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Now, section 106 reads as follows as it concerns the inquiry here. “Liquid metal fast breeder reactor demonstration program, fourth round:

(a) The Energy Research and Development Administration (ERDA) is hereby authorized to enter into cooperative arrangements with reactor manufacturers and others for participation in the research and development, design, construction and operation of a liquid metal fast breeder reactor power plant in accordance with criteria approved by the Joint Committee on Atomic Energy without regard to the provisions of section 169 of the Atomic Energy Act of 1954, as amended."

Then the rest is the authorizing part for appropriations.

Now, I want to ask Mr. Parler, will you elucidate for us as to whether or not the criteria have been presented to the committee and whether the committee has either informally or how, approved the said criteria ?

Mr. PARLER. The amendments to the criteria which were previously approved by the committee in 1969 were presented to the committee in Dr. Seamans' letter of March 10, 1975. The primary amendment to the criteria is the amendment which provides for the integrated Government utility management of the project.

Senator Montoya. Just a minute. Primary amendment to the criteria. That presupposes there were other criteria before that.

Mr. PARLER. There were the criteria that were submitted at the outset in May 1969 at the beginning of the project; yes, sir.

Senator Moxtoya. Then there were subsequent amendments to the criteria ; is that right?

Mr. Parler. The amendments were proposed by Dr. Seamans in his March 10, 1975, letter.

Senator Montoya. Will you provide those for the record and have them inserted in proper sequence?

Mr. PARLER. Yes, sir.
[The information subsequently provided follows:]

U.S. ATOMIC ENERGY COMMISSION,

Washington, D.C., May 27, 1969. Hon. CHET HOLIFIELD, Chairman, Joint Committee on Atomic Energy, Congress of the Unitcd Statcs.

DEAR MR. HOLIFIELD: This is to advise the Joint Committee that the Atomic Energy Commission plans to issue an Invitation for Proposals looking toward a definitive cooperative arrangement under the Liquid Metal Fast Breeder Reactor Demonstration Power Plant Program. The Invitation, a draft of which is enclosed, is to be issued on or about May 28, 1969.

As the Committee was informed during the FY 1968 and FY 1969 Authorization Hearings, the ('ommission is moving towards making a commitment for an LUFBR demonstration plant. The draft Invitation for Proposals emphasizes that any commitment by the AEC for a cooperative arrangement for a demonstration plant will be dependent upon the results from a Project Definition Phase contract; during this first phase it will be determined whether sufficiently well defined and realistically assessed bases exist for a definitive cooperative arrangement.

Proposals may be submitted by reactor manufacturers who are associated with a utility or group of utilities. Responsive proposals meeting the prerequisite criteria will be carefully considered by the AEC, and those proposals which are determined to be most desirable will be selected as the basis for negotiation of Project Definition Phase contracts. The principal bases for evaluation of the responsive proposals are set forth in the Invitation. The Commission is interested in entering into two or more Project Definition Phase contracts. The assistance that AEC would consider in connection with the Project Definition

Phase contracts and any definitive cooperative arrangement is stated in the Invitation.

The Commission believes that this two-phase approach to the demonstration plant program will help assure that the AEC and the proposers have thoroughly studied all facets of the pioposed demonstration plant. This should improve the chances for the successful outcome of the demonstration plant project, with a minimum of technical and financial surprises.

The Commission is requesting legis.ative FY 1970 authorization for appropriations in the amount of $4 million for the Project Definition Phase contracts. The first phase contracts would not be entered into until such time as authorization is enacted, and they would be subject to the availability of appropriations. Enclosed herewith are the Statutory Criteria for this proposed program, which were referred to in the proposed Authorization Bill and Bill Analaysis forwarded to you by letter of January 15, 1969.

We will keep the Committee informed of significant developments in this solicitation and selection process. Shouid you need additional information regarding this Invitation for Proposals, please let us know. Sincerely,

R. E. HOLLINGSWORTH,

General Manager.

