MEMORANDUM OF AGREEMENT
FOR THE CONTINUED OPERATION OF THE
PORTSMOUTH S&T FACILITIES FOR THE
PROCESSING OF AFFECTED INVENTORY
IN FISCAL YEAR 2005 AND THEREAFTER
This Memorandum of Agreement ("MOA") is entered into as of this 10th day of
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December, 2004, with the "MOA Effective Date" of December 9, 2004, by and
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between the United States Department of Energy ("DOE") and USEC Inc., a Delaware
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corporation with headquarters at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000.
USEC Inc. and its wholly owned subsidiary, United States Enrichment Corporation,
are referred to herein as "USEC," and DOE and USEC are sometimes referred to
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herein individually as a "Party" and collectively as the "Parties."
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WITNESSETH
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WHEREAS, on June 17, 2002, DOE and USEC concluded an agreement (the "June
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17 Agreement") in which they agreed, among other things, on procedures for
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dealing with the clean-up, exchange or replacement of up to 9,550 MTU of natural
uranium hexafluoride that DOE had transferred to USEC on or about June 30, 1993,
April 20, 1998, and May 18, 1998, and that did not meet ASTM Specification
C-787-90 (the "USEC Affected Inventory") and for the release of the United
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States from all liability with respect to such transferred material; and
WHEREAS, between June 17, 2002 and October 29, 2004 USEC processed
approximately 5,461 MTU of USEC Affected Inventory pursuant to the June 17
Agreement, two subsequent letter agreements dated September 19, 2003 and
November 20, 2003, and a Work Authorization dated April 7, 2004 (the "FY 2004
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Work Authorization"); and
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WHEREAS, DOE has in its inventory natural uranium hexafluoride that does
not meet ASTM Specification C-787-90 (the "DOE Affected Inventory") and natural
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uranium inventory that does meet ASTM Specification C-787-90 (the "DOE Clean
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Inventory"); and
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WHEREAS, DOE and USEC are contemplating a further agreement under which
USEC will continue processing USEC Affected Inventory as well as DOE Affected
Inventory (collectively "Affected Inventory") for a total of approximately 9,540
MTU of remaining USEC and DOE Affected Inventory; and
WHEREAS, in exchange for continuing to operate the Portsmouth S&T
Facilities (the "S&T Facilities") to process USEC Affected Inventory and
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releasing the United States from any and all liability and claims relating to or
arising from DOE's transfer to USEC of the amount of Affected Inventory
processed, DOE proposes to compensate USEC with marketable assets that are not
necessary for national security needs from DOE's former uranium program; and
WHEREAS, USEC will agree to process DOE Affected Inventory during FY 2005
and beyond under terms and conditions similar to those agreed for facility
operation in the FY 2004 Work Authorization; and
WHEREAS, the July 1, 1993 Lease Agreement between DOE and the United States
Enrichment Corporation (the "GDP Lease"), including Exhibit F to the GDP Lease
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titled "Memorandum of Agreement between United States Department of Energy and
United States Enrichment Corporation for the Supply of Services" (the "Services
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MOA"), provides that USEC and DOE may provide services to each other; and
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WHEREAS, USEC maintains that DOE is liable to USEC for the cost of
remedying Non-Compliant Cylinders transferred to USEC as part of the June 30,
1993, April 20, 1998, and May 18, 1998 transfers; and
WHEREAS, an estimated $80 million processing costs for treating the
remaining DOE and USEC Affected inventory can be avoided by virtue of USEC's
unique ability to accept Affected Inventory for use at its Paducah Gaseous
Diffusion Plant (the "Paducah GDP") with levels of Tc99 greater than ASTM
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Specification C-787-90, which costs are four times that estimated for remedying
USEC's Non-Compliant Cylinders (transferring the USEC Affected Inventory from
cylinders that do not comply with American National Standards Institute
Specification N14.1 ("Non-Compliant Cylinders") to cylinders that do comply with
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that specification ("Compliant Cylinders")); and
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WHEREAS, in consideration for the commitments set forth herein, USEC agrees
to waive any claim for fees or incentives for work performed pursuant to this
MOA; and
WHEREAS, on October 22, 2004, DOE and USEC concluded a "Memorandum of
Understanding Effectuating the Transfer of Natural Uranium Hexafluoride for
Affected Inventory" (the "October 22, 2004 MOU"); and
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WHEREAS, the October 22, 2004 MOU anticipates a future agreement for the
continued operation of the S&T Facilities for the processing of Affected
Inventory in Fiscal Year 2005 and beyond (a "Future Agreement") pursuant to
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which USEC will, among other things, transfer DOE Affected Inventory from
Non-Compliant Cylinders to Compliant Cylinders, accept processed DOE Affected
Inventory for use at the Paducah Gaseous Diffusion Plant, and return to DOE an
equivalent quantity of natural uranium hexafluoride that meets the ASTM
Specification C-787-90 for Technetium 99;
