Waste Isolation Pilot Plant Recovery Demonstrates Cost and Schedule Requirements Needed for DOE Cleanup Operations
GAO-16-608: Published: Aug 4, 2016. Publicly Released: Aug 4, 2016.
What GAO Found
The Department of Energy (DOE) did not meet its initial cost and schedule estimates for restarting nuclear waste disposal operations at the Waste Isolation Pilot Plant (WIPP), resulting in a cost increase of about $64 million and a delay of nearly 9 months. DOE incurred this cost increase and delay partly because it did not follow all best practices in developing the cost and schedule estimates. In particular, DOE's schedule did not include extra time, or contingency, to account for known project risks. Instead, DOE estimated it would restart waste operations in March 2016 based on a schedule with no contingency that gave DOE less than a 1 percent chance of meeting its restart date. In January 2016, DOE approved new estimates that added 8.5 months to the schedule, extending the restart to December 2016; increased the estimated cost of recovery by $2 million; and resulted in an additional $61.6 million in costs for operating WIPP in fiscal year 2016. DOE's WIPP operations activity manager said the revised schedule included contingency. However, according to DOE officials, they did not follow other best practices. For example, DOE did not provide evidence of having an independent cost estimate to validate the revised estimate. DOE did not follow all best practices for cost and schedule estimates in part because DOE does not require that its cleanup operations, such as WIPP, follow these practices. Therefore, DOE cannot have confidence that its estimates are reliable. In contrast, DOE established new requirements in June 2015 that its capital asset projects, such as the new ventilation system at WIPP, follow these best practices. By also requiring cleanup operations to follow them, DOE would have more confidence in the estimates for cleanup operations and capital asset projects.
DOE did not follow all best practices in analyzing and selecting an alternative for the new ventilation system at WIPP. As a result, DOE's analysis was not reliable and DOE cannot be confident that the alternative it selected in December 2015 will best provide the needed capabilities at WIPP. The analysis of alternatives (AOA) process entails identifying, analyzing, and selecting a preferred alternative to best meet the mission need. Of the four categories of best practices for AOAs, DOE's process fully met the category for identifying alternatives. For example, DOE identified a broad range of ventilation alternatives. However, DOE only partially or minimally met the other three categories: general principles, analyzing alternatives, and selecting the preferred alternative. DOE did not follow the best practice to select the preferred alternative based on a cost-benefit analysis that assesses the difference between the life-cycle costs and benefits of each alternative. In addition, an independent review that DOE commissioned consistent with best practices found that DOE's AOA did not adequately document a cost-benefit analysis and that, as a result, the selection of the preferred alternative was not supported by compelling information. The independent review recommended that DOE conduct a cost-benefit analysis consistent with best practices. However, DOE did not conduct the recommended analysis and document it before selecting the final alternative because there was no requirement to do so. In June 2015, the Secretary of Energy directed DOE to develop guidance for conducting AOAs consistent with AOA best practices. A DOE official said the department expected to issue the new guidance by December 2016.
Why GAO Did This Study
DOE's WIPP is the only deep geologic repository for the disposal of U.S. defense-related nuclear waste. In February 2014, waste operations were suspended following a truck fire and an unrelated radiological release. DOE estimated in February 2015 that it would complete recovery activities and restart limited waste operations by March 2016. To resume full operations, DOE planned to build a new ventilation system at WIPP. DOE completed an AOA to identify the best solution for this system in December 2015.
The Senate Report accompanying a bill for the National Defense Authorization Act for Fiscal Year 2015 included a provision for GAO to review WIPP operations. This report examines the extent to which DOE (1) met its initial cost and schedule estimates for restarting waste disposal operations, and (2) followed best practices in analyzing and selecting an alternative for the new ventilation system. GAO examined documentation on the WIPP recovery estimates. GAO compared DOE's February 2015 cost and schedule estimates and AOA with best practices GAO published.
What GAO Recommends
GAO recommends that DOE require cleanup operations to follow best practices for cost and schedule estimates and require projects, including the WIPP ventilation system, to implement recommendations from independent AOA reviews or document the reasons for not doing so. DOE concurred with the recommendations.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: On July 20, 2017, DOE EM approved a new policy for EM's cleanup program, which replaced the operations activities protocol. In response to our recommendation, the new policy specifies the use of GAO best practices for developing cost and schedule estimates for cleanup operations. In particular, the new EM policy focuses on the management framework and principles for organizing and executing cleanup segments, which include work classified as operations activities. According to the policy, the planning and execution of each segment will progress through four key decisions (KDs). The policy states that GAO best practices are to be used for development of cost and schedule estimates prior to KD-2, Authorize Segment Execution. According to the policy, incorporation of GAO best practices for costs and schedule estimating should be considered when developing the requirements for the segment. EM officials explained to us that developing the segment requirements will involve federal staff developing a government independent cost estimate for the segment that follows best practices. The government's estimate will be used to compare and evaluate contractor proposals. This action satisfies the recommendation.
Recommendation: To help ensure that DOE develops and uses reliable cost and schedule estimates and AOAs, the Secretary of Energy should direct Office of Environmental Management (EM) to revise its protocol governing cleanup operations activities to require use of best practices in developing cost and schedule estimates.
Agency Affected: Department of Energy
Comments: DOE concurred with clarification to the recommendation. In its written comments to our report, DOE stated that in accordance with GAO best practices, it will conduct further cost-benefit analysis on the WIPP ventilation system project prior to approval of Critical Decision-2, Approve Performance Baseline. DOE stated that several alternatives remain to be evaluated including the size of the ventilation system and the location of the exhaust shaft. In March 2017, a DOE Carlsbad Field Office official overseeing the project said that the project team completed an additional analysis of alternatives (AOA) for the ventilation system project at WIPP and a revised business case for the alternative to construct a safety significant confinement ventilation system and exhaust shaft that addresses the recommendations from the Department of Energy's Office of Project Management Oversight and Assessment. After we obtain a copy of the completed AOA, we will evaluate the action taken to determine whether to close the recommendation.
Recommendation: To help ensure that DOE develops and uses reliable cost and schedule estimates and AOAs, the Secretary of Energy should direct EM to implement the recommendation made by DOE's Office of Project Management Oversight and Assessments in its independent review of the AOA for WIPP's new permanent ventilation system to perform a cost-benefit analysis consistent with best practices for conducting an AOA, or justify and document why the office does not intend to do so.
Agency Affected: Department of Energy
Comments: DOE concurred with the recommendation and in its written comments to our report stated that it will prepare a project management policy on how DOE offices should respond to recommendations from independent reviews by December 2016. In addition, DOE stated that it will update DOE Order 413.3B with the new policy at the next available opportunity. In November 2017, a DOE official from the Office of Project Management, Oversight, and Assessments (PMOA) said that PMOA developed a project management policy statement on how DOE offices should disposition recommendations from independent reviews and PMOA intended to incorporate the policy into its planned update of DOE Guide 413.3-9 Project Review Guide for Capital Asset Projects, which was to be completed by December 2016. As of April 2017, according to a DOE official, development of the updated project review guide was on hold indefinitely along with all other actions to publish new, or update existing departmental directives in response to the two Presidential Executive Orders issued in January and February 2017 that directed federal agencies to, among other things, reduce and reform agency regulations.
Recommendation: To help ensure that DOE develops and uses reliable cost and schedule estimates and AOAs, the Secretary of Energy should direct DOE to revise its Order 413.3B to require that DOE offices implement any recommendations from an independent review of the extent to which an AOA followed best practices, or justify and document the rationale for not doing so.
Agency Affected: Department of Energy