Nuclear Waste: Better Performance Reporting Needed to Assess
DOE's Ability to Achieve the Goals of the Accelerated Cleanup
Program (29-JUL-05, GAO-05-764).
In February 2002, following years of rising costs to its nuclear
waste cleanup program, the Department of Energy (DOE) announced a
new initiative--the accelerated cleanup plan--and committed to
reduce costs of cleanup by $50 billion, shorten the cleanup
schedule by 35 years, and reduce risks to human health and the
environment. GAO reviewed (1) the progress DOE has made under its
accelerated cleanup plan, (2) the likelihood DOE will achieve its
estimated $50 billion in cost reductions, and (3) whether DOE's
performance reporting allows for a full understanding of progress
toward achieving the accelerated plan goals.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-764
ACCNO: A31558
TITLE: Nuclear Waste: Better Performance Reporting Needed to
Assess DOE's Ability to Achieve the Goals of the Accelerated
Cleanup Program
DATE: 07/29/2005
SUBJECT: Cost control
Environmental monitoring
Nuclear waste disposal
Nuclear waste management
Performance measures
Program evaluation
Radioactive waste disposal
Schedule slippages
Strategic planning
Tanks (containers)
Toxic substances
Environmental cleanups
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GAO-05-764
United States Government Accountability Office
GAO Report to the Chairman and Ranking Minority Member, Subcommittee on Energy
and Water Development, Committee on Appropriations, House of Representatives
July 2005
NUCLEAR WASTE
Better Performance Reporting Needed to Assess DOE's Ability to Achieve the Goals
of the Accelerated Cleanup Program
GAO-05-764
[IMG]
July 2005
NUCLEAR WASTE
Better Performance Reporting Needed to Assess DOE's Ability to Achieve the Goals
of the Accelerated Cleanup Program
What GAO Found
Since implementing its accelerated cleanup plan, DOE's progress in
reducing environmental risks has been mixed. By March 2005, DOE was on
track or ahead of schedule for many of the 16 cleanup activities it
measures, including packaging nuclear materials for disposition, disposing
of low-level waste, and removing buildings. In contrast, DOE was behind
its accelerated schedule for 3 challenging and costly
activities--disposing of transuranic and radioactive tank wastes and
closing tanks that had contained radioactive wastes. These three cleanup
activities had technical problems, such as developing waste separation
technology, or regulatory issues, such as determining when a storage tank
is clean enough to close. Furthermore, DOE has had problems with other
treatment and disposal activities not reflected in its performance
measures, such as delays in shipping plutonium from sites, resulting in
additional costs to secure and store the material.
DOE is not likely to achieve the full $50 billion estimated cost
reduction, a key goal of the accelerated cleanup plan. First, DOE's method
of calculating its $50 billion cost reduction likely overstated the
potential reductions. Second, DOE based estimated cost reductions on
assumed improvements that are highly uncertain, such as technology
development, revised contracting strategies, and regulatory requirements.
Third, while DOE expected cost reductions to come from most of its sites,
key sites are already experiencing delays and, by the end of fiscal year
2004, had incurred cost increases. Recognizing these problems, DOE no
longer cites its $50 billion estimate but still expects to achieve some
cost reductions.
DOE performance reporting does not allow for an adequate understanding of
its progress toward achieving overall cleanup goals because of limitations
in how DOE uses its performance measures. First, in its performance
reporting, DOE does not clearly link accomplishments with the incurred
costs. Second, DOE does not clearly highlight critical activities, such as
preparing radioactive tank waste for disposal, that have the greatest
impact on progress toward meeting overarching cleanup goals.
Key Assumptions Contributing to DOE's $50 Billion Estimated Cost Reduction
Revised cleanup agreements
Other
Revised contracting Work finished sooner
strategies
Technology improvements
Source: GAO analysis of DOE data.
United States Government Accountability Office
Contents
Letter
Results in Brief
Background
Progress in Accelerating Cleanup at DOE's Sites Has Been Mixed
DOE Is Unlikely to Achieve Its Estimated $50 Billion in Cost
Reductions
DOE's Performance Reporting Does Not Clearly Reflect Progress Made toward
Achieving the Overarching Goals of the Accelerated Cleanup Plan
Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation
1
5 7 11
20
29 36 37 37
Appendix I Scope and Methodology
Appendix II
DOE's Estimated Cost Reductions under the Accelerated Cleanup Plan
Appendix III Comments from the Department of Energy
Appendix IV GAO Contact and Staff Acknowledgments
Tables
Table 1: Types, Estimated Quantities, and Planned Treatment and
Disposal Approach for DOE's Surplus Special Nuclear
Materials and Waste Materials 8 Table 2: Cleanup Activities for Which DOE
Was Ahead of Schedule as of March 2005 12 Table 3: Cleanup Activities for
Which DOE Was Generally on Schedule as of March 2005 14 Table 4: Cleanup
Activities for Which DOE Is Behind the Accelerated Schedule as of March
2005 16 Table 5: Selected Cleanup Activities Experiencing Problems That
Are Not Included in DOE's Risk Reduction Measures 18
Table 6: Comparative Features of DOE's Risk Reduction Measures and Cost
Performance Measures 31 Table 7: Performance Information on Idaho National
Laboratory Transuranic Waste Shipments as of March 2005 32 Table 8:
Accelerated Cleanup Estimates 44
Figures
Figure 1: Contributions of Key Assumptions to DOE's Estimated $50 Billion
in Cost Reductions 24 Figure 2: DOE's Expected Cost Reduction by Office 25
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United States Government Accountability Office Washington, DC 20548
July 29, 2005
The Honorable David L. Hobson
Chairman
The Honorable Peter J. Visclosky
Ranking Minority Member
Subcommittee on Energy and Water Development
Committee on Appropriations
House of Representatives
The Department of Energy (DOE) is responsible for one of the world's
largest environmental cleanup programs. Decades of nuclear weapons
production have left a legacy of chemical, hazardous, and radioactive
wastes, including high-level and transuranic wastes1 to be cleaned up at
sites across the United States. In 1989, DOE established the Office of
Environmental Remediation and Waste Management (now the Office of
Environmental Management) to address the cleanup of these wastes. In
carrying out the cleanup program, DOE receives regulatory oversight from
various federal agencies, including the Environmental Protection Agency,
the Nuclear Regulatory Commission, and the Department of
Transportation, and the states where DOE's sites are located.
During the 1990s, we and others criticized DOE's nuclear waste cleanup
program for being expensive, slow, and lacking in commitment and
accountability. In response, DOE implemented or attempted to implement
a number of management initiatives to improve its performance and
address uncontrolled cost and schedule growth. These initiatives included
launching a major reform to its contracting practices in 1994,
establishing
an initiative to privatize certain projects in 1995, and developing an
approach to close sites on a compressed schedule in 1996. These
initiatives affected how DOE approached the cleanup work, the agency's
1Radioactive waste includes liquid, sludge, and solid waste. Radioactive
tank waste-which DOE manages as high-level waste-is largely liquid waste
and sludge resulting from the reprocessing of spent nuclear fuel and
containing highly radioactive fission products, longlived isotopes,
hazardous chemicals, and heavy metals. DOE intends to dispose of the
highlevel constituents of this waste in a geologic repository now under
development at Yucca Mountain in Nevada. DOE intends to dispose of the
remaining waste constituents at its sites. Transuranic waste includes
equipment, tools, and clothing contaminated with plutonium or other
elements with atomic numbers higher than uranium. DOE disposes of its
transuranic waste in a geologic repository in New Mexico.
relationship with its contractors, and in some cases, the schedule for
completing cleanup work.
Despite these initiatives, DOE's cleanup program continued to experience
cost and schedule growth. By 2001, DOE's estimates of the total cost and
timeframes for completing its cleanup program had climbed to about $192
billion2 and up to 70 years to complete. DOE reported that after having
spent over $60 billion (current dollars) on nuclear waste cleanup since
1989, little progress had been made toward reducing risks to the public
and the environment. DOE concluded that without significant reform the
cleanup program would continue to experience uncontrolled cost and
schedule growth.3
To address this cost and schedule growth, the Assistant Secretary for
Environmental Management announced a new initiative in February 2002, to
improve management of the program. This initiative-known as the
accelerated cleanup plan-had three main goals: rapidly reducing
environmental risks, decreasing the projected time to clean up sites, and
reducing the overall cost of the cleanup program. To implement the new
initiative, DOE took a number of steps including realigning the program to
focus on rapid reduction of environmental risks; improving contract
management; and restructuring how DOE managed the cleanup program to
better support an accelerated, risk-based approach. Other changes included
implementing procedures that require more discipline in controlling costs
and cleanup schedules and holding DOE managers more accountable for
achieving results.
DOE began implementing the accelerated cleanup plan late in 2002. In a
March 2003 congressional testimony before a House Appropriations
subcommittee, the department declared that its new strategy would
2DOE reports cost estimates that add actual (current) dollars for pre-2001
values, and constant 2003 dollars for values reported past 2001, which DOE
calls "2003 constant dollars." Unless otherwise noted, the numbers are
reported in DOE's 2003 constant dollars and without any adjustments.
3U.S. Department of Energy, A Review of the Environmental Management
Program (Washington, D.C.: Feb. 4, 2002).
reduce the total cost of the program by an estimated $50 billion.4 DOE
also committed to a strict schedule for timely completion of its cleanup
activities by 2035, 35 years earlier than called for in previous plans. To
expedite the acceleration of activities under this new plan, DOE said it
would need increased funding for its cleanup program in the first 3 years
of the accelerated approach-from fiscal years 2003 through 2005-after
which funding would begin to decline. DOE estimated that by fiscal year
2008, it will have reduced its annual funding requirements by one-third,
to approximately $4.5 billion per year (constant 2003 dollars), although
the actual amounts requested in the budget would differ due to inflation.
To improve performance monitoring and reporting on its cleanup activities,
DOE developed and began reporting on progress toward reducing
environmental risks primarily through 16 risk reduction measures that DOE
refers to as "gold chart metrics." These measures track progress toward
completing cleanup activities, such as the quantities of waste disposed of
and the number of buildings demolished at each DOE site.5 DOE also uses an
earned value management system to monitor progress of about 60 large
cleanup projects. Earned value provides DOE managers with information
about whether budgeted work was performed within cost and schedule
parameters. Following findings by the Office of Management and Budget
(OMB) in a performance review during fiscal year 2005 stating that DOE had
not developed adequate annual cost and schedule performance measures to
monitor progress towards completing the cleanup program, DOE has been
working to more fully implement its
4According to DOE, the department's adjusted cost estimates of both
cleanup and longterm stewardship work in 2001 and 2003, were $192 billion
(before accelerated strategy) and $142 billion (under its accelerated
strategy), in DOE's "2003 constant dollars," respectively, and resulted in
the $50 billion cost reduction. Although DOE's $50 billion estimate was
not adjusted for the time value of money, it is the cost reduction
estimate that DOE has cited publicly, such as in a November 2002 public
meeting of the Environmental Management Advisory Board in Washington,
D.C., and a March 2003 congressional testimony before the House
Appropriations Committee, Subcommittee on Energy and Water Development, so
it is used throughout this report. When it implemented its accelerated
strategy, DOE was managing to a $129 billion lifecycle cost, which is the
2003 estimate of $142 billion without long-term stewardship costs.
