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ANNEX WD TO
APPENDIX "F"

Cost and financial reports relating to Plant operations shall include

a balance sheet (financial condition) and a statement of operations for the

Plant showing revenues and operating costs.

The statement of operations

shall show costs by function such as production, maintenance and analytical

as well as pertinent elements of costs on a functional basis insofar as is

practical such as direct labor, chemicals, materials and supplies, deprecia

tion of major groups or units, utilities, rent, process losses, waste

storage, waste surveillance, Plant administration, corporate overhead and

research and development.

The statement of operations would show pertinent

operating statistics such as on-stream time, processing and revenue imits. and

customer loads,

In support of the processing cost of types of fuel,

the

Contractor will maintain on a routine basis data such as throughput rates,

processing time, chemicals and other direct material usage and waste genera

tion.

The statement of operations sball be prepared on a quarterly basis

(calendar year) for the current period and year to date.

The balance sheet

shall be submitted at least annually.

APPENDIX 9

SUMMARY OF CHANGES IN THE AEC, MAY 2, 1963, DRAFT CONTRACT AS COMPARED

WITH THE FINAL CONTRACT

ATOMIO ENERGY COMMISSION,

Washington, D.C., September 12, 1969. Mr. JOHN T. CONWAY, Ewecutive Director, Joint Committee on Atomic Energy, Congress of the United States.

DEAR MR. CONWAY: In compliance with your request of September 9, 1963, there is enclosed a summary of the changes in the AEC May 2, 1983, draft No. 5 contract furnished by our letter of May 3, 1963, as compared with the proposed execution copy of the Nuclear Fuel Services, Inc., contract, which was furnished your office on September 10, 1963. Sincerely yours,

R. E. HOLLINGSWORTH,
Deputy General Manager.

SUMMARY OF SIGNIFICANT CHANGES IN MAY 2, 1963, DRAFT OF NFS CONTRACT

ARTICLE I. DEFINITIONS

There are no essential changes in this article.

ARTICLE IL. STATEMENT OF WORK

The principal change in this article was to add a section G which provides that NFS in supplying the Commission its charges for nonspecification material delivered to the Commission by licensees for financial settlement prior to January 1, 1966, will not propose charges exceeding four principles set forth in the contract. Despite these principles, the section provides that the Commission may determine in its sole discretion that the NFS' charges, terms, and conditions are reasonable or unreasonable and that the determination is to be made by a quorum of the Commission.

ARTICLE II. EXCHANGE OF INFORMATION; DELIVERY SCHEDULE; DELIVERY ; STORAGE

There are no essential changes in this article.

ARTICLE IV, AMOUNT OF MATERIAL TO BE PROCESSED; DESIGNATION OF PROCESSING

LOT ; PROCESSING; DELIVERY OF RECOVERED PRODUCT

There are no essential changes in this article.

ARTICLE V. FIRM SCHEDULE OF PROCESSING

There are no essential changes in this article.

ARTICLE VI. CHARGES FOR CHEMICAL PROCESSING

The article now provides a basis for AEC payment of the actual cost for the design, construction, and installation of carbon steel tanks containing cooling coils (including spare tanks and all equipment necessary to operate the tanks in conjunction with the plant for the storage of waste resulting from the chemical processing of specification material in material category 7). This material category was formerly included in paragraph (2) of section A of the article.

Article VI A (2), (3), and (4) have been revised in a number of places to make clear that NFS will build the minimum number of spare tanks required by regulatory authorities, provided that in any event NFS will build at least one spare tank for every three cooled-carbon steel working tanks and at least one spare tank for every five stainless steel working tanks.

The article now provides the method for paying perpetual maintenance for waste charges which had not been negotiated in the May 2 version of the contract.

The charges for perpetual maintenance of waste from material categories 3, 5, 6, 7, and 8 are based on formulas in the article, if the Commission designates fuels in these categories. There is no charge for perpetual maintenance of waste for certain categories (1, 2, and 9). There is a flat perpetual mainte nance of waste charge of $116 per processing unit for category 4. There will be an adjustment downward in the perpetual maintenace of waste charge if the working tank-spare tank ratio is less than 5: 1 for stainless steel tanks, or 3:1 for carbon steel or cooled carbon steel tanks.

