Department of Energy: Improved Guidance, Oversight, and Planning 
Are Needed to Better Identify Cost-Saving Alternatives for	 
Managing Low-Level Radioactive Waste (31-OCT-05, GAO-06-94).	 
                                                                 
In 2004, the Department of Energy (DOE) disposed of more than	 
378,000 cubic meters of low-level radioactive waste		 
(LLRW)--contaminated building rubble, soil, and debris. In 2002, 
DOE directed its sites to use life-cycle cost analysis to manage 
LLRW. Life-cycle cost analysis examines the total cost of various
options to manage LLRW over its life, including its packaging,	 
treatment, transport, and disposal, to identify the lowest-cost  
alternative. GAO determined whether (1) DOE sites use life-cycle 
cost analysis to evaluate LLRW management alternatives and (2)	 
DOE has a strategy for cost-effectively managing LLRW		 
departmentwide, including state actions that may affect this	 
strategy.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-94						        
    ACCNO:   A40657						        
  TITLE:     Department of Energy: Improved Guidance, Oversight, and  
Planning Are Needed to Better Identify Cost-Saving Alternatives  
for Managing Low-Level Radioactive Waste			 
     DATE:   10/31/2005 
  SUBJECT:   Cost analysis					 
	     Cost effectiveness analysis			 
	     Life cycle costs					 
	     Radioactive waste disposal 			 
	     Strategic planning 				 
	     Waste management					 

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GAO-06-94

United States Government Accountability Office

GAO	Report to the Subcommittee on Energy and Water Development, Committee
on

                    Appropriations, House of Representatives

October 2005

DEPARTMENT OF ENERGY

    Improved Guidance, Oversight, and Planning Are Needed to Better Identify
       Cost-Saving Alternatives for Managing Low-Level Radioactive Waste

                                       a

GAO-06-94

October 2005

DEPARTMENT OF ENERGY

Improved Guidance, Oversight, and Planning Are Needed to Better Identify
Cost-Saving Alternatives for Managing Low-Level Radioactive Waste

                                 What GAO Found

The six DOE sites we visited, representing more than 70 percent of the
LLRW disposed of by DOE during 2003 and 2004, did not consistently use
life-cycle cost analysis because of weak DOE guidance and a lack of
oversight of contractors' implementation of this guidance. As a result,
DOE cannot ensure that lowest-cost LLRW management alternatives are
identified, so that managers make decisions that fully weigh costs against
noncost factors, such as safety and schedule. For example, DOE contractors
at two sites did not consistently consider alternative transportation
modes or postclosure maintenance and surveillance costs of disposal sites
in their analyses for fiscal year 2004 disposal decisions. GAO also could
not always determine how contractors used cost analyses in disposal
decisions because of incomplete documentation. While DOE's guidance
requires each site to develop the mechanisms necessary to ensure use of
life-cycle cost analysis, it does not specify, for example, (1) a
systematic, consistent method of analyzing all cost elements to determine
the lowest cost, or (2) when analyses should be performed. Also, no such
guidance was incorporated into site contracts, and DOE site offices had
not evaluated contractors' use of life-cycle cost analysis.

DOE has recognized that its current approach---having each site
responsible for developing mechanisms necessary to control costs-may
result in cost inefficiencies and may limit its ability to meet
departmentwide strategic objectives. As a result, DOE plans to begin
implementing a national LLRW disposition strategy by March 2006 to better
coordinate disposal efforts- specific schedules have not yet been
established for when the strategy will be fully in place. However, DOE
faces challenges in developing and implementing this strategy. First, it
needs to gather complete data on the amount of LLRW needing disposal.
Second, the fact that DOE's multiple program and site offices have
differing missions and oversee many contractors presents coordination
challenges. For example, one program office dismantled and disposed of a
supercompactor used to reduce the volume of large LLRW items without a
DOE-wide assessment of LLRW compacting needs and without considering other
potential cost-effective uses for the supercompactor that might benefit
other DOE sites. Third, DOE faces state actions that have restricted
access to disposal facilities, making it more difficult to coordinate and
integrate disposal departmentwide.

Cost Elements of LLRW Management United States Government Accountability Office

Contents

Letter                                                                   1 
                                  Results in Brief                          4 
                                     Background                             7 
             DOE Sites Do Not Consistently Use Life-Cycle Cost Analysis in 
                                    Managing LLRW                           9 
            DOE Faces Challenges in Developing a National LLRW Disposition 
                                      Strategy                             17 
                                     Conclusions                           22 
                        Recommendations for Executive Action               22 
                         Agency Comments and Our Evaluation                23 

Appendixes

Appendix I:
Disposed Waste Volume by Major DOE Generator Sites, Fiscal Year 2004
through Second Quarter, Fiscal Year 2005 26

Appendix II: Comments from the Department of Energy 27

Appendix III: GAO Contact and Staff Acknowledgments 29

Table Table 1:	Cost Elements in Life-Cycle Cost Analysis and Associated
Activities

Abbreviations

DOE Department of Energy
EM Office of Environmental Management
LLRW low-level radioactive waste
NNSA National Nuclear Security Administration

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protection in the United States. It may be reproduced and distributed in
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separately.

A

United States Government Accountability Office Washington, D.C. 20548

October 31, 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

In fiscal year 2004, the Department of Energy (DOE) disposed of more than
378,000 cubic meters of low-level radioactive waste (LLRW)-enough to fill
a football field to the depth of a 19-story building.1 This waste included
radioactively contaminated building rubble, soil, and debris, as well as a
small volume of mixed waste, which is LLRW that is further contaminated
with chemicals and other hazardous waste.2 DOE disposes of such waste at
two federal facilities-the Hanford Site in Washington State and the
Nevada Test Site-and one commercial facility in Utah. Disposal actions at
these facilities are in some cases subject to regulation and licensing
decisions by the states in which they are located. DOE's Office of
Environmental Management (EM) manages the majority of LLRW at
multiple sites where the department is cleaning up facilities that were
contaminated with radioactivity as a result of, for example, nuclear
weapons-related activities. Many factors must be taken into account in
managing this waste, including health and safety and the target dates for
cleaning up the sites. Cost is also an important factor. In 2000, we
reported
that DOE spent more than $700 million to manage LLRW from 1997 through
1999. 3

One tool for evaluating LLRW management costs is life-cycle cost analysis.
Such analysis calculates the total cost to manage waste over its life,
including cost elements like waste packaging, treatment, transportation,
disposal, and monitoring of the disposal site after closure. The analysis
is

1This volume is only for waste disposed of at off-site locations.
Additional LLRW is disposed of at the DOE sites where it is generated.

2Throughout this report, references to low-level radioactive waste also
include mixed waste, unless otherwise specified.

3GAO, Low-Level Radioactive Wastes: Department of Energy Has Opportunities
to Reduce Disposal Costs, GAO/RCED-00-64 (Washington, D.C.: Apr. 12,
2000).

valuable for comparing the total costs of various waste management options
leading up to and including disposal to identify the most costeffective
alternative. The results of such analyses can be used in making LLRW
management decisions that weigh cost against noncost factors such as
safety, health, and schedule. DOE's use of complete, current, and
welldocumented life-cycle cost analyses in making LLRW management
decisions, if properly conducted, is consistent with the intent of DOE
Order 430.1B on real property asset management. This order identifies
requirements for life-cycle management of real property assets, including
DOE land, improvements, facilities, and structures, from planning and
acquisition through disposal. The order is relevant to LLRW management
because many DOE facilities and structures that are considered real
property assets eventually become LLRW through EM cleanup efforts. The
proper use of life-cycle cost analysis is also consistent with Office of
Management and Budget Circular A-94, which provides guidance on conducting
cost-effective analyses of federal programs and projects. Among other
things, the circular states that a program is cost-effective if, on the
basis of life-cycle cost analysis of competing alternatives, it is
determined to have the lowest costs for a given amount of benefits.

