Department of Energy's Contract and Project Management for the National Nuclear Security Administration and Office of Environmental Management
The Department of Energy (DOE) oversees a broad range of programs related to nuclear security, science, energy, and waste cleanup, among other areas. As the largest civilian contracting agency in the federal government, DOE relies primarily on contractors to carry out its programs. DOE spends approximately 90 percent of its annual budget on contracts and acquiring capital assets. In fiscal year 2018, DOEâ€™s budget was $34.5 billion.
In 1990, we designated DOEâ€™s contract managementâ€”which has included both contract administration as well as project and program managementâ€”as a high-risk area because DOEâ€™s record of inadequate management and oversight of contractors left the department vulnerable to fraud, waste, abuse, and mismanagement.
In January 2009, recognizing the progress at DOEâ€™s Office of Science, we narrowed the focus of DOEâ€™s high-risk designation to two DOE program elementsâ€”NNSA and EM. In February 2013, we further narrowed the focus of the high-risk designation to NNSAâ€™s and EMâ€™s contracts, as well as major projectsâ€”those with an estimated cost of $750 million or greaterâ€”to acknowledge progress made in managing nonmajor projects.
Since our 2017 High-Risk Report, DOE has made progress in the demonstrated progress criterion. Our assessment of the ratings for the four other criteria remains unchanged.
Leadership commitment: met. In September 2018, the Deputy Secretary of Energy issued a memorandum laying out a series of reforms to improve the departmentâ€™s management of major contracts, including NNSA and EM. To ensure leadership engagement on major contracts, DOE plans to either expand the scope of the Energy Systems Acquisition Advisory Board or establish a second board to review them. This effort is recent, and we will follow DOEâ€™s progress in implementing these reforms.
In addition, in September 2017, NNSA agreed to implement our recommendation to strengthen its program management by applying life-cycle cost and schedule management to one of its major programs. One of NNSAâ€™s core offices, the Office of Defense Programs, strengthened program management by further implementing its Program Execution Instruction, which applies to the management of billions of dollars of nuclear weapons science and production efforts.
In July 2017, EM issued a new cleanup policy that requires EM senior leadership approval of any contracts for $200 million or more. In December 2017, DOE reorganized EM under the Office of Scienceâ€”the third move for EM in 10 years. The Assistant Secretary for the Office of Environmental Management also announced an intention to develop a strategic plan to address EMâ€™s large and growing environmental liabilities, as well as a new approach to contracting focused on accelerating the cleanup and closure of sites.
Capacity: not met. In August 2018, a statutorily required internal review of NNSAâ€™s capacity identified unmet critical staffing needs, especially staffing to manage and oversee work on the agencyâ€™s uranium and plutonium missions, which are expected to grow. In addition, in June 2018, an Office of Personnel Management (OPM) study found that the agency was understaffed across all functions. The number of additional staff that OPM recommended in the study would exceed the statutory cap on NNSAâ€™s full-time equivalent employees.
DOE revised its program and project management guidance in May 2016 to direct that capital asset acquisitions have adequate oversight staff. In recent years, NNSA has increased the number of oversight staff in some of its major project management offices, including for the Uranium Processing Facility in Tennessee and the Mixed Oxide Fuel Fabrication Facility in South Carolina. However, EM has not benefitted from this change because it does not follow DOEâ€™s program and project management requirements for the majority of its cleanup activities. In addition, EMâ€™s July 2017 cleanup policy does not sufficiently address the need for EM to have adequate staff for its work.
Action plan: partially met. The Deputy Secretaryâ€™s 2018 contract management reform memorandum lists several areas for improvementâ€”including increasing capacity and improving performance measuresâ€”which, if realized, will strengthen DOEâ€™s management of major contracts. After a comprehensive review of lessons learned from a multi-billion dollar warhead life extension program, NNSA has also implemented management reforms to support similar programs.
EM continues to need to identify the root causes of its contract and project management problems. DOE has conducted multiple studies over the years and closed many corrective actions plans as successful. However, these plans were not comprehensive, and their results were not linked to each other. In June 2017, EM initiated a 45-day review to identify decision-making priorities at each site, but this study was never finalized. In August 2018, EM initiated an ad-hoc root cause analysisâ€”DOEâ€™s fourth since 2008. EM officials stated that they are working on a continuous improvement plan based on the 2018 ad-hoc analysis, but this effort did not connect to DOEâ€™s previously identified problems or previous corrective measures. Until EM takes steps to identify the root causes of its problems, developing an effective action plan will be challenging. Notably, EMâ€™s 2017 cleanup policy does not direct EM to develop a root cause analysis and corrective action plan at either a program or project level when there is evidence that a cost or schedule baseline will not be met or there are cost overruns.
