Chemical Safety Board: Status of Implementation Efforts
(Statement/Record, 04/29/99, GAO/T-RCED-99-167).

Pursuant to a legislative requirement, GAO discussed the status of the
Chemical Safety and Hazard Investigation Board's: (1) investigations and
recommendations; (2) pay structure and use of staff; and (3) contracting
activities.

GAO noted that: (1) the Board has undertaken 11 full-scale
investigations of chemical incidents and issued reports with
recommendations on 2 of them; (2) draft reports are in process for 7 of
the remaining investigations; (3) the Board's recommendations have been
aimed at encouraging industry and government agencies to upgrade their
procedures, training, and communication of hazards; (4) as of February
1, 1999, the Board had 20 employees widely distributed among its
offices, such as investigations, general counsel, and external
relations, and 4 Board members; (5) the average compensation is about
$89,000 in salary and benefits; (6) the Board expects this average
compensation to be reduced to about $68,000 if it receives approval to
hire up to 60 employees; (7) GAO identified 8 contracts between the
Board and other entities that cost $100,000 or more; (8) the total cost
of the 8 contracts was about $3 million; (9) about one-third of this
amount directly supported the Board's investigations; (10) the balance
involved acquiring such goods and services as the development of a web
site, the establishment of a chemical incident data base, and the
production of an informational video; (11) GAO has two main concerns
about the Board's actions to date; (12) the Board has not updated its
August 1997 Business Plan to reflect the unanticipated backlog of
ongoing investigations; (13) critical to any effective plan for
addressing this backlog is an examination of how the Board chooses cases
to investigate and how it allocates its existing and future resources;
(14) the Board has not instituted formal, written procedures for its
staff to follow in awarding and managing contracts; and (15) such
procedures can help ensure adequate internal controls and help avoid
some contracting problems encountered by the Board.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-99-167
     TITLE:  Chemical Safety Board: Status of Implementation Efforts
      DATE:  04/29/99
   SUBJECT:  Budget administration
             Compensation
             Safety regulation
             Safety standards
             Hazardous substances
             Toxic substances
             Industrial accidents
             Accident prevention
             Human resources utilization
             Contract oversight

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rc99167t.book GAO

United States General Accounting Office

Testimony Before the Subcommittee on Veterans Affairs, Housing and
Urban Development, and Independent Agencies,

Committee on Appropriations, U.S. Senate

To Be Released At 5:30 p.m., EDT Thursday, April 29, 1999

CHEMICAL SAFETY BOARD

Status of Implementation Efforts

Statement for the Record David G. Wood, Associate Director
Environmental Protection Issues Resources, Community, and Economic
Development Division

GAO/T-RCED-99-167

Page 1 GAO/T-RCED-99-167

Mr. Chairman and Members of the Subcommittee: We appreciate this
opportunity to provide a statement for the record for use in the
Subcommittee's hearing on the fiscal year 2000 budget request for
the Chemical Safety and Hazard Investigation Board (the Board).
The Board recommends steps to enhance industrial safety based on
its investigations of accidental release of toxic and hazardous
chemicals and its other activities. The Board was funded at $4
million in fiscal year 1998, its first year of operation, and $6.5
million in fiscal year 1999. The Board is required to submit its
budget request concurrently to the Office of Management and Budget
(OMB) and the Congress. For fiscal year 2000, the Board has
requested $12.5 million while the President's budget, after OMB's
review, has requested $7.5 million for the Board.

You expressed concern that the new organization's operational
costs, especially salaries, might grow too quickly and become
excessive. At your request, we reviewed the status of the Board's
efforts to carry out its mission. Specifically, we are providing
information on the status of the Board's (1) investigations and
recommendations, (2) pay structure and use of staff, and (3)
contracting activities. We are also providing information on our
concerns about the Board's actions.

In summary, we found the following:  The Board has undertaken 11
full-scale investigations of chemical

incidents and issued reports with recommendations on 2 of them. In
addition, draft reports are in process for the remaining
investigations. The Board's recommendations have aimed at
encouraging industry and government agencies to upgrade their
procedures, training, and communication of hazards.  As of
February 1, 1999, the Board had 20 employees widely distributed

among its offices, such as investigations, general counsel, and
external relations, and 4 Board members. The average compensation
is about $89,000 in salary and benefits. The Board expects this
average compensation to be reduced to about $68,000 if it receives
approval to hire up to 60 employees.  We identified eight
contracts between the Board and other entities that

cost $100,000 or more. The total cost of the 8 contracts was about
$3 million. About one-third of this amount directly supported the
Board's investigations. The balance involved acquiring such goods
and services as the development of a web site, the establishment
of a chemical incident data base, and the production of an
informational video.