Concerned that DOE may be relying too heavily on the Nevada Test Site and
Hanford facilities instead of considering other alternatives, such as
commercial disposal facilities, the House Committee on Appropriations
directed DOE to prepare a cost study analyzing the life-cycle costs of
LLRW management alternatives.4 DOE's life-cycle cost study, sent to
Congress in July 2002, specified cost elements to include in life-cycle
cost analysis, defined some LLRW management alternatives, and highlighted
the potential for finding various cost differences among alternatives,
among other things. 5 The study stressed that a thorough evaluation of all
life-cycle costs is crucial to identifying the lowest-cost alternative for
LLRW management. Although the study recommended that DOE sites consider
all life-cycle costs in evaluating alternatives for LLRW management, it
cautioned that DOE's data collection and reporting processes needed to be
improved to make any departmentwide cost analyses useful.

4H.R. Rep. No. 107-112, at 135 (2001). A congressional conference
committee later issued a similar directive. H.R. Rep. No. 107-258, at 133
(2001).

5Department of Energy, Report to Congress, The Cost of Waste Disposal:
Life-Cycle Cost Analysis of Disposal of Department of Energy Low-Level
Radioactive Waste at Federal and Commercial Facilities (Washington, D.C.:
July 2002).

In this context, you asked us to determine whether (1) DOE sites use
lifecycle cost analysis to evaluate management alternatives for LLRW and
(2) DOE has a strategy for cost-effectively managing LLRW disposal
departmentwide, including state actions that may affect this strategy.

To determine whether DOE sites use life-cycle cost analysis to evaluate
management alternatives for LLRW, we obtained information from DOE and
contractor officials using structured interview guides, reviewed agency
documents on life-cycle cost analysis requirements and practices, and
reviewed analyses prepared at a nonprobability sample of six DOE sites
that generate LLRW.6 In selecting these waste generators for site visits,
we used LLRW disposal volumes reported by two disposal facilities-DOE's
Nevada Test Site and a commercial disposal facility in Utah-to select
three waste generator sites under EM's control: two EM sites that disposed
of the largest volume of LLRW in fiscal year 2004-Fernald, Ohio, and Rocky
Flats, Colorado-and one EM site with the largest projected volume for
fiscal year 2005-Paducah, Kentucky.7 To provide a DOE-wide perspective,
our nonprobability sample also included three waste generator sites under
non-EM program offices. Because multiple DOE program activities can exist
at a single non-EM site, and comprehensive, departmentwide data on LLRW
volumes needing disposal do not exist, we selected our non-EM sites based
on (1) the overall disposal volume of LLRW sent to the Nevada Test Site
and Envirocare of Utah in fiscal year 2004 and (2) judgments made by DOE
officials regarding the amount of newly generated LLRW volumes for which
DOE's National Nuclear Security Administration (NNSA) is responsible.
These three waste generator sites we visited were the Office of Science's
Oak Ridge Reservation and East Tennessee Technology Park, and NNSA's Y-12
Plant-all in Oak Ridge, Tennessee. We assessed the general reliability of
the information on LLRW disposal volumes by comparing data provided by
waste generators with data from disposal facilities, and determined that
this information was reliable enough for selecting sites. In total, the
six sites we visited constituted about 70 percent of DOE's LLRW disposal
volume for an 18month period-October 1, 2003, through March 31, 2005.

6Results of 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.

7We did not use information on LLRW volumes sent to DOE's Hanford disposal
site to select waste generators for site visits. Hanford's disposal site
accounted for less than 1 percent of DOE's off-site LLRW disposal volume
in fiscal year 2004.

To examine whether DOE has a strategy for integrating DOE-wide disposal
operations to ensure cost-effective disposal, we reviewed DOE's draft plan
for a national LLRW disposition strategy and used structured interview
guides to obtain information from DOE and contractor officials at DOE
waste generator sites and disposal facilities. In addition, we spoke with
DOE officials from DOE program offices in Washington, D.C, including EM,
NNSA, the Office of Science, and the Office of Nuclear Energy, Science and
Technology. We also spoke with appropriate DOE and state officials to
identify state actions, such as regulatory and court actions, that have
affected DOE LLRW disposal options and to determine DOE's response to
these actions. We performed our work between June 2004 and August 2005, in
accordance with generally accepted government auditing standards.

Results in Brief	The six DOE sites we visited, representing more than 70
percent of the LLRW disposed of by DOE during 2003 and 2004, did not
consistently use life-cycle cost analysis to ensure that the lowest-cost
LLRW management alternatives are identified because of weaknesses in DOE's
guidance for life-cycle cost analysis and a lack of oversight of
contractors' implementation of this guidance. Specifically:

o 	Cost analyses are not complete, current, or well documented. The six
DOE sites prepared various types of cost analyses in making LLRW
management decisions, but these analyses did not always include all
life-cycle cost elements or examine alternative courses of action, and
were not always current or formally documented. For example, DOE
contractors at two sites-Rocky Flats, Colorado, and Paducah, Kentucky-did
not consistently consider alternative transportation modes for shipping
waste or postclosure maintenance and surveillance costs of disposal sites
in their analyses supporting their fiscal year 2004 LLRW disposal
decisions. In contrast, the contractor at Fernald, Ohio, prepared cost
analyses that included all life-cycle cost elements and examined
alternative options. However, Fernald's life-cycle cost analysis, used to
justify its 2004 LLRW disposal decisions, was not current-it was over 10
years old and had not been updated to reflect any changes that might have
occurred in the costs for packaging, treatment, transportation, or
disposal. In other cases, such as at DOE's Rocky Flats site, we could not
determine how contractors incorporated cost analyses into their disposal
decisions because their documentation was incomplete. Rocky Flats
officials told us that disposal decisions were at times based on noncost
factors, such as schedule or safety, but

agreed that decisions were not consistently documented to show the
rationale for how cost was balanced against other factors.

o 	DOE's guidance and contractor oversight are weak. The cost analysis
inconsistencies have occurred, in part, because DOE's guidance on
lifecycle cost analysis is incomplete. For example, EM headquarters' July
2002 guidance to site offices on life-cycle cost analysis directed sites
to develop mechanisms necessary to establish that its LLRW disposal
decisions include the best estimate of full "cradle to grave" costs and
analysis of alternatives, but it did not specify (1) a systematic,
consistent method of analyzing all cost elements to determine the lowest
cost; (2) when or under what circumstances the analysis should be
performed; (3) relevant DOE orders, manuals, or other reference materials
that could provide consistent direction on life-cycle cost analysis; or
(4) how final LLRW management decisions should be documented. Furthermore,
DOE site offices were ineffective in overseeing contractors' use of
lifecycle cost analysis, which also contributed to ineffective
implementation of the guidance. At the sites we visited, neither DOE nor
contractors had taken identifiable steps to implement the guidance on
life-cycle cost analysis. For example, DOE has not incorporated lifecycle
cost analysis guidance into site contracts. When we brought these issues
to DOE's attention, EM officials responded that they have relied on the
use of incentive-based contracts to ensure contractors are making
cost-effective decisions. Incentive-based contracts provide specific
incentives for specified performance outcomes, often driven by
site-specific goals and objectives in areas such as health, schedule,
cost, or other areas, as negotiated between DOE and the contractor. For
example, incentive-based contracts might help DOE meet goals such as
accelerated cleanup, which may in some cases reduce overall site costs.
However, the use of these contracts does not necessarily ensure that
contractors identify the lowest-cost waste management alternatives, unless
the contract provides this specific focus.

