United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Energy and 

Water Development and Related Agencies, 

Committee on Appropriations, House of 

Representatives

HANFORD WASTE 

TREATMENT PLANT 

Contractor and DOE 

Management Problems 

Have Led to Higher Costs, 

Construction Delays, and 

Safety Concerns 

Statement of Gene Aloise, Director 

Natural Resources and Environment 

For Release on Delivery

Expected at 10:00 a.m. EDT 

Thursday, April 6, 2006

 

GAO-06-602T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 2006

HANFORD WASTE TREATMENT PLANT

Contractor and DOE Management 

Problems Have Lead to Higher Costs, 

Construction Delays, and Safety 

Concerns 

Highlights of GAO-06-602T, a testimony to 

the Subcommittee on Energy and Water 

Development and Related Agencies, 

Committee on Appropriations, House of 

Representatives 

The Waste Treatment Plant Project 

at the Department of Energy’s

(DOE) Hanford site in southeastern

Washington state is a massive

effort to stabilize and prepare for 

disposal 55 million gallons of 

radioactive and hazardous wastes

currently held in underground 

tanks. In 2000, DOE awarded an 11-

year, $4.3 billion contract project to 

Bechtel National, Inc. (Bechtel) to

design and construct the plant. 

Since then, numerous problems 

and changes have occurred that 

will significantly increase the

project’s final cost and completion

date. 

This testimony discusses (1) how 

and why the project’s cost and 

schedule have changed since 2000; 

(2) the status of DOE and Bechtel 

efforts to address these problems 

and improve project management ; 

and (3) our observations on issues

that need to be addressed in going 

forward. It is based on previous 

GAO reports and ongoing work.

What GAO Recommends

GAO recommends that DOE (1)

consider the feasibility of 

completing 90 percent of facility

design or facility component design

before restarting construction; (2)

ensure that the revised project 

baseline fully reflects remaining

uncertainties; and (3) improve 

management controls. 

DOE generally agreed, but was 

concerned about the costs of 

delaying construction to complete

design activities. 

Since the waste treatment plant construction contract was awarded in 2000, 

the project’s estimated cost has increased more than 150 percent to about 

$11 billion, and the completion date has been extended from 2011 to 2017 or 

later. There are three main causes for the increases in the project’s cost and 

completion date: (1) the contractor’s performance shortcomings in 

developing project estimates and implementing nuclear safety requirements, 

(2) DOE management problems, including inadequate oversight of the 

contractor’s performance, and (3) technical challenges that have been more

difficult than expected to address. 

To address the causes of the cost and schedule increases and regain 

management control of the project, DOE and Bechtel have taken steps to 

develop a more reliable cost and schedule baseline; slow down or stop 

construction activities on some of the facilities to allow time to address 

technical and safety problems and to advance design activities farther ahead 

of construction activities; and strengthen both project management and 

project oversight activities. 

Despite these actions, we have continuing concerns about the current 

strategy for going forward on the project. Our main concerns include: (1) the 

continued use of a fast-track, design-build approach for the remaining work 

on the construction project, (2) the historical unreliability of cost and 

schedule estimates, and (3) inadequate incentives and management controls 

for ensuring effective project management and oversight. 

Progression of Cost Estimates on the WTP Project 

www.gao.gov/cgi-bin/getrpt?GAO-06-602T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Gene Aloise at 

(202) 512-3841 or aloiseg@gao.gov. 
Mr. Chairman and Members of the Subcommittee: 

I am pleased to appear before the Subcommittee today to discuss our 

work on the Department of Energy’s (DOE) Waste Treatment Plant Project 

(WTP) under construction at DOE’s Hanford site in southeastern 

Washington state. The purpose of this massive project is to stabilize and 

prepare for disposal large quantities of radioactive and hazardous wastes 

stored in underground tanks. From the 1940s through most of the 1980s, 9 

nuclear reactors operated at the Hanford site, producing plutonium and 

other special nuclear materials primarily for DOE’s weapons program. 

