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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

December 2012: 

Hanford Waste Treatment Plant: 

DOE Needs to Take Action to Resolve Technical and Management 
Challenges: 

GAO-13-38: 

GAO Highlights: 

Highlights of GAO-13-38, a report to congressional requesters. 

Why GAO Did This Study: 

In December 2000, DOE awarded Bechtel a contract to design and 
construct the WTP project at DOE’s Hanford Site in Washington State. 
This project—one of the largest nuclear waste cleanup facilities in 
the world—was originally scheduled for completion in 2011 at an 
estimated cost of $4.3 billion. Technical challenges and other issues, 
however, have contributed to cost increases and schedule delays. GAO 
was asked to examine (1) remaining technical challenges, if any, the 
WTP faces; (2) the cost and schedule estimates for the WTP; and (3) 
steps DOE is taking, if any, to improve the management and oversight 
of the WTP project. GAO reviewed DOE and contractor data and 
documents, external review reports, and spoke with officials from DOE 
and the Defense Nuclear Facilities Safety Board and with contractors 
at the WTP site and test facilities. 

What GAO Found: 

The Department of Energy (DOE) faces significant technical challenges 
in successfully constructing and operating the Waste Treatment and 
Immobilization Plant (WTP) project that is to treat millions of 
gallons of highly radioactive liquid waste resulting from the 
production of nuclear weapons. DOE and Bechtel National, Inc. 
identified hundreds of technical challenges that vary in significance 
and potential negative impact and have resolved many of them. 
Remaining challenges include (1) developing a viable technology to 
keep the waste mixed uniformly in WTP mix tanks to both avoid 
explosions and so that it can be properly prepared for further 
processing; (2) ensuring that the erosion and corrosion of components, 
such as tanks and piping systems, is effectively mitigated; (3) 
preventing the buildup of flammable hydrogen gas in tanks, vessels, 
and piping systems; and (4) understanding better the waste that will 
be processed at the WTP. Until these and other technical challenges 
are resolved, DOE will continue to be uncertain whether the WTP can be 
completed on schedule and whether it will operate safely and 
effectively. 

Since its inception in 2000, DOE’s estimated cost to construct the WTP 
has tripled and the scheduled completion date has slipped by nearly a 
decade to 2019. GAO’s analysis shows that, as of May 2012, the project’
s total estimated cost had increased to $13.4 billion, and significant 
additional cost increases and schedule delays are likely to occur 
because DOE has not fully resolved the technical challenges faced by 
the project. DOE has directed Bechtel to develop a new cost and 
schedule baseline for the project and to begin a study of alternatives 
that include potential changes to the WTP’s design and operational 
plans. These alternatives could add billions of dollars to the cost of 
treating the waste and prolong the overall waste treatment mission. 

DOE is taking steps to improve its management and oversight of Bechtel’
s activities but continues to face challenges to completing the WTP 
project within budget and on schedule. DOE’s Office of Health, Safety, 
and Security has conducted investigations of Bechtel’s activities that 
have resulted in penalties for design deficiencies and for multiple 
violations of DOE safety requirements. In January 2012, the office 
reported that some aspects of the WTP design may not comply with DOE 
safety standards. As a result, DOE ordered Bechtel to suspend work on 
several major WTP systems, including the pretreatment facility and 
parts of the high-level waste facility, until Bechtel can demonstrate 
that activities align with DOE nuclear safety requirements. While DOE 
has taken actions to improve performance, the ongoing use of an 
accelerated approach to design and construction—an approach best 
suited for well-defined and less-complex projects—continues to result 
in cost and schedule problems, allowing construction and fabrication 
of components that may not work and may not meet nuclear safety 
standards. While guidelines used in the civilian nuclear industry call 
for designs to be at least 90 percent complete before construction of 
nuclear facilities, DOE estimates that WTP is more than 55 percent 
complete though the design is only 80 percent complete. In addition, 
DOE has experienced continuing problems overseeing its contractor’s 
activities. For example, DOE’s incentives and management controls are 
inadequate for ensuring effective project management, and GAO found 
instances where DOE prematurely rewarded the contractor for resolving 
technical issues and completing work. 

What GAO Recommends: 

GAO recommends that DOE (1) not resume construction on WTP’s 
pretreatment and high-level waste facilities until, among other 
things, the facilities’ design has been completed to the level 
established by nuclear industry guidelines; (2) ensure the department’
s contractor performance evaluation process does not prematurely 
reward contractors for resolving technical issues later found to be 
unresolved; and (3) take appropriate steps to determine whether any 
incentive payments were made erroneously and, if so, take actions to 
recover them. DOE generally agreed with the report and its 
recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-13-38]. For more 
information, contact David C. Trimble at (202) 512-3841 or 
trimbled@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Significant Technical Challenges Remain Unresolved: 

Substantial Additional Cost Increases and Schedule Delays: 

Are Likely: 

DOE Is Taking Steps to Address Some Management and Oversight Problems 
but Continues to Face Challenges to Completing the WTP: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the Department of Energy: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Figures: 

Figure 1: WTP Waste Treatment Process: 

Figure 2: WTP Construction Site as of March 2012: 

Abbreviations: 

DOE: Department of Energy: 

EPA: Environmental Protection Agency: 

ORP: DOE's Office of River Protection: 

PNNL: Pacific Northwest National Laboratory: 

WTP: Waste Treatment and Immobilization Plant: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

December 19, 2012: 

The Honorable Fred Upton:
Chairman:
The Honorable Henry A. Waxman:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives: 

The Honorable Cliff Stearns:
Chairman:
The Honorable Diana DeGette:
Ranking Member:
Subcommittee on Oversight and Investigations: 
Committee on Energy and Commerce:
House of Representatives: 

The Honorable Edward J. Markey:
House of Representatives: 

The Department of Energy (DOE) is responsible for one of the world's 
largest environmental cleanup projects: the treatment and disposal of 
millions of gallons of radioactive and hazardous waste at its 586-
square-mile Hanford Site in southeastern Washington State. A total of 
nine nuclear reactors--including the world's first operating large-
scale reactor, developed as part of the Manhattan Project during World 
War II--were built at Hanford and operated until the late 1980s. The 
primary mission of these reactors was to produce plutonium and other 
special nuclear materials for DOE's nuclear weapons program. Some of 
the large volumes of hazardous and radioactive waste that resulted 
from nuclear materials production was deposited directly into the 
ground in trenches, injection wells, or other facilities designed to 
allow the waste to disperse into the soil, and some was packaged into 
drums and other containers and buried. The most dangerous waste was 
stored in 177 large underground storage tanks. The underground tanks 
currently hold more than 56 million gallons of this waste--enough to 
fill an area the size of a football field to a depth of over 150 feet. 

The oldest 149 tanks, some of which date back to the 1940s, have 
single-layer walls, or shells; were built with a 20-year design life; 
and will be almost 100 years old by the estimated end of waste 
treatment. DOE has reported that 67 of these tanks are assumed or are 
known to have leaked waste into the soil. Because some of this 
contamination has reached the groundwater under the tanks, DOE 
officials are concerned that the contamination is now making its way 
to the Columbia River, which borders the Hanford Site for almost 50 
miles. The Columbia River is the second largest river in the United 
States and a source for hydropower production, agricultural 
irrigation, drinking water, and salmon reproduction. The site is also 
near the cities of Richland, Pasco, and Kennewick, with a combined 
regional population of over 200,000. DOE, the Environmental Protection 
Agency (EPA), and the Washington State Department of Ecology have 
determined that containing, stabilizing, and preparing this highly 
radioactive liquid waste for final disposal is one of the highest 
priority cleanup activities at the Hanford site. It is also one of the 
most complex cleanup activities and, as of August 2012, none of the 
waste in the tanks had been treated for disposal because no treatment 
facility was yet available. 

In 2000, DOE awarded a contract to Bechtel National, Inc. to design, 
construct, and commission a Waste Treatment and Immobilization Plant 
(WTP) to stabilize large quantities of this waste and prepare it for 
disposal at a permanent national geologic repository that is yet to be 
identified. The WTP is to consist of a pretreatment facility that 
separates waste into high-level and low-activity radioactivity waste 
streams; two facilities to treat these separated streams using a 
process called vitrification, where waste is mixed with melted glass 
and poured into steel canisters where it cools and hardens, to prepare 
it for final disposal; an analytical laboratory; and a variety of 
supporting facilities.[Footnote 1] See figure 1 for a description of 
the process that is to be used to treat and stabilize waste at the WTP 
and prepare it for disposal. 