Page 2 GAO/T-RCED-99-167

 We have two main concerns about the Board's actions to date.
First, the Board has not updated its August 1997 Business Plan to
reflect the unanticipated backlog of ongoing investigations.
Critical to any effective plan for addressing this backlog is an
examination of how the Board chooses cases to investigate and how
it allocates its existing and future resources. Second, the Board
has not instituted formal, written procedures for its staff to
follow in awarding and managing contracts. Such procedures can
help ensure adequate internal controls and help avoid some
contracting problems encountered by the Board.

Background The Board was created as an independent agency under
the Clean Air Act Amendments of 1990. 1 However, the Board did not
become operational

until 1998 because of funding constraints. The act directed the
Board to (1) investigate and report on the circumstances and
probable causes of any accidental release of toxic or hazardous
chemicals resulting in a fatality, serious injury, or substantial
property damages; (2) recommend measures to reduce the likelihood
or the consequences of accidental releases and propose corrective
measures; and (3) establish regulations for the reporting of
accidental releases. The act authorized the Board to conduct
research and studies with respect to the potential for accidental
releases and to issue reports concerning the prevention of
chemical accidents to the Environmental Protection Agency (EPA)
and Occupational Safety and Health Administration (OSHA).
Furthermore, the Board is to coordinate its activities with other
federal agencies such as the National Transportation Safety Board
(NTSB) and OSHA.

According to relevant legislative committee reports, the Board is
modeled after the NTSB, which retained the lead role in
investigating transportation- related chemical incidents. The
Board has no enforcement authority and a very limited regulatory
role. Because the EPA and OSHA also have responsibilities in
responding to chemical incidents, the Board has developed
memorandums of understanding with these agencies to coordinate
efforts and minimize potential duplication if they are
investigating the same incident.

Chemical incidents occur regularly and often have serious
consequences. According to a Board report, during the period 1987
to 1996, about 605,000

1 42 U.S.C.  7412(r)(6).

Page 3 GAO/T-RCED-99-167

known chemical incidents occurred, including about 250,000
chemical incidents that occurred at fixed locations occupied by
industrial and commercial businesses and about 260,000 incidents
related to the transportation of chemicals. 2 On average, 127
incidents per year involved fatalities.

Status of Investigations and Recommendations

To carry out its mission of enhancing industrial safety, the Board
conducts full-scale investigations and limited investigations
(called reviews) of chemical incidents and makes recommendations.
The status of these activities is discussed in the following
sections.

Investigations By statute, the Board investigates accidental
chemical releases resulting in a fatality, serious injury, or
substantial property damage. These

investigations often involve extensive site visits, evidence
collection, and analytical work. Because of limited resources, the
Board decides where to initiate investigations. In these
decisions, it weighs such factors as the expected impact of its
work and the potential for similar incidents at other locations.
The Board uses in-house and contractor staff, but assigns
leadership to its own staff. The lead investigator is expected to
direct the work, visit the site as necessary, and manage the
report writing process. While the Board currently follows the
Department of Energy protocols for accident investigations, it is
now developing its procedures and expects to complete them by next
year.

The Board started five full-scale investigations in 1998 and,
through March 30, six in 1999. 3 Of the 11 investigations, 2 from
1998 have been closed and in each case, a report was issued. The
first investigation took about 9 months and the second about 11
months from start to finish. Draft reports are in process for the
remaining three investigations begun in 1998 and the six
investigations begun in 1999.

Reviews The Board conducts reviews when resources are not
available to perform a field investigation, but knowledge about an
incident could still provide

valuable information for preventing future incidents. A review is

2 The 600K Report  Commercial Chemical Incidents in the United
States, 1987-1996 . February 1999.

3 Unless otherwise noted, all references to years will be fiscal
years.

Page 4 GAO/T-RCED-99-167

performed within the Board's offices and relies mainly on
documents and reports from other federal agencies and state
agencies, as well as the companies' internal investigations.
According to the Board, it takes about 40 days to gather and
analyze information, which may not be available until 6 months
after the incident, and additional time may be used to verify the
facts and resolve legal and technical issues.

The Board started 14 reviews in 1998 and 9 in 1999. The Board has
not issued any reports stemming from its reviews. As of March 30,
1999, it had closed 6 reviews with no report, was preparing a
draft report for 3 ongoing reviews, and had yet to begin drafting
a report for 14 ongoing reviews. According to an agency document,
the six reviews were closed without reporting because, among other
reasons, information was insufficient or conflicting, and some
cases had limited application. Board officials told us, however,
that the draft reports for the ongoing reviews are expected to
result in valuable information for preventing future incidents.