Monitoring: partially met. NNSA continues to make progress, most notably in managing contracts. For example, as it renews or recompetes contracts, NNSA has taken steps to include new contract clauses that strengthen management oversight and reporting of management information. NNSA has also taken steps to more actively monitor and address contract performance that does not meet expectations, for example, by recompeting one multibillion-dollar contract early after two instances of poor performance. In addition, NNSA has taken steps to implement our recommendation to re-establish a process for reviewing the effectiveness of field offices' contractor oversight by conducting four peer reviews as of October 2018, with more planned.
NNSA has also taken action to manage all contract documentation in a central recordkeeping system, as we recommended in August 2018. However, we reported in February 2019 that cost performance information was not a significant performance measure in NNSAâ€™s review and monitoring of some types of contract evaluations. NNSA agreed with our recommendation that it should include quality cost information in its contractor performance evaluations to enable better performance assessments.
In contrast to NNSAâ€™s progress, EMâ€™s monitoring continues to face challenges. In February 2019, we found that EMâ€™s 2017 cleanup policy does not follow most selected best practices for program or project management. For example, the policy does not require that DOE offices outside EM conduct independent project reviews, as is the case for capital asset projects over $50 million. We also found that the data and metrics EM uses to monitor its work do not accurately reflect cleanup performance, leaving decision makers without adequate information about what EM is achieving with its funding. EM agreed with our recommendations that it incorporate program and project management leading practicesâ€”especially by directing independent monitoring and oversight of its cleanup operationsâ€”into its 2017 cleanup policy, and generally agreed that it should integrate its data and metrics to provide a clear picture of performance.
DOE generally concurred with our March 2017 recommendation to implement leading practices for managing its risk of fraud and other improper payments but has not taken sufficient steps to implement it. The Deputy Secretaryâ€™s 2018 contract management reform memorandum, which commits DOE to using objective performance measures, including cost controls, indicates that the agency plans to take steps to improve its future monitoring.
Demonstrated progress: partially met. Through its Office of Cost Estimating and Program Evaluation, NNSA has enhanced its capability to estimate costs and schedules, and to assess alternatives, for programs and projects, among other things. NNSA also made progress by implementing best practices in several areas, such as those for estimating costs and schedules in nuclear weapons refurbishment activities and capital asset acquisitions. For example, we determined that DOEâ€™s revised cost estimate of $17.2 billion to construct a Mixed Oxide Fuel Fabrication Facility to dispose of surplus, weapons-grade plutonium substantially met best practicesâ€”providing assurance that the estimated costs could be considered reliable. This finding contributed to DOEâ€™s reevaluation of the project and ultimate termination, in October 2018, in favor of a potentially less costly disposal approach.
However, NNSAâ€™s cost estimates for a new uranium enrichment capabilityâ€”an effort that could cost billions of dollarsâ€”did not fully meet best practices. Also, while NNSA has taken steps to implement statutorily required common financial reporting across the nuclear security enterprise, we found in January 2019 that NNSAâ€™s plan for this effort does not follow leading project management practicesâ€”including having a detailed schedule and budget for implementing the project. NNSA generally agreed with our recommendations that it should follow leading practices in its approach to planning and implementing common financial reporting.
EM is close to completing one major cleanup projectâ€”the River Corridor Closure Project in Washington. However, another major EM cleanup project continues to face significant cost and schedule challenges. In particular, construction of the Waste Treatment and Immobilization Plant (WTP) at the Hanford site in Washington has faced persistent challenges, including quality assurance problems that have delayed it by decades and increased costs well beyond its last total program cost estimate of $17 billion. Six years after major nuclear safety and quality issues were discovered, we found in April 2018 that the contractor has not fully implemented all planned corrective measures.
Furthermore, EM has not ensured that all WTP quality assurance problemsâ€”such as engineering errors and construction deficienciesâ€”have been identified and some previously identified problems are recurring. DOE generally agreed with our recommendations that it require the contractor to determine the extent of problems in WTP structures, systems, and components, and order work stops when problems recur. Even so, in December 2018, DOE announced that EM had increased its estimate of the total costs to clean up the Hanford site by $82 billionâ€”to a total of $242 billionâ€”with part of that increase attributed to WTP construction and operating costs.
