Hanford Waste Treatment Plant:

Contractor and DOE Management Problems Have Led to Higher Costs, Construction Delays, and Safety Concerns

GAO-06-602T: Published: Apr 6, 2006. Publicly Released: Apr 6, 2006.

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Eugene E. Aloise
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The Waste Treatment Plant Project at the Department of Energy's (DOE) Hanford site in southeastern Washington state is a massive effort to stabilize and prepare for disposal 55 million gallons of radioactive and hazardous wastes currently held in underground tanks. In 2000, DOE awarded an 11-year, $4.3 billion contract project to Bechtel National, Inc. (Bechtel) to design and construct the plant. Since then, numerous problems and changes have occurred that will significantly increase the project's final cost and completion date. This testimony discusses (1) how and why the project's cost and schedule have changed since 2000; (2) the status of DOE and Bechtel efforts to address these problems and improve project management; and (3) our observations on issues that need to be addressed in going forward. It is based on previous GAO reports and ongoing work.

Since the waste treatment plant construction contract was awarded in 2000, the project's estimated cost has increased more than 150 percent to about $11 billion, and the completion date has been extended from 2011 to 2017 or later. There are three main causes for the increases in the project's cost and completion date: (1) the contractor's performance shortcomings in developing project estimates and implementing nuclear safety requirements, (2) DOE management problems, including inadequate oversight of the contractor's performance, and (3) technical challenges that have been more difficult than expected to address. To address the causes of the cost and schedule increases and regain management control of the project, DOE and Bechtel have taken steps to develop a more reliable cost and schedule baseline; slow down or stop construction activities on some of the facilities to allow time to address technical and safety problems and to advance design activities farther ahead of construction activities; and strengthen both project management and project oversight activities. Despite these actions, we have continuing concerns about the current strategy for going forward on the project. Our main concerns include: (1) the continued use of a fast-track, design-build approach for the remaining work on the construction project, (2) the historical unreliability of cost and schedule estimates, and (3) inadequate incentives and management controls for ensuring effective project management and oversight.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOE concurred with our recommendation and discontinued using the fast-track, design-build approach. Instead, DOE has maintained a one-year separation between design completion and construction activities. DOE has also taken steps to ensure that the design of each component is at least 90 percent complete before construction or installation into a waste treatment plant facility.

    Recommendation: The Secretary of Energy should discontinue using a fast-track, design-build approach to completing the project and consider the feasibility of completing at least 90 percent of the facility design or facility component design before restarting construction, and ensure that the project's major technical and safety problems have been addressed before restarting construction.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: DOE concurred with the recommendation and took steps, including chartering an independent assessment of the contractor's approach and obtaining independent validation of specific cost and schedule estimates from the U.S. Army Corps of Engineers, to develop a revised cost and schedule baseline for the project which better reflects remaining uncertainties. DOE approved the revised baseline in December 2006, as a reliable estimate of the project's cost and schedule.

    Recommendation: The Secretary of Energy should develop a revised project baseline that fully reflects the remaining uncertainties, including potential problems that may be encountered during the commissioning phase, before presenting it as a reliable estimate of the project's cost and schedule.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: DOE agreed with this recommendation and took steps to improve management controls on the project by increasing staffing in several key contract management areas, implementing organizational processes to improve communication between DOE and its contractors, and modifying the waste treatment plant contract to incorporate new incentives and require compliance with DOE's project management order. To strengthen accountability for performing oversight activities, DOE certified the contractor's earned value management system.

    Recommendation: The Secretary of Energy should establish improved management controls, including revising contract incentives and strengthening accountability for performing oversight activities.

    Agency Affected: Department of Energy


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