Nuclear Regulatory Commission: Status of Achieving Key Outcomes  
and Addressing Major Management Challenges (29-JUN-01,		 
GAO-01-760).							 
								 
This report reviews the Nuclear Regulatory Commission's (NRC)	 
fiscal year 2000 performance report and fiscal year 2002	 
performance plan required by the Government Performance and	 
Results Act of 1993 to assess its progress in achieving selected 
key outcomes that are important mission areas for the agency. NRC
reports mixed progress in achieving the three outcomes GAO	 
reviewed. To measure performance for the three outcomes, NRC	 
established the same four goals: one relates to safety and three 
relate to such nonsafety issues as public confidence, regulatory 
burden, and organizational enhancements. Although NRC's 	 
strategies for the safety-related performance goal outcomes seem 
clear and reasonable, GAO could not assess NRC's performance for 
the three nonsafety performance goals because NRC only recently  
developed and reported strategies for them in its fiscal year	 
2002 performance plan. Since NRC has had limited experience in	 
applying the strategies and measures for the three nonsafety	 
goals, it may need to revise them after it completes various	 
planned evaluations over the next three years.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-760 					        
    ACCNO:   A01177						        
  TITLE:     Nuclear Regulatory Commission: Status of Achieving Key   
             Outcomes and Addressing Major Management Challenges              
     DATE:   06/29/2001 
  SUBJECT:   Nuclear reactors					 
	     Nuclear waste management				 
	     Performance measures				 
	     Reporting requirements				 
	     Personnel management				 
	     Strategic planning 				 
	     GPRA						 
	     Government Performance and Results Act		 

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GAO-01-760
     
Report to the Ranking Minority Member, Committee on Governmental Affairs, U.
S. Senate

United States General Accounting Office

GAO

June 2001 NUCLEAR REGULATORY COMMISSION

Status of Achieving Key Outcomes and Addressing Major Management Challenges

GAO- 01- 760

Page i GAO- 01- 760 NRC's Status of Achieving Key Outcomes Letter 1

Appendix I Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges 19

Appendix II Comments From the Nuclear Regulatory Commission 30

Tables

Table 1: Comparison of Fiscal Years 1999 and 2000 Actual Performance to
NRC?s Targets for Fiscal Year 2002 9 Table 2: Major Management Challenges 20

Abbreviations

ADAMS Agencywide Documents Access and Management System EPA Environmental
Protection Agency GAO General Accounting Office GPRA Government Performance
and Results Act NRC Nuclear Regulatory Commission OIG Office of the
Inspector General OMB Office of Management and Budget Contents

Page 1 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

June 29, 2001 The Honorable Fred Thompson Ranking Minority Member Committee
on Governmental Affairs United States Senate

Dear Senator Thompson: As you requested, we reviewed the Nuclear Regulatory
Commission?s (NRC) fiscal year 2000 performance report and fiscal year 2002
performance plan required by the Government Performance and Results Act of
1993 (GPRA) to assess its progress in achieving selected key outcomes that
you identified as important mission areas for the agency. 1 These are
generally the same outcomes we addressed in our June 2000 review of NRC?s
fiscal year 1999 performance report and fiscal year 2001 performance plan to
provide a baseline by which to measure its performance from year- to- year.
2 These selected key outcomes are:

 prevent radiation- related deaths or illnesses due to civilian nuclear
reactors,

 prevent radiation- related deaths or illnesses due to the civilian use of
nuclear material, and

 prevent adverse impacts from radioactive waste to public health and
safety.

As agreed, using the selected key outcomes for NRC as a framework, we (1)
assessed the progress NRC has made in achieving these outcomes and the
strategies in place to achieve them and (2) compared NRC?s fiscal year 2000
performance report and fiscal year 2002 performance plan with its prior year
performance report and plan for these outcomes. In addition, we agreed to
analyze how NRC addressed its major management challenges, including the
governmentwide high- risk areas of strategic human capital management and
information security, that we and NRC?s Office of the Inspector General
identified. Appendix I provides detailed

1 This report is one of a series of reports on the 24 Chief Financial
Officers (CFO) Act agencies? fiscal year 2000 performance reports and fiscal
year 2002 performance plans. 2 Observations on the Nuclear Regulatory
Commission?s Fiscal Year 1999 Performance Report and Fiscal Year 2001
Performance Plan (GAO/ RCED- 00- 200R, June 30, 2000).

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

information on how NRC addressed these challenges; appendix II contains
NRC?s comments on a draft of our report.

NRC demonstrated mixed progress in achieving the key outcomes. To measure
performance for the three outcomes, NRC established the same four goals: one
relates to safety and three relate to such nonsafety issues as public
confidence, regulatory burden, and organizational enhancements. Although
NRC?s strategies for the safety- related performance outcomes seem clear and
reasonable, we could not assess NRC?s performance for the three nonsafety
performance goals because NRC only recently reported measures to achieve
them in its fiscal year 2002 performance plan. Since NRC has had limited
experience in applying the strategies and measures for the three nonsafety
goals, it may need to revise them after it completes various planned
evaluations over the next 3 years. The following are specific observations
about each outcome.

Planned outcome: Prevent radiation- related deaths or illnesses due to
civilian nuclear reactors. Because it is regulating a mature industry, NRC
has strategies, measures, and targets to maintain the status quo rather than
to demonstrate progress related to safety for this key outcome. NRC reported
that it met its targets in fiscal year 2000. However, human capital
challenges could affect NRC?s ability to meet its performance goals in the
future. This is because NRC?s office responsible for achieving this outcome
is facing the loss of a large percentage of its senior managers and
technical staff- about 16 percent and 22 percent, respectively, are eligible
to retire now. Because similar human capital challenges could affect meeting
all of its key outcomes, NRC has developed a 5- year plan to address human
capital concerns across the agency. Furthermore, NRC may find it difficult
to meet its performance goal for increasing public confidence because it has
not defined the public that it wants to target or developed a baseline from
which to measure the increase. NRC?s expected actions to meet this goal,
like assessing feedback from public meetings, will be of limited use since
they focus on selected segments of the public.

Planned outcome: Prevent radiation- related deaths or illnesses due to the
civilian use of nuclear material. NRC reported that it improved its
performance in fiscal year 2000 compared with its performance in fiscal year
1999 related to safety for this key outcome. Unlike last year, this year NRC
says that it has met all of the performance goals. However, NRC has concerns
about the quality of its performance data for 10 measures related to this
key outcome and noted that the actual data reported for some of the safety
performance goal measures are subject to change on the basis Results in
Brief

Page 3 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

of further analysis and the receipt of newly reported information. In
addition, although NRC developed more realistic performance targets for
fiscal year 2002, some are easily achievable and do not challenge or stretch
staff to improve their performance.

Planned outcome: Prevent adverse impacts from radioactive waste to public
health and safety. As with its outcome for civilian nuclear reactors, NRC
has strategies, measures, and targets to maintain the status quo rather than
to demonstrate progress related to safety for this key outcome. NRC reported
that it met its targets in fiscal year 2000. However, NRC?s ability to
achieve its performance measures in the future could be affected by external
factors. For example, the Environmental Protection Agency may issue more
stringent standards for the level of radiation that can safely remain at a
nuclear power plant site after licensees complete their decommissioning
activities than NRC is currently using.

