Department of Energy's Contract Management for the National Nuclear Security Administration and Office of Environmental Management
Since our high-risk report in February 2015, the Department of Energy (DOE) continued to meet the leadership commitment criterion and to partially meet the criterion for having a corrective action plan. DOE has improved its monitoring of the effectiveness of corrective measures and now partially meets this criterion. DOE did not meet the criterion for having the capacity to resolve contract and project management problems, nor did DOE meet the criterion for demonstrating progress toward implementing measures to resolve high-risk areas.
DOE oversees a broad range of programs related to nuclear security, science, energy, and nuclear waste cleanup, among other areas. To support these missions, DOE has several offices, each of which oversees numerous programs that often design and construct large capital asset projects to meet the department’s mission needs. DOE relies primarily on contractors to carry out its programs. It is the largest civilian contracting agency in the federal government, and spends approximately 90 percent of its fiscal year 2017 funding of more than $32 billion on contracts and large capital asset projects. We designated DOE’s contract management—which has included both contract administration and project management—a high-risk area in 1990 because DOE’s record of inadequate management and oversight of contractors has left the department vulnerable to fraud, waste, abuse, and mismanagement.
In January 2009, to recognize progress made at DOE’s Office of Science, we narrowed the focus of DOE’s high-risk designation to 2 DOE program elements—the Office of Environmental Management (EM) and the National Nuclear Security Administration (NNSA). Together, these 2 elements accounted for almost 60 percent of DOE’s annual budget. In February 2013, we further narrowed the focus of the high-risk designation to NNSA and EM’s major contracts and projects—those with an estimated cost of $750 million or greater—to acknowledge progress made in managing nonmajor projects, those with an estimated cost below $750 million. We continue to monitor DOE’s management of nonmajor projects to ensure that progress in this area is sustained.
In our 2015 assessment, we found that, of the five criteria needed for removal from the High-Risk List, DOE satisfied one: leadership commitment. During the last 2 years, we again observed DOE’s strong leadership commitment to addressing the high-risk area. The Secretary of Energy has taken several high-profile steps that demonstrate the department’s commitment to improving project management—steps that have been embraced by senior leadership within the department. Similarly, we continued to observe progress as DOE developed and implemented corrective actions that aim to identify and address root causes of persistent project management challenges and implement solutions. Since our 2015 assessment, we also observed progress in DOE’s monitoring of the effectiveness and sustainability of corrective measures. As in previous years, however, EM and NNSA struggled to ensure they have the capacity (both people and resources) to mitigate risks. They have also demonstrated limited progress in contract management, particularly in the area of financial management, and have struggled to stay within cost and schedule estimates for some major projects.
DOE has made progress in its contract and project management. DOE continued to meet the criterion for demonstrating a strong commitment and top leadership support for improving project management. The Secretary of Energy issued two memorandums, in December 2014 and June 2015, that lay out a series of changes to policies and procedures to improve project management. These changes were included in DOE’s revised project management order, DOE Order 413.3B, issued in May 2016. As noted in the memorandums, some of these changes are in response to recommendations we made in prior years, such as requiring that projects develop cost estimates and analyses of alternatives according to our best practices.
According to DOE officials, the two memorandums serve as DOE’s corrective action plan, but we note that this plan does not appear to be comprehensive and, as such, DOE continues to partially meet this criterion. Specifically, DOE’s corrective action plan does not address 1) acquisition planning for its major contracts—a phase during which critical contract decisions are made that have significant implications for the cost and overall success of an acquisition; 2) the quality of enterprise-wide cost information available to DOE managers and key stakeholders; 3) DOE’s need for a program management policy; and 4) how DOE’s new requirements will be applied to the department’s major legacy projects, which receive billions of dollars in annual funding and often present the most intractable project management challenges.
DOE also made significant efforts to improve its performance in monitoring and independently validating the effectiveness and sustainability of corrective measures and now partially meets our monitoring criterion. For example, the Secretary improved the department’s senior-level monitoring capability. These efforts are important and can substantively improve how DOE oversees and executes its major projects and programs, but additional time is needed for us to assess how effectively these recent monitoring improvements will validate the sustainability of corrective measures. We have not yet evaluated the operations of the newly created Project Management Risk Committee (PMRC). In addition, DOE’s new oversight and monitoring efforts are not comprehensive, as certain activities within EM are not subject to review by the PMRC, even though together they cost billions of dollars and last for numerous years. Finally, the effectiveness of DOE’s monitoring of its contracts, projects, and programs depends upon the availability of reliable enterprise-wide cost information on which to base oversight activities.
