RJO Guides MOX Project Prime Contractor to Successful Resolution of $1 Billion Dispute and Termination

After over three years of litigation and nearly six years of claims prosecution, with the dismissal of all claims on December 10, 2019, RJO resolved a sprawling series of disputes between its client, CB&I AREVA MOX Services LLC, and the Department of Energy’s National Nuclear Security Administration. The parties were over $1 billion apart in their competing claims. At the same time, RJO resolved one of the largest federal terminations for convenience in history for its client.

The MOX Project was to be a 400,000 square foot facility on the Savannah River Site near Aiken, South Carolina. In an unprecedented process, it was designed to combine plutonium from decommissioned nuclear warheads with uranium oxide, and pelletize and stack the mixed oxide into fuel rods that could be irradiated in commercial nuclear power reactors. In 2013, DOE’s support for the project waned as the estimated costs and schedule grew from initial projections. Congressional support, however, staved off termination for over five years. In the midst of litigation, NNSA finally ended the project in October 2018, after spending $6 billion on the facility.

During the five-year limbo, MOX Services was required to continue construction with inadequate congressional funding, and for a reluctant and at times hostile owner. Without political support for termination, DOE questioned MOX Services’ legitimately incurred costs, refused to acknowledge contract changes or approve critical work, rejected efforts to maintain the nuclear workforce, and attacked the contractor’s performance in the press and before Congress.

While DOE paid most of MOX Services’ costs from 2013 through termination, for over eight years before resolution the government refused to pay the contractor virtually any fee. RJO guided the contractor through this contentious and dysfunctional period. RJO developed a series of large requests for equitable adjustment, which were later presented to NNSA as certified claims. These claims became the basis for nine actions consolidated in the Court of Federal Claims.

The termination complicated an already complex series of disputes. Ultimately, following three years of active pleadings and motions practice, including a Federal Circuit appeal, and 18 months of contentious discovery, the parties began mediation in the spring of 2019. Heading off what looked to be years of litigation, in five months the parties had negotiated and executed a non-confidential settlement agreement.

The settlement resulted in a $186,000,000 payment to MOX Services. This figure represented the payment of all remaining fee available under the contract, plus an estimated sum for MOX Services to accept all termination liability, including subcontractor liability. In a very rare, and perhaps unique, accomplishment for a termination of this magnitude, the settlement occurred before MOX Services’ final termination settlement proposal was even due.

RJO’s Mark Linderman (lead counsel) and Dennis Callahan guided MOX Services throughout the representation from the first meetings to develop REAs through settlement payment.  Lisa Himes and Stephen Bacon also took leading roles in the litigation.  Approximately ten other RJO lawyers contributed significantly to achieving the beneficial conclusion of all of these matters.