DOE has recognized that its current approach---having each site
responsible for developing mechanisms necessary to control costs-may
result in cost inefficiencies and could limit its ability to meet
departmentwide strategic objectives, such as accelerated waste cleanup and
site closure. To overcome these problems, DOE has begun planning a
national LLRW disposition strategy to minimize life-cycle costs, among
other things. DOE plans to begin implementing this strategy in March 2006,
but specific schedules have not yet been established for when the strategy

will be fully in place. The department faces the following challenges in
achieving an integrated departmentwide strategy:

o 	Collecting basic data on the amounts of LLRW needing disposal by
program offices departmentwide. Although DOE continues to report progress
in disposing of LLRW, the LLRW volumes it reports as needing disposal are
not complete. DOE officials acknowledge that its databases are outdated
and incomplete and do not include all LLRW expected to be generated in the
future as part of ongoing environmental cleanup or produced by non-EM
generators. Complete information is crucial for developing a national
strategy and for holding organizations and individuals responsible and
accountable for cost-effectively managing LLRW. EM plans to gather
complete information as part of its national disposition strategy.

o 	Overseeing LLRW management in a department with a complex organization
and multiple missions. Specifically, DOE's multiple program offices and
related site offices have differing missions and oversee a variety of site
operating contractors, who manage wastes with many different
characteristics. DOE's Oak Ridge site illustrates how this complexity can
pose additional challenges for LLRW management. At the Oak Ridge site, DOE
has three different program offices, each with its own contractor with
differing levels of responsibility for managing or disposing of portions
of LLRW. This condition has complicated efforts to dispose of LLRW
cost-effectively. For example, in 2004, DOE allowed a contractor to
dispose of a supercompactor used to reduce the volume of large pieces of
LLRW debris from its gaseous diffusion plant. The decision to dismantle
and dispose of this compactor was made without a departmentwide assessment
of LLRW volume reduction needs and capabilities, and without fully
considering the supercompactor's potential for reducing LLRW volumes and
lowering costs for other program offices at Oak Ridge and other sites.
Consequently, DOE may have missed a potential cost-saving opportunity
because other waste generator sites might have benefited from the use of
the supercompactor, such as Paducah, Ketucky, which has 37,000 tons of
scrap metal that its current on-site compactor is incapable of crushing,
according to the site's senior contractor official responsible for LLRW
management.

o 	Addressing the impacts of recent state actions. Over the past 2 years,
states' regulatory and legal actions have restricted DOE's access to
disposal facilities, which compounds the challenges of coordinating and

integrating disposal efforts departmentwide. For example, the state of
Washington has sued to prevent LLRW from other DOE sites from being
disposed of at the Hanford facility. Consequently, DOE is incurring
increased costs for storage and treatment.

To ensure the cost-effective management and disposal of LLRW, we are
recommending that the Secretary of Energy take specific actions to ensure
that DOE sites use complete, current, and well-documented life-cycle cost
analyses in making LLRW management decisions, and develop and implement a
strategy for managing LLRW disposal departmentwide. Overall, DOE generally
agreed with our conclusions and thanked us for the recommendations.
Specifically, DOE agreed that its sites are not consistently using
life-cycle cost analysis in making LLRW management decisions. It also
agreed that its current guidance and oversight in the area of life-cycle
cost analysis for LLRW management decisions should be strengthened and
expressed appreciation for our support of an effective National
Disposition Strategy for LLRW management. DOE also provided technical
comments on certain statements in the draft report with which it disagreed
or wanted to clarify, which we incorporated as appropriate.

Background	Under the LLRW Policy Act of 1980, as amended, the federal
government is responsible for the disposal of LLRW owned or generated by
DOE. 8 DOE defines LLRW as all radioactive waste that does not fall within
other classifications, such as spent (used) nuclear fuel and other
high-level waste. Mixed waste is LLRW with hazardous components, such as
lead and mercury. LLRW can include material of varying levels of
radioactivity, from barely contaminated soil and debris to LLRW with
enough radioactivity to require remote handling. LLRW can include items
such as contaminated equipment, protective clothing, rags, and packing
materials and is managed at multiple sites under a variety of contractors.
(See app. I for a list of DOE sites that disposed of the majority of LLRW
in fiscal years 2004 and 2005.)

842 U.S.C. S: 2021c(b).

DOE sites typically dispose of LLRW at (1) on-site facilities, if suitable
capacity is available,9 (2) DOE's regional disposal facilities at the
Hanford Site or the Nevada Test Site, or (3) a commercial facility.10 The
selection of the disposal facility is based partly on the facility's waste
acceptance criteria. These criteria specify the allowable types and
amounts of radioactive materials, and types of containers acceptable at
the disposal facility.

In 2000, we reported that DOE had not developed full life-cycle costs for
its disposal facilities or established guidance to ensure that its
contractors base their disposal decisions on departmentwide considerations
of costeffectiveness, among other things.11 We also reported in 2001 that
cost analyses concerning the use of DOE's on-site disposal facilities
should be periodically updated to take into account changing economic
conditions.12 Subsequently, the House Committee on Appropriations directed
DOE to prepare an objective analysis of the life-cycle costs of LLRW
disposal for various federal and commercial disposal options.13 The
committee was concerned that DOE needed to include in its life-cycle cost
analysis certain cost elements, such as packaging, transportation,
disposal, and postclosure maintenance and surveillance.

In response, in its 2002 report to Congress on life-cycle cost analysis of
LLRW disposal, DOE listed among its next steps for EM sites to consider
the cradle-to-grave costs as they make LLRW management decisions. On July
18, 2002, EM issued guidance directing each site office to develop the
mechanisms necessary to ensure that contractors' LLRW disposal decisions
include the best estimate of full cradle-to-grave costs and analysis of
alternatives. Several other documents on life-cycle cost

9Sites with on-site disposal facilities include the Fernald Environmental
Management Project (in Ohio), Hanford in Washington, Idaho National
Laboratory, Los Alamos National Laboratory in New Mexico, Nevada Test
Site, Savannah River Site in South Carolina, and the Oak Ridge site in
Tennessee.

10Currently, Envirocare of Utah is the primary commercial option available
for disposal of DOE's LLRW.

11GAO/RCED-00-64.

12GAO, Nuclear Cleanup: DOE Should Reevaluate Waste Disposal Options
Before Building New Facilities, GAO-01-441 (Washington, D.C.: May 2001).