Recommendations As of March 30, 1999, the Board made a total of 22
recommendations in its two issued reports. The first report, dated
September 1998, involved an

accident at the Sierra Chemical Company in Nevada, where four
workers were killed. The report contained 16 recommendations. The
Board directed 10 recommendations to Sierra Chemical and other
explosive manufacturers, 3 to the Institute of Makers of
Explosives, 2 to the Department of Defense, and 1 to the Nevada
Occupational Safety and Health Enforcement Section. The recipients
of the first report have agreed to take corrective actions on 3
recommendations and are considering whether to take actions on the
remaining 13.

The second report, dated February 1999, involved an accident at a
Union Carbide plant in Louisiana, where 1 worker was killed. The
report contained six recommendations. The Board directed two
recommendations to Union Carbide and one each to the National
Institute for Occupational Safety and Health, OSHA, the Center for
Chemical Process Safety, and the Compressed Gas Association. The
Board has received a formal response from Union Carbide and is
aware of actions being considered by two other recipients of the
recommendations. The company identified new safety policies that
it would follow.

The Board's recommendations have aimed at encouraging industry and
government agencies to upgrade their procedures, training, and
communication of hazards. For example, the Board suggested that

Page 5 GAO/T-RCED-99-167

explosive manufacturers evaluate their safety programs to ensure
that (1) written operating procedures are specific to the process
being controlled; and (2) procedures and chemical hazards are
communicated in the languages understood by personnel. It also
suggested that the Institute of Makers of Explosives develop
safety training guidelines and distribute the Board's report to
its member companies. A listing of each recommendation and its
status is provided in appendix I.

To obtain recipients' reactions to the Board's recommendations, we
contacted the Department of the Army and OSHA. Officials from both
agencies told us that the reports were on target. An Army official
indicated that his agency was considering the recommendations, and
an OSHA official confirmed that the agency intended to implement
the recommendation.

A Board official said the Board plans to have a system in place to
track recommendations by the spring of 1999. According to a draft
directive, this system will be called the Safety Recommendation
Tracking System and will track recommendations from the time they
are issued until they are closed. The system will be used to
follow-up on open recommendations and keep a permanent record of
all recommendations.

Current and Planned Staffing Levels, Responsibilities, and

Salaries

The Board established a single-location organization with a
central management office and five program functions, located in
Washington, D.C.

Current Staffing Level and Responsibilities

As of February 1, 1999, the Board had 24 employees, including 4 of
the 5 Board members. It expects to grow from 24 to 30 employees,
including an additional board member, by the end of fiscal year
1999 and to 60 employees by the end of 2000 if its budget request
of $12.5 million is approved. According to its August 1997
Business Plan, the Board planned to grow to 88 employees in 2000,
but it has now extended its timeline for this level of staffing to
the end of 2001.

Table 1 identifies the allocation of staff, both current and
planned, and assigned responsibilities in the agency
organizational structure.

Page 6 GAO/T-RCED-99-167

Table 1: The Board's Staffing Levels, Current and Planned, and
Responsibilities, by Organizational Unit

Note: The head of the Office of General Counsel also acts as head
of the Office of Safety Programs. Source: The Chemical Safety
Board.

Salaries As of February 1, 1999, the Board had one GS-7 staff
member, one GS-12, two GS-13s, 16 GS-14s or above, and 4 Board
members. With this grade

structure in place, the average annual salary is $81,146,
excluding benefits, for on-board employees. (See app. II for more
details.) Combining salaries and benefits, the average annual
compensation per employee will be an estimated $89,100 at the end
of 1999. Board officials said that the 1999 average salary will
decrease as the Board hires more employees and the personnel base
on which the average salary is computed increases. In fact, the
Board is requesting $4.1 million in personnel compensation and
benefits in 2000 for 60 positions; that would result in an average
annual compensation package, combining salaries and benefits, of
$68,183 per employee in 2000.

In a proposal to the Office of Personnel Management, the Board
asked approval for six senior executive positions. After
consulting with OMB, the Office of Personnel Management approved
one permanent and two

Office Current

Staffing (2/ 1/ 99)

End Of 1999 Staffing (Planned)

End Of 2000 Staffing (Planned) Responsibilities

Board member 3 4 4 Reviews and approves reports, recommendations,
and

regulations Chairman/ Chief executive officer and management 4 7 9

Provides daily program supervision and ongoing operational
planning and evaluation; provides budgeting, technical writing,
and overall support to the organization

General counsel 3 3 9 Provides full range of administrative and
programmatic legal

services Safety programs

1 2 7 Directs design of safety policies and programs for the
Board; oversees recommendations Investigations 5 6 13 Conducts
accident investigations and reviews; prepares reports External
relations

4 4 9 Disseminates public and media information; acts as liaison
with business and academia; conducts governmental relations and
international activities

Information technology 4 4 9 Oversees information technology
systems and operational

programs; conducts administrative operations

Total 24 30 60

Page 7 GAO/T-RCED-99-167

temporary positions. The Office said that it was awaiting the
completion of this ongoing GAO study and it was obligated to
maintain a reduced number of senior executives in the government.
The Office of Personnel Management told the Board that its request
would be re-evaluated during the fall, 2000-2001 biennial
assessment period.