STATUTORY CRITERIA FOR FOURTH ROUND ARRANGEMENTS UNDER THE COMMISSION'S

POWER REACTOR DEMONSTRATION PROGRAM 1. Eligible Proposals

Proposals may be submitted by reactor manufacturers who are associated with a utility or group of utilities. The proposer and associated utility or group of utilities must be in the United States, its territories and possessions, Puerto Rico or the Canal Zone. The utilities may be investor-owned, cooperatively-owned or publicly-owned electric utilities. The proposer may have other associates, including Architect-Engineers. 2. Program Objectives

The program has as its major objectives the demonstration of the technology pertaining to, and the reliability, safety, and economics of, Liquid Metal Fast Breeder Reactor power plants in the utility environment. Other AEC purposes are:

(a) To provide for meaningful identification of areas requiring emphasis in the LMFBR research and development program.

(b) To the extent practicable, to validate technical and economic data and information pertinent to the total LMFBR program.

(c) To assist in the development of an adequate industrial base. (d) To provide for maximum utility participation and experience in LMFBR operation.

(e) To help assure overall program success.

(f) To demonstrate and maintain U.S. technological leadership. 3. Tuo-Phase Approach

a. Project Definition Phase Contract.--This will be the only means for reactor manufacturers and utilities to become eligible for participation in a definitive cooperative arrangement for the development, design, construction, test operation, and operation of an LMFBR demonstration plant. The essential purpose of the first-phase contracts will be to help assure that a sufficiently well identified and realistically assessed basis exists for a definitive cooperative arrangement. AEC will carefully consider responsive proposals and will select as the basis for negotiation those proposals which it determines most desirable. Each of the selected reactor manufacturers, with the participation of its utility and other associates, will conduct the Project Definition Phase to perform any necessary design and analyses and develop further various aspects of the contemplated demonstration plant, including: (i) the magnitude of the technical and economic risks associated with the proposed plant design: (ii) investigation of alternate sites so as to help insure meeting siting criteria, to help minimize the financial and technical risks and to help obtain regulatory approvals; (iii) the supporting research and development, component development, and proof-testing that will be required; (iv) trade-off studies constituting the basis for design decisions; (v) identification of codes and standards required for the second phase ; (vi) site and safety analyses, and (vii) technical coupling between the project and the ongoing and pianned development programs. The details of the scope of this portion of the Project Definition Phase, and the extent of the Commission's reimbursement for the performance of this work, will be negotiated by AEC and the selected proposers and specified in each contract. Each contract will also call for further identification of* (i) capabilities and resources of the contractor and of members or contemplated members of the demonstration plant team; (ii) project organization; (iii) top management participation; (iv) the extent and type of AEC assistance required and extent of assistance by others; and (v) training requirements. Such items would be carried out at no cost to AEC. Fees will not be paid by the AEC for work under the first-phase contracts.

Each contract will require utility association at the outset and will specify that continuing utility association will be necessary during the term of the contract; utility association will be a prerequisite for a definitive cooperative arrangement. The term of each first-phase contract will be the subject of mutual agreement during the negotiations. In any event, AEC would reserve the right to terminate for its convenience, and each contract would provide for possible extension upon mutual agreement of the contracting parties. If and when a contractor or contractors and AEC mutually conclude that the results of a pertinent Project Definition Phase contract or contracts indicate that a sufficiently well identified and realistically assessed basis exists for a definitive cooperative arrangement, and the AEC concludes that budgetary and other considerations warrant, the contracts will permit the AEC to call for a proposal package from the reactor manufacturer-utility team or teams. Thus, proposals for a definitive cooperative arrangement may be submitted only by those Project Definition Phase contractors whose proposals are specifically sought by AEC.

b. Definitive ('ooperative Arrangements.-Based on such proposal or proposals called for by AEC, negotiations will be undertaken only with such proposing reactor manufacturer-utility team or teams looking toward a mutually agreeable definitive contract or contracts for the development, design, construction, test operation and operation of an LMFBR demonstration plant. The details of a resulting contract, including those respecting AEC's assistance (without fee), need not be identical to those initially projected by the reactor manufacturer and associates in its original proposal or to those in the proposal package submitted subsequently by the reactor manufacturer-utility team. Should the LMFBR demonstration plant program eventually involve more than one demonstration plant, AEC does not expect to enter into more than one definitive cooperative arrangement involving the same reactor manufacturer. 4. Design requirements and plant objectives

(a) The design shall be for a central station, sodium-cooled, fast breeder nuclear plant of about 300 to 500 MWe capacity, reasonably practicable for scale-up to a commercial plant. The first core of the plant shall use a fuel consisting of mixed oxide of uranium and plutonium.

