It’s in the Contract: How the Department of Energy Controls the Future of the Downtown Lab Project Through the SRNL Operating Contract.

by Don Moniak
August 8, 2023
Updated August 9, 2023

Introduction

In June 2022 the South Carolina Legislature finalized the allocation of $525 million from the State of South Carolina’s Savannah River Site (SRS) plutonium settlement with the federal government. Of the $169 million that came to Aiken County, $20 million was allocated for “Off-site Infrastructure Improvements for SRS/National Lab, including the Aiken Technology/Innovation Corridor.”

Aiken County received the $20 million in funds. Savannah River National Laboratory’s (SRNL) initial involvement was limited to site selection and planning, but it did not receive any funding. The funds would be transferred to the governmental jurisdiction within the county as chosen by SRNL. That government body would then be responsible for the design and construction of a “Workforce Development” facility for the lab’s use.

SRNL eventually selected a controversial downtown City of Aiken location, situated on four former Project Pascalis properties owned at the time by the Aiken Municipal Development Commission (AMDC). When the site was announced, SRNL Director Dr. Vahid Majidi stated the most important factor was because “this building is the community face of the laboratory.”

As a result, the $20 million is now designated to the City of Aiken, whose request for the funds stated the project was for “construction of a workforce development center, shared event/exhibition space, and office space for the Savannah River National Laboratory.”

This site selection process took place in 2022 behind closed doors, with no public input and no public record. As reported in Three Missing Pages, the City then secretly chose the Aiken Corporation in November of 2022 to pursue a pre-development role—even though the properties were still owned and controlled by the AMDC.

The project went public in January 2023, and for five months it was presented, with great certainty for success, as a joint project between SRNL , the City of Aiken, and the Aiken Corporation. The city was to fund it, the Aiken Corporation was to prepare for development and later own and lease the facility, and SRNL was to provide design guidance and pay rent to the Aiken Corporation.

In the past month, the arrangement appears to have changed after the Department of Energy and the SRNL contractor issued a joint statement distancing themselves from the project. It is now characterized as a City of Aiken project, with SRNL mentioned as only a possible future tenant.

As it turns out, it was never SRNL’s decision to make. Rather, as administrator of SRNL’s operating contract, it is the Department of Energy that has final approval authority of the project location and other parameters.

Is the City of Aiken now planning to fund the design and construction of a 45,000-square-foot office building with no tenant, just months after requesting $20 million of plutonium funds specifically to construct a facility for the lab’s use?

A Dramatic but Subtle Change in Tone and Commitment

One month ago, the Department of Energy and Savannah River National Laboratory issued a statement indicating they are distancing themselves from the City of Aiken’s proposed $20-million-plus, 45,000 square foot, downtown “Workforce Development” office complex.

The statement was widely publicized when WFXG-FOX News of Augusta aired reporter Lauren Young’s July 12th story on the increasing controversy surrounding the SRNL project. (1). 

SRNL officials responded to Ms. Young’s request for comment by issuing an ambiguous, noncommittal, and eyebrow-raising prepared statement (below) denying an active role in, nor any commitment to, the $20 million plus project. Ms. Young’s report correctly stated that until now this had always been presented as a lab project.

Past Certainty of a Downtown Lab Project With SRNL Participation

The SRNL statement stands in vivid contrast to official expressions of optimism, certitude, and surety at the project’s debut announcement on January 23, 2023. This certainty continued until Mayor Rick Osbon’s June 9th advocacy column in the Aiken Standard; and two subsequent Aiken Standard op-eds by Aiken Corporation Board members Buzz Rich and Jason Rabun.

With the exception of the SRNL project being carefully rebranded as “a mixed-use facility” in May, the collaboration between the City, Aiken Corporation, and SRNL was not publicly in doubt until the mid-July news that SRNL is no longer directly involved. Statements of surety included:

• “I think is a great one that will be one of those major win-wins the Mayor has mentioned…I am pleased to say that downtown Aiken has been selected as SRS’s overwhelming preference.” — Mayor Pro Tem Ed Woltz, January 23, 2023, State of the City address. (2)
  
• ”But most  importantly this building is the community face of the laboratory…This  building…brings the Savannah River National Laboratory into the heart of the Aiken Community.” — SRNL Director Vahid Majidi, State of the City Address.(3)
  
• “SRNL (BSRA) has agreed to negotiate an operating agreement under which the tenant will be responsible for proportional utility, maintenance, tax and insurance obligations for the portion of the facility exclusively occupied by the tenant.” — City Manager Stuart Bedenbaugh in the SRS Settlement Request Form submitted to the South Carolina Joint Review Board via Aiken County Administrator Clay Killian.
  
• “If the project were to proceed with the Lab, they will provide a concept plan of what they want.“  — Aiken City Councilwoman Andrea Gregory, March 13, 2023 City Council Meeting.
  