Fifty-one recommendations were open as of December 2018; 15 recommendations were made since the last high-risk update in February 2017. DOE, including NNSA and EM, should implement our recommendations to use sound contract, program, and project management practices to enhance oversight and reduce the risk of fraud, waste, and abuse.
Congressional Actions Needed
Congress should consider working with NNSA to ensure that the statutory cap on staffing is re-examined and consistent with NNSAâ€™s human capital needs, as evaluated in two recent studies.
GAO-19-5: Published: Feb 26, 2019. Publicly Released: Feb 26, 2019.
The Department of Energy depends on the expertise of firms, universities, and others to do much of its work, including managing and operating nuclear weapons labs. In 10 years, it spent about $193 billion on management and operating contracts. DOE generally gave these contractors high ratings and awarded over 90% of available performance incentives. However, we found DOE could do a better job rep...
GAO-19-223: Published: Feb 19, 2019. Publicly Released: Mar 5, 2019.
The Cold War arms race created a buildup of nuclear waste in the United States that needs to be cleaned up. This almost-30-year-old effort will take another 70 years and cost about $500 billion more. Yet the Department of Energy program responsible for this effort categorizes most of its work in a way that does not adequately involve independent experts and DOE senior leadership. It also has not...
GAO-19-101: Published: Jan 31, 2019. Publicly Released: Jan 31, 2019.
The National Nuclear Security Administration uses contracts to manage its labs, production facilities, and test sites. Contractors track and report costs in their own waysâ€”using lists of components like labor or material at a certain level of detail. One contractor may break down the components differently from another contractorâ€”even for work on the same program. This makes it hard for NNSA...
GAO-19-25: Published: Dec 21, 2018. Publicly Released: Dec 21, 2018.
In 2007, the Department of Energy's nuclear security agency started building a facility to dispose of unneeded weapons-grade plutonium. After cost increases, schedule delays, and nearly $6 billion in spending, Energy cancelled the project in 2018. While this project was running, Energy took steps to address inexperience among its project management staff. As oversight improved, the project contra...
GAO-18-246R: Published: Aug 1, 2018. Publicly Released: Aug 1, 2018.
The National Nuclear Security Administration spent over $11 billion in 2016 on management and operating contracts at the federal sites that maintain the U.S. nuclear weapons arsenal, among other things. We found that NNSA was unable to promptly locate key contract documents, which NNSA officials need to effectively oversee these contracts, and justify awarding millions of federal dollars. We rec...
GAO-18-241: Published: Apr 24, 2018. Publicly Released: Apr 24, 2018.
The nuclear waste treatment plant DOE and its contractor are building at DOEâ€™s Hanford site in Washington has faced persistent challenges, and the cost of the project has more than tripled to nearly $17 billion. We found that DOE's quality assurance efforts did not always ensure detection of problems such as engineering errors and construction deficiencies, and some problems are recurring. We...
GAO-18-438T: Published: Mar 14, 2018. Publicly Released: Mar 14, 2018.
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GAO-17-773: Published: Sep 28, 2017. Publicly Released: Sep 28, 2017.
What is the U.S. government doing to keep nuclear weapons out of the wrong hands? The National Nuclear Security Administration implements nonproliferation programs to reduce the threat of more nations or non-state actors acquiring nuclear weapons or radiological materials for a â€śdirty bomb.â€ť The agency requested about $1.5 billion for 2018 to fund these programs, but we found that they do not...
GAO-17-306: Published: May 3, 2017. Publicly Released: May 3, 2017.
90% of the nuclear waste in tanks at the Department of Energy's site in Hanford, WA is low-activity wasteâ€”it is much less radioactive than high-level waste. To solidify low-activity waste for safe disposal, it can be mixed with molten glass (used for high-level waste; costs more) or grout (costs less). DOE plans to treat up to 1/2 of this low-activity waste with glass, but hasn't decided abo...
GAO-17-235: Published: Mar 30, 2017. Publicly Released: May 1, 2017.
DOE's inadequate management and oversight of its contractors led us to designate its contract management as a High Risk area. For example, in November 2016, DOE contractors constructing a nuclear waste treatment plant agreed to pay a combined $125 million to settle a lawsuit alleging, among other things, that a contractor improperly used federal funds for lobbying purposes. We found that DOE does...