Contracting Activities The Board contracted with outside entities
to help carry out its mission during 1998 and 1999. Excluding the
contract for renting office space, we

identified eight contracts costing $100,000 or more. 4 The total
cost of these contracts was about $3 million. Table 2 provides
information on these contracts.

4 We excluded the contract for leasing office space because of its
nondiscretionary nature.

Page 8 GAO/T-RCED-99-167

Table 2: Board Contracts of $100,000 or More, 1998 and 1999
Contractors Purpose/ description of contracts Amount

obligated

Oak Ridge National Laboratory (ORNL) Investigative support. The
contractor assists the Board by conducting several investigations
and preparing reports, including managing investigations,
collecting evidence, and conducting interviews. Strategic Plan.
The contractor assists the Board in the development of a 5- year

information technology plan. ORNL is a Department of Energy
laboratory that provides support to various federal agencies. The
$758,000 listed here is the cost of requested services during
1998; as of March 1999, the Board has requested an additional
$915,000 of services. $758, 000

915, 000 Battelle Memorial Institute Investigative support. The
contractor assisted the Board in conducting the Sierra Chemical

investigation in Nevada, including labor and material for
technical services and preparing a written report of the chemical
incident. 410, 000 Tri- Data Establishment of chemical incident
baseline and database. The contractor analyzed and

prepared a summary report on 10 years of data from five federal
government agencies' data bases to establish a chemical incident
baseline. Currently, the Board is designing a chemical incident
data base that will be located at the Board and populated with
data from at least the five government data bases. The data base
is to be used to help show where, when, and how often incidents
are occurring in a particular area. The information will form the
basis for recommendations on programs, regulations, and other
actions to help reduce chemical incidents. The report is scheduled
for completion by May 31, 1999. 350, 000

Bell- Atlantic Internet and Intranet web site development. The
contractor is expected to create and maintain a web site with
documentation that includes file structures, database table
structure, site architecture, and security information. A
technical person from the contractor is dedicated fulltime to the
Board. The cost is not to exceed $231,000 through September 1999.
231, 000

Rowland Productions Informational video. In August 1998, the Board
contracted with Rowland to produce a video that portrays what the
agency does. The intended audience for the video includes the
general public, industry, employee and environmental groups, and
government officials. Five companies

competed for the contract. The selected vendor's offer includes
plans for video insets tailored for specific audiences. Work was
temporarily suspended on the video because of the press of other
business in early 1999. 160, 000 Federal Emergency Management

Agency (FEMA) Internet service. The Board contracted with FEMA to
host, update, and administer the Board's web site and e- mail at a
cost up to $100,000 in 1998. National Emergency Coordination
Center. During 1998 and 1999, FEMA provides the Board with a 24-
hours- a- day, 7 days- a- week

communications center that supports the Board at a cost of $50,000
per year. (The 1998 charge was prorated.) 137, 000 Bell- Atlantic
Helpdesk support. This is a 1999 award that covers helpdesk
support and local area network support. 130, 000

Page 9 GAO/T-RCED-99-167

Note: Dollar amounts are rounded to the nearest thousand. Source:
The Chemical Safety Board.

Concerns About the Board's Actions

On the basis of our review of the Board's actions to date, we have
two main concerns. First, the Board has not updated its Business
Plan to reflect the unanticipated backlog of ongoing
investigations. Second, the Board has no written procedures for
its staff to follow in awarding and managing contracts with
outside entities.

Updated Business Plan In its August 1997 Business Plan and support
for its 1999 budget submission, the Board set forth its
expectations that it would be able to

complete its investigations within 6 months and conduct from 5 to
10 investigations during 1998 and from 13 to 19 investigations
during 1999. However, the Board has completed and reported the
results for two investigations since commencing operations in
January 1998. These investigations took 9 and 11 months from start
to finish. Actual in-the-field investigations have been concluded
for another seven investigations, and draft reports have been in
process since as long as April 1998. The Board has also yet to
issue any reports based on its reviews. It closed 6 reviews
without a report and, as of March 30, 1999, has 17 open reviews.
Draft reports are in process for 3 of the 17 open reviews. Board
officials told us that their expectations for conducting
investigations in 1999 were based on getting requested funding.
Also, their agency was not yet fully operating, and existing
investigation resources were needed to complete the backlog of
open investigations and reviews. As a result, the Board could
undertake no new investigations from mid-March 1999 through the
end of the fiscal year in September. On March 29, the Board wrote
to this Subcommittee confirming its freeze on new investigations.