DOE did not meet the criterion for having the capacity to mitigate risks with project and contract management. Since 2015, DOE has taken steps to improve capacity, such as increasing its number of contract specialists, but even with these recent steps, capacity challenges remain. The Secretary’s December 2014 and June 2015 memorandums were generally silent on capacity issues. In several recently issued reports, we found capacity shortfalls in key contract management functions, including cost and schedule performance evaluation, as well as in oversight of major projects and programs. For example, in May 2015, we found that NNSA had not determined whether it has sufficient, qualified personnel to ensure it used information from contractor assurance systems (CAS) consistently, which include information on contractors’ cost and schedule performance. In 2016, DOE issued a new Supplemental Directive on NNSA Site Governance requiring NNSA to develop training for NNSA organizations to help them implement the governance model that relied on information from CAS for oversight, but it is unclear whether this training has been developed and initiated. In November 2016, we found that DOE and NNSA had not established training programs, such as a career development program, for program managers. On December 14, 2016, the President signed the Program Management Improvement Accountability Act. The act, among other things, requires that each agency head appoint a Program Management Improvement Officer, who must develop a strategy for enhancing the role of program managers within the agency that includes enhanced training and educational opportunities for program managers. Finally, in July 2016, we found problems with DOE’s effort to evaluate the environment for raising concerns without fear of reprisal.
As noted earlier, DOE implemented a series of changes to policies and procedures to improve project management, but the department does not yet meet the criterion for demonstrating progress. DOE’s recent reforms are in the early stages, and more time is needed to assess the effectiveness of corrective measures and associated progress, especially with respect to ongoing major projects. DOE has taken significant actions regarding two of its six ongoing major projects but continues to encounter significant project management challenges, cost increases, and schedule delays on others. In addition, even though we removed nonmajor projects from our High-Risk List, we continue to monitor how DOE manages these projects to ensure that DOE sustains progress in this area. Finally, DOE’s recent reforms do not address contract management, and our work since the last high-risk report has identified several significant challenges with DOE contract management on which DOE has taken little action. Specifically, in May 2015, we found that NNSA had not established policies or guidance specific to using information from CAS to evaluate management and operations (M&O) contractor performance.
Congress has taken several actions related to this high-risk area. For example, the fiscal year 2016 National Defense Authorization Act (NDAA) was enacted with several provisions on the basis of our recommendations, including modifications to requirements for cost-benefit analyses for competing management and operating contracts and additional requirements related to the oversight of the Hanford Waste Treatment and Immobilization Plant (WTP). In addition, the Senate Armed Services Committee report accompanying the fiscal year 2017 NDAA included requirements for DOE relevant to many issues highlighted in our high-risk report, including specific provisions for the Mixed Oxide (MOX) Fuel Fabrication Facility, the Chemistry and Metallurgy Research Replacement (CMRR) project, and the WTP. The Senate Armed Services Committee also held hearings in 2015 and 2016 on challenges identified in this high-risk area. We testified on our observations on DOE’s management challenges and the steps taken to address them. The House Energy and Commerce Committee also held a hearing in 2015 in which we testified on the actions needed to improve DOE and NNSA oversight of management and operating contracts.
DOE continues to face persistent problems with design and construction of nuclear facilities and with program and contract management. DOE’s removal from the High-Risk List requires meeting all five of our long-established criteria. DOE must sustain the leadership commitment it has already demonstrated to address its project and contract management challenges. For the criteria that DOE has partially or not met, it should also address the following:
Capacity: DOE will need to commit sufficient people and resources to resolve its project, program, and contract management problems. DOE must develop a strategy to address these needs. We note that the initiatives DOE established in 2015, some of which we described in our last high-risk report, are not yet complete. NNSA’s issuance of a new Supplemental Directive on NNSA Site Governance is a good first step toward addressing the recommendations we made with regard to the agency’s capacity to conduct oversight activities using information from CAS. Specifically, the Supplemental Directive includes requirements for NNSA’s Office of Safety, Infrastructure and Operations to develop training for NNSA organizations to assist their implementation of the site governance model and to annually review and update the training as needed to ensure continuous improvement. However, NNSA has not yet established comprehensive guidance, beyond the general framework described in the new Supplemental Directive, to consistently implement the described governance model across the nuclear security enterprise, and this is needed to ensure that the training developed is aligned with the specifics of that governance model.