13H.R. Rep. No. 107-112, at 135 (2001). A congressional conference
committee later issued a similar directive. H.R. Rep. No. 107-258, at 133
(2001).

analyses are also available. For example, DOE has a cost-estimating guide,
developed in the mid-1990s, that provides a chapter dedicated to
life-cycle cost analysis, including definitions, processes, limitations,
common errors made in life-cycle cost analysis, methods, examples, and
diagrams.14 In addition, although not directly applicable to LLRW
management, guidance and manuals prepared by other federal agencies for
other DOE programs may be useful to the sites in explaining life-cycle
cost analysis methods. For example, the National Institute of Standards
and Technology has published two documents on life-cycle cost analysis
that are applicable to DOE's Federal Energy Management Program.15

  DOE Sites Do Not Consistently Use Life-Cycle Cost Analysis in Managing LLRW

DOE sites prepare various types of cost analyses in making LLRW management
decisions, but these analyses do not consistently use complete, current,
or well-documented life-cycle cost analysis to ensure that the lowest-cost
LLRW management alternatives are identified. As a result, the decisions
the sites make may not take into account the most cost-effective
alternative. These inconsistencies have occurred, in large part, because
DOE's guidance lacks necessary detail and its oversight of contractor
practices is weak.

    Site Cost Analyses Are Not Always Complete, Current, or Well Documented

Complete life-cycle cost analysis is cradle to grave and includes all
costs associated with the management and disposal of LLRW. As DOE's 2002
report to Congress explained, the costs preceding disposal vary greatly
and can be significantly greater than the actual cost of disposal. As a
result, DOE concluded it is essential to consider pre-disposal costs as
well as disposal costs. Table 1 shows the cost elements of a complete
life-cycle cost analysis, according to DOE's 2002 report.

14Department of Energy, Cost Estimating Guide, DOE G 430.1-1 (Washington,
D.C.: Mar. 28, 1997).

15A handbook, most recently updated in 1996, helps explain the
methodologies used in conducting life-cycle cost analysis. (Department of
Commerce, Life-Cycle Costing Manual for the Federal Energy Management
Program, NIST Handbook 135, 1995 Edition, Washington, D.C.: February
1996). In addition, guidance prepared in April 2005 clarifies how DOE
should determine life-cycle costs for energy programs, as required by
section 401 of Executive Order 13123. (National Institute of Standards and
Technology [Prepared for DOE], Guidance on Life-Cycle Cost Analysis
Required by Executive Order 13123, Gaithersburg, Maryland: National
Institute of Standards and Technology, April 2005).

Table 1: Cost Elements in Life-Cycle Cost Analysis and Associated
Activities

Cost element Activities

Preparation	The waste generator samples and analyzes the waste to ensure
that it will be certified as acceptable to the disposal site- actions also
known as waste characterization. The generator is also responsible for
treating the waste so that it is in a proper chemical and physical form to
meet the disposal facility's acceptance criteria. Treatment can include
drying or compaction.

Packaging	The generator is responsible for placing the waste-usually in
the form of soil or debris-in containers or in bulk, such as in a railcar.
The container type and cost vary with the characteristics of the waste.

Transportation	The generator sends LLRW off-site, usually by truck or
rail. According to DOE, truck shipments can cost up to 1.9 times the cost
of rail shipments, depending on the packaging method, waste density, and
routing.

Disposal	The disposal facility operator receives and disposes of LLRW.
Disposal facilities generally incur construction, operation, maintenance,
and postclosure costs that they may pass on to waste generators through
disposal fees. Postclosure activities are required to protect human health
and the environment from hazards remaining after closure, and can include
maintaining and repairing closure caps, monitoring environmental

a

contamination, and erecting and maintaining barriers.

Source: DOE.

aTypically, DOE disposal facilities do not include past construction or
future postclosure costs in their disposal fees because they operate on an
annual appropriations basis. In contrast, Envirocare of Utah, a commercial
operator, charges disposal fees that recoup such costs.

DOE LLRW generator sites we visited did not always include all life-cycle
costs-including the postclosure costs of long-term maintenance and
surveillance of the disposal site-and did not always consider alternative
actions when deciding on how to manage and dispose of LLRW. For example,
despite DOE's guidance to include all disposal costs in its lifecycle cost
analyses, DOE contractors at two sites-Rocky Flats, Colorado, and Paducah,
Kentucky-did not consistently consider postclosure costs in the analyses
supporting their LLRW disposal decisions for fiscal year 2004. In
contrast, the contractor at Fernald, Ohio, prepared a life-cycle cost
analysis that included estimated postclosure costs for both the Nevada
Test Site and for Envirocare of Utah, a commercial disposal facility.
Nevada Test Site officials told us they do not include these future costs
in their disposal fees because they operate on an annual appropriated
funds basis. Nevada Test Site officials estimated that if they were to
include postclosure costs in their fee, these costs would add an
additional $2.38 per cubic foot of waste

to the fee. Envirocare of Utah, on the other hand, includes the estimated
postclosure costs in its disposal fees, as required by the state of Utah.

Costs for certain LLRW activities vary widely among disposal sites and
should be considered in preparing life-cycle cost analysis. For example,
EM's 2002 report to Congress found that costs for one predisposal cost
element-waste characterization-can be higher for wastes shipped to the
Nevada Test Site and the Hanford Site for disposal than for wastes sent to
Envirocare of Utah. Waste characterization costs for the two DOE sites
ranged from $130 to $2,400 per cubic meter, while these same costs ranged
from $30 to $880 per cubic meter at Envirocare of Utah. The major factors
contributing to this cost differential are (1) required procedures for
accepting, handling, and disposing of LLRW with higher levels of
radioactivity at the Nevada Test Site and Hanford and (2) the higher cost
to the generator of characterizing wastes that are shipped in containers
to the Nevada Test Site and Hanford Site for disposal. Although waste
characterization is an important element in life-cycle cost analysis, the
Rocky Flats contractor did not include the costs of these activities in
its cost analysis.

In addition, waste generators do not always include potential lower-cost
alternatives when making LLRW decisions. For example, in fiscal year 2004,
the Paducah contractor shipped 600 cubic meters of LLRW in trucks to
Envirocare of Utah. Although in its preliminary analysis, the site
contractor believed that using rail could save 25 percent in
transportation costs, contractor officials indicated they did not validate
these preliminary assumptions or complete a formal cost analysis of the
rail option.

DOE contractors' cost analyses are not always current. Despite DOE's 2002
recommendation that cost estimates should be revisited periodically, one
DOE waste generator disposed of large volumes of LLRW in fiscal year 2004
on the basis of cost studies completed several years earlier.
Specifically, the contractor at Fernald acknowledged shipping over 100,000
cubic meters of LLRW to Envirocare of Utah in fiscal year 2004, using a
cost analysis completed in 1994. This analysis, while considering all
lifecycle cost elements, had not been updated during this 10-year period
to account for any changes that might have occurred in cost elements, such
as changes in disposal rates, costs for packaging, treatment, or
transportation. For example, disposal rates charged by Envirocare of Utah
can change from year to year, based on price discounts offered for larger
LLRW disposal volumes.

We also found that three of the five DOE sites that had expanded on-site
facilities since 2002 did not complete an analysis comparing the
life-cycle costs of on-site and off-site disposal alternatives. A 2001
congressional conference report requires DOE to perform such an analysis
"before proceeding with any new on-site disposal cell."16 DOE asserts that
the report language does not apply to ongoing facility development or
expansion. Officials at two sites indicated they did not believe they
needed to complete such a life-cycle cost analysis because the expansion
of their on-site disposal facility was already accounted for in the
initial facility design, completed before 2002. The third site completed a
life-cycle cost analysis of LLRW waste streams for its on-site facility.
However, site officials did not complete a life-cycle cost analysis of
off-site disposal because they assumed that the costs of off-site
transportation and disposal would be significant enough to preclude the
off-site option. Although the remaining two sites completed life-cycle
cost studies comparing on-site and off-site disposal costs, these studies
were not submitted to the congressional appropriations committees.

