Department of Energy: Fundamental Reassessment Needed to Address 
Major Mission, Structure, and Accountability Problems (21-DEC-01,
GAO-02-51).							 
								 
The Department of Energy (DOE) manages the nation's nuclear	 
weapons production complex, cleans up the environmental legacy	 
from the production of nuclear weapons, and conducts research and
development into both energy and basic science. DOE launched	 
several reforms in the 1990s to realign the organizational	 
structure, reduce the workforce, strengthen contracting 	 
procedures by competitive awards practices, streamline oversight 
of activities, and delegate some responsibilities to the private 
sector. Despite these reforms, GAO's review of more than 200	 
audit and consulting reports issued since 1995 found that	 
management weaknesses persist. DOE's performance problems persist
because its reforms were piecemeal solutions whose effect has	 
been muted by three impediments to fundamental improvement: the  
department's diverse missions, dysfunctional organizational	 
structure, and weak control of accountability. Unless DOE	 
addresses these impediments in a comprehensive fashion, 	 
management weaknesses and performance problems will likely	 
continue.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-51						        
    ACCNO:   A02380						        
  TITLE:     Department of Energy: Fundamental Reassessment Needed to 
Address Major Mission, Structure, and Accountability Problems	 
     DATE:   12/21/2001 
  SUBJECT:   Agency missions					 
	     Nuclear weapons					 
	     Performance measures				 
	     Environmental monitoring				 
	     Federal agency reorganization			 
	     General management reviews 			 
	     Strategic planning 				 

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GAO-02-51
     
Report to the Subcommittee on Energy and Water Development, Committee on
Appropriations, House of Representatives

United States General Accounting Office

GAO

December 2001 DEPARTMENT OF ENERGY

Fundamental Reassessment Needed to Address Major Mission, Structure, and
Accountability Problems

GAO- 02- 51

Page i GAO- 02- 51 Department of Energy's Performance Letter 1

Results in Brief 2 Background 4 DOE Initiated Major Reforms in the 1990s 7
Unresolved Management Weaknesses Contribute to Performance

Problems 10 Diverse Missions, Dysfunctional Structure, and Weak Culture of

Accountability Are Fundamental Impediments to Improvement 21 Conclusions 24
Recommendations for Executive Action 25 Agency Comments 25

Appendix I Scope and Methodology 29

Appendix II Documents Reviewed 31

Appendix III Comments From the Department of Energy 47

Appendix IV GAO Contacts and Staff Acknowledgments 58 Contents

Page 1 GAO- 02- 51 Department of Energy's Performance

December 21, 2001 The Honorable Sonny Callahan Chairman The Honorable Peter
Visclosky Ranking Minority Member Subcommittee on Energy and Water
Development Committee on Appropriations House of Representatives

Recurring problems in managing its programs and projects plagued the
Department of Energy (DOE) to such a degree in the late 1980s and early
1990s that some observers, including GAO, called for a rethinking of the
department?s missions and structure. Responding to calls for restructuring,
by 1995 DOE initiated ?unprecedented? reforms that it said would
?fundamentally improve the efficiency and effectiveness of the department.?

Created in 1977 from diverse agencies, DOE manages the nation?s nuclear
weapons production complex, cleans up the environmental legacy from the
production of nuclear weapons, and conducts research and development on both
energy and basic science. The relative emphasis given to these missions has
changed over time. Early emphasis by the department on research and
initiatives to cope with the global energy crisis quickly shifted to
accelerated nuclear weapons production. However, by the late 1980s, DOE
funding priorities again shifted to cleaning up the legacy of waste
generated by the weapons complex, and this work remains DOE?s largest budget
category. Since then, DOE has placed increased emphasis on basic scientific
research. DOE also has a role in helping to ensure the security of the
nation?s energy infrastructure. The result is a department with complex and
diverse missions. These diverse missions are largely implemented by
contractors to carry out DOE?s program and project activities at government-
owned facilities and sites across the country. The department contracts out
about 94 percent of its budget and has established an extensive network of
field offices to directly oversee the work of these contractors and address
other departmental responsibilities.

Concerned about the progress that DOE has made to strengthen its management
in recent years, you asked us to

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 02- 51 Department of Energy's Performance

 describe actions taken by DOE to improve its performance in the early to
mid- 1990s,

 assess DOE progress since then in addressing management weaknesses and
improving performance, and

 identify any underlying impediments to more effective management and
improved performance at DOE.

To address these objectives, among other steps, we examined more than 200
audits and reviews conducted since 1995 on various aspects of DOE?s
activities. These reviews, which are listed in appendix II, were conducted
by DOE?s Inspector General, internal and external ad- hoc bodies and
consultants, and us. We supplemented our analysis by visiting and holding
discussions with officials in the DOE headquarters and field offices
responsible for each of the department?s major mission areas. (See app. I.)

In response to widespread criticisms of its performance, DOE initiated
several reforms in the early to mid- 1990s to increase its efficiency and
effectiveness. These reforms were designed to, among other things, realign
the organizational structure; reduce the workforce; strengthen contracting
procedures by such means as competitive awards practices; streamline
oversight of activities; and delegate some departmental responsibilities to
the private sector. Many of these reforms achieved their immediate
objectives. For example, field offices have been realigned, overall staff
levels have been reduced, and 70 percent of DOE?s major facility contracts
have been reopened to competitive bidding since 1994.

Despite DOE?s many reforms, our review of more than 200 audit and consulting
reports issued since 1995 reveals that the department has persistent
management weaknesses that have led directly to a wide range of performance
problems, including major cost overruns and schedule delays in a variety of
noteworthy projects. For example, a DOE laser facility in California is $2
billion over cost and 6 years behind schedule, and a DOE tank- waste project
in Washington is still in the design phase after several false starts and a
cost increase of over $4 billion. DOE management weaknesses have also led to
terminations of projects that have already received substantial DOE funding,
such as a waste treatment plant in South Carolina that was suspended after
DOE invested $500 million. These and many other examples continue to erode
public confidence in the department and its contractors.

DOE?s performance problems persist because its past reforms were piecemeal
solutions whose effect has been muted by three underlying Results in Brief

Page 3 GAO- 02- 51 Department of Energy's Performance

impediments to fundamental improvement: the department?s diverse missions,
dysfunctional organizational structure, and weak culture of accountability.
These institutional impediments are interrelated, and unless DOE addresses
them in a comprehensive fashion, management weaknesses and resulting
performance problems will likely continue despite the department's ongoing
reforms. For example, DOE?s diverse missions have resisted integration
despite DOE management?s efforts at strategic planning. Poorly integrated
missions in turn have created major organizational challenges for DOE; the
department has not yet found an effective organizational scheme that
integrates the different operating styles and requirements of its diverse
missions of national security, environmental cleanup, energy resources, and
science. One symptom of DOE?s dysfunctional organizational structure is
continuing confusion about the roles and responsibilities of headquarters
and field staff. This confusion has contributed to DOE?s weak culture of
accountability, which has long impeded its ability to oversee contractors.
Improvements in contracting practices made since 1994, when DOE launched its
major contract reforms, have had a limited effect because DOE has not been
able to develop a technically competent workforce to oversee its
contractors, nor has it been able to hold its own staff fully accountable
for program and project failures. Further, DOE continues to self regulate
worker and nuclear safety in its facilities despite opportunities to shift
this responsibility to outside regulators who have the skills and regulatory
tools to better hold contractors accountable at potentially lower cost.

While DOE should take immediate steps to strengthen accountability,
resolving the interrelated mission and structural problems will require
consultation with the Congress and other federal agencies. Certain DOE
missions might be managed better if located elsewhere, either combined with
other federal agencies that have similar responsibilities or delegated to
the private sector. The Congress made an initial step in this direction by
creating the National Nuclear Security Administration to manage DOE?s
national security mission. Although this new administration is off to a slow
start, similar attention is needed for the energy, science, and
environmental missions. Any reassessment of these missions and their related
programs will need to consider their potential implications for homeland
security. DOE programs that could play a role in ensuring homeland security
include critical infrastructure protection; nonproliferation programs, which
aid in keeping nuclear material and weapons knowledge out of the hands of
terrorists; research and development; and emergency preparedness.
Accordingly, this report is recommending that the Secretary of Energy,
working with other agencies and the Office of Management and Budget, develop
a strategy for

Page 4 GAO- 02- 51 Department of Energy's Performance

determining the best place for DOE?s diverse missions and take immediate
steps to improve accountability among both federal and contractor staff.

In commenting on a draft of our report, DOE said that it accepts many of our
points and has initiatives under way that it believes will enable the
department to achieve the ?spirit? of our recommendations. However, while it
is too early to assess the effectiveness of these initiatives, we are
concerned that they may not adequately address the three root causes of
DOE?s recurring performance problems, particularly those related to it?s
diverse missions. Therefore, we reaffirm our recommendation that DOE develop
a strategy for realigning its missions, followed by a proposal to the
Congress.

The establishment of DOE brought together a collection of agencies with
diverse institutional cultures, structures, and procedures. Since its
inception, funding priorities for the department?s varied mission
responsibilities have shifted and new challenges have been added. Over the
years, DOE?s ability to effectively fulfill these responsibilities has been
repeatedly questioned, with calls for dismantling the department reaching a
highpoint in the mid- 1990s. We concluded at the time that the Congress and
the administration needed to rethink DOE?s missions and structure.

DOE summarizes its many responsibilities in one mission statement: To foster
a secure and reliable energy system that is environmentally and economically
sustainable; to be a responsible steward of the Nation?s nuclear weapons; to
clean up the department?s facilities; to lead in the physical sciences and
advance the biological, environmental, and computational sciences; and to
provide premier scientific instruments for the Nation?s research enterprise.

DOE groups these responsibilities into four ?business lines,? which DOE
describes as follows:

 Energy resources promotes the development and deployment of systems and
practices that provide energy that is clean, efficient, reasonably priced,
and reliable;

 National nuclear security enhances national security through military
application of nuclear technology and by reducing global danger from the
potential spread of weapons of mass destruction; Background

Missions and Organization of DOE

Page 5 GAO- 02- 51 Department of Energy's Performance

 Environmental quality cleans up the legacy of nuclear weapons and nuclear
research activities, safely managing nuclear materials, and disposing of
radioactive wastes; and

 Science advances tools to provide the foundation for the department?s
applied missions and to provide remarkable insights into the physical and
biological world.

Supporting these mission- related business lines is a ?corporate

management? function that constitutes a fifth ?business line.? This function
includes putting in place an effective organizational structure; efficient
management practices and information systems; procedures to ensure the
safety and health of the department?s workforce and the public, and to
protect the environment; and practices to ensure accountability to the
public. According to DOE, ?the department?s success within its diverse
portfolio of programs is largely dependent upon a strong and sound corporate
management function.?

DOE?s budget priorities have gradually shifted over the years from energy
policy to defense and now environmental cleanup. In fiscal year 2000, the
environmental quality business line was the department?s largest budget
category, accounting for approximately 34 percent (about $6.7 billion) of
its $19.7 billion budget. National nuclear security follows, with 25 percent
of the budget (about $5 billion). Science is allotted 16 percent of the
budget (about $3. 2 billion), and energy resources, the original
responsibility of the department, accounts for 13 percent of the budget
(about $2. 5 billion).

DOE has a workforce of almost 16,000 employees and over 100,000 contractor
staff located at over 50 major installations in 35 states. Crucial to DOE?s
missions and performance are its 22 laboratories, 11 of which are
responsible for multiple programs. Although each of these 11 multiprogram
laboratories conducts work in every DOE business line, 3 concentrate on
national security issues, 5 on basic science, 2 on environment, and 1 on
energy. DOE?s other laboratories are programspecific. The budgets for all 22
laboratories total nearly $8 billion annually.

