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Thursday, 14 May 2009
Page: 2973

Senator Ludlam asked the Minister for Innovation, Industry, Science and Research, upon notice, on 11 March 2009:

(1)   Given that the department’s 2008-09 Portfolio Budget Statement indicates that ‘Subject to regulatory approvals, ANSTO [Australian Nuclear Science and Technology Organisation] expects to complete commissioning of the OPAL [Open Pool Australian Lightwater] research reactor during the 2008-09 financial year’, is this commissioning still part of the contract for the Argentinean company, INVAP.

(2)   In 2002, when INVAP was contracted to design, construct and commission the OPAL reactor it was deemed financially viable, however, given the global economic crisis, has INVAP’s financial viability been recently investigated to ascertain INVAP’s capacity to pay any major claims; if so, is the Minister satisfied that INVAP is financially viable and able to pay the damages sought by the Government.

(3)   What is the extent of the current claims being made on INVAP.

(4) (a)   What court proceedings have occurred since 2002 in regard to the ANSTO/INVAP contract; and (b) what impacts have these court proceedings had on current negotiations with INVAP on completion of commissioning and performance demonstrations.

(5) (a)   Which department currently approves claims from ANSTO/INVAP for the OPAL project; and (b) who in the department signs off on those payments.

(6)   Can details be provided of the claims in regard to extras or variations claimed over and above the original lump sum for the contract.

(7)   Given that the original tender would have a schedule of costs associated with each major phase and component of the project, and that negotiations are currently in progress regarding extra items: (a) what were the original cost estimates for the OPAL project; and (b) who prepared these estimates.

(8)   Were the costs of supply of spare parts from INVAP (CN129849 valued at $1 140 357 for the period 2008-11) included in any estimates for completion of the OPAL project.

(9)   What are the costs of managing this supply contract, including any overseas inspection requirements.

(10)   What quality assurance provisions have been included in the contract for the spare parts to ensure that components provided by INVAP are safe and conform to all technical requirements.

(11)   What contingency provisions have ANSTO made for the inability of INVAP to provide conforming components.

(12)   Is ANSTO still considering building a treatment plant for the heavy water to mitigate the problems caused by the seepage.

(13)   Was this covered in the original estimate for the reactor facility or is it to be covered in defects claims from INVAP.

(14)   Were the Australian Radiation Protection and Nuclear Safety Agency’s (ARPANSA’s) costs for consulting and visits to Egypt, Argentina and France taken into account in the estimates for the reactor facility construction.

(15)   Has a cost benefit analysis been carried out based on the current cost of the reactor facility; if so, what were the results.

(16)   How much is the OPAL project contributing to ANSTO’s annual loss.

(17)   In the construction of the reactor pool liner, were the welds connecting the wall of the reactor pool liner to the reactor base radiographed or were they tested using ultrasound.

(18)   Why was porosity of the welds, that are now leaking, not picked up by testing and the quality assurance system.

(19)   What risk is there of further leaking in other vessels.

(20)   Why was it not until commissioning that the porosity in the welds was discovered.

(21)   (a) Has ANSTO examined the documents and test certificates for the leaking welds; and (b) do these documents indicate non-conformance.

(22)   Are the current negotiations for compensation and defects liability being held with the John Holland Evans Deakin Joint Venture (JHEDI) alliance or just with INVAP.

(23)   What are the contractual relationships between ANSTO and JHEDI.

(24)   Was the fabrication company DME Engineering Services Pty Ltd that made the non-conformances nominated in the tender, or were they chosen internally by JHEDI after the award of the main contract

(25)   (a) How long is the defects liability period for INVAP; and (b) what occurs at the end of the defects liability period if there are further leaks.

(26)   Are there liquidated damages opportunities in the INVAP/ANSTO contract for compensation resulting from errors and delays.

(27)   How confident is ANSTO that vessels and other components which were fabricated in Argentina away from Australian inspectors, comply with the required Australian standards and are not a safety risk.

(28)   Are the staff supervising the ongoing repair work of INVAP qualified in fabrication inspection; if so, can details be provided of the number and qualifications of these staff.

(29)   Given that some of the assumptions in the original safety reviews have shown to be incorrect, and the vessel may not have the engineering integrity assumed in the original assessment, has a further safety assessment or risk analysis been undertaken.