NOW, THEREFORE, the Parties hereby agree as follows:
Subject to the availability of funds and legislative authority for this
purpose, work under this MOA will be performed in the following two phases:
Phase I: USEC shall process Affected Inventory located at the Portsmouth
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Gaseous Diffusion Plant (the "Portsmouth GDP") in Compliant Cylinders, and make
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preparations for the shipment of Affected Inventory in Non-Compliant Cylinders
from the Paducah GDP to the Portsmouth GDP and for the subsequent transfer of
such Affected Inventory from Non-Compliant Cylinders to Compliant Cylinders, and
be compensated for Allowable Costs from the proceeds of the sale of 900 MTU of
Feed Material transferred from the DOE Clean Inventory pursuant to Article 3
below. During this phase, USEC shall be entitled to recover Allowable Costs as
defined in Article 2 of this MOA but shall earn no fee for processing Affected
Inventory. USEC shall process exclusively DOE Affected Inventory and Affected
Inventory remaining in USEC owned Previously Processed Cylinders (as defined
below) until such time as USEC has processed all of the 1493 MTU of Affected
Inventory that DOE received from USEC under the October 22, 2004 MOU. The
Parties anticipate that Phase I will last until all of the 1493 MTU of Affected
Inventory in Compliant Cylinders located at the Portsmouth GDP that was
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transferred to DOE pursuant to the October 22, 2004 MOU and Affected Inventory
remaining in USEC owned Previously Processed Cylinders has completed processing
at the S&T Facilities and the Paducah GDP;
Phase II: USEC and DOE currently anticipate that, subsequent to execution
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of the Amendment pursuant to Section 7.2 of this MOA, until all the funds
remaining from the sale of Feed Material or Supplemental Barter Material
transferred from the DOE Clean Inventory, the Deposit Removal Program, or other
inventories have been expended, USEC shall process both USEC and DOE Affected
Inventory including Affected Inventory in Non-Compliant Cylinders pursuant to
the Plan described in Section 7.2. During this phase, USEC shall, as agreed to
in the Plan resulting from Section 7.2, continue processing USEC Affected
Inventory and DOE's Affected Inventory for the purpose of producing materials
which can be (a) sold directly in the market together with other Feed Material
from DOE necessary to continue further processing operations at the S&T
Facilities or (b) fed as feed material at the Paducah GDP. USEC shall give
priority to the (a) shipment of the approximately 623 MTU of Affected Inventory
that USEC is to transfer to DOE from the Paducah GDP to the Portsmouth GDP under
the October 22, 2004 MOU and (b) the transfer of that Affected Inventory from
Non-Compliant Cylinders to Compliant Cylinders. During this phase, if provided
for in the Amendment, USEC shall be entitled to credit against the revenues from
the sale of the Feed Material or Supplemental Barter Material the Allowable
Costs as defined in Article 2 of this MOA and as further set forth in the
Amendment, but shall earn no fee for processing DOE or USEC Affected Inventory.
ARTICLE 1 - USEC'S COMMITMENTS
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1.1 USEC shall operate the S&T Facilities for the processing of DOE
Affected Inventory as outlined in the phased approach above and make
preparations for the shipment of Affected Inventory in Non-Compliant Cylinders
from the Paducah GDP to the Portsmouth GDP and subsequent transfer of such
Affected Inventory from Non-Compliant Cylinders to Compliant Cylinders.
1.2 USEC shall make a good faith effort to process as much Affected
Inventory as possible during each month.
(a) Subject to USEC's maintaining access to the operating portion of
the cascade and the ERP withdrawal station at the Portsmouth plant, cylinders
containing Affected Inventory shall be processed so that no more than 50 pounds
of UF6 is left in each cylinder after processing (unless non-volatile materials
prohibit obtaining the 50 pound level).
(b) Before the date of the transfer of title to and possession of the
first increment of Feed Material, as discussed in Article 3, USEC and DOE shall
execute a security agreement satisfactory to DOE pursuant to which USEC will
xxxxx XXX a security interest in the first increment of Feed Material, in
contracts for the sale of Feed Material, in accounts receivable generated by the
sale of Feed Material, and in the proceeds received from the sale of Feed
Material. This process shall be repeated prior to the transfer of any subsequent
increment of feed material.
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(c) As USEC Affected Inventory is processed, USEC will release DOE
from any claims of liability arising from DOE's transfer of Affected Inventory
to USEC on or about June 30, 1993.
1.3 The Parties acknowledge that some of the cylinders containing USEC
Affected Inventory processed under the June 17 Agreement and two subsequent
letter agreements were not completely emptied during processing (the "Previously
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Processed Cylinders"). Subject to USEC's maintaining access to the operating
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portion of the cascade and the ERP withdrawal station at the Portsmouth plant,
in addition to the processing referred to in Section 1.1, USEC shall make a good
faith effort to process all remaining Previously Processed Cylinders so that no
more than 50 pounds of UF6 is left in each cylinder after processing (unless
non-volatile materials prohibit obtaining the 50 pound level). Subject to
Section 1.7 below, the goal shall be to complete processing of all the
Previously Processed Cylinders by September 30, 2005. All incremental costs for
operation of the Purge Cascade for treatment of Affected Inventory shall be
Allowable Costs under this MOA and shall not be charged against any other work
performed by USEC for DOE.