DOE has a complex structure to manage its diverse missions. All staff and
support offices at headquarters report to the Secretary of Energy and a
deputy secretary, who serves as the chief operating officer. Below them are
two under secretaries: one for national nuclear security, who is also the
Administrator of the National Nuclear Security Administration (NNSA), and
the other for the energy, science, and environmental missions. A variety of
deputy administrators, directors, and assistant

Page 6 GAO- 02- 51 Department of Energy's Performance

secretaries are subordinate to the two under secretaries and oversee
individual program areas. DOE has an extensive set of field offices, which
are responsible for overseeing contractor performance. The field offices
include 11 ?operations? offices and several smaller, affiliated ?area? and

?site? offices, which are usually located at contractor sites. For example,
DOE has an area office in the Los Alamos National Laboratory that reports to
an operations office in Albuquerque, New Mexico. DOE also has other field
offices affiliated with the energy resources business line.

Contractors manage and operate DOE?s facilities and sites under the
supervision of department employees. Given that DOE spends most of its
budget through these contractors, the ability of DOE to direct, oversee, and
hold accountable its contractors is crucial for its mission success and
overall effectiveness. DOE?s contracting practices are rooted in the
development of the atomic bomb under the Manhattan Project during World War
II. Special contracting arrangements were developed by DOE?s predecessor
agencies, with participating industry and academic organizations, to
reimburse all of the contractors? costs and to indemnify contractors against
any liability they might incur. Most of the current contractors are for-
profit companies that receive incentives for meeting certain performance
objectives. Several large contractors, however, are nonprofit institutions,
such as the University of California, which typically operate research
institutions for DOE. Some of these nonprofit contractors also have
financial incentives for achieving certain DOE goals.

In August 1995 we reported that a fundamental reevaluation of DOE was
warranted, based on prior reviews by us, DOE?s Inspector General and other
experts, and our survey of experts. 1 All of these reviews identified
serious management weaknesses at the department. Our report was neither the
first nor the last to recommend rethinking the department?s structure and
mission responsibilities.

Our August 1995 report said that DOE had gone through many evolutionary
changes since its creation, in part resulting from shifts in

1 See Department of Energy: A Framework for Restructuring DOE and Its
Missions

(GAO/ RCED- 95- 197, Aug. 21, 1995). For this report, we surveyed 37 experts
to obtain their views about the need and proper place for the department?s
missions. The experts included four former Secretaries of Energy; former
President Jimmy Carter, under whose administration DOE was created; business
leaders; and energy specialists from academic and research institutions.
GAO?s Call for a New

Assessment of DOE

Page 7 GAO- 02- 51 Department of Energy's Performance

priority among its diverse responsibilities. We concluded that even though
the department had embarked on some major restructuring, in line with
government- wide initiatives to reduce the federal workforce and become more
results- oriented, there was no assurance that these reforms would
fundamentally alter and improve the ways that DOE managed its missions. We
noted that attempting to resolve management weaknesses without first
evaluating and achieving consensus on missions was a risky approach to
restructuring the department.

Overwhelmingly, our survey of experts concurred that DOE must change. While
there was general consensus that DOE should retain and concentrate on
essential energy activities, opinions differed on where to place other
departmental responsibilities. Most experts considered moving the weapons-
related and environmental cleanup responsibilities to other federal agencies
and creating a new organizational structure for the national laboratories,
such as sharing them among federal agencies or, in some cases, privatizing
them. We concluded that the ultimate structure of each mission should be
determined by the option that encouraged the most cost- effective practices,
attracted necessary technical talent, provided ample flexibility to react to
changing conditions, and exhibited the highest degree of accountability.

In the early to mid- 1990s, newly appointed Energy Secretary Hazel O?Leary
initiated many reforms to address long- standing criticisms of how DOE
conducted its business. As part of this process, DOE commissioned various
study groups and panels to make recommendations intended to fundamentally
improve the department?s efficiency and effectiveness. Based on these
recommendations, DOE launched a series of reforms to realign and downsize
the agency, as well as address structural weaknesses and improve its
management and oversight of contractors. Many of these reforms achieved
their immediate objectives.

In 1993, DOE launched an internal initiative to improve safety and awareness
of good practices throughout all aspects of the department?s work. The
initiative included more attention to risk reduction, improving the
qualifications of the workforce, organizational realignment, and moving to
external regulation of facilities. In particular, outside reviewers and
DOE?s own senior managers questioned the continued justification for the
department?s self- regulation of its contractor operated facilities, given
that virtually all other federal facilities are externally regulated
(including some DOE facilities). In 1994, while legislation was proposed and
the Congress held hearings to assess the proposal to move to external DOE
Initiated Major

Reforms in the 1990s

Page 8 GAO- 02- 51 Department of Energy's Performance

regulation, no action was taken. A year later, a DOE advisory committee
concluded that secrecy had been used as a shield to deflect public scrutiny
of safety and health problems at these facilities, and that the widespread
environmental contamination at some facilities was clear evidence that self-
regulation had failed.

Also in 1993, the Energy Secretary told the Congress that DOE was not
adequately in control of its major facility and site contracts and,
therefore,

?not in a position to ensure effective and efficient expenditures of
taxpayer dollars.? 2 To improve this condition, the Secretary created the
Contract Reform Team. (We had previously designated DOE contracting
practices as high risk, making the department vulnerable to waste, fraud,
abuse, and mismanagement. It remains on our high risk list today.) DOE?s
contract reform team made more than 45 recommendations, including a call for
strengthening financial information systems, using performancebased
contracts, and including performance criteria and incentives in contracts.
One significant recommendation urged DOE to shift from making noncompetitive
contract awards to adopting a full and open competitive process.

DOE also commissioned two special task forces in 1993 to examine the quality
and effectiveness of the department?s laboratories and the management of its
energy research and development (R& D) mission. The Secretary of Energy
Advisory Board 3 chartered The Task Force on Alternative Futures for the
Department of Energy National Laboratories, chaired by a former chairman of
the Motorola Corporation, Robert Galvin, to look at the laboratories. The
task force?s final report, issued in February 1995, concluded that DOE?s
laboratories were in ?serious jeopardy, owing to patterns of management and
organization that have grown in complexity, cost, and intrusiveness over a
long period.? 4 The report called for a more disciplined research focus by
the national laboratories and recommended improvements in DOE management of
these facilities,

2 Testimony before the House of Representatives, Committee on Energy and
Commerce, Subcommittee on Oversight and Investigations (May 26, 1993). 3 The
Secretary of Energy Advisory Board was established in January 1990 to
provide the Secretary with advice on issues such as basic and applied
research, economic and national security policy, educational issues, and
laboratory management.

4 Alternative Futures for the Department of Energy National Laboratories,
Secretary of Energy Advisory Board Task Force on Alternative Futures for the
Department of Energy National Laboratories, DOE (Feb. 1995).

Page 9 GAO- 02- 51 Department of Energy's Performance

including moving to an independent management structure resembling a
government corporation. In response, DOE created the Laboratory Operations
Board, an advisory group whose purpose was to provide dedicated management
attention to laboratory issues.

The Secretary chartered The Task Force on Strategic Energy Research and
Development, chaired by energy analyst Daniel Yergin, to examine DOE?s
energy resources business line. The June 1995 report of this task force
assessed the rationale for the federal government?s support of energy R& D,
reviewed the priorities and management of the overall program, and
recommended ways to make it more efficient and effective. 5 The task force
recommended that DOE streamline its R& D management, develop a strategic
plan for energy R& D, eliminate duplicative laboratory programs and research
projects, and reorganize and consolidate the many dispersed R& D programs at
DOE laboratories.

The Galvin and Yergin reports led to many changes in how DOE interacts with
its contractors, including a streamlining of departmental orders and
procedures.

In addition to these improvement efforts, DOE also established a strategic
alignment initiative in the fall of 1994, following the results of its
extensive strategic planning process. The strategic plan was developed based
on the principles of ?total quality management? and the desire to increase

?stakeholder? participation in decision- making. Under this plan, the
department organized itself by ?business lines? that were essentially the
same as they are today. 6 The first phase of the strategic alignment
initiative was employee driven and aimed to identify better, more cost-
effective means of performing the core missions of the department as defined
in the strategic plan. In May 1995, DOE announced its plan to achieve $1.7
billion in savings over the next 5 years by reducing overhead costs; closing
or consolidating field offices; realigning the organizational structure;
reducing federal employment; and initiating the delegation of some
departmental responsibilities to the private sector (referred to as

?privatization?). A portion of the overhead cost savings was to come from 5
Energy R& D: Shaping our Nation?s Future in a Competitive World. Final
Report of the Task Force on Strategic Energy Research and Development,
Secretary of Energy Advisory Board, DOE (June 1995).

6 DOE briefly added ?Industrial Competitiveness? as a business line in 1996
but dropped it in subsequent plans.

Page 10 GAO- 02- 51 Department of Energy's Performance

externally regulating environment, safety, and health activities; reforming
contracting practices; and streamlining departmental oversight. In August
1995, DOE released the specifics of 45 implementation plans, developed in
the second phase of the initiative, to guide the cost- saving efforts and
improve the department?s performance and accountability.

DOE officials were well aware of the criticism aimed at their department in
the early 1990s. While maintaining that their own initiatives could
transform the department, DOE officials also recognized that others were
calling for more radical changes, ranging from organizing the national
laboratories under a corporate structure to completely dismantling the
department. DOE officials stated in response to our August 1995 report that
while there is ?no assurance DOE?s initiatives will succeed, we know that no
alternative approach can provide that assurance either.? The department
continued to assert that its reforms, unprecedented in its history, would
transform the department into a ?positive model of organizational change and
effectiveness.? According to the Deputy Secretary at the time, the
department?s initiative promised to

?fundamentally alter how we [DOE] look and how we conduct business?.?

Unresolved management weaknesses have led to recurring performance problems
within DOE. Our analysis of more than 200 audit and consultant reports
issued since 1995 that pertain to the department identified persistent
weaknesses in the integration of strategic plans and information systems;
clarification of the respective roles and responsibilities between
headquarters and field offices; maintenance of a technically qualified
workforce; and implementation of contract management reforms. While many of
DOE?s reforms have achieved their immediate objectives, weaknesses persist
and have been linked to wide- ranging performance problems, including major
cost overruns and schedule delays in a variety of noteworthy projects.

DOE has steadily improved its strategic and annual performance plans in
response to past criticism. However, the department has not been able to use
its strategic plan and other corporate management tools, such as a
department- wide information system, to organize and integrate its missions.
According to DOE, its strategic plan is a composite of plans guiding the
activities of its major programs within the four business lines. This
approach has created some management problems that have been identified in
our past reports, in particular: Unresolved

Management Weaknesses Contribute to Performance Problems

Strategic Plan Not Used to Organize and Integrate Diverse Missions

Page 11 GAO- 02- 51 Department of Energy's Performance

 Disconnects exist between the current strategic ?business lines? and the
way the department is actually organized. While DOE?s strategic goals and
objectives are stated within the context of the business lines, the
department is organized and managed by its multiple programs. In some cases,
several programs contribute to the same business line without any apparent
integration. While we have called on DOE to rectify this misalignment, it
has not done so. DOE has asserted that its structure is affected by external
factors and that no single alignment will yield an organization that
eliminates crosscutting objectives. DOE told us that it has therefore
organized itself around budget decision units and set program performance
measures that are linked to each strategic plan business line.

 Shortcomings persist in program planning and priority setting, as well as
in the use of strategic goals and measures to describe specific activities.
For example, we could not determine from DOE?s 1999 and 2000 accountability
and performance reports what the department was trying to accomplish. We
also noted that DOE had not corrected the problems in its strategic goals
and measures that we identified 2 years ago. 7 According to DOE, changes
were made in the FY 2001 Annual Performance Plans to track accomplishments
by budget decision units rather than the strategic plan.

 DOE has not been able to develop a single strategic plan that integrates
its vast laboratory network. The laboratories, particularly the multiprogram
ones, operate largely as separate entities. DOE has no central program
control over the laboratories, but has instead required that each report to
a lead headquarters program office since 1999. Integration into the
strategic plan is supposed to occur through the interests of the
headquarters offices, even though the major laboratories conduct work in all
business lines.

 DOE does not have an integrating management information system to
consolidate its business, organizational, and operational information
throughout the department. In the absence of such an integrating system,
mission and program areas have developed their own systems and procedures. A
September 2000 DOE Office of Inspector General report noted that duplicative
systems existed or were under development at virtually all organizational
levels within the department. DOE has acknowledged that a significant
barrier to greater departmental

7 Under the Government Performance and Results Act of 1993, federal agencies
are to prepare annual performance plans that establish performance goals and
measures covering a given fiscal year and that link agency?s long- term
goals and day- to- day activities. The annual accountability report
addresses the degree to which the performance goals were met.