Figure 1: WTP Waste Treatment Process: 

[Refer to PDF for image: process illustration] 

Characterization: 
Sampling and analyzing the waste throughout preparation for treatment. 

Retrieval: 
Retrieving waste from tanks and preparing for treatment. 

Pretreatment: 
Mixing and separating waste constituents into high-level and low-
activity waste streams. 

Treatment: 
Vitrifying high-level waste and placing it into stainless steel 
canisters; Vitrifying low-level waste and placing it into stainless 
steel containers. 

Final disposal: 
Storing high-level waste canisters temporarily on site until permanent 
repository opens; Storing low-level waste containers permanently on 
site in landfill. 

Source: GAO and DOE. 

[End of figure] 

To construct the facility, DOE and Bechtel adopted a fast-track, 
design-build approach. Using the unconventional design-build approach, 
technology development activities, plant design, and construction 
occur simultaneously. In a conventional construction approach, these 
activities occur sequentially. As required by DOE's project management 
directives, approval to begin construction is granted when technology 
development and design of the facility is essentially complete and 
after the establishment and approval of a project's performance 
baseline, which represents DOE's commitment to complete a project with 
a specific scope at a certain cost and by a specific date. We and 
others have raised concerns about DOE's use of the design-build 
approach for the WTP because some sections of this facility are 
constructed before designs are complete and before technology issues 
are fully resolved, which has led to significant cost increases and 
schedule delays.[Footnote 2] Specifically, when the contract was 
awarded in 2000 for the WTP, the contract for constructing the WTP 
specified that the project would cost $4.3 billion and would be 
completed in 2011. As a result of numerous problems with the design 
and construction of WTP facilities, in 2006, DOE significantly 
modified the project's baseline. Despite the problems throughout the 
construction process, however, DOE has continued with the design-build 
approach. In the last 2 years, several WTP project engineers and 
managers and the Defense Nuclear Facility Safety Board (Safety Board)--
an independent oversight agency created by Congress to assess safety 
conditions and operations at defense nuclear facilities at DOE's 
sites--publicly criticized DOE and Bechtel for ignoring technical and 
safety concerns that threaten the plant's ability to operate safely 
once constructed. In 2011, DOE reported that unresolved technical 
risks would cause the cost and schedule estimates to slip further 
unless additional funding was provided. 

In this context, you asked us to evaluate DOE's management of the WTP 
project. Our objectives were to examine: (1) remaining technical 
challenges, if any, the WTP faces; (2) cost and schedule estimates for 
the WTP; and (3) steps DOE is taking, if any, to improve the 
management and oversight of the WTP project. 

To accomplish our objectives, we conducted our work at the Hanford 
Site, including the WTP construction site; DOE's Office of River 
Protection (ORP)--which is responsible for DOE management of the 
construction of the WTP; Bechtel's WTP project office in Richland, 
Washington; and test facilities at Mid Columbia Engineering. We 
interviewed, among others, current and past DOE WTP project directors 
and officials from WTP project support divisions, including the WTP 
Engineering Division, ORP Engineering and Nuclear Safety Division, and 
ORP Environmental Safety and Quality Division. 

To identify any remaining technical challenges that the WTP is facing, 
we reviewed DOE and Bechtel documents that provide a summary and 
current status of technical issues, including criteria for addressing 
these issues and a timeline for their resolution. We also examined 
independent reviews on technical and safety issues and interviewed 
officials from DOE's Office of Engineering and Construction Management 
and Office of Health, Safety, and Security; the Pacific Northwest 
National Laboratory (PNNL); the Safety Board; and the Consortium for 
Risk Evaluation with Stakeholder Participation--a group of 
engineering, scientific, and policy experts from seven universities 
that advises DOE in its environmental management activities.[Footnote 
3] We also interviewed officials from the Washington State Department 
of Ecology and EPA. 

To examine the current cost and schedule estimates for the WTP, we 
reviewed the most current estimates for the project that DOE prepared 
in 2006, DOE and Bechtel progress reports on the project's adherence 
to these cost and schedule estimates, and project risk management 
plans. We also interviewed DOE officials to obtain information on 
recent efforts to revise the project's cost and schedule estimates. 

To determine any steps DOE is taking to improve the management and 
oversight of the WTP project, we reviewed DOE policies on project 
management, examined regulatory requirements, and reviewed agreements 
between DOE, EPA, and the state of Washington. We also reviewed DOE 
WTP management documents, risk analysis reports, and contractor 
project plans. 

We conducted this performance audit from September 2011 to December 
2012 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

Established in 1943, Hanford produced plutonium for the world's first 
nuclear device. At the time, little attention was given to the 
resulting by-products--massive amounts of radioactive and chemically 
hazardous waste--or how these by-products were to be permanently 
disposed of. About 46 different radioactive elements represent the 
majority of the radioactivity currently residing in Hanford's tanks. 
Once Hanford tank waste is separated by the WTP waste treatment 
process, the high-level waste stream will contain more than 95 percent 
of the radioactivity but constitute less than 10 percent of the volume 
to be treated. The low-activity waste stream will contain less than 5 
percent of the radioactivity but constitute over 90 percent of the 
volume. The tanks also contain large volumes of hazardous chemical 
waste, including various metal hydroxides, oxides, and carbonates. 
These hazardous chemicals are dangerous to human health and can cause 
medical disorders including cancer, and they can remain dangerous for 
thousands of years. Over the years, the waste contained in these tanks 
has settled; today it exists in the following four main forms or 
layers: 

* Vapor: Gases produced from chemical reactions and radioactive decay 
occupies tank space above the waste. 

* Liquid: Fluids (supernatant liquid) may float above a layer of 
settled solids or under a floating layer of crust; fluids may also 
seep into pore spaces or cavities of settled solids, crust, or sludge. 

* Saltcake: Water-soluble compounds, such as sodium salts, can 
crystallize or solidify out of wastes to form a salt-like or crusty 
material. 

* Sludge: Denser water-insoluble or solid components generally settle 
to the bottom of a tank to form a thick layer having the consistency 
similar to peanut butter. 

DOE's cleanup, treatment, and disposal of radioactive and hazardous 
wastes are governed by a number of federal and state laws and 
implemented under the leadership of DOE's Assistant Secretary for 
Environmental Management. Key laws include the Comprehensive 
Environmental Response, Compensation, and Liability Act of 1980, as 
amended,[Footnote 4] and the Resource Conservation and Recovery Act of 
1976, as amended.[Footnote 5] In addition, most of the cleanup 
activities at Hanford are carried out under the Hanford Federal 
Facility Agreement and Consent Order among DOE, the Washington State 
Department of Ecology, and EPA. Commonly called the Tri-Party 
Agreement, this accord was signed in May 1989 and has been amended a 
number of times since then to, among other things, establish 
additional enforceable milestones for certain WTP construction and 
tank waste retrieval activities. The agreement lays out a series of 
legally enforceable milestones for completing major activities in 
Hanford's waste treatment and cleanup process. A variety of local and 
regional stakeholders, including county and local government agencies, 
citizen and advisory groups, and Native American tribes, also have 
long-standing interests in Hanford cleanup issues. These stakeholders 
make their views known through various public involvement processes, 
including site-specific advisory boards. DOE's ORP administers 
Hanford's radioactive liquid tank waste stabilization and disposition 
project including the construction of the WTP. The office has an 
annual budget of about $1 billion and a staff of 151 federal 
employees, of which 54 support the WTP project. Other cleanup projects 
at Hanford are administered by DOE's Richland Operations Office. 

