Department of Energy:

Management and Oversight of Cleanup Activities at Fernald

RCED-97-63: Published: Mar 14, 1997. Publicly Released: Mar 18, 1997.

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James E. Wells, Jr
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Pursuant to a congressional request, GAO provided information on: (1) the extent to which the Department of Energy (DOE) is providing effective management and oversight of two key cleanup projects at its Fernald site--the vitrification pilot plant project and the uranyl nitrate hexahydrate project--that were reported on in the Cincinnati Enquirer; (2) DOE's oversight of safety and health activities at the site; (3) the contractor's compliance with certain performance and financial system procedures; and (4) DOE's overall contracting and management initiatives and how they may resolve any problems identified at Fernald.

GAO noted that: (1) DOE has not exercised adequate management and oversight of the vitrification and uranyl projects or of the contractor's safety and health activities; (2) for example, DOE provided limited oversight during the early stages of the two projects and did not prepare many of the required project management documents for the uranyl project; (3) these and other DOE oversight weaknesses contributed to a total of $65 million in estimated cost overruns and almost 6 years of schedule slippages for the two projects; (4) in the safety and health area, from 1993 to 1995, serious concerns were raised about DOE's ability to ensure the contractor's compliance with safety and health requirements; (5) for example, DOE did not have adequate plans to supervise the contractor's activities and was not conducting the required safety and health assessments; (6) in the performance and financial management area, some of the contractor's practices for maintaining key systems make it difficult for DOE and the contractor to exercise effective control and oversight of the contractor's costs and activities; (7) DOE recognizes that contracting and management problems exist throughout the Department and is implementing major reforms to change the way it does business at Fernald and other sites; (8) at Fernald, DOE has made some improvements in the areas that GAO reviewed; (9) for example, in project management, DOE has increased the frequency with which it meets with the contractor to discuss the status of its most important projects; (10) in the safety and health area, DOE has increased the number of assessments and is making other changes that are not far enough along to evaluate; (11) DOE has directed the contractor to make changes to address weaknesses identified in recent reviews of the contractor's financial and performance management; (12) these actions address some of the weaknesses GAO identified; (13) however, it is too soon to assess the overall effectiveness of these improvements and reforms; and (14) their implementation at Fernald will be a real test of DOE's reforms.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: According to the Assistant Contracting Officer at Fernald, DOE extended its contract with Fluor-Daniels-Fernald for an additional 2 years. The contract, originally set to expire on December 1, 1997, now runs through November 10, 1999 and incorporates DOE's major contract reform initiative.

    Recommendation: In view of the approaching expiration of the contract with Fluor Daniel Fernald, the Secretary of Energy should ensure that the contract reform initiatives that DOE has undertaken are fully integrated into the Fernald contract.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: In response to the report, DOE implemented several site-wide activities to strengthen project management skills and to improve communication between project managers and contractor officials. For example, key DOE project staff have completed a 3-week series of management courses and have actively participated in efforts to develop requests for proposals for clean-up projects. Also, DOE project managers are now meeting weekly to discuss critical projects and attending monthly program reviews and evaluations of project costs. Finally, DOE Fernald staff have expanded their methods for disseminating lessons learned from implementing projects, including those cited in the report, and have received training on the contractor's major project management and cost account systems.

    Recommendation: In view of the approaching expiration of the contract with Fluor Daniel Fernald, the Secretary of Energy should ensure that the Fernald Area Office strengthens its oversight at Fernald in order to correct the project management, safety and health program, and performance and financial system weaknesses that GAO has identified.

    Agency Affected: Department of Energy


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