• “The Savannah River Site is one of the largest employers in the region and will continue its commitment to the area with the new SRNL offices.” — Mayor Rick Osbon, Guest Column: “New mixed-use office building will deliver value for Aiken,” Aiken Standard, June 9, 2023. 

The SRNL Operating Contract and DOE’s Veto Power

Following are five provisions from the SRNL operating contract to consider when trying to make sense of the Department of Energy/SRNL public statement distancing themselves from the project.

1. Savannah River National Laboratory (SRNL) is a Department of Energy (DOE) institution that is currently operated under a contract with the Battelle Savannah River Alliance (BSRA). As such, it is owned by the American taxpayers.
   
   The DOE/BSRA contract designates a Director as the “authorized supervisor for technical and administrative performance” for all of the lab’s work. The Director is “the primary point of contact between the SRNL Contractor and (DOE’s) Contract  Representative.” Dr. Majidi as the current director represents the contractor. (Section G-2003).
   
   
2. DOE approves all public communications from its contractors:
   
   “All communications or releases of information to the public, the media, or Members of Congress prepared by the Contractor related to work performed under the contract shall be reviewed and approved by DOE prior to issuance. Therefore, the Contractor shall, at least seven calendar days prior to the planned issue date, submit a draft copy to the Contracting Officer of any planned communications” for review prior to release. (Section H-51)
   
   Both the latest official SRNL/DOE position statement, and likely Dr. Majidi’s January 23rd speech, were pre-approved by DOE. Therefore the speech also appears to have reflected DOE’s position. The contract provision may also account for the silence of SRNL leadership at the only public forum held to date on February 6th.
   
   
3. Final decisions involving third-party facilities are made by mutual agreement between DOE and BSRA.

“DOE agrees to furnish and make available to the Contractor, for its possession and use in performing the work under this contract… Government-owned or leased facilities at such other locations as may be approved by DOE for use under this contract; and Subject to mutual agreement, other facilities may be used in the performance of the work under this contract.” (Section H-54)

Therefore, DOE has approval power over the use of any offsite, third-party facilities.


4. BSRA is required to be closely involved with any leased, third-party facilities:

The Contractor shall perform overall integrated planning, acquisition, upgrades, and management of Government-owned, leased, or controlled facilities and real property accountable to SRNL. (Section C, 2.6.1)

DOE/SRNL’s position that the downtown project is strictly a City of Aiken project is contrary to this contractual requirement and many other similar clauses.


5. BSRA’s contract includes a standard “Community Commitment” clause, which involves identifying “those meaningful actions and activities that it intends to implement within the surrounding counties and local municipalities.” (Section H-50)

The Community Commitment clause reflects DOE’s policy (5) to “recognize that giving back to the community is a worthwhile business practice.”

This policy exists in part to project a positive community image of the Savannah River Site. BSRA’s Community Commitment plan describes a continuation of “the strong philanthropy and sponsorships of the SRS contractor community as well as the expansion of efforts to engage SRNL staff in community outreach.”

Questions for the Department of Energy

There are several questions. and implications of these contractual obligations, including :

• Is the positive image of DOE and SRNL threatened by substantive community opposition to an SRNL facility in the downtown Aiken retail district? DOE’s Community Commitment requirement clearly does not include incitement of controversy. 
  
• Has the Department of Energy become uncomfortable with SRNL leasing a facility through the complex, multiple layers of the City and the Aiken Corporation? 
  
• Has the uncertainty and evolving nature of the downtown project , as reported in What is the Status of the Downtown SRNL Project and The $20 Million Dollar Question, given DOE second thoughts about any involvement with an Aiken Corporation that has not completed a major capital project in twenty years? And has Aiken Corporation’s recent Notification of Violation from the South Carolina Secretary of State’s Office added more apprehension to DOE’s decision making process?
  
  Only the Department of Energy can answer these questions, and given its long history of secrecy and lack of disclosure it is unlikely to do so.
  
  In the meantime, Aiken County residents are justified in asking these and other questions:
  
• Is the City of Aiken forging ahead with a $20 million, 45,000 square-foot, three-story downtown office building without a  committed tenant?
  
• Can the City of Aiken use the $20 million originally allocated to Aiken County by the legislature, and transferred to the City, for anything other than a facility specifically dedicated to the lab? 
  
• Is the Department of Energy and SRNL/BSRA interested in the most recent proposal by developer Tracey Turner for the city to construct  the facility at former County Administration Building and Old Aiken Hospital? 

Footnotes

(1) The lab facility, wherever it is located, is funded by $20 million of State of South Carolina plutonium settlement funds. The proposed downtown location is situated on properties obtained by the Aiken Municipal Development Commission for the failed Pascalis project. The properties are now owned by the City of Aiken. 