5DOE's risk reduction measures address the following 16 cleanup
activities: packaging plutonium, packaging enriched uranium, packaging
plutonium and uranium residues, packaging depleted uranium, packaging
high-level solid wastes, packaging spent nuclear fuels, eliminating liquid
tank wastes, closing waste tanks, disposing of transuranic wastes,
disposing of low-level and low-level mixed wastes, remediating release
sites, eliminating material access areas, removing nuclear facilities,
removing radioactive facilities, removing industrial facilities, and
closing geographic sites.
earned value management system. This work includes ensuring all
mission-related projects are covered by earned value management and
monitoring these projects against their long-term costs, rather than the
contract period, as DOE currently does.
Given the significant cost of cleaning up DOE's wastes and the importance
of effectively managing the cleanup effort, you asked us to review the
progress DOE has made under its accelerated cleanup plan. Specifically,
our report examines (1) the progress DOE has made in accelerating cleanup
at its sites, (2) the likelihood that DOE will achieve its estimated $50
billion in cost reductions, and (3) whether DOE's performance reporting
allows for a full understanding of progress toward achieving the
accelerated cleanup plan goals.
To determine what progress DOE has achieved under its accelerated cleanup
plan, we obtained and analyzed DOE's cost, schedule, and earned value data
for each site and each project. In addition, we determined how DOE
developed its performance measures. We also obtained cost, schedule, and
performance information on selected projects from five DOE sites chosen on
the basis of location, cost, and type of waste-the Hanford Site in
Washington state; the Savannah River Site in South Carolina; the Idaho
National Laboratory in Idaho; the Miamisburg Closure Project in Ohio, and
the West Valley Demonstration Project in New York state. To determine the
basis of DOE's estimated $50 billion in cost reductions, we obtained and
evaluated information regarding the changes that DOE made to its cleanup
program and DOE's plan to implement those changes. We also obtained and
analyzed DOE's cost estimates to determine how, where, and when DOE
expects to reduce the cost and schedule for the cleanup work. We did not
adjust the cost estimates to correct for the time value of money or the
effect of inflation. To evaluate DOE's performance measures, we reviewed
reports and studies on performance measurement and discussed with DOE
officials how the department develops and uses its performance measures.
We also reviewed and analyzed DOE's most recent performance reports and
compared that information to the actual progress documented at various DOE
sites. To assess the reliability of the data provided by DOE, we obtained
and analyzed information about the methods for compiling cost, schedule
and performance data, and steps taken to ensure its accuracy and
completeness from the sites we included in our analysis. A more detailed
description of our scope and methodology is presented in appendix I. We
performed our work between June 2004 and July 2005 in accordance with
generally accepted government auditing standards, including an assessment
of data reliability.
Results in Brief
DOE has made progress in the 2 years since it implemented the accelerated
cleanup plan, but the most difficult cleanup challenges remain.
Specifically, by March 2005, 13 of the 16 risk reduction measures-
including packaging nuclear materials for disposition, removing buildings,
and disposing of low-level and low-level mixed waste-had met, nearly met,
or were ahead of the accelerated cleanup schedule. In contrast, DOE was
behind its accelerated schedule for 3 challenging and costly
activities-disposing of transuranic waste, disposing of radioactive tank
waste, and closing tanks that had contained radioactive wastes. These 3
cleanup activities often had technical problems, such as developing waste
separation technology, or regulatory issues such as determining when a
storage tank is clean enough to close. Furthermore, DOE has had problems
with other treatment and disposal activities not reflected in its
performance measures, such as delays in shipping plutonium from sites,
resulting in additional costs to continue storing and securing the
material until long-term storage issues are resolved.
DOE will likely not fully achieve its projected $50 billion in cost
reductions, a key goal of the accelerated cleanup plan, for three main
reasons. First, DOE's method for calculating cost reductions does not take
into account the time value of money. Considering the time value of money,
the actual cost reduction from the accelerated plan, if implemented as
intended, would likely be much lower. For example, in 2004, we
recalculated DOE's estimated cost reduction for the Hanford waste
treatment plant, which DOE estimated to be $20 billion, not considering
the time value of money. However, considering the time value of money, the
estimated cost reduction was reduced by about 40 percent to about $12
billion. Second, DOE based the estimated cost reductions on the assumption
that there would be improvements in cleanup technology, revisions to
contracting strategies, and changes in regulatory requirements that govern
the level of required cleanup. However, evidence is mounting that some of
the improvements and regulatory changes may not be realized. For example,
some of the technologies, such as new methods for treating a portion of
the tank waste at Hanford, are not fully tested and the costs to operate
the technology are not known. Although ultimately these technologies may
be effective in treating waste, it is uncertain whether anticipated cost
reductions will be realized. Additionally, regulators-such as the state of
New Mexico and the Environmental Protection Agency- have not yet approved
some of DOE's proposed regulatory revisions, such as its plan to send
certain types of tank waste now located at the Idaho National Laboratory
to the Waste Isolation Pilot Plant in New Mexico. Third, DOE expected
nearly all of the total cost reductions to come from accelerating cleanup
at three major sites-Hanford in Washington state,
Savannah River in South Carolina, and the Idaho National Laboratory.
However, DOE is behind schedule in some of its cleanup activities at these
sites and cost estimates for completing the work are rising. In addition,
DOE's planned high-level waste repository at Yucca Mountain in Nevada is
expected to be delayed at least 2 years, which could also increase cleanup
costs. Recognizing the uncertainty of achieving the full $50 billion cost
reduction it committed to achieving with its accelerated plan, DOE has
recently stopped citing a specific estimate of potential cost reductions
it believes it can achieve; however, the department still believes it will
achieve some cost reductions with its accelerated strategy.
DOE's performance reporting does not clearly reflect progress made toward
the overall cleanup plan goals of a $129 billion total program cost and a
2035 completion date, because of two main shortcomings.
o First, in reporting on its progress, DOE does not establish how
accomplishments made in addressing wastes, which DOE measures through its
risk reduction measures, are associated with the costs incurred, which DOE
measures through its cost performance measures. This makes it difficult to
clearly understand whether cleanup activities, such as the amount of waste
disposed of, were accomplished within projected costs. For example, as of
March 2005, DOE's Idaho National Laboratory was more than one year-or more
than 1,000 shipments- behind the planned number of shipments of
transuranic waste to a repository. However, DOE had no corresponding
indicator to show how this delay has affected estimated costs.
o Second, DOE's performance reporting does not clearly highlight that
certain performance measures are more important than others in indicating
whether DOE is on track toward achieving its overall performance goals.
For example, DOE expects a significant portion of its cost reductions to
result from improvements in addressing radioactive tank wastes and
transuranic wastes. Radioactive tank wastes alone account for almost $30
billion of DOE's estimated $50 billion cost reductions-or 60 percent-under
the accelerated plan. Although DOE's performance measures show that DOE
has fallen behind in both transuranic and radioactive tank waste cleanup
activities, its performance reporting does not highlight the relative
significance that these critical measures have in providing a full
understanding of overall progress toward the goals of the accelerated
cleanup plan. Falling behind in these activities could significantly add
to overall cleanup costs and, therefore, make it difficult for DOE to
achieve its $129 billion overall cost target.
We are recommending that the Secretary of Energy ensure that DOE's
performance reporting (1) includes a clearer, discernible relationship
between cleanup accomplishments and cost and (2) highlights the status of
performance measures that are the most critical to achieving cost and
schedule goals. DOE agreed with our recommendations to ensure its
performance reporting provides a clearer linkage between cleanup
accomplishments and costs incurred, and highlights performance measures
most critical to achieving its accelerated goals.
Background The Department of Energy's Office of Environmental Management
is responsible for addressing nuclear and hazardous wastes, including some
of the most dangerously radioactive wastes in the world, and special
nuclear materials, such as plutonium, resulting from more than 50 years of
nuclear weapons production. DOE has planned or implemented a variety of
treatment and disposal approaches, depending on the nature and extent of
the waste (see table 1).
Table 1: Types, Estimated Quantities, and Planned Treatment and Disposal
Approach for DOE's Surplus Special Nuclear Materials and Waste Materials
Planned treatment and Description Estimate disposal approach
Special nuclear materials
Enriched uranium 8,428 containers Blend high quality material
into reactor fuel.
Plutonium 5,850 containers Stabilize, package, and
Plutonium/uranium 107,782 dispose in either the
residues kilograms transuranic or high-level
waste repositories.
Depleted uranium and 685,161 metric
uranium tons Convert to a stable form,
package, and dispose as low-
level waste or reuse.
Radioactive tank wastea
Liquid, saltcake, and sludges stored in tanks
88 million gallons Separate waste into highlevel and low-activity
portions. Stabilize the highlevel portion in a glasslike material
(vitrification) and package in canisters and then dispose in planned
highlevel waste repository. Treat low-activity portion and bury in near
surface burial grounds, generally at sites where it is currently located.
Sodium-bearing tank waste 900,000 gallons Treat, package, and dispose in a
geologic repository.
Vitrified waste 18,735 canisters Dispose of vitrified waste at planned
high-level waste repository.
Solidified low-activity waste About 1,000,000 cubic Dispose in near
surface burial
b
meters grounds at sites where it is currently located.
Dried high-level waste called 4,400 cubic meters Treat, if necessary,
calcine repackage and dispose in planned repository.
Transuranic waste
Various types of materials 141,892 cubic meters Treat and repackage, as
contaminated with plutonium and necessary, and dispose in
other man-made elements and transuranic waste repository.
may also contain hazardous
waste
Planned treatment and Description Estimate disposal approach
Low-level and low-level mixed waste
Various waste material including
1,190,463 cubic
Treat, repackage and bury in DOE or commercial near surface disposal
facilities. Actual techniques to be used depend on the material.
soil, building debris, operational by-products
meters
Hazardous waste
Chemicals, heavy metals and
No comprehensive
Recycle, incinerate, or use other treatment approach and dispose at DOE or
commercial facilities.
other materials measure
Spent nuclear fuel
Fuel rods stored in pools and dry
2,420 metric tons Prepare fuel, package, and dispose in planned high-level
waste repository.
storage casks
Facilities Waste site
Nuclear facilities such as 515 facilities Decontaminate and
reactors, processing decommission followed
facilities by
and storage buildings demolition or reuse.
Radioactive facilities
such as labs, shops, and 822 facilities
warehouses
Industrial facilities of 3,103 facilities
many different types
Underground radioactive 241 tanks Empty tanks and fill
waste with
tanks grout or other
material to
prevent collapse.
Burial grounds, dried ponds, 10,416 sites Depending on the nature and
spills and leaks, and many other extent of contamination, types of sites
approach varies from removal
and disposal of waste material to release of site for reuse.