DOE contractors' cost analyses are not always well documented. In some
cases, we could not determine how contractors incorporated cost analyses
into their disposal decisions because documentation was incomplete.
According to DOE and contractor site officials at Rocky Flats, disposal
decisions were at times based on noncost factors, such as schedule or
safety. For example, a 2003 cost study determined that using trucks to
transport building debris to a nearby rail loading area less than 1 mile
away would be more cost-effective than extending a rail line to the
building. However, contractor officials told us they decided to build a
rail extension to the building being demolished because the extra traffic
at the site caused by trucks hauling the LLRW to the rail line could
endanger the health and safety of the workers. This decision, however, was
not documented. Contractor officials at Rocky Flats agreed that such LLRW
management decisions were not consistently documented to show the
rationale for how cost was balanced against other factors.

16H.R. Rep. No. 107-258, at 133 (2001). The five sites expanding their
on-site disposal facilities since 2002 included the On-Site Disposal
Facility at Fernald (Ohio), the Idaho CERCLA Disposal Facility at the
Idaho National Laboratory, the TA-54 On-Site Disposal Facility at the Los
Alamos National Laboratory, the Environmental Management Waste Management
Facility at Oak Ridge, Tennessee, and the Engineered Trenches at the
Savannah River Site in South Carolina.

At other sites, cost analyses were informal and not documented. For
example, contractor officials responsible for LLRW disposal at Paducah
told us that they made some disposal decisions informally because they
believed their knowledge of the factors involved made it unnecessary to
complete a formal analysis. In addition, Oak Ridge contractor officials
coordinating the removal of LLRW from the site told us they did not
complete a formal analysis of disposal options for each waste stream
because their contract did not require such an analysis.

DOE's 2002 Guidance Lacks Necessary Detail

DOE sites have not consistently used life-cycle cost analysis, in part
because EM's 2002 guidance memo on life-cycle cost analysis lacks the
necessary detail for how and when to use it. Consequently, each site was
responsible for deciding how to incorporate cost into its LLRW management
decisions. For example, although EM's guidance directed sites "to develop
mechanisms necessary to establish that its LLRW disposal decisions include
the best estimate of full `cradle to grave' costs and analysis of
alternatives," the guidance did not do the following things:

o 	Lay out a systematic, consistent method for (1) analyzing all cost
elements or (2) comparing key alternatives within these cost elements to
determine the lowest cost. Consequently, as we found, analyses often did
not include cost elements that might have altered a disposal decision.

o 	Specify when or under what circumstances sites should prepare cost
analyses. As we found, some sites did not update their analyses to show
that their original LLRW management decisions were still supported by
current economic conditions;

o 	Refer sites to relevant DOE orders, manuals, or other reference
materials that could provide consistent direction on life-cycle cost
analysis. Such references could include, for example, the DOE order for
real property asset management, the DOE manual on preparing lifecycle cost
estimates, Office of Management and Budget guidance for completing a
cost-effective analysis, and the National Institute of Standards and
Technology guidance for completing life-cycle cost analysis, or portions
of these documents.

o 	Lay out how final LLRW management decisions should be documented. For
example, the guidance does not explain how sites should weigh disposal
costs against noncost factors such as safety and health. As we

found, without adequate documentation at some of the sites we visited, it
was difficult for site contractors to justify the decisions they had made.

    DOE Has Not Taken Steps to Oversee Contractors' Use of Life-Cycle Cost
    Analysis, Relying Instead on Incentive-Based Contracts to Ensure
    Cost-Effective LLRW Decisions

DOE site offices were ineffective in overseeing contractors' use of
lifecycle cost analysis, which also contributed to ineffective
implementation of the guidance. At the sites we visited, neither DOE nor
the contractors had taken identifiable steps to implement the guidance on
life-cycle cost analysis.

First, DOE has not incorporated life-cycle cost guidance into contracts.
Most of the incentive-based contracts at the sites we visited require
contractors to comply with DOE Order 430.1A on life-cycle asset
management, which requires the use of life-cycle cost analysis. However,
neither that order, nor its successor, DOE Order 430.1B, provide
sufficient detail on life-cycle cost analysis definitions, methods,
examples, or diagrams that would be useful in preparing such analyses. In
contrast, DOE's cost-estimating guide provides a chapter dedicated to
life-cycle cost analysis.17 This chapter includes definitions, processes,
limitations, a list of common errors made in life-cycle cost analysis,
methods, examples, and diagrams. However, the estimating guide is not
explicitly cited in DOE Order 430.1A or 430.1B, or in the site contracts.
As a result, the contractor official responsible for controlling LLRW
costs at Rocky Flats, for example, could not tell us whether the
contractor used DOE's cost-estimating guide, particularly the chapter on
life-cycle cost analysis in LLRW management decisions, because he was not
familiar with the guide.

Second, DOE field offices have not taken steps to implement guidance or to
evaluate contractors' use of life-cycle cost analysis. For example,
contractor officials at Paducah were not aware of EM's July 18, 2002,
guidance memo on life-cycle cost analysis until we showed a copy to them
at the time of our visit. In addition, in October 2002, DOE's Rocky Flats
Field Office sent a memo to its contractor, Kaiser-Hill Company,
concerning this EM guidance. According to the memo, the department was
already aware that the contractor used licensed commercial disposal
facilities and that disposal decisions considered technical acceptability,
schedule, and cost benefit; the field office therefore concluded that the
mechanisms to

17DOE G 430.1-1.

establish cost-effective disposal decisions by Kaiser-Hill were already in
place and thus satisfied the intent of the EM guidance. However, we found
no indication at any of the sites we visited that DOE officials had
specifically assessed the contractor's use of life-cycle cost analysis in
making LLRW management decisions.

When we brought our concerns to EM officials on the inconsistent use of
life-cycle cost analysis at the sites, they responded that EM has relied
on the use of incentive-based contracts to ensure contractors are making
costeffective LLRW management decisions, rather than encouraging the use
of life-cycle cost analysis. Incentive-based contracts provide specific
incentives for specified performance outcomes, often driven by
sitespecific goals and objectives in areas such as health, safety,
schedule, cost, or other areas, as negotiated between DOE and the
contractor. We recognize that incentive-based contracts might help DOE
meet goals such as accelerated cleanup and that these contracts may, in
some cases, reduce overall site costs. However, their use may not
necessarily identify lowestcost waste management alternatives, unless the
contract provides this specific focus. Since the department relies on
incentive-based contracts, it is critical that the contract's total
estimated cost be based on, among other things, life-cycle cost analyses
of LLRW management alternatives and that the contract specify the proper
use of life-cycle cost analysis.