1.4 Each cylinder of DOE Affected Inventory processed by USEC that meets
the ASTM Specification will be returned to DOE custody in a Compliant Cylinder
within thirty (30) days of completing processing at the S&T Facilities and each
cylinder of DOE Affected Inventory processed by USEC that does not meet the ASTM
Specification after 1 or 2 passes will be used as feed in the Paducah GDP
cascade, and USEC will provide DOE, within thirty (30) days of such Affected
Inventory being introduced as feed in the Paducah GDP, with an equivalent
quantity of natural uranium hexafluoride that meets the ASTM Specification and
is contained in a Compliant Cylinder. USEC shall introduce such Affected
Inventory as feed in the Paducah GDP as quickly as feasible, taking into account
the approximately 2450 MTU of USEC Affected Inventory currently scheduled to be
introduced as feed over the next 16 months, the rate at which the Paducah GDP
can accept feed that does not meet the ASTM Specification, USEC's existing
contractual commitments to deliver feed to customers, and USEC's commitment not
to use DOE Inventory as USEC working inventory. Upon DOE's request, USEC shall
provide DOE with information sufficient to verify that USEC has abided by its
commitment not to use DOE Inventory as USEC working inventory. As referenced in
the October 22, 2004 MOU, USEC will use its best efforts to:
(a) schedule the processing of all of the 2116 MTU of Affected
Inventory transferred from USEC to DOE in Compliant and Non-Compliant Cylinders,
and provide DOE with 2116 MTU of natural uranium hexafluoride that meets ASTM
Specification C-787-90 and that is contained in Compliant Cylinders by December
31, 2006;
(b) in the event the Paducah GDP operations or feed scheduling
circumstances preclude such use in the Paducah GDP to meet the schedule above,
USEC may, upon written notification of the circumstances made to DOE and to
which DOE does not object in writing, delay the return to DOE by up to 180 days
(not to exceed 360 days from the date of processing) of an equivalent quantity
of natural uranium hexafluoride that meets the ASTM Specification contained in a
Compliant Cylinder;
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(c) delivery by USEC following processing may be made to either DOE's
Portsmouth or Paducah UF6 cylinder yards, as directed by DOE; and
(d) prior to execution of a Future Agreement USEC will verify that
the cost of transferring approximately 2,077 MTU of USEC Affected Inventory
(prior to the transfer pursuant to the October 22, 2004 MOU) from Non-Compliant
Cylinders to Compliant Cylinders will not exceed the sum of (1) $9 million
dollars of direct costs, plus (2) the allocable indirect costs.
1.5 As assurance that DOE will not be left with an inventory of
contaminated feed when USEC ceases operation of the S&T Facilities, this MOA
provides DOE with the sole option to continue operation of the S&T Facilities
for the sole purpose of managing/cleaning DOE Affected Inventory, in the event
USEC ceases operations of the S&T Facilities in accordance with Section 1.7 of
this MOA. In the event DOE elects to exercise this option, USEC will return to
DOE the related leased facilities and transfer those assets (including
intellectual property) of the operation necessary for DOE to operate the S&T
Facilities on and after termination of this MOA consistent with USEC's ability
to operate the American Centrifuge Project and the Lead Cascade Demonstration
Facility. This transfer will not relieve USEC from the termination requirements
otherwise outlined in the GDP Lease, although DOE's operation of the S&T
Facilities shall not increase USEC's liabilities under the GDP Lease.
1.6 USEC has determined that the 19,500 pounds of slightly enriched
uranium recovered during the Deposit Removal Program that is contained in
cylinder 4APK1392 (the "Deposit Removal Material") can be fed into the cascade
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at the Paducah plant. Within 30 days of the MOA Effective Date, USEC shall
provide DOE with its calculation of the market value of the Deposit Removal
Material.
1.7 USEC shall cease performance under this MOA if it concludes in good
faith at any time that further performance will cause Allowable Costs (as that
term is defined in Section 2.1 below) in any government fiscal year to exceed
the sum of (a) the value of the Deposit Removal Material; and (b) proceeds
received or expected to be received from the sale of other Feed Material (as
that term is defined in Section 2.2 below). USEC shall provide DOE written
notice as soon as such a condition is known and a decision has been made but no
later than 120 days before ceasing performance pursuant to this Section 1.7.
USEC has been informed and acknowledges that no funds are currently appropriated
to pay for performance under this MOA and that, although DOE reserves the right
to do so, DOE does not currently intend to seek an appropriation for the work to
be performed by USEC under this MOA.