Source: Compiled by GAO from DOE data.
aDOE has traditionally managed all of the wastes in its tanks as
high-level waste because the waste resulted primarily from the
reprocessing of spent nuclear fuel and contains significant amounts of
radioactivity. However, DOE based its approach to treatment and disposal
of this waste on separating the high-activity portion from the
low-activity portion, allowing DOE to use less costly treatment approaches
for the majority of what is now managed as high-level waste. In this
report, we refer to the tank waste-which DOE manages as high-level
waste-as "radioactive tank waste."
bDOE's lifecycle estimate of solidified low-activity waste is based on
anticipated separation efficiencies and treatment processes.
Numerous legal and regulatory requirements govern various aspects of DOE's
cleanup effort. Many of the cleanup activities are governed by the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, and the Resource Conservation and Recovery Act of 1976,
as amended, through various agreements with regulators. Additional laws
affecting high-level waste and transuranic wastes are the Nuclear Waste
Policy Act of 1982, as amended, which establishes the program to develop a
geologic repository for storing high-level waste and spent nuclear fuel,
and the Waste Isolation Pilot Plant Land Withdrawal Act, which establishes
the requirements for operation of a repository for transuranic wastes. In
addition, under the Federal Facility Compliance Act of 1992, DOE has
entered into agreements with federal and state regulators that establish
milestones for accomplishing specified cleanup activities and a mechanism
to obtain approval to change priorities and approaches. For example, under
the agreement at Hanford, 10 percent of the tank waste is to be processed
by 2018 and a report on the plans for the remaining 90 percent was due to
regulators in January 2005, but now has been extended to June 30, 2006.
DOE, under the direction of the Secretary of Energy, carries out its
environmental cleanup program under the leadership of the Assistant
Secretary for Environmental Management and in consultation with a variety
of stakeholders. In addition to U.S. Environmental Protection Agency and
state environmental and health agencies that have regulatory authority in
states where the sites are located, stakeholders include county and local
governmental agencies, DOE community advisory groups, and Native American
tribes. DOE's Office of Environmental Management is primarily responsible
for cleaning up the wastes, largely through the use of contractors
overseen by DOE staff. In addition, DOE's Office of Civilian Radioactive
Waste Management is responsible for the high-level waste repository being
developed at Yucca Mountain in Nevada, which is the repository where DOE
plans to dispose of spent nuclear fuel and high-level waste. DOE's Office
of Legacy Management, created in 2003, is responsible for managing DOE's
postclosure responsibilities at its former nuclear weapons production
sites to ensure the continued protection of human health and the
environment.
Progress in Accelerating Cleanup at DOE's Sites Has Been Mixed
Over 2 years after implementing the accelerated cleanup plan, DOE has made
progress in a number of areas, but the most difficult cleanup challenges
remain. By March 2005, DOE was ahead or on its planned schedule in 13 of
16 risk reduction activities.6 Activities that had met or were ahead of
the accelerated schedule included packaging nuclear materials for
disposition, disposing of low-level and low-level mixed waste, and
removing buildings. In some cases where DOE was meeting or exceeding
current risk reduction targets, only a small percentage of the overall
work had been accomplished. In contrast, DOE was behind its schedule for
key activities that will have a major impact on DOE's overall cleanup
goals. These activities involve some of the more complex cleanup
activities, including disposing of transuranic waste, treating high-level
liquid waste, and closing tanks that had contained radioactive wastes.
These activities account for at least 30 percent of the total expenditures
DOE expects on cleanup and more than half of the cost reductions it hopes
to achieve under the accelerated cleanup plan. Finally, DOE has had
problems with other treatment and disposal activities not reflected in its
performance measures, such as significant delays in shipping plutonium
from sites to final storage locations, and delays in design and
construction of key facilities. Taken together, these results suggest that
DOE may already be at risk of not achieving its accelerated cleanup goals.
6As previously noted, DOE also uses an earned value management system to
monitor large projects' progress toward cost and schedule goals. An earned
value system, when fully implemented, is intended to provide managers the
ability to examine cost, schedule and performance accomplishments on a
project. We do not discuss DOE's earned value as a measure of progress in
this report for two reasons. First, DOE has not fully implemented its
earned value management system to measure all of its mission-related
projects against a lifecycle cost estimate. In response to OMB
recommendations noted above, DOE is currently working toward this goal.
Second, we and others have raised concerns about the reliability of DOE's
earned value data. For example, the National Research Council reported in
2004 that the Department's earned value management information may not be
completely accurate. See National Academy of Sciences, Progress in
Improving Project Management at the Department of Energy: 2003 Assessment
(2004) (Washington, D.C.: 2004). In addition, we reported in March 2005
that for several major projects, earned value management principles had
not been properly implemented to measure cost and schedule performance.
See U.S. Government Accountability Office, Department of Energy: Further
Actions Are Needed to Strengthen Contract Management for Major Projects,
GA0-05-123 (Washington, D.C.: Mar. 18, 2005).
Progress Has Been Made on Several Cleanup Activities, Such as Disposing of
Low-Level Waste and Removing Buildings
DOE's cleanup was ahead of its planned accelerated schedule for several
activities, and other activities appeared to be on track. As of March
2005, DOE was ahead of schedule in 9 risk reduction measures that fell
into the following cleanup categories7-(1) tearing down and disposing of
facilities, (2) packaging and disposing of special nuclear materials, (3)
cleaning up low-level and low-level mixed waste, and (4) completing
cleanup of specific locations where releases of contamination occurred.
For example, in disposing of low-level and low-level mixed waste, DOE was
more than 181,000 cubic meters-or 35 percent-ahead of its accelerated
target goal. Table 2 shows the progress DOE has made in four categories,
as of March 2005.
Table 2: Cleanup Activities for Which DOE Was Ahead of Schedule as of
March 2005
Cumulative Cumulative units Cumulative units completed units
planned as as of ahead as Risk reduction measure (unit Lifecycle of March
March of March measured) totala 2005 2005 2005
Tearing down and disposing of facilities Special nuclear materials
Low-level/low-level mixed waste
Industrial facilities (number
complete) 3,103 734 985
Nuclear facilities (number complete) 515 27 44
Radioactive facilities (number
complete) 822 180 219
Plutonium packaged (number of
containers) 5,850 5,724 6,314
Enriched uranium packaged
(number of containers) 8,428 3,373 4,508 1,135
Plutonium/uranium residues
packaged (kilograms packaged) 107,782 107,744 107,752 8b
Depleted uranium and uranium
packaged (metric tons) 685,161 4,915 9,293 4,378c
Low-level/low-level mixed waste
disposed (cubic meters) 1,190,463 524,981 706,587 181,606
7For purposes of this report, we grouped DOE's 16 risk reduction measures
into eight broad categories.
Cumulative Cumulative units Cumulative units completed units
planned as as of ahead as Risk reduction measure (unit Lifecycle of March
March of March measured) totala 2005 2005 2005
Areas of Contamination
Remediation complete (number of
contamination areasd) 10,416 5,425 5,605 180
Source: Compiled by GAO from DOE data.
aDOE's lifecycle totals are based on estimates of the total amount of
material required to be cleaned up. In 2003, these estimates were placed
under DOE's configuration control system-that is, the estimates cannot be
changed unless approved by a DOE Environmental Management review board.
bThis measure was slightly ahead of schedule and nearly complete.
cAs of March 2005, DOE had packaged less than 2 percent of the lifecycle
inventory for depleted uranium. A rapid increase in packaging is planned
in 2009.
dContaminated areas include burial grounds, dried ponds, and spills.
These risk reduction measures show that DOE has made progress at an
accelerated pace for a variety of cleanup activities that often require
more readily available technology or standard treatment processes. For
example, facility disposal primarily involves decontaminating and tearing
down a building, and disposing of the rubble at established disposal
sites. In addition, DOE's measures show that it had nearly completed its
activity to package plutonium and uranium residues, a highly dangerous
activity due to the potential for a nuclear accident or worker exposure.
While DOE has made progress in several areas, a significant part of the
progress was due to accelerated activities at relatively few sites and
reflects completion of only a small percentage of the overall work to be
performed. For example, DOE's Rocky Flats site alone accounted for more
than 180,000 of the total 181,600 cubic meters of low-level and low-level
mixed waste that DOE disposed of ahead of schedule. Similarly, more than
half of the progress made ahead of schedule in remediating potential
contamination areas was due to work performed at Rocky Flats. And although
DOE made progress on many of its risk reduction measures, some individual
sites did not make progress at an accelerated pace. For example, although
DOE was ahead of schedule in disposing of low-level and low-level mixed
waste, both the Oak Ridge site and the Lawrence Livermore National
Laboratory were slightly behind their site targets on this measure. In
addition, DOE's progress in a few areas reflected achieving only a small
portion of the overall work to be completed. The most extreme example
shows that DOE was ahead in packaging depleted uranium; however, this
reflects about 1 percent of the nearly 700,000
metric tons to be packaged. In tearing down and disposing of nuclear
facilities, DOE had completed about 9 percent of the 515 facilities it has
to clean up.
In addition to areas in which DOE was ahead of schedule, cleanup progress
was on track or nearly on track for four risk reduction measures in the
following cleanup categories: (1) packaging high-level waste for disposal,
(2) cleaning up special nuclear materials, (3) packaging spent nuclear
fuel for disposal, and (4) eliminating geographic sites (see table 3).
These cleanup activities involve difficult and hazardous work.
Table 3: Cleanup Activities for Which DOE Was Generally on Schedule as of
March 2005
Cumulative Cumulative units Status of units completed cumulative
planned as as of units as of Risk reduction measure (unit Lifecycle of
March March March measured) totala 2005 2005 2005
Radioactive tank waste
High-level waste packaged for
disposition (number of containers)b 18,735 2,118 2,116
Special nuclear materials
c
Material access areas eliminated
(areas eliminated) 14 7 8
Spent nuclear fuel
Spent nuclear fuel packaged for disposition (metric tons of heavy metal)
2,420 2,129 2,125
Site closures
Geographic sites eliminated (entire
site complete) 114 76 75 -1d
Source: Compiled by GAO from DOE data.
aDOE's lifecycle totals are based on estimates of the total amount of
material required to be cleaned up. In 2003, these estimates were placed
under DOE's configuration control system-that is, the estimates cannot be
changed unless approved by a DOE Environmental Management review board.
bWork accomplished under this cleanup activity reflects the processing,
vitrifying, and packaging of high-level waste sludge primarily at the
Savannah River Site.
cA material access area is a secure area that offers protection and
control for a variety of special nuclear materials.
dDOE was behind in closing the Salmon, Mississippi, site scheduled for
2003. Completion is expected in fiscal year 2005.
Making progress on cleanup activities is an important step in reducing
environmental risks and annual operating costs, and in demonstrating
results under the accelerated cleanup plan. DOE officials told us that
achieving cleanup results for these waste activities helps reduce future
mortgage costs such as surveillance and maintenance of unneeded
facilities, avoids potentially higher remediation costs in the future, and
demonstrates actual cleanup progress. To achieve such progress in reaching
its risk reduction goals, DOE took a number of steps including changing
the sequence of some cleanup activities to complete tasks earlier than
originally scheduled and reducing work scope where warranted for other
activities. Site officials credited the achievements to remediating
targeted areas such as contaminated burial grounds, waste sites,
facilities, and plutonium production reactors along the Columbia River at
Hanford and a variety of obsolete buildings at Idaho and Savannah River.
