APPENDIX IG-TITLE PAGE, TRANSMITTAL LETTER AND SUMMARY FROM GAO REPORT B-114878 OF JANUARY 10, 1962 REPORT TO THE CONGRESS OF THE UNITED STATES REVIEW OF ATOMIC ENERGY COMMISSION DEPARTMENT OF THE NAVY LARGE SURFACE SHIP REACTOR WESTINGHOUSE ELECTRIC CORPORATION Herewith is our report on the review of the Atomic Energy Commission (AEC) and Department of the Navy Large Surface Ship Reactor, AlW land-based prototype project (AlW project), constructed under contracts with Westinghouse Electric Corporation (Westinghouse). The AlW project was directed toward the development, construction, and testing of a nuclear propulsion plant suitable for installation in a large naval surface ship. The project involved the design, construction, and operation of a land-based prototype and necessary site facilities located at AEC's National Reactor Testing Station in Idaho. Construction of the AlW project was carried out by Westinghouse through subcontracts with Newport News Shipbuilding and Dry Dock Company and other subcontractors. Our review disclosed that the terms of the contracts were consistent with the applicable legislation and that the purposes of the contracts were successfully accomplished. A summary of the scope of our review and the results of our review, including our major conclusions and a recommendation for the consideration of the Commission, is presented on pages 1 through 5. The Commission's views on the recommendation are presented on page 4. This report is also being sent today to the President of the Senate and to the Chairman, Joint Committee on Atomic Energy. Copies are being sent to the President of the United States, the Commissioners of the Atomic Energy Commission, and the Secretaries of Defense and the Navy. Sincerely yours, Bupa Campbell Comptroller General Enclosure REPORT ON REVIEW OF ATOMIC ENERGY COMMISSION AND DEPARTMENT OF THE NAVY LARGE SURFACE SHIP REACTOR A1W LAND-BASED PROTOTYPE PROJECT CONSTRUCTED UNDER CONTRACTS WITH WESTINGHOUSE ELECTRIC CORPORATION GENERAL COMMENTS AND SUMMARY The General Accounting Office made a review of the activities relating to the Large Surface Ship Reactor, AlW land-based prototype project (AlW project), under Atomic Energy Commission (AEC) contract AT(11-1)-GEN-14 and Department of the Navy (Navy) contract N0bs 67500 with Westinghouse Electric Corporation (Westinghouse), Pittsburgh, Pennsylvania. Our examination was made pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 53), the Accounting and Auditing Act of 1950 (31 U.S.C. 67), and the Atomic Energy Act of 1954 (42 U.S.C. 2206). Our review included an examination of contracts, task orders. negotiation files, cost estimates, correspondence, reports, and other pertinent documents which were made available to us by A5C, Navy, and Westinghouse and its subcontractors. We discussed mat ters pertinent to our review with AEC, Navy, and contractor offi cials. We also examined, on a test basis, data relating to research and development and construction costs of the project; however, we directed this examination primarily to data relating to construction costs. In performing our review and determining the nature and extent of our tests, consideration was given to the work performed by AEC and Navy internal auditors. Based on Westinghouse records, AEC and Navy costs and open commitments as of March 31, 1960, totaled $142,693,000, comprising $103,560,000 for research and development and $39,133,000 for construction. A detailed breakdown of such costs by the major contracts and subcontracts is shown on page 47. AEC's estimated cost of construction of the AlW project increased from $25,000,000 in May 1955 to $35,000,000 in March 1957; this estimate remained unchanged as of March 1960. The Navy's estimated cost of the construction work to be performed under Westinghouse task orders issued to Newport News Shipbuilding and Dry Dock Company (Newport News), Newport News, Virginia, increased from original estimates totaling $3,400,000--mainly made in 1956--to $4,977,000 as of March 1960. The major causes cited by AEC and the major contractors for the increases in construction costs were (1) the shift from skilled Newport News shipbuilding craftsmen to less efficient local construction craft labor, (2) the various material problems and design changes, and (3) the original underestimating of costs. The AlW project was directed toward the development, construction, and operation of a nuclear propulsion plant suitable for installation in a large naval surface ship. The project involved the design, construction, and testing of a land-based prototype plant located at AEC's National Reactor Testing Station (NRTS) in Idaho. The prototype plant consists of a hull structure and the machinery for one of the four shafts of an aircraft carrier, including two reactor plants and a propulsion plant. The reactor plants are of the pressurized water type. The construction of the prototype plant began in April 1956 and was orig inally scheduled for completion by July 1958. The first reactor began to produce power in January 1959, and the prototype plant was first brought into full-power operation in September 1959 when the second reactor reached full power. Our findings and conclusions with respect to the contracts for the construction of the AlW land-based prototype project and the operations conducted under these contracts are as follows: 1. The terms of the contracts were consistent with the applicable legislation, and the purposes of the contracts were successfully accomplished. 2. Contract administration and management by Government personnel was vigorous and was competently handled. 3. We believe that the advantages of the effective organiza- |