Without the proper use of life-cycle cost analysis in establishing and
overseeing incentive-based contracts, DOE cannot be assured that the
contractor has identified the lowest life-cycle cost alternatives for LLRW
management. For example, the Rocky Flats contractor, operating under an
incentive-based contract, prepared various analyses of transportation
alternatives from 2000 to 2003, but these analyses did not comprehensively
address sitewide LLRW disposal needs because they were incomplete and not
updated. Specifically, two DOE contractor draft studies in 1999 and 2000
indicated that adding rail as an alternative for shipping LLRW from Rocky
Flats to off-site disposal facilities could save millions of dollars in
transportation costs. Despite this cost-saving potential, the contractor
decided in 2000 to rely exclusively on trucks for all Rocky Flats LLRW
shipments. Subsequently, in 2002, the contractor analyzed transportation
alternatives specifically for shipping certain contaminated LLRW soil
offsite. Although the analysis concluded that using rail to transport this
soil alone could save up to $216,000, the contractor continued using
trucks exclusively in fiscal year 2003 and most of fiscal year 2004 to
transport this waste to Envirocare of Utah. In 2003 the contractor
determined that the total volume of this LLRW soil would be significantly
higher than

previously estimated, further increasing the cost-saving potential of
using rail, but nevertheless did not update or formalize the analysis.
Instead, the contractor decided to send the soil by rail only after
determining that it would use rail for shipping debris from an altogether
separate LLRW project at Rocky Flats. In September 2004, the site began to
transport the LLRW soil by rail, after it had already sent over 4,200
truck shipments of soil to Utah in fiscal years 2003 and 2004. Use of rail
instead of trucks to ship the LLRW soil might have saved the site over $4
million during fiscal year 2004. Comprehensive, complete, and current
analyses of transportation alternatives for sitewide LLRW disposal needs
might have better identified the lowest-cost transportation alternative,
therefore providing an opportunity for reducing LLRW management costs for
the site.

In April 2005, as part of our ongoing engagement, we briefed the
Subcommittee on Energy and Water Development, House Committee on
Appropriations, on the preliminary results of our work. We stated that DOE
LLRW generators were not consistently using life-cycle cost analyses in
their disposal decisions because of poor guidance and weak oversight. One
month later, in its report to accompany the fiscal year 2006 energy and
water appropriations bill, the full Appropriations Committee emphasized
its intention to have DOE use life-cycle cost analysis in LLRW management
decisions. Using our preliminary findings, the committee noted its concern
with the department's reliance on incentive-based contracts as a mechanism
for ensuring cost-effective decision making rather than using life-cycle
cost analyses, as directed.18

According to the committee, while contractors should pursue costeffective
cleanup activities at their sites, it is up to the federal management
responsible for those contractors to provide guidance and make decisions
that benefit the whole DOE complex. As such, the committee directed the
Secretary of Energy to report to the committee within 30 days of enactment
of the 2006 Energy and Water Development Appropriations Act, on the
specific steps the department will take to ensure that contractors use
lifecycle cost analysis in considering LLRW options, and that DOE
maintains a viable oversight function to oversee the implementation of
such guidance. The committee further recommended that a third of EM's
budget for

18H. R. Rep. No. 109-86, at 147-148 (2005).

managing the cleanup program, or $82,924,000, be withheld until after the
Secretary of Energy delivers a report to the committee.19

  DOE Faces Challenges in Developing a National LLRW Disposition Strategy

To better coordinate disposal efforts among sites and program offices,
increase efficiencies, and minimize life-cycle costs, DOE has begun
developing a national LLRW disposition strategy. Although DOE expects to
begin implementing this strategy by March 2006, specific schedules have
not yet been established for when the strategy will be fully in place, and
it faces several significant challenges. These include developing a
database that can be used to manage LLRW complexwide and overcoming
organizational obstacles created by the department's varied missions.

    DOE Expects to Begin Implementing a Departmentwide Strategic Plan for
    Disposing of LLRW in 2006

DOE has recognized that its current approach---having each site
responsible for developing mechanisms necessary to control costs-may
result in cost inefficiencies and could limit its ability to meet
departmentwide strategic objectives, such as accelerated waste cleanup and
site closure. To overcome these problems, EM has begun developing a
National Disposition Strategy, which it plans to implement in 2006. EM
plans to use the strategy to evaluate predisposal, storage, treatment, and
disposal options across the department. The focus of the strategy will be
on DOE LLRW that is shipped off-site for disposal and on waste for which
DOE currently has no treatment or disposal options. EM hopes to make
specific recommendations regarding waste without treatment or disposal
options, develop a LLRW database, and reduce predisposal costs. To
implement a successful strategy, EM expects to integrate sites' waste
disposition plans by (1) identifying and quantifying LLRW by waste
category and site, (2) developing potential treatment and disposal
options, and (3) identifying federal and commercial site capabilities for
disposal of LLRW. DOE has not yet established specific schedules for when
the strategy will be fully in place.

EM plans to develop this national disposition strategy in two phases. In
Phase I, EM will examine those DOE sites that now have significant
quantities of EM LLRW, including Oak Ridge, Savannah River, Idaho

19H.R. Rep. No. 109-86, at 151 (2005).

National Laboratory, Hanford (including the Office of River Protection),20
Fernald, Portsmouth (in Ohio), and Paducah (in Kentucky). DOE will also
take into account LLRW requiring disposal from fiscal year 2005 to about
fiscal year 2035. In Phase II, EM will examine the LLRW managed by other
DOE program offices, such as NNSA and the Office of Science. Efforts in
Phase II will require considerable coordination among different DOE
program offices.

    DOE Lacks Departmentwide Data on Its LLRW Inventory

To develop and implement its national strategy for LLRW disposition, DOE
needs basic data-both current and forecasted-from individual sites on
their disposition plans. However, EM does not have complete data, either
for its own sites or for non-EM sites with LLRW. Although DOE continues to
report progress in disposing of LLRW, the LLRW volumes it reports as
needing disposal are not complete. EM's databases do not include all LLRW
expected to be generated in the future as part of ongoing environmental
cleanup or waste produced by non-EM generators. This information may be
time-consuming and costly to obtain from the different program offices.
For example, when we sought information on current and forecasted LLRW
volumes from the Office of Science, NNSA, and the Office of Nuclear
Energy, Science, and Technology (Nuclear Energy), only the Office of
Science provided the requested information. NNSA and Nuclear Energy did
not provide this information because, according to officials from each of
these program offices, the information was not readily available.

Regarding cost information, EM's 2002 report to Congress recommended that
DOE sites consider all life-cycle costs in evaluating alternatives for
LLRW management, but it cautioned that DOE's data collection and reporting
processes needed to be improved to make any departmentwide cost analyses
useful. EM officials stated that they will consider LLRW costs in their
National Disposition Strategy. Currently, according to EM, DOE does not
have uniform requirements for defining, monitoring, and reporting waste
disposal costs, and sites may differ significantly in their protocols for
collecting cost information. However, EM agrees that if DOE is to use
lifecycle cost analysis to improve the bases for sites' disposal
decisions, standardized protocols for collecting and reporting the data
would have to be established.

20In accordance with 50 U.S.C. S: 2622, the Office of River Protection was
established in 1998 to manage the Department of Energy's largest, most
complex environmental cleanup project: Hanford tank waste retrieval,
treatment, and disposal.

DOE recognizes these problems and has begun to develop some information it
needs to support the evolving disposition strategy. Specifically, DOE is
determining (1) what data it needs; (2) whether it can use the data in
existing databases or has to develop a new database; and (3) how these
data should be organized in a database.

    DOE's Organization and Multiple Missions Pose Challenges to Developing a
    National Strategy

EM's ability to develop an integrated strategy for managing LLRW is
further complicated by the fact that DOE has multiple program and site
offices with different missions, and these offices oversee a variety of
site contractors who manage waste with many different characteristics.