According to DOE officials at these sites, many of these areas were
scheduled for decommissioning and disposal in the future, but because they
were no longer needed, they were disposed of earlier than originally
planned. In addition, making progress in certain areas can free up funding
for use on other, more complex projects. For example, at DOE's Idaho
National Laboratory, officials told us that completing disposal of most of
its low-level and low-level mixed waste 2 years ahead of schedule has
allowed them to apply the funds originally planned for managing this waste
to other cleanup activities at the site.
Problems Have Occurred on Major Activities, Including Disposing of
Transuranic Waste and Radioactive Tank Waste and Shipping Plutonium to
Storage Locations
In contrast to progress on cleanup activities for which DOE is ahead of or
on schedule, DOE is having difficulty with other cleanup work that could
have a major impact on its accelerated cleanup goals. As of March 2005,
DOE was falling behind in three risk reduction measures under two cleanup
categories that account for a significant portion of the potential cost
reductions DOE was expecting-radioactive tank waste and transuranic waste.
See table 4 for a list of cleanup activities for the two waste types on
which DOE has fallen behind since implementing the accelerated cleanup
plan.
Table 4: Cleanup Activities for Which DOE Is Behind the Accelerated
Schedule as of March 2005
Cumulative Cumulative Cumulative Risk reduction units planned units units
measure (unit Lifecycle as of March completed as behind as of measured)
totala 2005 of March 2005 March 2005
Radioactive tank waste Transuranic waste
Liquid waste eliminated
(gallons)b 88,000,000 2,960,000 0 -2,960,000
Liquid waste tanks
closed (number of tanks) 241 13 2 -11
Transuranic waste
disposed (number of
cubic meters) 141,892 30,926 24,461 -6,465
Source: Compiled by GAO from DOE data.
aDOE's lifecycle totals are based on estimates of the total amount of
material required to be cleaned up. In 2003, these estimates were placed
under DOE's configuration control system-that is, the estimates cannot be
changed unless approved by a DOE Environmental Management review board.
bWhile this cleanup activity is active at DOE's Savannah River Site, no
liquid waste has yet been eliminated, primarily because technology has not
been fully developed and regulatory issues have not been fully resolved.
DOE efforts to treat and dispose of radioactive waste from its tanks are
primarily at three DOE sites-Hanford, Idaho, and Savannah River.8 However,
because the Hanford and Idaho sites have not yet begun to treat their
liquid radioactive tank waste, the measure for eliminating liquid waste
from underground tanks applies to the Savannah River Site. Although
Savannah River has been processing radioactive tank waste sludge since
1996, it was behind in processing and eliminating from its tanks nearly 3
million gallons of liquid primarily because the site was still developing
waste separation technology and lacked operational treatment facilities
for disposing of liquid tank waste.9 While all three of DOE's sites had
performance goals for closing radioactive waste tanks through March
8DOE's West Valley site completed treatment of its high-level tank waste
in 2002.
9As part of its radioactive tank waste treatment and disposal strategy,
DOE plans to eliminate a large volume of low-activity waste in the tanks
in its Salt Stone Facility where the waste is permanently immobilized on
site using a concrete material called grout. However, efforts to operate
this facility have been delayed.
2005, no tanks have been closed since 1997.10 Plans to close tanks at the
three sites have been delayed because DOE continues to work with
regulators to reach agreement on closure requirements and due to a legal
challenge to DOE's tank closure strategy. DOE's authority to proceed with
its tank closure plans at its Savannah River Site and the Idaho National
Laboratory was resolved by federal legislation enacted in 2004; however,
the law excluded the Hanford Site.11 Even so, Savannah River and the Idaho
National Laboratory are still behind schedule in preparing waste removal
facilities and obtaining regulatory approval to close the tanks. Although
DOE is preparing 12 of its 241 radioactive waste tanks for closure, no
tanks have actually been closed since the accelerated cleanup plan was
implemented in 2003.
Transuranic waste is present at several DOE sites, but lagging performance
is due primarily to the Idaho National Laboratory. Disposing of
transuranic waste involves specialized characterization and treatment,
packaging, and shipping in specially designed containers to a repository
in New Mexico. As of March 2005, DOE had fallen behind its accelerated
schedule by about 6,500 cubic meters, achieving about 80 percent of the
goal. Delays in Idaho's transuranic waste disposal were primarily due to
contractor performance problems in preparing the waste for shipment and
difficulties in implementing a specially designed treatment technology.
The activities and projects for which DOE was falling behind the
accelerated schedule involve technically complex and costly cleanup
activities, and usually require specialized treatment technologies.
Radioactive tank waste, for example, involves treating highly radioactive
waste generated from the reprocessing of reactor fuel that contains a mix
of hazardous and radioactive constituents, and requires relatively complex
treatment technologies such as waste separation and vitrification.
Cleaning up radioactive tank waste accounts for about 30 percent-or almost
$40 billion-of DOE's estimated total cleanup costs. To date, key
facilities DOE needs to use to treat and dispose of this waste are still
being
10The Savannah River Site closed two tanks in 1997. DOE planned to close
11 additional tanks through March 2005. However, this has been delayed due
to legal and regulatory issues, discussed in this paragraph.
11Pub. L. No. 108-375, S: 3116 authorizes DOE to pursue activities that
would allow tank closure at its Savannah River Site and the Idaho National
Laboratory, subject to certain criteria, existing cleanup orders and
agreements, and monitoring by the Nuclear Regulatory Commission. Section
3116 states that the authority does not apply to sites in the state of
Washington, where the Hanford Site is located.
designed and built, and waste treatment technologies continue to be
developed and tested. Similarly, some of the greatest risks, cleanup
costs, and technical challenges involve the disposal of transuranic waste.
This waste often requires an extensive retrieval, characterization, and
treatment process as well as repackaging in containers before it can be
shipped to and disposed of in the designated geologic repository for
transuranic waste in New Mexico. Transuranic waste disposal is behind
schedule and DOE will have difficulties catching up if this activity
continues to fall behind.
In addition to the cleanup activities that DOE measures, other cleanup
activities not included in DOE's risk reduction measures are experiencing
problems further impacting overall cleanup progress. Although no
comprehensive list of these cleanup activities was available from DOE, we
found several examples, some of which are listed below, that involve
constructing facilities critical to DOE's cleanup mission and relocating
certain wastes or nuclear materials (see table 5).
Table 5: Selected Cleanup Activities Experiencing Problems That Are Not
Included in DOE's Risk Reduction Measures
Potential impact on Sites Project or activity Problem or uncertainty
future progress
Hanford Shipment of plutonium Planned shipping of Increased costs for to
offsite location plutonium to designated extended onsite site has been
deferred storage and security while long-term storage requirements issues
are resolved
Hanford Construction of Delays primarily due Increased
waste to
treatment plant contractor performance construction
costs,
problems and design extension of
facility
changes to comply with startup beyond
2011
seismic requirements
Idaho Construction of
Storage of spent storage
National nuclear fuel facility is behind
Laboratory schedule
At least a 3-year schedule delay in facility construction and operation
and potential cost increases. Delays may be offset by delay in opening the
planned disposal repository
Potential impact on future progress
Sites Project or activity Problem or uncertainty
Miamisburg Cleanup of landfill Disagreement with local
Increased cleanup costs
community over further cleanup of landfill
West Valley Decommissioning of Dispute over who is
Increased costs and extension of schedule beyond 2012 contaminated process
facility
responsible
Source: Compiled by GAO from DOE data.
These cleanup activities can involve significant technical and operational
problems. Even though DOE does not track the status of these problems in
its risk reduction measures, DOE officials are aware of these problems and
are working to resolve them. However, because these problems remain
unresolved and their potential impact on the accelerated cleanup plan is
uncertain, DOE may already be at risk of not achieving the kind of
progress it predicted under its accelerated cleanup plan. For example, the
Hanford Site must construct key facilities and test complex technologies
before it can treat 55 million gallons of radioactive tank waste.
Recently, work on this project has been delayed due to engineering and
contractor performance problems, leading DOE to reevaluate its ability to
complete the project under current cost and schedule constraints. DOE
expects to revise project cost and schedule goals in fiscal year 2006.
Despite these problems, DOE does not have a risk reduction measure that
shows the progress of these activities or their potential impact on
overall cleanup progress. Consequently, DOE will not be able to quantify
progress in treating radioactive tank waste at Hanford until facilities
are operational- now planned for 2011, or later. Similarly, DOE's strategy
under the accelerated cleanup plan to consolidate Hanford's plutonium
offsite has been deferred while long-term storage issues are being
resolved. DOE Hanford officials estimate that if the plutonium remains
on-site, the additional costs to continue storing and securing the
material may amount to more than $2 billion. Despite this problem, DOE's
plutonium risk reduction measure, which focuses on completing
stabilization and packaging of the material, shows that this cleanup
activity was ahead of schedule.
When considered together, the results of DOE's risk reduction measures for
two main types of cleanup activities-radioactive tank waste and
transuranic waste, which are behind schedule and require additional
cleanup activities-suggest that DOE may already be at risk of not
achieving its overall risk reduction goals. Each of these problems
represents a significant obstacle to DOE successfully completing cleanup
activities under its accelerated plan. Success hinges on DOE's ability to
DOE Is Unlikely to Achieve Its Estimated $50 Billion in Cost Reductions
continue reducing risks by making cleanup progress and keeping costs and
schedules within the constraints of DOE's plan.
DOE's accelerated plan is unlikely to achieve the $50 billion cost
reduction goal for three main reasons. First, DOE's method for calculating
cost reductions has limitations that raise questions about its
reliability. The actual cost reduction from the accelerated cleanup plan,
if implemented as intended, would likely be much lower. Second, the
accelerated plan is based on a number of key assumptions about
improvements to the cleanup approach-such as shortened schedules and
technology improvements-that may not occur as planned. Third, the three
sites that account for most of the cost reduction are already facing
challenges and have either increased their cost estimates or plan to
increase their funding requests, raising doubts about DOE's ability to
achieve its full expected cost reductions. While DOE believes the
accelerated cleanup plan will reduce costs, the actual amount of those
cost reductions is uncertain.
DOE Estimates Overstated
Potential Cost Reductions
DOE calculated its estimated $50 billion in cost reductions by comparing
its fiscal year 2001 cost estimate for the program-the last cost estimate
before DOE implemented its accelerated strategy-with its fiscal year 2003
cost estimate for the program-the first complete cost estimate under the
new accelerated strategy.12 DOE's 2001 cost estimate for the program was
$192 billion, reflecting its prior approach to cleaning up its radioactive
and hazardous wastes by 2070.13 The 2001 estimate represented forecasts
generated by DOE's field staff at each of its sites and for each of its
activities. Aggregating these site-developed estimates, DOE arrived at its
2001 cost estimate for the program. In contrast, to develop its 2003
estimate-reflecting an accelerated approach-DOE provided several of the
sites with target costs that the sites were to work towards meeting.14
These target costs were based on assumptions from the headquarters
officials about how and when the work should be completed. Under this
12DOE began implementing the accelerated plan in 2002, but the accelerated
cost estimates were not in place until fiscal year 2003.