DOE has attempted and abandoned several different strategies to treat 
and dispose of Hanford's tank wastes. In 1989, DOE's initial strategy 
called for treating only part of the waste. Part of this effort 
involved renovating a World War II-era facility in which it planned to 
start waste treatment. DOE spent about $23 million on this project but 
discontinued it because of technical and environmental issues and 
stakeholder concerns that not all the waste would be treated. In 1991, 
DOE decided to treat waste from all 177 tanks. Under this strategy, 
DOE would have completed the treatment facility before other aspects 
of the waste treatment program were fully developed; however, the 
planned treatment facility would not have had sufficient capacity to 
treat all the waste in a time frame acceptable to EPA and the 
Washington State Department of Ecology. DOE spent about $418 million 
on this strategy. Beginning in 1995, DOE attempted to privatize tank 
waste cleanup. Under its privatization strategy, DOE planned to set a 
fixed price and pay the contractor for canisters and containers of 
stabilized tank waste that complied with contract specifications. If 
costs grew as a result of contractor performance problems, the 
contractor, not DOE, was to bear these cost increases. Any cost growth 
occurring as a result of changes directed by DOE was to result in an 
adjustment to the contract price and was to be borne by DOE. Under the 
privatization strategy, DOE's contractor would build a demonstration 
facility to treat 10 percent of the waste volume and 25 percent of the 
radioactivity by 2018 and complete cleanup in 2028. However, because 
of dramatically escalating costs and concerns about contractor 
performance, DOE terminated the contract after spending about $300 
million, mostly on plant design. Following our criticisms of DOE's 
earlier privatization approach,[Footnote 6] DOE decided that a cost-
reimbursement contract with incentive fees would be more appropriate 
than a fixed-price contract using a privatization approach for the 
Hanford project and would better motivate the contractor to control 
costs through incentive fees. In total, since 1989 when cleanup of the 
Hanford site began, DOE has spent over $16 billion to manage the waste 
and explore possible ways to treat and dispose of it. 

DOE's current strategy for dealing with tank waste consists of the 
construction of a large plant--the WTP--to treat and prepare the waste 
for permanent disposal. Begun in 2000, the WTP project is over half 
completed and covers 65 acres and is described by DOE as the world's 
largest radioactive waste treatment plant. As designed, the WTP 
project is to consist of three waste processing facilities, an 
analytical laboratory, and over 20 smaller supporting facilities to 
treat the waste and prepare it for permanent disposal. The three waste 
processing facilities are as follows (see figure 2) 

* Pretreatment Facility - This facility is to receive the waste from 
the tanks and separate it into high-level and low-activity components. 
This is the largest of the WTP facilities--expected to be 12-stories 
tall with a foundation the size of four football fields. 

* High-Level Waste Facility - This facility is to receive the high-
level waste from the pretreatment facility and immobilize it by mixing 
it with a glass-forming material, melting the mixture into glass, and 
pouring the vitrified waste into stainless-steel canisters to cool and 
harden. The canisters filled with high-level waste were initially 
intended to be permanently disposed of at a geological repository that 
was to be constructed at Yucca Mountain in Nevada. However, in 2010, 
DOE began taking steps to terminate the Yucca Mountain project and is 
now considering other final disposal options.[Footnote 7] In the 
meantime, high-level waste canisters will be stored at Hanford. 

* Low-Activity Waste Facility - This facility is to receive the low-
activity waste from the pretreatment facility and vitrify it. The 
containers of vitrified waste will then be permanently disposed of at 
another facility at Hanford known as the Integrated Disposal Facility. 

Figure 2: WTP Construction Site as of March 2012: 

[Refer to PDF for image: photograph] 

Labeled on photo: 
Waste Pretreatment Facility; 
High-Level Waste Processing Facility; 
Low-Level Waste Processing Facility. 

Source: DOE. 

[End of figure] 

Constructing the WTP is a massive, highly complex, and technically 
challenging project. For example, according to Bechtel documents, the 
completed project will contain almost 270,000 cubic yards of concrete 
and nearly a million linear feet of piping. The project also involves 
developing first-of-a-kind nuclear waste mixing technologies that will 
need to operate for decades with perfect reliability because, as 
currently designed, once WTP begins operating, it will not be possible 
to access parts of the plant to conduct maintenance and repair of 
these technologies due to high radiation levels. 

Significant Technical Challenges Remain Unresolved: 

Since the start of the project, DOE and Bechtel have identified 
hundreds of technical challenges that vary in their significance and 
potential negative impact, and significant technical challenges 
remain. Technical challenges are to be expected on a one-of-a-kind 
project of this size, and DOE and Bechtel have resolved many of them. 
However, because such challenges remain, DOE cannot be certain whether 
the WTP can be completed on schedule and, once completed, whether it 
will successfully operate as intended. 

Among others, the significant technical challenges DOE and Bechtel are 
trying to resolve include the following: 

* Waste mixing--One function of the WTP will be to keep the waste 
uniformly mixed in tanks so it can be transported through the plant 
and to prevent the buildup of flammable hydrogen and fissile material 
that could inadvertently result in a nuclear criticality accident. The 
WTP project has been developing a technology known as "pulse jet 
mixers" that uses compressed air to mix the waste. Such devices have 
previously been used successfully in other materials mixing 
applications but have never been used for mixing wastes with high 
solid content like those to be treated at the WTP. In 2004 and again 
in 2006, we reported that Bechtel's inability to successfully 
demonstrate waste mixing technologies was already leading to cost and 
schedule delays.[Footnote 8] Our 2004 report recommended that DOE and 
Bechtel resolve this issue before continuing with construction. DOE 
agreed with our recommendation, slowed construction on the 
pretreatment and high-level waste facilities and established a path 
forward that included larger-scale testing to address the mixing 
issue. In 2010, following further testing by Bechtel, DOE announced 
that mixing issues had been resolved and moved forward with 
construction. However, concerns about the pulse jet mixers' ability to 
successfully ensure uniform mixing continued to be raised by the 
Safety Board, PNNL, and DOE engineering officials on site. As a 
result, in late 2011, DOE directed Bechtel to demonstrate that the 
mixers will work properly and meet the safety standards for the 
facility. According to DOE officials, no timeline for the completion 
of this testing has been set. 

* Preventing erosion and corrosion of WTP components--Excessive 
erosion or corrosion of components such as mixing tanks and piping 
systems in the WTP is possible. Such excessive erosion and corrosion 
could be caused by potentially corrosive chemicals and large dense 
particles present in the waste that is to be treated. This excessive 
erosion and corrosion could result in the components' failure and lead 
to disruptions of waste processing. Bechtel officials first raised 
concerns about erosion and corrosion of WTP components in 2001, and 
these concerns were echoed in 2006 by an independent expert review of 
the project. Following further testing, DOE project officials declared 
the issue closed in 2008. However, DOE and Bechtel engineers recently 
voiced concerns that erosion and corrosion of components is still a 
significant risk that has not been sufficiently addressed. 
Furthermore, in January 2012, the Safety Board reported that concerns 
about erosion in the facility had still not been addressed, and that 
further testing is required to resolve remaining uncertainties. 
Bechtel has agreed to do further work to resolve technical challenges 
surrounding erosion and corrosion of the facilities internal 
components; however, DOE and Bechtel have not yet agreed upon an 
overall plan and schedule to resolve this challenge. 

* Preventing buildup of flammable hydrogen gas--Waste treatment 
activities in the WTP's pretreatment and high-level waste facilities 
can result in the generation of hydrogen gas in the plant's tanks and 
piping systems. The buildup of flammable gas in excess of safety 
limits could cause significant safety and operational problems. DOE 
and Bechtel have been aware of this challenge since 2002, and Bechtel 
formed an independent review team consisting of engineers and other 
experts in April 2010 to track and resolve the challenge. This team 
identified 35 technical issues that must be addressed before the 
hydrogen buildup challenge can be resolved. Bechtel has been working 
to address these issues. However, a 2011 DOE construction project 
review noted that, while Bechtel continues to make progress resolving 
these issues, the estimated schedule to resolve this challenge has 
slipped.[Footnote 9] According to DOE and Bechtel officials, Bechtel 
is still conducting analysis and is planning to complete the work to 
resolve this challenge by 2013. 

* Incomplete understanding of waste--DOE does not have comprehensive 
data on the specific physical, radiological, and chemical properties 
of the waste in each underground waste tank at Hanford. In the absence 
of such data, DOE has established some parameters for the waste that 
are meant to estimate the range of waste that may go through the WTP 
in an effort to help the contractor design a facility that will be 
able to treat whatever waste--or combination of wastes--is ultimately 
brought into the WTP. In 2006, an independent review team stated that 
properly understanding the waste would be an essential key factor in 
designing an effective facility. In 2010, the Consortium for Risk 
Evaluation with Stakeholder Participation, PNNL, and the Safety Board 
reviewed the status of DOE's plans to obtain comprehensive data on the 
characteristics of the waste, and each concluded that DOE and Bechtel 
did not have enough information about the waste and would therefore 
need to increase the range of possible wastes that the WTP is designed 
to treat in order to account for the uncertainty. Officials at PNNL 
reported that not having a large enough range is "a vulnerability that 
could lead to inadequate mixing and line plugging." The Safety Board 
reported that obtaining representative samples of the waste is 
necessary to demonstrate that the WTP can be operated safely, but that 
DOE and its contractors have not been able to explain how those 
samples will be obtained. In its 2011 review of the WTP project, a DOE 
headquarters construction project review report notes that progress 
has been made on including additional information and uncertainties in 
the efforts to estimate and model the waste that will be fed to the 
WTP. However, DOE officials stated that more sampling of the waste is 
needed. An expert study is under way that will analyze the gap between 
what is known and what is needed to be known to design an effective 
facility. This study is expected to be completed in August 2014. 