Page 12 GAO- 02- 51 Department of Energy's Performance

integration of information systems has been the Chief Information Officer?s
lack of control and influence over the program budgeting processes.

 Problems continue with the validity and verifiability of the data used by
the information systems to provide a baseline from which to track
performance across many parts of the department.

Since 1995, there have been a number of attempts to clarify roles and
responsibilities between headquarters and field staffs to improve lines of
authority and accountability. A resolution for this management issue has
been elusive because of the way DOE oversees its contractors. Typically,
field office managers sign contracts and rate contractors on their
performance, but direction on programs or project work comes from the
headquarters program offices. Additionally, at least in the past,
headquarters staff offices have been allowed to give direct orders to field
offices outside of the formal chain of command. The reports that we reviewed
frequently cited problems with such intermingled roles and responsibilities.

 A 1997 study by the Institute for Defense Analyses revealed that the
coordination between DOE programs is an ?undisciplined, uncoordinated,
essentially ad hoc process between the field managers and each of the
program assistant secretaries.? The institute concluded that there was no
assurance that resource decisions are weighed against each other in a
complete and consistent manner.

 A 1999 Panel to Assess the Reliability, Safety and Security of the United
States Nuclear Stockpile reported that DOE suffered from a diffusion of
functional responsibilities across a range of staff and line organizations
that has led to clouded lines of authority and blurred responsibilities and
accountability.

 In 1999, the President?s Foreign Intelligence Advisory Board reported that
DOE?s ?decentralized structure, confusing matrix of cross cutting and
overlapping management, and shoddy record of accountability has advanced
scientific and technological progress, but at the cost of an abominable
record of security.?? The board labeled DOE?s organization as a
?dysfunctional? structure that has too often resulted in mismanagement of
security in weapons- related activities and in a lack of emphasis on
counterintelligence. The board concluded that ?for the past two decades, the
Department of Energy had embodied science at its best and security at its
worst.?

 A 1999 National Research Council review of DOE?s project management
problems found that DOE?s ?organizational structure makes it much more Roles
and Responsibilities

Remain Unclear

Page 13 GAO- 02- 51 Department of Energy's Performance

difficult to carry out projects than in comparable private and public sector
organizations.? The council noted that by operating as an aggregate of
independent agencies amid various program and field operations offices, DOE
had failed to benefit from economies of scale.

 In 1999 and 2000, we attributed problems at DOE?s Spallation Neutron
Source project under construction in Oak Ridge, Tennessee, and at DOE?s
National Ignition Facility being built in Livermore, California, to, among
other problems, DOE?s complex management and organizational structure and
unclear lines of authority.

 A March 2000 National Academy of Public Administration report on DOE?s
Energy Efficiency and Renewable Energy Office found that the office had
suffered from unclear roles and responsibilities among various
organizational levels. The Academy noted that there are ?significant

differences in [DOE managers?] understanding of the roles and
responsibilities for program and project management.?

Recognizing these problems, DOE has changed reporting relationships between
headquarters and field offices in an attempt to clarify lines of authority
and to strengthen accountability. The latest major realignment occurred in
1999 with the assigning of field offices to lead program secretarial offices
at headquarters. In addition, a Field Management Council was established to
coordinate the direction given to the field by program and support offices.
DOE?s field offices now report to whichever headquarters program office
provides the most funding to the contractor sites overseen by the field
managers- an approach used without success in the past. This realignment had
to be modified slightly in late 2000 to accommodate the establishment of
NNSA. The current reporting arrangement, however, has given rise to some new
management problems. We found, for example, that there is considerable
uncertainty about reporting relationships in situations where many different
headquarters programs support activities at shared facilities and complexes.
This problem is particularly acute at DOE?s multiprogram national security
laboratories, where work is conducted on all of DOE?s missions, yet field
management must report only to NNSA headquarters. Thus, non- NNSA program
staff in headquarters must work through NNSA management in the field to
accomplish work related to the science and environmental missions.
Conversely, some NNSA staff members work in field offices that report to
headquarters programs in science or environmental management, even though
they can receive direction only from NNSA. Various memorandums of agreement
have been created to sort out these arrangements and to provide support
services across business lines. However, staff in some field offices that we
visited told us that they are unsure how the new reporting relationships
will work.

Page 14 GAO- 02- 51 Department of Energy's Performance

The establishment of NNSA has yet to clarify roles and responsibilities
within the nuclear security business line and may have exacerbated reporting
relationships, at least temporarily. In early 2001, we and the Panel to
Assess the Reliability, Safety and Security of the United States Nuclear
Stockpile challenged NNSA to develop a plan for fundamentally redefining
roles and responsibilities among its headquartered and field organizational
units. The panel called on NNSA to ?clarify functional authority, reduce
management layers, eliminate micromanagement [of the laboratories], and
downsize.? As late as April 2001, we found that NNSA had not specified the
roles and responsibilities of each of the headquarters offices; the
relationship between the headquarters and the field offices; whether
headquarters or field offices will direct and oversee contractors; and the
relationship between the NNSA staff and the rest of DOE. In NNSA?s May 2001
interim report, the administration stated that it intended to seek expert
advice on clarifying relationships between headquarters and the field, as
well as on other issues in preparation for an October 2001 status report to
the Congress. On June 26, 2001, in testimony before the House Armed Services
Committee, the chairman of the Panel to Assess the Reliability, Safety and
Security of the United States Nuclear Stockpile noted that ?some of the more
fundamental management problems [with DOE] still remain to be addressed.?

Lack of technically qualified staff within DOE is another long- standing
management weakness that has been linked to performance problems. We have
raised concerns about this weakness since 1991, and many other external
reviewers have echoed these concerns since then. For example, a 1997 report
by the Institute for Defense Analyses pointed out deficiencies in the
technical capabilities of those DOE managers who had survived departmental
downsizing. In addition, the Defense Nuclear Facilities Safety Board warned
in 1997 that, given likely future reductions in DOE?s budget, the department
needed to make advance preparations to avert the loss of technically
competent safety personnel.

Responding to these and other concerns, the department announced a new
Workforce for the 21st Century Initiative to strengthen technical and
management capabilities for its mission requirements. In particular, a 1998
internal DOE study confirmed the need to develop programs to address
workforce management weaknesses in the procurement environment, such as
recruitment, retention, and succession planning. However, despite these
actions, additional internal and external reports that followed have raised
concerns about the qualifications of DOE?s workforce. Lack of Qualified
Staff Has

Impeded Effective Contractor Oversight

Page 15 GAO- 02- 51 Department of Energy's Performance

 We reported in 1999 that while the Spallation Neutron Source project
appeared to be on schedule, it had already exhibited warning signs of
failure because it lacked personnel with technical skills and managerial
experience.

 In 1999, the Commission on Maintaining United States Nuclear Weapons
Expertise found that DOE?s aging workforce, the tight market for talent, the
lack of a long- term hiring plan, and other constraints had raised serious
doubts that the department would be able to maintain its nuclear weapons
expertise in the future.

 In 1999, the National Research Council found that DOE did not have ?the

necessary experience, knowledge, skills, procedures or abilities to prepare
good performance measures? for its contracts.

In its fiscal year 2001 Annual Performance Plan, the department stated that
it had ?fully addressed? the lack of technical and management skills by
establishing a Corporate Education, Training and Development Plan in fiscal
year 1999. DOE pointed out that it had training programs in place for
procurement professionals, property managers, and information management
specialists, and that it was establishing a new program to rebuild a
talented and well- trained corps of R& D technical program managers. In
particular, DOE reported in March 2000 that it had initiated a program to
develop future leaders of the acquisition workforce. The Defense Nuclear
Facilities Safety Board?s 2000 report credited DOE with taking steps to
improve the technical capabilities of personnel at its defense nuclear
facilities, but pointed out the need for DOE?s leadership to pay increased
attention to this issue and to follow through with its improvement plan.
Notwithstanding these efforts, the department has now acknowledged that its
workforce weaknesses represent a much broader challenge encompassing the
larger arena of human capital management. 8

In commenting on a draft of this report, DOE said it had additional efforts
in workforce restructuring. In support, DOE officials provided us with its
September 2001, ?Five- Year Workforce Restructuring Plan,? prepared in
response to an Office of Management and Budget requirement of all federal
agencies. The plan describes itself as a ?corporate roadmap? for, among
other things, reducing manager and organizational layers, increasing spans
of control, and redeploying positions.

8 See DOE?s fiscal year 2000 Performance and Accountability Report.

Page 16 GAO- 02- 51 Department of Energy's Performance

DOE has made process improvements in its contracting by implementing many of
the 1994 contract reform team recommendations. For example, DOE has
increased competition, imposed greater contractor liability, phased in
performance- based incentives, and begun using results- oriented statements
of work. According to DOE, 26 of its 37 major site and facility management
contracts have now been competed, up from just 3 prior to 1994. All of these
new contracts employ performance- based techniques in defining contractor
requirements, evaluating performance, and linking financial incentives to
results. In addition, according to DOE, there has been an overhaul and
standardization of contract regulations and the issuance of guidance on
proper contract administration. Nonetheless, the department has been
criticized for not fully implementing its contract reforms, as noted in
several reports.

 In an October 1997 report, DOE?s Inspector General reported problems with
performance- based contracting at DOE?s Nevada Operations Office. The report
found that performance- measurement milestones had been estimated after the
work had actually been completed. In addition, performance measures
associated with this aspect of the contract were vague, leading DOE to
reward performance that could not be objectively validated.

 In May 1999, we reported that while DOE laboratory contracts we examined
had some performance- based features, there was a wide variance in the
number of performance measures and the types of fees negotiated. We also
found that DOE had not determined whether giving higher fees to encourage
superior performance by laboratory contractors is advantageous to the
government.

 The National Research Council?s 1999 report concluded that DOE has had
limited success in establishing and managing performance- based contracts.
In its 2001 follow- up report, the Council noted that DOE has yet to devise
and implement either a contract performance measurement system or an
information system that can track contracts and contractor performance while
cycling information back into key decisions.

 DOE?s Inspector General reported in April 2000 that performance- based
incentives in the contract for DOE?s Idaho National Engineering and
Environmental Laboratory had not been fully successful in improving
performance and reducing costs. For some incentives, performance declined or
remained unchanged. For other incentives, performance improved, but the
gains were overstated, the contractor was compensated twice, improvements
either could not be linked directly to actions taken by the contractor
during the incentive period or were made for a disproportionately high fee,
and the contractor could not demonstrate any reduction in cost. Contract
Management

Reforms Not Fully Implemented

Page 17 GAO- 02- 51 Department of Energy's Performance

DOE?s Inspector General has also identified other areas where contract
reforms have not been fully implemented, including the following:

 A November 1998 audit determined that 16 of DOE?s 20 major for- profit
operating contracts did not incorporate liabilities provisions called for
under contract reform.

 A December 1999 audit concluded that the department?s award procedure

?effectively circumvented federal requirements designed to promote and
ensure the appropriate use of competition in contracting.?

 A January 2000 audit of outsourcing opportunities at the Los Alamos
National Laboratory determined that although the laboratory contractor found
that only 4 of 184 support services could potentially be obtained at lower
cost from outside entities, in fact at least 128 had outsourcing potential.
9

 A February 2000 audit found that only one of the four contractors reviewed
had fully met a requirement to prepare ?make- or- buy? plans to obtain
supplies and services on a least- cost basis.

 A January 2000 summary report on management challenges facing DOE pointed
out that while incentives have been included in most contracts, reviews show
systemic weaknesses in the way these incentives have been administered.
Incentive fees have risen dramatically, but there has been no commensurate
increase in financial risk to DOE?s major contractors.

DOE has also struggled to effectively implement its privatization program,
which is intended to keep the department?s environmental cleanup projects on
schedule at budgeted costs. For example, the cleanup contracts were
terminated at two noteworthy privatization projects- the Hanford tank- waste
project and the Idaho Pit 9 cleanup project- because of concerns with
rapidly escalating costs and the contractor performance.