13In 2001, when the estimate was developed, the scope of work included
both waste cleanup activities and postcleanup stewardship activities at
the sites once the cleanup work is complete.
14According to DOE officials, sites were allowed to request a higher
target cost estimate, but had to have this approved by the Assistant
Secretary. Four sites did make this request for their 2003 cost estimate.
new strategy, DOE's 2003 estimate for completing the cleanup work was $142
billion. DOE subtracted the 2003 estimate for the new strategy ($142
billion) from the 2001 estimate under the original strategy ($192 billion)
to
15
arrive at its $50 billion cost reduction estimate.
However, DOE's estimated $50 billion in cost reductions from accelerating
cleanup at its sites may not be fully reliable for several reasons:
o Pre-acceleration baseline cost estimate may be unreliable. In a
February 2002 review of the cleanup program, DOE specifically acknowledged
that its cost estimate of the program did not provide a reliable estimate
of project costs. DOE officials explained that the site-level estimates of
cleanup work were based on calculations that were highly uncertain beyond
the life of the contracts. We and others have previously raised concerns
that DOE's cleanup cost estimates may not be fully reliable. In our prior
work, we noted that in preparing baseline cost estimates, DOE lacked a
standard methodology for sites to use.16 Further, in the past, DOE's
Office of Inspector General and the National Research Council have raised
similar concerns about DOE's estimates being incomplete and
17
unreliable.
o Estimates did not include contingency costs. Because of the high
uncertainty surrounding the cleanup work, DOE computes additional
uncertainty costs-called contingency estimates18-which are added to the
15To make these figures comparable, DOE made some adjustments. For
example, DOE subtracted approximately $10 billion from its 2001 cleanup
estimate of $202 billion to account for work that was included in its
pre-accelerated scope but had not yet been included in 2003, and added
approximately $13 billion of long-term stewardship work to its 2003
cleanup estimate of $129 billion. DOE currently manages to the $129
billion cost estimate. For comparison purposes, the adjusted estimates of
both cleanup and long-term stewardship work in 2001 and 2003 were $192
billion and $142 billion, in DOE's stated "2003 constant dollars,"
respectively. See also footnote 2.
16U.S. General Accounting Office, Nuclear Waste: Challenges to Achieving
Potential Savings in DOE's High-Level Waste Cleanup Program, GAO-03-593
(Washington, D.C.: June 17, 2003).
17U.S. Department of Energy Office of Inspector General, Audit of the U.S.
Department of Energy's Consolidated Financial Statements for Fiscal Year
1998, IG-FS-99-01 (Germantown, Md: Feb. 25, 1999). See also National
Research Council, Improving Project Management in the Department of Energy
(Washington, D.C.: June 1999).
18As defined in DOE's fiscal year 2004 financial statements, contingency
estimates are intended to account for the uncertainties associated with
the technical cleanup scope of the program.
overall cleanup estimates in its annual financial statements. These costs
are intended to cover any underestimated or unforeseen cleanup work. In
2001, DOE estimated that because of uncertainty related to the cleanup, it
would add a contingency estimate equal to an additional 17 percent of its
cleanup cost estimate. In contrast, following implementation of the
accelerated plan, DOE estimated in 2003 that increased uncertainty called
for nearly doubling the contingency estimate to 29 percent of the cleanup
cost estimate. However, when calculating its expected cost reduction under
the accelerated plan, DOE did not include either of these contingency
estimates in its comparison of the two estimates. Doing so would likely
have lowered the estimated cost reductions to below $50 billion.
o No present value analysis was performed. DOE's estimate of potential
cost reductions did not consider the time value of money. As we noted in
our previous report,19 according to standard economic analysis and
guidance developed by OMB,20 cost-comparison analyses should be based on
lifecycle costs of competing alternatives with future costs discounted to
present value; that is, adjusted both for inflation and the time value of
money.21 According to OMB's cost-estimating guidance, DOE should have
first converted the annual expected costs of cleanup for both its 2001 and
its 2003 estimates to their present value in 2003, and then compared the
two present-value costs. While DOE's comparison of its estimates is based
on values that are expressed in constant 2003 dollars (to account for
inflation), DOE did not adjust its figures to account for the time value
of future costs.22 Had DOE compared present value estimates for 2001 and
2003, the resulting cost reduction would likely have been much lower. For
example, when we adjusted DOE's estimated $20 billion cost reduction for
19U.S. General Accounting Office, Nuclear Waste: Absence of Key Management
Reforms on Hanford's Cleanup Project Adds to Challenges of Achieving Cost
and Schedule Goals, GAO-04-611 (Washington, D.C.: June 9, 2004).
20OMB Circular No. A-94, Guidelines and Discount Rates for Benefit-Cost
Analysis of Federal Programs (Washington, D.C.: Oct. 29, 1992).
21DOE's own guidance requires a present value analysis to discount future
dollars to reflect the time value of money. Present value analysis is a
method used to evaluate alternative expenditures that occur at different
times and put them on a common basis for comparison. It goes beyond
adjusting the values for inflation, which is a correction for changes in
the purchasing power of the dollar. Therefore, conducting a present value
analysis goes beyond computing cost estimates in constant year dollars.
22In addition, DOE's cost estimate includes actual (current) dollars for
pre-2001 values, rather than calculating these in constant 2003. As a
result, DOE's 2001 and 2003 baselines do not fully reflect constant 2003
dollars.
the Hanford waste treatment project to consider the time value of money,
the potential cost reduction decreased by about 40 percent-to about $12
billion.
Cost Reductions Were Based on Assumed Performance Improvements That May Not
Occur
As part of its plan to reduce the expected cost of the cleanup and
eliminate risks more quickly, DOE made several assumptions about ways to
improve the cleanup work. These assumptions included (1) developing new
technologies, such as a technology to allow more efficient vitrification
of some wastes; (2) implementing new acquisition strategies that encourage
and reward contractor efficiencies, such as performancebased contracts;
(3) revising site cleanup agreements to simplify treatment and disposal
requirements, such as reclassifying some wastes allowing for disposal on
site rather than remotely; and (4) completing work sooner than planned
thereby eliminating out-year costs.
Assumed improvements in DOE's cleanup approach resulted in DOE's estimated
$50 billion in cost reductions (see figure 1).
Figure 1: Contributions of Key Assumptions to DOE's Estimated $50 Billion
in Cost Reductions
Other
Revised cleanup agreements
Work finished soonera
Technology improvements
Revised contracting strategies
Source: GAO analysis of DOE data.
aWhen DOE collected its cost reduction data from each site, some of the
improvements related to finishing cleanup work sooner were also closely
tied to the other assumed improvements resulting in some overlap among the
categories.
The assumptions enabled DOE to develop revised cleanup cost estimates at
most sites that reflected cost reductions (see figure 2).
Figure 2: DOE's Expected Cost Reduction by Office
aIncludes both the Office of River Protection and the Richland Operations
office.
bDOE did not estimate large cost reductions from Rocky Flats because that
site had already implemented many of the accelerated strategies and
reduced its cost estimate before 2001.
cIncludes Headquarters and Program Direction costs.
dBecause of work transfers within the Office of Environmental Management,
some costs changed in 2003 at sites that closed before 2003.
Although these assumed improvements may have the potential to reduce
cleanup costs, many of them are still uncertain and may not occur. For
example,
o Technology improvements. DOE assumed that significant cost reductions
would result from improved technologies that would allow treatment and
disposal of waste faster and at lower costs. Nearly all of the estimated
cost reduction pertains to improvements in the technologies at the Idaho
National Laboratory and Hanford sites. For example, DOE expected a $4.7
billion cost reduction at the Idaho National Laboratory by using a
technology for separating a portion of the tank waste, but that technology
has still not been successfully tested and implemented on DOE tank waste.
Similarly, at the Hanford site, DOE is testing a technology that officials
estimated would speed up the stabilization of some low-activity wastes
reducing costs by an estimated $8.9 billion. However, the technology has
not been fully implemented or tested on Hanford's unique waste, and costs
of operating the new technology are not yet known, so the extent of cost
reductions DOE assumed could be incorrect. For example, an official for
the contractor developing the pilot plant to test this technology said the
project is already projecting cost increases and is currently estimated to
begin operating about 6 months late.
o Contract reform. DOE estimated that revised contracting strategies
would also result in significant cost reductions. However, at two of DOE's
largest sites-Savannah River and Hanford-DOE will not award some major new
contracts until 2006. Until then, the final price of DOE's new contracts
and any potential cost reductions associated with them are uncertain. For
example, DOE has assumed it will reduce overall costs by more than 20
percent under its new Savannah River Site contract. However, the details
and final cost of the contract will not be finalized until the contract is
awarded. External auditors acknowledged this uncertainty at Hanford in
their assessment of DOE's fiscal year 2004 environmental liabilities
estimate, noting that it was "not appropriate" to assume cost reductions
from future contracts since those reductions are "neither probable nor
susceptible of reasonable estimation."
o Revisions to cleanup agreements. DOE estimated additional cost
reductions would result from revising site-specific waste cleanup
agreements with federal and state regulators. However, regulators have not
agreed to or are resisting revisions to agreements that accounted for most
(at least 75 percent) of these expected cost reductions. For example, DOE
expected to be able to determine that some radioactive tank waste is not
high-level waste but transuranic waste, thereby allowing DOE to ship the
treated waste to the Waste Isolation Pilot Plant for permanent disposal
and reducing costs by $1.5 billion. However, in late 2004, the head of New
Mexico's Environment Department-the state regulator for the
repository-said the state would refuse to accept DOE's tank waste for
disposal at the repository because New Mexico considers that waste to be
high-level, not transuranic, waste. In addition, because of the
uncertainty about the disposal path for this radioactive tank waste, the
state of Idaho-which has a regulatory agreement with DOE to treat and
dispose of the waste out of the state-prefers that DOE apply more
extensive highlevel waste treatment technologies.
o Work completed sooner. DOE also expected cost reductions resulting
from completing work sooner through improvements that, in many cases, also
depend on the assumptions discussed above. Because of the uncertainty
surrounding assumed improvements in its cleanup operations, DOE's
anticipated cost reductions from completing work sooner are also in
jeopardy. For example, DOE estimated approximately $2.8 billion in cost
reductions at its Savannah River Site from accelerating the cleanup of
radioactive tank waste. However, that reduction depends on implementing a
new waste treatment technology that has not yet been fully tested outside
a laboratory. As a result, the uncertainties surrounding technological
improvements raise doubts about DOE's ability to accelerate its schedule.
In addition, several of the projects that DOE expects to complete in less
time are already experiencing problems. For example, DOE estimated that an
approximately $2.8 billion cost reduction would result, in part, from
revising its schedule for shipping transuranic waste to the repository in
New Mexico. However, as we noted above, transuranic waste packaging and
shipping is already behind schedule.