The risks posed by these technical challenges are exacerbated because 
once the facility begins operating, certain areas within the WTP 
(particularly in the pretreatment and high-level waste facilities) 
will be permanently closed off to any human intervention in order to 
protect workers and the public from radioactive contamination. To 
shield plant workers from intense radiation that will occur during WTP 
operations, some processing tanks will be located in sealed 
compartments called "black cells." These black cells are enclosed 
rooms where inspection, maintenance, repair, or replacement of 
equipment or components is extremely difficult because high radiation 
levels prevent access into them. As a result, plant equipment in black 
cells must last for WTP's 40-year expected design life without 
maintenance. According to a recent review conducted by the DOE 
Inspector General, premature failure of these components could result 
in radiation exposure to workers, contaminate large portions of the 
WTP and/or interrupt waste processing for an unknown period.[Footnote 
10] Significant failures of components installed in the WTP once 
operations begin could render the WTP unusable and unrepairable, 
wasting the billions of dollars invested in the WTP. In August 2012, 
DOE announced that it was asking a team of experts to examine the 
WTP's capability to detect problems in the black cells and the plant's 
ability to repair equipment in the black cells, if necessary. 
According to DOE officials, the team will, if needed, recommend design 
changes to improve the operational reliability of the black cells and 
the WTP. In addition, the Secretary of Energy has been actively 
engaged in the development of a new approach to managing WTP technical 
challenges and has assembled subject matter experts to assist in 
addressing the technical challenges confronting the WTP. 

Substantial Additional Cost Increases and Schedule Delays Are Likely: 

The estimated cost to construct the WTP has almost tripled since the 
project's inception in 2000, its scheduled completion date has slipped 
by nearly a decade, and additional significant cost increases and 
schedule delays are likely to occur because DOE has not fully resolved 
the technical challenges faced by the project. In addition, DOE 
recently reported that Bechtel's actions to take advantage of 
potential cost savings opportunities are frequently delayed and, as a 
result, rising costs are outpacing opportunities for savings. 

DOE Has Not Yet Fully Estimated the Cost and Schedule Impact of 
Resolving Technical Challenges: 

DOE's original contract price for constructing the WTP, approved in 
2000, stated that the project would cost $4.3 billion and be completed 
in 2011. In 2006, however, DOE revised the cost baseline to $12.3 
billion, nearly triple the initial estimate, with a completion date of 
2019. As we reported in 2006, contractor performance problems, weak 
DOE management, and technical challenges resulted in these cost 
increases and schedule delays.[Footnote 11] A 2011 DOE headquarters 
review report on the WTP projected additional cost increases of $800 
million to $900 million over the revised 2006 cost estimate of $12.3 
billion and additional delays to the project schedule.[Footnote 12] 
Furthermore, in November 2011, the Department of Justice notified the 
state of Washington that there is a serious risk that DOE may be 
unable to meet the legally enforceable milestones required by legal 
agreement, for completing certain activities in Hanford's WTP 
construction and startup activities, as well as tank waste retrieval 
activities.[Footnote 13] The Department of Justice did not identify 
the cause of the delay or specify the milestones that could be 
affected. As of May 2012, according to our analysis, the project's 
total estimated cost had increased to $13.4 billion, and additional 
cost increases and schedule delays are likely, although a new 
performance baseline has not yet been developed and approved. 

DOE ORP officials warn that cost increases and schedule delays will 
occur as a result of funding shortfalls and will prevent the 
department from successfully resolving technical challenges the WTP 
project faces. However, from fiscal years 2007 to 2010, the project 
was appropriated the $690 million that DOE requested in its annual 
congressional budget request.[Footnote 14] In fiscal years 2011 and 
2012, DOE received approximately $740 million each year--a $50 million 
increase over fiscal year 2010 funding. DOE project management 
officials and Bechtel representatives told us that $740 million for 
fiscal year 2012 was not enough to support planned work and, as a 
result, project work would slow down and project staffing levels would 
be reduced. However, according to senior DOE officials, including the 
acting Chief Financial Officer, the primary cause of the increasing 
costs and delayed completion has been the difficulty in resolving 
complex technical challenges rather than funding issues. 

DOE and Bechtel have not yet fully estimated the effect of resolving 
these technical challenges on the project's baseline. In February 
2012, DOE directed Bechtel to develop a new, proposed cost and 
schedule baseline for the project and, at the same time, to begin a 
study of alternatives that includes potential changes to the WTP's 
design and operational plans to resolve technical challenges faced by 
the project. The study is to also identify the cost and schedule 
impact of these alternatives on the project. For example, according to 
a DOE official, one alternative Bechtel is studying is to construct an 
additional facility that would process the tank waste by removing the 
largest solid particles from the waste before it enters WTP's 
pretreatment facility. This advance processing would reduce the risks 
posed by insufficient mixing of the waste in the pretreatment facility 
by the pulse jet mixers. A DOE official told us that this alternative 
could add $2 to $3 billion to the overall cost of the project and 
further delay its completion by several years. 

According to DOE officials, other alternatives being studied involve 
reducing the total amount of waste the WTP treats or operating the WTP 
at a slower pace for a longer period of time to accomplish its waste 
processing mission. However, these alternatives could delay the total 
time needed to process Hanford's waste and add billions of dollars to 
the total cost to treat all of Hanford's tank waste. Further delays 
constructing the WTP could also result in significant cost increases 
to treat all of Hanford's waste. For example, DOE has estimated that a 
4-year delay in the WTP start-up date could add an additional $6 to $8 
billion to the total cost of the Hanford Site tank waste treatment 
mission. 

In June 2012, DOE announced that the new cost and schedule baseline 
Bechtel is developing would not include the pretreatment and high-
level waste facilities. According to DOE officials, additional testing 
and analysis is needed to resolve the facilities' technical challenges 
before a comprehensive new cost and schedule baseline can be 
completed. DOE officials responsible for overseeing the WTP project 
are uncertain when the new baseline for these facilities will be 
completed. As a result, our May 2012 cost estimate of $13.4 is highly 
uncertain and could grow substantially if the technical challenges 
that the project faces are not easily and quickly resolved. 

Project Cost and Schedule Increases Could Be Partially Offset by 
Opportunities for Savings: 

DOE and Bechtel have identified some opportunities for cost savings, 
but these opportunities are not always pursued in a timely fashion. 
For example, Bechtel has identified an estimated $48 million in 
savings that could be achieved over the life of the project by 
accelerating specific areas of the project scope. Specifically, some 
of these savings could be achieved by acquiring material and equipment 
in bulk to maintain the pace of construction activities and avoid 
delays. In addition, another $24 million in savings could be achieved 
by reducing the amount of steel, pipe, wire, and other materials 
needed in remaining design work. DOE reported in March 2012, however, 
that Bechtel's actions to take advantage of potential cost savings 
opportunities are frequently delayed and, as a result, rising costs 
have outpaced opportunities for savings. For example, DOE reported 
that Bechtel continues to perform poorly in meeting planned dates for 
material delivery due to delayed identification and resolution of 
internal issues impacting procurement of plant equipment. 
Specifically, DOE noted that, of 95 needed project equipment 
deliveries scheduled for July 2011 through October 2011, 42 were 
delivered on time and that this poor performance trend is expected to 
continue. 

DOE Is Taking Steps to Address Some Management and Oversight Problems 
but Continues to Face Challenges to Completing the WTP: 

DOE is taking steps to improve its management and oversight of 
Bechtel's activities, including levying penalties on the contractor 
for quality and safety problems but continues to face challenges to 
completing the WTP project within budget and on schedule. For example, 
DOE's continued use of a fast-track, design-build management approach 
where construction on the project has moved forward before design 
activities are complete has resulted in costly reworking and schedule 
delays. 