NRC made a number of improvements to its fiscal year 2000 performance report
and fiscal year 2002 performance plan. For example, NRC developed measures
for three performance goals and provided additional information to ensure
the credibility of its performance data- an issue that has concerned us for
several years. In addition, NRC?s fiscal year 2002 performance plan
describes ongoing and planned actions to address the management challenges
that we and its Office of the Inspector General identified and relates each
challenge to the strategic and performance goals for the three key outcomes.
NRC did not include comparable information in its fiscal year 2001
performance plan.

NRC?s fiscal year 2000 performance report does not explain its progress in
resolving the challenges related to strategic human capital management or
information security, and its performance plan for fiscal year 2002 does not
have performance goals or measures related to them. However, NRC?s fiscal
year 2002 performance plan included a management strategy to sustain a high-
performing, diverse workforce. To attain this goal, NRC says that it will
base human resource decisions on sound workforce planning and analysis. In
this regard, in January 2001, the staff provided the Commission with a
suggested action plan- a 5- year, $2.4 million effort for maintaining core
competencies, knowledge, and skills needed by NRC. Concerning other
management challenges, NRC does have performance measures or strategies that
specifically address two of the management challenges that we identified:
(1) resolving numerous issues to implement a risk- informed approach for
commercial nuclear power plants and (2) overcoming inherent difficulties to
apply a risk- informed approach to nuclear material licensees. Although NRC
does not have a performance

Page 4 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

goal or measure for the third challenge related to managing the agency-
coping with its strategic human capital management crisis, improving its
financial management by developing and implementing a cost accounting
system, and ensuring that information technology acquisitions are developed
and implemented as intended- it has management strategies to address the
challenge. For example, NRC says it will provide proactive information
management and information technology services by working with its program
and support offices and by providing a reliable and user friendly
infrastructure for internal and external stakeholders. Although its
management strategies show NRC?s commitment to address this challenge, it is
early in their implementation and continued attention and oversight will be
needed to ensure that NRC?s actions are effective in resolving this
challenge.

Although NRC generally agreed with the information presented in the report,
it does not agree that its fiscal year 2000 performance report showed mixed
progress in achieving the three key outcomes. We revised the report to make
it clear that we concluded that NRC's performance was mixed because it had
not established measures for three performance goals until it issued its
fiscal year 2002 performance plan. Therefore, we could not fully assess
NRC's progress in meeting the three key outcomes. NRC also provided
technical clarifications, which we incorporated as appropriate.

GPRA is intended to shift the focus of government decisionmaking,
management, and accountability from activities and processes to the results
and outcomes achieved by federal programs. New and valuable information on
the plans, goals, and strategies of federal agencies has been provided since
federal agencies began implementing GPRA. Under GPRA, annual performance
plans are to clearly inform the Congress and the public of (1) the annual
performance goals for agencies? major programs and activities, (2) the
measures that will be used to gauge performance, (3) the strategies and
resources required to achieve the performance goals, and (4) the procedures
that will be used to verify and validate performance information. These
annual plans, which are issued soon after transmittal of the president?s
budget, provide a direct linkage between an agency?s longer- term goals and
mission and day- to- day activities. 3 Subsequent annual performance reports
show the degree to which

3 The fiscal year 2002 performance plan is the fourth of these annual plans
under GPRA. Background

Page 5 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

performance goals were met. The issuance of the agencies? performance
reports, due by March 31, represents a new and potentially more substantive
phase in the implementation of GPRA- the opportunity to assess federal
agencies? actual performance for the prior fiscal year and to consider what
steps are needed to improve performance and to reduce costs in the future. 4

NRC is responsible for ensuring that those who use radioactive material in
the generation of electricity, for experiments in universities, and for such
medical uses as treating cancer do so in a manner that protects the public,
the environment, and workers. NRC has issued licenses to 103 operating
commercial nuclear power plants and 10 facilities that produce fuel for
these plants. In addition, NRC or the 32 states that have agreements with
NRC regulate almost 21,000 entities. In the medical field alone, licensees
annually perform an estimated 10 million to 12 million procedures that
involve radioactive material in the diagnosis or treatment of diseases. NRC
is confronting a number of challenges to ensure the safe operation of
commercial nuclear power plants, safe use of nuclear material, and safe
disposal of radioactive waste.

NRC has been moving from its traditional regulatory approach, which was
largely developed without the benefit of quantitative estimates of risk, to
a more risk- informed, performance- based approach. Under this approach, NRC
will use risk assessment findings, engineering analysis, and performance
history to focus attention on the most important safetyrelated activities,
establish objective criteria to evaluate performance, develop measures to
assess licensee's performance, and focus more on results as the primary
basis for making regulatory decisions.

4 The fiscal year 2000 performance report is the second of these annual
reports under GPRA. .

Page 6 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

This section discusses our analysis of NRC?s performance in achieving its
selected key outcomes and existing strategies, particularly for strategic
human capital management 5 and information technology, for achieving these
outcomes. In discussing these outcomes, we have also provided information
drawn from our prior work on the extent to which NRC provided assurances
that the performance information it is reporting is credible.

In its fiscal year 2000 performance report, NRC said that it had met its
goal and targets for the safety- related performance outcomes related to
civilian nuclear reactor safety. Although NRC?s strategies to achieve its
safetyrelated performance outcomes seem clear and reasonable, we could not
assess its performance for the three nonsafety performance goals because NRC
only recently reported measures to achieve them in its fiscal year 2002
performance plan. However, since NRC has had limited experience in applying
the strategies and measures for the three nonsafety goals, it may need to
revise them after it completes various planned program evaluations.

Like other federal agencies, NRC faces strategic human capital management
and other challenges that could affect achieving its future goals. In a
highly technical, complex industry, NRC is facing the loss of a significant
percentage of its senior managers and technical staff. For example, within
the Office of Nuclear Reactor Regulation, about 22 percent of the technical
staff and 16 percent of senior executive service staff are eligible to
retire now; and by 2005, the number eligible for some type of retirement is
about 42 percent and 77 percent, respectively. 6 At the same time, NRC will
need to rely on these staff to achieve its strategic and performance goals.
To help resolve its strategic human capital management challenge, NRC
identified such options as allowing it to rehire retired staff without
jeopardizing their pension. In addition, for the nuclear reactor safety key
outcome, NRC is implementing an intern

5 The key elements of modern human capital management include strategic
human capital planning and organizational alignment; leadership continuity
and succession planning; acquiring and developing staff whose size, skills,
and deployment meet agency needs; and creating results- oriented
organizational cultures.

6 The Office of Nuclear Reactor Regulation is responsible for ensuring that
commercial nuclear power plants operate safely and do not endanger the
public or the environment. Assessment of NRC?s

Progress and Strategies in Achieving Selected Key Outcomes

Civilian Nuclear Reactor Safety

Page 7 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

program to attract and retain individuals with scientific, engineering, and
other technical competencies.

Another major challenge will be for NRC to demonstrate that it meets one of
its four performance goals- increasing public confidence- for three reasons.
First, to ensure its independence, NRC cannot promote nuclear power and must
walk a fine line when communicating with the public. Second, NRC has not
defined the public that it wants to target in achieving this goal. Third,
NRC has not established a baseline to measure the

?increase? in its performance goal. As we reported last year, the Commission
did not approve a staff proposal to conduct a survey to establish a
baseline. Instead, in October 2000, NRC began an 18- month pilot effort to
use feedback at the conclusion of public meetings. NRC expects to
semiannually evaluate the information received to enhance its public
outreach efforts. NRC?s evaluation of feedback from public meetings will
provide information on the extent of public awareness of the meeting and the
clarity, completeness, and thoroughness of the information that NRC provided
at the meetings. Over time, for a particular plant, NRC may find that the
public better understands the issues of concern or interest. It is not
clear, however, how this information will show that the public?s confidence
in NRC as a regulator has increased.

