr. Goldberg next presented a slide concerning Ebasco commercial items, which included multipliers of 2.10 and 1.69. He then presented the Stone & Webster multipliers of 1.86 and 1.35. Mr. Goldberg advised that 10 million manhours to go at
$35 per manhour would come out to $350 million. [He first then multiplied this figure by 2 for the markup but later reversed this, explaining that the markup was already in the $35 per manhour.]
About 2:27 there began a discussion regarding the completion date for Unit No. 1, based on the assumption that a 1.5% per month reflected full steam production. I am not certain
- that I got these numbers right but if '82 was assumed to produce 0%, '83 12%, '84 18% and '85 12%, this would make a total of 42%
in those years on a plant which is now about 50% completed, leaving part of the work to be done in '86 (this would presumably be con-sistent with a late 1986 fuel load date?). At 3:33 Mr. Jordan stated tha t HL&P was convinced, and will recommend to the other participants, that Brown & Root be replaced as engineer and construction manager. He then reviewed the potential replacements: Gibbs & Hill was eliminated from the list. Westinghouse was disqualified because of a non-responsive quote. Ebasco is less qualified than either Bechtel or Stone & Webster. This would narrow the gap to a decision between Bechtel and Stone
& Webster, with respect to which Mr. cordan stated he would pursue Bechtel's qualifications first.
Mr. Jordan said he comes down on Bechtel's side for several reasons: The change will be accepted well by NRC, PUC and the public that has been following the plant. m
- VG
l The participants will not get another chance to change engineers and should, therefore, go to the organization that has more nuclear plant design experience than all of the others combined. Bechtel's total people resources, in the range of 22,000, are tremendously important (he noted that , Brodn & Root hasn't had the resources, couldn't get the resources or didn't know they needed the resources). If the new engineer has to take over construction, in addition to engineering and construction management, Bechtel is much stronger in this area. Bechtel is better equipped to do the startup of the plant after the construction is complete. Mr. Jordan reported that Mr. Reinsch of Bechtel is in London now and will try to get to Houston as soon as possible. At 3:45 Mr. Hancock suggested periodic meetings between Jordan and Bechtel's CEO until construction progress is up to 1.5% per month. Mr. von Rosenberg inquired whether Bechtel would accept the existing engineering, to which Mr. Jordan replied in the negative. Mr. Jordan explained that the engineering done to date would have to be checked and Bechtel would have to be satisfied with it before any additior.pl work was done based thereupon. Mr. Hancock asked Mr. Goldberg about HL&P's organization, to which Mr. Goldberg replied that he had interviewed 15 additional engineering people and that four had proved to be acceptable. However, Mr. Goldberg mentioned (not by name) an engineer at Brown
& Root who he thought was better if Goldberg could get him to leave Brown & Root and join the HL&P organization. Mr. Goldberg said that he is also looking for a good contract administrator.
Mr. Goldberg explained that HL&P will have excess people after the change because HL&P has had to staff to compensate for Brown
& Root weaknesses. Mr. Goldberg also noted that there are several people who will not be needed in the short term but who will be needed later, it being his plan to have these poeple stay on the HL&P payroll and work for the contractor during the interim.
Mr. Hancock inquired whether this meant that the new AE would be more responsible and HL&P less for the day to day work. I did not understand Mr. Goldberg's answer but it involved a long description of the staff changes he has made since he came in October of 1980. Mr. Poston asked if the changing of AEs was within the perogative of the Project Manager, to which Mr. Jordan answered in the affirmative. Mr. Cowan, apparently thinking that Mr. Poston was talking about the Brown & Root contract, answered with respect to the Brown & Root contract, insofar as it involved a change in Brown & Root's scope under Section 3.4. [ huh
Mr. Poston inquired where we were on the reforecast. Mr. Cowan replied that the decision to recommend to the Management Committee a change of AE was made before the reforecast (?). At 4 :09 the discussion continued regarding the refore-cast and its current status. Mr. Goldberg described the work shop at Bay City a week or so ago, from which a 10-page list , of questions by HL&P to Brown & Root resulted. He reported that . Brown & Root is working on the answers to those questions now. Mr. Jordan expressed the view that it would be bad to put out the flawed forecast now because everyone knows it's wrong and whether it is wrong high or wrong low, it will operate to the disadvantage of the Project. If it proves to be high it will remove the incentive to the new contractor to keep it down. On the other hand, if it proves to be low the participants will take heat now for part of the increase and then heat again in nine months when the correct forecast is made.
. Mr. Hancock asked if it would be possible to publish a press release regarding the change but which release would not name the new AE. Mr. Jordan replied that all of the transi-tional changes could be completed in two weeks and he saw no need to do anything sooner. A discussion followed about the selling of securities by several of the participants. Mr. Hancock noted that Austin is selling bonds on September 27 and Mr. Range noted that San Antonio is pricing its bonds next week for delivery in about a month.
At 4:18 p.m. Mr. Poston expressed the view that San Antonio will endorse the change 100%. Mr. Jordan reported that the first time he can see Reinsch of Bechtel (either in Houston or San Francisco) is next Thursday (September 17) . Mr. Range requested more information concerning cost estimates and schedule, saying something about B&R decreases and (?) increases (question and answer not clear). Mr. Range also requested more information about why the Westinghouse proposal had been discarded, to which Mr. Goldberg replied that a turnkey price was not responsive to the request for proposals and that Westinghouse's proposal to exercise all discretion on the Project would, if permitted, be a usurpation of HL&P's non-delagable responsibilities under NRC regulations. At 4:30 Mr. Goldberg continued his discission of the infirmities in the Westinghouse proposal and recounted Westing-house's experience on a project in Yugoslavia (a project which Stone & Webster was later requested to get involved in but which Stone & Webster wouldn't touch). Mr. Jordan said that Westinghouse has never built a reactor in the United States. [ M L [. )
Mr. Hancock reported that the nuclear election would be held in the City of Austin on Tuesday, November 3. Mr. Hancock then gave some figures of about 5.9 at a probable growth rate of about 6% and 5.1 at a slow growth rate at 4%, said something about looking at 4.5 to 2.8 (Gibbs & Hill), a 30-month slip on Unit No. 1 and 18 more on Unit No. 2 (but I did no understand any of his data). The question at the , election (-will be whether to sell all or nothing of Austin's - share. Mr. Hancock noted that Austin is funded through 1982 but does not have any bond money after that. Mr. Hancock asked what legal questions would be presented to the CEOs on Tuesday, in answer to which Mr. Jordan referred to the Cost Audit Team (1980) results and suggested that Brown & Root will want to settle (i.e., be released from any past responsibilities) as the price of cooperating in the transition. [Mr. Jordan requested that Messrs. Oprea, Dean and Thrash get together Monday to review the Cost Audit Team's 1980 results.] Mr. Hancock asked if Mr. Jordan wanted a mora-torium on lawsuits by the participants. I never heard any clear answer. Mr. Range said that CPL would forebear if Brown & Root can get their act together. At 4:55 the meeting was adjourned, with 9:30 a.m. Tuesday morning being set as the time for the meeting of the CEOs and the Management Committee representatives with HL&P. g . 9 4 Q .a m 1
Re: Discussions among STP participants September 22, 1981 regarding replacement of Architect / Engineer and Construction Manager At 1:00 p.m. on September 12, 1981 the following represenfativesoftheparticipantsmettodiscussthis .' subject: City of Austin, Messrs. Hancock and Pokorny City of San Antonio, Messrs. Poston and von Rosenberg CPL, Messrs. Range and Muench HL&P, Messrs. Oprea, Goldberg and Jordan Messrs. Newman and Cowan and the writer were also in attendance. Mr. Jordan began the meeting by explaining that the b Committee CEO's of the participants had wanted the Management to meet with HL&P today, prior to the meeting of the CEO's and h A 7 /f Mr. Jordan Tucc5 g the Manacfement Committee with HL&P offered to stay as long as the persons present wished to stay to get any questions answered. Mr. Jordan explained that Messrs. MM Oprea and Goldberg " m: plain the analysis procedure and then that he, Mr. Jordan, would explain the decision HL&P had made. Mr. Oprea outlined the presentation to be made by Messrs. Goldberg, Newman and Cowan, concerning proposal analysis, licensing and contract problems, respectively. Mr. Oprea explainedbrieflytheprocedurethathafbeenfollowedinrequest-ing proposals and also explained the meeting which he and Mr. ( Goldberg hadg th Messrs. Sy rt and Collins of the NRC's Region IV office in Arlington. Mr. Oprea reported that the NRC was leaning in the direction of a decision that the Quadrex report required a 55cf report by HL&P on an " engineer ntrol breakdown" under criterion 7. At 1:16 Mr. Goldberg began a discussion of the following documents which had been passed out by Mr. Oprea: {hu e
Exhibit A. A page entitled "IV. Criteria for evaluation and overview of proposals" Exhibit B. Request for proposals, dated July 24, 198f (five pages) , Exhibit C. August 24 letter to Bechtel Exhibit D. August 18 letter to Ebasco Exhibit E. August 21 letter to Stone & Webster At 1:20 Mr. Goldberg started the slidgron resources, which slides compared the key eleven men for each of the bidders, the total resourcesoftheorganizationsandtheplaceswherek$$planj to do the work. Mr. Goldoerg commented that there would be a
" pause" during which rework gets done and engineering gets reviewed.