DOE's experience with the use of a supercompactor at its Oak Ridge site
illustrates the difficulty EM faces in developing a waste disposition
strategy that covers multiple program offices. At this site, EM and NNSA
program offices have their own contractors that are responsible for
various activities, including managing or disposing of LLRW. In 1997, DOE
awarded BNFL a 6-year fixed-price contract to decontaminate and
decommission three buildings once used to enrich uranium at the Oak Ridge
gaseous diffusion plant.21 These buildings comprised more than 4.8 million
square feet and housed more than 328 million pounds of material. To
dispose of this waste, BNFL had constructed a supercompactor, the largest
of its type in the nuclear industry. Using this supercompactor, the
contractor was able to reduce the volume of several thousand tons of LLRW
by 75 percent and save an estimated $100 million in LLRW management and
disposal costs. Despite the supercompactor's potential for reducing LLRW
volumes and lowering costs for the other program offices at the Oak Ridge
site, the contractor, with the approval of the DOE site office, decided in
2004 to dismantle the supercompactor and ship it as LLRW to Envirocare of
Utah for disposal.

According to NNSA officials at the Y-12 Plant, also located at the Oak
Ridge site, they have contaminated buildings that need to be dismantled
and disposed of, but neither DOE nor the contractor consulted with NNSA
officials about the potential use of the supercompactor for NNSA's ongoing
compacting needs. Similarly, contractor officials at EM's Paducah Site in
Kentucky, which is about 300 miles away, stated that they might have
benefited from the use of the supercompactor but were not given the

21In 2005, BNFL changed its name to British Nuclear Group of America.

opportunity to consider alternatives to its disposal. For example, Paducah
had about 37,000 tons of remaining scrap metal, as of June 26, 2005, that
its current on-site compactor is incapable of crushing, according to a
contractor official at the Paducah site.

A DOE official at the Oak Ridge site stated that it would probably not be
cost-effective to ship debris to the supercompactor from other sites, and
the supercompactor could not cost-effectively be relocated. However,
neither DOE nor contractor officials provided any documentation of cost
analysis to support this statement. Although the dismantling, shipping,
and disposal of the supercompactor may have been the correct decision, DOE
did not conduct a departmentwide assessment of volume reduction needs and
capabilities, and the costs or potential obstacles associated with
maintaining or moving the supercompactor under various LLRW management
alternatives. Consequently, DOE may have missed a potential cost-saving
opportunity. Oak Ridge officials told us that they are currently
developing an integrated disposition plan to better coordinate LLRW
management activities specifically for the Oak Ridge site. According to
DOE, other integrated activities underway at Oak Ridge include, among
other things, a pilot program between EM and the Office of Science to
dispose of LLRW that needs no further storage or processing.

    Litigation and State Actions Can Affect DOE's Waste Management Options

As a result of lawsuits and state regulatory and legislative actions in
two states-Washington and Nevada-DOE cannot currently rely on either of
its federal disposal facilities-Hanford or the Nevada Test Site-to dispose
of mixed LLRW. Consequently, DOE is incurring increased costs for storage
and treatment. Texas may provide DOE with new disposal options, but not
sooner than December 2007. Specifically:

o 	In July 2004, Washington state asked a U.S. district court to prohibit
DOE from sending LLRW from other DOE sites to Hanford for disposal.22 DOE
voluntarily suspended LLRW shipments pending the court's decision. In May
2005, the court ruled in favor of the state, issuing a preliminary
injunction prohibiting DOE from sending LLRW from other sites to Hanford
for disposal.23 In addition, in November

22Washington asserted, among other things, that DOE did not comply with
the National Environmental Policy Act of 1969 and implementing
regulations.

23Washington v. Bodman, 2005 WL 1130294 (E.D. Wash. May 13, 2005).

2004, Washington state voters passed an initiative, now incorporated in
Washington state law, that would prohibit DOE from accepting out-ofstate
waste until existing waste at Hanford is cleaned up.24 The scope and
constitutionality of the initiative are currently being litigated in
federal district court.25 DOE officials told us that its inability to ship
mixed LLRW to Hanford from other states is increasing costs and may delay
cleanup and closure plans at several sites. For example, at Rocky Flats,
approximately 1,000 cubic meters of mixed LLRW, intended for disposal at
Hanford, instead had to be shipped off-site for commercial treatment,
temporary storage, and eventual disposal at Envirocare of Utah to avoid
delaying site cleanup; the Rocky Flats contractor estimates incremental
storage, handling, treatment, and disposal costs of this LLRW may exceed
$8 million.

o 	In Nevada, as of August 2005, DOE was still awaiting approval from
state regulators for a permit to dispose of, at the Nevada Test Site,
mixed LLRW from other sites.26 After DOE filed its permit application in
December 2000, Nevada objected to DOE's planned method of disposal. DOE is
working with the state regulators to achieve a mutually agreeable
resolution, and state officials indicate this issue could be resolved by
the end of 2005. Until DOE receives this permit, DOE cannot dispose of
mixed LLRW generated at other sites at the Nevada Test Site.

o 	In 2004, the Nevada Attorney General objected to DOE's plan to ship
certain LLRW from DOE's Fernald, Ohio, site for disposal at the Nevada
Test Site, asserting in a letter to DOE that the plan violated federal law
and regulations. Pending a resolution of these issues, DOE signed a $7.5
million contract in April 2005 with a commercial facility in Texas to
temporarily store 6,800 cubic meters of this LLRW for up to 2 years.

o 	Texas may provide DOE with additional storage options. In February
2005, the state approved a license amendment for Waste Control Specialists
to enlarge its LLRW storage facility. In addition, the state has

24Initiative 297, the Cleanup Priority Act, is now codified in chapter
70.105E of the Revised Code of Washington.

25United States v. Hoffman, No. CV-04-5128-AAM (E.D. Wash. filed Dec. 1,
2004). The U.S. district court certified questions of state law to the
Washington Supreme Court, which issued its ruling on July 28, 2005. United
States v. Hoffman, 116 P.3d 999 (Wash. 2005).

26At the Nevada Test Site, the hazardous components of mixed wastes are
regulated by the State of Nevada under the Resource Conservation and
Recovery Act of 1976, as amended.

begun a technical review of WCS's application for a LLRW disposal facility
license, which could be issued by December 2007.

Conclusions	Given the large volumes of LLRW generated by DOE activities,
it is imperative that DOE recognize the importance of life-cycle cost
analysis in identifying the most cost-effective alternatives for managing
LLRW and then weighing the cost of these alternatives against noncost
factors, such as safety and schedule. However, EM's July 2002 guidance on
life-cycle cost analysis did not include information on how or when such
an analysis should be completed. Moreover, the department has not
performed oversight to ensure that contractors are completing life-cycle
cost analyses. EM has elected not to encourage the use of life-cycle cost
analysis in making LLRW management decisions, relying instead on
incentive-based contracts to ensure contractors are making cost-effective
decisions. However, we believe that this contract mechanism does not
necessarily ensure that contractors identify the lowest-cost LLRW
management options. Without complete, well-documented life-cycle cost
analysis, EM may be overlooking cost-saving opportunities that could have
resulted from pursuing alternative disposal options. Furthermore, this
lack of transparency diminishes confidence in DOE's ability to ensure that
contractors have considered life-cycle costs, regardless of whether the
lowest-cost alternative is selected.

Although DOE has been disposing of LLRW for decades, it still lacks an
integrated national strategy for doing so. Such a departmentwide strategy
is crucial for ensuring that LLRW management needs throughout DOE are
identified and addressed in a cost-effective manner that also meets other
departmental goals, such as timely site cleanup. Specifically, an
integrated approach could help consolidate similar types of LLRW to obtain
economies of scale and lower per-unit disposal costs across the complex.
DOE will need to develop basic information on LLRW volumes departmentwide
and by program office, and to overcome the challenges posed by DOE's
complex organization and multiple missions, and recent state actions.

