MANAGEMENT STRUCTURE AND RESPONSIBILITIES Under the original memorandum, the PMC Board of Directors was to consist of five members: two representing TVA, two representing Commonwealth, and one representing BRC. The memorandum provided also that PMC would establish a project steering committee composed of one PMC board director representing TVA, one PMC board director representing Commonwealth, and one AEC representative. The steering committee was to provide general policy guidance for the project. The original memorandum provided that PMC would comply with requests from AEC, TVA, or Commonwealth to consult, review project activities, or approve project plans or actions. It also provided that, if any party objected to or questioned the need for any particular approval request, the matter could be referred to the head of the party requesting approval (AEC, TVA, or Commonwealth) for concurrence or rejection. The original memorandum did not indicate how disagreements among the parties would be resolved. In the amendment to the memorandum and in the proposed contract among AEC, PMC, TVA and Commonwealth, the provision of the original memorandum which gave AEC, TVA, and Commonwealth approval rights was deleted. The parties agreed that, in its place (1) PMC would manage the project and establish general policies for the project, (2) AEC would seek legislative authorization to permit two of its officials to serve on the PMC board and up to five of its employees to serve on the PMC staff, and (3) the project steering committee would be empowered to manage the project until AEC had membership on the PMC board (interim arrangement). AEC officials provided us with the following statement as to why AEC agreed to seek membership on the PMC board. The heads of AEC, TVA, and Commonwealth, after TVA and Commonwealth believe that this could Management structure under interim arrangement The proposed contract provides for the following interim management structure until AEC obtains legislation to have two of its representatives on the PMC board. The PMC board will establish general policies for the project. The steering committee, made up of three members representing AEC, TVA, and Commonwealth will implement management of the project subject to the general policies established by the PMC board. Each steering committee member will have the right to bring "any matter" he considered significant before the steering committee for consideration. The proposed contract does not specifically state whether the steering committee members (AEC's only representation under the interim management structure) can question the general policies established by the PMC board. Therefore, we believe there is a need to clarify whether the term "any matter" includes the general policies established by the board. In commenting on this matter, AEC officials told us that it was their intent and interpretation of the contract that the individual members of the steering committee could question the general policies established by the board. We believe, therefore, that AEC should take steps to insure that the other parties to the contract have the same understanding. Under the terms of the proposed contract, a majority decision of the steering committee would be final unless a steering committee or PMC board member referred the matter to the PMC board. A majority decision of the PMC board would be final unless the AEC member of the steering committee or any PMC board member referred the matter to the heads of AEC, TVA, and Commonwealth for unanimous resolution. the proposed contract, however, does not indicate how disagreements among the heads of AEC, TVA, and Commonwealth would be settled. AEC officials told us that if the heads could not resolve the disagreement, the project could possibly be terminated pursuant to the termination criteria in the proposed contract. AEC officials stated that the parties believed that disagreements among the heads were highly unlikely because the heads were dedicated to seeing that the project proceeded effectively and efficiently to a successful conclusion. Therefore, according to AEC, a provision for resolving possible disagreements was not included in the contract. One section of the proposed contract (2.3.5) provides that the PMC board or steering committee not take any action on a matter referred to the heads of AEC, TVA and Commonwealth until they have resolved the matter. Another section, (2.10), however, exempts from the referral procedure (1) notices about the sufficiency of project resources and (2) any matter pertaining to indemnification. It also permits PMC to continue to act, or to refrain from acting, on a matter referred to and being decided by the heads, if PMC otherwise could be in breach of the proposed contract. In view of the apparent conflict between sections 2.3.5 and 2.10, we consider it important that the contract be clarified to indicate whether, and under what conditions, PMC may proceed on matters which are pending resolution by the heads. Without such clarification, an instance could arise whereby PMC could continue work on a project matter which the heads subsequently decided not to approve. Under such circumstances costs incurred for this work could contribute to a project cost overrun which otherwise may have been avoidable. In commenting on this matter, AEC officials said that it was AEC's intent that section 2.10 would take precedence over section 2.3.5. We believe, therefore, that AEC should take steps to insure that the other parties to the contract have the same understanding. Management structure with AEC representation on PMC board Under the management structure whereby AEC, after obtaining legislative authorization, would have membership on the PMC board, the proposed contract provides that PMC would have the responsibility and authority to manage the project. The steering committee would become the executive committee of the PMC board. The proposed contract does not elaborate further on the management roles of the PMC board and the executive committee. Since the PMC bylaws provide that a majority vote of the PMC board members would constitute a board decision, the two AEC board members could be overruled on any issue submitted for a board decision. Furthermore, even if the AEC board members are not satisfied with a board decision the proposed contract does not have a provision that a nonunanimous board decision could be referred to the heads of AEC, TVA, and Commonwealth. According to AEC officials responsible for negotiating the proposed contract, however, the parties did not intend a majority decision of the PMC board to be final. They explained that it was intended that any dissenting PMC board member could refer a nonunanimous PMC decision on a significant issue to the heads of AEC, TVA, and Commonwealth for unanimous resolution. We expressed the opinion to AEC officials that the proposed contract should be changed to include the parties' intent. AEC officials agreed and stated that the proposed contract would be changed as soon as possible to provide that any decisions by the PMC board which were not unamimous could be referred by a dissenting PMC board member to the heads of AEC, TVA, and Commonwealth for unanimous resolution. As we said before if the heads do not resolve the disagreements, the project could possibly be terminated pursuant to the termination criteria in the contract. ASSIGNMENT OF AEC PERSONNEL TO PMC The amendment to the memorandum and the proposed contract among AEC, PMC, TVA, and Commonwealth require that AEC try to secure the legislative authority to permit up to five AEC employees to serve in any capacity on the PMC staff while remaining on AEC's payroll. AEC officials said that, although the original memorandum did not have such a requirement, TVA officials had, during negotiation of the original memorandum, expressed an interest in having AEC expertise on the PMC staff. AEC officials explained that TVA and Commonwealth, recognizing AEC's experience in dealing with reactor manufacturers and the nuclear industry, believed that AEC representation on the PMC staff would benefit the project. They stated that, when this subject was discussed in more detail during contract negotiations, AEC recognized that the experience of its personnel could help PMC resolve day-to-day problems. Thus AEC agreed to seek legislation to assign up to five individuals to PMC. AEC officials told us that AEC would probably assign technical personnel to PMC, possibly at the GS-14 and GS-15 levels. AEC officials told us also that AEC had not estimated the five employees' salaries because the employees had not been selected. They indicated, however, that such costs could range from $125,000 to $175,000 annually over the expected 10-year life of the project. They further stated that these costs represented an additional AEC contribution to the project (see p. 8) and would be included as part of the overall project cost. In explaining this additional contribution, AEC officials pointed out that, under the project agreement, TVA and Commonwealth would each contribute (in addition to their contributions to BRC as electric utilities) $2 million over a 10-year period to cover the salaries of their employees assigned to PMC as well as to other project activities. They stated that if these funds were spent before the project was completed, the salaries of TVA and Commonwealth employees working for PMC would then be paid from existing project resources. |