ML20098D088
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MEMORANOCM OF UNDERSTANDING .
This Memorandum of Understanding, entered into this 1980, by and between Washington 25th day of April ,
s Public Power Supply System (the " System"), a municipal
- corporation of the State of Washington, and the United States of America, Depart =ent of Energy, acting by and .
through the Benneville Power Ad=inistrator ("BPA*), for the .
purpose of clarifying the roles and responsibilitie.s'of the parties under the Project Agree =ents relating to the con-struction and operation of the System's Nuclear Projects 1, 2 and 3 (the " Net Billed Projects"),
NOW, THERIPORI, in consideration of the mutual cove-nants and pr==ises contained herein, the p.arties do mutually agree as follows:
!. SPA ADMINISTRATOR (a) It is mutually agreed that full responsibility for management is with the System's Board of Direc:crs. It is -
not the intent of BPA by this agreement to presume to engage in day-to-day management of the System. It is the in ent of SPA to have full information, timely recei.ved, to prctect I i
BPA's Project responsibilities.
s (b) The SPA Ad=inistrator (or his designa:ed repre-sentative) may participate in all regular and special =ee:- .
ings of the System Board of Directors and Ixecutive 00=mi: ee.;
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BPA shall be provided on the same time b' asis as =e=bers of -
-the Board or Cem=ittee with ccpies of all.information dis- ,.-
tributed to the ' Beard or Committee members which has a '.
material bearing en cost, schedcle or operat$bn of the Net
- Billed Projects and may participt.te fully in the discus'sien .
of all issues brought before such meetings. *
(c)
The BPA Administrator shall distribute to the .
mambership of the Board or Com=ittee, as the case pay be, ,
and the Managing Director copies of pertinent materials and studies related t'o the Net Billed Projects or any of them '
which have been prepared by EPA. The BPA Administrater shall furnish such materials and studies at the earliest date possible. -
(d)
The Administrator shall use his best efforts to communicate to the System's Managing Director, as far in advance as is feasible, any differences which can be identi-fled which may arise at such meetings between the views of BPA and the System's staff recc=mendaticns. .
(e) The SPA Administrator shall have no voting privi-leges and shall not be held accountable or liable for actions taken by the Beard of Directors or Executive Cem=ittee.
- II. INFOP".ATION RIOUIPS".INTS
, f a) In addition to the exchange of informatien between .
the staffs of EPA and the System conte = plated by the physihal presence of 3PA personnel as referred to in Paiagraph !!!, -
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( - I Amandator Agreenent No.~ 1 to Centract ..o. 14-03-39211 2-19-74 WASHINGICN PUBLIC PCWER SL7!LY SYSTEM MJCLEAR PICJECT NO.1 AMENDATCE AGREEMENT ex'ecuted by the INTED STATES OF AMERICA EPARIMENT OF DIE INTERIOR acting by and through the BCNNTnLLE PCNER .OfINISTRATCR and l
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l WASHINGTON PUBLIC PCWER SUPPLY SYSTE!
(Project Apat) l This #!ENr.ATCn AcREsec, executed as of [nr T/ , 1974, by i f
the LWITED STATES CF AMERICA, Depar~ent of the Interior /, acting by and through l the BCNNEVILLE PCWER ADIINISTPATCR (Ad=inistrator), and WASHINGION PUBLIC PC:ER [
l SL7!LY SYSTDI (Sqply System), a mnicipal c:r; oration of the State of Washingt=n, W I T N E S S E T H: ;
MiEREAS the panies hereto, on Febra.ary 6,1973, executed the Projet:
Agree.ent for the Washingt=n Public Power Supply System Nuclear Project No.1
(Centrac: No. 14-03-39211, hereinafter referred to as Pr-M Contract), W.ich, 4
mong other things, provides budget.r.g and operating procedt:res for the Project, !.
I and the parties desire to amend the Primary Contract to incorporate a new Project description and revise other provisions related to the Harderd Project ar.d the
. Generating Facilities, both as defined'therein; and MIEREAS the Project, as described in the Prtnary Centract, includes the use j I
vf the Generating Facilities which are a part of the Ha-ford Project,' and 2.ich e
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D_ i f-the System shall, on a monthly basis during construct on o informa- ,"
i the Net' Billed Projects, provide.BPA the folicw ng l
tion in writing:
- I Craf t manhours for each Net Billed Project (1) e per unit of Project ccmpletion with trend analysis and -
explanation of variances; (2) Project completion progress compa-ed to .
schedule with explanation of variance; -
(3)
Construction contract costs per unit of completion with explanation of any variance frcm the most recent revised or updated Construction Budget; (4) Project costs, cash flow and financing with i
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\/ exp'lanation of any variance frem the most recent re- 1 vised or updated Construction Budget; (5) Administrative and general expenses by organizational unit and major budget item with a con-recenp cise explanation of any variances frem the mest revised or updated Construction Budget; .