This article provides that NFS must use the same formulas in assessing perpetual maintenance of waste charges to each of its other customers. If it charges lesser amounts to other customers, AEC is to obtain a refund and pay no further charge. AEC has no liability for perpetual maintenance of waste in any material category if it doesn't designate material in that category.

ARTICLE VII. INSPECTION OF WORK

There are no essential changes in this article.

ARTICLE VIII. NON SPECIFICATION MATERIAL

There are no essential changes in this article.

ARTICLE IX. WASTE; DISCLAIMER BY COMMISSION ; PERPETUAL MAINTENANCE

There are no essential changes in this article.

ARTICLE X. CONTAINERS

There are no essential changes in this article.

ARTICLE XI. SPECIAL PROVISIONS APPLICABLE TO CHEMICAL PROCESSING OF SMALL

PROCESSING LOTS; COMBINED PROCESSING LOTS

There are no essential changes in this article.

ARTICLE XII, SERVICES OTHER THAN CHEMICAL PROCESSING

There are no essential changes in this article.

ARTICLE XIII. PROVISIONS APPLICABLE TO CHEMICAL PROCESSING FOR PERSONS OTHER

THAN THE COMMISSION

There are no essential changes in this article.

ARTICLE XIV. ESCALATION

The provisions of this article are essentially the same as in the May 2 draft: however, for purposes of clarity the article has been recast.

ARTICLE XV. PATENTS ; TECHNICAL DATA; COPYRIGHT

The foreground patent provision has been modified to provide the contractor a nonexclusive, irrevocable, royalty-free license for use in any plant owned or operated by the contractor, or by subsidiary, affiliated or parent companies of the contractor ; with the right to grant sublicenses for use in plants similar to the plant, owned or operated by third parties. NFS' obligations to include the foregrousd patent provisions in contracts, subcontracts and agreements has been clarified to express the intent that NFS' obligation to include patent provisions is limited to research and development contracts. The foreground patent provision, as it relates to the work by Bechtel has been modified to permit the same rights to NFS as indicated above (that is, a nonexclusive license, etc.), plus an exclusive license to NFS for the outfield. Formerly, the outfield license had been granted to Bechtel and Bechtel concurred in NFS' retention of these rights. Similarly, the requirement for inclusion of the background patent provision in NFS' contracts, subcontracts, and arrangements was clarified to apply to those of research or developmental nature.

The provisions of technical data formerly separated foreground and background by use of the date of October 23, 1962. The provisions of the execution copy of the contract distinguish between technical data originated prior to the issuance of an operating license and that originated after the issuance of an operating license, The Commission therefore does not have as general access to the data developed between October 1962 and issuance of an operating license and the kinds of data available have been definitized. Further, NFS agrees to prepare a technical manual at AEC's request, which shall be available for dissemination to the public without charge. In the event payment is called for by the Commission for reports other than normally prepared, the article now incorporates the AEC's allowable cost provision as the basis of payment. Again, the provision relating to subcontracts has been modified to apply to those of a research or developmental nature.

ARTICLE XVI. COMMISSION RIGHTS OF INSPECTION OF COSTS AND FINANCIAL

DATA; REPORTS

This article has been rewritten to eliminate the date of October 23, 1962, which date previously determined the breakpoint after which the Commission would acquire rights to cost information. The execution copy of the contract now gives the Commission access to NFS and Bechtel cost information developed prior to that date. The revised article also makes reference to an appendix which sets forth a format as to the types of reports the Commission desires from Bechtel in relation to cost breakdown and price breakdown; and, from NFS for the detailed backup operating data for the plant. In addition, the article provides that, if the Commission is to pay for any reports, payment will be in accordance with its allowable cost provisions. The article now provides that the Government may utilize all the information made available to it under the article for Government purposes and provides that the Commission may disseminate to the public without charge for use of NFS' "owner's price breakdown by functional units” and NFS' detailed backup operating data and gives the Commission the right to disseminate without charge all of Bechtel's cost data in a form set forth in the appendix, providing that the information in total would not permit a determination of Bechtel's profit or Bechtel's method of estimating cost of performing work.

ARTICLE XVII, CHANGES

There are no essential changes in this article.

ARTICLE XVIII. UNIFORMITY OF CONDITIONS AMONG CUSTOMERS

There are no essential changes in this article.

ARTICLE XIX. BILLING AND PAYMENTS

There are no essential changes in this article.

