CONTACTS 
0201 - Dep Natrl Rscrs & Consvn           406 444 6699 fax 6721                                                                                                       O-00000395 0301
020101 - Ms. Sarah Ann Bond, Esquire
020102 - Department Counsel =406 444 6660; Legal Division
020103 - Mr. Wayne Wetzel

SUBJECTS
Voith Contract Closeout
Replace v. Retrofit, 920120
Engineering Management

0505 -    ..
0506 - Summary/Objective
0507 -
050701 - Sarah asked my opinion about DNRC's approach to deciding whether
050702 - to demand Voith replace the SI.  I generally concurred with her
050703 - analysis and submitted prior remarks on this to assist her,
050704 - ref SDS 3 and 4.
050705 -
050706 - Prepared memo from discussion with Wayne on helical or spur gears, ref
050707 - SDS 4, and submitted with this record as part of ref DIT 1.  Included
050708 - discussion on handling punch list, ref SDS 1, since it seems to me to
050709 - be related to the SI matter, as discussed in the other material.
050710 -
050711 -
0508 -
0509 -
0510 - Discussion
0511 -
051101 - Sarah said Walt and Dave met yesterday and discussed the question of
051102 - retrofit v. replace the speed increaser.  They are concerned about the
051103 - risk of responsibility for lost revenue in the event that it takes
051104 - longer than 3 months (12 weeks), to retrofit the unit.  Sarah indicat-
051105 - ed she advised that the Engineer can direct Voith to submit a state-
051106 - ment of work procedures in order to make an independent evaluation of
051107 - the likelihood of success for the 3 month estimate, similar to that in
051108 - Tudor's Aug 16, 1991 letter, ref DIP 1.  The Engineer can give Voith
051109 - notice that it is preparing recommendations to the State based on
051110 - Voith's representations, such that Voith will be liable for any lost
051111 - revenue arising from construction times that exceed the period
051112 - represented by Voith.  This will give Voith incentive to present a
051113 - realistic estimate.  [I noted here that this is a secondary argument
051114 - in the event Voith is not liable for all lost revenue].  If Voith's
051115 - "realistic" estimate shows it is cheaper to retrofit, assuming this
051116 - otherwise meets with DNRC objectives, DNRC can adopt that course. Such
051117 - was my understanding of the issue.
051118 -
051119 - Sarah asked my opinion on this.
051120 -
051121 - I explained my views were submitted at ref SDS 3 & 4, and DIP 2 & 3,
051122 - and that the considerations Sarah presented this morning, as above,
051123 - seem appropriate.  So far it appears to me that the engineering record
051124 - shows there is a strong likelihood that the actual time to retrofit
051125 - the speed increaser will exceed 3 months by a significant amount.  I
051126 - encouraged the Department to obtain a written recommendation from the
051127 - Engineer and to review it carefully to see that it is adequately
051128 - supported.
051129 -
051130 - Sarah indicated that engineering analysis shows there are advantages
051131 - to spur gears relative to helical.
051132 -
051133 - I related my discussion with Wayne on this point, ref SDS 4 line 101.
051134 -
051135 - Sarah seems to have a good understanding of these issues.  So far the
051136 - only treatment I have seen from the Department is the statement of
051137 - questions, ref SDS 5 and DIP 4.  I believe Sarah appreciates the need
051138 - to go beyond formulating questions, by writing out an analysis that
051139 - answers the questions based on the available evidence, and where
051140 - necessary, to obtain additional information from Voith or consultants.
051141 -
051142 - Sarah also indicated she had seen the report at ref SDS 3.  To be
051143 - sure there is no misunderstanding and since she called and asked
051144 - about this matter, I will submit this information.
051145 -
051146 - Discussed this with Wayne and he concurred, ref SDS 8.
051147 -
051148 -
051149 -
051150 -
051151 -
051152 -
051153 -
051154 -
051155 -
0512 -