Finally, while DOE has increased the number of major site and facility
contracts that it awards competitively, several major contracts have not
been, including nine contracts with a combined value of $22 billion.
Furthermore, despite glaring performance problems at certain laboratories,
DOE has excluded its largest laboratories from full and open competition.
For example, DOE?s contracts with the University of California to operate
two national laboratories have not been opened to

9 Since 1994, DOE has required its management and operating contractors to
identify and evaluate all of their services to determine whether they can be
obtained at a lower cost from an outside entity.

Page 18 GAO- 02- 51 Department of Energy's Performance

competitive bidding since they were awarded over 50 years ago, despite
reported security and project management problems at these laboratories. In
commenting on a draft of this report, DOE said that it has not been required
to competitively award these types of contracts (Federally Funded Research
and Development Centers) and that it ?actively

considers the use of competitive procedures for such contracts and has
competed them where appropriate.? DOE also said that it retained its
contracts with the University of California based on ?national security
considerations.?

Several of the unresolved management weaknesses that we identified have been
linked to recurring problems with the management of programs and projects.
In 1997, we documented that over a 16- year period, of 80 DOE projects
started that cost at least $100 million each, only 15 were completed, with
most of these experiencing scheduling delays and cost overruns; 31 were
terminated; and the 34 ongoing projects were exhibiting scheduling delays
and cost increases. Since 1995, DOE and its contractors have drawn a litany
of criticism for poor performance on several specific projects, including
the following.

 In 1997, we reported that cleanup of the Pit 9 waste area at DOE?s Idaho
National Engineering and Environmental Laboratory was at least 26 months
behind schedule and that, if completed, total costs would more than double,
exceeding $400 million. We found that DOE staff lacked adequate experience
with nuclear materials and failed to successfully execute design work and to
provide oversight of project- related environment, safety, and health
activities.

 In 1998, we reported that phase one of DOE?s tank- waste project at
Hanford, Washington, faced a 10- year delay and a cost increase of over $4
billion (from $4.3 billion to $8.9 billion). By 2000, cost estimates were
projected to exceed $15 billion, and the contract was terminated. We found
that while DOE had recognized the need for additional expertise to manage
and oversee this project, DOE had a history of not implementing its plans
for improvement.

 In 1998, after spending $500 million over 10 years, DOE suspended
development of a waste treatment plant to separate high- level radioactive
wastes from liquids stored in tanks at DOE?s Savannah River facility in
South Carolina. DOE then began efforts to develop an alternative technology,
which DOE projected would not likely be available until 2007 and could cost
up to $3.5 billion. Thus, we reported that project management problems could
cause DOE to miss its deadline of 2022 for cleanup of the Savannah River
facility. In response, DOE stated that it had Persistent Management

Weaknesses Contribute to Project Management Problems

Page 19 GAO- 02- 51 Department of Energy's Performance

revised its project management procedures to facilitate finding an
alternative solution.

 In 1998, we reported that the ineffective oversight and coordination of
the 5- year, $50 million project to design and develop a replacement
plutonium pit container led to design flaws that later had to be corrected
by a newer container that was very expensive to produce. 10

 In 1999, DOE first disclosed anticipated multimillion- dollar cost
overruns and multiyear scheduling delays in development of the National
Ignition Facility. We reported in 2000 and in 2001 that, while the facility
was originally expected to cost about $2.1 billion when completed in 2002,
it may instead cost more than $4 billion and will not be completed until at
least 2008. These projected cost overruns and delays could escalate because
substantial research and development is still incomplete. We attributed
project problems to several management weaknesses, including unclear roles
and responsibilities and unqualified staff, among other deficiencies.

 In 1999, the National Research Council found that DOE was ?one of the most
inefficient organizations in the federal government.? To illustrate this
inefficiency, the council asserted that if existing management practices
continued and project costs remained 50 percent more than necessary, the
department would spend more than $50 billion unnecessarily on waste cleanup
projects alone. The Council also found that

DOE projects commonly overrun their budgets and schedules, leading to
pressures for cutbacks that have resulted in facilities that do not function
as intended, projects that are abandoned before they are completed, or
facilities that have been so long delayed that, upon completion, they no
longer serve any purpose. In short, DOE?s record calls into question the
credibility of its procedures for developing designs and cost estimates and
managing projects.

The Council not only reiterated a listing of past project failures, but also
noted that 26 major projects under review at the time of its study were
showing notable deficiencies in project management. 11 The report concluded
that DOE?s prior efforts to solve project management problems had been so
unsuccessful that achieving improvements in this area would require
fundamental changes in organizational structures, documents,

10 Plutonium pits are used as triggers for nuclear weapons. 11 The National
Research Council report Improving Project Management in the Department of
Energy also contains a lengthy appendix listing sources of DOE project
reviews that document problems, including GAO reports.

Page 20 GAO- 02- 51 Department of Energy's Performance

policies and procedures, as well as drastic changes in the ?culture? of the
department.

DOE acknowledged the persistence of problems in its project management
practices in the department?s fiscal year 2001 performance and
accountability report. DOE stated that ?the results from 33 independent
external project reviews, undertaken this past year, indicate serious
systemic issues needing correction. Among the most prevalent problems are
inadequacies in technical scope, schedule planning and control, cost
estimating, and lack of clarity on roles and responsibilities.?

In response to the Council?s 1999 recommendations for improving project
management in DOE, the department created the central Office of Engineering
and Construction Management and affiliated support offices in the three
largest departmental program offices. These offices intend to create new
policies and procedures, conduct independent project reviews, and train
staff in project management practices. The department also plans to create a
career track for project managers. However, a follow- up report by the
Council in January 2001 raised concerns about DOE?s leadership commitment to
implementing the report?s recommendations, particularly regarding the role
of the Office of Engineering and Construction Management.

In commenting on a draft of this report, DOE said that many of its projects
are "unique, one- of- a- kind" ventures that contain significant research
and development which can impact cost and schedule assumptions. We agree
with DOE that its projects are often challenging. We also agree that such
challenges are not an excuse for poor project management performance, a
common problem in many DOE activities.

Page 21 GAO- 02- 51 Department of Energy's Performance

The persistence of DOE management weaknesses and project problems, despite
the many actions taken by the department to improve its performance, are
indicative of underlying impediments that have not been addressed. We found
that the department?s diverse missions, dysfunctional organizational
structure, and weak culture of accountability impede fundamental improvement
at DOE. Unless these underlying and interrelated impediments are addressed,
DOE?s management and performance problems will likely continue.

Fundamental improvement in DOE?s performance is impeded by the difficulty of
effectively integrating the management of the department?s diverse missions.
DOE?s energy, environmental, science, and national nuclear security staffs
operate largely as separate entities within the department, maintaining
their own operating styles and decision- making practices. For example, some
mission areas retain strong central control over their programmatic actions,
as in the science area, while others delegate more of this responsibility to
the field, as in the environmental area. Uncoordinated and inconsistent
direction from program headquarters offices still places the burden of
effectively integrating varying goals, objectives, and management styles on
the field managers who must manage this diversity at shared facilities.

The National Research Council?s 1999 report on DOE project management noted
that ?cultures, attitudes and organizational commitments have shaped service
delivery, and as DOE?s missions changed in response to external conditions,
the diversity of cultures inherited by the department?s collection of
agencies did not necessarily change with it.? This diversity of mission
cultures under one roof has long prevented DOE from developing a consistent
approach in its systems, structures, and interactions with contractors. For
example, DOE?s national security programs have a long history of operating
in secret, which leads to practices that are quite different from DOE?s
science programs, which are more open and flexible- yet these programs
operate at shared facilities. This clustering of diverse programs has
complicated lines of authority, thus diluting accountability among staff,
and has impeded DOE?s ability to oversee contractors.

It has been difficult for DOE to meet all the priorities of its mission
programs and the requirements of the department staff offices. For Diverse
Missions,

Dysfunctional Structure, and Weak Culture of Accountability Are Fundamental
Impediments to Improvement

Diverse Missions Resist Integration

Page 22 GAO- 02- 51 Department of Energy's Performance

example, more management attention has sometimes been given to DOE
contractors meeting nuclear weapons program goals than to operating safely
and in an environmentally responsible manner. The widely publicized security
problems at the Los Alamos National Laboratory in 1999 and 2000 are another
example. DOE?s contract with Los Alamos contained few incentives for
controlling classified material but many rewards for high quality science
work- yet this work was taking place in a top- secret laboratory, whose
primary mission is designing nuclear weapons. As a result, although
laboratory staff performed security tasks poorly, such lapses had limited
impact on the lab contractor?s overall DOE rating and subsequent performance
fee.

In the future, the task of integrating diverse missions will likely be
complicated by the need to place additional emphasis on DOE programs that
play a role in ensuring homeland security. Such programs include critical
infrastructure protection; nonproliferation programs, which aid in keeping
nuclear material and weapons knowledge out of the hands of terrorists; R& D;
and emergency preparedness.

A second basic impediment to improved management and performance is the
department?s organizational structure. DOE carries out its diverse missions
through a network of multilayered field offices that oversee contractor
activities at facilities and sites widely dispersed throughout the country.
The structure inherited by the department and the different program cultures
and management styles within that structure have confounded DOE?s efforts to
develop a more effective organization. The difficulty of reforming this
structure was noted in a 1999 report of the Special Investigative Panel of
the President?s Foreign Intelligence Advisory Board, which stated,

Over the last decade or so, DOE has undertaken major departmental shake- ups
every two or three years. None have stemmed recurring fundamental problems
and all have been thwarted by institutional intransigence.

The most problematic organizational problems have involved the nuclear
weapons complex. Years of tinkering with reporting relationships between the
offices that have a role in national nuclear security and the laboratories
where most weapons- related work is performed have not yielded many positive
results. For example, the Special Investigative Panel of the President?s
Foreign Intelligence Advisory Board noted in its 1999 report that
?convoluted, confusing, and often contradictory reporting channels have made
the relationships between DOE headquarters and the Organizational Structure

Precludes Effective Management and Performance

Page 23 GAO- 02- 51 Department of Energy's Performance

laboratories, in particular, tense, internecine, and chaotic.? In addition,
the panel found that much of the confusion centered on the role and power of
the field offices. As the panel reported, ?senior DOE officials often
described these offices as redundant operations that function as shadow
headquarters, often using their political clout and large payrolls to push
their own agendas and budget priorities in the Congress.?

To address long- standing security problems across the nuclear weapons
complex, the panel concluded that because ?DOE was incapable of reforming
itself- bureaucratically and institutionally- in a lasting way,? an
autonomous structure should be established for the national nuclear security
business line, free of all other obligations imposed by DOE management.
Specifically, the panel recommended creation of a new agency that is far
more mission- focused and bureaucratically streamlined. Instead, the
semiautonomous NNSA was established within the department.

DOE and NNSA officials are now attempting to develop and implement an
organizational plan that can operate effectively within DOE?s overall field
and headquarters structure. Historically, DOE?s efforts to reorganize
assumed that current missions will be retained under any new structure.
However, as DOE?s Laboratory Operations Board concluded in December 2000,
the creation of NNSA will present organizational and management challenges,
especially maintaining a national laboratory system that can meet the
department?s current mission requirements. Making changes in the current
environment is further complicated by the need to consider DOE?s potentially
expanded role on homeland security matters on overall departmental missions.

DOE?s lack of a strong culture of accountability is the third basic
impediment to improved performance. A number of factors have weakened
accountability in the department. DOE?s organizational structure, which has
blurred lines of authority, has made it difficult to hold staff and
contractors accountable for poor performance. In addition, DOE has not taken
action to improve the accountability of the organization in other areas that
were identified in the mid- 1990s. These pertain to contracting practices,
health and safety regulation, and human capital management.

The reluctance of past Secretaries to open all major DOE site and facility
contracts to competitive bidding has diluted accountability by weakening the
department?s position with its contractors. Only once has DOE fired a Weak
Culture of

Accountability

Page 24 GAO- 02- 51 Department of Energy's Performance

contractor for performance problems (at Brookhaven National Laboratory in
May 1997), and rarely has it taken aggressive action to hold contractors
accountable, even in the face of major project failures.