Nearly All of the Cost Reductions Were to Occur at Three Sites Where DOE Is
Having Significant Technical, Regulatory, or Management Challenges
DOE expected cost reductions to occur at nearly all of its cleanup sites,
but most of the total estimated cost reduction was expected from 3 sites
that account for the largest portion of DOE's overall cleanup costs-
Hanford, Savannah River, and Idaho National Laboratory. However, these
sites are already facing challenges to their cleanup efforts which may
jeopardize DOE's ability to achieve its estimated $50 billion cost
reduction. Although it is impossible to precisely predict the impact that
these challenges will have on DOE's overall cleanup costs, any cost
increases at these sites could offset cost reductions at other sites and
lower the potential for overall cost reductions from the accelerated plan.
The types of challenges that could increase cleanup costs at these three
DOE sites include the following:
o Delays in disposing of highly radioactive wastes. In early 2005, DOE
reported that a slip in the scheduled opening of DOE's planned repository
at Yucca Mountain, Nevada would delay shipment of waste by at least 2
years-and possibly for as long as 7 years-due to technical and regulatory
issues. As a result, sites now storing high-level waste and spent nuclear
fuel have been reevaluating their waste disposal plans and associated cost
and schedule estimates. The sites potentially affected include Hanford,
Idaho National Laboratory, Savannah River, and West Valley. Most sites
expect costs to increase as disposal schedules slip. In its fiscal year
2006 budget request, DOE estimated that a five year delay in opening the
Yucca Mountain repository could increase costs by as much as $720 million
at its three largest sites. This includes building additional storage
buildings and added operating costs.
o Legal obstacles preventing DOE from implementing aspects of its
cleanup approach. DOE faces challenges to its planned treatment strategy
at the Hanford Site that could potentially increase costs. A 2002 lawsuit
challenged DOE's plans to separate and determine that a portion of its
waste could be treated and disposed of as other than high-level waste, and
to DOE's plans to close tanks leaving some radioactive residual in the
tanks. In October 2004, a federal appeals court overturned a district
court
ruling against DOE and held that it was premature to rule on the matter
until DOE implemented its strategy.23 Federal legislation passed in
October
2004 provided authority for DOE to carry out its acceleration completion
strategy at its Savannah River Site and Idaho National Laboratory.
However, the law excluded the Hanford Site.24 If similar authority is not
provided for the Hanford Site, costs at the site could increase
significantly-up to $67 billion, according to DOE's estimate. Similarly,
uncertainty surrounds Hanford's ability to accept waste from other DOE
sites as the result of two ongoing lawsuits: one involving a challenge by
the state of Washington to DOE's plan to ship low-level, low-level mixed,
and transuranic waste into the state,25 and one concerning a recent
Washington state citizens' initiative that could prohibit Hanford from
accepting additional waste until existing waste is cleaned up.26 Although
DOE believes it will ultimately prevail in these lawsuits, some cleanup
activities at the other sites may face delays and increased storage costs
until the issue is resolved.
o Other pressures increasing costs at key sites. By the end of fiscal
year 2004, the total cost estimate of the cleanup work at two of DOE's
largest sites had already increased above cost targets established in
2003. At the Savannah River Site and Idaho National Laboratory overall
cleanup estimates in 2004 were over $2.0 billion higher than in 2003.
Similarly, officials at DOE's Hanford Site indicated in recent public
meetings that they are requesting cleanup funding above previously
established funding targets for fiscal year 2007, which, if approved, will
also add to the plan's total cost. According to the site officials, the
additional funds are being
23Natural Resources Defense Council v. Abraham, 388 F.3d 701 (9th Cir.
2004).
24Pub. L. No. 108-375, S: 3116 (2004).
25State of Washington v. Bodman, No. CV-03-5018-AAM (E.D. Wash.).
26Washington state voters passed Initiative 297, the Cleanup Priority Act,
now codified in chapter 70.105E of the Revised Code of Washington (RCW),
in November 2004. Its scope and constitutionality are currently being
litigated in the federal district court and in the Supreme Court of
Washington. United States v. Hoffman, No. CV-04-5128-AAM (E.D. Wash.,
filed Dec. 1, 2004), certified to Washington state to address
interpretation of state law, United States v. Hoffman, No. 76629-1 (Wash.
Feb 8, 2005).
DOE's Performance Reporting Does Not Clearly Reflect Progress Made toward
Achieving the Overarching Goals of the Accelerated Cleanup Plan
requested primarily to address higher than expected waste management and
treatment costs.
Because of the limitations and uncertainties discussed above, DOE's $50
billion cost reduction goal is unlikely to occur. Recognizing that
achieving the full $50 billion in cost reductions may be in jeopardy, DOE
officials recently stopped citing any specific estimate in connection with
the accelerated plan. However, DOE continues to believe it will achieve
some cost reductions with its accelerated strategy.
DOE's performance reporting does not present a clear understanding of
progress toward meeting the $129 billion cost target and 2035 completion
date of the accelerated cleanup plan. While DOE performance measures, as
discussed earlier in this report, provide useful information about the
current status of cleanup activities, there are two main shortcomings in
the way DOE uses these measures to report its progress toward meeting the
overarching goals of the accelerated plan. First, in reporting on its
performance, DOE does not clearly relate cleanup accomplishments with
their associated costs. Second, DOE reports its performance in a way that
does not highlight key cleanup activities or events that have significant
implications for achieving overall cleanup goals. These shortcomings make
it difficult for the Congress and the public to fully understand how
likely DOE will be able to achieve its accelerated cleanup cost target and
completion date.
Performance Reporting Practices Make It Difficult to Clearly Understand the
Relationship Between Cleanup Progress and Cost Performance
We and others have emphasized the importance of ensuring that reporting on
program performance allows a clear understanding of how well a program is
meeting goals; that is, linking performance goals with program costs. In a
February 2005 study, we noted that federal accountability laws-the
Government Performance and Results Act of 1993 (GPRA) and the Chief
Financial Officers Act of 1990-emphasize the importance of linking program
performance information with financial information as a key feature of
sound management and an important element in presenting to the public a
useful and informative perspective on federal spending.27 Additionally,
OMB indicated to federal agencies that annual performance
27U.S. Government Accountability Office, Performance Budgeting: Efforts to
Restructure Budgets to Better Align Resources with Performance,
GAO-05-117SP (Washington, D.C.: Feb. 2005).
budgets should clearly link performance goals with costs for achieving
those goals, both long-term and annual performance goals.28
DOE's performance reporting does not provide for a clear understanding of
how well the cleanup program is performing. In reporting on its progress,
DOE does not establish how accomplishments made in addressing wastes-which
DOE measures through its risk reduction measures-are associated with the
costs incurred-which DOE measures through its cost performance measures.
Rather, DOE reports separately on the waste treatment and disposal goals
it has achieved using one measure and reports on whether cleanup
activities are being performed within cost parameters using another
measure. These separate measures are organized around different categories
and have different units of measure, making it difficult to link the
information the two measures provide (see table 6).
28Executive Office of the President, Office of Management and Budget, OMB
Circular No. A-11 (2004), Part 6, Section 220-1-Preparing and Submitting
Performance Budgets (Washington, D.C.: July 2004).
Table 6: Comparative Features of DOE's Risk Reduction Measures and Cost
Performance Measures
Cost performance Comparative features Risk reduction measures measures
Organization of Organized around 16 specific Organized around 7 measure
categories or outcomes project categories
Information included May have more than one measure May include costs for
the same waste type, for associated with more than example, radioactive
tank waste one cleanup activity, such has 3 risk reduction outcomes as
packaging transuranic
waste and disposing of low-level waste
Time period measured Measures progress against the Measures against costs
in lifecycle plan contract period
Type of measurement Scored as a positive or negative An overall score
indexed variance, indicating number of to 1.0, where greater than units
ahead/behind the target 1 is on or ahead of
schedule and below 1 is behind schedule
Scope limitations Does not cover all activities Does not cover all costs
associated with a waste group, for related to specific waste example
radioactive tank waste activities, for example, measures do not include
shipping does not cover security activities costs
Source: GAO analysis.
The difficulty of understanding the relationship between cleanup
accomplishments and cost performance can be illustrated by comparing the
performance information available on transuranic waste. DOE's risk
reduction measure provides useful information about how much transuranic
waste was processed and disposed of, but DOE does not separately report
cost information related to transuranic waste accomplishments. Instead,
DOE includes costs associated with transuranic waste activities as part of
a larger project category titled "solid waste stabilization and
disposition." Therefore, DOE and others generally do not have a complete
picture of performance for this activity, such as the impact on cost and
schedule of falling behind in processing and disposing of the waste. For
example, as of March 2005, DOE's Idaho National Laboratory was more than
one year-or more than 1,000 shipments-behind its planned number of
shipments of transuranic waste to the federal repository. However, DOE
reports no corresponding cost performance measure to indicate the impact
of this delay on cost and schedule (see table 7). During the same time
period, Idaho's solid waste stabilization and disposition cost performance
score indicated the project category was "green," or remaining within cost
and schedule goals.
However, because of the delays in transuranic waste shipments, DOE is
significantly behind schedule, has recently ended the contract, and is now
in the process of determining the cost impact of these delays.
Table 7: Performance Information on Idaho National Laboratory Transuranic
Waste Shipments as of March 2005
Risk reduction performance Cost performance
Total units to ship overall 66,139 Total lifecycle cost Not
cubic separately
meters reported
Planned units shipped to 14,581 Planned cost to date Not
date
cubic separately
meters reported
Actual units shipped to date 4,160 Actual cost to date Not
cubic separately
meters reported
Variance -10,421 Variance Not
cubic separately
meters reported
Source: DOE.
The importance of directly linking progress on cleanup with cost
performance has been recognized by OMB. In a fiscal year 2005 program
review of DOE, OMB found that DOE's cleanup program had not developed
annual cost and schedule performance measures to monitor progress towards
completing the cleanup mission. OMB officials said that better linking
cleanup progress and cost performance in DOE's performance reporting would
allow for tracking DOE's performance against its long term goals.
DOE acknowledged that its performance reporting practices currently do not
directly link progress on cleanup with performance against cost and
schedule targets. According to a senior DOE adviser to the Principal
Deputy Assistant Secretary for Environmental Management, the Department's
earned value management system could eventually provide this linkage, but
DOE is still working to fully implement the system and to ensure that it
provides reliable data. He said that DOE's earned value management system
will eventually produce information on the cost, schedule, and work
completed over the lifecycle of all projects related to its cleanup
mission, and may eventually provide an aggregate earned value score for
the entire cleanup program.
While these steps may be useful, for DOE's performance reporting using
earned value to provide for a full understanding of cleanup performance,
DOE will need to also report on the linkage between cost, schedule, and
performance data by (1) generating comparable cost, schedule, and
performance data at an activity level, such as processing and disposing of
transuranic waste and (2) ensuring that the cost data is reported in
relation to lifecycle cost targets, not just for a specific year or
contract period. While DOE is working toward including lifecycle cost
targets and performance in its earned value data, it is not taking steps
to directly link risk reduction measures with cost performance at the
activity level. According to a senior adviser to the Principal Deputy
Assistant Secretary for Environmental Management, the department has been
focused on ensuring that site cost estimates are reliable and that all
mission-related projects are covered under the earned value system.
However, unless this linkage is established, DOE performance reporting
will not provide for a full understanding of progress being made by
individual cleanup activities or whether it is on track with its overall
$129 billion cost target for completing the cleanup program.