Hequhms commented that this is essentially what Mr. Salterelli of Brown & Root is doing now. EkMr. Goldber:g ft1:54 began a discussion of the slide regarding takeover experience. Mr. Poston inquired what Bechtel's k 48417* ** M dirty linen consisted of,jto wHich Mr. Goldberg r^rli^^ Calvert Cliffs and Mr. Newman sor'4eM Midland. Mr. Muench commented thatShod!mwasStone& Webster'sdirtylinenandthattheplant may never get built.. At 2:04 Mr. Goldberg began a discussion of his slide i regarding planning, scheduling and cost estimates. At 2:10 Mr. Goldberg presented the slide on takeover strategy by Bechtel, noting that Bechtel would initiate construc-tion management in four weeks and have full control of construction management in six weeks. Mr. Poston inquired what happens between now and the takeover of construction management. Mr. Muench commented that no safety work would be done during this period
, ,n
*V^d
and the main problem would be to keep welders busy. Between 2:17 and 2:24 Mr. Goldberg presented and discussedtheslidesregardingEbascohandStone& Webster's a takeover [ strategies. , At 2:24 Mr. Newman began his discussion of licensing, noting that a takeover at this point in engineering and construction is unprecedented in the NRC annals of nuclear plants. Mr. Newman explained that the threshold question is whether a CP amendment will be needed and he felt there was a 70% probability that it would. If a CP amendment is required Mr. Newman felt there was a 50-50 chance that it would require a notice and hearing and possibly a year to complete such a hearing, during which the new AE could design but could not build. Mr. Newman explained that this would require a long interface with Brown & Root.
-fb/$
The discussion at ehe-point drifted to the possibility of the new engineer eventually having to takeover the construction as well. At 2:40 Mr. Muench started a discussion of which contractors could do g t constructiong r the national union agreement 9647 versus contractors who could work open shop. At 2:47 Mr. Cowan began a discussion of the HL&P-Brown
& Root contract, citing Section 3.4 as a basis for HL&P's legal limiting right to do what HL&P wants to do in xastriEliMg 3rown & Root's scope. Mr. Cowan said that this scope reduction program would be initiated "if it's approved" it was not clear to the writer who must approve it
. - Hec Mr. ?Cowan W Ltactics h%r discussed
. . *) for getting Brown & Root's cooperation, expressing the view that Brown & Root
]{ b v $
knows about the proposed replacement of Brown & Root as engineer
. d/2-
~
but is T'T being cooperative in the licensing hearingd. Mr. Cowan also commented upon a letter which HL&P had received from Mr. RicefofBrown& Root, blaming cost increases and schedule .' delays on actions that had been taken or not taken by HL&P.
%1 //
Mr. Cowan brought up the subject of the tolling agreement (which had been executedj& at the ALP,3aR &}},/?I'2-end of 1979 to cover a two year period and which provided that neither HL&P nor Brown & Root would plead the statute of limitations during such two year period) andinquiredwhatshapethehrticipantswouldbeinifthere is no extension of the tolling agreement. Cowan offered his ownopinionthatthehrticipants' legal positions.would be weakened but not obliterated. Mr. Cowan commented that the participants can't be suing Brown & Root for 1.5 billion and expect to get their cooperation tubso during the transitional period. n &p Mr. Jordaninquiredwhatgeffectp if suit is filed against Brown & Root and Brown & Root is replaced as the constructor (as well as the engineer and construction manager). Mr. Newman ventured the opinion that the NRC would shut the job down. Mr. Cowan opined that the plant would never get built. Mr. Jordan discussed further the question of the hard dollar effect of Brown & Root cooperation and stated that there needed to be an understanding among the partners (about who might sue whom?). Mr. Cowan commented that we couldjput the licensing case together without Brown & Root. Mr. Poston interjected that no statute of limitations E SL 3
runs against the municipalitiesj therefore there is no incentive for the municipalities to file suit at this time. Mr. Poston (at 2:58 p.m.) inquired what position HL&PwilftakeifB&Rrefusestosignatollingagreement.
- Mr. Cowan said he would make a strong plea that suit not be filed and that the tolling agreement be allowed to die because "we couldn't recover enough in a lawsuit to offset the cost of Brown & Root non-cooperation". Mr. Range opined that Brown &
Root will not sign an extension of the tolling agreement because they understand the leverage they have. I Mr. Poston -L.e m-~2 that Mr. Rice of Brown & Root has all of the details about the request for proposals, etc., such having been given by Westinghouse to Gibbs & Hill and thence by Gibbs & Hill to Mr. Rice. Mr. Rice expressed the hope to Mr. Poston two or three days ago that Brown & Root can keep a piece of the work. Mr. Hancock inquired whether there will be a problem d46&h Brown & Root and Bechtel if the recommendation of HL&P should be Bechtel. Mr. Oprea commented that the " tom-toms" have Bechtel as already 59 m selected. At 3:08 Mr. Muench asked for the commercial slides, whereupon Mr. Goldberg presented the Bechtel comr.iercial proposal, which involved a $12 million fee, a $15 million incentive item and a $10 million penalty max. The Bechtel proposal also involved a 2.38 multiplier for manhours between 0 and three million, a 2.24 multiplier for manhours between three and four million and a 2.18 multiplier for manhours over four million. Site professionals
*U*O
would be billed at a multiplier of 1.82. Mr. Goldberg next presented a slide concerning Ebasco commerical items, which included multipliers of 2.10 and 1.69. He then Rresented I the Stone & Webster multipliers of 1.86 and 1.35I Mr. Goldberg advised that 10 million manhours to go at
$35 per manhour would come out to $350 million. [He first then multiplied this figure by 2 for the markup but later reversed this, explaining that the markup was already in the $35 per manhour.]
/herebeganadiscussionf$ bout 2:27regardingthe e
completion date for Unit No. 1, based on the assumption that 1.5% per month reflected full steam I am not certain that I got these numbers right but if 82 was assumed to produce 0%, 83 12%,'84 18%
\
and 85 12%, this would make a total of 42% in those years on a plant which is now about 50% completed, leaving part of the work to be done in '86 (this would presumably be consistent with a late 1986 fuel load date?). At 3:33 Mr. Jordan stated that HL&P was convinced)and will recommend to the other participants, that Brown & Root [as engineer andconstructionmanager(bereplace{( He then reviewed the potential replacements: Gibbs & Hill was eliminated from the list. Westinghouse was disqualified because of a non-responsive quote. Ebasco is less qualified than either Bechtel or Stone & Webster. This would narrow the gap to a decision between Bechtel and Stone
& Webster, with respect to which Mr. Jordan stated he would pursue Bechtel's qualifications first.
m JE6o o--
Mr. Jordan said he comes down on Bechtel's side for several reasons: The change will be accepted well by NRC, PUC and the[publicthathasbeenfollowingtheplant. ' The participants will not get another chance to change engineers and should, therefore, go to the
&dn organization that has moreA. experi nce than#aIll of the others combined.
Bechtel's total resources, in the range of 22,000j are tremendously important (he noted that Brown & Root hasn't had the resources, couldn't get the resources or didn't know they needed the resources). If the new engineer has to take over construction, in addition to engineering and construction management, Bechtel is much stronger in this area. Bechtel is better equipped to do the startup of the plant after the construction is complete. Mr. Jord,in reported that Mr. Reinsch of Bechtel is in London now and will try to get to Houston as soon as possible. At 3:45 Mr. Hancock suggested periodic meetings between Jordan and Bechtel's CEO until construction progress is up to 1.5% per month. Mr. von Rosenberg inquired whether Bechtel would accept the existing engineering, to which Mr. Jordan replied in the negative. Mr. Jordan explained that the engineering done to date would have to be checked and Bechtel would have to be satisfied with it before any additional work was done based thereupon. { 6 1v13
Mr. Hancock asked Mr. Goldberg about HL&P's organization, to which Mr. Goldberg replied that he had interviewed 15 additional engineering people and that 4 had proved to be acceptable. However, a Mr. Gold {ergmentioned (not by name) an engineer at Brown & Root , who he thought was better if u get him to leave Brown & Root and join the HL&P organization. Mr. Goldberg said that he is also looking for a good contract administrator ~. Mr. Goldberg explained that HL&P will have excess people after the change because HL&P has had to staff to compensate for Brown & Root weaknesses. Mr. Goldberg also noted that there are several people who will not be needed in the short term but who will be needed later, it being his plan to have these people stay on the HL&P payroll and work for the contractor during the interim. Mr. Hancock inquired whether this meant that the new AE would be more responsible and HL&P less for the day to day work. I did not understand Mr. Goldber 's answer but it involved a long jw M M descriptionofthestaffchangesg'sincehecameinOctoberof1980. Mr. Poston asked if the changing of AE's was within the perogative of the Project Manager, to which Mr. Jordan answered in the affirm-ative. Mr. Cowan, apparently thinking that Mr. Poston was talking about the Brown & Root contract, answered with respect to the Brown & Root contractj insofar as it involved a change in Brown & Root's scope under Section 3.4. Mr. Poston inquired where we were on the reforecast. Mr. Cowan replied that the decision to recommend to the Management Committee a change of AE was made before the reforecast (?). At 4:09 Wdiscussion continued regarding the reforecast 4 and its current status. Mr. Goldberg described the work shop at Bay City a week or so ago, from which a 10-page list of q s I ns
by HL&P to Brown & Root resulted. He reported that Brown & Root is working on the answers to those questions now. Mr. Jordan expressed the view that it would be bad to e put out the flawed forecast now because everyone knows it's wrong ,' and whether it is wrong high or wrong low, it will operate to the disadvantage of the Project. If it proves to be high it will remove the furniEkxRn incentive to the new contractor to keep it down. On the other hand, if it proves to be low the participants will take heat now for part of the increase and then heat again in nine months when the correct forecast is made. Mr. Hancock asked if it would be possible to publish a ase regarding the change but which release would not name the new AE. Mr. Jordan replied that all of the transitional changes could be completed in two weeks and he saw no need to do anything sooner. A discussion followed about the selling of securities by several of the participants. Mr. Hancock noted that Austin is selling bonds on September 27 and Mr. Range noted that San Antonio is pricing its bonds next week for delivery in about a month. At 4:18 p.m. Mr. Poston expressed the view that San Antonio will endorse the change 100%. Mr. Jordan reported that the first time he can see Reinsch of Bechtel (either in Houston or San Francisco) is next Thursday [ I7). Mr. Range requested more information concerning cost estimates and schedule, saying something about B&R decreases and [ .' increases (question and answer not clear). E Sl o]
1 l Mr. Range also inquirnd requested more information about why the Westinghouse proposal had been discarded, to which Mr. Goldberg replied that a turnkey price was not respon-sive to {he request for proposals and that Westin house's proposal , o' pwW
- to exercise all discretion on the Project would be a usurpa# tion of HL&P's non-delagable responsibilities under NRC regulations.