Producing these special nuclear materials generated large volumes of 

hazardous and radioactive waste. Some of this waste was deposited 

directly into the ground in trenches, injection wells, or other facilities 

designed to allow the waste to disperse into the soil; and some was 

packaged into drums and other containers and buried. The most 

dangerous waste was stored in 177 large underground storage tanks. DOE 

has managed this tank waste over the years as high-level waste. The 

underground tanks currently hold more than 55 million gallons of this 

waste—enough to fill an area the size of a football field to a depth of over 

150 feet. DOE, the Environmental Protection Agency (EPA), and the 

Washington state Department of Ecology—have determined that 

stabilizing this waste is one of the most urgent cleanup activities at the 

Hanford site. 

The Hanford site occupies 586 square miles near the cities of Richland, 

Pasco, and Kennewick, with a combined regional population of over 

200,000. The Columbia River—the second largest river in the United States 

and a source for hydropower production, agricultural irrigation, drinking 

water, and salmon reproduction—flows through the site for almost 50 

miles. Although the underground storage tanks are several miles from the 

river, tank monitoring data and detection techniques have shown that 

some of the tanks have leaked in the past. Because the contamination has 

reached the groundwater under the tanks, officials are concerned that it is

now making its way to the Columbia River. 

To stabilize the approximately 55 million gallons of waste remaining in the 

tanks, Hanford’s waste treatment project involves (1) designing, 

constructing, and testing a waste treatment plant1

 (the construction 

 1

The waste treatment plant consists of a pretreatment facility that separates waste into 

high-level and low- activity waste, two facilities to treat separated portions of the waste, 

one analytical laboratory, and a variety of supporting facilities. 

Page 1 GAO-06-602T 
project) and (2) operating this plant and others in subsequent years to 

process and prepare the tank waste for permanent disposal (the 

operations project). Schedule milestones for stabilizing the tank waste and 

preparing it for disposal, as well as agreements on the technologies to be 

used, are set forth in the Hanford Federal Facility Agreement and Consent 

Order between DOE, Washington state’s Department of Ecology, and EPA. 

This agreement, commonly called the “Tri-Party Agreement,” was signed in 

May 1989. 

In 2000, DOE awarded an 11-year, $4.3 billion contract for the construction 

project to Bechtel National, Inc. (Bechtel). DOE plans to solicit bids 

through a competitive process and award a separate contract to operate 

the WTP once the construction project is completed. 

Since the contract with Bechtel began in 2000, numerous problems with 

and changes to the construction project have occurred, which has 

significantly affected the project’s final cost and completion date. My 

testimony will discuss: (1) how the project’s cost and schedule have 

changed since the contract was awarded to Bechtel in December 2000, and 

the primary causes for those changes; (2) the status of DOE and Bechtel 

efforts to address these causes and establish effective management 

controls over the project; and (3) our observations on issues that need to 

be addressed in going forward on the project. 

My testimony is based on our past reviews of DOE’s Environmental 

Management program and the Hanford project, especially our 2004 report 

on the project,2

 and our currently ongoing work for this Subcommittee. 

Regarding our ongoing work, in order to understand how the project’s cost 

and schedule estimates have changed, the reasons for those changes, and 

efforts to address any problems, we obtained and analyzed project 

documents and records developed by DOE and Bechtel as well as 

evaluations of various aspects of the project conducted by the U.S. Army 

Corps of Engineers and other independent reviews. We also interviewed 

 2

U.S. General Accounting Office, Nuclear Waste: Challenges to Achieving Potential

Savings in DOE’s High-Level Waste Cleanup Program, GAO-03-593 (Washington, D.C.: 

June 17, 2003); U.S. General Accounting Office, Nuclear Waste: Absence of Key

Management Reforms on Hanford’s Cleanup Project Adds to Challenges of Achieving 

Cost and Schedule Goals, GAO-04-611 (Washington, D.C.: June 9, 2004); and U.S.

