Social and Behavioral Sciences Commons^™

Allocating Contractor Risks In The Hanford Waste Cleanup, Jeffrey M. Keisler, William A. Buehring, Peter D. Mclaughlin, Mark A. Robershotte, Ronald G. Whitfield

Management Science and Information Systems Faculty Publication Series

Organizations may view outsourcing as a way to manage risk. We developed a decision-analytic approach to determine which risks the buyer can share or shift to vendors and which ones it should bear. We found that allocating risks incorrectly could increase costs dramatically. Between 1995 and 1998, we used this approach to develop the request for proposals (RFP) for the US Department of Energy’s (DOE’s) privatization initiative for the Hanford tank waste remediation system (TWRS). In the model, we used an assessment protocol to predict how vendors would react to proposed risk allocations in terms of their actions and their …