At 4:30 Mr. Goldberg continued his discussion of the 2ffir=; tic:: in the Westinghouse proposal and recounted Westing-A. house's experience o project in Yugoslavia (a project which f Stone & Webster wasj r quested to get involved in but which Stone _t that Westinghouse
&Websterwouldn'ttouch).Mr. Jordan
=^
has never built a reactor in the United States. Mr. Hancock reported that the nuclear election would be held in the City of Austin on Tuesday, November 3. Mr. Hancock then gave some figures of about 5.9 ad"a probable growth rate of about 6% and 5.1 at a slow growth rate at 4%, said something about looking at 4.5 to 2.8 (Gibbs & Hill), a 3 0-month slip on Unit No. 1 and 18 more on Unit No. 2 hut I did not understand d**M whek his datg). The question at the election will bejto sell all or nothing of Austin's share. Mr. Hancock noted that Austin is funded through 1982 but does not have any bond money after that. Mr. Hancock asked what legal questions would be presented ~ in answer to the CEOs on Tuesday,/to which Mr. Jordan referred to the Cost Audit Team (1980) results and suggested that Brown & Root will want to settle (i.e., be released from any past responsibilities) A4 M price of cooperating in the transitionl#. [Mr. Jordan requested ad-wm that Messrs. Hardany Oprea, Dean and Thrash get together Monday
/
to review the Cost Audit Teamsults.] he#4 Mr. Hancock asked if g s i C .:.
_11_ Mr. Jordan'wantedamoratoriumonlawsuitsbytheparticipants[, I never heard any clear answer. Mr. Range said that CPL would forebear if Brown & Root can get their act together. [At4:55themeetingwasadjourned)with9:30a.m. , Tuesday morning being set as the time for the meeting of the CEOs and the Management Committee representatives with HL&P.
, -m Ad*J
[ y: SOUTH TEXAS PROJECT Re: Meeting held at 9:30 a.m. on September 22, 1981 September 15, 1981 to discuss the possible replacement of Brown &' Root as engineer and construction manager f
- CEOs and Management Committee principals and repre-sentatives of the participants who were present were as follows:
' Participant CEO MC Principal MC Alternate City of Austin Hancock Pokorny City of San Antonio Spruce Poston von Rosenberg CPL Borchelt Range Muench HL&P Jordan Oprea Goldberg Also present were Messrs. Cowan and Newman and the writer.
At 9:37 Mr. Jordan began the meeting and stated that same format would be followed as on Saturday. Mr. Jordan
. ,ed that HL&P had made its decision and hoped that the other participants concur. Mr. Jordan also reported that he had a conference scheduled with Mr. Feehan, CEO of Brown & Root, for
.:00 p.m. that afternoon.
3 Mr. Oprea passed out a draft of a press release, attached as Exhibit A, and retraced the deficiencies that had been dis-covered beginning in late 1979 and early 1980 to date. Mr. Oprea stated that Brown & Root had been unable to develop the human engineering resources, the management systems and the senior management attitudes necessary to successfully prosecute the Project. Mr. Oprea also briefly discussed the visit which he and Mr. Goldberg had had during the last few days with NRC Region IV representatives and the advance notice that HL&P had given to Region IV of the changes. At 9:42 Mr. Goldberg began a description of the proposals by first describing the Westinghouse turnkey proposal and why HL&P had disregarded it. He explained that the NRC would not have allowed HL&P to turn over all responsibility to Westinghouse, as Westinghouse desired. He also noted that Westinghouse would have used the Gilbert organization. Mr. Goldberg next began a comparison of the resources (eleven individuals in key slots) that had been proposed by Bechtel, Ebasco and Stone & Webster. He continued with the take-over experience, plan, schedule and cost approaches and takeover strategies. F F>1 G ~ 3 l
,a-.. ,- -.,.,.n., -,-...,,...,..,..n-n._,... n.,~-, _~n. n -
,-.-n 7.---.n---, .n,-- n - --
- Mr. Hancock asked how long it would take us to know where we are, to which Mr. Goldberg replied that a preliminary idea should be available in six months and a good idea available in twelve months.
At 1:07 Mr. Goldberg continued with the takeover strategy [ charts,withrespecttowhichMr. Spruce inquired about a how one 6f the bidders would work as a " consultant". Mr. Spruce inquired whether Brown & Root would stay on as AE with Stone & Webster, for example, being a consultant for Brown & Root. Mr. Goldberg explained that the successful bidder would be a con-sultant to HL&P during the transition. With respect to commercial terms, Mr. Goldberg reported that the Company can negotiate satisfactory terms with any of the bidders. Mr. Poston inquired whether the Bechtel rates (multi-pliers) will be the same as the others? Mr. Goldberg explained that Bechtel's proposed multipliers are higher but that the subject is negotiable. At 10:13 a.m. Mr. Goldberg completed the slide projection portion of his presentation. Mr. Range expressed the view that there should be an incentive to complete the job quickly and a disincentive to lengthening the job and increasing the manhours. There followed a long discussion here regarding Bechtel multipliers versus other multipliers, it being noted that if the Project gets into this sort of detail with Bechtel they will likely know they have the job wrapped up. Mr. Oprea stated that this item would be the last item on the discussion agenda with Bechtel because there are many other things to talk about. Mr. Spruce inquired whether HL&P would go to Stone & Webster if it can't work out the multiplier question with Bechtel. The answer was not clear but it sounded like "yes". Mr. Borchelt inquired whether HL&P would have any more control over Bechtel or Stone & Webster than it has had over Brown
& Root. Mr. Goldberg replied that he didn't believe that Brown
& Root had meant to overrun, but believed that they simply did not know how to do the job properly.