(6) Reports on manpower level changes and re- .
organizations of System and Architect-Engineer staffs that are charged to Net Billed Projects ,with cencise explanation of purposes.
(b)
In addition to such specific infor=ation as may be
- requested by BPA during the construction of the Net Billed ,
Projects, the System staff shall provide te SPA all infer- '
' mation with respect to Net Billed Projects which is prov ded
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\_} to the Board of Directors and Executive Committee of the System on the fol10 wing ' =atters:
contract negotiations,
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rework and change orders, bid packages, audits, cost and schedule estimate adjustments and forthcoming press re-leases. .
This information will be provided as such infor-
- mation becomes available to the System. '. '
(c) Subject ,
to prevailing law or regulation, BPA shall, on a routine basis and in a timely manner, provide
' the Managing Director er designated staff with the feri cwing information in writing, as well as such other info rmation as the System shall reasonably request relating to the Sy s em's t relationship with BPA, other agencies and constituencies:
(1)
BPA analyses, studies, reports or memoranda g,j cn System documents and projects; (2) .
Estimates, projections and suppcrting ma- '
terials relating to SPA rate structures:
(3) a Ccmmunications. contracts or negotiations that would involve other parnies in BPA activities concerning the System; .
(4)
Copies of BPA testimony and hearings before .
state legislatures and/or in the U.S. Cc.7gress (in .
cluding appropriations and legislative subecmmittees) .
i relating to System projects; (5) Studies of BPA's role by GAO, OCE or other '
federal agencies. .
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III. 'BPA REPRESENTATIVIS AT THE SYSTEM ,
(a) BPA has currently at the site of each of the Net ,
Billed Projects a Project Engin'eer. It is agreed that , .
its
.during the construction period, BPA may employ, at ,
expense, representatives to be stationed at each of the .
project sites to be responsible for obtaining from the System's Project Managers and other personnel at the appro-priate sites timely information pertaining to events which -
may affect cost or the schedule for cc=pletion of the !.let Billed Projects and to evaluate for BPA the Project control techniques and progress. Such representatives shall have no authority regarding ad=inistration or inspection of project g,, construction.
. (b) In addition to the SPA employees referred to in Subsection (a) above, SPA will employ a Coordinator to be stationed in Richland, Washington. The function of such sta'f,
' Coordinatcr will be to previde the System management including the System's designated staf f, i==ediate and .
direct access to BPA for the purposes of exchange of infor-mation and for interf ace between BPA and headquarters staff of the System. The Coordinator shall be respensible f6: ,
maintaining effective contact with the System, including the liaison staff designated by the System and shall provide such designated staf f with the copies of all forthec=ing .
Billed Projects press releases by BPA pertaining to the Net J
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or the System in a timely manner, and shall receive cop'ies .
of all forthcoming press releases to be issued by the System .
pertaining to the Net Billed Projects or SPA. The Cc,ordina- ,
ter shall report to the Assistant to the Administrator for ,
t Thermal Projects, and shall, through such reports, consti- ,
tute a vehicle for advising SPA of matters r, elating to f
planning, engineering studies and censtruction of the ' Net .
Billed Projects, as well as copies of other plans or ddeu-
=ents cencerning policies relating to the constructica or cperation of the Net BilIJtd Projects. To facilitate the execution of the Coordinator's duties, the Syste= shall, to the extent not inconsistent with other duties, cooperate with the Coordinator in,the discharge of the foregoing V
responsibilities.
(c) System shall exert every effort to ease the access of staff of BPA via System policies on site visits, passes and meetings. Attendance by EPA at System .ectings arranged by Project Managers or their staffs or by the Managing ,
Director or his staff may be left to the discretion of the appropriate Project Managers or the Managing Directcr, who must take responsibility for the tone, timing and resEles of . .
such meetings; provided, however, that it is the policy of s
the System that, as a general rule, System =eetings shall be open to SPA representation.
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IV. StOGET Pr/IEW MEETING It is understood and acknowledged that as'of August 23, 1979, the System's management has instituted monthly revlew -
meetings to discuss, explain and review matteis affecting .
s the construction budgets for all System projects, including
- tha Net Billed Projects. These meetings are open to the
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public, and all interested parties are specifically invited -
to attend, including the Budge: Cem=ittee of the System's Scard of Oirectors, SPA, the Participants' Review Ecard for each Net Silled Project and the Owners' Committee en the System's Nuclear Projects 3 and 5 and the Participants' Cc=mittee fer Projects 4 and 5. The purpose of these meetings is to provide all interested parti.es and parti- 1 V
cipating agencies, including SPA, the opportunity for a l
continuous review of the total construction budgets, project goals and the System's performance. It is the intent of the System to continue to conduct such meetings thrcughout the ~
ccnstruction periods of all projects, including the Net
- Eilled Projects.