DOE?s shifting policies on external regulation also reflect DOE leadership?s
ambivalence toward accountability. Despite the position of former Secretary
O?Leary- and her internal managers and consultants- that external regulation
would give DOE credibility and make its facilities safer, subsequent leaders
reversed course. At first, Secretary Federico Peï¿½a, O?Leary?s successor,
slowed the process by ordering a pilot program of external regulation
concepts. His cautious approach was meant to test how regulators might treat
DOE, and at what cost. His successor, Secretary Bill Richardson, concluded
that external regulation was not worth pursuing because the costs would
likely outweigh the benefits. However, this position conflicted with DOE?s
own pilot program results and was inconsistent with conclusions reached by
the Nuclear Regulatory Commission and the Occupational Safety and Health
Administration- DOE?s likely regulators.

Finally, DOE?s leadership has not devoted enough attention to recruiting and
training a qualified technical workforce, even though these needs have been
known for over a decade. Without such staff, the department lacks the
expertise to direct and oversee contractors working on highly technical
matters and hold them accountable for poor performance.

Past DOE leadership has not succeeded in transforming the Department into an
effective agency, as shown by the persistence of management weaknesses that
have led to the performance problems documented in this report.
Historically, DOE has made piecemeal changes in response to problems or
criticisms without assessing the root causes of its management weaknesses:
DOE?s diverse missions, dysfunctional organizational structure, and weak
culture of accountability.

While DOE should take immediate steps to strengthen accountability,
addressing the impediments to improved performance stemming from its diverse
missions and dysfunctional organizational structure will require
consultation with the Congress and other federal agencies. Since 1995,
legislation has been introduced each year to eliminate DOE and transfer its
missions to other agencies, or to terminate some of its R& D programs and
laboratories. The establishment of NNSA might suggest opportunities to
reconfigure other business lines, as some have suggested for the Office of
Science. While the program activities of the department are important,
Conclusions

Page 25 GAO- 02- 51 Department of Energy's Performance

that does not mean that all can be best managed under one agency or that
each is inherently governmental.

DOE must also have an organizational structure that effectively meets the
needs of the department?s missions. However, given the current diversity of
these missions, the semi- autonomous status of the NNSA, and shifting
mission emphases, such as protecting energy infrastructure, establishing an
optimum structure embracing all of DOE?s missions may simply not be
possible. New leadership, ongoing organizational changes, and the need to
consider how DOE?s responsibilities contribute to homeland security
missions, make this an opportune time to address the root causes of
performance problems in DOE.

To address its diverse mission and organizational issues, we recommend that
the Secretary of Energy, in consultation with the Office of Management and
Budget and other federal agencies that might gain or lose missions if DOE
were reconstructed, develop a strategy for determining whether some missions
would be managed better if located elsewhere, combined with other agencies,
or privatized. Once this is accomplished, the Secretary should report his
findings and a proposal to realign the various missions to the Congress.

Pending the results of a comprehensive review of DOE?s missions, the
Secretary of Energy should take immediate steps to improve the department?s
accountability. Such steps should include, for example, ensuring that all
contract- reform initiatives already under way are completed, holding staff
and contractors strictly accountable for performance, ending self regulation
of worker and nuclear safety in its facilities, and developing a more
technically competent workforce.

In commenting on a draft of our report, DOE said that the Secretary
"recognizes and accepts" many of our points and has already "instituted a
path forward for achieving his vision of excellence." DOE also noted that
its management challenges are "enormous" and efforts to resolve them "will
take time." An important effort under way, according to DOE, is its
"strategic mission review," for which a report is due in January 2002.
According to DOE, the purpose of this review is to focus the department on
activities that best support its "overarching national security mission."
DOE also listed several other steps that it said will help clarify roles and
responsibilities, streamline its organizational structure, and instill
stronger accountability among federal and contractor staff. Further, DOE
said it Recommendations for

Executive Action Agency Comments

Page 26 GAO- 02- 51 Department of Energy's Performance

has launched initiatives to "determine why previously identified problems
have not been addressed." Finally, the department said that the sum of its
ongoing initiatives should enable it to "achieve the spirit" of our
recommendations to improve mission, structure, and accountability.

DOE's many initiatives, if fully implemented, address several management
challenges that have long plagued the department. However, while it is too
early to assess the effectiveness of these initiatives, we are concerned
that they may not adequately address the root causes of DOE?s recurring
performance problems, particularly those related to the department's diverse
missions. For example, while we applaud the Secretary's efforts to provide a
strategic focus to guide all program activities, it is unclear how a

?national security? mission can subsume each of DOE?s highly diverse
programs in science, environmental quality, and energy resources. Developing
measurable national security objectives for environmental management, DOE?s
largest budget category, will be particularly challenging.

Also, it appears that DOE's "strategic mission review" assumes that each of
its many missions is still best managed by the department. As we noted in
our report, many of DOE's structure and accountability problems stem from
the nearly impossible task of managing diverse (and sometime conflicting
cultures) within a common field structure. The role and responsibility
problems that result from this condition will likely persist, absent a
comprehensive evaluation of how and where best to manage each mission. The
creation of NNSA was an attempt to resolve some of these issues internally,
but the effectiveness of its management structure and associated processes
is still highly uncertain. In particular, DOE has still not clearly defined
roles and responsibilities for NNSA?s headquarters and field units or
relationships with the rest of the department. 12 DOE's task of developing
an integrated department is made more difficult by an expanding mission
emphasis on safeguarding energy infrastructure and enhancing homeland
defense against terrorist threats. We believe that with these new mission
emphases and the persistent questions about how NNSA will operate relative
to other DOE programs, it is more important than ever for a strategic
mission review to focus on determining whether some missions would be
managed better if located elsewhere, combined with other agencies, or
privatized. As we explained in our report, a

12 See NNSA Management: Progress in the Implementation of Title 32 (GAO- 02-
93R, Dec. 12, 2001).

Page 27 GAO- 02- 51 Department of Energy's Performance

comprehensive mission assessment would require the Secretary to consult with
the Office of Management and Budget and other federal agencies that might
gain or lose missions if DOE were restructured.

Many of the organizational changes cited by DOE are positive steps, such as
clarifying the roles of the deputy and undersecretary, and creating a Field
Management Council to facilitate cooperation among the department?s diverse
programs. However, past experience has shown that such process changes have
merely tinkered with a flawed structure. Without a serious effort to
consider each mission for its proper placement in or out of DOE, the
structural problems that have clouded roles and responsibilities will likely
persist. Therefore, we reaffirm our recommendation that DOE develop a
strategy for realigning its missions, followed by a proposal to the
Congress.

Finally, while DOE cited numerous initiatives to strengthen accountability,
it is too early to judge whether these and other efforts adequately address
our recommendation in this area. In particular, we note that none of the
initiatives cited by DOE would end self- regulation of nuclear and worker
safety in its facilities. Moreover, DOE leadership has not been able to
fully implement and sustain past initiatives aimed at improving
accountability among federal and contractor staff.

Appendix III includes the full text of DOE's comments and our response. We
conducted our review from November 2000 through September 2001 in accordance
with generally accepted government auditing standards. Appendix I provides
details about the scope and methodology of our review.

As arranged with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution of it until 15 days
from the date of this letter. We will then send copies to the Secretary of
Energy; the Director, Office of Management and Budget; appropriate
congressional committees; and other interested parties. We will also make
copies available to others on request.

Page 28 GAO- 02- 51 Department of Energy's Performance

If you or your staff have any questions about this report, please call me on
(202) 512- 3841. Key contributors to this report are listed in appendix IV.

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

and Environment

Appendix I: Scope and Methodology Page 29 GAO- 02- 51 Department of Energy's
Performance

We conducted our analysis primarily through an assessment of more than 200
external and internal reviews of the Department of Energy (DOE) since August
1995. We selected this date as a baseline because it coincides with our
first call to assess DOE?s structure and missions, based on a series of
prior reports on the department. In addition, we relied on information from
interviews and internal documents obtained previously from DOE headquarters
in Washington, D. C., and operations offices in the field that are
affiliated with the three largest program offices. These field offices
included the Oakland Operations Office in California, aligned with the
National Nuclear Security Administration (NNSA); the Chicago Operations
Office in Illinois, aligned with the Office of Science; and the Savannah
River Operations Office in South Carolina, aligned with the Office of
Environmental Management.

To describe actions taken by DOE to improve its performance by the mid-
1990s, we reexamined our 1995 report on a framework for restructuring DOE
and its missions. We also reviewed documents pertaining to the reforms
initiated by DOE at the time of our report, including the results of several
noteworthy task forces that were established by the department. We relied
primarily on the department?s comments on our August 1995 report to
represent DOE?s position on the significance of its initiated reforms.

To assess DOE progress since the mid- 1990s in addressing management
weaknesses and improving performance, we searched our database for reviews
of DOE that we published between August 1995 and May 2001. Of the more than
225 reports identified, we selected 121 that addressed DOE corporate
management functions, including strategic planning; information
technologies; retaining, recruiting and training staff; security;
environment, safety and health practices; contracting; program and project
management; and national laboratory reform. We prepared summaries of the
observations and recommendations contained in each of these reports. We
chose not to include reports that addressed either independent agencies
within the department or issues that do not consume many DOE resources.
Specifically, we excluded reports on the Nuclear Regulatory Commission, the
Federal Energy Regulatory Commission, the Power Marketing Administration,
the Tennessee Valley Authority, and issues related to global climate change.
With the exception of our major management challenges reports on DOE, the
reports that we included were limited in scope and addressed only specific
issues under review. The reports, therefore, do not cover all of the program
and project activities of the department. For example, there was limited
review of the department?s energy resources business line. To improve our
coverage of Appendix I: Scope and Methodology

Appendix I: Scope and Methodology Page 30 GAO- 02- 51 Department of Energy's
Performance

the department, we searched other sources of reports to identify 87
additional documents that addressed the department?s performance since 1995.
The Congressional Research Service, DOE?s Inspector General, the National
Research Council, the National Academy of Public Administration, several DOE
task forces and commissions, as well as the department, were among those
organizations that prepared these reports. Appendix II lists the reports and
other documents that we reviewed.

To identify any underlying impediments to more effective management and
improved performance at DOE, we reviewed our collection of reports to
determine the possible causes behind the recurring management weaknesses.
While there was no single source among the reports reviewed that explicitly
observed all three of our root causes, there were many documents that
mentioned one or two of them as contributing to a departmental culture that
resists fundamental change. We assessed the strength and pervasiveness of
these root causes, as well as the actions of past DOE leadership, to draw
our conclusions and recommendations.

We conducted our review from November 2000 through September 2001 in
accordance with generally accepted government auditing standards.

Appendix II: Documents Reviewed Page 31 GAO- 02- 51 Department of Energy's
Performance

Department of Energy: Views on the Progress of the National Nuclear Security
Administration in Implementing Title 32 (GAO- 01- 602T, Apr. 1, 2001).

Information Security: Safeguarding of Data in Excessed Department of Energy
Computers (GAO- 01- 469, Mar. 29, 2001).

Nuclear Cleanup: Progress Made at Rocky Flats, but Closure by 2006 Is
Unlikely, and Costs May Increase (GAO- 01- 284, Feb. 28, 2001).

High Risk Series: An Update (GAO- 01- 263, Jan. 2001).

Major Management Challenges and Program Risks: Department of Energy (GAO-
01- 246, Jan. 2001).

Nuclear Weapons: Improved Management Needed to Implement Stockpile
Stewardship Program Effectively (GAO- 01- 48, Dec. 14, 2000).

Financial Management: Billions in Improper Payments Continue to Require
Attention (GAO- 01- 44, Oct. 27, 2000).

Reinventing Government: Status of NPR Recommendations at 10 Federal Agencies
(GAO/ GGD- 00- 145, Sept. 21, 2000).

Government Performance and Results Act: Information on Science Issues in the
Department of Energy?s Accountability Report for Fiscal Year 1999 and
Performance Plans for Fiscal Years 2000 and 2001

(GAO/ RCED- 00- 268R, Aug. 25, 2000).

National Ignition Facility: Management and Oversight Failures Caused Major
Cost Overruns and Schedule Delays (GAO/ RCED- 00- 271, Aug. 8, 2000).