Mr. Borchelt observed that Brown & Root has had no incentive to hire good people. At 10:20 Mr. Oprea contrasted Bechtel's and Stone & Webster's comprehension of the problems and solutions involved, as evidenced in the interviews that he and Goldberg and Newman had had with the three bidders, with the comprehension of Brown
& Root. This resulted in a long colloquy between Goldberg F MGM
1 and Borchelt, Borchelt taking the position that HL&P has to control Bechtel so that this project does not turn out to be "one of their bad ones". Mr. Goldberg felt that companies want to protect and enhance their reputations, plus the fact that all three bidders (Stone & Webster, Ebasco and Bechtel) are putting forth 9o94 people and the contract will require approval by HL&P before such people could be taken off the job. 7 At 10:26 Mr. Goldberg continued with the discussion of the commercial _ terms, as proposed by Bechtel and Stone & Webster, noting that Stone & Webster was proposing a bonus of 10% of labor for timely completion. Mr. Borchelt inquired how the owners and contractor agree as to what is a good schedule. There followed a discussion of what the various bidders might accept in terms of fee incentives and how it could be determined what true costs were attempted to be recovered by the arbitrary multipliers. At 10:37 Mr. Borchelt asked Mr. Goldberg what he was going to do in negotiating with Bechtel. He cited the difficulty with Brown & Root regarding schedule and budget (he sarcastically remarked that he thought he had been getting one for the last nine months) and asked how Goldberg would control Bechtel on schedule and budget. Mr. Borchelt continued and ingr'. red how HL&P would know in nine months whether it had a good schedule and budget. In reply, Mr. Goldberg explained that Brown & Root would not divulge how its schedule and budget had been developed - in essence Brown & Root refused to talk to HL&P about the subject. Mr. Goldberg explained that the basic problem was that Brown & Root does not work for the participants, but rather the participants are deemed by Brown & Root to work for them. Mr. Goldberg con-trasted this attitude with the philosophy he had learned: 1.e. the client is always right - you can argue with the client but finally, if he won't agree, he is always right. Mr. Borchelt inquired whether, if the Project does not have economic incentives and disincentives built into the contract, the Project will have the same thing over again. Mr. Goldberg replied in terms of the " peculiar chemistry" of Brown & Root - the intent to schnooker, deceive, etc. At 10:43 Mr. Oprea began an explanation of Bechtel's cathode ray tube (CRT) system, under which not only Bechtel but HL&P'could access Bectel's data bank to produce required informa-tion immediately. Mr. Borchelt responded by pointing out that "that's what Brown & Root told us two years ago with respect to Artemis". Mr. Borchelt cited MAC's advice that the owner must control the contractor and noted that "We haven't been able to do this - one man should be in charge". He continued, "We've dicked around with Brown & Root too long but there are some reasons for that". FMbD
_4_ Mr. Borchelt asked "How is Goldberg going to pull this off with~ a new contract?" He then commented "I am a systems man and can't be comfortable until I can get an answer to (I did not understand the rest of the statement)". At 10:47 Mr. Poston inquired whether Mr. Goldberg would gey more involved than he's ever been, to which Mr. Goldbergereplied in the affirmative. Mr. Poston observed that 7 TU says that HL&P is not involved enough. Mr. Poston inquired whether NRC had also made this charge. Mr. Goldberg responded that he thought it was an intervenor charge and inquired "If we're so deeply involved, why are there so many problems?"(?) Mr. Goldberg said he would also like to know who at Texas Utilities was critiqueing the Project. Mr. Goldberg explained that HL&P could not engineer this Project. However, Brown & Root has failed to do everything and HL&P has tried to reinforce Brown & Root. Mr. Poston repeated his question, "Will HL&P be more or less involved?" Mr. Goldberg replied that HL&P will be less involved but with better people. Mr. Borchelt inquired whether there was going to be an increase in the quality of HL&P involve-ment, to which Mr. Goldberg replied "Yes, we are now hiring only experienced people, whereas in the past we have hired out-of-college people without experience". Mr. Borchelt inquired how far along Goldberg was, to which Mr. Goldberg replied that there are few positions vacant except the key man, the head of the Project engineering team (he reiterated that he has a Brown & Root man in mind for this job). Mr. Goldberg also stated that he has one good controls man that may work out. Mr.4&&Fdber'g inquired what will happen to Gibson, to which Mr. Goldterg replied that Gibson may stay with Brown & Root. At 11: 00 a.m. Mr. Borchelt said that from the Saturday meeting reports he could not understand why nine to twelve months would be required for transitions, during which nothing would be done. He asked, "How are we going to manage that and keep 5,000 people involved?" With respect to engineering, Mr. Goldberg replied that HL&P is getting reports on the qualified Brown & Root engineering
" hitters", whom HL&P hopes to retain under service contracts.
Mr. Goldberg explained that Bechtel will want certain design work to proceed by Brown & Root under Bechtel's direction. With respect to construction, Mr. Goldberg explained that much correction of work (as reported in the nonconformance reports), such as welds, voids, etc., had to be done and it would therefore be possible to keep many of the welders on the job. F 6 v1 S 2'
a Mr. Goldberg also explained that new work could be done as the new engineers free it up. He felt that useful work could be found for 1,000 people and that possibly warehousing and main-tenance would employ another 500. He said that only 1600 people were on the site now (?). fMr.GoldbergexplainedthatMr. Salterelli at Brown .'
& Root was going through much the same thing but that Salterelli was sitting on quicksand. He explained that the engineering review has impeded the normal engineering new work production, therefore a new contractor will not change much what is being done. Mr. Goldberg noted that Mr. Salterelli's projected manhours to completion of the engineering are more than most engineers use for a whole job. Mr. Goldberg explained that much work can be done now on turbine building supports, for example.
Mr. Hancock questioned whether construction craft forces would be reduced and engineering increased. Mr. Goldberg replied that this would be the case and reported that Mr. Thompson is doing cutting in the construction forces at the site now. Mr. Goldberg noted that 1100 people (mostly engineers) are on Brown
& Root's home office payroll.
Mr. Spruce inquired where the QA and QC functions would wind up. Mr. Goldberg explained that the engineering QA would go to the new engineer, that the QA for construction would be done by HL&P and that the QC for the construction would be left with Brown & Root. At 11:13 Mr. Borchelt said that the Management Committee does not have control of much, but that it does control budget and the structure of the project management team. He then noted again that the thing that's not in place is a budget and schedule that the participants can rely on. He asked again, "When can we get it"? Mr. Goldberg replied that Brown & Root has presented a bottom line number and has made qualitative judgments for which there is no rationale. He reiterated the questions that HL&P had sent to Brown & Root. Mr. Goldberg said that with the activity we now have going on it would be counterproductive to put out Brown & Root's numbers, explaining again that if B&R's numbers are erroneously high they would be adopted by other contractors and if erroneously low the Project would have to explain higher numbers now and even higher numbers later. Mr. Goldberg felt that the Brown & Root numbers are probably not representative of what the new contractor will come up with and felt that the schedule is too long (although the new contractor would probably love to adopt the long schedule). Mr. Borchelt raised the question of what the partici-pants tell the outside world, at which time the discussion shifted I to the " tolling" agreement and the extension thereof and the effect that the replacement will have upon Brown & Root (Borchelt ( ? ) said
" Brown & Root will be badly hurt and will need assurances, possibly a release").
F slu:
Mr. Spruce explained that in San Antonio there was a confrontation over the schedule and budget issues and that some-thing had to be said. At 11:23 Mr. Newman was requested to discuss licensing and explpin the probable need for a CP amendment and the possible
- requirement of a prior notice and hearing. Mr. Newman explained .
this could take up to a year, depending upon the intervenors, to qualify a new AE and construction manager completely although the construction manager functions would probably be qualified sooner. Mr. Newman commented that if there is not much construc-tion anyway for a year, the CP amendment procedure will not likely be important insofar as schedule effect is concerned. Mr. Newman explained that the intervenors start on September 28 with a witness (Hubbard) who will emphasize the need for a split between the engineer and constructor and that he, therefore, felt that the licensing board should be advised this week (Wednesday or Thursday) that " changes are in the offing" and that the September 28 hearing should probably be deferred. Mr. Newman felt that three or four weeks after the l new contractor is aboard a meeting could be held with the NRC staff (including the NRC legal staff) to arrange for an orderly transfer. At this point the discussion turned to the press release (Exhibit A) which had been distributed earlier and Mr. Poston inquired if the reason for telling the board is to keep the GE witness off the stand. Mr. Newman explained that this was not the case, but rather that if we proceed without telling the board on September 28, the participants' credibility will be damaged when the board later learns what has been going on. Mr. Newman also noted that such a concealment would probably be a breach of the rules. Mr. Hancock inquired what safety-related work can be done during the time of the transition (such as coating, welding repair, etc.)? Mr. Newman replied that this work could be done under Brown & Root's aegis and under Bechtel's supervision as consultant to HL&P. At 11:35 Mr. Borchelt came back to the " tolling" agreement, but was asked to defer to Cowan who would discuss the matter later. Mr. Borchelt asked Mr. Newman what was the downside risk of the CP amendment hearing. Mr. Newman replied that if there are other intervenors, with greater resources and who sense in the weakness of the Project an opportunity to shut it down, the result could be serious. At 11:40 Mr. Cowan began a discussion of the legal / contractual elements and reported that HL&P could shrink Brown
& Root's scope with or without any reason. With respect to the f: 81C
" tolling" agreement, Mr. Cowan said that the ideal thing would be to get. Brown & Root to sign an extension thereof. He said it would be a tough decision before the end of the year because Brown & Root's cooperation is essential to the transition but such cooperation could not be expected if Brown & Root and the partici-pants ar9in life or death litigation. ,
2 ' Mr. von Rosenberg inquired whether Cowan thought Brown
& Root will demand a release as the price of their cooperation, noting that the section that Cowan was relying on required re-negotiation and "an equitable adjustment".
Mr. Cowan stated that going past the end of the year without the " tolling" agreement extension would reduce but not destroy it (what? - the participants' cause of action?). Mr. Cowan said something about "the participants would get the benefit of two years (?) even if the agreement expired". Mr. Borchelt asked Mr. Jordan what procedure would be followed about the announcement, to which Mr. Jordan replied that he would let Feehan look at the proposed press release and then advise the licensing board Thursday morning (September 17). There followed a long discussion here (at 11:50) regard-ing the " tolling" agreement. Mr. Jordan noted that Brown & Root and Halliburton don't like the " tolling" agreement and that an extension will be more difficult than the original agreement. Mr. Jordan said he favors Mr. Cowan's idea that the amount to be recovered in litigation would be less than the damages from non-cooperation. Mr. Cowan said it is hard to tell the licensing board how good the construction is and be litigating against Brown & Root about how bad it is. He also reiterated his point that the plant can't be licensed without Brown & Root's coopera-tion. Mr. Cowan also noted, however, that after the transition Brown & Root will have less to bargain with. During this dis-cussion Mr. Poston said something about the " privates" losing one year of damages. At 12:02 the group returned to a discussion of the reforecast, Mr. Spruce stating that San Antonio can't live with-out a reforecast but that he would be happy to bring the mayor of San Antonio and others and let HL&P explain the problem to them. At this point Mr. Jordan noted that San Antonio's mayor would not return his telephone calls. Mr. Range suggested the possibility of concentrating on the slipped schedule, rather than the budget, and using it as a predicate for the change. Mr. Borchelt emphasized a need for a reforecast to (a) enable the Management Committee to set a budget and (b) give
. the nuclear fuel contractors better dates (he noted that we had already given changed dat
- s to some of them) .