1.8 USEC shall provide DOE with monthly reports on the technetium
contamination of each cylinder of USEC and DOE Affected Inventory which are
sampled before processing, other available test data after processing, and the
number of cylinders processed at the S&T Facilities that month that meet ASTM
Specification C-787-90 or are otherwise accepted by USEC.
1.9 USEC shall provide the following:
a. monthly project reports (including quantity of uranium processed,
and quantity and date DOE uranium is scheduled for processing at the Paducah
GDP);
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b. monthly financial reports:
1) estimated costs of operating the S&T Facilities;
2) Allowable Costs incurred to date; and
3) estimated Allowable Costs incurred at completion;
c. report of the value of the Deposit Removal Material;
d. waste inventory reports;
e. sales proceeds report within 10 days of sales/receipt of payment;
f. quarterly report on sales, proceeds received, and estimated
future sales of Feed Material; and
g. auditable disclosure statement and other financial documents as
necessary for the full and complete financial verification of
Allowable Costs and sales revenues.
1.10 USEC will make every effort to continue to minimize the cost of the
cleanup project and the associated direct/indirect costs. USEC understands that
this work is subject to DOE oversight consistent with the FY 2004 Work
Authorization even though no direct funding is currently being planned to be
provided by DOE under this MOA. DOE oversight will continue under DOE's
Portsmouth/Paducah Project Office ("PPPO"), including the evaluation of
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Allowable Costs.
ARTICLE 2 - DOE'S COMMITMENT
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2.1 The proceeds from the sale of Feed Material (as defined below) shall
be used to reimburse USEC for all allowable direct, indirect, and plant overhead
costs incurred in operating the S&T Facilities for the processing of Affected
Inventory and preparations for the transfer of Affected Inventory from
Non-Compliant Cylinders to Compliant Cylinders as determined pursuant to the
Federal Acquisition Regulation - Part 31, including, but not limited to,
reasonable and allocable costs of transporting cylinders containing Affected
Inventory, the costs of waste characterization, transportation, storage, and
disposal, container purchases, audit support costs and any other expenses of
processing Affected Inventory. Costs allowed pursuant to this Section 2.1 are
referred to herein as "Allowable Costs." Notwithstanding the provisions of FAR
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Part 31.205-20, the actual or imputed incremental costs of financing Allowable
Costs incurred by USEC to operate the S&T Facilities in advance of using the
Deposit Removal Material or receiving proceeds from the sale of Feed Material
received under this barter agreement also shall be Allowable Costs; provided,
however, such financing costs are fully auditable and are subject to review and
approval by DOE based upon a standard of commercial reasonableness (the
"Proposed Advanced Cost Agreement"). USEC shall not, however, be entitled to a
fee under this Section 2.1 for processing Affected Inventory.
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2.2 To compensate USEC for operating the S&T Facilities for the
processing of Affected Inventory and preparations for the transfer of Affected
Inventory from Non-Compliant Cylinders to Compliant Cylinders during Phase I
above, and for processing additional Affected Inventory pursuant to the Plan
outlined in Section 7.2 below, DOE shall, under the terms and conditions set
forth below, transfer to USEC title to and possession of 900 MTU of natural
uranium feed material that meets ASTM Specification C-787-90 and is contained in
Compliant Cylinders (such material being referred to herein as the "Feed
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Material"). To compensate USEC as outlined in the previous sentence, DOE may, in
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its sole discretion, transfer the Deposit Removal Material discussed in Section
1.6 above, and such other material as is acceptable to USEC (all such material
also being referred to herein as Feed Material).
2.3 DOE reserves the right to adjust this MOA for the processing of
Affected Inventory at any time by providing partial or complete direct payment
of USEC Allowable Costs.
ARTICLE 3 - TRANSFER OF THE FEED MATERIAL
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DOE shall transfer title to and possession of the Feed Material to USEC in
two increments. The first increment of 900 MTU of Feed Material shall be
transferred within three working days of the date on which the Security
Agreement referred to in Section 1.2(b) above is executed, to support Phase I of
this Agreement. The second increment of Feed Material, and any Supplemental
Barter Material, to support continued operations will be transferred as
described in the Plan outlined in Section 7.2. Such transfers shall facilitate
contracts for the sale of Feed Material, or Supplemental Barter Material,
pursuant to the Amendment called for in Section 7.2.
ARTICLE 4 - DISPOSITION OF FEED MATERIAL
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4.1 USEC shall prepare a marketing strategy (the "Marketing Strategy")
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within 5 working days of the MOA Effective Date for DOE review that will specify
the terms, conditions and price at which the Feed Material will be offered for
sale. DOE shall make a good faith effort to approve the Marketing Strategy
within 10 working days of receipt by DOE, and then USEC shall sell the Feed
Material on terms and conditions detailed in the DOE-approved Marketing Strategy
and account to DOE for the sales. In making the sales, USEC shall use its good
faith efforts to obtain the best possible price, given market conditions at the
time of the sale.