(30)   What magnitude of earthquake events was the reactor designed to tolerate.

(31)   Has the patched and leaking vessel been reassessed for integrity under earthquakes of these magnitudes.

(32)   Has ANSTO re-evaluated the reactor’s ability to tolerate earthquake events given the issues arising from the patched and leaking reactor vessel.

(33)   Given that the risk analysis informing the reference accident assumed a ‘high quality design’ can no longer be guaranteed as several basic errors have occurred, is the reference accident based on a certain level of engineering integrity of the facility still considered valid.

(34)   Was the independent peer review of the Preliminary Safety Analysis Report recommended by Environment Australia undertaken; if so: (a) which organisation conducted the review; (b) did the review pick up the design errors; (c) what were the recommendations of the review; and (d) will the Minister table a copy of this review.

(35)   Given that the construction license process and negotiations with ARPANSA were not complete until after the award of the contract, were the license requirements imposed on ANSTO by ARPANSA fully reflected in the contract documents for the vendors, fabricators, construction contractors and subcontractors.

(36)   How long has the occupational health and safety unit at ANSTO been in operation and what are the current competencies of staff in relation to safety standards.

(37)   Given that the Welding Technology Institute of Australia’s (WTIA’s) review of the ANSTO strategy for the repairs commented that ‘in qualifying the weld procedure used for welding the 6mm wall to 12mm base plate, test coupons had not used plate of sufficient thickness’, did the recommended re-qualification of the weld procedure occur.

(38)   Has WTIA been asked to further review the welds.

(39)   Given that the non-standard engineering drawings provided by INVAP to the liner fabricators was a non-conformance: (a) was the drawing that did not comply with Australian practice recorded as a non-conformance; and (b) were subsequent drawings and documents checked for compliance with Australian practice.

(40)   As a result of the non-conformances it would appear that ARPANSA has taken on a far more detailed supervisory role than would be expected of a high level licence approval authority, what are the costs for ARPANSA’s work on this project.

(41)   Given that repeated reference is made to a final safety analysis report (FSAR), what is the status of the FSAR.

(42)   Given that a Deed of Indemnity exists between the Commonwealth Government and ANSTO under which the Government has formally agreed to indemnify ANSTO and ANSTO officers from any loss or liability arising from claims caused by ionising radiation, who is ultimately responsible in the event of accidental radiation exposure to the public.

Senator Carr (Minister for Innovation, Industry, Science and Research) —The answer to the honourable senator’s question is as follows:

(1)   Yes. With respect to commissioning of the OPAL reactor, the Argentine company, INVAP (the Contractor) is required under the Contract to develop and implement a Commissioning Plan that includes all inspections and tests to be undertaken during commissioning, including contract performance demonstration tests to be undertaken by the Contractor. The Commissioning Plan has been executed and the contract performance demonstration tests have been completed. ANSTO expects to soon receive formal recognition for the full conclusion of commissioning from ARPANSA.

(2)   INVAP’s financial viability has not been recently investigated, but ANSTO holds securities as part of the contract.

(3)   There are no “claims” on INVAP. Rectifications are currently underway in accordance with the provisions of the Contract. INVAP however are currently late in completing some parts of the Contract and are therefore exposed to Liquidated Damages. ANSTO will recover money paid to INVAP for fuel supplied under the contract with INVAP that did not meet contractual specifications. These matters are consistent with normal construction industry practice.

(4) (a)   None. (b) N/A.

(5) (a)   ANSTO is a statutory authority with full authority to manage the INVAP contract. No departmental sign-off is necessary. (b) Not applicable.

(6)   As would be anticipated in a project of this complexity, there have been many contract variations of a minor nature covering necessary technical changes to requirements. The total value of contract variations paid to date is in the order of $40 million. As noted in the response to Question No. BI-100, asked in the Senate Standing Committee on Economics in the June 2008 Budget Estimates Hearing, the major variations related to the need to meet additional requirements specified by the project regulators, the Australian Radiation Protection and Nuclear Safety Agency (ARPANSA) and the Australian Safeguards and Non-Proliferation Office (ASNO), and to meet additional project costs arising from the discovery of a geological anomaly at the site at the commencement of construction in 2002. Claims for an additional value of approximately $10 million have yet to be resolved, and will be resolved together with the resolution of the liquidated damages issue referred to in the response to (3) above.