Government Accountability Office, Nuclear Waste: Better Performance Reporting Needed

to Assess DOE’s Ability to Achieve the Goals of the Accelerated Cleanup Program, 

GAO-05-764 (Washington, D.C.: July 29, 2005). 

Page 2 GAO-06-602T 
DOE and Bechtel project and technical managers about the main causes of

the cost increases and schedule delays and steps they are taking to 

address the problems. We also toured the construction site to observe the 

actual condition of the facilities. A more complete discussion of our scope 

and methodology is presented in appendix II. We conducted our review 

from June through September 2005 and from January through April 2006 in 

accordance with generally accepted government auditing standards. We 

are continuing our work on this project and plan to issue a final report in

October 2006. 

In summary, we found the following:

The Hanford waste treatment plant construction project’s estimated cost 

has increased over 150 percent to about $11 billion since 2000, and the 

completion schedule has been extended by 6 years to at least 2017. There 

are three main causes for these results—contractor performance 

problems, DOE management shortcomings, and difficulties addressing 

various technical challenges encountered during design and construction. 

Regarding the contractor’s performance: 

• Bechtel has performed poorly on several aspects of the project. For 

example, Bechtel significantly underestimated the price of steel and how 

much engineering effort would be needed to complete facility designs. 

These mistakes, and others like them, have added about $2 billion to 

project costs. Bechtel also continues to need increased contingency

funding for unexpected problems. Adjusting for additional contingency 

funding added over $2 billion to the cost estimate. Importantly, Bechtel 

failed on several occasions to ensure that nuclear safety requirements 

were being met, including allowing design changes to be made without 

following nuclear safety procedures and failing to detect serious 

construction flaws in tanks that will hold radioactive material in the 

facilities. 

Regarding DOE management: 

• DOE has followed an approach to constructing the project known as “fasttrack,” design-build —- where design, construction, and technology 

development occur simultaneously. However, this approach is not 

recommended for designing and constructing one-of-a-kind, complex 

nuclear facilities because, among other things, it increases the risk of 

encountering problems that can adversely affect a project’s cost and 

schedule. DOE also did not establish project management requirements 

Page 3 GAO-06-602T 
and DOE headquarters staff was not involved in evaluating the project or 

the contractor’s performance. 

Regarding technical challenges: 

• Bechtel and DOE have encountered many technical problems with facility 

design and equipment that are taking considerable more time and money 

than expected to address and correct. These problems include 

reengineering plant facilities to withstand earthquakes; correcting design 

and operation problems with waste mixing pumps; and preventing 

flammable hydrogen gas from building up to unsafe levels in tanks and 

pipes. Although final cost estimates are not yet available, as of April 2005,

these technical challenges have added about $1.4 billion to project cost 

estimates. 

To address project cost and schedule problems, DOE and Bechtel have 

focused on three main areas— slowing down construction while 

addressing technical and safety problems; establishing new project cost 

and schedule estimates; and strengthening project management and 

oversight. For example, DOE directed Bechtel to slow down or stop 

construction activities on the two facilities affected by changing

earthquake protection requirements—the pretreatment facility and the

high-level waste treatment facility. Slowing the pace of construction will 

allow more time to address technical and safety problems and make any 

needed design changes before construction is restarted. DOE also directed 

Bechtel to develop a new project cost and schedule baseline starting with 

an analysis of material and labor quantities and costs, and incorporating 

more contingency funding to address future uncertainties. DOE’s project 

management improvements have included developing a headquarters 

oversight board that includes several senior DOE executives and funding 

independent reviews of (1) the new project baseline by the Corps of 

Engineers and (2) the technical feasibility of the treatment project by a 

panel of outside experts. These initiatives are ongoing. Bechtel has 

focused on improving its project performance information, implementing 

several management and organizational changes, and strengthening safety 

and quality assurance practices. 

