How could a project once budgeted at about $2 billion and slated for completion in 1994 now cost a projected $36 billion and be forecast to drag on for another decade? And why have some of the nation's largest chemical and engineering companies, including E. I. du Pont de Nemours and Co. and Parsons Corp., walked away from lucrative project contracts?

The short answer: The project, called the Chemical Stockpile Disposal Program, involves destruction of America's estimated 31,500 tons of Cold War chemical weapons stocks—among them VX and sarin nerve agents, among the deadliest substances on earth.

The more complicated answer: When you mix miscalculation and public relations missteps by the project's operator, the Army, with an outsized public wariness over nerve-agent disposal methods, bad things are bound to happen.

Indeed, with the program, now entering its third decade, bogged down in delays and now mushroomed into the largest non-weapons outlay in the Pentagon budget, taxpayers, and some companies, are getting burned.

Insight into how this happened can be gleaned by heading off to Port Arthur, Texas, to talk to Dan Duncan, a stocky, loquacious man whose crew cut, mustache, and wraparound sunglasses lend him the bearing of an Army drill sergeant.

Beneath an imposing smokestack that he assures me is venting only harmless water vapor, Duncan, the plant's environmental, health, and safety manager, begins to tell the story of how the company he works for, Veolia North America, got a $49 million piece of the Chemical Stockpile Disposal pie when it landed a Department of Defense contract in 2007.

The mission: To incinerate, at long last, a 1,269-ton stockpile of neutralized VX nerve agent that has been stored for decades in heavily guarded Cold War chemical-weapons silos in Newport, Indiana, about 900 miles away.

The Port Arthur project has had its share of problems and controversies, but overall it has proceeded on time and within budget; the last of the nerve gas residue is being incinerated now. The problem: Incineration is only the last—and cheapest—part of what has morphed into a complicated and extravagantly costly process. And Veolia only got into the act after two previous contracts awarded by the Pentagon over a five-year period ended in costly, time-sucking failures amid citizens' uprisings and a slew of lawsuits.

In fact, the Chemical Stockpile Disposal Program has been so dogged by such problems that Craig Williams, of the non-profit Chemical Weapons Working Group, says "the representations made to Congress and the American people by the Army on their projected technical capabilities, cost, and schedule ... were off by orders of magnitude and to a degree almost unheard-of even in government."

Williams, whose organization from the beginning has been involved in the two-decade-long fight over how and where to dispose of these agents, might seem like a spokesman for another alarmist watchdog group. But his sentiments were echoed in a 2005 letter signed by several congressmen, including Senate Republican leader Mitch McConnell, whose state, Kentucky, holds one of the storage depots.

The letter, flaying the Defense Department's stewardship of the disposal scheme, notes that it is one of only 22 programs in the entire federal government to be judged "'ineffective' by the Office of Management and Budget."

So what went wrong?

Following the checkered history of efforts to dispose of the Newport, Indiana, VX nerve gas proves instructive. The Veolia's Port Arthur hazardous-waste remediation plant is the tail end of a process that was originally supposed to take a year or two, but will end up taking almost a decade.