In addition, the Office of Nuclear Reactor Regulation began a 1- year effort
in October 2000 to assess the effectiveness of NRC?s program that verifies
allegations concerning regulated activities and the impact of the program on
public confidence. NRC has been asking whether an individual?s experience
with the program has increased his/ her confidence in NRC as a regulator.
NRC believes that such information will provide it a baseline to judge the
contribution that the allegation program makes to meeting its public
confidence goal. Like the feedback from public meetings discussed above, the
feedback from those who participate in the allegation program will be
limited. For example, in fiscal year 2000, NRC received 468 reactorrelated
allegations and estimates receiving 370 in fiscal year 2001. Therefore, the
baseline data that NRC accumulates will be limited to a very small
percentage of the public.

Although program evaluations would help determine the validity and
reasonableness of NRC?s key outcomes, goals, and strategies and identify the
factors that are likely to affect their achievement, NRC did not complete
any evaluations in the key outcome of nuclear reactor safety in fiscal year
2000. NRC would benefit from such evaluations because the actions of its
licensees and industry organizations have a significant impact on the extent
to which NRC will achieve its strategic and

Page 8 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

performance goals for this key outcome and because NRC cannot show a one-
to- one relationship between the performance of its licensees and the impact
that the agency?s programs have on safety. According to NRC staff, no one
program evaluation will test its strategic direction for this and other key
outcomes. Rather, NRC expects to conduct a number of evaluations that over
time, should provide insights on whether a need exists to change its
strategic direction.

For example, by the end of June 2001, NRC expects to complete one program
evaluation related to this key outcome- an assessment of its first year of
implementing the new safety oversight process for commercial nuclear power
plants. The new safety oversight process has been the centerpiece in NRC?s
efforts to move to a risk- informed, performancebased regulatory approach.
NRC believes that the evaluation will help determine whether it will meet
its four performance goals, but as discussed earlier, we have doubts that
the evaluation will determine whether NRC will meet its increasing public
confidence goal because it will not have the baseline data needed for the
evaluation. In addition, a NRC advisory panel concluded in May 2001 that the
agency did not have the necessary data to evaluate the new safety oversight
process against the performance goals.

NRC?s strategies to ensure that the commercial nuclear power plants continue
to operate safely appear clear and reasonable. For example, NRC expects to
improve its inspection activities to better assess the safety performance of
the nation?s 103 operating nuclear power plants. Other strategies include
resolving such safety issues as age- related plant degradation, ensuring
that plant operator licenses are issued to and renewed only for qualified
individuals, and continuing to develop and incrementally use risk- informed,
and where appropriate, less prescriptive performance- based regulatory
approaches. For its newly developed strategies for the three nonsafety
goals, NRC may need to revise them and/ or specify how some strategies will
help achieve its desired outcomes. For example, one strategy to make its
activities more effective, efficient, and realistic is to anticipate
challenges posed by the introduction of new technologies and changing
regulatory demands. Without further amplification, it is difficult to see
how this strategy will result in more effective, efficient, and realistic
NRC activities and decisions.

NRC reported that it had improved its performance in fiscal year 2000
compared with its performance fiscal year 1999 for the safety- related
performance outcomes for this key outcome. However, NRC has concerns Nuclear
Material

Licensees? Performance

Page 9 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

about the quality of its performance data for 10 measures related to this
key outcome and noted that the actual data reported for some of the safety
performance goal measures are subject to change on the basis of further
analysis and the receipt of newly reported information. NRC?s strategies to
achieve its safety- related performance goal outcomes seem clear and
reasonable. But we could not assess its performance for the three nonsafety
performance goals because NRC only recently reported the measures to achieve
them in its fiscal year 2002 performance plan. As with the nuclear reactor
safety key outcome, NRC has had limited experience in applying the
strategies and measures for the three nonsafety goals. As a result, it may
need to revise them after it completes various planned program evaluations.

Although NRC has set more realistic performance targets for this key
outcome, it continues to set others that are easily achievable and do not
challenge or stretch its staff to improve their performance. On the basis of
more complete historical data, NRC revised some of its performance targets.
The same analysis showed that in some areas, actual nuclear material
licensees? performance was much better than NRC?s targeted performance.
Table 1 shows some of NRC?s performance goal measures for the nuclear
material safety key outcome and compares its actual performance in fiscal
years 1999 and 2000 with the targets for fiscal year 2002.

Table 1: Comparison of Fiscal Years 1999 and 2000 Actual Performance to
NRC?s Targets for Fiscal Year 2002 Measure Fiscal year 1999 Fiscal year 2000
Fiscal year 2002

Actual Actual Target Number of losses of licensed material per year 227 201
350 Events resulting in overexposures that exceed regulatory limits 26 11 40
Medical events per year 35 28 45

As noted above in the nuclear reactor safety key outcome, NRC faces
strategic human capital management and other challenges that could impair
accomplishing its goals. During this period of potentially very high
attrition, the Office of Nuclear Material Safety and Safeguards will be
challenged to implement a risk- informed regulatory approach for a large

Page 10 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

number of diverse licensees. 7 As part of its strategy to address this
challenge, NRC is implementing an intern program to attract and retain
individuals with scientific, engineering, and other technical competencies.

As it did with the nuclear reactor safety key outcome, NRC did not complete
any program evaluations in fiscal year 2000 for the key outcome of nuclear
material safety. NRC expects to complete one program evaluation in June
2001. The evaluation will address redefining NRC?s role in an environment
where an increasing number of states are entering into agreements with NRC
to regulate material licensees within their borders (agreement states). As
of September 2000, 32 states had such agreements with NRC and by 2004, NRC
anticipates that 35 states will have such agreements and that the states
will oversee more than 80 percent of all material licensees. Such a large
shift of responsibility over time from NRC to the agreement states could
have significant budgetary and other implications for NRC.

The program evaluation will consider such issues as the roles and legal
responsibilities of NRC, the agreement states, and others; the need for
statutory changes; and the resources needed. This program evaluation should
help determine whether NRC will meet one of its four performance goals-
maintain safety- but is not likely to provide information to assess the
impact on NRC?s three nonsafety performance goals. For example, it is
unlikely that a useful assessment can be made of the ?improve the efficiency
and effectiveness of NRC?s activities? performance goal when the evaluation
will not address such questions as the following: Would NRC continue to need
staff in all four of its regional offices as the number of agreement states
increases? And what are the appropriate number, type, and skills needed for
its headquarters staff? In commenting on a draft of this report, NRC said
that program evaluations are to assess the manner and extent to which
programs achieve their intended objectives and to assess program
implementation policies, practices, and processes.

NRC?s strategies to ensure that licensees use nuclear material safely appear
clear and reasonable. For example, NRC will continue to focus on the
relative risk of licensees' activities to determine the appropriate level of
oversight, determine that licensees? activities are consistent with

7 The Office of Nuclear Material Safety and Safeguards is responsible for
ensuring that nuclear material licensees use and dispose of nuclear material
in a safe and environmentally sound manner.

Page 11 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

regulatory requirements, and respond to operational events that have
potential safety or safeguards consequences. For its newly developed
strategies for the three nonsafety goals, NRC may need to revise them and/
or specify how some strategies will help achieve its desired outcomes. For
example, one strategy is to improve the regulatory framework to increase
NRC?s effectiveness and efficiency. Without further amplification on how NRC
expects to improve the regulatory framework, it is difficult to determine
how this strategy will result in more effective and efficient NRC activities
and decisions.