Despite the steps DOE and Bechtel have taken to address technical, safety, 

and other management problems on the construction project, we have 

continuing concerns about the current strategy for going forward. Our 

main concerns include: (1) the continued use of a fast-track, design-build 

approach for the remaining work on the construction project; (2) the 

reliability of the revised project cost and schedule estimates, and whether 

Page 4 GAO-06-602T 
there is enough flexibility in the revised schedule to address remaining 

project uncertainties during the construction and commissioning phases; 

and (3) the adequacy of management actions taken to ensure effective 

project management and oversight. DOE is continuing with the fast-track

approach to try and stay as close as possible to milestone dates agreed to 

in the Tri-Party Agreement and to keep costs down. However, the 

technical, safety, and management problems on the project make it clear 

that a fast-track approach is not appropriate. In our view, proceeding with 

a project construction plan more closely aligned with nuclear industry 

guidelines, which suggest completing at least 90 percent of the design 

before restarting construction provides a better chance of successfully 

completing the project and controlling the cost and completion date. 

Furthermore, the cost and schedule baseline is being revised before all of 

the technical issues are understood and the cost and time needed to 

address them is known. For example, it is not clear whether DOE has 

allowed sufficient time for testing of all the facilities during the 

commissioning phase of the project. Also, in our view, the revised cost 

estimate should contain cost and schedule contingencies that are 

sufficient to ensure that no further re-baselining of the project will be 

needed in the future. Finally, regarding overall project management, it is 

unclear whether the actions taken by DOE and Bechtel are adequate to 

bring the project under control and create greater overall accountability 

for results. Specifically, it is unclear how DOE will modify contractor 

incentives once the cost and schedule baselines are finalized. The current 

contract incentives are no longer meaningful because the current cost and 

schedule goals are no longer achievable and are being revised. However, 

modifying the contract to provide new incentives could be viewed as 

rewarding Bechtel’s past performance. It remains to be seen whether DOE 

can establish a combination of project incentives and management 

controls that will lead to the successful completion of the construction 

project. 

We are recommending that the Secretary of Energy take steps to prevent 

further use of a fast-track, design-build approach to the project; ensure 

that facility design or facility component design have reached at least 90 

percent completion and that technical and safety problems have been 

satisfactorily addressed before restarting construction; and take other 

management actions to help ensure that the new project baseline will be 

reliable and that controls and accountability are such that Bechtel will 

safely and effectively complete the project. 

On April 4, we met with DOE officials, including the Assistant Secretary 

for Environmental Management, to obtain oral comments on this 

Page 5 GAO-06-602T 
testimony. DOE generally agreed with the testimony findings and 

conclusions and two of the three recommendations. DOE agreed with our 

recommendations to ensure that the new project baseline fully reflects all

remaining uncertainties on the project and to strengthen management 

controls over the project. However, regarding our recommendation that 

DOE not restart construction until facility design has reached 90 percent 

and the project’s major technical and safety problems have been 

satisfactorily addressed, DOE only partially agreed. DOE said that it would 

discontinue using a fast-track, design-build approach to completing the 

project and acknowledged that use of this approach has led to increased 

costs and schedule delays on the project. DOE’s Assistant Secretary for 

Environmental Management said that DOE has already taken some initial 

steps to discontinue the fast-track approach by widening the gap between

facility design and construction to at least one year or longer. However, 

the Assistant Secretary expressed concern about delaying construction of 

WTP facilities until the facility design has reached at least 90 percent 

completion and the project’s major technical and safety problems have 

been satisfactorily addressed. He said that DOE has not studied the extent 

to which such a delay in restarting construction could potentially increase 

the overall cost of the project. Accordingly, we modified our 

recommendation to ensure that DOE evaluates the feasibility of 

completing at least 90 percent of the facility design or facility component 

design, and that major technical and safety issues have been satisfactorily 

addressed before restarting construction. 