If DOE has not disapproved the Marketing Strategy within 20 working
days of its receipt by DOE, USEC may begin to implement that strategy and sell
Feed Material in accordance with it.
4.2 The first increment of 900 MTU referred to in Article 3 above shall
be deemed for all purposes to be uranium hexafluoride transferred to DOE
pursuant to Section 3112(b)(1) of the USEC Privatization Act, 42 USC ss.2297h-10
(b)(1). USEC shall be entitled to sell 900 MTU for consumption by end users in
the United States or abroad, provided, that sales for consumption by end users
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in the United States shall be subject to the use restriction set forth in
Section 3112(b)(2)(D) of the USEC Privatization Act, 42 USC ss.2297h-10(b)(2)
(D).
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ARTICLE 5 - TRANSFER AND VALUATION OF DEPOSIT REMOVAL MATERIAL
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Within 30 days of the date on which USEC provides DOE with the calculation
referred to in Section 1.6, DOE and USEC shall meet to negotiate (a) the terms
and conditions under which DOE would transfer the Deposit Removal Material to
USEC and (b) the valuation of that material.
ARTICLE 6 - ACCOUNTING
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6.1 DOE plans to employ an independent auditing firm to assess the sales
and cost accounting related to this MOA. The Parties agree to make reasonable
amendments to the financial aspects of this MOA to maximize the mutual value of
this MOA to the Government and USEC. USEC agrees to make any information
supporting DOE's financial review under this MOA available to DOE, or its
auditors, and to provide copies of any relevant documentation, as requested.
6.2 Proceeds from sales of the Feed Material shall be applied exclusively
to compensating USEC for Allowable Costs. Any proceeds in excess of Allowable
Costs (referred to herein as "Excess Proceeds") at the end of this MOA, or upon
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termination of this MOA by either Party, shall be returned to DOE within 30
days, subject to any mutual agreement for additional time to reconcile
outstanding accounts. Excess Proceeds at the end of any month, if any, shall be
invested at a commercially reasonable rate of return, and any interest earned by
USEC on Excess Proceeds shall be credited against the costs of the MOA
activities or returned to the DOE within 30 days from the completion of this
MOA.
6.3 USEC shall notify DOE as each contract for the sale of the Feed
Material is executed and the agreed contract price.
6.4 USEC shall report the costs of operating the S&T Facilities to DOE
monthly pursuant to the requirements of this Agreement.
6.5 USEC shall report the proceeds from sales of the Feed Material (and
the incremental costs of those sales, if any) to DOE within 10 days of the date
on which USEC receives payment.
6.6 USEC shall feed the Deposit Removal Material into the Paducah GDP as
determined in the Amendment described in Section 7.2 and credit the agreed-upon
value of the Deposit Removal Material against Allowable Costs at the time such
material is fed to the Paducah Gaseous Diffusion Plant.
6.7 Within 30 days of the close of each quarter, USEC shall provide DOE
with a report stating the amount of the Feed Material that has been sold and the
proceeds received from those sales and providing USEC's good faith estimate of
the proceeds expected to be received from sales of all the Feed Material. Within
30 days of the close of each month, USEC shall provide DOE with a report stating
the (a) Allowable Costs incurred to date; and (b) total Allowable Costs USEC
expects to incur during the remainder of the period of performance pursuant to
the requirements of this Agreement.
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6.8 USEC shall provide DOE with a reconciliation of (a) the costs of the
program; (b) proceeds from sales of the Feed Material; and (c) the agreed-upon
value of the Deposit Removal Material within 90 days after the day on which USEC
receives payment for the final sale of Feed Material.
6.9 The Parties acknowledge that the final reconciliation of all costs
and proceeds can be accomplished only after all audits have been closed.
6.10 The cost for any audit by DOE, including costs incurred by USEC to
support any such audit, shall be considered an Allowable Cost subject to USEC's
good faith cooperation in such audit.
ARTICLE 7 - PROCESSING AFFECTED INVENTORY IN PHASE II
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7.1 The Parties recognize that, although USEC will be required to expend
cash before receiving the proceeds from the sales of Feed Material, such
proceeds could exceed Allowable Costs for Phase I (such excess being referred to
herein as the "Phase I Surplus"). USEC shall provide DOE with its good faith
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estimate of any Phase I Surplus and incorporate this in the plan to be provided
pursuant to Section 7.2 by December 30, 2004.