(7) (a)   The original cost estimate for the OPAL reactor project was $286.4 million (1997 dollars); (b) ANSTO, in consultation with the Department of Finance.

(8)   They were not included in the original cost estimate.

(9)   ANSTO’s project management costs for the OPAL contract, including the cost of overseas inspections, have been $11.1 million.

(10)   INVAP performs its activities under the control of a quality management system which complies with the ISO 9001 standard and appropriate nuclear standards.

(11)   There are several contractual provisions allowed under the contract for non-conforming components, including: Having the component removed, demolished, replaced or corrected; ANSTO directing a variation to INVAP (with appropriate costs directed to the Contractor); or ANSTO accepting the non-conforming component (with appropriate deductions from payments to the Contractor).

(12)   Yes. The Contractor, INVAP, has proposed the construction of a heavy water treatment plant as a component of the disposition of the reflector vessel defect.

(13)   The cost of the construction of a heavy water treatment plant was not covered in the original estimate for the reactor facility. It is the responsibility of INVAP to rectify defects at their cost.

(14)   ANSTO paid ARPANSA a construction licence application fee of $420,000, which came out of the overall moneys allocated by government. That licence fee was intended to meet ARPANSA’s costs of assessing the application, including any travel costs.

(15)   No. It is not normal practice to carry out cost benefit analyses following the completion of a project.

(16)   Nothing.

(17)   The welds connecting the wall of the reactor pool liner to the base of the pool were tested using ultrasonics.

(18)   The cause of the weld defects is being investigated by ANSTO and INVAP. The defects may have only occurred as a result of the installation of other components after the reflector vessel was installed and tested in the reactor pool. In those circumstances, there would have been no defects to detect at the time of testing. Should the defects have been pre-existing, one reason for the defects being missed in the dye penetrant testing might be due to the difficulty of the inspection task, being undertaken with flange studs in place thus limiting visibility of the seal weld, and the use of standard dye penetrant contrast media. Under that scenario, the failure to detect the defects during helium leak testing may have been due to the presence of entrapped water between the flange faces, which would result in a delayed onset of leak detection. It is standard engineering practice, for industrial safety reasons, to undertake a hydrostatic test (a pressure test) on pressure vessels prior to undertaking a gaseous leak test. This practice was followed for the reflector vessel. Unfortunately, because of the unique design of the vessel, it is possible that a small quantity of water remained within the vessel following the hydrostatic test. This water may have masked the presence of any pre-existing defects during the subsequent gaseous leak test.

(19)   The design of the OPAL reactor takes into consideration the risk of leakage from other pressure vessels in the same way as other plant (e.g. access for in-service inspections, leakage detection provision, and conservative design for the applicable operating conditions). There is currently no evidence of leaks in other pressure vessels at OPAL. The risk of leaks in pressure vessels is low, and maintenance practices provide a process for adequate monitoring and corrective actions. In the unlikely event of further defects, there are safety systems in place, which would ensure that they would have no effect upon the overall safety of the reactor.

(20)   See response to (18).

(21)   (a) Yes. (b) No.

(22)   Contractual negotiations can only be held with INVAP, as ANSTO have no direct contractual relationship with JHEDI.

(23)   There is no direct contractual relationship between ANSTO and JHEDI. JHEDI is a subcontractor to INVAP.

(24)   The 2003 misplacement of penetrations in the OPAL pool tank, for which DME was responsible, was remedied at the time and is unrelated to the current issues in relation to seepage in the reflector vessel (which do not involve DME). DME were not nominated in the tender.

(25)   (a) Warranty periods vary dependent upon what part of the works is involved, but in general are for around 24 months. (b) The Contract has a latent defects period of 15 years to cover such matters.

(26)   There are liquidated damages applicable to the late completion of the separable parts of the works.

(27)   ANSTO is confident that vessels and other components which were fabricated in Argentina comply with the required Australian standards and are not a safety risk because: Detail engineering documentation for design was subject to review, verification and acceptance by ANSTO and ARPANSA prior to manufacture. Inspection and test plans for manufacture were subject to review, verification and acceptance by ANSTO prior to manufacture. Witness and hold points for key inspections and tests were implemented by ANSTO and ARPANSA inspectors in Argentina. Manufacturing records (History Dockets) were reviewed by ANSTO and ARPANSA inspectors both in Argentina and Australia.