DOE carries out its high-level waste cleanup program at Hanford under the 

auspices of the Assistant Secretary for Environmental Management and in 

consultation with a variety of stakeholders. The EPA and the Washington

State Department of Ecology provide regulatory oversight of cleanup 

activities at the site. The Defense Nuclear Facilities Safety Board (Safety 

Board) also oversees DOE’s operations. The Safety Board was created by

the Congress in 1988 to provide an independent assessment of safety 

conditions and operations at defense nuclear facilities, including DOE’s 

Hanford site. Other stakeholders involved in the Hanford cleanup project 

include county and local governmental agencies, citizen groups, advisory 

groups, and Native American tribes. These stakeholders advocate their 

views through various processes, including site-specific advisory boards. 

DOE manages the tank waste at Hanford through its Office of River 

Protection, which Congress directed DOE to establish in 1998. The office 

Background 

Page 6 GAO-06-602T 
has a staff of about 110 DOE employees and a fiscal year 2006 budget of 

about $1 billion. It manages Hanford’s tank waste through two main 

contracts: a tank farm operations contract with CH2M Hill Hanford Group3

to maintain safe storage of the waste and to prepare it for retrieval, and a

construction contract with Bechtel to design, construct, and commission 

the operation of a waste treatment plant. For additional information on 

Hanford’s tank wastes, see appendix I. 

The Hanford waste treatment construction project includes the 

construction of three primary processing facilities, a large analytical

laboratory, and 23 supporting buildings on a 65 acre site. The three 

primary processing facilities are: 

• the pretreatment facility, which receives the waste from the tank farms 

and separates it into its low-activity and high-level waste components; 

• the high-level waste facility that immobilizes high-level waste for offsite 

disposal through a process known as vitrification, which mixes nuclear 

waste with molten glass;4

 and 

• the low-activity waste facility, which vitrifies the low-activity waste for 

onsite disposal. 

The waste treatment plant facilities are large and complex. For example, 

Bechtel estimates that the completed project will contain almost 270,000 

cubic yards of concrete and nearly a million linear feet of piping. The 

largest building, the pretreatment facility, has a foundation the size of four 

football fields and is expected to be 12-stories tall. 

 3

CH2M Hill Group is a limited liability corporation of the CH2MHill Company.

4

DOE currently is evaluating the suitability of Yucca Mountain in Nevada as the site of the 

repository for the high-level waste canisters.

Page 7 GAO-06-602T 
In just over 5 years, the estimated cost of the project has increased more 

than 150 percent to about $11 billion and the schedule has been extended

from an 11-year project to a 17-year project. Three main factors were 

responsible for the cost and schedule increases: (1) poor contractor 

performance in developing project estimates and implementing nuclear 

safety and other requirements, (2) management weaknesses in DOE’s 

approach to and oversight of the project, and (3) technical challenges that

have been more difficult than expected to address. 

Since DOE awarded the contract to Bechtel in 2000, both the contract 

price and the completion date have increased significantly. In 2000, the 

contract price was $4.3 billion, including contractor fee and project 

contingencies. In 2003, Bechtel revised the estimate to $5.7 billion, based 

on changes DOE wanted to make in plant capacity and to correct for 

estimating errors and other problems that were already occurring on the 

project. Since then, the cost estimate has continued to climb. For example, 

Bechtel’s December 2005 estimate of the cost to complete the project, an 

estimate that DOE has not yet approved, totals about $10.5 billion plus 

contractor fee, a significant increase from the initial estimate in 2000. 

Bechtel is still revising its estimate of the project costs, and the final 

estimate will very likely be higher. For example, in a February 2006 

hearing before the Senate Armed Services Committee, the Secretary of 

Energy said that the final cost for the project could be nearly $11 billion. 

Figure 1 shows this progression of cost estimates for the construction 

project. 