7.2 USEC shall submit to DOE no later than December 30, 2004, a
reasonable detailed Plan and cost proposal for continuing to operate the S&T
Facilities to complete the processing of all DOE and USEC Affected Inventory in
Compliant Cylinders and Non-Compliant Cylinders. The proposal will be negotiated
and finalized as an amendment to this MOA, and DOE and USEC will use their best
efforts to execute the amendment no later than January 31, 2005 (referred to
herein as the "Amendment"). Until the Amendment is executed, the obligations and
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commitments in this MOA shall only be binding with respect to work conducted in
Phase I. The Parties expect that the Amendment will state at a minimum the
following:
(a) to the extent not accomplished in Phase I, a first priority under
the Amendment shall be (i) shipment of the approximately 623 MTU of Affected
Inventory that USEC is to transfer to DOE from the Paducah GDP to the Portsmouth
GDP; and (ii) the transfer of that Affected Inventory from Non-Compliant
Cylinders to Compliant Cylinders;
(b) processing of DOE and USEC Affected Inventory shall be on a fair
and equitable basis;
(c) DOE shall transfer to USEC title to and possession of such
additional natural uranium feed or other material acceptable to USEC as is
required ("Supplemental Barter Material"). The transfer will be accompanied by a
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mutually agreeable security interest of equivalent value to any Supplemental
Barter Material transferred to USEC;
(d) USEC shall be entitled to credit against the revenues from the
sale of Feed Material or Supplemental Barter Material all Allowable Costs for
the processing of DOE and USEC Affected Inventory and transferring DOE and USEC
Affected Inventory from Non-Compliant Cylinders to Compliant Cylinders;
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(e) as USEC Affected Inventory is processed, USEC will release DOE
from any claims of liability arising from DOE's transfer of Affected Inventory
to USEC as part of the June 30, 1993 transfer;
(f) each cylinder of DOE Affected Inventory processed by USEC will be
returned to DOE custody pursuant to the terms and conditions specified in
Section 1.4 above;
(g) as referenced in the October 22, 2004 MOU, USEC will use its best
efforts to:
(i) transfer approximately 623 MTU of DOE Affected Inventory from
Non-Compliant to Compliant Cylinders by September 30, 2005;
(ii) process such Affected Inventory and return to DOE custody an
equivalent amount of approximately 623 MTU of natural uranium hexafluoride that
meets ASTM Specification C-787-90 and that is contained in Compliant Cylinders
by June 30, 2006; and
(iii) process the remaining portion of the 2116 MTU of Affected
Inventory transferred from USEC to DOE in Compliant and Non-Compliant Cylinders,
and provide DOE with the remaining portion of the 2116 MTU of natural uranium
hexafluoride that meets ASTM Specification C-787-90 and that is contained in
Compliant Cylinders by December 31, 2006.
(h) in the event the Paducah GDP operations or feed scheduling
circumstances preclude such use in the Paducah GDP to meet the schedules
referenced in paragraph (g) USEC may, upon written notification of the
circumstances made to DOE and to which DOE does not object in writing, delay the
return to DOE by up to 180 days (not to exceed 360 days from the date of
processing) of an equivalent quantity of natural uranium hexafluoride that meets
the ASTM Specification contained in a Compliant Cylinder;
(i) delivery by USEC following processing may be made to either DOE's
Portsmouth or Paducah UF6 cylinder yards, as directed by DOE; and
(j) the cost of transferring Affected Inventory from Non-Compliant
Cylinders to Compliant Cylinders will be Allowable Costs provided, however, that
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the cost of transferring approximately 2,077 MTU of USEC Affected Inventory
(prior to the transfer pursuant to the October 22, 2004 MOU) from Non-Compliant
Cylinder to Compliant Cylinders will not exceed the sum of (1) $9 million
dollars of direct costs to be verified and agreed to by DOE prior to execution
of the Amendment, plus (2) the allocable indirect costs.
(k) as assurance that DOE will not be left with an inventory of
contaminated feed when USEC ceases operation of the S&T Facilities, the
Amendment shall provide DOE with the sole option to continue operation of the
S&T Facilities for the sole purpose of managing/cleaning DOE Affected Inventory,
in the event this MOA is terminated under circumstances outlined in the
Amendment. To facilitate this option, the Amendment will include a provision
requiring both the return to DOE of leased facilities and transfer of those
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assets (including intellectual property) of the operation necessary for DOE to
operate the S&T Facilities on and after termination of this MOA consistent with
USEC's ability to operate the American Centrifuge Project and the Lead Cascade
Demonstration Facility. This transfer will not relieve USEC from the termination
requirements otherwise outlined in the GDP Lease, although DOE's operation of
the S&T Facilities shall not increase USEC's liabilities under the GDP Lease.
Execution of the Amendment will constitute the "Future Agreement" contemplated
by the October 22, 2004, MOU.
7.3 Processing of Affected Inventory beyond Phase I shall be contingent
upon the successful execution of the Amendment to address Phase II of this MOA
as described above.
7.4 The Parties agree that the provisions providing that USEC shall
receive no fee for processing Affected Inventory under this MOA and the
Amendment under Section 7.2 shall have no precedential value in circumstances
under which USEC may provide other services to DOE while earning a fee.
ARTICLE 8 - WASTE
-----------------
8.1 USEC shall be responsible for managing waste generated under this MOA
in compliance with all applicable laws. USEC shall directly provide for the
final disposal of all unregulated solid (e.g. sanitary) waste. All waste streams
will be packaged in USEC-furnished containers according to applicable
environmental laws, nuclear criticality safety standards, and security
requirements.