Department of Energy: Uncertainties and Management Problems Have Hindered
Cleanup at Two Nuclear Waste Sites (GAO/ T- RCED- 00- 248, July 12, 2000).

Nuclear Security: Information on DOE?s Requirements for Protecting and
Controlling Classified Documents (GAO/ T- RCED- 00- 247, July 11, 2000).
Appendix II: Documents Reviewed

GAO Reports

Appendix II: Documents Reviewed Page 32 GAO- 02- 51 Department of Energy's
Performance

Observations on the Department of Energy?s Fiscal Year 1999 Accountability
Report and Fiscal Year 2000/ 2001 Performance Plan

(GAO/ RCED- 00- 209R, June 30, 2000).

Nuclear Waste Cleanup: DOE?s Cleanup Plan for the Paducah, Kentucky, Site
Faces Uncertainties and Excludes Costly Activities

(GAO/ T- RCED- 00- 225, June 27, 2000).

Department of Energy: National Security Controls Over Contractors Traveling
to Foreign Countries Need Strengthening (GAO/ RCED- 00- 140, June 26, 2000).

Nuclear Waste: Observations on DOE?s Privatization Initiative for Complex
Cleanup Projects (GAO/ T- RCED- 00- 215, June 22, 2000).

Information Security: Vulnerabilities in DOE?s Systems for Unclassified
Civilian Research (GAO/ AIMD- 00- 140, June 9, 2000).

Nuclear Waste: DOE?s Advanced Mixed Waste Treatment Project: Uncertainties
May Affect Performance, Schedule, and Price

(GAO/ RCED- 00- 106, Apr. 28, 2000).

Nuclear Waste Cleanup: DOE?s Paducah Plan Faces Uncertainties and Excludes
Costly Cleanup Activities (GAO/ RCED- 00- 96, Apr. 28, 2000).

Federal Research: DOE Is Providing Independent Review of the Scientific
Merit of Its Research (GAO/ RCED- 00- 109, Apr. 25, 2000).

Low- Level Radioactive Wastes: Department of Energy Has Opportunities to
Reduce Disposal Costs (GAO/ RCED- 00- 64, Apr. 12, 2000).

Department of Energy: Views on Proposed Civil Penalties, Security Oversight,
and External Safety Regulation Legislation

(GAO/ T- RCED- 00- 135, Mar. 22, 2000).

Nuclear Security: Security Issues at DOE and Its Newly Created National
Nuclear Security Administration (GAO/ T- RCED- 00- 123, Mar. 14, 2000).

Nuclear Nonproliferation: Limited Progress in Improving Nuclear Material
Security in Russia and the Newly Independent States

(GAO/ RCED/ NSIAD- 00- 82, Mar. 6, 2000).

Appendix II: Documents Reviewed Page 33 GAO- 02- 51 Department of Energy's
Performance

Department of Energy: Views on DOE?s Plan to Establish the National Nuclear
Security Administration (GAO/ T- RCED- 00- 113, Mar. 2, 2000).

Nuclear Security: Improvements Needed in DOE?s Safeguards and Security
Oversight (GAO/ RCED- 00- 62, Feb. 24, 2000).

Occupational Safety and Health: Federal Agencies Identified as Promoting
Workplace Safety and Health (GAO/ HEHS- 00- 45R, Jan. 31, 2000).

Nuclear Weapons: Challenges Remain for Successful Implementation of DOE?s
Tritium Supply Decision (GAO/ RCED- 00- 24, Jan. 2000).

Nuclear Waste: DOE?s Hanford Spent Nuclear Fuel Storage Project- Cost,
Schedule, and Management Issues (GAO/ RCED- 99- 267, Sept. 20, 1999).

Department of Energy: Uncertain Future for External Regulation of Worker and
Nuclear Facility Safety (GAO/ T- RCED- 99- 269, July 22, 1999).

Observations on the Department of Energy?s Fiscal Year 2000 Performance Plan
(GAO/ RCED- 99- 218R, July 20, 1999).

Department of Energy: Problems in the Management and Use of Supercomputers
(GAO/ T- RCED- 99- 257, July 14, 1999).

Department of Energy: Need to Address Longstanding Management Weaknesses
(GAO/ T- RCED- 99- 255, July 13, 1999).

Nuclear Safety: Department of Energy Should Strengthen Its Enforcement
Program (GAO/ T- RCED- 99- 228, June 29, 1999).

Nuclear Weapons: DOE Needs to Improve Oversight of the $5 Billion Strategic
Computing Initiative (GAO/ RCED- 99- 195, June 28, 1999).

Department of Energy: DOE?s Nuclear Safety Enforcement Program Should Be
Strengthened (GAO/ RCED- 99- 146, June 10, 1999).

Department of Energy: Cost Estimates for the Hanford Tank Waste Remediation
Project (GAO/ RCED- 99- 188R, May 19, 1999).

National Laboratories: DOE Needs to Assess the Impact of Using Performance-
Based Contracts (GAO/ RCED- 99- 141, May 7, 1999).

Appendix II: Documents Reviewed Page 34 GAO- 02- 51 Department of Energy's
Performance

Nuclear Waste: DOE?s Accelerated Cleanup Strategy Has Benefits but Faces
Uncertainties (GAO/ RCED- 99- 129, Apr. 30, 1999).

Department of Energy: Accelerated Closure of Rocky Flats: Status and
Obstacles (GAO/ RCED- 99- 100, Apr. 30, 1999).

Nuclear Waste: Process to Remove Radioactive Waste From Savannah River Tanks
Fails to Work (GAO/ RCED- 99- 69, Apr. 30, 1999).

Department of Energy: Key Factors Underlying Security Problems at DOE
Facilities (GAO/ T- RCED- 99- 159, Apr. 20, 1999).

DOE Management: Opportunities for Saving Millions in Contractor Travel Costs
(GAO/ RCED- 99- 107, Apr. 1, 1999).

Department of Energy: Usefulness of Performance Plan Could Be Improved (GAO/
T- RCED- 99- 134, Mar. 24, 1999).

Department of Energy: Challenges Exist in Managing the Spallation Neutron
Source Project (GAO/ T- RCED- 99- 103, Mar. 3, 1999).

Nuclear Nonproliferation: Concerns With DOE?s Efforts to Reduce the Risks
Posed by Russia?s Unemployed Weapons Scientists

(GAO/ RCED- 99- 54, Feb. 19, 1999).

Department of Energy: Actions Necessary to Improve DOE?s Training Program
(GAO/ RCED- 99- 56, Feb. 12, 1999).

Major Management Challenges and Program Risks: Department of Energy (GAO/
OGC- 99- 6, Jan. 1999).

Nuclear Weapons: Key Nuclear Weapons Component Issues Are Unresolved (GAO/
RCED- 99- 1, Nov. 9, 1998).

Department of Energy: Management of Excess Property

(GAO/ RCED- 99- 3, Nov. 4, 1998).

Department of Energy: DOE Needs to Improve Controls Over Foreign Visitors to
Its Weapons Laboratories (GAO/ T- RCED- 99- 28, Oct. 14, 1998).

Nuclear Waste: Department of Energy?s Hanford Tank Waste Project- Schedule,
Cost, and Management Issues (GAO/ RCED- 99- 13, Oct. 8, 1998).

Appendix II: Documents Reviewed Page 35 GAO- 02- 51 Department of Energy's
Performance

Nuclear Waste: Schedule, Cost, and Management Issues at DOE?s Hanford Tank
Waste Project (GAO/ T- RCED- 99- 21, Oct. 8, 1998).

Department of Energy: Problems in DOE?s Foreign Visitor Program Persist
(GAO/ T- RCED- 99- 19, Oct. 6, 1998).

Nuclear Waste: Further Actions Needed to Increase the Use of Innovative
Cleanup Technologies (GAO/ RCED- 98- 249, Sept. 25, 1998).

Department of Energy: DOE Lacks an Effective Strategy for Addressing
Recommendations From Past Laboratory Advisory Groups

(GAO/ T- RCED- 98- 274, Sept. 23, 1998).

Department of Energy: Uncertain Progress in Implementing National Laboratory
Reforms (GAO/ RCED- 98- 197, Sept. 10, 1998).

Department of Energy: Lessons Learned Incorporated Into PerformanceBased
Incentive Contracts (GAO/ RCED- 98- 223, July 29, 1998).

Information Technology: Department of Energy Does Not Effectively Manage Its
Supercomputers (GAO/ RCED- 98- 208, July 17, 1998).

Financial Management: Fostering the Effective Implementation of Legislative
Goals (GAO/ T- AIMD- 98- 215, June 18, 1998).

DOE Management: Functional Support Costs at DOE Facilities

(GAO/ RCED- 98- 193R, June 12, 1998).

DOE Fiscal Year 1999 Budget Request for Energy Efficiency and Renewable
Energy and Financial Management Issues

(GAO/ RCED- 98- 186R, June 10, 1998).

Department of Energy: Alternative Financing and Contracting Strategies for
Cleanup Projects (GAO/ RCED- 98- 169, May 29, 1998).

Results Act: Observations on DOE?s Annual Performance Plan for Fiscal Year
1999 (GAO/ RCED- 98- 194R, May 28, 1998).

Department of Energy: Clear Strategy on External Regulation Needed for
Worker and Nuclear Facility Safety (GAO/ T- RCED- 98- 205, May 21, 1998).

Department of Energy: Clear Strategy on External Regulation Needed for
Worker and Nuclear Facility Safety (GAO/ RCED- 98- 163, May 21, 1998).

Appendix II: Documents Reviewed Page 36 GAO- 02- 51 Department of Energy's
Performance

Nuclear Waste: Management Problems at the Department of Energy?s Hanford
Spent Fuel Storage Project (GAO/ T- RCED- 98- 119, May 12, 1998).

Department of Energy: DOE Contractor Employee Training

(GAO/ RCED- 98- 155R, May 8, 1998).

Department of Energy: Problems and Progress in Managing Plutonium

(GAO/ RCED- 98- 68, Apr. 17, 1998).

Results Act: DOE Can Improve Linkages Among Plans and Between Resources and
Performance (GAO/ RCED- 98- 94, Apr. 14, 1998).

Nuclear Weapons: Design Reviews of DOE?s Tritium Extraction Facility

(GAO/ RCED- 98- 75, Mar. 31, 1998).

Nuclear Waste: Understanding of Waste Migration at Hanford Is Inadequate for
Key Decisions (GAO/ RCED- 98- 80, Mar. 13, 1998).

Best Practices: Elements Critical to Successfully Reducing Unneeded RDT& E
Infrastructure (GAO/ NSIAD/ RCED- 98- 23, Jan. 8, 1998).

Department of Energy: Subcontracting Practices (GAO/ RCED- 98- 30R, Nov. 24,
1997).

Department of Energy: Information on the Tritium Leak and Contractor
Dismissal at the Brookhaven National Laboratory (GAO/ RCED- 98- 26, Nov. 4,
1997).

Department of Energy: Clearer Missions and Better Management Are Needed at
the National Laboratories (GAO/ T- RCED- 98- 25, Oct. 9, 1997).

Department of Energy: DOE Needs to Improve Controls Over Foreign Visitors to
Weapons Laboratories (GAO/ RCED- 97- 229, Sept. 25, 1997).

Results Act: Observations on the Department of Energy?s August 15, 1997,
Draft Strategic Plan (GAO/ RCED- 97- 248R, Sept. 2, 1997).

Results Act: Observations on Federal Science Agencies

(GAO/ T- RCED- 97- 220, July 30, 1997).

Nuclear Waste: Department of Energy?s Pit 9 Cleanup Project Is Experiencing
Problems (GAO/ T- RCED- 97- 221, July 28, 1997).

Appendix II: Documents Reviewed Page 37 GAO- 02- 51 Department of Energy's
Performance

Nuclear Waste: Department of Energy?s Project to Clean Up Pit 9 at Idaho
Falls Is Experiencing Problems (GAO/ RCED- 97- 180, July 28, 1997).

Results Act: Comments on Selected Aspects of the Draft Strategic Plans of
the Departments of Energy and the Interior (GAO/ T- RCED- 97- 213, July 17,
1997).