Mr. Goldberg reported that Gibbs & Hill had reviewed Brown & Root's reforecast (for Brown & Root?) and thought it h hUS)
~ high. A long discussion here followed concerning Brown & Root's reforecas.t of budget (4.8 billion) and schedule (late 1987 fuel load for Unit No. 1), according to Mr. Goldberg. This discussion continued until 12:40 p.m., when the group recessed for lunch at the Houston Club. Mr. Cowan excused himself to return to the STP hear $gs, which were in progress, and did not join the group
- for lune,n or thereafter. ,
At 2:16 the group resumed, after having asked Mr. Barker to join. Mr. Barker's notes on the information that had been furnished to him by Brown & Root were as follows: Plan A Plan B (continue past (incorporate Gibbs practices) & Hill improvements) Manhours required 19 million 17 million Fuel load date No. 1 12/86 9/86 Fuel load date No. 2 12/88 3/88 Total cost 4.779 billion 4.44 billion Mr. Barker thought these costs included a 10% congingency, and owners' costs of about $875 million. Mr. Borchelt asked a ques' tion about how, if we have already spent about $300 million and have the nuclear steam supply sytems and turbine generators, we can spend another $600 million. Mr. Barker stated (about 2:30 p.m.) that Brown & Root wants to go on a " risk" basis, put in now and do paper work later (apparently this remark applied to all construction work to be done by Brown & Root, and not just the owners' costs to which Mr. Borchelt's question had been directed) . Mr. Barker noted that out of the previous (1979) estimated cost of 2.7 billion, 498 million had been owners' costs. There followed here a discussion of manhours but it is not clear to the writer what the assumptions were. These totals were as follows: Engineering Construction Total Total manhours 15 100 115 Spent to date 8 20 28 Left 7 80 87 At 2:40 Mr. Jordan reiterated HL&P's decision (based upon Bechtel's record of successfully completed and operating units, the size of Bechtel's organization, the commitment of Bechtel to the Project and Bechtel's ability to manage startup) no negotiate Q&-a7 4
9 with Bechtel to replace Brown & Root on engineering and construction management. Mr. Jordan stated that he would initiate negotiations with Mr. Reinsch to this end either Thursday or Friday. He asked if there were any objections from any of the participants and there was none. [ At 2:47 Mr. Jordan left for his meeting with Mr. Feehan ,* and Mr. Barker was excused from the meeting. At 2:52 Mr. Borchelt stated that he felt the schedule and budget were completely unacceptable and that he would like to " sleep on", for the rest of the week, the B&R replacement. Mr. Poston announced that the Management Committee meetings originally scheduled for next Thursday and Friday, September 24 and 25, had been cancelled. At 3:12 p.m. the meeting was adjourned. fI S.1UCI
f) 4 77 Re: Meeting held at 9:30 a.m. on September 22, 1981 September 15, 1981 to discuss the possible replacement of Brown & Root as engineerseny construction manager CEOs and Management Committee principals and repre-sentatives of the participants who were present were as follows: Participant CEO MC Principal MC Alternate City of Austin Hancock Pokorny City of San Antonio Spruce Poston von Rosenberg CPL Borchelt Range Muench HL&P Jordan Oprea Goldberg Also present were Messrs. Cowan and Newman and the writer. At 9:37 Mr. Jordan began the meeting and stated that the same format would be followed as on Saturday. Mr. Jordan stated that HL&P had made its decision and hoped that the other participants concur. Mr. Jordan also reported that he had a conference scheduled with Mr. Feehan, CEO of Brown & Root, for 3:00 p.m. that afternoon. Mr. Oprea passed out a draft of a press release, attached as Exhibit A, and retraced the deficiencies that had been discovered beginning in late 1979 and early 1980 to date. Mr. Oprea stated that Brown & Root had been unable to develop the human engineering resources, the management systems and the senior management atti-tudes necessary to successfully prosecute the Project. Mr. Oprea also briefly discussed the visit which he and Mr. Goldberg had had l during the last few days with NRC Region IV representatives and , the advance notice that HL&P had given to Region IV of the changes. At 9:42 Mr. Goldberg began a description of the proposals
'by first describing the Westinghouse turnkey proposal and why HL&P F MOD
I' had disregarded it. He explained that the NRC would not have allowed HL&P to turn over all responsibility to Westinghouse, as Westinghouse desired. He also noted that Westinghouse would haveuseptheGilberIorganization.
- Mr. Goldberg next began a comparison of the resources (eleven individuals in key slots) that had been proposed by Bechtel, Ebasco and Stone & Webster. He continued with the takeover experience, plan,ned schedule and cost approaches and takeover strategies, asked Mr. Hancock quantianad how long it would take us to know where we are, to which Mr. Goldberg replied that a preliminary idea should be available in six months and a good idea available in twelve months.
At 1:07 Mr. Goldberg continued with the takeover strategy charts, with respect to which Mr. Spruce inquired about how one of the bidders would work as a " consultant". Mr. Spruce inquired whether Brown & Root would stay on as AE with Stone & Webster, for example, being a consultant for Brown & Root. Mr. Goldberg explained that the successful bidder would be a consultant to HL&P/'t h hy[ M. With respect to commercial terms, Mr. Goldberg reported that the Company can negotiate satisf actory terms with any of the bidders. l Mr. Poston inquired whether the Bechtel rates (multipliers) l will be the same as the others? Mr. Goldberg explained that f Bechtel's proposed multipliers are higher but that the subject is l negotiable. F 61023 L
d At 10:13 a.m. Mr. Goldberg completed the slide projection portion of his presentation. Mr. Range expressed the view that there should be an incentiv[tocompletethejobquicklyandadisincentiveto ' lengthening the job and increasing the manhours. There followed a long discussion here regarding Bechtel multipliers versus other multipliern, it being noted that if g nto this sort of 4 detail with Bechtel they will likely know they have the job wrapped j up. Mr. Oprea stated that this item would be the last item on the discussion agenda with Bechtel because there are many other things to talk about. Mr. Spruce inquired whether HL&P would go to Stone & Webster if it can't work out the multiplier question with Bechtel. - The answer was not clear but it sounded like "yes". Mr. Borchelt inquired whether HL&P would have any more l control over Bechtel or Stone & Webster than it has had over Brown
& Root. Mr. Goldberg replied that he didn't believe that Brown ,
& Root had meant to overrun, but believed that they simply did not know how to do the job properly.
Mr. Borchelt observed that Brown & Root has had no incentive to hire good people. At 10:20 Mr. Oprea contrasted Bechtel's and Stone & ' and solutions Webster's comprehension of the problems / involved, as evidenced in the interviews that he and Goldterg and Newman had had with the three bidders, with the comprehension of Brown & Root,9$p This resulted in a long colloquy between Goldberg and Borchelt, Borchelt taking the position that HL&P has to control Bechtel so that this project does not turn out to be "one of their bad ones". Mr. Goldberg f elt that companies want to protect and F COM
enhance their reputations, plus the fact that all three bidders (Stone & Webster, Ebasco and Bechtel are putting forth good people and the contract will require approval by HL&P before suchpeoflecouldbetakenoffthejob. a At 10:26 Mr. Goldberg continued with the discussion of the commercial terms, as proposed by Bechtel and Stone & Webster, noting that Stone & Webster was proposing a bonus of 10% of labor for timely completion. Mr. Borchelt inquired how [ the owners and contractor agree as to what M a good schedule. There followed a discussion of what the various bidders might accept in terms of fee incentives and how it could be determined what true costs were attempted to be recovered by the arbitrary multipliers. At 10:37 Mr. Borchelt asked Mr. Goldberg what he was , going to do in negotiating with Bechtel. He cited the ft -v
# rown & Root regarding schedule and budget (he sarc stically remarked that he thought he had been getting one for the last nine months) and w te 1 tel on p schedule and budget.