8.2 No hazardous waste shall be generated by USEC that would result in
noncompliant storage by DOE or USEC.
8.3 Regulated waste shall be managed in accordance with the agreement
found at Exhibit C of the GDP Lease. USEC shall expeditiously treat (as
necessary) and dispose all waste generated under this MOA. USEC shall dispose of
the regulated waste for which there is a disposal option (including MgF trap
material) and shall use its best efforts to ensure that no regulated waste for
which there is not now a disposal option remains on the Portsmouth site for more
than six months after a disposal option becomes available to USEC. USEC shall
notify in writing, DOE's GDP Lease Administrator and the Manager, PPPO, of the
generation and quantity of any regulated waste which they believe does not have
a current disposition path. The quantity remaining on-site shall be reported
monthly.
8.4 It is recognized that the disposition of a portion of such waste may
not be completed until after the processing of Affected Inventory and DOE
material under this MOA has stopped. DOE agrees that such storage and disposal
costs are Allowable Costs under this MOA.
8.5 USEC shall remain responsible for wastes generated by the Tc-99
cleanup program on or before December 19, 2003.
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ARTICLE 9 - ADDITIONAL CLAUSES
------------------------------
9.1 The following contract clauses are hereby incorporated into this MOA
by reference. These clauses shall have the same force and effect as if they were
incorporated in full text:
52.215-2 Audit and Records-Negotiation (June 1999)
52.215-10 Price Reduction For Defective Cost or Pricing Data (Oct 1997)
52.215-11 Price Reduction For Defective Cost or Pricing Data-
Modifications (Oct 1997)
52.215-12 Subcontractor Cost or Pricing Data (Oct 1997)
52.215-13 Subcontractor Cost or Pricing Data-Modifications (Oct 1997)
52.215-15 Pension Adjustments and Asset Reversions (Jan 2004)
52.215-18 Reversion or Adjustment of Plans For Postretirement Benefits
(PRB) Other Than Pensions (Oct 1997)
52.216-7 Allowable Costs and Payments (Dec 2002)
52.215-21 Requirements For Cost Or Pricing Data or Information Other
Than Cost or Pricing Data-Modifications (Oct 1997)
52.230-2 Cost Accounting Standards (Apr 1998)
52.230-6 Administration of Cost and Accounting Standards (Nov 1999)
52.242-1 Notice of Intent to Disallow Costs (Apr 1984)
952.250-70 Nuclear Hazards Indemnity Agreement (June 1996)
9.2 Work under this MOA shall be conducted in compliance with the terms
of this MOA, the June 17 Agreement, the Services MOA, and the GDP Lease. In the
event of any inconsistent or incompatible provisions, this MOA shall take
precedence, followed by the provisions of the June 17 Agreement, the Services
MOA, and then of the GDP Lease.
9.3 DOE and USEC's obligations under this MOA are subject to compliance
with applicable law including the National Environmental Policy Act.
ARTICLE 10 - DISPUTE RESOLUTION
-------------------------------
If a dispute arises under this Agreement, these procedures shall apply.
Either Party may invoke this dispute resolution procedure. The Parties shall
make a reasonable effort to informally resolve disputes at the lowest level
prior to the issuance of a formal written statement of dispute under the
procedures set forth below:
A. INFORMAL DISPUTE
Informal dispute resolution may be invoked by either Party for any action
which leads to or generates a dispute. A Party who wishes to invoke dispute
resolution shall do so by first issuing a written statement of informal dispute
resolution. The written statement of informal dispute shall set forth the nature
of the dispute, the work affected by the dispute, the disputing Party's position
with respect to the dispute, and the information the disputing Party is relying
upon to support its position. During informal dispute, the disputing Party shall
engage the other Party in informal dispute resolution among the Technical
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Representatives (TRs) and/or their immediate supervisors. During the informal
dispute resolution process, the Parties shall meet as many times as are
necessary to discuss and attempt resolution of the dispute. The informal dispute
resolution period shall be limited to thirty (30) days from the date on which
the disputing Party provides the other Party with the written statement of the
informal dispute resolution, unless extended by agreement of the Parties.
B. FORMAL DISPUTE
If agreement cannot be reached on any issue during the informal dispute
resolution process, then the disputing Party shall forward, no later than
fifteen (15) days after the end of the informal dispute resolution period, a
written statement of dispute to the other Party setting forth the nature of the
dispute, the work affected by the dispute, the disputing Party's technical and
legal position regarding the dispute, and the relief requested. The written
statement of dispute shall be mailed by the Dispute Resolution Manager for the
disputing Party to the Dispute Resolution Manager for the other Party.
The Dispute Resolution Managers shall have thirty (30) working days to
resolve the dispute from the date of receipt of the written statement of
dispute. The resolution of the dispute shall be memorialized in writing. Both
parties shall abide by the terms and conditions of any final resolution of the
dispute.
