U.S. military quietly revokes planned contract for small nuclear plant at Eielson Air Force Base

The U.S. military has rescinded the preliminary award of what could be a nine-figure contract with the company it had tentatively selected to build a small-scale nuclear power plant at Eielson Air Force Base near Fairbanks.

The Department of the Air Force and the Defense Logistics Agency in August announced an “intent to award” the contract to Oklo — a Silicon Valley startup backed by Sam Altman, the leader of the company behind ChatGPT who was ousted and then rehired this month.

In late September, the DLA’s energy arm revoked its decision, citing a need for “further consideration” of its obligations under a specific military contracting regulation, according to a memo sent to a competing bidder and obtained by Northern Journal from another source.

The regulation says the military should engage in post-bidding negotiations and discussions for contracts worth $100 million or more.

A DLA spokeswoman, Michelle McCaskill, declined to make agency officials available for an interview. In an emailed response to questions, she explained the revocation by repeating the language from the memo and said all bidders that responded to the agency’s request for proposals are still under consideration.

McCaskill said a “pre-filing notice of protest” of the award to Oklo was submitted to the U.S. Court of Federal Claims, but she declined to share a copy. A spokeswoman for Ultra Safe Nuclear Corp., the company that received the memo obtained by Northern Journal, confirmed that her business had made the pre-filing notice but added that a formal protest had not been filed.

Oklo is one of a growing number of businesses developing what are known as “micro-reactors,” which the military describes as small projects with “built-in safety features that self-adjust to changing conditions and demands to prevent overheating.”

The Eielson contract drew broad interest from the energy industry; officials from companies like Westinghouse, Rolls-Royce and Siemens participated in an informational meeting about it last year, according to a roster published by the military.

Oklo’s chief executive, Jake DeWitte, said in a brief interview that his company is letting the contracting process play out.

“But we are more than excited about the opportunity,” he said.

Experts say the micro-reactor concept could be a good match to replace generators running on expensive, imported diesel in remote Alaska communities or at resource development projects like mines — not to mention for the military.

But the systems now under development have not been commercially proven: No micro-reactors have yet been built in the U.S. since the earliest days of nuclear technology.

This month, the only company with an approved design, Oregon-based Nuscale Power, announced that it had canceled a leading demonstration project in Idaho. Several potential customers had abandoned the project amid increasing costs, according to Reuters.

Oklo officials and military leaders had celebrated the August announcement that the company would build the micro-reactor at Eielson, which is home to dozens of fighter jets, including two squadrons of F-35s.

“You have an energy source — local, within the installation — that allows you to get those two critical fighter squadrons in the air and executing their business, executing their mission,” Assistant Air Force Secretary Ravi Chaudhary said at the time.

At five megawatts — roughly equivalent to the average demand of the Southwest Alaska hub town of Bethel — military brass hailed the micro-reactor as a way for Eielson to generate carbon-free energy that’s independent from the rest of the electrical grid. The base currently depends on a 15-megawatt coal plant, according to KUAC.

Following the revocation, the office of Republican U.S. Sen. Lisa Murkowski, who helped secure federal spending on micro-reactor development, asked the Department of Defense for a timeline but has not heard back, spokesman Joe Plesha said in an email.

“We will continue to monitor this issue closely,” he said.

At the time of the August announcement, the Air Force said the micro-reactor was expected to go online by the end of 2027, based on a directive in Congress’ 2019 military spending bill. McCaskill, the DLA spokeswoman, said there is no revised timeline to the contracting process and that the agency still intends to meet all deadlines.

The Ultra Safe Nuclear Corp. spokeswoman, Mary Woollen, said her firm is still “extremely interested in providing this solution to the Air Force and (is) waiting for DLA’s contracting officer to notify us of the next steps in the procurement process.”

“USNC believes it is in the best position to support the Air Force and will continue to pursue all means at its disposal to support its bid,” she wrote in an email.

USNC, which is based in Seattle, has proposed to build what could be Canada’s first micro-reactor, in Ontario, and aims for it to go online by 2028.

This piece was originally published in Northern Journal, a newsletter published by Nathaniel Herz. Subscribe here.