NRC reported that it had met the safety- related performance outcomes for
this key outcome in fiscal year 2000. Although NRC?s performance and
strategies for achieving the safety- related goal for this key outcome
appear reasonable, as with the other two key outcomes, we could not assess
NRC?s performance relative to the three nonsafety goals for which NRC did
not have performance measures. In addition, to ensure that NRC can meet the
strategies, goals, and measures, it will have to follow through on its plans
to attract and retain individuals with the competencies and skills needed to
carry out its mission.

On the basis of our prior work, we believe that NRC?s achieving some of its
strategies and performance goals in this key outcome may be affected by such
external factors as the standards that the Environmental Protection Agency
(EPA) eventually issues on the level of residual radiation that can safely
remain at a nuclear power plant site after licensees complete their
decommissioning activities as well as the recently issued standards for the
Department of Energy?s potential high- level waste repository at Yucca
Mountain, Nevada. EPA started to develop residual radiation standards in
1984 but has not yet finalized them. Currently, licensees are using
standards that NRC issued in 1997. If NRC?s licensees are ultimately
required to comply with EPA standards, which are more restrictive than
NRC?s, the licensees may have to perform additional cleanup activities and
incur additional costs. Likewise, NRC's success may be affected by EPA's
final rule on the environmental radiation protection standards for Yucca
Mountain. The rule, published in the Federal Register

on June 13, 2001, includes a separate limit for groundwater. NRC, along with
such others as the National Academy of Sciences, does not believe that a
scientific basis exists for establishing the separate limit. Nevertheless,
in commenting on a draft of this report, NRC said that it will implement
EPA's standards for Yucca Mountain. Radioactive Waste

Disposal

Page 12 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Although program evaluations are helpful and important, NRC did not complete
any such evaluations related to the nuclear waste safety key outcome in
fiscal year 2000. However, NRC expects to evaluate ongoing and planned
changes related to its decommissioning program for nuclear power plants and
other radioactively contaminated sites in fiscal year 2003. In doing so, NRC
expects to assess its various decommissioning initiatives, determine whether
it has achieved all four performance goals, identify deviations from its
performance goals, and determine whether a need exists for NRC to change its
goals, strategies, or measures related to this key outcome. If NRC meets
these objectives, the information should help determine the validity and
reasonableness of the agency?s goals and strategies for this key outcome.

NRC?s strategies appear reasonable and clearly discuss how the agency plans
to meet its fiscal year 2002 safety- related goals. For example, NRC expects
to evaluate new research and safety information as well as international
programs and licensees' operational experience to improve its regulation of
nuclear waste activities. NRC says that it will also keep pace with the
nation?s high- level waste program to ensure that it can meet the time frame
established by legislation when deciding to license a geological repository.
For its newly developed strategies for the three nonsafety goals, NRC may
need to revise them and/ or specify how some strategies will help achieve
its desired outcomes. As with the nuclear material safety outcome, one
strategy is to improve the regulatory framework to increase NRC?s
effectiveness and efficiency. Again, however, without further amplification
on how NRC expects to improve the regulatory framework, it is difficult to
determine how this strategy will result in more effective and efficient NRC
activities and decisions.

Page 13 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

For the selected key outcomes, this section describes major improvements or
remaining weaknesses in NRC?s (1) fiscal year 2000 performance report in
comparison with its fiscal year 1999 report and (2) fiscal year 2002
performance plan in comparison with its fiscal year 2001 plan. It also
discusses the degree that NRC?s fiscal year 2000 report and fiscal year 2002
plan address concerns and recommendations by the Congress, GAO, the
Inspectors General, and others.

NRC made a number of improvements to its fiscal year 2000 performance
report. For example, NRC used final and finite data for its performance
measures rather than preliminary data as it had for some measures last year.
In its fiscal year 1999 performance report, NRC used preliminary data for
three nuclear reactor safety measures: no more than one event that could
lead to a severe accident, no significant radiation exposures resulting for
nuclear power plants, and no deaths resulting from radiation or radiation
releases from nuclear plant operations. NRC designated the data as
preliminary because the Commission had not approved their release to the
public. In its fiscal year 2000 report, NRC used final data. According to
NRC staff, they would be aware of an event, release, or death by the end of
the fiscal year and before the Commission approved releasing the data.
Therefore, NRC concluded that it did not need to show this information as
?preliminary? in the fiscal year 2000 performance report. In addition, NRC
previously used a combined 5- year average as its target for some
performance measures. NRC now uses an annual value, which will better allow
the Congress and others to assess its performance in a particular fiscal
year.

In addition, NRC included information to address the requirements of the
Reports Consolidation Act of 2000. The act requires agency heads to assess
the completeness and reliability of the data used in their fiscal year 2000
performance reports. The Office of Management and Budget (OMB) issued draft
guidance describing how agencies should assess the completeness and
reliability of data. NRC?s performance report discusses these two data
related issues. In its fiscal year 2000 performance report, NRC says that
its performance data are complete, noting that it has reported actual or
preliminary data for every strategic and performance Comparison of NRC?s

Fiscal Year 2000 Performance Report and Fiscal Year 2002 Performance Plan
With the Prior Year Report and Plan for Selected Key Outcomes

Comparison of Performance Reports for Fiscal Years 1999 and 2000

Page 14 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

measure, and reliable because its managers and decision makers use the data
in the normal course of their duties. NRC discusses data quality in its
fiscal year 2000 performance report and refers to its fiscal year 2002
performance plan for details on its efforts to ensure that its performance
data are credible.

NRC?s performance plan for fiscal year 2002 differs in several significant
ways from its predecessor. First, NRC followed through on its commitment to
establish measures for three of its performance goals. In its fiscal year
2001 performance plan, NRC established measures for the

?maintain safety? performance goal only, saying that it would develop
measures for the three nonsafety performance goals- increase public
confidence; reduce unnecessary regulatory burden; and enhance the
effectiveness, efficiency, and realism of its activities and decisions- for
the fiscal year 2002 plan. NRC has done so and now shows measures for all
four performance goals. NRC also links each performance measure to a
specific performance goal.

Second, NRC provided greater details on how it ensures the credibility of
the data used to assess its performance in achieving its strategic and
performance goal measures. As noted in prior reports on NRC?s performance
plans, the credibility of its performance data is an issue that has
concerned us for several years. Now, NRC links each strategic and
performance goal measure to the data source and the automated system in
which the data are collected and stored. NRC also described its process to
ensure that the data were valid and reliable. For example, to verify the
data used to determine whether it has achieved the ?no more than one event
per year identified as a significant precursor of a nuclear accident?
performance measure, NRC evaluates nuclear power plants' operating
experience and identifies those events that were the most safety
significant. NRC describes each step taken in its evaluation process. In
those cases where NRC identified data limitations, it described the actions
it had taken to address the limitations. For example, NRC highlighted its
concerns with the credibility of the data used to assess its achievements in
the key outcome of nuclear material safety. In commenting on a draft of this
report, NRC noted that this key outcome includes over 15,000 licensees
administered by the agreement states and that NRC relies on the agreement
states to collect performance data related to them. NRC also said that it
has provided training for the states and its own staff on the database used
to collect the information and data collection procedures. It is also
developing an internal policy to ensure continued improvements in the
performance data reported to the Congress. Comparison of

Performance Plans for Fiscal Years 2001 and 2002

Page 15 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Third, NRC described the actions it has taken to address the management
challenges that we and its Office of the Inspector General identified. NRC?s
fiscal year 2002 performance plan includes an appendix that describes its
ongoing and planned actions to address these management challenges. NRC also
relates each challenge to its strategic and performance goals and
strategies. NRC did not include comparable information in its fiscal year
2001 performance plan.