Mr. Borchelt continued and inquired how HL&P would know in nine months whether it had a good schedule and budget. In reply, Mr. Goldberg explained that Brown & Root would not de lge how its scheduleandbudgethadbeendeveloped[inessenceBrown& Root refused to talk to HL&P about the subject. Mr. Goldberg explained that the basic problem was that Brown & Root does not work for the participants, but rather the participants are deemed by Brown & Root to work for them. Mr. Goldberg contrasted this attitude hejud $ n ='; je with the philosophy 1.e. theclientwasmiramalwaysrightf-you can argue with the client but finally, if he won't agree, F A l u, u,_ he is always right. Mr. Borchelt inquired whether, if the Re
Project does not have economic incentives and disincentives built M into the contract, ung6c the Projectjhave the same thing over again. Mr. Goldberg replied in terms of the " peculiar chemistry" of Brown e N' b' ,
& Root - phe intent to schnooker, dec5ive, etc. ,
At 10:43 Mr. Oprea began an explanation of Bechtel's g & tube (CRT) system, under which not only Bechtel but HL&P could access Bechtel's data bank to produce required infor-mation immediately. Mr. Borchelt responded by pointing out that "that's what Brown & Root told us two years ago with respect to Artemis". C Mr. Borchelt cited MAC's advije that the owner must control the contractor and noted that "we haven't been able to do this - one man should be in charge". He continued, "we've dicked around with Brown & Root too long but there are some reasons for that". Mr. Borchelt asked "how is Goldberg going to pull this off with a new contract?" He then commented "I am a systems man and can't be confortable until I can get an answer to (I did not understand the rest of the statement)". At 10:47 Mr. Poston inquired whether Mr. Golberg would h e '4 get more involved than Scu cc over been , to which Mr. Goldberg replied in the affirmative. Mr. Poston observed that TU says that
$ is not involved enough. Mr. Poston inquired whether NRC nad also made this charge. Mr. Goldberg responded that he thought it was an intervenor charge and inquired "if we're so deeply involved, 7
why are there so many problems'f) 4 Mr. Goldberg said he would also like to know who at Texas Utilities was critiqueing the Project. Mr. Goldberg explained that HL&P could not engineer this Project. However, Brown & Root has failed to do everything and HL& P has tried to reinforce Brown & Root. f ke""J 4 dO
l l I-Mr. Poston repeated his question, "will HL&P be more or less involved"? Mr. Goldberg replied that HL&P will be less involved but with better people. Mr. Borchelt inquired whether there wa[ going to be an increase in the quality of HL&P involve ,* ment, to which Mr. Goldberg replied "yes, we are now hiring only ! experienced people, whereas in the past .we have hired out-of-college l people without experience". Mr. Borchelt inquired how far along Q n woe., ,a, hich to w Mr. Goldberg replied that there are few posi-l tions vacant except the key man, the head of the Project engineering team (he reiterated that he has a Brown & Root man in mind for this job). Mr. Goldberg also stated that he has one trols man that may work out. Mr. Borchelt inquired what will happen to Gibson, to which Mr. Goldberg replied that Gibson may stay with Brown & Root. At 11:00 a.m. Mr. Borchelt said that from the Saturday meeting reports he could not understand why nine to twelve months would be required for transitions, during which nothing would be done. He asked, "h w are we oing to manage that and keep 5,000 _ p, m % g -- n people involved"? hMr. Goldberg rep, ed that HL$P is Te,tting a 4_ reports on the qualified Brown & Rot engineering " hitters", whom HL&P hopes tb retain under service contracts. Mr. Goldberg l explained that Bechtel will want certain design work to proceed y , woJL m c e = -f l by Brown & Root under Bechtel's direction. Mr. Goldber exp ained that much correction of work (as reported in the nonconformance reports), such as welds, voids, etc.;had to be done and it would therefore be possible to keep many of the wolders on the job. Mr. Goldberg also explained that new work could be done as the FS4.~, ve-
e
-7 new engineers free it up. He felt that useful work could be found for 1,000 people and that possibly warehousing and main-
~
tenance would employ another 500. He said that only 1600 people P2:rg:r 4'a ^ 'ar^;^4"? +^ r;pa:r'e , wereon(hesitenow(?). & he*" cr rngi..ss..uy, Il... 'u^ 46--- nna construction, latter two 4 + - r . ] Mr. Goldberg explained that Mr. Salterelli at Brown l
& Root was going through much the same thing but that Salterelli was sitting on quicksand. He explained that the engineering review has impeded the normal engineering new work production, therefore a new contractor will not change much what is being done.
Mr. Goldberg noted that Mr. Salterelli's projected manhours to
. H completion of the engineering enr more than most engineers use for a whole job. Mr. Goldberg explained that much work can be done now on turbine building supports, for example.
Mr. Hancock questio.wd whether construction craft forces would be reduced bu& engineering increased. Mr. Goldberg replied that this would be the case and reported that Mr. Thompson is doing cutting in the construction forces at the site now. Mr. Goldberg noted that 1100 people (mostly engineers) are on Brown & Root's home office payroll. Mr. Spruce inquired where the QA and QC functions would wind up. Mr. Goldberg explained that the engineering QA would go to the new engineer j that the QA for construction f would be done by HL&P and that the QC for the construction would f be left with Brown & Root, p r,1 0 3 3 1
.8-L ~
At 11:13 Mr. Borchelt said that the Management Committee does not have control of much, but that it does control budget and the structure of the project management team. l Hethenhotedagainthatthethingthat'snotinplaceisa
- budget and schedule that the participants can rely on. He asked again, "when can we got it"? Mr. Goldberg replied that Brown &
Root has presented a bottom line number and has made qualitative : I judgments for which there is no rationale, He reiterated h i the questions that HL&P had sent to Brown & Root. Mr. Goldberg j said that with the activity wo now have going on it w e j counterproductive to put out Brown & Root's numbers, r " ?b k _
- that if _. er; nnumbers are erroneously high they would be adopted by other contractors and if erroneously low the Project would have i t
to explain higher numbers now and even higher numbers later. Mr. i ! Goldberg felt that the Brown & Root numbers are probably not i ! t representative of what the new contractor will como up with and l I felt that the schedule is too long (although the now contractor l would probably love to adopt the long schedulo). ! Mr. Dorcholt raised the question of what the partici-j pants tell the outside world, at which time the discussion shifted e o to the tolling agrooment and the extension thereof and 4 hat tho LD
'd effect that the replacement will have upon Brown & Root
& Root will be badly hurt
{" Brown (~ and will need assurances, possibly a release"). Mr. Spruce explained that in San Antonio there was a confrontation over the schedule and budget issues and that something i had to be said. F 810D
At 11:23 Mr. Newman was requested to discuss licensing and explain the probable need for a CP amendment and the possible requirement of a prior notice and hearing. Mr. Newman explained thiscou[dtakeuptoayeardependingupontheintervenors,to j ." u qualify 4nowAEandconstructionmanagercompletelyalthoughthe construction manager functions would probably be qualified sooner. Mr. Newman commented that if there is not much construction anyway for a year, the CP amendment procedure will not likely be important insofar as schedule offect is concerned. Mr. Newman explained that the intervonors start on September 28 with a witness (Hubbard) who will emphasize the need for a split betwoon the enginocr and constructor and that he, therefore, felt that the licensing board should be advised this week (Wodnesday or Thursday) that " changes are in the fr. _g)7 fig $ " and that the September 28 hearing should probably be deferred. Mr. Newman felt that three or four weeks after the now contractor is aboard a mooting could be held with the NRC staff (including the NRC Icgal staf f)- Earrangeforanorderly transfer. the (Exhibit A) At this point ni discussion turned to the press rolcase/ which had boon distributed earlier and Mr. Poston inquired if the reason for telling the board is to keep the GE witness off the stand. Mr. Newman explained that this was not the caso, but rather that if we proceed without telling the board on September 28, the participants' credibility will be damaged when the board later learns what has been going on. Mr. Newman also noted that such a concealmont would probably be a broach of the rules. f81Y"d
s Mr. Ilancock inquired what safety.related work can be dono during the time of the transitisan transition (such as coating, welding repair, etc.)? Mr. Newman replied that this workcou[dbedonounderBrown& Root's /ogis f9sj under Bochtol's ( supervision as consultant to HL&P. o e At 11:35 Mr. Dorcholt came back to the tolling agrooment, but was asked to defer to Cowan who discuss the matter lator. Mr. Borcholt asked Mr. Newman what was the downsido risk of the C 7 L L - } hoaring. Mr. Newman replied that if there are other intervonors, with greator resources ho sense akness th Project an oportunity to shut it down the result could be serious. j At 11:40 Mr. Cowan began a discussion of the legal /
- n. nA contractual olomonts and reported that ilL&P ni D. M chrink Drown &
Root's o ,, thu scope with or without any roanon . With respect to the tolling agrooment, Mr. Cowan said that the ideal thing would be to got Brown & Root to sign an extension thereof. Ito said it would be a tough decision before the end of the year becauso Brown & Rooth cooperation is essential to the transition but such cooperation could not be expected if Drown & Root and the participants are in life or death litigation. Mr. von Rosenborg inquired whether Cowan thought Brown l' Root will demand a relonso as the prico of their cooperation, notinJ that the section that Cowan was relying on required re-negotiation and "an equitablo adjustment". Mr. Cowan stated that going past the and of the year without the tolling agroomont extension would reduge but not e% pW V % w of MYE* ?),9 Mr. Cowafi said something about the participants destroy it (what? . F410R
would get the benefit of two years (7) even if the agreement
~
expired." Mr. Borchelt asked Mr. Jordan what procedure would befollohdabouttheannouncement, to which Mr. Jordan replied
- that he would let Fechan look at the proposed press release and then adviso the licensing board Thursday morning [Q./7)
There followed a long discussion here (at 11:50) regarding pt ## the tolling agreement. Mr. Jordan noted that Brown & Root and Halliburton don't like the tolling agreement and that an extension will be more difficult thag the original agreement. Mr. Jordan said he favors Mr. Cowan's idea that the amount to be recovered in litigationA an the damages from noncooperation. Mr.
.un.