Performance Reporting Does Not Highlight Critical Activities that Are Best
Indicative of Overall Performance
Performance reporting should provide for a clear understanding by the
Congress and the public of how an agency is progressing in achieving its
program goals. In assessing how various government agencies reported on
their progress, we noted in a 2004 report that agencies need to consider
the needs of the information's user and best tailor performance
information so that a clear picture of the agency's progress is presented.
We found that an agency's performance data can have real value only if the
data are used to highlight actual performance against an agency's planned
goals.29
DOE publicly reports on its progress toward achieving accelerated cleanup
plan goals through various means, including providing information to the
Congress in annual budget submissions, reporting progress against selected
annual goals in the agency's annual performance and accountability report,
and making information accessible on the department's Web site. In all
three cases, DOE primarily relies on the risk reduction measures as the
indicator of cleanup progress. For example, in
29U.S. Government Accountability Office, Results-Oriented Government: GPRA
Has Established a Solid Foundation for Achieving Greater Results,
GAO-04-38 (Washington, D.C.: Mar. 10, 2004).
its fiscal year 2006 budget request to the Congress, DOE provided
information on all 16 risk reduction measures, including the amount of
work estimated to be completed through fiscal year 2006, such as number of
buildings torn down, and the estimated total amount of work to accomplish.
In the budget request, DOE also included a variety of other program
information, such as general cleanup achievements to date, and identified
7 risk reduction measures it would use to assess progress at the end of
the fiscal year. Similarly, in accordance with federal reporting
requirements, DOE provides performance information each year in its annual
performance and accountability report that accompanies the department's
annual financial statement. In the performance and accountability report,
DOE describes the general goals of the cleanup program, external factors
that could affect DOE's ability to achieve those goals, and its progress
against selected performance goals for the year. Finally, on its Web site,
DOE provides descriptive information for its 16 risk reduction measures,
including how much work has been accomplished to date for each measure and
the estimated total amount of work to accomplish for each measure.
Although this information is useful, DOE's performance reporting does not
present a complete picture of progress toward accelerated cleanup plan
goals. For example, DOE has, up to now, reported on its progress as
measured against annual goals, rather than its progress in meeting its
overall $129 billion cost target and 2035 completion date. By doing so,
DOE provided a different picture of the department's progress than if
progress was compared with longer term goals. Two examples from the
agency's performance reporting in its 2004 Performance and Accountability
Report illustrate this point. In its 2004 report, DOE reported it met less
than 80 percent of its annual goal of closing 9 liquid waste tanks in
fiscal year 2004. In fact, DOE met 0 percent of its goal, has closed no
tanks since 1997, and is currently significantly behind its estimated
lifecycle target for this activity. To regain its performance schedule,
DOE would need to complete the regulatory process and close 19 waste tanks
by the end of fiscal year 2005. However, this is an unlikely achievement
given the length of time of remediation and regulatory work that is
required before the tanks can be closed. In a second example, DOE reported
it had met less than 80 percent of its annual planned target for packaging
plutonium and uranium residues because it was 175 kilograms behind its
accelerated schedule. However, calculating DOE's performance for this
activity against the estimated lifecycle target indicates that DOE was
actually 33 kilograms ahead of its cumulative goal by the end of 2004.
According to a senior DOE adviser to the Principal Deputy Assistant
Secretary in the Office of Environmental Management, DOE plans to begin
reporting its progress against lifecycle goals in the department's fiscal
year 2005 performance and accountability report.
Another area of concern is that DOE's performance reporting does not
highlight performance on critical cleanup activities that could best
provide information about whether the department is on track to meet its
$129 billion cost target. Among DOE's various performance measures,
certain ones are more important for indicating whether DOE is on track
with its overall accelerated cost and schedule goals, and may provide a
different picture of progress than DOE is currently reporting. In the
longer term, to provide an indication of progress toward overall
accelerated goals, projects that account for a large portion of DOE's
spending-and correspondingly contribute the most towards cost
reductions-can serve as key indicators of progress. For example, DOE
expects a significant portion of accelerated plan cost and schedule
reductions to be achieved from two waste types that are the most difficult
to address-radioactive tank waste and transuranic waste. DOE's radioactive
tank waste program alone accounts for nearly 60 percent-almost $30
billion-of DOE's estimated cost reductions under the accelerated plan.
Highlighting performance in these areas would provide a better indication
of how well DOE is progressing toward its longer term accelerated cleanup
goals. As previously discussed, both radioactive tank waste and
transuranic waste are the two areas where DOE's progress has fallen
behind. In three of four risk reduction measures the department uses to
track progress of its radioactive tank waste and transuranic waste
activities, DOE has experienced delays that could impact cost.
Furthermore, work on DOE's $5.7 billion waste treatment construction
project at Hanford-an activity not tracked by a risk reduction measure-has
been delayed, creating potentially significant cost and schedule
increases. While DOE includes radioactive tank waste and transuranic waste
in its performance reporting, the department does not identify the
significance of these cleanup activities for meeting overall cleanup cost
and schedule goals.
In the short term, closure sites and key activities that are contributing
to planned budget declines over the next few years may provide a good
indication of whether DOE is currently on track to meet its planned
accelerated cost target. DOE's accelerated plan calls for a decrease in
annual funding requirements between 2005 and 2008. That is, DOE's annual
funding requirement is planned to drop from about $7.3 billion in fiscal
year 2005, to about $4.5 billion by 2008-or a decline of about $2.8
billion. Almost 90 percent of this decline is attributable to 10 sites
scheduled to be closed in 2006, and progress on eight key projects.
Currently, the indicators for these sites and projects show that at least
half
are behind in some or all cleanup activities. For example, DOE's
Miamisburg, Fernald, and Lawrence Livermore Laboratory sites-all scheduled
to complete cleanup by 2006-are behind in at least one risk reduction
activity. Similarly, DOE's spent nuclear fuel project at Hanford was in
danger of exceeding its cost target as of April 2005. Providing aggregate
information on the potential cost increases or schedule delays in this
group of sites could help gauge DOE's ability to achieve a funding decline
over the next few years.
It is not clear what impact the challenges DOE faces will have on its
overall ability to achieve near-term or longer-term cost reduction goals.
However, DOE's performance reporting does not highlight this information
nor does DOE report which activities are the most significant to achieving
its overall cost and schedule goals. DOE officials said that, in their
view, the department's current reporting of its performance in the annual
performance and accountability report and in its budget submission is
sufficient to provide an understanding of progress towards the program's
long-term goals. DOE officials also noted that, internally, senior DOE
managers use a variety of performance measures to monitor more critical
elements of the program that are not included in any public reporting of
accelerated cleanup progress. Nevertheless, because DOE reporting methods
do not identify critical indicators such as progress on key cleanup
activities, the department is not providing the Congress and the public
the basis for a full understanding of its progress toward achieving the
goals of the accelerated cleanup plan.
DOE expected that its accelerated cleanup plan would allow it to clean up
contaminated sites faster and at significantly lower cost than previously
planned. While DOE has made progress toward its cleanup goals, important
challenges remain and DOE is not likely to achieve its original goal of
$50 billion in estimated cost reductions. While DOE's performance
reporting provides information on some aspects of cleanup progress, it
does not provide for a full understanding of how the many uncertainties
DOE faces could affect achieving cleanup goals and does not include a
meaningful analysis of the significance of the data. Furthermore, because
DOE's reporting methods do not directly correlate cleanup results with the
associated costs and fail to identify critical indicators, such as
progress on key cleanup activities, DOE is not providing an adequate
picture of its overall progress toward staying within the $129 billion
total program cost and 2035 completion date goals. We believe that
improving DOE's performance reporting to address these limitations would
provide more
Conclusions
Recommendations for Executive Action
complete information and allow for a more accurate assessment of DOE's
progress toward achieving accelerated cleanup plan goals.
To help DOE and the Congress monitor progress toward meeting DOE's
accelerated cleanup plan cost and schedule goals, we recommend that the
Secretary of Energy take the following two actions:
o Improve DOE's performance reporting so that there is a clearer,
discernable relationship at the activity level between cleanup
accomplishments and the costs incurred in doing the work and
o Identify in DOE's performance reporting to the Congress and others
those performance measures that are the most critical to achieving cost
and schedule goals, and summarize the progress on these measures and the
potential impact of any problems that could affect achieving accelerated
cleanup plan goals.
Agency Comments
and Our Evaluation
We provided a draft of this report to DOE for review and comment. In
written comments, DOE's Principal Deputy Assistant Secretary for
Environmental Management agreed with the report's recommendations. The
Principal Deputy Assistant Secretary also provided technical comments as
an enclosure to the letter. We have incorporated these comments as
appropriate. DOE's written comments on our draft report are included in
appendix III.
Regarding the report's two recommendations, DOE agreed to improve its
performance reporting so that there is a clearer, discernable relationship
between cleanup accomplishments and the costs incurred in doing the work.
DOE also agreed to identify and highlight in its progress reports to the
Congress and others those performance measures that are the most critical
to achieving cost and schedule goals, and summarize the progress on those
measures and the potential impact of any problems that could affect
achieving the goals. To aid in implementing these recommendations, DOE
said it will continue to improve its earned value management system to
serve as a link between performance measures and cost.
In technical comments to us accompanying the letter, DOE disagreed with
our discussion in the report that it should use present value analysis in
calculating the estimated cost reduction it expects to achieve under its
accelerated cleanup plan. DOE stated that we have misinterpreted OMB
Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis
of Federal Programs, regarding the use of present value analysis. DOE said
that present value calculations are more applicable to cost-benefit
analyses, particularly when attempting to analyze the costs and benefits
to various options or alternatives. DOE emphasized that its cost
estimating methodology was developed solely for the purpose of estimating
the program's environmental liability, and its cost reduction estimate is
simply the difference between fiscal year 2001 and fiscal year 2003
environmental liability estimates. DOE believes that since it was not
attempting to calculate benefits, a present value analysis is not
appropriate.
In our view, our interpretation of the OMB circular is correct and, in
fact, is supported by DOE's own guidance, which recommends using present
value analysis as a standard methodology for cost comparisons of different
alternatives. OMB Circular A-94 (revised October 29, 1992), standard
economic analysis, and DOE's guidance (Report to Congress, July 2002,
Appendix A-Lifecycle Cost Analysis) recommend present value analysis as
the appropriate technique for analysis of alternative options even if the
benefits from different approaches are the same or a comparison of the
benefits is not possible. As we previously reported, although using
current dollar estimates may be appropriate for budget purposes, present
value analysis is the standard methodology to be used for comparing costs
of different alternatives that occur at different times, such as comparing
DOE's accelerated and baseline cleanup alternatives.
We are sending copies to other interested congressional committees and to
the Secretary of Energy. We will also make copies available to others upon
request. In addition the report will be available at no charge on the GAO
Web site at http://www.gao.gov.
If you or your staff have any questions on this report, please call me on
(202) 512-3841. Contacts points for our Office of Congressional Relations
and Public Affairs may be found on the last page of this report. Other
staff contributing to this report are listed in Appendix IV.