Finally, NRC addressed three governmentwide performance goals as directed by
OMB in March 2001: (1) the use of performance- based contracts for at least
20 percent of all service contracts over $25,000; (2) expanding the use of
on- line procurement methods by posting acquisitions of over $25,000 to www.
FedBizOpps. gov; and (3) completing studies to determine whether it is more
cost- effective to have commercial activities performed in- house by its
staff or outsourced. In September 2000, we reported that NRC identified 783
full- time equivalent employees performing activities that are exempt from
OMB?s cost comparison requirements. 8 NRC discusses its efforts to meet the
three governmentwide reforms and believes that it has satisfied OMB?s
requirements for various reasons. For example, its management strategy to
?employ innovative and sound business practices? includes efforts to make
greater use of performance- based contracts. NRC participated in a task
group that developed the Best Practices Guide on PerformanceBased Service
Contracting, which the Office of Federal Procurement Policy published for
use by other federal agencies. In addition, NRC believes that the same
management strategy will help it increase the use of competition and ensure
more accurate Federal Activities Inventory Reform Act inventories.

Despite these enhancements over its fiscal year 2001 performance plan, we
identified an area warranting improvement and additional attention. NRC says
it will provide proactive information management and information technology
services by working with its program and support offices and by providing
reliable and easy- to- use systems for internal and external stakeholders.
Although NRC?s fiscal year 2002 performance plan sets targets to meet its
information technology objectives, it does not address how it expects to
verify and validate the data. As a result, we have no assurance that the
measures can be used reliably to gauge the

8 See Competitive Contracting: Agencies Upheld Few Challenges and Appeals
Under the FAIR Act (GAO/ GGD/ NSIAD- 00- 244, Sept. 29, 2000).

Page 16 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

effectiveness of NRC?s information technology performance or as a basis for
making program decisions and revisions. According to its staff, NRC only
describes how it verifies and validates performance goal data that are
reported to the Congress. Since it only has output measures (that are not
reported to the Congress) for information technology, NRC does not describe
how it verifies and validates the data related to them.

For the three major management challenges that GAO identified, NRC?s fiscal
year 2000 performance report discussed its progress in resolving two
challenges, but it did not discuss the agency?s progress in resolving the
challenge related to managing the agency- strategic human capital
management, financial management, and information technology. However, in
its fiscal year 2002 performance plan, NRC identified management strategies
to address this challenge.

GAO identified two governmentwide high- risk areas: strategic human capital
management and information security. Regarding strategic human capital
management, NRC?s performance report for fiscal year 2000 did not explain
its progress in resolving this challenge and its performance plan for fiscal
year 2002 did not have goals and measures related to it. However, in its
fiscal year 2002 performance plan, NRC included a management strategy to
sustain a high- performing, diverse workforce. To achieve this strategy, NRC
says that it will base human resource decisions on sound workforce planning
and analysis. In this regard, in January 2001, the staff provided the
Commission with a suggested action plan- a 5- year, $2.4 million effort to
maintain the core competencies, knowledge, and skills needed by NRC. NRC has
also taken the initiative and identified options to attract new employees
with critical skills, developed training programs to meet its changing
needs, and identified legislative options to help resolve its aging staff
issue. As we recently testified, continued oversight of NRC?s multiyear
effort is needed to ensure that it is being properly implemented and is
effective in achieving its goals. 9

With respect to information security, NRC has no goal, strategy, or measure
to resolve this challenge agencywide, and its fiscal year 2000 performance
report did not explain its progress in resolving it. NRC staff acknowledged
the lack of an agencywide goal, strategy, or measure but

9 See Nuclear Regulation: Challenges Confronting NRC in a Changing
Regulatory Environment (GAO- 01- 707T, May 8, 2001). NRC?s Efforts to

Address Its Major Management Challenges Identified by GAO

Page 17 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

noted that the support office responsible for information security has
developed a management strategy and output measure for its own use in
addressing this issue. Since the output measure is not applicable to the
entire agency and NRC did not include one that is in its fiscal year 2002
performance plan, the Congress will have no assurance that NRC is
effectively addressing this challenge. In addition, NRC?s plan did not
address contingency planning to respond to the loss or degradation of
essential services because of a problem in an automated system. In general,
a contingency plan describes the steps that NRC would take, including the
activation of manual processes, to ensure the continuity of its core
business processes in the event of a system failure. According to NRC staff,
the agency has processes to ensure continuity in the event of a system
failure and did not believe that it needed to disclose this information in
the fiscal year 2002 performance plan.

For two other major management challenges that GAO identified- resolving
numerous issues to implement a risk- informed approach for commercial
nuclear power plants and overcoming inherent difficulties to apply a risk-
informed approach to nuclear material licensees- NRC established strategies
or performance measures that specifically address them. For example, one
strategy is to develop and incrementally use riskinformation and, where
appropriate, less prescriptive performance- based regulatory approaches to
maintain safety.

As agreed, our evaluation was generally based on the requirements of GPRA,
the Reports Consolidation Act of 2000, guidance to agencies from OMB for
developing performance plans and reports (OMB Circular A- 11, Part 2),
previous reports and evaluations by us and others, our knowledge of NRC?s
operations and programs, GAO?s identification of best practices concerning
performance planning and reporting, and our observations on NRC?s other
GPRA- related efforts. We also discussed our review with NRC staff in the
Office of the Chief Financial Officer, Office of the Executive Director for
Operations, and Office of the Inspector General. The agency outcomes that
were used as the basis for our review were identified by the Ranking
Minority Member, Senate Governmental Affairs Committee, as important mission
areas for NRC and generally reflect the outcomes for almost all of NRC?s
programs or activities. The major management challenges confronting NRC,
including the governmentwide high- risk areas of strategic human capital
management and information security, were identified by GAO in our January
2001 performance and accountability series and high- risk update, and were
identified by NRC?s Office of the Inspector General in December 2000. We did
not Scope and

Methodology

Page 18 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

independently verify the information contained in the performance report and
plan, although we did draw from other GAO work in assessing the validity,
reliability, and timeliness of NRC?s performance data. We conducted our
review from April 2001 through June 2001 in accordance with generally
accepted government auditing standards.

We provided copies of a draft of this report to NRC for its review and
comment. NRC provided a number of specific comments, which are presented in
appendix II. Although NRC generally agreed with the information presented in
the report, it does not agree that its fiscal year 2000 performance report
showed mixed progress in achieving the three key outcomes. We revised the
report to make it clear that we concluded that NRC's performance was mixed
because it did not have measures for three performance goals until it issued
its fiscal year 2002 performance plan. NRC also provided technical
clarifications, which we incorporated as appropriate.

As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will send copies to appropriate
congressional committees; the Chairman, Nuclear Regulatory Commission; the
Commissioners, Nuclear Regulatory Commission; and the Director, Office of
Management and Budget. Copies will also be made available to others on
request.

If you or your staff have any questions, please call me at (202) 512- 3841.
Key contributors to this report were Mary Ann Kruslicky and Philip Olson.