(b) The primary objectives of the plant are to operate safely, reliably, and with a high plant factor. These, plus the objectives of plant inspectability and maintainability, should be kept foremost in mind during the design of the plant.

(C) The design should require a minimum of component or system development, make maximum use of existing technology and facilities, and be consistent with the nature of the ongoing LMFBR R&D program; however, consideration should be given to the accommodation of future improvements in the technology which may be anticipated.

(d) The plant shall include sufficient instrumentation to demonstrate the design performance of all important plant components and systems, as well as to aid in special testing and in the prediction and diagnosis of any abnormal performance characteristics of a component or system.

(e) The inclusion of this instrumentation as well as the provision in (c) above, should not compromise the primary objective that the plant operate reliably and safely.

(f) The plant should demonstrate the key technological design features and economic aspects which will contribute in as direct a manner as possible to the development, application and acceptance of future commercial plants on a utility system.

(9) The design shall be for a central station plant of the type and size described in (a), at a suitable site requiring no unusual design features or special

considerations in licensing because of unfavorable local conditions, i.e., hydrology, seismology, meteorology, etc.

(h) The plant shall be designed, fabricated, constructed, tested, operated and maintained in conformance with established engineering standards and also with high quality assurance practices. Systematic disciplined means of assuring application of these standards and practices shall be utilized and documented (in such form as to be available for use by others). These means will include quality assurance, engineering reviews, and sufficient proof testing to establish a high level of confidence in the operational performance of plant components. 5. Prerequisites for Acceptance of Proposals In order to be considered, the proposals should satisfy the following conditions :

(a) Meet the requirements indicated in paragraph 1., above.

(0) Accept in principle the objectives and requirements stated in the Invitation for Proposals, as it may be amended.

(c) Demonstrate to the satisfaction of AEC the technical and financial competence and integrity of the proposer and principal associates.

(d) Evidence that the reactor manufacturer has designed and participated in the construction and operation of at least one central station nuclear power plant, and that there is a strong management commitment (evidenced by corporate expenditures and actions) to become an established supplier of LMFBR plants.

(e) Evidence that the reactor manufacturer is associated with a utility or group of utilities for participation under the Project Definition Phase contract with a view towards a firm commitment for a definitive cooperative arrangement.

(f) Evidence the capability of the proposing team to arrive at a sufficiently well identified and realistically assessed basis for a definitive cooperative arrangement within a reasonable period of time.

(9) Supply the information required by the Invitation for Proposals, as

it may be amended. 6. Possible AEC assistance

The Commission desires to secure accomplishment of the demonstration plant program at minimum cost consistent with its other program objectives. Maximum industrial and utility participation is desired. The Commission will consider requests to provide financial assistance, as part of a definitive cooperative arrangement, in one or more of the following areas:

(a) Research and development, including testing, development and applications of codes and standards, quality control programs, special components and instrumentation, or special testing and operational expenses not normally required for commercial operation, and the conduct of such activities in AEC's facilities when appropriate.

(6) Engineering, procurement and proof testing of first-of-a-kind components, first-of-a-kind equipment (including maintenance equipment) and special instrumentation ;

(c) Design and related work (Title I, II and III and other engineering services such as vendor engineering, expediting, quality assurance, and system check-out and testing);

(d) Fuel fabrication ;
(e) Training;

(f) Start-up and related work, over and above R&D, necessary to place the nuclear steam supply system in condition ready for full scale operation, and periodic tests and inspection during the period of the definitive cooperative arrangement; and

(9) Furnishing special nuclear materials or an entire core(s), for stated periods, under an arrangement whereby AEC assumes part or all of the

costs. 7. Commission action on proposals

The Commission reserves the right, without qualification, to select any proposal(s) as the basis for negotiation, to reject all proposals, and to exercise its discretion and apply its judgment with respect to any aspect of any proposal. 8. Addenda

The Commission reserves the right, without qualification, to issue revisions or supplements to these criteria, at any time or times, by written addenda.

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REPORT TO THE JOINT COMMITTEE
ON ATOMIC ENERGY
CONGRESS OF THE UNITED STATES

ACCOUNTING

Proposed Changes To The
Atomic Energy Commission's
Arrangement For Carrying Out The
Liquid Metal Fast Breeder Reactor
Demonstration Project

8-164105

BY THE COMPTROLLER GENERAL
OF THE UNITED STATES

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