In March, 1979, ground was broken for the Fluidized Bed Industrial Boiler Demonstration Plant at the US Navy Training Station, Great Lakes, Illinois. EPA approval of the Prevention of Significant Deterioration report fulfilled the final prerequisite to the start of construction. Sub-Scale Unit (SSU) testing provided significant information for the final design of the Demonstration Plant. Design work for the Demo continued space, along with planning and preparation for operation and testing. SSU shakedown was completed, and about 60% of the planned test matrix was accomplished. Based on the test results, Demo Plant design values were developed for: combustion efficiency, free-board heat release, in-bed heat transfer coefficients, and elutriation rates. Indications for the Demo Plant are that the natural circulation rate will be satisfactory, and SO/sub 2/ and NO/sub x/ emissions will be well within required limits. Several phases of the Demo Plant design were reviewed or updated, and a number of features were finalized. Heat and mass Balance, Process Flow Diagrams, and performance design criteria were revised to reflect SSU test results. Bed surface requirements of the boiler were recalculated. Plant systems were simplified by deletion of the combustion air system bypass and acid wash line.