Contractors Purpose/ description of contracts Amount obligated

National Ground Intelligence Center Software development. In July
1998, the Board contracted with the National Ground Intelligence
Center, an organization within the Department of Defense, to
develop a civilian version of military intelligence software that
will help a facility determine where its safety systems are prone
to

failure and how to best address the problems. The Center would
develop a prototype initially then build toward a full operational
capability that the Board plans to make available to companies for
their confidential use. Software development would continue for a
number of years. The total cost is not yet known, but the Board
obligated $100,000 in 1998 funds for this purpose and expects to
spend another $200, 000 each year from 2000 through 2002, if funds
are

made available. 100, 000

Total $3, 191, 000

Page 10 GAO/T-RCED-99-167

In our view, the unanticipated backlog and the slower-than-
expected progress in completing ongoing investigations and reviews
raise questions about how the Board decides which incidents to
look into and how it allocates its staffing and financial
resources. The Board does not intend to update its August 1997
Business Plan but is working with OMB to develop a strategic plan
by February 2000 that complies with the Government Performance and
Results Act. The Board intends to identify the criteria for
selecting incidents in this strategic plan and reallocate
resources as a management decision after addressing the backlog.

Criteria for Selecting Incidents to Investigate and Review

According to Board officials, about 200 chemical incidents are
reported to the Board each day. Fatalities, serious injuries, and
significant property damage often occur, and the Board does not
have the resources to conduct an on-site, full-scale investigation
of every incident with serious consequences or even a limited
review of such incidents. In deciding which incidents to
investigate and review, the Board uses criteria weighted toward
accidents in which fatalities occur. Some judgment is still, of
course, involved, and the Board uses factors such as a high level
of interest that should make it easier to implement
recommendations and the potential for similar incidents at other
locations. The Board would have to weigh the various consequences
of revising the criteria in ways that would either raise or lower
the barin other words, be more or less selective in choosing which
cases to pursue. By raising the bar, workload would be limited.
Although factors such as complexity of the incident and the extent
of cooperation by company officials affect how quickly cases can
be completed, a more limited workload would help to speed up the
closure of existing cases. By lowering the bar, workload would be
increased and existing cases would tend to take longer to close or
additional resources would need to be allocated to investigations,
helping the Board to complete these cases more quickly.

Allocation of Resources The Board's Business Plan, in setting
expectations for the new organization, assumed a $4 million budget
in 1998 and a $7 million budget in 1999. In its formal budget
request, the Board asked for $8.2 million for 1999. In its actual
appropriations, the Board received the full $4 million in its
first year and $6.5 million in 1999. According to the Board, it
spent 30 percent of its $4 million budget in 1998 on incident
prevention (primarily investigations and reviews). The Board
expects to spend 37 percent of its 1999 budget and 44 percent of
its 2000 request for this purpose.

Regardless of what the Board expected its funding levels to be,
the Board has encountered difficulties in handling its workload.
An examination of

Page 11 GAO/T-RCED-99-167

how the Board would allocate its existing resources and spend
future fundsassuming differing levels of funding in 2000 and
beyondis critical to any effective plan for addressing the backlog
of ongoing investigations and reviews.

One area for review is the Board's staffing allocation. According
to the plan, the Board would establish a flat organization. To the
maximum extent possible, it would buy services when and as needed,
thereby keeping staffing levels and overhead costs low, and
permitting the bulk of resources to be devoted to its mission. As
of February 1, 1999, the Board employed four in-house
investigators; one began work in July 1998, two in September 1998,
and the other one in November 1998. The investigators have a
caseload of two to three investigations and five to six reviews.
At times, the Board also uses noninvestigative staff, such as
program analysts, to assist with investigations and reviews. The
Board also allocated four staff members to its external relations
and three to its general counsel offices. If its budget request
for 2000 is approved, the Board intends to have 13 (or 22 percent)
of its 60 total personnel in its investigations unit compared with
9 each in its external relations and general counsel units
(together equaling 30 percent of total staffing). The Board would
allocate the remaining 29 staff (48 percent) to other offices,
such as the Chairman's staff, safety programs, and information
technology.

For comparison purposes, we obtained resource allocation
information from NTSBthe agency considered in the legislative
history as the model for the Chemical Safety Board. NTSB
investigators comprise 40 percent of the organization's staffing
while personnel in its legal and public affairs offices together
comprise about 5 percent. 5 Like the Board, NTSB investigators
work on multiple investigations at a time and use contractors to
support their work. Unlike the Board, NTSB can obtain voluntary
serviceslabor hours that are not reimbursedfrom outside entities.
The Board has recommended to the Congress that it be authorized to
obtain these voluntary services.