The involved properties cost the City of Aiken ~$4.25 million. If the property is leased to the Aiken Corporation, then the SRNL project costs rise to nearly $25 million.

If a parking garage is built to accommodate the facility workforce and visitors, that adds up to another $7 million in costs—also likely to derive from plutonium settlement funds. That raises project costs to ~$32 million.

A surface parking lot on Aiken Corporation property on Newberry Street is also proposed to supplement the garage. The property was purchased for $650,000 in 2022 utilizing a City of Aiken loan. This raises the costs by at least another $1 million when the loan is included.

__________

(2) Following is a transcript of Councilman Ed Woltz’s description of the proposed facility, slightly edited for clarity from archived City of Aiken YouTube transcript. Mr. Woltz was incorrect in stating the alternative location was “outside the gate” of Savannah River Site. The $20 million dedicated to an SRNL facility was originally intended to be located at or near the University of South Carolina at Aiken (USCA) campus. The intent was to create a broader “innovation district” with the Department of Energy’s Advanced Manufacturing Collaborative presently under construction at USCA.

Councilman Ed Woltz: Thank you Mr Mayor. Well ladies and gentlemen this is the first time I’ve ever used these things so I’m going to do my best on it. We’re going to do this together ladies and gentlemen. Over the last several weeks I’ve been asked to take the lead for Council and exploring a plan that I think is a great one that will be one of those major win-wins the Mayor has mentioned.

As as you may know Governor Henry McMasters and our legislative delegation have committed to investing in a new Workforce Development Center for the Savannah River National Laboratory.  This new building is to be located more centrally than the lab’s aging and remote facilities that’s at the Savannah River Site now. This is so important that the state has set aside 20 million in plutonium settlement funding to get it built. That’s 20 million dollars that’s in addition

[Applause]

That’s in addition to 25 million the Mayor just mentioned. That’s 45 million dollars of investment. It’s important to mention at this point that I may be up here leading this charge, but the credit is not mine the idea belongs to others. Former Aiken Municipal Development Corporation members chairman Keith Wood, Vice chairman Christopher Verenes, and Chamber of Commerce president David Jamerson really identified this as an opportunity more than one year ago. Thank you David.

They have worked tirelessly to get the funds for it and to have it located here in Aiken,  my hat’s off to them for teeing this up when it was needed. Even when the the funds seemed like a done deal last year, the question is where would it be built stayed up in the air. Could it be downtown Aiken or would it be just outside the Gated SRS.  What a night I am pleased to say that downtown Aiken has been selected as SRS’s overwhelming preference

[Applause]

It doesn’t hurt that while all this was taking place at about the same time it became clear that’s a very nice downtown properties that he owns right across the street just might be available for a new and better idea. Sometimes a better plan comes along just when you least expect it. First, let me be clear none of this is finalized and city council has just hadinitial discussions about it and so we’re not close to finalizing.

In fact I’m asking tonight the city staff within schedule a public forum within the next two weeks to gather input thoughts and concerns as we begin looking at the possibilities that as a city and Council so look for that in two weeks. Let me share with you some of the thoughts Council has had about initial discussions and we’ll begin exploring fully over the next few months.

We have a picture I hope yes of the building the proposed building. {points to screen behind him with photo of downtown area in question] I can’t see it you can. So this will provide for a 40 to 45 000 square foot office and exhibition space requested by SRNL between Bee Lane, Newbury Street and Richland Avenue.  The building will house approximately 100 or more paid SRNL workers with a rotating group of faculty and students from SRNL’s University collaborative. That group of universities includes the University of South Carolina, Clemson University, South Carolina State University, University of Georgia andGeorgia Tech. The building would also have a dedicated space for USC Aiken and provideeducation and Outreach downtown.

[Applause]

The plan is to preserve the existing businesses on the Block leaving Newbury Hall  untouched, relocated relocate Warneke Cleaners to the buildings at front of Richland Avenue. These retail buildings on Richland Avenue will be renting and upgradedas part of the project and the Thai [Taj Aiken, which features Indian cuisine] restaurant would remain on Richland Avenue.

The Proposal allows for the Johnson drugstore here on the corner of Richmond Newbury to undergo historic renovation and preserve it and return the exterior to more of its original look. So now the only anticipated demolition would be the dry cleaning building, the motel strip along B Lane that was built in 1981, and perhaps the old gun shop/finance company on Richland Avenue.

The next big question what about parking? We need to plan ahead for parking the demand created by this project. We do that through creating a surface parking lot across from St John’s Church on Newberry and that would provide dedicated workday parking for SRNL employees, and that would be available to the public and the church goers nights and weekends. We’d also be looking for the possibility of more parking behind the room we’re in right now which would be a  structured facility that would be a lot next to the new Municipal Building providing between the two spaces somewhere between 250 and 300 parking spaces.