Contractor 

Performance 

Problems, DOE 

Management 

Shortcomings, and 

Technical Challenges 

Have Resulted in 

Significantly Higher 

Cost Estimates and 

Longer Completion 

Dates for the 

Construction Project 

Project Cost and Schedule 

Have Increased 

Significantly 

Page 8 GAO-06-602T 
Figure 1: Progression of Cost Estimates for WTP Construction Project. 

a

These cost estimates do not include contractor performance fees.

Note: This comparison is based on dollar values that were not adjusted for inflation which was about 

15 percent over this time period.

The estimated completion date has also been extended. In 2000, the 

estimated date to complete the construction of the waste treatment 

project was 2011. This date corresponded to the work schedule agreed to

by DOE in the Tri-Party Agreement under which DOE was to begin 

operating the waste treatment facilities by 2011. However, Bechtel’s latest 

estimate, not yet approved by DOE, is that the construction project will be 

completed by 2017 or later, at least a 6-year extension and a 50 percent 

increase in the project’s schedule. 

Furthermore, the revised cost and schedule estimates Bechtel developed

in December 2005 are not final and will likely increase further. At least 

through the rest of 2006, DOE and Bechtel will continue to address 

identified technical and safety issues and incorporate additional design 

changes into its estimates. For example, Bechtel is currently reviewing 

several technical issues recently raised by a panel of experts DOE invited 

Page 9 GAO-06-602T 
to study the project.5

 Bechtel plans to incorporate changes resulting from 

the review into a new cost estimate. This revised estimate is expected to 

be complete in late May 2006. Once that estimate is available and DOE has 

completed its review of the estimate, DOE and Bechtel will need to agree 

on a revised contract price that incorporates any changes made to the 

project, including any changes to the fee that Bechtel can potentially earn.

DOE officials do not expect to have these activities completed until late 

2006. 

In our view, Bechtel and DOE both share in the responsibility for the 

problems with the Hanford waste treatment plant.

6

Contractor performance. Poor contractor performance in the areas of 

developing and revising cost estimates and adhering to nuclear safety and 

other requirements contributed to cost and schedule increases. 

Bechtel made a number of miscalculations on a broad range of activities 

when developing and revising its cost estimates for the project. 

Specifically, we found that Bechtel: 

Bechtel and DOE Share 

Responsibility for the Main 

Causes of the Cost 

Increases and Schedule 

Delays 

• underestimated by more than 50 percent the engineering hours needed to

design the facilities (a small portion of this increase was due to changes in 

seismic design criteria). The current estimate for design hours is now over 

14 million hours. 

 5

“Comprehensive Review of the Hanford Waste Treatment Plant Estimate at

Completion—Preliminary Draft,” Assessment Conducted by an Independent Team of

External Experts, at the direction of the U.S. Department of Energy, Office of 

Environmental Management (Washington, D.C.: Mar. 20, 2006). 

6

Between 2000 and 2003, cost increases estimated at $1.2 billion occurred because of 

engineering problems, estimating errors, and contingency funding increases. Cost increases

occurring between 2003 and May 2005, based on Bechtel’s April 2005 estimate and the

Corps of Engineers’ May 2005 review of Bechtel’s estimate, show that Bechtel 

underestimated costs by an additional $845 million, ongoing technical problems added an

additional $1.15 billion to costs, and an additional $1.45 billion was added to the project’s 

estimated contingency. These estimates were based on a revised contract price of $9.3 

billion. These analyses have not yet been updated to document the current cost increases 

based on the latest estimated contract price estimate of nearly $11 billion. DOE expects 

Bechtel to complete its current cost and schedule estimate in late May 2006. 

Page 10 GAO-06-602T 
• underestimated the cost of key commodities like steel. Steel prices 

climbed sharply once project construction started. 

• incorrectly assumed that it could obtain an exception to the fire code and 

avoid applying a protective coating on some of the structural steel used in

the facilities and instead use a less expensive sprinkler system. 

In April 2005, Bechtel estimated that the estimating errors collectively 

added about $845 million to the estimated contract price. 