(28)   ANSTO staff supervising the ongoing repair work of INVAP are qualified and experienced mechanical engineers and technicians from both the OPAL Engineering group and the ANSTO Engineering and Technical Services group.

(29)   The only assumption made in the Safety Analysis Report in relation to the integrity of the reflector vessel is that any leakage would be inwards (i.e. light water from the reactor pool leaking into the reflector vessel) due to the engineered pressure differential. The actual presence of leaks does not invalidate this assumption and as such, no additional safety assessment or risk analysis is required with respect to the leaks themselves. Additional safety assessments and risk analyses have been performed in relation to activities intended to control and/or mitigate the effects of the reflector vessel leaks in accordance with standard engineering practice.

(30)   The OPAL reactor is designed to be able to be shutdown and maintained in a safe shutdown state following a 1 in 10000 year earthquake consistent with international best practice. For the Lucas Heights site, this equates to an earthquake with a mean peak horizontal ground acceleration of 0.37 g with the response spectrum based on the Loma Prieta earthquake.

(31)   This question appears to confuse the 2003 misplacement of penetrations in the OPAL pool tank with the current issues in relation to seepage in the reflector vessel. It is therefore unclear which “vessel” is being referred to. With respect to the reactor pool liner, the repairs were completed to the same standard as the liner itself and as such, no leakage is occurring and no re-assessment of the liner’s integrity is required. With respect to the reflector vessel, the seepage is occurring through non-structural welds and as such, no re-assessment of the structural integrity is required.

(32)   See the response to (31).

(33)   The purpose of the Reference Accident was to assess the suitability of the proposed site. As such, it assumed an accident and assessed what the likely consequences of that accident would be. As such, minor engineering issues which have arisen during construction and commissioning do not affect the relevance of that accident. In addition, the assumption that “a ‘high quality design’ can no longer be guaranteed as several basic errors have occurred” misrepresents the situation in that neither the repairs to the reactor pool liner nor the reflector vessel leaks arose because of errors of design.

(34)   Yes. (a) The CEO of ARPANSA commissioned an international team of experts, led by an expert from the International Atomic Energy Agency to conduct an independent peer review of the PSAR in 2001. (b) There were no design errors. (c) and (d) The peer review was published on the ARPANSA web site in July 2001, and can be found at:

(35)   The contract requires INVAP to meet ARPANSA requirements.

(36)   There has been a safety division (under various titles) at the Australian Atomic Energy Commission and then ANSTO since 1957. Currently the Safety and Radiation Protection Division employees approximately 50 staff across four main areas, Radiation Protection, Occupational Hygiene and Safety Services and Environmental Monitoring. Those staff have qualifications and significant experience in radiological protection, occupational health and safety, environmental science, engineering and other disciplines.

(37)   Yes.

(38)   No.

(39)   The engineering drawings provided by INVAP to the liner fabricators were not a non-conformance.

(40)   As would be evident from a survey of IAEA standards, a nuclear regulator is not “a high level licence approval authority”; rather the regulator plays a continual role in monitoring safety issues. ARPANSA’s role in relation to this project is consistent with that international practice. ANSTO is not aware of ARPANSA’s costs, although it does note that it pays annual licence fees to ARPANSA, in addition to the licence application fees referred to in the response to (14).

(41)   The Safety Analysis Report is a living document, and was completely revised as part of the Application for an Operating Licence (available on the ARPANSA web site). As required by Licence Condition 1.2, the Safety Analysis Report is currently undergoing further revision to incorporate results of the commissioning program and various changes and modifications that have been implemented since the granting of the licence. Further updates will occur during the life of the facility as part of a periodic safety review in accordance with Licence Conditions 1.1 and 1.3.

(42)   ANSTO, as operator of the facility, is responsible for its safe operation. However, in terms of compensating for any harm as a result of an incident at the facility, ANSTO holds commercial insurance to cover a range of possible losses, including damage caused to third persons by ANSTO activities. In the very unlikely event of accidental radiation exposure to the public, that insurance policy would be invoked. Should that insurance not apply or be insufficient, the Deed of Indemnity would be invoked.