Recommendations for To promote cost-effective LLRW management, we are
recommending that Executive Action the Secretary of Energy take the
following four actions:

o 	Prepare comprehensive guidance on life-cycle cost analysis that, at a
minimum, specifies (1) a systematic, consistent method of analyzing all
cost elements or of comparing key alternatives within these cost elements
to determine the lowest cost; (2) when and under what circumstances sites
should prepare cost analyses; (3) relevant DOE orders, manuals, or other
reference materials that should be consulted to provide consistent
direction on how and when to perform the analysis; and (4) how final LLRW
management decisions should be documented to demonstrate that life-cycle
cost factors were adequately weighed against noncost factors, such as
safety, health, or schedule.

o 	Incorporate the revised life-cycle cost guidance into new or existing
site contracts or into the departmental orders cited in those contracts.

o 	Direct DOE to oversee contractors to ensure that site contractor
officials properly use life-cycle cost analyses in evaluating LLRW
management alternatives.

o 	Actively promote and monitor the development of a timely, national LLRW
management strategy that is based on departmentwide data on LLRW needing
disposal, and ensure that the implementation of the strategy is fully
carried out.

  Agency Comments and Our Evaluation

We provided DOE with a draft of this report for review and comment.
Overall, DOE generally agreed with our conclusions and thanked us for the
recommendations, but disagreed with or wanted to clarify certain
statements in the draft report and provided technical comments, which we
incorporated as appropriate. Specifically, DOE agreed that its sites are
not consistently using life-cycle cost analysis in making LLRW management
decisions. It also agreed that its current guidance and oversight in the
area of life-cycle cost analysis for LLRW management decisions should be
strengthened and noted that it is currently reevaluating its guidance
documents and their implementation. In addition, DOE expressed
appreciation for our support of an effective National Disposition Strategy
for LLRW management, and expects this strategy to be available by March
2006.

DOE also provided comments on several specific statements in our report.
First, DOE disagreed with our statement on the lack of an effective,
integrated approach for LLRW management at Oak Ridge and offered examples
of integration, which we have incorporated into our report.

Nonetheless, we found that not all LLRW activities at Oak Ridge were
integrated into a sitewide LLRW management strategy. For example, NNSA
officials told us their future need to decontaminate and decommission
numerous buildings on the site had not yet been included in any sitewide
LLRW management strategy.

Second, in its technical comments, DOE stated that our discussion of the
supercompactor at Oak Ridge was misleading and did not agree that cost
savings would have been realized if the supercompactor had been retained
and redeployed to another site. We believe that our discussion of the
supercompactor is accurate. It was intended to illustrate the difficulty
EM faces in developing a waste disposition strategy that covers multiple
program offices. In its technical comments, DOE told us that the
contractor at Oak Ridge completed a cost analysis and decided that the
supercompactor should not be reused. Nevertheless, neither DOE nor
contractor officials provided us with any documentation of a cost analysis
to support the dismantling and disposition of the supercompactor. DOE also
told us that the contractor who owned the supercompactor and Oak Ridge
management "openly solicited" other contractors in the complex about
potentially reusing the supercompactor but did not find any interest.
However, NNSA officials at Oak Ridge told us that neither DOE nor the
contractor consulted with them about the potential use of the
supercompactor, and the contractor at Paducah told us that it might have
benefited from the supercompactor but was not given the opportunity to
consider alternatives to its disposal.

Finally, DOE also stated that the lack of consistency that we found in
implementing cost guidance and preparing formal documentation should not
be interpreted to mean that the department's waste disposal systems are
necessarily inefficient or overly expensive, and asserted that flexibility
is needed in the level of detailed cost analysis required. However, we did
not conclude that the lack of consistent implementation and the lack of
documentation was indicative of an inefficient or overly costly LLRW
management system. Rather, we stated that we could not determine how
contractors incorporated costs analyses into their disposal decisions
because documentation did not exist or was incomplete. Conclusions cannot
be drawn about the cost-effectiveness of LLRW management decisions if
contractors do not adequately document their decisions for not using
life-cycle cost analysis and DOE does not require them to do so. While we
would agree that flexibility may be important in determining the level of
cost analyses required, we believe this flexibility should be

accompanied by proper documentation to support the level of analysis
completed and the degree to which life-cycle cost principles were
followed.

DOE's comments on our draft report are presented in appendix II.

We are sending copies of the report to the Secretary of Energy, the
Director
of the Office of Management and Budget, and appropriate congressional
committees. We will make copies available to others on request. In
addition, the report will also be available at no charge on the GAO Web
site
at http://www.gao.gov.

If you or your staff have any questions about this report, please call me
at
(202) 512-3841. Contact 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 III.

Gene Aloise
Director, Natural Resources

and Environment

Appendix I

Disposed Waste Volume by Major DOE Generator Sites, Fiscal Year 2004 through
Second Quarter, Fiscal Year 2005

                          Waste volume in cubic meters

Generator site/contractor

                              Total waste disposed off-site, fiscal year 2004

Total waste disposed off-site, October 2004-March 2005

                                      Total waste disposed for 18month period

                  Rocky Flats/Kaiser                            
                                Hill    118,460       63,940          182,400 
               Fernald/Fluor Fernald    102,343       68,495          170,838 
                    Mound/CH2M Hill,                            
                               Mound    43,554        55,534           99,088 
                           Oak Ridge                            
                           ETTP/BNFL    37,502        9,278            46,780 
                 Knolls Atomic Power                            
                  Laboratory/Nuclear                            
                       Fuel Services    21,208        3,432            24,640 
                           Oak Ridge                            
                 Reservation/Bechtel                            
                              Jacobs     9,658        7,686            17,344 
                  Portsmouth/Bechtel                            
                              Jacobs    11,038        3,644            14,682 
                 Brookhaven National                            
                     Lab/ Brookhaven                            
                  Science Associates     4,199        8,436            12,635 
                     Paducah/Bechtel                            
                              Jacobs     9,690         268              9,958 

Oak Ridge National
Laboratory/
University of
Tennessee/Battelle 440 4,984 5,424

                     Ashtabula/RMI                              
                          Titanium     4,056                  0         4,056 
                  West Valley/West                              
                    Valley Nuclear                              
                          Services     1,124          2,042             3,166 
                      Oak Ridge Y-                              
                           12/BWXT     2,485                400         2,885 
               Remaining generator                              
                        sites (27)     12,508         5,461            17,969 
                             Total    378,265        233,600          611,865 

Source: DOE waste generator sites and EM headquarters.

Note: We identified 40 Department of Energy (DOE) waste generators for the
period we examined. We list in this table the 13 generators with the
highest volume of waste disposed off-site during this period. These 13
generators accounted for over 97 percent of DOE's low-level radioactive
waste (LLRW) volume disposed of off-site for the 18-month period.

                                  Appendix II

                     Comments from the Department of Energy

Appendix IIComments from the Department of Energy

Appendix III

                     GAO Contact and Staff Acknowledgments

                     GAO Contact Gene Aloise (202) 512-3841

Staff 	In addition to the individual named above, Daniel Feehan, Doreen
Feldman, Thomas Kingham, Mehrzad Nadji, Omari Norman, Christopher

Acknowledgments	Pacheco, Judy Pagano, Carol Herrnstadt Shulman, and Peter
Zwanzig made key contributions to this report.

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