Results Act: Observations on the Department of Energy?s Draft Strategic Plan
(GAO/ RCED- 97- 199R, July 11, 1997).

Department of Energy: Status of DOE?s Efforts to Improve Training

(GAO/ RCED- 97- 178R, June 27, 1997).

High- Risk Program: Information on Selected High- Risk Areas

(GAO/ HR- 97- 30, May 1997).

Department of Energy: Opportunity for Enhanced Oversight of Major System
Acquisitions (GAO/ RCED- 97- 146R, Apr. 30, 1997).

Department of Energy: Information on the Distribution of Funds for
Counterintelligence Programs and the Resulting Expansion of These Programs
(GAO/ RCED- 97- 128R, Apr. 25, 1997).

Department of Energy: Funding and Workforce Reduced, but Spending Remains
Stable (GAO/ RCED- 97- 96, Apr. 24, 1997).

Department of Energy: Plutonium Needs, Costs, and Management Programs (GAO/
RCED- 97- 98, Apr. 17, 1997).

Department of Energy: Improving Management of Major System Acquisitions
(GAO/ T- RCED- 97- 92, Mar. 6, 1997).

Department of Energy: Management and Oversight of Cleanup Activities at
Fernald (GAO/ RCED- 97- 63, Mar. 14, 1997).

High- Risk Series: Department of Energy Contract Management

(GAO/ HR- 97- 13, Feb. 1997).

Nuclear Waste: DOE?s Estimates of Potential Savings From Privatizing Cleanup
Projects (GAO/ RCED- 97- 49R, Jan. 31, 1997).

Nuclear Waste: Impediments to Completing the Yucca Mountain Repository
Project (GAO/ RCED- 97- 30, Jan. 17, 1997).

Appendix II: Documents Reviewed Page 38 GAO- 02- 51 Department of Energy's
Performance

Department of Energy: Contract Reform Is Progressing, but Full
Implementation Will Take Years (GAO/ RCED- 97- 18, Dec. 10, 1996).

Department of Energy: Opportunity to Improve Management of Major System
Acquisitions (GAO/ RCED- 97- 17, Nov. 26, 1996).

DOE Security: Information on Foreign Visitors to the Weapons Laboratories
(GAO/ T- RCED- 96- 260, Sept. 26, 1996).

Department of Energy: Observations on the Future of the Department

(GAO/ T- RCED- 96- 224, Sept. 4, 1996).

Hanford Waste Privatization (GAO/ RCED- 96- 213R, Aug. 2, 1996).

Nuclear Weapons: Improvements Needed to DOE?s Nuclear Weapons Stockpile
Surveillance Program (GAO/ RCED- 96- 216, July 31, 1996).

Information Management: Energy Lacks Data to Support Its Information System
Streamlining Effort (GAO/ AIMD- 96- 70, July 23, 1996).

Energy Management: Technology Development Program Taking Action to Address
Problems (GAO/ RCED- 96- 184, July 9, 1996).

DOE?s Cleanup Cost Savings (GAO/ RCED- 96- 163R, July 1, 1996).

DOE?s Laboratory Facilities (GAO/ RCED- 96- 183R, June 26, 1996).

Energy Research: Opportunities Exist to Recover Federal Investment in
Technology Development Projects (GAO/ RCED- 96- 141, June 26, 1996).

Department of Energy: Progress Made Under Its Strategic Alignment and
Downsizing Initiative (GAO/ T- RCED- 96- 197, June 12, 1996).

Federal Facilities: Consistent Relative Risk Evaluations Needed for
Prioritizing Cleanups (GAO/ RCED- 96- 150, June 7, 1996).

Managing DOE: The Department?s Efforts to Control Litigation Costs

(GAO/ T- RCED- 96- 170, May 14, 1996).

Energy Downsizing: While DOE Is Achieving Budget Cuts, It Is Too Soon to
Gauge Effects (GAO/ RCED- 96- 154, May 13, 1996).

Appendix II: Documents Reviewed Page 39 GAO- 02- 51 Department of Energy's
Performance

Success Stories Response (GAO/ OCG- 96- 3R, May 13, 1996).

DOE Cleanup: Status and Future Costs of Uranium Mill Tailings Program (GAO/
T- RCED- 96- 167, May 1, 1996).

DOE?s Success Stories Report (GAO/ RCED- 96- 120R, Apr. 15, 1996).

Environmental Protection: Issues Facing the Energy and Defense Environmental
Management Programs (GAO/ T- RCED/ NSIAD- 96- 127, Mar. 21, 1996).

Nuclear Weapons: Status of DOE?s Nuclear Stockpile Surveillance Program
(GAO/ T- RCED- 96- 100, Mar. 13, 1996).

Federal R& D Laboratories (GAO/ RCED/ NSIAD- 96- 78R, Feb. 29, 1996).

Nuclear Nonproliferation: Concerns With the U. S. International Nuclear
Materials Tracking System (GAO/ T- RCED/ AIMD- 96- 91, Feb. 28, 1996).

Uranium Mill Tailings: Status and Future Costs of Cleanup

(GAO/ T- RCED- 96- 85, Feb. 28, 1996).

Energy?s Financial Resources and Workforce (GAO/ RCED- 96- 69R, Feb. 28,
1996).

Nuclear Waste: Management and Technical Problems Continue to Delay
Characterizing Hanford?s Tank Waste (GAO/ RCED- 96- 56, Jan. 26, 1996).

Uranium Mill Tailings: Cleanup Continues, but Future Costs Are Uncertain
(GAO/ RCED- 96- 37, Dec. 15, 1995).

Department of Energy: A Framework for Restructuring DOE and Its Missions
(GAO/ RCED- 95- 197, Aug. 21, 1995).

Report to Congress on the Plan for Organizing the National Nuclear Security
Administration (Department of Energy, National Nuclear Security
Administration, May 3, 2001).

Special Report: Performance Measures at the Department of Energy

(Department of Energy, Office of Inspector General, DOE/ IG- 0504, May
2001). Other Reports

Appendix II: Documents Reviewed Page 40 GAO- 02- 51 Department of Energy's
Performance

Prepared Testimony of John A. Gordon, Under Secretary of Energy and
Administrator for Nuclear Security, National Nuclear Security
Administration, U. S. Department of Energy, Before the Senate Appropriations
Committee, Energy & Water Subcommittee (Apr. 26, 2001).

Statement of John A. Gordon, Under Secretary of Energy and Administrator for
Nuclear Security, National Nuclear Security Administration, U. S. Department
of Energy, Before the Special Oversight Panel on Department of Energy
Reorganization, Committee on Armed Services, U. S. House of Representatives
(Apr. 4, 2001).

Audit Report: Bechtel Jacobs Company LLC?s Management and Integration
Contract at Oak Ridge (Department of Energy, Office of Inspector General,
DOE/ IG- 0498, Mar. 21, 2001).

Science and Technology Issues Facing the 107th Congress: First Session

(Congressional Research Service- RL30869, Mar. 1, 2001).

Department of Energy: Performance and Accountability Report Fiscal Year 2000
(Department of Energy/ CR- 0071, Feb. 16, 2001).

Federal Managers? Financial Integrity Act (Department of Energy, Memorandum
for the Secretary of Energy from Gregory H. Friedman, Inspector General, CR-
L- 01- 06, Feb. 8, 2001).

FY 2000 Report to Congress of the Panel to Assess the Reliability, Safety,
and Security of the United States Nuclear Stockpile (Feb. 1, 2001).

Eleventh Annual Report to Congress (Defense Nuclear Facilities Safety Board,
Feb. 2001).

H. R. 376- To Abolish the Department of Energy (107th Congress, Jan. 31,
2001).

Interim Letter Report for the Improved Project Management in the Department
of Energy (The National Academies, Jan. 17, 2001).

The Department of Energy?s Tritium Production Program

(Congressional Research Service- RL30425, Jan. 12, 2001).

Nuclear Energy Policy (Congressional Research Service- IB88090, Jan. 12,
2001).

Appendix II: Documents Reviewed Page 41 GAO- 02- 51 Department of Energy's
Performance

Civilian Nuclear Waste Disposal (Congressional Research ServiceIB92059, Jan.
10, 2001).

The National Ignition Facility: Management, Technical, and Other Issues
(Congressional Research Service- RL30540, Jan. 4, 2001).

Department of Energy Research and Development Budget for FY 2001:
Description and Analysis (Congressional Research Service- RL30445, Jan. 3,
2001).

Annual Performance Plan for FY 2001

(Department of Energy/ CR- 0068- 9).

China: Suspected Acquisition of U. S. Nuclear Weapon Secrets

(Congressional Research Service- RL30143, Dec. 20, 2000).

DOE Science for the Future: A Discussion Paper (Academic Panel, Dec. 14,
2000).

Performance- Based Management at the Department of Energy (External Members
of the Laboratory Operations Board, Dec. 7, 2000).

Contributions and Value of the Laboratory Operations Board

(Department of Energy, Memorandum from Ernest Moniz and John McTague to Bill
Richardson, Secretary of Energy, Dec. 7, 2000).

Special Report: Management Challenges at the Department of Energy

(Department of Energy, Office of Inspector General, DOE/ IG- 0491, Nov. 28,
2000).

United States Department of Energy: Fact Book FY 2000 (Department of Energy,
Office of Management and Administration, Office of Management and Operations
Support, Nov. 2000).

Establishing the National Nuclear Security Administration: A Year of
Obstacles and Opportunities (Special Oversight Panel on Department of Energy
Reorganization, Committee on Armed Services, U. S. House of Representatives,
Oct. 13, 2000).

DOE?s Civilian Information Technology Program (Congressional Research
Service- RS20626, Oct. 5, 2000).

Appendix II: Documents Reviewed Page 42 GAO- 02- 51 Department of Energy's
Performance

Field Restructuring (Department of Energy, Memorandum for Heads of
Departmental Elements from T. J. Glauthier, Sept. 26, 2000).

Restructuring DOE and Its Laboratories: Issues in the 106th Congress

(Congressional Research Service- IB10036, Sept. 13, 2000).

The Department of Energy?s Spallation Neutron Source Project: Description
and Issues (Congressional Research Service- RL30385, Sept. 12, 2000).

Strategic Plan: Powering the 21st Century- Strength Through Science

(Department of Energy/ CR- 0070, Sept. 2000).

Audit Report: Security Overtime at the Oak Ridge Operations Office

(Department of Energy, Office of Inspector General, ER- B- 00- 02, June 21,
2000).

Roles and Responsibilities Guiding Principles (Department of Energy,
Memorandum from T. J. Glauthier to Under Secretary, Energy, Science, and
Environment and Acting Administrator for Nuclear Security, June 2, 2000).

Audit Report: Central Shops at Brookhaven National Laboratory

(Department of Energy, Office of Inspector General, ER- B- 00- 01, May 11,
2000).

Audit Report: Performance Incentives at the Idaho National Engineering and
Environmental Laboratory (Department of Energy, Office of Inspector General,
WR- B- 00- 05, Apr. 3, 2000).

Statement of Dan W. Reicher, Assistant Secretary for Energy Efficiency and
Renewable Energy, U. S. Department of Energy, Before the Subcommittee on
Interior and Related Agencies, Committee on Appropriations, U. S. House of
Representatives Oversight Hearing on Energy Conservation Financial
Management Procurement (Mar. 30, 2000).

Charitable Giving Requirements in Department of Energy Contracts

(Department of Energy, Memorandum From the Inspector General to the Deputy
Secretary, HQ- L- 00- 01, Mar. 14, 2000).

A Review of Management in the Office of Energy Efficiency and Renewable
Energy (National Academy of Public Administration, Mar. 2000).

Appendix II: Documents Reviewed Page 43 GAO- 02- 51 Department of Energy's
Performance

Audit Report: The Department?s Management and Operating Contractor Make- or-
Buy Program (Department of Energy, Office of Inspector General, DOE/ IG-
0460, Feb. 17, 2000).

Tenth Annual Report to Congress (Defense Nuclear Facilities Safety Board,
Feb. 2000).

Strength Through Science- U. S. Department of Energy FY 2001 Budget Request
to Congress- Budget Highlights (Department of Energy, Office of Chief
Financial Officer, Feb. 2000)

Congress and the Fusion Energy Sciences Program: A Historical Analysis
(Congressional Research Service- RL30417, Jan. 31, 2000).

