Free Statement of Facts - District Court of Federal Claims - federal

Case 1:91-cv-01362-CFL

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Exhibit 46

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foridentification

..,
August 14, 1989

?-_Ct_,

Admiral James D. Watkins The Secretary of Energy Washington, D.C~ 20585 Dear Admiral Watkins:

In response to your request of June 15, 1989 we are submitting the plan you requested. Implementation of this plan, entitled "Management Plan for Rocky Flats Plant Operation-Improvements," is intended to assure that compliance with environmental, safety and health requirements will not be subordinated to the Plant's production missions. We believe the Plan also is responsive to those of the ten initiatives which you announced on June 27, 1989 which are applicable to operators of the Department's nuclear weapons facilities. The Plan has four integrated, core programs. Taken together we expect the actions proposed in the Plan will further heighten employee sensitivity~nd pe~~onal accountability to the necessary changes responsive to DOE's initiatives. These programs are focused on: ¯ o COM~.~NICATIONS -- both to our employees and the many constituenciea, federal, state and local, vitally interested in the Rocky Flats Plant. Consistent with protection of national security interests, we are committed to having an open environment that affirms and communicates effectively Rockwell's dedication to a culture of accountability for safety, health and environmental protection in its management of the Rocky Flats Plant. KNViRONMENTAL AND WASTE ~%NAGEMENT -- enhanced and accelerated actions for environmental protection and restoration and waste minimization, disposition and control are the cornerstones of our proposed efforts that build further on the five year Environmental Restoration/Waste Management Plan we submitted to your Department in April 1989.

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Admiral James D. Watkins August 14, 1989 Page 2

CONDUCT OF OPERATIONS -- formal, detailed and stringent criteria for the Plant~s processes and facilities are to be further documented and training programs augmented to assure that all Plant personnel recognize that safe and reliable operations must be based on full comgliance with these established criteria. These programs include, in addition to training, the implementation of NQA-I in the Plant's Quality Program, completion of a Nuclear Facilities Operations Manual program We began in October 1988, added health and safety initiatives and security and safeguards improvements. PLANT IMPROVEMENTS -- added facilities and state of the art equipment, together with an accelerated maintenance program to repair and replace aging facilities, will provide g[eate~ assurance of safe ~--ani~ environmentally sound Plane operation. The ~'~~np~g~am also provides~for additional resources for o

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~rtantIy, We are also continuing our review of applicable permits, compliance agreements and related governmental filings to determine any additional actions that may be necessary or appropriate thereunder. The Plan reflects the recommendations of the corporate overview board and the task force which were appointed as part of the actions I described in my letter to you of June 28, 1989o Accompanying the enclosed Plan is a detailed proposal (a copy. of which aiso accompanies this letter) that includes work statements, required resources, and schedule and cost data. Full implementation of the Plan, as you will see, requires substantial additional funding above currant Rocky Flats Plant baseline budgets. We also will need the continued cooperation of the Department in obtaining approvals of applicable federal, state and local authorities necessary to implement certain of the proposed actions.

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Admiral James D. August 14, 1989 Page 3

Watkins

We look forward to reviewing the enclosed Plan with and welcome comments, questions or recommendations. Sincerely,

your

staff

Donald

R.

Beall

Enclosures

_~__._~:q~(w/enclosures) sr

: The Honorable Henson ~4oore

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Exhibit 47

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The Secretary of Energy Washington, DC 20585 August 25, 19B9

foridentificafJon JEANNETTEJESSUP K.
Mr. Donald R. Beall Chairman of the Board and Chief Executive Officer Rockwell International Corporation 2230 East Imperial Highway E1 Segundo, California 90245 Dear Mr. Beall:

I am writing to confirm the discussions which Deputy Secretary W. Henson Moore had with Sam Iacobellis, President, Aerospace Operations, on August 17, 1989, regarding Rockwell's August 14th submittal of the "Management Plan for Rocky Flats Plant Operation Improvements." Detailed comments on the Rockwell Management Plan will be provided separately to Mr. Iacobellis by the Acting Assistant Secretary for Defense Programs. .I have reviewed the Rockwell Management Plan and have received ~::-~ from members of my-staff who-~have input also reviewed the plan~ I am in full agreement with Deputy Secretary Moore's position that this plan does not adequately address the issue of menageme~. problems at Rocky Flats as requested in my June 15th letter. understand that Rockwell has agreed to provide a written supplemental response addressing this issue by October i, 1989. In particular, I am concerned that your initial plan focuses largely on identification of resource requirements for acceleration of environmental and waste management initiatives as well as facility and capital upgrades. While I believe the capital intensive actions you propose are ultimately necessary to upgrade the Rocky Flats facilities, I am convinced that an aggressive program to infuse competent, highly skilled and disciplined staff is the most essential and productive action which you could take at this time. i recognize that the Department is obliged to take similar actions on a prompt basis. I have recently approved a near doubling of resident Departmental staff at the Rocky Flats Area Office to ensure that our full responsibilities can be effectively carried out. Further, I have reorganized line management to provide that

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2

the staff of the Rocky Flats Area Office report directly to the Assistant Secretary for Defense Programs to ensure that we can more effectively oversee and support Rocky Flats operations. I appreciate your continuing cooperation and your willingness to provide a revised Management Plan. I hope, however, that you will no~ wait until your October ist submittal of a revised plan to provide additional management and staff for the Rocky Flats Plant. I believe that prompt action in this regard is needed in order to achieve our mutual objective of improved operations at Rocky Flats. Sin.cerely yours,

~

Admiral,

U.S.