Gene Aloise Director, Natural Resources and Environment
Appendix I: Scope and Methodology
To determine what progress DOE has achieved under its accelerated cleanup
plan, we identified the measures DOE uses to monitor and report its
performance. We found that DOE uses two primary measures to monitor
progress: its "Gold Chart" metrics (risk reduction measures) and earned
value metrics. For DOE's risk reduction measures, we discussed with DOE
officials-both at headquarters and at specific sites-how these measures
were developed. We also discussed how these measures are used by DOE-both
internally and for external reporting. We obtained and analyzed DOE's
current risk reduction measures to determine both current status and
implications of out year requirements for the overall cleanup. In
reviewing DOE's efforts to develop earned value data, we reviewed various
reports on DOE's earned value system, including a recent GAO report
discussing the data and a 2004 National Academy of Sciences report.1 We
reported in March 2005, that for several major projects, earned value
management principles had not been properly implemented at the department
to measure cost and schedule performance. In addition, the National
Research Council reported in 2004 that the quality of earned value
management in the department was inconsistent and may not be completely
accurate. We also discussed DOE's earned value measures with DOE officials
in its Environmental Management, Office of Performance Assessment and with
DOE officials in the Office of Engineering and Construction Management. In
part due to the concerns raised by GAO and others about the reliability of
information from DOE's earned value system and in part because DOE had not
completed addressing these concerns by more fully implementing its earned
value management system, we did not report on earned value data as a
measure of DOE's progress in achieving its accelerated goals.
To determine how DOE implemented its accelerated strategy, we reviewed
several documents at DOE headquarters providing the status of 10
restructuring initiatives implemented when the accelerated initiative was
started. We reviewed DOE policy and procedure documents, and discussed
DOE's strategy to implement its accelerated plan with DOE headquarters
officials in its Office of Environmental Management. We further reviewed
site performance management plans-a document laying out each site's
strategy for implementing the accelerated initiative.
1U.S. Government Accountability Office, Department of Energy: Further
Actions Are Needed to Strengthen Contract Management for Major Projects,
GAO-05-123 (Washington, D.C.: Mar. 18, 2005), and National Academy of
Sciences, Progress in Improving Project Management at the Department of
Energy: 2003 Assessment (2004) (Washington, D.C.: 2004).
Appendix I: Scope and Methodology
To understand how the accelerated cleanup plan was being implemented at
the site level and progress made, we selected a nonprobability sample of 5
sites to review, based on several criteria.2 We started with a list given
to us by DOE that contained all DOE cleanup sites, each site's expected
completion date, each site's 2003 estimated lifecycle target, and each
site's contribution to cost reductions under the accelerated initiative.
We eliminated from consideration any site that (1) had completed cleanup
by 2004; (2) had a 2003 estimated lifecycle target less than $1 billion,
and (3) contributed less than $100,000 in cost reductions to DOE's overall
$50 billion estimated cost reductions from implementing its accelerated
initiative. This gave us a list of sites, which we placed into three
categories, based on DOE's budget accounts: (1) sites expected to close by
2006, (2) sites expected to close by 2012, and (3) sites expected to close
by 2035. We selected a minimum of one site from each category. In making
our selection, we considered the following factors: geographic dispersion
of the sites, the site's estimated contribution to DOE's annual budget,
the diversity of waste types represented at the site, and contribution to
DOE's estimated $50 billion cost reduction from acceleration. Applying
these criteria, we selected the following five sites: Hanford Site-both
DOE's Office of River Protection and Richland Operations Office; Savannah
River Site; Idaho National Laboratory; the West Valley Demonstration
Project, and DOE's Miamisburg Closure Project. For each site we selected,
we reviewed and obtained information regarding cost, schedule, and
performance under DOE's risk reduction measures. We independently
verified, to the extent possible, the dollar figures and waste cleanup
performance data provided to us by DOE, by taking various steps. For
example, we analyzed budget formulation documents, documented waste
cleanup assumptions, and obtained information on cost validation
procedures. We determined that these data were sufficiently reliable for
purposes of this report. In addition, at each site, we discussed with site
officials implementation of the accelerated cleanup plan, progress toward
meeting cost and performance goals, and any obstacles to meeting those
goals.
To develop information on the key assumptions underlying the Department of
Energy's accelerated cleanup plan, we analyzed information and documents
provided by DOE officials and contractors at
2Results from nonprobability samples cannot be used to make inferences
about a population, because in a nonprobability sample some elements of
the population being studied have no chance or an unknown chance of being
selected as part of the sample.
Appendix I: Scope and Methodology
DOE headquarters and various sites. For many of the sites, we reviewed the
performance management plans to assess how their approach to site cleanup
would change under the accelerated plan. To determine how those
assumptions affected achieving the accelerated cleanup goals, we evaluated
site estimates of how the proposed changes under acceleration would impact
site cleanup activities. Analyzing the reports provided by DOE, we
determined the key contributors to the planned cost reductions. We then
assessed through review of various reports and interviews with responsible
officials the status of the key initiatives. We also discussed the
progress of the plan with state regulators and Environmental Protection
Agency officials, DOE headquarters officials, including the acting
Assistant Secretary for Environmental Management, and officials from other
headquarters offices.
In order to assess the reliability of the gold chart metrics and the cost
and schedule data provided to us by DOE, we took several steps. First, we
obtained and reviewed selected site baselines. These included reviews by
DOE's Office of Engineering and Construction Management, as well as DOE's
Office of Environmental Management. We also obtained and examined the
review of DOE's fiscal year 2004 environmental liability estimate by DOE's
independent auditor, KPMG. KPMG audits DOE's environmental liability
estimate as part of its annual audit of DOE's financial statements. In
addition to these steps, for the sites we visited, we obtained information
on data reliability procedures from site and contractor officials to
determine internal controls used to ensure accurate, complete, and timely
data. Finally, we developed and administered a data reliability form to
each site we reviewed, obtaining information including what types of tests
are administered in database systems to ensure the accuracy and
completeness of data entered into the system, if and how frequently data
are reviewed by independent parties, and how DOE ensures risk reduction
measures are independently verified. The forms were completed by DOE and
contractor officials. We asked follow-up questions whenever necessary.
Based on the information we obtained and our analysis of the information
provided, we determined that the reliability of the data provided was
adequate for the purposes of this report. As we noted throughout the
report, we found methodological problems with DOE's reporting of cost data
and estimation of cost reductions. In reporting its cost data, DOE
incorrectly added cost numbers in actual (current) dollars for years prior
to 2001 to cost numbers in constant 2003 dollars for years post-2001. DOE
also incorrectly estimated cost reductions of $50 billion without
adjusting for the time value of money. Since in our previous work we
demonstrated the effect of these problems by correcting and re-estimating
DOE's cost reductions, we did not do so again in this
Appendix I: Scope and Methodology
report.3 Therefore, we used DOE's estimates throughout as reported by DOE
with no further correction. We conducted our review from June 2004 through
July 2005 in accordance with generally accepted government auditing
standards.
3U.S. General Accounting Office, Nuclear Waste: Absence of Key Management
Reforms on Hanford's Cleanup Project Adds to Challenges of Achieving Cost
and Schedule Goals, GAO-04-611 (Washington, D.C.: June 9, 2004).
Appendix II: DOE's Estimated Cost Reductions under the Accelerated Cleanup Plan
Table 8: Accelerated Cleanup Estimates
Dollars in thousands (2003 constant)
FY03 Lifecycle
Cost
Closure date Cost change from (does not include
change from FY01(includes long- long-term
Office Site/Program FY01 term stewardship)a stewardship)b
Albuquerque Kansas City Plant -1 year $1,440 $28,199
Los Alamos Laboratory 0 -$726,528 $1,436,564
Operations - $256,797 $437,280
Pantex -9 $23,220 $186,539
Sandia National Laboratory -3 -$39,887 $228,846
Carlsbad Waste Isolation Pilot Plant -4 -$3,697,077 $4,967,519
Chicago Argonne National Laboratory 6 -$28,120 $62,239
Brookhaven National
Laboratory 3 $83,469 $362,166
Operations - $36,833 $97,649
Idahoc Idaho National Laboratory -35 -$10,936,713 $11,599,306
Nevada c Nevada Test Site -2 -$54,657 $1,940,373
Oak Ridge Oak Ridge Reservation 2 -$1,503,154 $6,883,568
Oakland Energy Technology
Engineering Center 0 -$2,044 $198,982
Lawrence Berkeley National
Laboratory 2 -$24,611 $33,165
Laboratory Energy-related
Health Research -1 -$846 $40,464
Lawrence Livermore National
Laboratory -1 $30,473 $504,405
Operations - -$2,066 $49,461
Stanford Linear Accelerator
Center 2 $7,477 $20,139
Separations Process
Research Unit 0 -$5,085 $207,881
Ohio
Ashtabula Environmental
Management Project 0 -$44,921 $154,977
Columbus Environmental
Management Project 0 -$2,504 $161,095
Fernald Environmental
Management Project -4 -$55,294 $3,329,720
Miamisburg Environmental
Management Project 0 -$128,648 $1,304,317
Operations - $453,820 $453,820
Appendix II: DOE's Estimated Cost Reductions under the Accelerated Cleanup
Plan
Dollars in thousands (2003 constant)
FY03 Lifecycle
Cost
Closure date Cost change from (does not include
change from FY01(includes long- long-term
Office Site/Program FY01 term stewardship)a stewardship)b
West Valley Demonstration
Project -29 -$326,532 $1,109,463
Paducah Paducah Gaseous Diffusion
Plant 20 $3,827,024 $3,476,147
Portsmouth Portsmouth Gaseous
Diffusion Plant 6 $7,539,895 $4,469,936
Richland Hanford Site -15 -$5,695,324 $20,380,244
River Protection Office of River Protection -18 -$16,710,839 $24,309,630
Rocky Flats Rocky Flats Environmental
Technology Site 0 -$223,022 $6,949,013
Savannah River Savannah River Site -13 -$14,089,347 $23,725,375
Other
Sites closed before 2003d -$701,188 $203,757
Environmental Management-wide
costs e -$6,545,128 $9,655,527
Costs transferred out in 2003 -$723,818 $0
Total -$50,006,905 $128,967,766
Source: DOE.
aBecause of the difficulty in separating long-term stewardship and cleanup
activities from the pre accelerated cost estimates, DOE included both when
calculating the cost change under the new plan.
bThe FY03 lifecycle cost estimate includes cleanup costs only since most
long-term stewardship costs were transferred to other offices under the
accelerated plan.
cIncludes operations office costs.
dBecause of work transfers within Environmental Management, some costs
changed in 2003 at sites that closed before 2003.
eIncludes Headquarters and Program Direction costs.
Appendix III: Comments from the Department of Energy
Appendix III: Comments from the Department of Energy
Appendix IV: GAO Contact and Staff Acknowledgments
GAO Contact
Staff Acknowledgments
(360499)
Gene Aloise (202) 512-3841
In addition to the individual named above, Chris Abraham, John Delicath,
Doreen Eng, Doreen Feldman, Nancy Kintner-Meyer, Jeffrey Larson, Gregory
Marchand, Mehrzad Nadji, Judy Pagano, Thomas Perry, and Bill Swick made
key contributions to this report.
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