DOE Is Taking Steps to Improve the Management and Oversight of the WTP 
Project: 

DOE is taking steps to improve its management and oversight of 
Bechtel's activities. For example, in November 2011, DOE's Office of 
Enforcement and Oversight started an investigation into Bechtel's 
potential noncompliance with DOE's nuclear safety requirements. 
Specifically, this DOE office is investigating Bechtel's processes for 
designing, procuring, and installing structures, systems, and 
components and their potential noncompliance with DOE nuclear safety 
requirements. If the contractor is found to not be complying with DOE 
requirements, DOE's Office of Enforcement and Oversight is authorized 
to take appropriate action, including the issuance of notices of 
violations and proposed civil penalties against Bechtel. Since 2006, 
DOE's Office of Enforcement and Oversight has conducted six 
investigations into Bechtel's activities at WTP that resulted in civil 
penalty against Bechtel. Five of the six investigations involved 
issues related to the design and safe operation of the WTP. For 
example, in 2008, DOE's Office of Enforcement and Oversight 
investigated Bechtel for circumstances associated with procurement and 
design deficiencies of equipment for the WTP and identified multiple 
violations of DOE nuclear safety requirements. This investigation 
resulted in Bechtel receiving a $385,000 fine. 

In addition, in January 2012, DOE's Office of Health, Safety, and 
Security reported that some aspects of the WTP design may not comply 
with DOE safety requirements.[Footnote 15] Specifically, under DOE 
safety regulations, Bechtel must complete a preliminary documented 
safety analysis--an analysis that demonstrates the extent to which a 
nuclear facility can be operated safely with respect to workers, the 
public, and the environment. However, Bechtel's preliminary documented 
safety analyses have not always kept pace with the frequently changing 
designs and specifications for the various WTP facilities and DOE 
oversight reviews have highlighted significant deficiencies in the 
project's safety analyses. In November 2011, according to DOE 
officials, DOE ordered Bechtel to suspend work on design, procurement, 
and installation activities for several major WTP systems including 
parts of the pretreatment facility and high-level waste facility until 
the contractor demonstrates that these activities are aligned with DOE 
nuclear safety requirements. This suspension remains in effect. 

DOE has also taken steps to address concerns about the project's 
safety culture. According to DOE's Integrated Safety Management System 
Guide, safety culture is an organization's values and behaviors 
modeled by its leaders and internalized by its members, which serves 
to make safe performance of work the overriding priority to protect 
workers, the public, and the environment. In 2011, the Safety Board 
issued the results of an investigation into health and safety concerns 
at WTP. The investigation's principal conclusion was that the 
prevailing safety culture of the WTP project effectively defeats DOE's 
policy to establish and maintain a strong safety culture at its 
nuclear facilities. The Safety Board found that both the DOE and 
Bechtel project management behaviors reinforce a subculture at WTP 
that deters the timely reporting, acknowledgment, and ultimate 
resolution of technical safety concerns. In addition, the Safety Board 
found a flawed safety culture embedded in the project at the time had 
a substantial probability of jeopardizing the WTP mission. As a result 
of these findings, the Safety Board made a series of recommendations 
to DOE to address WTP project safety problems. DOE has developed 
implementation plans to address the Safety Board's recommendations. In 
addition, DOE itself has raised significant concerns about WTP safety 
culture. In 2011 DOE's Office of Health, Safety, and Security 
conducted an independent assessment of the nuclear safety culture and 
management of nuclear safety concerns at the WTP. As a result of this 
assessment, DOE determined that most DOE and Bechtel WTP staff at the 
WTP believed that safety is a high priority. However, DOE also 
determined that a significant number of DOE and Bechtel staff 
expressed reluctance to raise concerns about safety or quality of WTP 
facilities design because WTP project management does not create an 
atmosphere conducive to hearing concerns or for fear of retaliation. 
Employees' willingness to raise safety concerns without fear of 
retaliation is an essential element of a healthy safety culture and 
creating an atmosphere where problems can be identified. DOE's 
assessment also determined that DOE has mechanisms in place to address 
safety culture concerns. For example, according to a January 2012 
issued DOE Office of Health, Safety, and Security report on the safety 
culture and safety management of the project, the project has an 
employee's concerns program and a differing professional opinion 
program that assist staff to raise safety concerns. In addition, the 
January 2012 issued report stated that several DOE reviews of the WTP 
project have been effective in identifying deficiencies in WTP designs 
and vulnerabilities that could impact the future operation of waste 
treatment facilities. 

DOE's Fast-Track, Design-Build Management Approach and Other 
Management and Oversight Problems Have Led to Cost Increases and 
Schedule Delays: 

DOE has taken some steps to improve its management and oversight of 
Bechtel's activities, but some problems remain. For example, DOE's 
ongoing use of a fast-track, design-build approach continues to result 
in cost and schedule problems. As we reported in 2006, DOE's 
management of the project has been flawed, as evidenced by DOE's 
decision to adopt a fast-track, design-build approach to design and 
construction activities, and its failure to exercise adequate and 
effective oversight of contractor activities, both of which 
contributed to cost and schedule delays.[Footnote 16] According to DOE 
officials, DOE's current project management orders will not allow the 
use of the fast-track, design-build approach for first-of-its-kind 
complex facilities such as the WTP.[Footnote 17] However, DOE was able 
to start the project using the fast-track, design-build approach 
before this order was in place. In a February 2012 written statement, 
DOE defended the fast-track, design-build management approach for the 
WTP project by stating that: (1) it allows for a single contract that 
gives the contractor responsibility for designing, building, and 
commissioning the facility, thus helping ensure that the design works 
as expected; (2) it allows the contractor to begin construction on 
parts of the facility for which design was complete; and (3) doing so 
would encourage construction to be completed faster. 

According to DOE officials, construction of the WTP is currently more 
than 55 percent complete, though the design is only about 80 percent 
complete. Nuclear industry guidelines suggest that design should be 
complete to at least 90 percent before starting construction of 
nuclear facilities. Furthermore, according to current DOE orders, 
construction should not begin until engineering and design work on 
critical technologies is essentially complete, and these technologies 
have been tested and proven to work. According to DOE's analysis in 
2007, several years after the beginning of WTP construction, several 
critical technologies designed for the WTP had not yet reached this 
level of readiness.[Footnote 18] In addition, current DOE guidance 
states that the design-build approach can be used most successfully 
with projects that have well-defined requirements, are not complex, 
and have limited risks. 

Using the fast-track, design-build approach, DOE has moved the project 
forward constructing and fabricating WTP components that may not work 
and may not meet nuclear safety standards. For example, as discussed 
above, pulse jet mixer technology continues to be tested to evaluate 
its effectiveness. Moreover, some already procured and installed 
equipment may need to be removed, refabricated, and reinstalled. For 
example, to keep pace with the construction schedule, Bechtel 
fabricated 38 vessels containing pulse jet mixers and installed 27 of 
them into the WTP pretreatment and high-level waste facilities. 
However, according to DOE officials, Bechtel has been forced to halt 
construction on the pretreatment facility and parts of the high-level 
waste facility because it was unable to verify that several vessels 
would work as designed and meet safety requirements. Bechtel is 
currently analyzing potential alternatives that include, among other 
things, scrapping 5 to 10 already completed vessels and replacing them 
with vessels with more easily verifiable designs, according to DOE 
officials. The cost and schedule impact of these alternatives has not 
yet been fully estimated. 

DOE has also experienced continuing problems overseeing its 
contractor's activities. For example, DOE's incentives and management 
controls are inadequate for ensuring effective project management and 
oversight of the WTP project to ensure that the WTP project is 
completed within budget and on schedule. As we reported in 2006, DOE 
did not ensure adherence to normal project reporting requirements and 
as a result, status reports provided an overly optimistic assessment 
of progress on the project.[Footnote 19] We also questioned the 
adequacy of project incentives for ensuring effective project 
management. Specifically, because of cost increases and schedule 
delays, we noted that the incentive fees in the original contract--
including more than $300 million in potential fees for meeting cost 
and schedule goals or construction milestones--were no longer 
meaningful. Since that time, some problems have continued. For 
example, Bechtel's current contract, which was modified in 2009, 
allows the contractor to receive substantial incentives, such as an 
award fee for achieving specified project objectives, and DOE has paid 
this fee, although events subsequently revealed that the project was 
likely to exceed future cost and schedule estimates. Since 2009, DOE 
has paid Bechtel approximately $24.2 million or 63 percent of its 
$38.6 million incentive fee based, in part, on Bechtel's adherence to 
cost and schedule targets and its resolution of technical challenges 
associated with waste mixing. However, the WTP project is now at 
serious risk of missing major future cost and schedule targets, and it 
was subsequently determined by DOE that the waste mixing technical 
challenges were not resolved after all. According to DOE officials, 
substantial further effort is needed that will take at least an 
additional 3 years of testing and analysis until project scientists 
and engineers can fully resolve this challenge. In the current 
contract, there is no contractual mechanism for recovering an 
incentive fee that was paid to a contractor for work that was 
subsequently determined to be insufficient, according to DOE officials. 

