Thank you, Chair, for this opportunity to appear as a witness.
The government-owned, contractor-operated, or GOCO, model for managing AECL's nuclear assets and asset retirement obligations creates major risks—ballooning tax expenditures, an ever-growing nuclear liability, poor waste disposal projects and public health risks. These risks increase when AECL's responsibilities are contracted to U.S. corporations with little Canadian experience.
In 2015, the former AECL subsidiary, Canadian Nuclear Laboratories, or CNL, was sold to a U.S.-led consortium for one dollar. That was the final act of restructuring AECL. The stated rationale was that private sector rigour and expertise would reduce AECL's nuclear liability and operating costs. But this did not happen. Last year, as total AECL funding went from $1.59 billion to $1.95 billion, AECL's asset retirement obligations—that is, the decommissioning liability—went from $8.7 billion to $9.5 billion.
Parliamentary e-petition 6636, signed by nearly 2,500 Canadians, noted that AECL's performance under the GOCO model was never audited. It called for an independent, objective and systematic assessment by the Auditor General of Canada, and asked that any new contract be delayed until audit results were made public and discussed by Parliament. This also did not happen.
The NRCan minister, Tim Hodgson, replied that AECL's performance under the GOCO model was part of a special examination conducted by the Auditor General in 2017, with a subsequent special examination slated for 2026-27. The 2017 audit occurred only one year after restructuring, when AECL “had not yet evaluated the contractor's performance with respect to annual earnable awards.” The audit found that AECL had no “formal, systematic process for monitoring and reporting on the risks”, and that AECL's reporting framework could not measure the overall objectives of restructuring, which were to “enhance efficiency and effectiveness, and to contain and reduce costs and risks for Canadians over time.”
Do these weaknesses persist? How were fee awards issued during the previous contract? What are the award provisions in the new contract? Has the committee seen it?
Richard Sexton, an American with ties to members of the previous contracting corporation, was AECL's president during most of the previous contract. He served as fee determination officer. Another American, David Hess, joined AECL as lead contracting officer in April 2015. He is shown today on LinkedIn as managing “the multi-billion dollar cost-reimbursement contracts and agreements governing the contractors’ activities” and as holding “unlimited contracting authority”.
AECL is building an advanced nuclear materials research centre without a regulatory hearing or other form of government oversight. It would allow training and experimentation in handling plutonium, the key element in nuclear weapons. Benefits to Canadians are questionable, but obvious for American members of Nuclear Laboratory Partners of Canada, all of whom manage U.S. nuclear weapons facilities.
Radiation's health risks make managing nuclear waste far more expensive than for other waste. American contractors have an ever-growing guaranteed revenue stream if AECL's waste remains in storage or is put in an above-ground facility, such as the proposed NSDF, where it would require centuries of institutional control and monitoring. They have no incentive to examine safer, in-ground facilities. By insisting on a permanent facility at AECL's Chalk River Laboratories on the Ottawa River, the American contractors are ignoring the geological and biophysical limitations of that location. Their experience with waste management in arid U.S. environments is not transferable to an earthquake-prone area next to a river that provides drinking water for millions of Canadians.
When American managers arrived in 2015, they discarded existing long-term waste management plans.