To deal with the existing backlog of cases and expected new cases,
the Board could also review its use of funds now spent on
contracting. About two-thirds of these funds are not related
directly to investigations but

5 Of the 402 personnel on board in April 1999, NTSB has 162
investigators, 11 employees in its Office of General Counsel, and
11 staff members (excluding those performing the function of
working with affected families after an accident) in its Office of
Government, Public, and Family Affairs. NTSB also has other staff,
such as Administrative Law Judges, performing legal-related work.

Page 12 GAO/T-RCED-99-167

support accomplishment of its mission in other ways. An updated
Business Plan would help the Board to determine the appropriate
balance, at different levels of funding, between using more of its
resources to do investigations versus investing in other mission-
related activities.

Controls Over Contracts In its Business Plan and other key
documents, the Board stated that its approach to doing business
would emphasize contracting out or

outsourcing. The Board contended that doing so would enable it to
avoid the expense associated with establishing a large permanent
administrative infrastructure and having to make a long-term
commitment of funds for such items as space and equipment.

The Board pursued this approach within a week of its commencing
operations when it asked an outside entity to investigate an
accident. A chemical incident causing four fatalities occurred at
Sierra Chemical Company's plant in Mustang, Nevada, on January 7,
1998. Two days later, the Board wrote a letter to Battelle
authorizing the contractor to begin incurring labor and travel
costs starting January 8 and before a formal contract had been
signed. According to the statement of work, Battelle would provide
labor and materials to assist the Board in the investigation and
would also provide a written report delineating the explosion. The
Board estimated the contract would be in the $250,000 range. The
Board believed that it was entering into a work for others
arrangement with the Pacific Northwest National Laboratory, which
is owned by the Department of Energy (DOE) and run by Battelle.
Under a work for others arrangement, a DOE laboratory may conduct
work for other federal agencies on a cost-reimbursable basis.

On the basis of our file reviews and interviews with Board
officials, we found that concerns surfaced almost immediately
about the growing costs of Battelle's work. The Board was
surprised to learn that it was using Battelle directly rather than
working through DOE's Pacific Northwest National Laboratory, with
Battelle as a subcontractor. As a result, the Board noted that it
was being charged higher rates under a noncompetitive arrangement
with Battelle. According to Board officials, they attempted to
control costs by asking Battelle to take people off of the
investigation and proposing contract terms that put Battelle in
the position of working through the federal laboratory. The Board
ultimately signed an agreement with Battelle directly, dated March
17, 1998, to pay $410,000, including a fixed fee of $54,000, for
its services. On that day, a Board official wrote a

Page 13 GAO/T-RCED-99-167

memorandum to the file that the Board was still trying to get
information from Battelle that would support the contract cost

The Board has taken some steps to ensure that a repeat of the
problems described earlier would not recur. First, it has decided
not to use Battelle directly again in a noncompetitive
arrangement. Second, the Board has employed a more structured
approach for acquiring support for its investigations. In an
agreement with DOE's Oak Ridge National Laboratory, the Board
identifies tasks, the laboratory estimates the costs for
performing those tasks, and the Board provides authorization and
reimbursement for services provided by the laboratory as
appropriate. The Board also receives a monthly report from the
laboratory on progress, accomplishments, status, and planned work
for the next month. We believe these are prudent steps for
protecting the government's interests.

In the Battelle case, formal, written contracting procedures--
based on the Federal Acquisition Regulation but tailored to the
Board's needs--were not available to the staff. The Board told us
that these procedures are now being developed. However, more than
a year has elapsed since it signed the agreement with Battelle for
which the Board expressed such concern. The importance of
instituting formal procedures is even greater given the Board's
reliance on contracted support for not only investigations but
also other mission-related tasks.

Under the Federal Acquisition Regulation, contracting officers are
responsible for ensuring that applicable procedures have been
followed before an agency enters into a contract. For the major
contracts we reviewed, we found that the contracting officer has
been the Board's Program Officer, the second-in-command in the
organization, who has multiple responsibilities. We asked the
Board about its need for a full-time contracting officer. The
Board told us that there were only seven full-time- equivalent
employees in 1998, and the Board did not award enough contracts to
justify establishing and filling a contracting officer position.
The Board did not comment on its reasons for not establishing such
a position in 1999. In the Battelle case, even with a limited
staff, such an officer could have informed the Board of the proper
procedures for obtaining work-for-others-type assistance. If the
Board does not consider it cost-effective to establish a
contracting officer position in-house, alternatives such as the
use of technical support from the General Services Administration
or another federal agency could be explored.