Cowan said it was hard to toll the licunsing board how goodL + tho construction is and bo litigating against Brown 3 Root / T ow bad it is. Ho also reiterated his point that the plant can't be licenned without Brown & Root's cooperation. Mr. Cowan also noted, however, that after the transition Brown & Root will have less to bargain with. During this discussion Mr. Poston said something about the "privatos" losing one year of damages. A At12:02thogroupreturnodtofdiscussionofthere-forecast, Mr. Spruco stating that San Antonio can't live without a refonocaat but that he would bo happy to bring the mayor of San Antonio and others and let ilL&p explain the problem to them. At this point Mr. Jordan noted that San Antonio's mayor would not return telephono calls. Mr. Rango suggested the possibility of concentrating on the slipped schedule, rather than the budgot, and using it as a predicato for change. paan
.'. i Mr. Borcholt emphasized a nood for a reforocast to (a) onable the Management Committoo to set a budget and (b) give the nuclear fuel contr ctors botter datos (ho noted that wehada[readygivenchang9gdatostosomeofthem). ,
Mr. Goldborg reported that Gibbs & 11111 had reviewod Brown & Root's reforecast (for Brown & Root?) and thought it was high. A long discussion here followed concerning Brown & Root's inxumast reforecast of budgot (4.8 billion) and schedulo (lato 1987 fuel load for Unit No.1), according to Mr. Goldborg. This discussion continued until 12:40 p.m.j when the group rocossed for lunch at the llouston Club. Mr. Cowan excused himself to return to the STP hearings, which woro in progross j and did not join the group for lunch e M At 2:16 the group resumed, aftor having asked Mr. Darker to join. Mr. Darker's notes on tho information that had boon furnished to him by Drown & Root were as follows: Plan A Plan D (continuu past practicos) (incorporate Gibbs
& 11111 improvementt Manhours required 1 million million Fuol load dato No. 1 1 6 16 Fuel load dato No. 2 1 8 8 afanuses./5tal cost 4.779 billion .44 billion Mr. Darker thought thoscammense' costs included a 10% contingoney, Q*b'"t - .I Q 4
- q aboutdR2Axatitian $875 million.
Mr. Dorcholt askud a question about how, if wo have already spent about $300 million and havo the nuclear stonm supply systomfand turb n gonoratoy, wo can spend another $600 million.
- r. Darker k !: d (about 2 :30 p.m. ) that Drown & Root wants to go on a " risk" basis, put in now and do paper work lator (apparently FS10'3
this remark applied to all construction work to be done by Brown
& Root, and not just the owners' costs to which Mr. Borchelt's question had been directed).
I Mr . Barker noted that out of the previous (1979) estimated cost of 2.7 billion, 498 million had been owners' costs. There followed here a discussion of manhours but it
'e is' hot clear to the writer what the assumptions were. These totals t
were as follows: 1
,) Item Engineering Construction Total Total manhours 15 ' 100 115 Spent to dato 8 20 28 Left 7 80 87 At2:40Mr.JordanreiteratedHL&P'sdecision(based upon Bechtol's record of successfully completed and operating units, the size of Bochtel's organization, the commitment of r
Buchtel to the Project and Bechtol's ability to manage startup) to.nogotiate with Bochtel to replace Brown & Root on engineering and construction managomont. Mr. Jordan stated that he would initiato negotiations with Mr. Reinsch to this and either Thursday or Friday. Ho asked if there were any objections from any of the participants and there was none. At 2:47 Mr. Jordan left for his meeting with Mr. Techan and Mr. Barker was excused from the meeting. At 2:52 Mr. Borcholt stated that he felt the schedule and budget were completely unacceptable and that he would like t to " sleep on", for the rest of the week, the B&R replacement. ===-"17 Mr. Poston announced that he Management Committee Y$ heft meetingsoriginallyscheduledforgThursdayandFriday, September 24 and 25, had been cancelled. p gig,**. At 3:12 p.m. the meeting was adjourned.
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t CONFIDENTIAL , p BROWN & ROOT. INC. OFFICf. MDs0 T0: W. H.. Rice
- September 22, 1931 FRON E. N. koon . ,
1 5'J BJECT: Telephone Cell to George 0 pres of 9/22/31
. At your suggestion, I tele 9 honed George Opres to suggest an alternate plan that ilL&p alght consider wlth respect to
- replaceoent of Brown & Root as the engineer. construction
. . - manager for ETP. The siternate I described ses that which you suggested, thereby Stone & liebster (or any other suitable not rechtet) would be brought in as an " overlord" over.
AE,ing see Brown & Root's activities for a period of 6 to 12 i sonths, following thich any division of engineering responsibilities up to complete removal of stown & floot from the job, could be made. This sould introduce the new At to the project with i much less risk of precipitating licensing problems, and, af ter the 6 to 12 ponths, their involveme9t up to that time would make possible their assueption of the " engineer of record" role, should liLLp desire. George Oprea listened with no comment until I finished. lie then responded by recounting the events that led then to their present decision that tromn & Root engineering staply cannot support the field activities. lie stated that after
; the Show Cause Order, he becane very concerned then entineering problems con'inued to surf ace. lie stated that he concluded that our engineering ses not well integrated between disciplines, lie referred to the Quadres audit and he referred to the no.lle itens, hhtch have been reporteJ since show Cause. l'e said that the) feel se lack sophisticated management systems that the time required would altliougl.
simply bewe toocould long ultimately provide, for this project. T hey concluded that a and new begin engineer to showcan come inwith progress withregard a provento system immediately,d licensing. lie state that he felt they had a 50/10 chance under the circumstances of replacing the engineer of record without a serious licensing problem i public Eea.e., rings, revocation etc. of the construction pernit or new Ile stated that they had considered many alternatives, but felt stat a significant change on the engineering side was necessary because Region IV was aware of the Quadrei Audit and was looking very carefully for a significent change. I
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Meso to W. M. Rice September 22, Ital - Page 2 C e conceded at the same time that many of the Quadres findings 3 lere w invalid. J wishl.eto stated replace throu &gh all of this chang.*0LP thatBrown does not Root, nor to be charhtam stated that they feel that our construction work is much more credible and want us to finish the construction. I got no real Indication free Mr. Oprea that he would give i any serious considerat ton to your proposals homever, he did seen at least casually interested in some of his questions. la specifically tanted to kno= thy we could work more easily with Stone 4 hebater than with Bechtel. E. M. Broom bb S e l i t 0483137 4 Il . I , i
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' Second draft of policy story / statement from HLsP/ Sept. 23, 1991 !
l F r Release 9 A.M. Friday, September 25 - . Bechtel to Take Oser Engineering At Bouth Texas N@; lear Project ,8 te eumc4 Houston Lighting and Power Company, managing punemer of the South Texas - Nuclear Project, Friday announced that Bechtel Corporation will assume engineering and construction management responsibilities from Brown and Root on the vast South ! Tcx:s Nuclear Project. Bechtel Corporation is the most emperienced nuclear power plant crchitect/ engineer in the world, having successfully completed and licensed more nuclear units than any other single organisation. HL&P President and Chlaf Executive Officer Don Jordan made the announcement cnd said that discussions already are underway to help assure en orderly tranaltion. l t Brown & Root will continue to do construction work on the mammoth Bay City power plant l cnd has pledged cooperation in the management move, he said. !
"Bechtel was chosen to undertake heavy responsibility at STP only after extende l cvaluation and study of progress on the project by HL&P top management over recent i I
Y months. We are convinced that the vast nuclear power plant experience of the firm hf and the breadth and depth of resources it can commit to the task will help complete the project as quickly and economically as humanly possible consistent with maintenance l
"/
cf high s4fety standards," Jordan said. M ! Jorden said the change, which was to c tract with Brown & Root, cas prompted by growing concern over the need fo,rAengiftering support of construction ! t activities,and an inability despite ongoing efforts by the present engineering contractor l to attract and me!ntain resources sufficient to complete the project in a timely manner. I l f l r
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" Subsequent to our evolustion and the deciolon to make a change, Brown & Root //7 p, i has within the post few days provided us new cost estimates en the project rang
$4.442 billion to $779 billion and revised target dates for fuel load of Unit One from e /W"(' j, h . 1 September to Decebber of 19H," Jordan continued. . , -
u/l "While we now have the Brown & Root forecasts in hand, it is our judgment that further evaluation and study must be made of the remaining engineering and construction management tasks before we can have full confidence in any forecast. Such study is part of the priority assignment given to Bechtel, and until that exercise is completed, we cannot commit to a more definitive projection, in the meantime, ce will do everything possible to expedite the transillon process. Harry Reinsch, president of Bechtel Power Corporation, said that the ::dd ;_!* wngineerlany firm has placed top priority on the South Texas Project.
"The South Texas Project is a viable one which ultimately can provide an important part of the future Texas energy supply at lower cost than alternatives,"
he said. "We are dedicating a major portion of our resources and talent to helping bring about its reality." m Hechtel has done engineering or construction work on of the nuclear power plants in operation In the United States as well as installations in ... and Jordan pointed out that while the South Texas Project is a partnership with three other owners -- Central Power & Light, City of Austin and City Public Service cf San Antonio -- HLLP retains the largest single stake - 30 percent -- In the ! reallnation of STP.