Furthermore, under its project management order, DOE is to incorporate 
and manage an appropriate level of risk--including critical technical, 
performance, schedule, and cost risks--to ensure the best value for 
the government.[Footnote 20] However, DOE has no assurance that the 
incentives included in the WTP construction contract are assisting in 
the effective management of these risks. The contract provides that 
"incentives are structured to ensure a strong financial motivation for 
the Contractor to achieve the Contract requirements."[Footnote 21] 
However, the contract requirements have been, and continue to be, 
revised to provide for a longer schedule and higher cost. For example, 
DOE has already announced that the project will not be completed 
within the 2006 performance baseline and has directed the contractor 
to prepare a revised performance baseline. Further, since 2009, DOE 
has awarded $15.6 million in incentive fees to Bechtel for meeting 
periodic schedule and cost goals, even though the WTP's schedule has 
slipped, and construction costs have continued to increase.[Footnote 
22] Bechtel has estimated, as of May 2012, that costs to complete the 
project are currently more than $280 million over the amount specified 
in the construction contract. 

DOE's Inspector General has also found that DOE may have awarded 
Bechtel fees without the contractor adequately fulfilling work. A 2012 
DOE Office of Inspector General report notes that DOE may have 
overpaid $15 million of potentially $30 million in incentive fees for 
the delivery and installation of vessels into the WTP facility. 
[Footnote 23] When DOE learned that one of the vessels did not have 
quality assurance records and therefore did not conform to contract 
requirements, it instructed Bechtel to return $15 million of the 
performance fee. However, according to the DOE Office of Inspector 
General report, neither DOE nor Bechtel could provide evidence that 
the fee was returned to DOE. 

DOE's oversight of Bechtel's activities may also be hampered because 
project reviews, such as external independent reviews or independent 
project reviews--which are a key oversight mechanism--are only 
required by DOE's project management order to occur at major decision 
points in a project. These reviews examine a project's estimated cost, 
scope, and schedule and are intended to provide reasonable assurance 
that the project can be successfully executed on time and within 
budget. For example, these independent reviews are to occur when a 
cost and schedule baseline is completed for the project or when 
construction is authorized to begin. A 2006 review conducted by the 
U.S. Army Corps of Engineers, for example, identified serious problems 
with Bechtel's progress on the WTP project and indicated that the 
project would significantly exceed both cost and schedule targets. 
[Footnote 24] In 2009, the Office of Project Management also conducted 
an external independent review. Such reviews are an important 
mechanism for overseeing DOE contractor activities. In a large, 
complex, multiyear project such as WTP, however, many years can pass 
between these critical decision points and the associated independent 
reviews. DOE officials noted that other reviews, such as Construction 
Project Reviews, were also completed between 2009 and 2011 for the WTP 
project. While officials stated that these reviews did examine the 
project's cost and schedule, they noted that the reviews were not as 
extensive as the 2006 and 2009 reviews. 

Conclusions: 

DOE is responsible for one of the world's largest environmental 
cleanup projects in which it must stabilize large quantities of 
hazardous and radioactive waste and prepare it for disposal at a 
permanent national geologic repository that has yet to be identified. 
By just about any definition, DOE's WTP project at Hanford has not 
been a well-planned, well-managed, or well-executed major capital 
construction project. Daunting technical challenges that will take 
significant effort and years to resolve combined with a near tripling 
of project costs and a decade of schedule delays raise troubling 
questions as to whether this project can be constructed and operated 
successfully. Additional cost increases amounting to billions of 
dollars and schedule delays of years are almost certain to occur. DOE 
and Bechtel officials have stated that the most recent cost increases 
and schedule delays are the result of, among other things, Congress 
not providing the required funding to resolve technical issues. In our 
view, however, the more credible explanation continues to be DOE's 
decision to build what the department itself describes as the world's 
largest and most complex nuclear waste treatment plant using a fast-
track, design-build strategy that is more appropriate for much 
simpler, smaller scale construction projects. Where nuclear industry 
guidelines suggest completing 90 percent of design prior to beginning 
construction, DOE instead began construction when design of the 
facility was in the early stages and insisted on developing new 
technologies and completing design efforts while construction was 
ongoing. The result has been significant design rework, and some 
already procured and installed equipment to possibly be removed, 
refabricated, and reinstalled. 

The technical challenges are especially acute in the WTP's 
pretreatment and high-level waste facilities. Technologies for these 
facilities require perfect reliability over the plant's 40-year 
lifetime because no maintenance or repair will be possible once waste 
treatment begins. According to DOE's analysis, several critical 
technologies designed for the WTP have not been tested and verified as 
effective. Additional expensive rework in the pretreatment and high-
level waste facilities, particularly in the area of waste mixing, is 
likely to occur. Further, an additional facility to treat tank waste 
before the waste arrives at the WTP's pretreatment facility may be 
required. This additional facility could add billions to the cost of 
treating Hanford's waste. All the while, DOE and outside experts 
continue to raise safety concerns, and Bechtel continues to earn 
incentive fees for meeting specific project objectives even as the 
project's costs and timelines balloon far beyond the initially planned 
goals. DOE's recent actions to identify cost savings opportunities and 
to hold Bechtel accountable for the significant deficiencies in its 
preliminary documented safety analyses and requiring the contractor to 
comply with DOE's nuclear safety regulations are steps in the right 
direction. However, we continue to have serious concerns not only 
about the ultimate cost and final completion date for this complex 
project, but whether this project can successfully accomplish its 
waste treatment mission given that several critical technologies have 
not been tested and verified. 

Recommendations for Executive Action: 

To improve DOE's management and oversight of the WTP project, we 
recommend that the Secretary of Energy take the following three 
actions: 

* Do not resume construction on the WTP's pretreatment and high-level 
waste facilities until critical technologies are tested and verified 
as effective, the facilities' design has been completed to the level 
established by nuclear industry guidelines, and Bechtel's preliminary 
documented safety analyses complies with DOE nuclear safety 
regulations. 

* Ensure the department's contractor performance evaluation process 
does not prematurely reward contractors for resolving technical issues 
later found to be unresolved. For example, DOE could seek to modify 
its contracts to withhold payment of incentive fees until the 
technical challenges are independently verified as resolved. 

* Take appropriate steps to determine whether any incentive payments 
made to the contractor for meeting project milestones were made 
erroneously and, if so, take appropriate actions to recover those 
payments. 

Agency Comments and Our Evaluation: 

We provided DOE with a draft of this report for its review and 
comment. DOE generally agreed with the report and its recommendations. 
In its written comments, DOE described actions under way to address 
the first recommendation, as well as additional steps it plans to take 
to address each of the report's recommendations. 