V. CONST?.UCTION Bt:0GETS The construction budget should constitute.a base .
against which schedules and costs can be =easured.
Funds
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may be ecmmitted or expended only for the purpcses desig-nated, including contingency, in the updated or revised -
construction budget applicable at the ti=e, but ec==itments .
y or expenditures frc.a budgeted acccunts which are act des $g-nated for specific uses er exceed the ascunt budgeted for
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( ,j ' the specific use require submission to BPA for review and .
opportunity for disapproval except as provided in the last-paragraph of Subsection (b) (5) and in Subsection- (g) herein. i All updated or revised construction budgets will.be sup- '.
ported by detailed construction schedules, setting forth '
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projections for completion of critical path. objectives.
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-When the dif ference between scheduled and actual critical path progress objectives in accordance with Project Control ,
Schedules exceeds ten percent or an increase in projected ,
costs for a Project exceeds ten percent, the System shall, .
at BPA's request, submit a revised construction budget to BPA for review and opportunity for disapproval. In order to provide BPA with sufficient detail to review revised or
( ,j updated construction budgets for each Net Billed Project, and to ensure that said budgets contain adequate cost itemization, all updated or revised constructicn budgets prepared and submitted by the System pursuant to the Project Agreements shall contain the follcwing budget 'ine items: .
(a) Direct Construction Costs.
(1) Construction and Prepurchased Equipment The System shall submit as items : .
o Estimated or actual award amount, including performance bond; s o Executed, pending or anticipated contract modifications:
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'V o Escalation (as defined in the Appendix)r o Identified other amount to equal total con- ,
tract cost for each construction and each ,
prepurchased equipment contract for each Net ,.
Billed Project. These amounts, together with
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the amounts submitted under' Subsection (3) ,
below, "WPPSS - Controlled Costs", will reflect costs in' accounts which are described as follows and defined in the Appendix: -
" Structures and Improvements", " Reactor Plant -
Equipment", "Turbogenerator Unit", "Acces-sory Electric Equipment", " Miscellaneous Power Plant Equipment", " Station Equipment",
.V "Other Tangible Prcperty" and " Escalation".
"Constructicn Contracts", "Prepurchased Equipment Contracts", " Contract Base Value" and " Contract Cost" are also~ defined in the Appendix. .
(2) Contingency: The System will submit a total budget for each Net Billed Project which reflects costs ,
in an account described as " Contingency"; provided, however, that not more than 10 percent of the cur,ent r budgeted amount for each specific contract may be ex-r pended from " Contingency" for such specific contract ,
without prior submission to SPA for review and oppor-tunity for disapproval.
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\%,[- (3) WPPSS-Controlled Costs: The System will. .
submit a budget for each Net Billed -Project which reflects the costs described as "WPPSS-Controlled .
Costs" as defined in the Appendix. .
, (4) Land and Land Rights: The System will submit a total budget amount which reflects costs for Nuclear Project 3 only in an account described 'as " Land and Land Rights" and defined in the Appendix. ,
(5) Other Tangible Property: The System will ,
submit a total budget amount for each Net Billed
. Project which reflects costs in an account described as "Other Tangible Property" as defined in the Appendix to the extent not covered by "WPPSS-Controlled Costs".
\ ,/ (b) Other Construction Costs.
(1) Cperational Spare Parts: The System will submit a budget for each Net Billed Project which reflects the costs in an account described as " Opera-ticnal Spare Parts" and identified in the Appendix, separately stating the items allowed for escalation, ,
contingency and sales tax applicable to this account.
(2) Sales Tax: The System will submit,a total budget amount for each Net Billed Project which re-flects costs in an account described as " Sales Tax" and
- defined in the Appendix.
(3) Architect-Engineer: The System will submit a total budget account for each Net Billed Project which ,
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=# reflects ces:s in an account described as " Architect- ,
Ingineer" and defined in the Appendix. -
(4)
Construction Manager: The System will submit *a- ' .
total budget amount for each Net Silled Project which '
reflects costs in an account described as " Construction. -
Manager" and defined in the Appendix.
(5) Cwner's Cost: The System will submit,a budge: fer .
each organi:ational activity, itemized by major expense items fer each such activity as set forth below: -
Managing Director and Staff Managing Director Legal Auditing V rinance Group Assistant Director Management Control Finance Division -
Treasury Division .
Corporate Information Systems Administrative Services Operation Cperations Ma.mager , ,
Administrative Divisica Personnel Programs Divisicn s
Health, Safety & Security Divisien
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k% ,/ Technology Group -
Assistant Director ,
.. TMI Working Cor.mittee ,
Technical Division ,
Engineering Division ;
Quality Assurance Division
- 1 Generation Group -
Assistant Director .