Sincerely yours, (Ms.) Gary L. Jones Director, Natural Resources

and Environment Agency Comments

and Our Response

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 19 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

The following table identifies the major management challenges that confront
the Nuclear Regulatory Commission (NRC), including the governmentwide high-
risk areas of strategic human capital management and information security.
The first column lists the management challenges that we and/ or NRC?s
Office of the Inspector General (OIG) have identified. The second column
discusses the progress, as discussed in its fiscal year 2000 performance
report, that NRC has made in resolving its challenges. The third column
discusses the extent to which NRC?s fiscal year 2002 performance plan
includes performance goals and measures to address the challenges that we
and its OIG identified. Overall, we found that NRC?s performance report
discussed the agency?s progress in resolving some of its challenges.
However, it did not discuss its progress in resolving the following
challenges:

 coping with strategic human capital management, improving its financial
management activities, and ensuring that its information technology
acquisitions perform as intended;

 information security;

 intra- agency communication (up, down, and across agency organizational
lines); and

 regulatory processes that are integrated and continue to meet NRC?s safety
mission in a changing external environment.

In its fiscal year 2000 performance report, NRC says that the Reports
Consolidation Act of 2000 required an assessment by the Inspector General of
the agency?s management challenges. As a result, NRC staff said they did not
discuss each of the management challenges in its performance report but that
specific actions and milestones related to the challenges are included in
NRC?s fiscal year 2002 performance plan.

Of its nine major management challenges, NRC has strategic and performance
goals and measures directly related to four; management strategies for four
others; but no goal, strategy, or output for one- information security. One
GAO management challenge includes three issues- strategic human capital
management, financial management, and information technology. For ease of
presentation, we discuss each of these issues separately. Table 2 provides
information on how NRC addresses the two governmentwide high- risk areas and
its major management challenges. Appendix I: Observations on the Nuclear

Regulatory Commission?s Efforts to Address Its Major Management Challenges

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 20 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Table 2: Major Management Challenges Major management challenge

Progress in resolving major management challenge as discussed in the fiscal
year 2000 performance report Applicable goals and measures in the

fiscal year 2002 performance plan GAO- designated governmentwide high risk

Strategic Human Capital Management: GAO has identified shortcomings at
multiple agencies involving key elements of modern human capital management,
including strategic human capital planning and organizational alignment;
leadership continuity and succession planning; acquiring and developing
staff whose size, skills, and deployment meet agency needs; and creating
results- oriented organizational cultures.

(GAO also identified NRC?s continued efforts to cope with significant human
capital issues as a major management challenge for the agency.)

NRC did not discuss options or actions to hire and retain staff in its
fiscal year 2000 performance report. NRC noted, however, that it has
training efforts to provide staff with the knowledge and skills required to
implement a risk- informed approach and for managers to help them adapt to
NRC?s changing regulatory environment.

None. However, in its fiscal year 2002 performance plan, NRC included a
management strategy to sustain a highperforming, diverse workforce. NRC has
identified subsidiary strategies to achieve this goal. For example, NRC says
that it will base human resource decisions on sound workforce planning and
analysis. In this regard, NRC expects to use a human resources planning
process to identify current and future skill needs and gaps for the agency.
In January 2001, the staff provided the commission with a suggested action
plan for maintaining core competencies. The staff proposed to begin the 5-
year effort in February 2001 at an estimated cost of $2. 4 million,
including the costs to purchase software that will be used to identify the
knowledge and skills needed by NRC. NRC sets out several actions and
milestones in its fiscal year 2002 performance plan related to the 5- year
effort.

In addition, for the nuclear reactor safety and nuclear material safety
outcomes, NRC is implementing an intern program to attract and retain
individuals with scientific, engineering, and other technical competencies.
NRC is also working to develop and maintain a pool of high- potential
management candidates through its Senior Executive Service Candidate
Development Program.

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 21 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan

Information Security: Our January 2001 high- risk series update noted that
the agencies? and governmentwide efforts to strengthen information security
have gained momentum and expanded. Nevertheless, recent audits continue to
show that federal computer systems are riddled with weaknesses that make
them highly vulnerable to computer- based attacks and place a broad range of
critical operations and assets at risk of fraud, misuse, and disruption.

(NRC?s OIG identified information security as part of a broader management
challenge related to the identification, acquisition, and implementation of
information technologies.)

NRC did not discuss information security in its fiscal year 2000 performance
report.

None. However, the support office responsible for information security has a
management strategy and an associated output measure for its own use related
to information security. Since this output measure is not applicable to the
entire agency and NRC did not include one that is in its fiscal year 2002
performance plan, the Congress will have no assurance that NRC is
effectively addressing this challenge.

In its fiscal year 2002 performance plan, NRC requested funding to, among
other things, increase computer security activities. These activities are
intended to ensure that the agency?s information and automated systems
protect classified information, unclassified safeguards information, and
sensitive unclassified information. To accomplish these objectives, NRC
expects to continue providing security awareness training for its staff and
monitor the effectiveness of its security protection initiatives.

NRC did not address contingency planning to respond to the loss or
degradation of essential services due to a problem in an automated system.
In general, a contingency plan describes the steps NRC would take, including
the activation of manual processes, in the event of a system failure.
According to staff, NRC routinely prepares contingency plans for its major
business systems, but the agency does not believe that it needed to disclose
this information in the fiscal year 2002 performance plan.

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 22 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan GAO- and OIG- designated major management
challenges

Development and implementation of a risk- informed approach for commercial
nuclear power plants: NRC faces numerous challenges in implementing a risk-
informed approach for nuclear power plants. Whatever processes NRC
ultimately adopts must be consistent, visible, and clear. A clearly defined
strategy would help NRC and the utilities address the public?s concerns as
it implements a riskinformed regulatory approach. Although NRC initially
agreed on the need for a comprehensive strategy, it has not followed through
to develop one. Instead, NRC developed a RiskInformed Regulation
Implementation Plan, but the plan is not as comprehensive as it needs to be
because it does not identify those items critical to achieving its
objectives, activities that cut across the agency, resources, performance
measures, or the relationships among these various activities.

NRC discussed some completed and ongoing riskinformed initiatives in its
fiscal year 2000 performance report. In July 2000, for example, NRC issued
revised regulations on the types of events that licensees should report to
NRC. The regulations are intended to reduce the reporting burden associated
with events of little or no safety significance. In addition, NRC briefly
described its ongoing efforts to change other such regulations as those
related to the control of combustible gas during accidents.

In its fiscal year 2001 performance plan, NRC had established measures for
the ?maintain safety? performance goal only, saying that it would develop
measures for the three nonsafety performance goals for the fiscal year 2002
plan. NRC has done so in the fiscal year 2002 plan. But since NRC has
limited experience in applying the strategies and measures for the three
nonsafety goals, it may find that they need to be revised after it completes
various planned evaluations over the next 3 years.

A major challenge will be for NRC to demonstrate that it is meeting its

?increasing public confidence? goal. This is because NRC has not defined the
"public" that it is targeting and does not have a baseline by which to
measure the ?increase.? To address this performance goal, NRC instituted an
18- month pilot effort in October 2000 to use feedback from public meetings.
In March 2000, the Commission did not approve a staff proposal to conduct a
survey to establish a baseline. Evaluating feedback from public meetings
will provide NRC with information on the extent to which the public was
aware of the meetings and the clarity, completeness, and thoroughness of the
information that NRC provided at the meetings. Over time, for a particular
plant, NRC may find that the public better understands the issues of concern
or interest. It is not clear how this will show that public confidence in
NRC as a regulator has increased.

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 23 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan

NRC has addressed some challenges related to developing and implementing a
risk- informed approach for commercial nuclear power plants in its fiscal
year 2002 performance plan and in the 25 activities identified in its
RiskInformed Regulation Implementation Plan. It has established a
performance goal measure to complete specific milestones discussed in the
plan. For example, NRC expects to provide the Commission with a report on
the lessons learned from the first year of implementation of the new safety
oversight process for nuclear power plants in June 2001.