DOE stated that it has recently taken action that is, in part, aligned 
with the first recommendation. Specifically, it issued guidance to the 
contractor, which directed the contractor to address remaining WTP 
technical and management issues sufficient to produce a high 
confidence design and baseline for the pretreatment and high-level 
waste facilities of the WTP. DOE also established a limited 
construction activity list for the high-level waste facility, as well 
as a much more limited set of construction activities in the 
pretreatment facility, which DOE stated will allow it to complete 
construction of some portions of the facilities while taking into 
account the unresolved technical issues. DOE stated that it believes 
this approach balances the intent of the recommendation and the need 
to continue moving forward with the project and preparations to remove 
waste from Hanford waste storage tanks. While this approach appears 
reasonable, we would caution that DOE should sufficiently monitor the 
construction activities to ensure that additional construction beyond 
the activities specifically named on the approved list not be 
undertaken until the technical and management issues are 
satisfactorily resolved. DOE also noted that the Secretary of Energy 
has been actively engaged in the development of a new approach to 
managing the WTP and, together with a group of independent subject 
matter experts, is working to resolve long-standing technical issues. 
As requested by DOE, we did incorporate information into the report to 
indicate the Secretary's personal involvement in addressing the WTP 
issues and the technical teams assembled to help resolve these 
persistent technical issues. In addition, DOE stated that the 
department and the contractor have implemented a plan to assure that 
the WTP documented safety analysis will meet the department's nuclear 
safety requirements and DOE established a Safety Basis Review Team 
that will provide a mechanism for reviewing the documented safety 
analyses for each facility to ensure it meets nuclear safety 
requirements. DOE's planned actions to address the recommendations in 
this report are discussed more fully in DOE's letter, which is 
reproduced in appendix I. DOE also provided technical clarifications, 
which we incorporated into the report as appropriate. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the Secretary of Energy; the appropriate congressional committees; 
the Director, Office of Management and Budget; and other interested 
parties. In addition, the report will be available at no charge on the 
GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staff members have any questions about this report, 
please contact me at (202) 512-3841 or trimbled@gao.gov. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix II. 

Signed by: 

David C. Trimble: 
Director: 
Natural Resources and Environment: 

[End of section] 

Appendix I: Comments from the Department of Energy: 

Department of Energy:
Washington, DC 20585: 

November 30, 2012: 

David Trimble: 
Director: 
Natural Resources and Environment: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Mr. Trimble: 

The U.S. Department of Energy (DOE) has reviewed the Government 
Accountability Office (GAO) draft report entitled: Hanford Waste 
Treatment Plant: DOE Needs to Take Action to Resolve Technical and 
Management Challenges, GAO-13-38, that was provided to the Secretary 
of Energy on November 1, 2012. I am responding with comments on the 
GAO's findings, conclusions, and recommendations on behalf of the 
Secretary. 

Your report contains three recommendations, The first recommendation 
states: "Do not resume construction on the WTP's pretreatment and high-
level waste facilities until critical technologies are tested and 
verified as effective, the facilities' design has been completed to 
the level established by nuclear industry guidelines, and Bechtel's 
preliminary documented safety analyses complies with DOE nuclear 
safely regulations." The Department has recently taken action that is, 
in part, aligned with this recommendation. The DOE issued guidance to 
the contractor on August 16, 2012, which included direction to address 
remaining Waste Treatment and Immobilization Plant (WTP) technical and 
management issues sufficient to produce a high confidence design and 
baseline for the Pretreatment and High-Level Waste facilities of the 
WTP. At the same time, DOE established a limited construction activity 
list for the High-Level Waste facility which allows for completing 
construction of some portions of the facility, such as structural 
walls, to continue while taking into account the remaining open 
technical issues, and a much more limited set of activities in the 
Pretreatment Facility, primarily devoted to preserving the installed 
components and structure. We believe that this path forward balances 
the intent of this recommendation with prudent project management at 
this stage of the project and the need to expeditiously remove waste 
from the storage tanks. In addition, DOE directed the contractor to 
continue construction on the Low Activity Waste and Analytical 
Laboratory facilities, which are at 76 and 72 percent design complete, 
respectively, as of September 2012. I would note that for the latter 
facility most of remaining design effort is for development of 
laboratory methods to support operations. 

Since mid-July, the Secretary has been actively engaged in the 
development of a new approach to managing the WTP, and has been 
working with a personally handpicked group of independent, highly 
capable subject matter experts since mid-July to resolve long-standing 
technical issues. The Secretary and his expert group have been 
devoting about five to ten hours per week over the past four months, 
including nights and weekends. Because of this work, the DOE is in the 
process of revamping the WTP project team structure to facilitate a 
more efficient and effective approach to executing our mission at 
Hanford. Recently, a new functional structure was created to bring 
synergy to the project and finally resolve the myriad of technical 
issues. A management core team and eight technical teams have been 
assembled from DOE, national laboratories, and contractor personnel in 
order to mitigate the environmental hazards and the risks in 
completing and operating the waste treatment plant. The Secretary and 
his group of experts will remain fully engaged. We respectfully 
request that your report acknowledge the Secretary's personal 
involvement and the resulting new management approach to resolving the 
technical issues. 

In addition, the Department and the contractor have implemented a plan 
to assure that the WTP documented safety analysis will meet the 
Department's nuclear safety requirements. In January 2012 the 
contractor completed a root cause analysis to identify underlying 
reasons regarding misalignments between the preliminary documented 
safety analysis and the approved plant design. That review identified 
two primary reasons and consequently the contractor has identified and 
is implementing actions to address these issues. DOE has also 
established a Safety Basis Review Team that will provide a mechanism 
for reviewing the documented safety analyses for each facility to 
ensure they meet DOE nuclear safety requirements. 

The second recommendation, which DOE accepts, states: "Ensure the 
department's contractor performance evaluation process does not 
prematurely reward contractors for resolving technical issues later 
found to be unresolved. For example, DOE could seek to modify its 
contracts to withhold payment of incentive fees until the technical 
challenges are independently verified as resolved " While there have 
been improvements in the process and documentation for contract fee 
milestones, the contractor performance evaluation process continues to 
be an area that needs improvement. There are currently 60 fee-bearing 
activity milestones in the contract. DOE has added a new attachment to 
the WTP contract that specifies the requirements the contractor must 
meet to successfully complete the milestones (reference WTP Contract 
Section J — List of Attachments, Attachment P "Completion Definition 
Sheets for Incentive Fee C.1 Activity Milestone Completion 
Incentive"). When the contractor believes it has completed a 
milestone, the contractor completes an Activity Milestone Definition 
Sheet, attaches all supporting documentation, and submits it to the 
Office of River Protection (ORP) for review. ORP then performs a 
formal review of the contractor's submission within 30 days of its 
receipt, which includes review of the documentation submitted by the 
contractor, in addition to a physical review of the work in the field. 
After completion of this review, ORP either disapproves the 
contractor's milestone submittal; requests additional information to 
complete the review and validation process; or validates the 
completion of the milestone and authorizes the contractor to submit an 
invoice for payment, The entire process is formally documented and 
included in the contract file. DOE continues to strive for continuous 
improvement in the administration of its contracts, including 
administration of fee structures and management of risks ensuring the 
best value for the government. DOE is currently evaluating the entire 
fee structure of the WTP contract, and will negotiate a new contract 
fee structure as part of the ongoing re-baseline and replan of the 
project. 

The third recommendation, which DOE accepts, states: "Take appropriate 
steps to determine whether any incentive payments made to the 
contractor for meeting project milestones were made erroneously, and 
if so, take appropriate actions to recover those payments." In 
response to an earlier Inspector General report, ORP investigated 
whether there were irregularities regarding payment of a fee to the 
WTP contractor for a milestone for which quality assurance issues were 
identified. ORP noted that with regard to previous payments of fee, a 
modification of the contract was issued in January 2009. That contract 
modification essentially determined that the final fee determinations 
for work performed prior to that modification totaled a specific 
dollar value. ORP noted that the final fee determinations consisted of 
previously paid fee for scheduled milestones, and previously paid 
provisional fee, which was deemed earned at the time, and was not 
subject to further clawback. ORP will perform a review of all 
milestone and incentive fee payments between January 2009 and the 
current date. The Department is supportive of clawback of fees paid to 
its contractors where appropriate, for instance when the quality of an 
item has been subsequently determined not to have met requirements. 

In addition to our responses to the three GAO recommendations, below 
are some additional comments on the report. 

On Page 5, the report describes the original approach adopted for WTP 
as being a fast-track, design-build approach and subsequently notes 
that DOE's project management directives require approval to begin 
construction after technology development is completed and design of 
facilities is essentially complete. The WTP construction approach had 
already been incorporated in the project strategy prior to the 
Department's issuing guidance on the use of design-build approaches. 

On page 10, in regard to DOE terminating a contract on a privatization 
approach after spending $300 million, it is important to note that the 
conceptual design developed by the privatization contractor was 
retained by the current engineering, procurement, construction and 
commissioning contractor, as the fundamental design approach for the 
WTP. 

In the highlights section and on page 18, the report mentions Bechtel 
National, Inc. (BNI) studying alternatives for processing the waste 
and operating the WTP. These alternatives were discussed in a BNI-
hosted May 2012 workshop that included representatives from DOE 
Headquarters, DOE ORP, BNI, ORP Tank Farm contractor Washington River 
Protection Solutions, State of Washington Department of Ecology, 
Pacific Northwest National Laboratory and Savannah River National 
Laboratory. Three of the aforementioned eight technical teams are now 
evaluating many of the alternatives discussed during this workshop, 
Based on the merits of the alternatives, they may be pursued as 
potential solutions to waste processing issues. 

