ML20246C674

Informs That DOE Will Not Extend Sales Agreement & Will Discontinue Discussions of Sale of Centrifuge Equipment

ML20246C674
Person / Time
Site:	05000000, 05000603, 05000604
Issue date:	08/11/1989
From:	Hall J ENERGY, DEPT. OF
To:	Carey A ALL CHEMICAL ISOTOPE ENRICHMENT, INC.
References
25866, NUDOCS 8908250074
Download: ML20246C674 (3)

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Dr. A. Andrew Carey,

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C, DOCKU CLERK J. ' O

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Dear Dr. Carcy:

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• CENTRIFUCE EQUIPMENT AGREEMENT AND llILL OF SALE

.l The Snics Ar,rcement for removal of excess equipment at t.hc Cas Ilk

$g Centrifur,c Enrichment Plant (CCEP) between the Department of Energy (DOE) and All Chemical Isotopen Enrichment Company, Inc. (A1ChemIE) expires Aur.ust 15, 1989, and will not be extended by the DOE. This

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Ar.reement was executed on November 20, 1987, for a one year period and

..fd' has been extended by DOE fifteen times to allow A1ChemIE Lime to acct

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its contractual conunitiaents to the DOE.

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M[)j A1ChcanIE has titin to the unciansified equipment at the GCEP as specified in the Sales Ar.rnement, but no clansified equipment has been or will be transferred to A1ChemIE. The unclassified equipment owned by f5h

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A1ChemIE must be promptly removed from the GCEP by A1ChemIE.

DOE will

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impose storar,c charges for unciansified equipment remaining past the date contained in the Equipment Remeval Schedule which was agreed to by a !p A1 Chem 1E and the DOE on September 29, 1958.

Q The DOE decision not to extend the Sales Ar,rcement past August 15, 1989,.

M is based substantially on the continuiny, failure of A'lChem1E to meet y

contractual commitments to the DOE. and thn cicar indication that W

ALChemlE in in no position now or in the foreseeabic future to meet 3lj p

those commitments, Alf 1.

AlchemIE has not met the Equipment Removal Schedule which was

k.;g; agreed to by AlchemIE and the DOE on September 29, 1988.

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Financini assurance, including a bond to cover decommissioning and decontaminnt. ion of AlchemlE cc:uipment and financial protection 1

(insurance) i'or the DOE relative to A1ChemIE utilization of

%g centrifur.c equipment, has not been received by the DOE.

The fact

t. hat AlChem1E's very recent attempt t.o produce a bond resulted in an aller,nd fraudulent bond being executed raiuct. doubts about the j.

Corpro ation's ability to meet this requirement in any event.

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'Dr. AL: Andrew Carey i2-August 11 1989-4 F

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AlchemIE has not met the removal schedule' an contained in Contract

Mod, 7,~ dated January.11, 1989, which specified machine' removal

'.would begin'in. April 1989 and be contpleted by Junc!1990.

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A1ChemIE has not provided the DOE an adequate centrifuge hardwarc j

. disposal plan fn1lowinr, the DOE conunents, transmitted to AlchemIE on

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Februa ry 27, 1989 on the initial plan, or.a revision to the plan.

based on A1Ghem1E's more recent commercial plans.

The DOE must ment its _ obligations. to the Defense Logistics Agency (DIA).

to make availabic:1.o 't.hc D1A the buildin*gs 'at t.hc CCEP beginning October l1990.. To meet this schedule, the~ DOE must,immediately begin removal of; classified equipment at'the CCEP. Continuing the Sains-Agreement with A1 Chem 1E would interfere with that conunitment.

Such-interferenen cannot

' be' considered by DOE since t.hcre ' are no. indications A1ChemIE is in 'a position to fulfill'.the. commitments that would result from an extension

of t.he Sales Agreement.

In view of. failure to remove equipment from CCEP as scheduled, the

' absence and apparent ^ inability of A1 Chem 1E to provido - the required financial assurancen, and Alchem1E*n failure to mect'other contract conditionis' and its apparent inability to meet those in the future, this letter is to. inform you that DOE will not Curther extend thn Sales

( Agreement beyond August 15, 1989.

In accordance with the' terms of the

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Er., crow Agreement. dated May 4,1988, and executed by A1 Chem 1E and the Bank of Anderson County.with approval of the DOE, the funds in escrow =

agreement shall become the property of the DOE without requirement of any legal action [ Paragraph B. (iii)).

In ~ addition to not extending the-Sales Agreement with AlchemIE, thc DOE

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will discontinue discussions with A1 Chem 1E on tho' nale of centrifuge equipment contained in and the Icase of the Centrifuge' Plant 4

Demonstration Facility located at the Oak Ridge Cascous Diffusion Plant.

Sincerely,

--wa k s c. d to 11all Q Me;fstant Manager for Enriching Operations e

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