Audit Report: Follow- up Audit of Program Administration by the Office of
Science (Department of Energy, Office of Inspector General, DOE/ IG- 0457,
Jan. 24, 2000).

Audit Report: The Management of Tank Waste Remediation at the Hanford Site
(Department of Energy, Office of Inspector General, DOE/ IG- 0456, Jan. 21,
2000).

Audit Report: Outsourcing Opportunities at the Los Alamos National
Laboratory (Department of Energy, Office of Inspector General, WR- B- 00-
03, Jan. 18, 2000).

Research and Development Budget of the Department of Energy for FY2000:
Description and Analysis (Congressional Research ServiceRL30054, Dec. 16,
1999).

Inspection Report: Inspection of Alleged Improprieties Regarding Issuance of
a Contract (DOE/ IG- INS- O- 00- 02, Dec. 16, 1999).

Contractor Make or Buy Plan Implementation (Department of Energy, Memorandum
from Richard Hopf, Director, Office of Procurement and Assistance
Management, to Heads of Contracting Activities, Dec. 6, 1999).

Stockpile Stewardship Program: 30- Day Review (Department of Energy, Nov.
23, 1999).

FY 1999 Report of the Panel to Assess the Reliability, Safety, and Security
of the United States Nuclear Stockpile (Nov. 8, 1999).

Appendix II: Documents Reviewed Page 44 GAO- 02- 51 Department of Energy's
Performance

Department of Energy: Programs and Reorganization Proposals

(Congressional Research Service- RL30307, Sept. 17, 1999).

DOE Security: Protecting Nuclear Material and Information

(Congressional Research Service- RS20243, July 23, 1999).

Glauthier Announces DOE Project Management Reforms (Department of Energy
Press Release, June 25, 1999).

Technology Transfer to China: An Overview of the Cox Committee Investigation
Regarding Satellites, Computers, and DOE Laboratory Management
(Congressional Research Service- RL30231, June 11, 1999).

Science at its Best, Security at its Worst: A Report on Security Problems at
the U. S. Department of Energy (A Special Investigative Panel, President?s
Foreign Intelligence Advisory Board, June 1999).

Changes to the Departmental Management Structure (Department of Energy,
Memorandum from the Secretary of Energy to Heads of Departmental Elements,
Apr. 21, 1999).

Commission on Maintaining United States Nuclear Weapons Expertise: Report to
the Congress and Secretary of Energy (Mar. 1, 1999).

Ninth Annual Report to Congress (Defense Nuclear Facilities Safety Board,
Feb. 1999).

Audit Report: The U. S. Department of Energy?s Implementation of the
Government Performance and Results Act (Department of Energy, Office of
Inspector General, DOE/ IG- 0439, Feb. 4, 1999).

U. S. National Security and Military/ Commercial Concerns with the People?s
Republic of China (Select Committee, United States House of Representatives,
Jan. 3, 1999).

Department of Energy: Accountability Report Fiscal Year 1999

(Department of Energy/ CR- 0069, 1999).

Improving Project Management in the Department of Energy (National Research
Council, 1999).

U. S. Department of Energy Strategic Alignment Initiative, Fiscal Year 1998
Status Report (Department of Energy, 1999).

Appendix II: Documents Reviewed Page 45 GAO- 02- 51 Department of Energy's
Performance

Audit Report: The U. S. Department of Energy?s Efforts to Increase the
Financial Responsibility of Its Major For- Profit Operating Contractors

(Department of Energy, Office of Inspector General, DOE/ IG- 0432, Nov. 20,
1998).

Audit Report: Project Hanford Management Contract Costs and Performance
(Department of Energy, Office of Inspector General, DOE/ IG- 0430, Nov. 5,
1998).

Audit Report: The U. S. Department of Energy?s Prime Contractor Fees on
Subcontractor Costs (Department of Energy, Office of Inspector General, DOE/
IG- 0427, Sept. 11, 1998).

Unlocking Our Future: Toward a New National Science Policy (A Report to
Congress by the House Committee on Science, Sept. 24, 1998).

Audit Report: The Cost Reduction Incentive Program at the Savannah River
Site (Department of Energy, Office of Inspector General, ER- B- 98- 08, May
29, 1998).

Inspection Report: The Fiscal Year 1996 Performance Based Incentive Program
at the Savannah River Operations Office (Department of Energy, Office of
Inspector General, May 1998).

Assessing the Need for Independent Project Reviews in the DOE

(National Research Council, 1998).

Audit of Support Services Subcontracts at Argonne National Laboratory

(Department of Energy, Office of the Inspector General, DOE/ IG- 0416, Dec.
23, 1997).

Departmental Reporting Relationships (Department of Energy, Memorandum from
J. M. Wilcynski, Manager, Idaho Operations Office, to the Deputy Secretary
and Under Secretary, Nov. 26, 1997).

Audit Report: Audit of the Contractor Incentive Program at the Nevada
Operations Office (Department of Energy, Office of Inspector General, DOE/
IG- 0412, Oct. 20, 1997).

Restructuring DOE and Its Laboratories: Issues in the 105th Congress

(Congressional Research Service- IB97012, Oct. 15, 1997).

Appendix II: Documents Reviewed Page 46 GAO- 02- 51 Department of Energy's
Performance

External Members of the Laboratory Operations Board Analysis of Headquarters
and Field Structure Issues (Secretary of Energy Advisory Board, Oct. 2,
1997).

DOE Laboratory Restructuring Legislation in the 104th Congress

(Congressional Research Service- 97- 558SPR, May 13, 1997).

The Organization and Management of the Nuclear Weapons Program: 120- Day
Study (Institute for Defense Analysis, Feb. 27, 1997).

Seventh Annual Report to Congress (Defense Nuclear Facilities Safety Board,
Feb. 1997).

Department of Energy Strategic Alignment Initiative Status Report- Fiscal
Year 1996 (DOE, Dec. 1996).

How to Close Down the Department of Energy (The Heritage Foundation, Nov. 9,
1995).

Department of Energy Abolition? Implications for the Nuclear Weapons Program
(Congressional Research Service- 95- 1020F, Sept. 29, 1995).

Strategic Alignment: Tracking Our Progress (Department of Energy, Sept. 5,
1995).

Energy R& D: Shaping Our Nation?s Future in a Competitive World

(Final Report of the Task Force on Strategic Energy Research and
Development, June 1995).

Alternative Futures for the DOE National Laboratories (Task Force on
Alternative Futures for the National Laboratories (Secretary of Energy
Advisory Board, Feb. 1995).

Appendix III: Comments From the Department of Energy

Page 47 GAO- 02- 51 Department of Energy's Performance

Appendix III: Comments From the Department of Energy

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

See comment 1.

Appendix III: Comments From the Department of Energy

Page 48 GAO- 02- 51 Department of Energy's Performance

Appendix III: Comments From the Department of Energy

Page 49 GAO- 02- 51 Department of Energy's Performance

Appendix III: Comments From the Department of Energy

Page 50 GAO- 02- 51 Department of Energy's Performance

Appendix III: Comments From the Department of Energy

Page 51 GAO- 02- 51 Department of Energy's Performance

Appendix III: Comments From the Department of Energy

Page 52 GAO- 02- 51 Department of Energy's Performance

See comment 3. See comment 2.

Appendix III: Comments From the Department of Energy

Page 53 GAO- 02- 51 Department of Energy's Performance

See comment 8. See comment 7.

See comment 6. See comment 4.

See comment 5.

Appendix III: Comments From the Department of Energy

Page 54 GAO- 02- 51 Department of Energy's Performance

See comment 8.

Appendix III: Comments From the Department of Energy

Page 55 GAO- 02- 51 Department of Energy's Performance

The following are GAO's comments on the Department of Energy's letter dated
November 30, 2001.

1. Our response is included in the body of the report. 2. In our report, we
acknowledge and support DOE?s efforts to

implement performance- based contracting practices and to competitively
award more of its contracts. As suggested, we have revised our report to
note that the department has not been required to compete contracts to
manage its Federally Funded Research and Development Centers.

3. As we state in our report, our concern is that some of DOE's largest
contracts, notably those with the University of California to manage several
national laboratories, have never been opened to competitive bidding.
According to DOE, the decisions related to the most recent contract
extension with this university were based on "national security
considerations " and were not "contract management decisions ?" The benefits
of competing contracts are widely accepted and espoused by DOE in its own
policies. Recent interest shown by another university in competing for the
Sandia National Laboratory contract when it expires in 2003 suggests that
there may be other capable competitors, and that national security
considerations do not inhibit DOE from attracting new performers.

4. We agree that DOE sponsors many "unique" projects that contain
significant research and development that can impact cost and schedule
assumptions, and we have incorporated this comment in our report.
Nevertheless, we concur with DOE that this circumstance should not be used
as "an excuse for the poor performance in project management" that was cited
in our report.

5. We do not concur with DOE that the department?s strategic planning
process has worked effectively to organize and integrate its diverse
missions. As we said in our report, DOE told us that its strategic plan is a
composite of plans that guides the program activities of the department's
four "business lines," each of which establishes its own objectives and
management systems. Acknowledging the unfocused nature of the department,
the Secretary is just now taking steps to define an overarching departmental
objective for all programs and to expand NNSA?s new Planning, Programming,
Budgeting and GAO Comments

Appendix III: Comments From the Department of Energy

Page 56 GAO- 02- 51 Department of Energy's Performance

Evaluation system department- wide. He is also creating a new office under
the Chief Financial Officer that "will analyze and evaluate plans, programs
and budgets in relation to the department's objectives?" The department said
that it expects this office will serve as the "linchpin" for making
improvements in strategic planning in the future.

6. We reported in 1998 1 that DOE's Strategic Laboratory Missions plan,
which was published in 1996, was essentially a descriptive summary of
current laboratory activities; it did not direct change. Nor did the plan
tie DOE's or the laboratories' missions to the annual budget process. As we
previously reported, when we asked laboratory officials about strategic
planning, most discussed their own planning capabilities, and some
laboratories provided us with their own self- generated strategic planning
documents. None of the officials at the multiprogram laboratories we visited
at the time mentioned DOE's Strategic Laboratory Missions plan as an
essential document for their own strategic planning.

7. We noted in our report that DOE is attempting to clarify roles and
responsibilities. We also noted that DOE's 1999 reorganization was similar
to steps the department had taken previously without success. While we have
not assessed the effectiveness of the new Field Management Council, we noted
in our report that the establishment of the NNSA appears to have created, at
least temporarily, additional confusion regarding roles, responsibilities,
and reporting relationships within the department.

8. We noted in our report that the department has been taking steps to
address its workforce problems since the early 1990s, and it continues to do
so today. As we said, we are concerned by the lack of succession planning
and progress by DOE in addressing known human capital deficiencies. We have
revised our report, however, to reflect that DOE published, in September
2001, its "Five- Year Workforce Restructuring Plan." According to DOE, the
plan responds to an OMB requirement of all federal agencies and presents a
"corporate roadmap" for reducing manager and organizational layers,
increasing spans of control, and redeploying staff. The plan describes a
variety of ongoing and planned actions. Regarding DOE's discussion

1 Department of Energy: Uncertain Progress in Implementing National
Laboratory Reforms (GAO/ RCED- 98- 197, Sept. 10, 1998).

Appendix III: Comments From the Department of Energy

Page 57 GAO- 02- 51 Department of Energy's Performance

of the many underlying factors affecting its staffing, we agree that
building a quality workforce is very challenging. As DOE notes, these
challenges are made more difficult by the constant changes in mission focus
that characterize DOE's history.

Appendix IV: GAO Contacts and Staff Acknowledgments

Page 58 GAO- 02- 51 Department of Energy's Performance

Gary L. Jones, (202) 512- 3841 Gary R. Boss, (202) 512- 6964

In addition to those named above, Tom Laetz, Dan Feehan, William Lanouette,
Tom Kingham, Linda Chu, James Charlifue, and Cynthia Norris made key
contributions to this report. Appendix IV: GAO Contacts and Staff

Acknowledgments GAO Contacts Staff Acknowledgments

(360005)

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