To help achieve its performance goals and measures, NRC?s fiscal year 2002
performance plan identifies a number of outputs. But NRC does not relate the
outputs to its performance goals, strategies, or measures. However, a
careful reading of the plan shows that most of the outputs relate to the
safety performance goal. Inherent difficulties in applying a risk- informed
approach to nuclear material licensees: The sheer number of licensees-
almost 21,000- and the diversity of the activities they conduct- converting
uranium; transporting radioactive materials; and using radioactive material
for industrial, medical, or academic purposes- increase the complexity of
developing a risk- informed approach for nuclear material licensees. In
addition, NRC will be challenged to define its role, including the size and
skill mix of staff both in headquarters and regional offices, as an
increasing number of states assume responsibility for regulating nuclear
material users within their borders. The decisions that NRC ultimately makes
could have budgetary and other implications for the agency.

NRC's fiscal year 2000 performance report notes that it formed a group to
ensure consistency in applying risk for nuclear materials regulations and
industry and staff guidance in implementing the regulations. In addition,
NRC revised its regulations applicable to those facilities that produce fuel
for commercial nuclear power plants to make them more risk- informed and
performance- based. NRC

In its fiscal year 2001 performance plan, NRC had established measures for
the "maintain safety" performance goal only, saying that it would develop
measures for the three other performance goals for the fiscal year 2002
plan. NRC has done so in the fiscal year 2002 plan. However with the
exception of the ?maintain safety? goal, NRC has no strategies to use risk
information to achieve the other three goals.

NRC has addressed some challenges to applying a risk- informed approach to
nuclear material licensees in its fiscal year 2002 performance plan and in
the

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 24 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan

also revised its policy on the medical uses of NRCregulated radioactive
material, putting greater emphasis on high- risk procedures and less
emphasis on procedures posing a lower risk to the patient, workers, and the
public.

eight activities included in the RiskInformed Regulation Implementation
Plan. It has established a performance goal measure to complete specific
milestones discussed in the plan. For example, NRC expects to develop risk
assessment tools and guidance for material licensees and perform risk
studies, revise its oversight program for those facilities that produce fuel
for commercial nuclear power plants, pilot test a risk- informed program for
the conduct of inspections for medical facilities, and train staff on
applying risk analysis.

See discussion above about NRC?s efforts related to achieving the

?increase public confidence? goal. Improving financial management systems:
NRC needs to develop and implement a cost accounting system. NRC?s Office of
the Inspector General identified the lack of a cost accounting process as a
material weakness constituting a substantial noncompliance with the Federal
Financial Management Improvement Act.

As last year, NRC does not have a cost accounting system to provide managers
with reliable and routine information for decisionmaking purposes. NRC
experienced delays in implementing the time- and labor- reporting software
portion of the cost model for its managerial cost accounting system. NRC
expects to implement a managerial cost accounting system by October 7, 2001.
Once implemented, NRC will have to determine whether the system provides
office directors with the information they need. If it does not, NRC would
have to enhance the system to provide additional cost information.

None. However, in its fiscal year 2002 performance plan, NRC has a
management strategy to employ innovative and sound business practices. To
achieve this goal, NRC says that it will strengthen its financial systems
and processes. NRC also expects to increase managers? accountability and
responsibility for their decisions by placing more agency funds under their
control. The performance plan lists some actions and milestones to address
this management challenge.

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 25 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan

NRC also expects to terminate its contract with the U. S. Department of the
Treasury for the Federal Financial System by the end of fiscal year 2002.
NRC will seek to acquire core accounting services from another federal
agency before that time. Information technology issues: NRC experienced
problems with implementing a new document capture and retrieval system-
Agencywide Documents Access and Management System (ADAMS).

NRC relies on a wide variety of information systems and networks to carry
out its mission. The performance report notes that NRC has made improvements
in budgeting for new systems development but also said that further
improvements are needed.

NRC, like other federal agencies, continues to struggle in its efforts to
obtain a good return on its information technology investments. Although NRC
has made improvements in how it budgets for new systems development, its
Inspector General found that NRC needs to improve in the areas of planning
and managing information technology projects.

NRC discussed the actions it has taken to implement a system to track the
training

None. However, in its fiscal year 2002 performance plan, NRC has a
management strategy to provide proactive information management services and
has identified subsidiary strategies to achieve its goals. For example, NRC
says that it will work with program and support offices to integrate
information technology and business planning and will make it easier for its
staff to acquire, access, and use the information needed to perform their
work. NRC also says that it will provide external stakeholders with the
ability to easily access publicly available information and to conduct
mutual business electronically.

NRC has established outputs for its information technology program,
including the availability of key infrastructure services, level of staff
satisfaction with NRC?s primary data application systems, and completion of
milestones to implement ADAMS. NRC continues to experience problems with
implementing ADAMS. NRC?s fiscal year 2002 performance plan identifies
actions and milestones to address

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 26 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan

received by inspectors. Staff can register for training using the system,
and each office has designated a training contact to enter completed
external training information into the system and monitor attendance at NRC-
provided training.

various information technology issues, including the problems related to
ADAMS.

Although NRC identified targets for its information technology measures, it
does not address the verification and validation of the data. As a result,
we have no assurance that the measures can be reliably used to gauge the
effectiveness of NRC?s information technology performance or as a basis for
making program decisions and revisions. According to its staff, NRC only
described how it verifies and validates performance goal data that are
reported to the Congress. Since it only has output measures (that are not
reported to the Congress) for information technology, NRC did not describe
how it verifies and validated the data related to them.

OIG- designated major management challenges

Clear and balanced communication with external stakeholders: NRC says that
it will accomplish this by providing external stakeholders with clear and
accurate information. This is a difficult task because of the highly
technical nature of NRC?s operations and the balance it must maintain to
remain independent.

In its report, for the three key outcomes, NRC discusses some of its public
outreach efforts. For example, NRC developed communication plans for its
more visible nuclear reactor safety programs, is redesigning its Web site,
and solicited feedback from stakeholders at public meetings. For the nuclear
materials safety outcome, NRC said that it conducted public workshops and
issued for public comment a report on potential radiation doses associated
with source and byproduct material that are exempt from NRC's regulations.
For the nuclear waste safety outcome, NRC said it held seven workshops and a
series of public meetings to obtain public recommendations

NRC has a performance goal to increase public confidence for the three key
outcomes-- nuclear reactor safety, nuclear materials safety, and nuclear
waste safety. NRC also has a management strategy to establish, evaluate, and
sustain effective communication with external stakeholders. Although NRC has
identified actions and milestones to address this management challenge, most
are scheduled to be completed in fiscal year 2001.

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 27 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan

and comments on, among other things, the performance of casks to store and
ship spent nuclear fuel.

In commenting on a draft of this report, NRC said that in April 2001, it
held a public meeting to obtain recommendations from the public on ways to
improve NRC's public participation procedures. NRC staff expect to use this
information to recommend changes to its policies and procedures.

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 28 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan

Intra- agency communication (up, down, and across agency organizational
lines): Internal communication is a fundamental necessity to conducting
NRC?s business and carrying out its critical health and safety mission.

NRC did not discuss this management challenge in its fiscal year 2000
performance report.

According to NRC?s fiscal year 2000 performance report, the Reports
Consolidation Act of 2000 required an assessment by the Inspector General of
the agency?s management challenges. As a result, staff said that NRC did not
discuss each of the management challenges in its performance report.

