The Company That's Making Over a Billion Dollars Destroying Chemical WMDs

By Markets Fool.com

The international Chemical Weapons Convention bans the production, stockpiling, and use of chemical weapons of mass destruction -- nerve gas, mustard gas, and other chemical nastiness. The United States signed this convention outlawing chemical WMDs on Jan. 14, 1993. Four years later, Congress ratified it.

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But 18 years later, we still haven't destroyed all of our chemical weapons.


One down, 779,999 chemical WMDs to go, as Bechtel spools up the Pueblo Chemical Agent-Destruction Pilot Plant. Photo source: U.S. Army.

Better late than never?
The good news is that this is about to change. Last month, in a little-noticed development, the U.S. Department of Defense announced that it has awarded defense contractor Bechtel $1.34 billion in additional funding on a contract "for Agent Operations of the Pueblo Chemical Agent-Destruction Pilot Plant (PCAPP)."

According to the Pentagon, "the original contract was for PCAPP facility design, construction, equipment acquisition, systemization, pilot testing, operations, and [eventual] closure of the plant to destroy the chemical weapons stockpile stored at the depot under this contract." April's addition of funds to this original contract appears to mark the plant's shift from production and testing to actual destruction of chemical WMDs.


Chemical WMD? Blow it up. Blown-up nuclear reactor? Cover it up. Photo source: Bechtel.

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Who is Bechtel?
Boasting $39.4 billion in annual revenue and ranked No. 4 on Forbes' list of America's largest private companies, the family-owned Bechtel Group specializes in large engineering and construction projects around the globe.

Among its claims to fame, Bechtel helped build the Hoover Dam back in the 1930s and the Channel Tunnel (or "Chunnel") between Britain and France in the 1990s, and it's currently working on a $1.3 billion effort to stabilize the 21-story "sarcophagus" containing the exploded Chernobyl nuclear power plant in Ukraine.

Simply put, massive engineering challenges, and multibillion-dollar projects, are not something from which Bechtel shies away. Bechtel eats these kinds of projects for lunch.

What's for lunch today?
Not long after the Pentagon contract was announced, USA Today confirmed that destruction of America's chemical WMDs at the PCAPP is indeed under way. According to the news outlet, Bechtel will have a pile of "about 780,000" mustard gas-filled "shells and mortar rounds" to dispose of.

USA Today describes the process of destroying chemical WMDs as "expensive, slow -- and safe." (So one out of three isn't bad.)

How slow?
Current technology will permit Bechtel to destroy about six shells per day, with most of the work done by hand. At that rate, however, destruction of all 780,000 munitions on site would take more than 350 years to complete.

There's good news and bad news on that score. A new facility set to open at PCAPP next year will largely automate the process of destroying chemical WMDs and accelerate the rate of bomb disposal to 60 units per hour. At that rate, we're talking a job that could take as little as a year and a half, and the Pentagon is therefore targeting completion by 2019.

So in just a little over four years, the U.S. could theoretically be "chemical WMD-free," and in compliance with the Chemical Weapons Convention.

How expensive?
Indeed, Bechtel's $1.34 billion contract award is expected to run through July 19, 2019, assuming everything goes smoothly with the new plant. But that's not a given -- and neither is the price tag.

USA Today puts the cost of the new PCAPP facility at $4.5 billion, for example. But if you add up the $1.34 billion contract awarded to Bechtel last month, plus the company's original $510 million contract to begin work, awarded in 2009, the sum comes to less than half the projected cost of completing PCAPP -- much less operating it.

What's more, referring back to the original contract that Bechtel was awarded, we see that Bechtel was hired to build and run the plant not just through July 19, 2019 -- but all the way through Dec. 25, 2060!

If that's the real timeline the Pentagon is envisioning, and not the 2019 date that's being bandied about in the news, then getting rid of America's chemical WMDs stockpile could take a whole lot longer -- and be a whole lot more expensive -- than anyone thinks.

Good news for Bechtel. Bad news for taxpayers.


Announcing the start of operations at PCAP... was just the beginning. Closing ceremonies could still be 45 years away. Photo source: U.S. Army.

The article The Company That's Making Over a Billion Dollars Destroying Chemical WMDs originally appeared on Fool.com.

Rich Smithdoes not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handleTMFDitty, where he's currently ranked No. 327 out of more than 75,000 rated members.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.