Plant operations for WNP-1, NNP-2, ,
or WNP-3, as appropriate Generation Services Division Hanford Generation Project
. Tes & Startup Programs Division
\-/ Proje, cts Croup Assistant Director Project Planning & Measurement Project Business Staff Construction Industrial Relations Project Division for WNP-1, WN?-2, '
or WNP-3, as appropriate Materials Manage =ent operation Operation Manager '.
Materials Management Division s
F (w/ Organization Performance Operation
- Cperation Manager .
Corporate Performance .
-Relations Operation . .
Operation Manager ,'
Communications Divisich .
The foregoing represents the System's organ'ization in effect as of the date of this Memnrandum of Uf. der-standing. Any budgets sch=i::ed shall reflect.and be
- consistent with reorgani:ations that may be effected by' the System.
It is understood and agreed that the System may
., transfer between the foregoing organizational activi-ties or between major expense items of each organiza-tional activity up to 10 percent of the I: cunts budgeted therefer provided, however, that the total a=ount budgeted for " Owner's Cost" shall not be exceeded.as a result of such transfer (s) . .
(6) Potential Exposure: The System will submit a t
total budget amount for each Net Billed Project which -
reflects-the costs in an account de.- ribed as "P'otential Exposure" and defined in the Appendix. Proposed commit -
men:s or expenditures frem this category for purposes s
c which are not specifically stated must be submitted to BPA for review and cpportunity for disapproval.
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(7). Plant Relocation Cost: The System shall -
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submit a total budget a=ount which reflects costs for ,
Nuclear Project 1 only in an account described as
" Plant Relocation Cost" and defined in the Appendi'x. .' .
(S) DOE Settlement: The Systen shall submit a ',
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total budget amount which reflects costs for Nuclear .
Project 1 only in an account described as " DOE Settle--
ment" and defin.ed in the Appendix. ,
(c) Nuclear Fuel: ,
The System will submit an itemized breakdewn for each .
Net Billed Project which represents costs in an account described as " Nuclear Fuel" and defined in the Appendix.
The breakdewn is as follows:
Initial Core D Uranium Conversion .
-Enrichment Fabrication Other Contingency Sales Tax Reload .
Uranium -
Conversion, Storage and Insurance Enrichment .
. Contingency Cther .
(d) Interest, Financing and Reserves':- ',
(1) Reserves and *4orking Capital: The System s
will suh=it an itemi:ed breakdown for each Ne Billed .
Project which reflects costs in an acccunt described as v ,
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\" " Reserves and Working Capital" and defined in the .'
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Appendix. The breakdown will state the a= cunt funded by BPA and the amount funded by the. System. .
(2) Interest and Financing Cost: The System will.'.
submit an itemized breakdown for each Net Billed Project which reflects costs in accounts which are described as-follows and defined in the Appendix. " Net Capitalited
. Interest / Construction," " Net Capitalided Interest / Fuel,".
" Financing Cost" and "A= cunt Funded by SPA." .
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(e) In addition to the above-described items, the System will continue to furnish backup documentation pre-pared in detail sufficient to support a comprehensive review of the construction budgets. -
V (f) The updated Construction Budget shall contain an estimate of the amounts su==ari:ed by ma]or categories to be expended therefor for each quarter of the forthec=ing budget l
year and annual allotments thereaf ter. If a revised budget is necessary new quarterly allotments for the remainder of the current budget year shall be submitted and new annual allotments for succeeding years.
t (g) With respect to WNP-3, items subject to review by
, the Owner's Committee under the Ownership' Agreement s'..all not be subject to furt,her review by BPA, hence it is under-
' stood that the System shall submit the construction budgets and any deviations therefrom to the Cwner's Oc=mitte'e in i adi
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D O accordance with the Ownership Agreement for WNP-3'and'shall l
submit to SPA only budget items described under Section V(d) -:
hereof which are not subject to review by the owner's Committ,ee. s VI. MODIFICATION The parties agree that this working agreement may be -
modified from time to time as circumstang,es may require. -
Either party may notify the other party in writing of anj ,
preposal for modification or expansion of this Memoraddum of .
Understanding, and the party receiving such a propcsal .
agrees to respond within thirty days.
VII. CONFLICTS In any conflict between the terms and conditions of this Memcrandum of Understanding and those of the Project
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' Agreements, the ter=s and conditions of the Project Agree- ,
ments shall prevail.
VIII. TERMINATION This agreement will terminate for each project as each project reaches its commercial operation da:e.
WASHINGTON PUBLIC PCWER SC7 PLY .
SYSTEM BY' e * - .
President, Board ci I reciers
' BONNEVILLE PCWER ACMINISTRATICN ad.~u..- s s i
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