Navy

(Retired)

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Exhibit 48

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September

18,

1989

M

E ;4O

RA

N

D

U

H

for identificaf3o,,] JEANNETTE JE.SSUP K.
TO: FROM: RE: File Stephen Rocky A. Wakefield Contractor J~.O

Flats

At 4:45 p.m. on September 18, 1989, Don Beall, CEO of Rockwell International, telephoned Admiral Watkins to discuss Rockwell's continuing operations of the Rocky Flats Plant. The following recounts my understanding of the half-hour conversation which I overheard on the Admiral's second line. Beall initially statedi~h~t they had reviewed the "land ban" agreement between EPA and DOE and had some concern that the-agreement only applied to DOE and "expressly excluded" Rockwell from-~s coverage. Nevertheless, all things considered and with some risk of criminal prosecution, Rockwell had determined it would continue "at this time" to operate Rocky Plats. Beal! stated that, while common sense dictated that prosecutions for ongoing violations should not be brought in the face of the Justice Department letter of September 14, his lawyers were concerned with the politics of the situation and were advising him that significant risks existed that criminal prosecutions should be brought against Rockwell executives. He was advised that the DOJ had given other parties stronger assurances than this against prosecutions in the past and was determined to seek to obtain from DOJ strengthened assurances, hopefully with DOE support, in the near future. As part of this program r Rockwell is considering filing a petition within the next few days to define its rights under the Rocky Flats Contract. The bases for accepting these significant risks in order to continue to operate include the at

this

time

017SAWAN/039D01

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~emo to File

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national security risk of shutting down Rocky Flats and Rockwell's desire to continue in its business of operating the Plant. He was sensitive to the fact the Admiral had suggested on September 15 that DOE might terminate the contract if Rockwell stopped operations and that I had reiterated in a subsequent conversation with Charles Harff, his General Counsel, that DOE was prepared to terminate Rockwell for default and obtain a new contractor. Beall wanted the Admiral to know that Rockwell's only concern was the potential of criminal exposure to its employees and that, as a business matter, it wanted to continue as operator under its contract. At this point, Admiral Watkins expressed his understanding that Rockwell had no present intention o~ shutting the Plant down on the basis previously expressed, i.e., potential ongoing criminal exposure. However, he was concerned that Rockwell had not acknowledged properly his directives to accept a new culture which would place environment, safety and health on a level equivalent to production. Unless Rockwell was prepared to accept these changes and dedicate sufficient new managerial talent, the Admiral believed everyone would be better served by the parties~_mene~otiating the contract to permit the intro¯ duction-of a new contractor at Rocky Flats. ._ " Beal~ xesponded that he agreed with the Admiral's ~iews and was committed to bringing that new culture to Rocky Flats. His policy was to stay on the job and "do it right." He believed that Rockwell had good people, and the right people, at Rocky Flats. He intended to augment them with more management talent., but said that the difference between his views and the Admiral's might be in their assessment of the competence of those Rockwell personnel. If the Admiral didn't believe these personnel, properly directed, could get the job done, they had an honest difference of opinion and perhaps someone else should be the contractor. The Admiral said he appreciated hearing Beall's acceptance of the Admiral's philosophy and the need for a cultural change. As he understood it, Beall wanted Rockwell to remain as contractor at Rocky Flats and do a good job and that Beall would support this effort. The Admiral said that his remaining stated intention to obtain additional concern was assurances

Beall's

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from the DOJ. The Admiral's view was that these assurances would not be forthcoming; DOJ had already stuck its neck out and won't go any further. If the failure to get further assurances would cause Rockwell to reassess its position, it would be best to have that advice now so that DOE could renegotiate the contract and install a new contractor. If Beall could not keep his eye on the Rocky Flats operations, a new contractor could be in place in 4 to 8 weeks. Beall refused to say what his position would be if further entreaties at DOJ proved fruitless, but did indicate he would promptly advise DOE if his position toward continuing under the contract should change.

SAW:ccw

017SAW~/039D01

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Exhibit 49

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¯ The Secretary of Energy
Washington,DC20585

September

20, 1989

M~. Donald R. Beall Chairman of the Board and Chief Executive Officer Rockwell International Corporation 2230 East Imperial Highway E1 Segundo, California 90245 Dear Mr. Beall: As you know, the Department has had under advisement the question of the proper award fee determination to be made for the management and operation of the Department's Rocky Flats plant for the period October i, 1988, through March 31, 1989. Beceuse of the importance of this facility's operstions to DOE's ability to carry out its missions and the environmental sensitivity presented by its activities, at my direction the Department has considered with special care the proper fee for this period, particularly as it reflects Rockwell's performance in environment, safety and health. After this thorough review, the Department has concluded that an award fee for this period that reflects approximately 40% of the total possible award fee is the proper determination in this instance. Accordingly, Rockwell will, in the near future, be advised of the particulars of the award fee determination of the Department by the appropriate contracting officer, as is the normal procedure. I feel obliged to observe, however, that this deter~inatlon was made under an award fee plan as it ........ existed before the recent revisions to award fee plans enabled more s~rlngent downward adjustments in the even~ of deficiencies in contractor performance for environment, safety and health. I am encouraged,

002012

8,859,013

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2 however, by Rockwell's added sensitivity and appreciation of the importance of these areas in view of.the risk to continued operation that can be presented by any departdre from excellence in performance in these highly regulated areas of activity. I particularly appreciate your statements to me on September 18 ~hat you era in accord wi~/~ my views that environment, safety and health must be given equal status with production objectives. I'am pleased that you accept ~he need for a cultural change at Rocky Flats and will augment management ~here to achieve excellence in Rockwell's performance under its contracts with this Department. Sincerely,

~

Admlral,

U.S.

Navy (Retired)

E 0020J3 8,859,014