The last three sentences of the paragraph on page 21 do not provide a 
full description of the situation regarding safety culture reviews by 
the Office of Health Safety and Security (HSS). In 2010 HSS performed 
their first evaluation of the WTP safety culture in response to a 
request by the Assistant Secretary for Environmental Management. In 
response to a commitment made to the Defense Nuclear Facilities Safety 
Board, HSS conducted a follow-on safety culture review at WTP in 2011 
using a more rigorous assessment process, and reported the results in 
a January 2012 report. Although the subsequent 2012 assessment report 
does not identify any substantive program improvements in the areas of 
employee concerns, differing professional opinions, or ORP oversight, 
it noted that most personnel at WTP believed that safety was a high 
priority. We also acknowledge the existence of a cultural challenge on 
the WTP project wherein employees were reluctant to raise safety 
concerns because of an overriding perception that issues would not be 
addressed in an aggressive and timely manner. We are working with HSS 
and the Secretary to change and improve the safety culture at ORP and 
across the DOE complex. 

Thank you for the opportunity to comment on your draft GAO-13-38 
report regarding DOE's management of the Waste Treatment and 
Immobilization Plant. If you have any further questions, please call 
Kenneth G. Picha, Jr., Deputy Assistant Secretary for Tank Waste and 
Nuclear Material, at (202) 586-2003. 

Sincerely, 

Signed by: 

David Huizenga: 
Senior Advisor for Environmental Management: 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David C. Trimble, (202) 512-3841, or trimbled@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Ryan T. Coles and Janet 
Frisch, Assistant Directors; Gene Aloise; Scott Fletcher; Mark 
Gaffigan; Richard Johnson; Jeff Larson; Mehrzad Nadji; Alison O'Neill; 
Kathy Pedalino; Tim Persons; Peter Ruedel; and Ron Schwenn made key 
contributions to this report. 

[End of section] 

Footnotes: 

[1] As designed, the WTP Low Activity Waste Facility will only be 
capable of treating less than half of the expected quantity of 
Hanford's low-activity waste. DOE has indicated that a second plant or 
alternative approach that is not part of the current project will be 
necessary to treat the rest of the low-activity waste and is still 
exploring a supplemental technology outside the scope of the WTP to 
treat this waste. See GAO, Nuclear Waste: DOE Should Reassess Whether 
the Bulk Vitrification Demonstration Project at Its Hanford Site Is 
Still Needed to Treat Radioactive Waste, [hyperlink, 
http://www.gao.gov/products/GAO-07-762] (Washington, D.C.: June 12, 
2007). 

[2] GAO, Hanford Waste Treatment Plant: Contractor and DOE Management 
Problems Have Led to Higher Costs, Construction Delays, and Safety 
Concerns, [hyperlink, http://www.gao.gov/products/GAO-06-602T] 
(Washington, D.C.: Apr. 6, 2006); GAO, Department of Energy: Major 
Construction Projects Need a Consistent Approach for Assessing 
Technology Readiness to Help Avoid Cost Increases and Delays, 
[hyperlink, http://www.gao.gov/products/GAO-07-336] (Washington, D.C.: 
Mar. 27, 2007); [hyperlink, http://www.gao.gov/products/GAO-07-762]. 

[3] DOE's Office of Engineering and Construction Management is now 
called the Office of Project Management and is within DOE's Office of 
Acquisition and Project Management. 

[4] 42 U.S.C. § 9601 et seq. The act, among other things, provided the 
federal government with authority to respond to releases or threatened 
releases of hazardous substances. 

[5] 42 U.S.C. § 6901 et seq. Under the act, the owners or operators of 
facilities located on sites where hazardous waste was or is treated, 
stored, or disposed of must, among other things, clean up present and 
past contamination within the boundaries of their sites, as well as 
contamination that may have spread beyond those boundaries. 

[6] See GAO, Nuclear Waste: Observations on DOE's Privatization 
Initiative for Complex Cleanup Projects, [hyperlink, 
http://www.gao.gov/products/GAO/T-RCED-00-215] (Washington, D.C.: June 
22, 2000). 

[7] GAO, Commercial Nuclear Waste: Effects of a Termination of the 
Yucca Mountain Repository Program and Lessons Learned, [hyperlink, 
http://www.gao.gov/products/GAO-11-229] (Washington, D.C.: May 10, 
2011). 

[8] GAO, Nuclear Waste: Absence of Key Management Reforms on Hanford's 
Cleanup Project Adds to Challenges of Achieving Cost and Schedule 
Goals, [hyperlink, http://www.gao.gov/products/GAO-04-611] 
(Washington, D.C.: June 9, 2004) and [hyperlink, 
http://www.gao.gov/products/GAO-06-602T]. 

[9] DOE, Department of Energy Review Committee Report on the 
Construction Project Review of the Waste Treatment and Immobilization 
Plant Project at the Office of River Protection at Hanford 
(Washington, D.C.: August 2011). 

[10] U.S.DOE Office of Inspector General, Audit Report: The Department 
of Energy's $12.2 Billion Waste Treatment and Immobilization Plant--
Quality Assurance Issues--Black Cell Vessels, DOE/IG-0863 (Washington 
D.C.: April 2012). 

[11] [hyperlink, http://www.gao.gov/products/GAO-06-602T]. 

[12] DOE, Department of Energy Review Committee Report on the 
Construction Project Review of the Waste Treatment and Immobilization 
Plant Project at the Office of River Protection at Hanford 
(Washington, D.C.: August 2011). 

[13] Consent Decree at 4 and Appx A in Washington v. DOE, Case No. 08-
5085-FVS (E.D. WA. October 25, 2010). 

[14] DOE's 2008 enacted appropriation of $690 million was later 
reduced by a rescission of .91 percent to $683.721 million. 

[15] DOE, Office of Health, Safety, and Security, Office of 
Enforcement and Oversight, Independent Assessment of the Nuclear 
Safety Culture and Management of Nuclear Safety Concerns at the 
Hanford Site Waste Treatment and Immobilization Plant (Washington, 
D.C.: January 2012). 

[16] [hyperlink, http://www.gao.gov/products/GAO-06-602T]. 

[17] DOE, Program and Project Management for the Acquisition of 
Capital Assets, DOE Order 413.3B (Washington, D.C.: Nov. 29, 2010). 
The order also states that "aggressive risk mitigation strategies are 
required" for fast-tracked, design-build projects. 

[18] DOE measures technology readiness using Technology Readiness 
Levels, which range from 1 to 9; where 9 represents a fully tested and 
proven technology. DOE guidance indicates that critical technologies 
should be at Technology Readiness Level 6 or higher before 
construction begins. However, in 2007, the last time DOE assessed 
Technical Readiness Levels for the entire project, DOE found that 14 
out of 21 critical technologies assessed were at a Technology 
Readiness Level lower than 6. 

[19] [hyperlink, http://www.gao.gov/products/GAO-06-602T]. 

[20] DOE, Program and Project Management for the Acquisition of 
Capital Assets, DOE Order 413.3B (Washington, D.C.: Nov. 29, 2010). 
The order also states that "aggressive risk mitigation strategies are 
required" for fast-tracked, design-build projects. 

[21] Contract No. DE-AC27-01RV14136, § B.4 (conformed through 
modification No. 287). 

[22] The contract specifically links schedule incentives with overall 
progress under the contract: "Each milestone represents and measures 
progress towards achieving the Contract requirements and do not 
represent payment for the specific named milestone itself." Contract 
No. DE-AC27-01RV14136, § B.4(c) (conformed through modification No. 
287). 

[23] DOE Office of Inspector General, Audit Report: The Department of 
Energy's $12.2 Billion Waste Treatment and Immobilization Plant -- 
Quality Assurance Issues--Black Cell Vessels, DOE/IG-0863 (Washington, 
D.C.: April 2012). 

[24] U.S. Army Corps of Engineers, Independent Validation Review of 
the May 2006 Estimate at Completion for the Hanford Waste Treatment 
and Immobilization Plant Project (U.S. Army Corps of Engineers Walla 
Walla District: Aug. 28, 2006). 

[End of section] 

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