None. However, in its fiscal year 2002 performance plan, NRC has a
management strategy to employ innovative and sound business practices. To
achieve this goal, NRC says that it will strengthen collaborative processes
for conducting business among support offices and between support and
program offices. NRC notes that collaboration is essential for integrating
information technology initiatives with programmatic initiatives and for
integrating training and development with programmatic initiatives to
improve performance. The plan identifies actions and milestones to address
this management challenge. NRC expects to complete some activities in fiscal
year 2001; the remainder relate to periodic, ongoing activities.

NRC has also established a management strategy to effectively communicate
with its internal and external stakeholders. To achieve this goal
internally, NRC expects to assess the effectiveness of communication
channels and methods within the agency. NRC also expects to develop an
inventory of the methods used to transmit information, identify staff's
information needs and expectations, and develop a list of specific changes
needed to improve the effectiveness and efficiency of internal
communications. In commenting on a draft of this report, NRC noted that a
report on improving internal communications has been provided to the
Executive Director for Operations, who will determine the actions that NRC
staff should pursue.

Appendix I: Observations on the Nuclear Regulatory Commission?s Efforts to
Address Its Major Management Challenges

Page 29 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Major management challenge Progress in resolving

major management challenge as discussed in the fiscal year 2000 performance
report Applicable goals and measures in the

fiscal year 2002 performance plan

Regulatory processes that are integrated and continue to meet NRC?s safety
mission in a changing external environment: NRC is in a period of
transition, and the change is more rapid than in any time in the history of
civilian nuclear power. NRC?s organizational structure can also affect the
way the agency integrates its internal processes.

NRC did not discuss this management challenge in its performance report.

According to NRC?s fiscal year 2000 performance report, the Reports
Consolidation Act of 2000 required an assessment by the Inspector General of
the agency?s management challenges. As a result, staff said that NRC did not
discuss each of the management challenges in its performance report.

NRC has a performance goal to enhance the effectiveness, efficiency, and
realism of its activities and decisions for the three key outcomes- nuclear
reactor safety, nuclear materials safety, and nuclear waste safety. Although
none of the strategies relate to integrating activities across the agency,
NRC has integrated research activities with the three key outcomes since its
first performance plan in fiscal year 1999. In addition, the fiscal year
2002 performance plan identifies actions and milestones to address this
management challenge. NRC expects to complete some activities in fiscal year
2001; the remainder relate to periodic, ongoing activities.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 30 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Appendix II: Comments From the Nuclear Regulatory Commission

Note: GAO's comments supplementing those in the report's text appear at the
end of this appendix.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 31 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Appendix II: Comments From the Nuclear Regulatory Commission

Page 32 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

See comment 4. See comment 3.

See comment 2. See comment 1.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 33 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

See comment 7. See comment 6. See comment 5.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 34 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

See comment 10. See comment 9.

See comment 8.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 35 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

Now on p. 12. See comment 13. See comment 12. See comment 11.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 36 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

See comment 18. Now on pp. 26 and 27. See comment 17.

Now on p. 21. See comment 16.

Now on p 19. See comment 15.

See comment 14. Now on p. 13.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 37 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

See comment 19. Now on p. 28.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 38 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

The following are GAO's comments on the Nuclear Regulatory Commission's
letter dated June 19, 2001.

1. We agree that NRC's fiscal year 2000 performance report shows that it
achieved its goals and targets for the safety- related performance goal for
the three key outcomes. We revised the report to make it clear that we
concluded that NRC's performance was mixed because it did not have measures
for three performance goals until it issued its fiscal year 2002 performance
plan. Therefore, we could not fully assess NRC's progress in meeting the
three key outcomes.

2. We did not make the change suggested by NRC since we wanted to
distinguish between safety- and nonsafety performance goals.

3. We revised the report to show the Office of Nuclear Reactor Regulation
staff that are eligible to retire now.

4. We did not include the additional information that NRC suggested because
the final standards that the Environmental Protection Agency issued on June
13, 2001, relate to the Department of Energy's proposed high- level waste
repository at Yucca Mountain, Nevada- not to the residual radiation that can
safely remain at a commercial nuclear power plant site after
decommissioning.

5. The information presented on pages 3 and 14 are not inconsistent and do
not need to be changed. In our comparison of performance plans for fiscal
year 2001 and 2002 (p. 14), we note that NRC's fiscal year 2002 performance
plan describes the actions that NRC has taken to address the management
challenges that we and its Office of the Inspector General identified. This
is not inconsistent with our discussion related to the information that was
not included in NRC's fiscal year 2000 performance report (p. 3). The
information that we discuss relates to two different NRC documents.

6. We did not make the change that NRC recommended because in fiscal year
2001, about 16 percent of NRC staff are eligible to retire, and by the end
of fiscal year 2005, about 33 percent will be eligible. In our opinion,
NRC's replacing such a large number of staff qualifies as a crisis. In
addition, last year, one NRC Commissioner said, "There is a crisis looming
in government" because an entire generation of employees is going to retire
or will be eligible to retire in the near future. Finally, in January 2001,
we identified strategic human capital management as a high- risk area
governmentwide. GAO?s Comments

Appendix II: Comments From the Nuclear Regulatory Commission

Page 39 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

7. See comment 3. 8. NRC has correctly portrayed one of the overall
conclusions of its

advisory panel concerning the new safety oversight process; that is, that
the process has made progress toward achieving NRC's four performance goals.
The advisory panel also concluded that NRC has the necessary elements to
evaluate the new oversight process against the performance goals. But the
panel concluded, as we noted in this report, that NRC did not have the
necessary data to evaluate the new safety oversight process against the
performance goals. As a result, we did not change the report as NRC
suggested.

9. NRC says that the strategy- anticipate the introduction of new
technologies and changing regulatory demands- focuses on making NRC's
activities more realistic. We will add "realistic" to the information
presented. However, NRC provided no further amplification about how the
strategy will make NRC's activities more realistic.

10. As NRC noted, its fiscal year 2000 performance report discussed data
limitations related to the nuclear material safety key outcome. Since NRC's
efforts to provide greater details on how it ensures the credibility of the
data used to assess its performance are discussed later in the report, we
made no change here as NRC suggested. However, we included some of the
information that NRC suggested in the section of the report that compares
the fiscal years 2001 and 2002 performance plans.

11. We revised the report to include a broader description of how program
evaluations can be used. It should be noted that NRC's programs contribute
to achieving its performance measures and ultimately its performance and
strategic goals. Therefore, we do not believe that NRC's views and our views
are inconsistent.

12. We revised the report to show that the Environmental Protection Agency
issued the final rule for the Department of Energy's high- level waste
repository at Yucca Mountain on June 13, 2001. We also included the
information that NRC recommended.

13. We did not revise the report as NRC suggested because we included the
information earlier in the report. (See comment 11.)

14. We corrected the typographical error that NRC identified.

Appendix II: Comments From the Nuclear Regulatory Commission

Page 40 GAO- 01- 760 NRC's Status of Achieving Key Outcomes

15. We did not delete the information as NRC suggested because we believe it
clarifies the conditions under which NRC verifies and validates performance
data.

16. We corrected the typographical error that NRC identified. 17. We revised
the report as NRC recommended. 18. We revised the report as NRC recommended
and included some of the

additional information it provided. 19. We revised the report to show that
NRC staff have offered

recommendations for improving internal communications to the Executive
Director for Operations who will determine the actions that NRC staff should
pursue.

(360074)

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