Additionally, Bechtel also incorrectly estimated the amount of contingency 

funds that would be needed to account for project uncertainties. In 2000,

Bechtel estimated that $500 million in contingency was needed. However, 

in its December 2005 estimate, Bechtel proposed that a total of $2.8 billion

in contingency be allocated to the project. The $2.8 billion in contingency 

funds included $1.76 billion to address technical and programmatic risks 

outside the current scope of the project and an additional reserve of about 

$1 billion for potential future problems not yet identified. 

Finally, Bechtel was ineffective at ensuring that the completed facilities 

would meet nuclear safety requirements. In March 2006, DOE’s Office of 

Enforcement issued a report documenting a number of different safety 

problems with the construction project, including a failure to (1) include 

safety requirements in design documents, (2) identify and use the correct 

design codes and safety standards, and (3) track design changes to ensure 

purchased materials and supplies were consistent with those changes.7

These failures led to significant problems. For example, Bechtel ordered

approximately 70 tanks with incorrect structural specifications to ensure 

the quality of their welds. These tanks, that will be located in inaccessible 

areas of the waste treatment plant, were in various stages of fabrication.

Had this problem not been identified, the quality of welds for all of these 

tanks could have been flawed. One tank had already been installed using 

these incorrect specifications before the problem was discovered. The 

tank was installed because neither the supplier nor Bechtel had performed 

the required weld inspection. Furthermore, when the welds were first 

repaired the subcontractor used incorrect welding rods, requiring more 

rework to repair the repairs. 

 7

No estimate is available for how problems in meeting nuclear safety requirements 

specifically affected project cost estimates. 

Page 11 GAO-06-602T 
In addition, in September 2005, Bechtel discovered errors that had been 

made in structural steel calculations for the laboratory facility. These 

potentially serious errors included design specifications that were 

incorrect and discrepancies between engineering calculations and design

drawing specifications, which led to replacing steel already purchased and 

correcting hundreds of engineering drawings. Of significant concern, a 

2005 DOE-sponsored survey found that some construction and 

engineering employees were reluctant to raise safety concerns to Bechtel 

management, fearing reprisal. Bechtel is now developing a strategy for 

cultivating a more rigorous culture of safety among its workforce that it 

expects to complete by June 2006. 

DOE management. In our view, DOE’s management of the project has 

been flawed, as evidenced by (1) adopting a fast-track approach to design 

and construction activities that both created and exacerbated problems 

and (2) failing to exercise adequate and effective oversight of contractor

activities, both of which contributed to cost and schedule increases. 

DOE’s decision to pursue a fast-track, design-build approach under which 

technology development, facility design, and construction activities were 

carried out concurrently has proven to be regrettable. DOE adopted the 

fast-track approach because of commitments made under the Tri-Party 

Agreement to have facilities operating by 2011, and to treat all of the tank

waste by 2028. However, using a fast-track approach for nuclear facilities 

is considered “high risk,” and is not recommended for designing and 

constructing one-of-a-kind, or first-of-a-kind complex nuclear facilities. 

DOE’s own project management guidance cautions against using this 

approach for complex facilities. For example, DOE Order 413.3 cautions 

that a design-build approach should only be used in limited situations, 

such as when work scope requirements are well defined, projects are not 

complex, and technical risks are limited. 

Furthermore, the project approach included optimistic assumptions that 

virtually every major safety, technology, regulatory, and nuclear material

acquisition uncertainty could be resolved while facilities were being 

constructed at an unusually fast pace for the largest, most complex, firstPage 12 GAO-06-602T 
of-a-kind, nuclear waste treatment plant in the United States.8

 Less than 

one year after construction began, DOE was already experiencing 

problems with construction activities outpacing design, technology 

problems that were affecting the critical path of the construction project, 

contractor safety control inadequacies, and outdated facility seismic 

criteria. Despite these problems, DOE insisted on continuing its fast-track 

design-build approach under its accelerated cleanup plan until early 2005.