Page 14 GAO/T-RCED-99-167

Scope and Methodology

To review the status of the Board's efforts to carry out its
mission, we reviewed documents supplied by the Board related to
its planning, budgeting, and programs; personnel data such as
salary information; and contract files. We interviewed officials
from the Board; other federal agencies, including the NTSB, OSHA,
the Department of the Army, and OMB. We conducted our work between
January through April 1999 in accordance with generally accepted
government auditing standards.

Agency Comments We provided a draft of this statement to the Board
for its review and comment. We met with the Chairman and other
Board officials. They

generally agreed with the information contained in this statement
but provided clarifications and corrections, which we incorporated
as appropriate.

The Board also pointed to considerations that it believes, in the
interest of fairness, should be recognized. First, the Board has
the unique status of being a start-up agency. It did not have the
advantages of having staff or even office space and found itself
putting an infrastructure in place to provide services while at
the same time beginning to provide those services. The Board
stated that our concerns about the unanticipated backlog of
investigations and absence of written procedures for contracting
should be viewed in the context of their being a new agency.
Second, the Board is expected to accomplish a broad and complex
mission but has only limited resources to do so. The Board said
that while this mission extends beyond investigations to other
activities designed to enhance industrial safety, the Board has
had the equivalent of only 5 full- time employees in 1998 and 24
in 1999.

We recognize in our statement that the Board is a start-up agency.
Accordingly, we believe the Board's comments highlight the
opportunity the Board now has to consider its future allocation of
staff and financial resources. For example, the Board has greater
flexibility as a start-up agency to find the appropriate balance,
at different levels of funding, between using its resources to do
investigations versus investing in other mission-related
activities.

Page 15 GAO/T-RCED-99-167

Page 16 GAO/T-RCED-99-167

Appendix I

Status of Recommendations Appendi x I

Listing of the Board's safety recommendations contained in the two
investigation reports issued by the Board and the recipients'
responses to the recommendationsas of March 30, 1999

Table I. 1: Investigation at the Sierra Chemical Company, Mustang,
Nevada. Two explosions at an explosives manufacturing facility
killed four workers and injured six. Recommendation was directed
to Recommendation A a D b P c Comments

Company and explosives manufacturers

Explosives manufacturers should evaluate the effectiveness of
their explosives safety programs to ensure that: A bill pending in
the Nevada state legislature would require, among other things,
that the relevant state agency adopt regulations establishing
standards and procedures for

places of employment where explosives are manufactured. The
company has not yet responded to the Board's recommendation
letter. However, the plant was destroyed in the blast and has not
been rebuilt. The Board will send a follow- up letter to the
company.

(1) Process hazard analyses include the examination of quantity-
distance requirements, building design, human factors, incident
reports, and lessons learned from explosives manufacturers.

X (2) Written operating procedures are specific to the process
being controlled and address all phases of the operation.

X (3) Procedures, chemical hazards, and process safety information
are communicated in the language( s) understood by personnel
involved in manufacturing or handling of explosives.

X A bill pending in the state of Nevada would require that workers
receive safety training in a language they understand.

(4) Explosives training and certification programs for workers and
line managers provide and require the demonstration of a basic
understanding of explosives' safety principles and job- specific
knowledge.

X (5) Process changes, such as the construction or modification of
buildings, or changes in explosive ingredients, equipment, or
procedures are analyzed and Process Safety Management elements are
updated to address these changes.

X (6) Pre- startup safety reviews are performed to verify
operational readiness when changes are made.

X

Appendix I Status of Recommendations

Page 17 GAO/T-RCED-99-167

Source: Chemical Safety Board. (7) All elements of OSHA's Process
Safety Management Standard are verified by performing periodic
assessments and audits of safety programs.

X (8) The employee participation program effectively includes
workers and resolves their safety issues. X

(9) Explosive safety programs provide an understanding of the
hazards and control of detonation sources.

X (10) The following issues are addressed in plant design or
modification:  Operations in explosives manufacturing plants are
separated by adequate intraplant distances to reduce the risk of
propagation.

 Unrelated chemical or industrial operations or facilities are
separated from explosives facilities using quantity- distance
guidelines.  Facilities are designed to reduce secondary
fragmentation that could result in the propagation of explosions.

X Institute of Makers of Explosives (IME) (1) Develop and
disseminate process and safety training guidelines for personnel
involved in the manufacture of explosives that include methods for
the demonstration and maintenance of proficiency.

X In February 1999, IME submitted a proposed revision to OSHA's
explosives safety standard for the Board's review. The proposed
revision includes a section on worker training. The Board is
studying the document and will respond to IME. (2) Distribute the
Board's report on the incident to IME member companies. X

(3) Develop safety guidelines for the screening of reclaimed
explosive materials. X IME will work on this recommendation at its
May meeting. Nevada (OSHA) (1) Increase the frequency of safety
inspections of

explosives manufacturing due to their potential for catastrophic
incidents.

