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B-178205.80 1 (1978-03-16)

handle is hein.gao/gaobadtgi0001 and id is 1 raw text is: S ' NB 78205, ? COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON, D.C. 20548 MAR 16 1978 The Honorable Abraham A. Ribicoff Chairman, Committee on Governmental Affairs united States Senate Dear Mr. Chairman: On November 14, 1977, the Under Secretary of the Department of Energy (DOE) responded to you on our August 17, 1977, report on the first Federal attempt to demonstrate a synthetic fossil energy technology--the Coalcon project. Our report and the DOE response are enclosed for your reference. The purpose of this letter is to summarize the situation with respect to the Coalcon project and to comment on parts of the DOE response where it disagrees with our report. The Coalcon project was a part of the former Energy Research and Development Administration's (ERDA's) Clean Boiler Fuel Demonstration Program which was initiated in 1974 by the Office of Coal Research, Department of the Interior. Coalcon--a partnership between Chemical Construction Corpora- tion and Union Carbide Corporation--was awarded a $237 million contract by Interior on January 17, 1975, to design, construct, and operate a clean boiler fuel demonstration plant. ERDA terminated the project on June 15, 1977, without achieving project objectives. We reported that the project failed in its initial phase despite a $10 million cost over- run (211 percent) and a 14-1/2 month schedule slippage. Over- all, we concluded that ERDA did not properly manage the proj- ect. In responding to you on our report, DOE disagreed with our (1) computation of the cost overrun for the project and (2) assessment of the adequacy of DOE's monitoring of the project. As discussed below, we believe our report was accu- rate on both accounts. COST OVEFRUN In computing the 211 percent cost overrun for the Coalcon project, we attributed all of the project's $14.8 million cost at the time of our review to Phase i of the contract (concep- tual and preliminary demonstration plant design and pilot tests) and compared that to the contract ceiling of $4.75 mil- lion for Phase I. ......................................*. . K' . I .L b 5-145

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