'1.,
i "You may be assured that no one is more interested in the ultimate completion and operation of the South Texas Project than Houston Lighting & Power," Jorden I emphaslaed. "Eveh day of delay and increase in cost which hurts one of our partners,* hurts HLsP even more. Nothing carries a higher concern priority with us than the South Texas Project." Jordan said that the partners were apprised and are supportive of the management Ghanges. i l l e c l t i ! i l
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@@D @M,lDC. Post Office Box Three, Houston, Texas 77001 n - .. J. F s.. ,- ,
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c on .. (7ui6764ni September 24, 1981 Mr. D. D. Jordan Houston Lighting & Power Co. P. O. Box 1700 Houston, TX 77001
Dear Don:
I'm returning your proposed press release draft with our comments; namely, deleting the last paragraph. We've prepared a statement of our own which in essence says the same thing and believe it is advisable that we speak for e'trrelves. Sincerely, N bW T. J. Feehan TJFier RECEIVED SEPa4 ve U* U, JUKutus
'. . September 23, 1981 I J HLEP Co. Press Release Houston Lighting & Power Company (HL&P) announced today that l It has deciddd to reallocate responsibilities for certain functions for the , t completion of the South Texas Project (STP). Although contractual negotiations have not yet been completed, l HL&P and the Bechtel Power Corporation (Bechtel) have agreed in principle ; that Bechtel will provide technical assistance consisting of the review of the existing engineering, design and construction activities and their associated records in order to " benchmark" project status, to verify conformance with applicable requirements and practices and to prepare a project completion t cost and schedule forecast. In addition, after an orderly tranaltion period, ' Bechtel will assume responsibility for engineering, design and construction management services necessary to complete the project. Brown & Root (B&R), : the current contractor at STP has been asked by HL&P to continue to perform I the construction work at the STP.
"These steps are being taken after careful review of the status of the project," said Don Jordan, President of HL&P, "In order to bolster engineering and construction management activities. The availability of Bechtel's personnel will enable design and engineering to progress more expeditiously, and will strengthen the scheduling and planning functions. _
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September 23, 1981 i HL&P Co. Press Release Houston Lighting & Power Company (HL&P) announced today that it has decided to reallocate responsibilities for certain functions for the ,e completion of the South Texas Project (STP). Although contractual negotiations have not yet been completed, HL&P and the Bechtel Power Corporation (Bechtel) have agreed in principle that Bechtel will provide technical assistance consisting of the review of the existing engineering, design and construction activities and their associated records in order to " benchmark" project status, to verify conformance with applicable requirements and practices and to prepare a project completion cost and schedule forecast. In add; tion, after en orderly transillon period, Bechtel will assume responsibility for engineering, design and construction management services necessary to complete the project. Brown & Root (B&R), the current contractor at STP has been asked by HL&P to continue to perform the construction work at the STP.
"These steps are being taken after careful review of the status of the project," said Don Jordan, President of HL&P, "In order to bolster engineering and construction management activities. The avallebility of Bechtel's personnel will enable design and engineering to progress more expedillously, and will strengthen the scheduling and planning functions.
Jordan said that these matters heJ been discussed with Mr. Thomas Feehan, President of B&R, who had expressed B&R's determination to cooperate fully in the transition. j L L
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D i h ! l bN SW PRESS DAL HOU LP HOU t * () STATEMENT BY DON D. JSRDAN, PRFSIDFNT, HOUSTON LICHTING A POVER I COMPANY ! b STPT 24--HOUSTON LIGHTING A POWER COMPAt# HAS DECIDED TO REALLOCATF PESPONSIDILIT!TS FOR CFRTAIN FUNCTIONS FOR COMPLETION OF THE SOUTH TEXAS PROJECT. l
- ALTHOUGH CONTPACTUAL NFOOTI ATIONS HAVE NOT YET UTEN COMPLETEte HL4P AND THE BECHTEL POVFR CORPORATION HAVE AGREED IN PRINCIPLE
[ THAT BECHTEL VILL PROVIDE TECHNICAL ASSISTANCE CONSISTING OF THE REV!!V 0F THE EXISTING EN0!NEFRING, DESIGN AND CONSTRUCTION 6 U ACTIV!T!ES AND THEIR ASSOCI ATFD PTCORDS IN ORDER 70 "DENCHMANr(" PROJECT STATUS TO VERIFY CONFORMANCE WITH APPLICALLE REQUIREMENTS AND PPACTICES AND 70 PREPARE A PROJECT COMPLET!0N COST AND SCHEDULE FORECAST. IN ADDITION, AFTER AN OkDERLY TRANSITION PERIOD, DECHTEL VILL ASSUME RESPONSIDlL!TY FOR EN01NEERINO, DESIGN AND CONSTRUCTl 3N MANAGEMENT SEPVICES NFCESSARY TO C.1MPLETE THE PROJECT. DR0VN & R30Te THE CURRENT CONTRACTOR AT STP, HAf DETN ASHED DY HL4P TO CONTINUE TO PEPFORM THE CONSTRUCTION V0MH At STP. l ' THESE STEPS APE DFING TAHEN AFTER CARFFUL REVIEV 0F THE STATUS SF THE PP0 JECT IN OPDFP TO DOLSTFR EN0!NEFPING ANC CONSTRUCTION i l MANAGEMENT ACTIVITIES. THE AVAILADILITY OF DECHTEL'S PERSONNEL , VILL FNADLE OFSION AND ENGINEERING 70 PR00DESS MORE E4PFDIT!0USLY AND VILL STPENCTHEN THE SCHEDULIN3 AND PLANNINO FUNCTIONS. s 30 ( m FOR MOPE INFSPMAtl0N CONTACT DR. D3N DEETH, (713) 229 730$ . fl@= l rr 8
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WEina 6 ment Bull 6 tin""i"""' : Houston Lig!1 ting & Power Company
- September 24,1981 The following statement was issued this afternoon by Mr. Jordan:
Houston Lighting & Power Company has decided to reallocate responsi-bilities for certain functions for completion of the South Texas Project. Although contractual negotiations have not yet been completed. HL&P
. and Bechtel Power Corporation have agreed in principle that Occhtel will provide technical assistance consisting of the review of the existing engineering, design and construction activities and their associated records in order to " benchmark" project status, to verify confomance with appli-cable requirements and practices and to prepare a project completion cost ,, and schedule forecast. In addition, af ter an orderly transition period, Oechtel will assume responsibility for ngineering, desian and construction i management services necessary to comple's the project. Brown & Root, the current contractor at STP, has been asked by HL&P to continue to perfom the construction work at STP.
7 These steps are being taken after careful review of the status of the , project in order to bolster enginenring and construction management
. activities, The availability of Dechtel's portannel will enable design and
;. engineering to progress more expe.ditiously and will strengthen the scheduling and planning functions.
.T 9
RawvW 9-24-81 W-l $. 3 o 8"
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Proposed release from B&R: HL&P has informed Brown & Root that it has decided to make a basic change in Brown & Root's role in the South Texas Project. HL&P has negotiated with another firm to assume the engineering and construction management responsibilities for the project and has asked Brown & Root to continue to perfom construction. Brown & Root intends to cooperate fully with HL&P in making this change, and it has the question of its future role in the project under study.
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TEXT OF HOUSTON LIGHTING & POWER CO. PRESS RILEASE i
'On September 24, 1981, KL&P announced that it had decided to reallocate res;cnsibilities for certain ,
functions of the South Texas Project. The planned reallocation conta= plated that techtel would assume M responsibility for engineering, design and construction , managt=ent services. Brown & Root was asked by NL&P to r3
- continue to perform the construction work. It became apparent Wednesday that Brown & Root and KL&P could not reach agreement on the basis for Brown & Root's remaining
% /
as constructor. As a result, KL&P is considering several
. options regarding a new construction contractor.
-= 'KL&P said that the details of the transition will '
~
be worked out over the next several weeks.'
* ,a i a i t g
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Houston Lighting & Power Company (HLEP) announced today that it is considering a change in ruponsibility for certain functions on the South Texas Projo9t (STP). "We are reviewing this matter very carefully", said Don Jordenf President of HLEP, " and expect to reach a decision in the next few weeks." "While the quality of the construction to date is satisfactory" said Don Jordan "we are considering these measures in order to strengthen engineering and construction management activities." Jordan said that these matters had been discussed with Mr. Thomas Feehan, President of Brown & Root, current contractor on the STP. Mr. Feehan expressed Brown & Root's determination to cooperate fully in order to complete the Project successfully.
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IMPLEMENTINC ACTIONS i THURSDAY FRIDAY SATURDAY j SUNDAY MONDAY TUESDAY WEDNESDAY l ! ! ! ' l l Preparation for ! Management Revision of r Mgmt. Committee i Committee Evaluation Board of Dir. l Report i meeting j
! l l I CEOs Mtg. Meeting with STP hearing Meeting with i Meeting with !To Washington Board of '
selected AE BER (Oprea,J .G . ) selected AE including preliminary {: Dir. -----
- - - - - Letter to STP STP hearing Telephone planning for f l Vendor (Oprea, J .G. ) contact with ' NRC meeting h:aring i i
STP hearing
- NRC,(Reg.Hg) 1 l l and with PUC I I I I i
I Preparation . Preparation NRC meeting Notify ASLB l fsr NRC for NRC (preliminary) ------ 3 g meeting meeting ---- Meeting with including AE including AE NRC Legal Intervenors , at convenient in Washington in Washington Staff mtg. location N l 3-4 w uus aeb hk M. 23 byd g m uJ 14.ve, . bb,l,, ptau,up;wuu$,up wb M Nree k betyss nznuso k Plw t I l . l 1}}