Now, I’ve just outlined it but I want to bring someone up here who knows a lot more about this than any of us, Dr. the director of the National Laboratory.

__________

(3) From Dr. Majidi’s comments at the January 23, 2023 “State of the City” jamboree. The full comments, taken from the You Tube transcript and edited for clarity are as follows:

Dr. Majidi: Well good good evening everybody just want to remind you it’s a kinder year. So we’re going to start on that note. Five years ago ago I moved to Aiken to become the director of Savannah River National Laboratory. I came here because the laboratory had a reputation for being able to consistently get the work done but also because I knew it had the largest potential for growth amongst all National Laboratories.

Just three years ago the Department of Energy acted on their long-standing vision of an enduring National Laboratory in South Carolina and created an opportunity for the lab to be operated as an independent National Laboratory. The purpose of a National  Laboratory is to address large complex research and development challenges with a multi-disciplinary approach. Savannah River National Laboratory is the newest National Laboratory under the Department of Energy.  Nationwide there are 17 DOE National Labs and SRNL is the only lab in Carolina serving the Southeast region of the United States, along with our good partners at Oakridge National Laboratories. 

[Mayor Osbon adjusts his microphone] 

One disadvantage of being a short laboratory director is that somebody else has to adjust your microphone for you. 

Today our laboratory is operated by a vital cooperatorion with University of South Carolina Clemson, South Carolina State, University of Georgia, and Georgia Institute of Technology. 

Our mission is ensuring America’s security and prosperity by addressing its energy environmental and nuclear challenges through transformative Science and Technology Solutions. We create high quality jobs in central Savannah River area, and our enduring economic engine attracting not only professionals from all across the country but also Advanced science and technology-based companies to CSRA. 

SRNL achieved its Mission by attracting motivating and training a diverse and highly skilled Workforce to execute on complex DOE programs. This new facility in Aiken allows a laboratory to have a more direct presence in the community we serve with the goal of developing a pipeline of new Talent as well as developing the existing employee base. It will also complement our brand new Advanced manufacturing collaborative as USC Aiken, creating a hub for partnership with industry and Academia. 

What else are we planning to put in this building? 

I should emphasize that this Savannah River National Laboratory building is being designed for only computational administrative work we don’t have any chemicals hoods or hazardous material in this facility uh….

[very light applause and few laughs from the crowd]

There is a joke there somewhere right?

SRNL employees will perform some of our computational modeling and simulation. We’ll  have a team of employees working with the university to increase our engagement with faculty postdoctoral and graduate students interns and minority serving institution programs. Some of our employees will work on non-proliferation training programs while other will work on Workforce Development and HR functions moreover as a collaboration Hub.

This facility will host faculty and students and allows for scientific Gatherings including technical discussions poster presentations and other student programs. We will have the Next Generation classroom space for training sessions and will support remote learning environments. It will host science and technology engineering and math camps for Teacher development workshops but a specific focus on K-12.

University of South Carolina Aiken will have an enduring presence through their Workforce Development program. I’m very much looking forward to expanding our activities with USCA on both, in this new facility and advanced manufacturing collaborative building

[Applause]

But most  importantly this building is the community face of the laboratory. A portion of this  building will be open to the public to Foster Community awareness of the work we do at SRNL, and its benefits to the society. The lobby will display our most recent scientific work, and this facility is the first stop for all new laboratory employee upon their entry for onboarding and training. 

It takes a great Community to make something like this possible.

I want to make sure that I take a moment to recognize Governor Henry McMaster’s hard work to identify this need and to allocate 20 million dollars for this facility. We’re grateful for Governor McMaster’s  enduring support.

Moreover, we’re grateful to the South Carolina state legislatures for their wisdom to recognize the need and the necessity for this building to help us bring the laboratory to the community. I also want to recognize the city of Aiken, the Mayor’s office,  and the city council members for their steadfast supports to bring this project to reality.

I want to recognize the Department of Energy for selecting the Battelle Savannah River Alliance as the management and operating company for the laboratory, to create an enduring capability in South Carolina. This building along with the advanced manufacturing collaborative brings the Savannah River National Laboratory into the Heart of the Aiken Community we plan to be a productive citizens and hope to have a broader impact to our community.

__________

(4) The clause is based on Department of Energy Acquisition Regulation (DEAR) 970.5226-3, Community Commitment, which states:

“It is the policy of the DOE to be a constructive partner in the geographic region in which DOE conducts its business. The basic elements of this policy include: (1) Recognizing the diverse interests of the region and its stakeholders, (2) engaging regional stakeholders in issues and concerns of mutual interest, and (3) recognizing that giving back to the community is a worthwhile business practice. Accordingly, the Contractor agrees that its business operations and performance under the Contract will be consistent with the intent of the policy and elements set forth above.”