X Nevada's Governor signed an executive order requiring
inspections at least twice a year.

Department of Defense (1) Develop a program to ensure that
reclaimed, demilitarized explosives sold by the Department of
Defense are free of foreign materials that can present hazards
during subsequent manufacturing of explosives.

X Letter received from the Secretary of the Army stating that DOD
will study the recommendation. (2) Provide access to explosives
incident reports and lessons learned information to managers and
workers involved in explosives manufacturing, associations such as
IME, government agencies, and safety researchers.

X

Totals 3 0 13

Appendix I Status of Recommendations

Page 18 GAO/T-RCED-99-167

Table I. 2: Investigation at a Union Carbide Plant in Hahnville,
Louisiana. One worker was killed and an independent contractor was
seriously injured due to asphyxiation from nitrogen in confined
space.

Recommendation was directed to Recommendation A a D b P a a A =
The recipient acted on the recommendation, and the Board's review
of the action is pending. bD = The recipient decided to take no
action on the recommendation. cP = The recipient is considering
whether to act on the recommendation. Source: Chemical Safety
Board.

Comments

Company (1) Post signs containing the warning Danger, Confined
Space: Do Not Enter Without Authorization or similar wording at
potential

entryways when tanks, vessels, pipes, or other similar chemical
industry equipment are opened. When nitrogen is added to a
confined space, post an additional sign that warns personnel of
the potential nitrogen hazard.

X Union Carbide submitted new safety policies that address the
recommendation. The Board is studying these documents.

(2) Ensure that the plant safety program addresses the control of
hazards created by erecting temporary enclosures around equipment
that may trap a dangerous atmosphere in the enclosure if the
equipment leaks or vents hazardous material.

X Union Carbide submitted new safety policies that address the
recommendation. The Board is studying these documents.

National Institute for Occupational Safety and Health (NIOSH)

(1) Conduct a study concerning the appropriateness and feasibility
of odorizing nitrogen in order to warn personnel of the presence
of nitrogen when it is used in confined spaces.

X NIOSH's preliminary response raised technical issues regarding
the feasibility of the recommendation. These issues will be
discussed with NIOSH's technical departments at a

meeting scheduled for late April 1999.

Occupational Safety and Health Administration (1) Issue a safety
alert that addresses the hazards and provides safety guidelines
for the use of temporary enclosures that are erected around
equipment containing hazardous substances.

X Center for Chemical Process Safety (1) Communicate the findings
of this report to your

membership. X Compressed Gas Association (CGA) (1) Communicate the
findings of this report to your

membership. X CGA plans to publish an article on the Board's
report in its newsletter.

Totals 2 0 4

Page 19 GAO/T-RCED-99-167

Appendix II

Grade Structure and Salaries of Board Employees of February 1,
1999 Appendi x I I

Table II. 1: Grade Structure and Salaries of Board Employees, as
of February 1, 1999

Source: The Chemical Safety Board.

Office Start date Position title Grade Salary

Board members 11/ 97 11/ 98 12/ 98

Board member Board member Board member

EX- 4 EX- 4 EX- 4

$118, 400 118, 400 118, 400

Chairman/ CEO and management 11/ 97

12/ 97 7/ 98 11/ 98

Chairman/ Board member Program Officer Management Analyst Program
Analyst

EX- 4 GS- 15 GS- 14 GS- 14

118, 400 94, 098 70, 855 68, 570

Investigations 9/ 98 7/ 98 9/ 98 10/ 98 11/ 98

Senior Investigator Investigator Investigator Program Analyst
Investigator

GS- 15 GS- 14 GS- 14 GS- 7 GS- 14

80, 658 82, 284 75, 427 27, 508 82, 284

Safety program 6/ 98 Program Analyst GS- 14 68, 570 General
counsel 2/ 98

7/ 98 10/ 98

Attorney Attorney Attorney

GS- 15 GS- 14 GS- 13

99, 474 79, 999 63, 829

External relations 1/ 98 2/ 98 8/ 98 1/ 99

Public Affairs Specialist Public Affairs Specialist Intergov.
Relations Mgr. Constituent Relations Mgr.

GS- 15 GS- 14 GS- 14 GS- 14

94, 098 70, 855 70. 855 68, 570

Information technology 12/ 97 6/ 98 7/ 98 2/ 99

Program Analyst Program Analyst Computer Specialist Program
Analyst

GS- 12 GS- 13 GS- 15 GS- 14

48, 769 65, 763 86, 034 75, 427

Average Salary $ 81, 147

(160467) Let t er

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