ARTICLE XX. FORCE MAJEURE

There are no essential changes in this article.

ARTICLE XXI. PERMITS AND LICENSES

This article in the May 2, 1963, draft was entitled "Permit and License; Termination by Contractor.” The provisions for termination by the contractor have been eliminated from the contract. The provision relating to permits and licenses is unchanged.

ARTICLE XXIL. TERMINATION FOR CONVENIENCE OF THE GOVERNMENT

This article was not in the May 2, 1963, draft; however, it was furnished in a letter to Mr. Conway, dated May 13, 1963. The present article eliminates from the May 13, 1963, version the right of AEC to terminate for convenience prior to the commencement of chemical processing in the plant. AEC eliminated this provision when an examination of NFS' lease with ARDA revealed that there is a possibility that ARDA could receive $8.5 million from NFS in the event of an NFS default as a result of AEC's termination for convenience, with little or no cost having been incurred by ARDA. In addition, ARDA would receive title to all of NFS facilities in the event of such an NFS default. The termination provision in the May 13, 1963, draft provided a ceiling payment by AEC of approximately $11.25 million in the event NFS elected to abandon con

1 In a subsequent draft (July 5, 1963) this number was increased to approximately $13,900,000 and a number of other changes were made.

struction upon AEC's termination, prior to completion of construction. An analysis of AEC liabilities in the event of termination for convenience, on or about September 17, 1963, in light of the ARDA lease indicated that this ceiling might be equaled or exceeded by that time. In order to remove this objectionable feature from the NFS-ARDA lease, staff and NFS met with ARDA and proposed an alternate arrangement which would have simply covered ARDA's cost in the event of an AEC termination of the NFS contract for convenience, which in turn caused an NFS default under its lease agreement with ARDA. ARDA counterproposed that the lease be left undisturbed, but that ARDA and AEC agree separately that:

I. If AEC terminates the NFS contract for convenience causing NFS to de fault, ARDA may elect to abandon the entire project in which case ARDA would be reimbursed its cost to date, with AFC retaining title to the unfinished chemical processing plant, and either a lease for, or title to, ARDA's remaining facilities, subject to certain restrictions on use of the site.

II. If ARDA elects to go forward with the project, it would use its best efforts to find a new operator who would take over NFS' obligations, thus relieving NFS of some, or all of, its liability to pay the liquidated damages required by the lease.

III. If a new operator could not be found, ARDA would have the plant built for its own account and collect the liquidated damages from NFS (under the terms of the May 13, 1963, AEC-NFS draft termination for convenience article ARDA would be collecting from AEC). AEC would be entitled to a refund of its termination payment, but only after, and to the extent that, all of ARDA's operating expenses had been paid off, as well as the ARDA bondholders and the banks.

ARDA's counterproposal was unacceptable to the staff, since the conditions under which an alternate operator may contract and operate the plant may not be acceptable to AEC, and since any credit to be returned to AEC for its investment in the facilities would be contingent upon ARDA making a profit with its venture. Rather than accept ARDA's counterproposal, or to allow the May 13, 1963, draft to stand as written (in light of the ARDA lease), the staff con

lud tha EC should forgo its right to terminate during construction of the plant in order to avoid giving the impression that AEC has other than an illusory right to terminate the contract during this period. It appears extremely unlikely that AEC would terminate the contract during the construction period. Furhermore, AEC retains the right to terminate for convenience during operation of the facility, which right is essentially the same as that set forth in the May 13, 1963, draft.

ARTICLE XXIII. TERM OF CONTRACT

[graphic]

This article is unchanged.

ARTICLE XXIV. RESEARCH AND DEVELOPMENT CONCERNING CHEMICAL PROCESSING

This article is unchanged.

ARTICLE XXV. DEFERRED CONSTRUCTION OF CERTAIN PLANT FACILITIES

There are no essential changes in this article.

ARTICLE XXVI. REDUCTION IN CHARGES

There are no essential changes in this article.

ARTICLE XXVII. INTERNATIONAL SAFEGUARDS

This article has been rewritten to clarify that NFS would comply with safe guards to the extent that the safeguards are no more stringent than those which would be required by the nuclear materials management control system as set forth in or referred to in article XXX. NFS would not make any extra charge.

ARTICLE XXVIII, OBLIGATION OF FUNDS

This article has been completed to include the amount of funds ($6,950,000) currently obligated.

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