The Parties shall diligently perform under this Agreement pending the
completion of these dispute resolution procedures.
If the Dispute Resolution Managers are unable to resolve the dispute within
thirty (30) working days of receipt of the written statement of dispute, the
Parties will elevate the matter(s) for resolution by the Under Secretary of
Energy and the President of USEC. The Under Secretary and President of USEC
shall have thirty (30) working days to resolve the dispute from the date of
forwarded by the Dispute Resolution Managers. The resolution of the dispute
shall be memorialized in writing. Both Parties shall abide by the terms and
conditions of any final resolution of the dispute.
In the event that the Under Secretary of Energy and the President of USEC
do not resolve the matter(s), the parties may pursue whatever remedies they may
have at law and equity.
The time frames set forth above for reporting and resolution of disputes
may be extended by mutual agreement of the Parties, and such agreement shall be
in writing.
C. IDENTIFICATION OF DISPUTE RESOLUTION PARTIES:
For purposes of this Dispute Resolution Article, the USEC Technical
Representative is:
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Name: Xxxxx X. Xxxxxx
Title: Technetium Program Manager
Address: X.X. Xxx 000
Xxxxxxx, Xxxx 00000
For purposes of this Dispute Resolution Article, the USEC Dispute
Resolution Manager is:
Name: Xxxxxxx Xxxxxx
Title: Director, Production Operations
Address: USEC Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
For purposes of this Dispute Resolution Article, the DOE Technical
Representative is:
Name: Xxxx Xxxxxxxx
Title: Technical Representative
Address: United States Department of Energy
0000 X.X. Xxxxx 0
Xxxxxxx, Xxxx 00000
For purposes of this Dispute Resolution Article, the DOE Dispute Resolution
Manager is:
Name: Xxxxxxx X. Xxxxxxx
Title: Manager, Portsmouth/Paducah Project Office
Address: United States Department of Energy
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
ARTICLE 11 - LIABILITY
----------------------
Each Party's liability to the other Party, to parties related to the other
Party, and to third persons arising out of or in connection with this Agreement,
shall be governed by the provisions of the GDP Lease and applicable law.
Requests for the reimbursement of liability claims under this Article 11 shall
be handled in accordance with Article 10 - Dispute Resolution.
Any fines, penalties, or other costs related to work under this Agreement
resulting from a Party's breach of any law, regulation, permit, order,
requirement or standard of performance shall be the responsibility of the Party
primarily responsible for any such breach, without regard to which Party is
assessed the fine or penalty, except to the extent that such costs are paid or
reimbursed by insurance or a third party. Each Party shall use its best efforts
to defend against and reduce the amount of any fine, penalty or costs for which
it may seek reimbursement from the other Party under this subparagraph.
Neither Party shall be liable to the other Party for consequential,
indirect or special damages, including loss of profit, fee compensation of any
kind, or losses, costs or damages due to business interruption, arising out of
the activities contemplated by this MOA.
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ARTICLE 12 - OWNERSHIP OF MATERIALS AND EQUIPMENT
-------------------------------------------------
All equipment and materials purchased by USEC with receipts from the sale
of DOE Feed Material in connection with work performed under this Agreement
shall be the property of DOE.
ARTICLE 13 - TERMINATION
------------------------
DOE may, at its option, terminate this MOA, at any time by a sixty (60) day
written notice to USEC. Such notice shall specify the extent to which the
performance of the work under this MOA is terminated and the effective date of
such termination. In the event of termination, USEC shall discontinue work in
accordance with notice from DOE and shall cancel, to the extent permitted under
applicable agreements, any purchase order, subcontract, rental, or other
agreement existing for performance of the terminated work; maintain, protect and
dispose of work in progress, plant, tools, equipment, property, and materials
acquired or furnished under this Agreement; and complete performance of work not
terminated.
The sole right and remedy of USEC upon termination by DOE shall be payment
(in the form of Feed Material, Supplemental Feed Material, or otherwise) of
Allowable Cost incurred prior to the effective date of termination, and
reasonable termination costs in accordance with cost principles set out in Part
31 of the Federal Acquisition Regulation and Section 2.1 above, which shall
include only the reasonable costs incurred in demobilization of the work
(including, but not limited to, costs of terminating subcontracts, personnel and
severance costs and placing operations in a safe condition) and protection and
disposition of residual material, plant and equipment, and reasonable
administrative costs of settling and paying claims of subcontractors arising out
of the termination. Within thirty (30) days after the date of termination, USEC
shall submit to DOE a written statement setting forth the termination costs.
IN WITNESS WHEREOF, the Parties have caused this Memorandum of Agreement to
be signed in two originals by their duly authorized representatives as of the
MOA Effective Date.
UNITED STATES DEPARTMENT USEC INC.
OF ENERGY
By: /s/ W. E. Murphie By: /s/ Xxxxxx X. Xxxxxx
------------------------------ --------------------------------
Title: Manager, PPPO Title: Senior Vice President
--------------------------- -----------------------------
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