In addition, significant additional action is required by both EM and NNSA to fully address our recommendations. DOE must implement program management policies and develop a strategy for enhancing the role of program managers, including for training, as required by the Program Management Improvement Accountability Act, and address our and others’ recommendations on whistleblower protection to ensure a safety-conscious work environment where staff are encouraged to use their expertise, identify risks, and proactively mitigate them without fear of workplace retaliation.
Action Plan: DOE will need to ensure that its corrective action plan is comprehensive and addresses all root causes—including all front-end planning challenges and contract and program management, as well as capacity issues. To be considered a corrective action plan, DOE’s plan must also set milestones and timelines, assign responsibilities for implementing and completing corrective measures, and identify mechanisms to monitor progress and provide measurable outcomes. DOE must also ensure the corrective action plan includes steps necessary to implement solutions we and others have recommended.
The plan should be a living document that can reflect progress made, reconcile past plans and root cause analyses, reflect improved understanding of underlying causes and corrective measures, and identify what challenges remain. DOE’s corrective action plan should also address acquisition planning for its major contracts, the quality of enterprise-wide cost information, and how DOE’s new requirements will be applied to major legacy projects. Finally, we will monitor how DOE applies—enterprise-wide—the standards, policies and guidelines for program management that are to be established at federal agencies in response to the Program Management Improvement Accountability Act.
Monitoring: DOE will need to continue to monitor and independently validate the effectiveness and sustainability of its corrective measures, particularly for major projects. Meeting the monitoring criterion will require a comprehensive corrective action plan—as described above—against which progress can be monitored. DOE has created the PMRC to track progress of projects across the agency, but it is too early to assess its effectiveness, especially on major projects. As a next step, DOE should create a framework in which the PMRC and programs use existing and other tools as needed to track progress against a comprehensive corrective action plan and regularly update the plan with progress and any newly identified root causes based on the PMRC’s validation of completion.
DOE should also ensure it has the reliable, enterprise-wide cost information that is needed to effectively monitor projects and programs. DOE will also need to ensure that EM’s operations activities that are currently outside of project management requirements are included in this framework and are subject to comparable monitoring and oversight by the PMRC or another body.
Demonstrated Progress: DOE will need to demonstrate progress in implementing corrective measures, especially measures intended to improve the performance of major projects and contracts. For example, for projects, DOE must continue to show improvements on meeting cost and schedule targets and a commitment to applying new requirements to all of its major projects. DOE should also continue to monitor progress and apply corrective measures to nonmajor projects. For contracts, once DOE’s corrective action plan addresses contract management, DOE must apply these measures to address its longstanding contract management problems. More specifically, DOE should address some of the problems we found, such as developing a contract management framework addressing the use of CAS so that DOE staff have the ability to evaluate contractor performance.
GAO-17-141: Published: Jan 19, 2017. Publicly Released: Jan 19, 2017.
GAO-17-51: Published: Nov 21, 2016. Publicly Released: Nov 21, 2016.
GAO-16-585: Published: Aug 9, 2016. Publicly Released: Aug 9, 2016.
GAO-16-529: Published: Aug 9, 2016. Publicly Released: Sep 8, 2016.
GAO-16-608: Published: Aug 4, 2016. Publicly Released: Aug 4, 2016.
GAO-16-618: Published: Jul 11, 2016. Publicly Released: Jul 14, 2016.
GAO-16-422T: Published: Feb 23, 2016. Publicly Released: Feb 23, 2016.
GAO-16-218: Published: Feb 4, 2016. Publicly Released: Feb 4, 2016.
GAO-15-525: Published: Jul 13, 2015. Publicly Released: Jul 13, 2015.
GAO-15-662T: Published: Jun 12, 2015. Publicly Released: Jun 12, 2015.
GAO-15-216: Published: May 22, 2015. Publicly Released: Jun 10, 2015.
GAO-15-354: Published: May 7, 2015. Publicly Released: May 7, 2015.
GAO-15-532T: Published: Apr 15, 2015. Publicly Released: Apr 15, 2015.
GAO-15-331: Published: Mar 23, 2015. Publicly Released: Mar 23, 2015.
GAO-15-182: Published: Feb 18, 2015. Publicly Released: Mar 23, 2015.