At that point, the effect of these and other unresolved issues, contractor 

performance problems, and signs of significant cost growth and schedule 

delays caused DOE to direct Bechtel to significantly slow construction, 

rework the design, and reevaluate safety, seismic, and regulatory 

requirements. 

The impact of many of these problems could have been lessened if facility 

design had been more complete before construction began. Under nuclear 

industry guidance, which recommends that facility design be essentially 

complete before construction begins, major environmental, technological, 

and regulatory issues can be resolved in advance of construction.9

 The 

benefit of this process is that most uncertainties are resolved before major 

capital is at risk, and the potential for project delay is significantly 

reduced. On this project, under the fast track approach, actual schedule 

delays of more than two years have occurred, contributing to more than 

1,000 workers being laid off, and work on the two largest waste treatment 

facilities coming to a halt. 

GAO, the Safety Board, and others have criticized DOE in the past for 

using the fast-track approach for large, complex first-of-a-kind nuclear 

cleanup facilities. We issued reports in 1993, and again in 1998, that were 

critical of DOE for using an approach that differs so significantly from 

 8

The Corps of Engineers reported in May 2004 that DOE did not properly account for cost

increases that should have been expected from the overall complexity of nearly every 

aspect of the project—including the variety of tank wastes; the required technology 

integration; the design, construction, and commissioning of the plant; and the regulatory

climate. See U.S. Army Corps of Engineers, Independent Cost and Schedule Baseline

Review Summary Report, (Walla Walla, Washington, May 28, 2004).

9

10 CFR 52.47(b)(1) for certification of a nuclear power plant design, calls for facility 

design to be “essentially complete” to resolve safety issues before starting construction. 

According to the director of new plant deployment at the Nuclear Energy Institute, for a 

first-of-a-kind plant, the commercial nuclear power industry’s goal is to achieve 90 percent

completion of final detailed design before construction begins. In addition, DOE’s own 

Order 413.3 states that facility design should be “essentially complete” and all 

environmental and safety criteria met when the project is ready to begin construction. 

Page 13 GAO-06-602T 
nuclear industry guidelines for constructing complex nuclear facilities. 

The Safety Board cautioned in June 2002, and again in March 2004, that a 

fast-track, design-build approach could lead to expensive plant 

modifications or to the acceptance of increased public health and safety 

risks. In June 2004, we recommended that DOE avoid using a fast-track 

approach to designing and constructing its complex nuclear facilities. The 

department accepted this recommendation, but apparently believes that it

does not apply to this project. At the time of our 2004 report, the 

department could not identify a single instance where it had successfully 

used the approach to construct a large, complex nuclear cleanup facility. 

Despite the fact that DOE has never been successful with this approach on 

any complex nuclear cleanup project, Bechtel reported in its most recent 

cost and schedule estimate that a “fast-track engineering, procurement, 

and construction” approach is a standard commercial approach for large 

projects and the best approach for a schedule-driven project.

DOE’s lack of oversight of Bechtel’s activities has also been unfortunate.

DOE did not ensure adherence to normal project reporting requirements 

and, as a result, status reports provided an overly optimistic assessment of 

progress on the project. For example, in January 2005, DOE’s project 

status report indicated that costs and scheduled work to date were 

proceeding as planned. However, Bechtel was not providing accurate

information. The project almost always appeared to be on schedule 

because Bechtel adjusted the project baseline schedule to match actual 

project results. In addition, DOE headquarters oversight officials were 

generally unaware of the full extent of the problems with the project. 

Finally, DOE has not prevented significant safety problems from occurring 

on the project. DOE is responsible for ensuring that its activities follow 

nuclear safety requirements and generally receives no outside regulatory 

oversight of nuclear safety. However, the department was not fully 

effective in ensuring that nuclear safety requirements were being met. 

Contributing to the problem, DOE’s internal safety oversight had been

significantly reduced since 2000. Furthermore, key responsibilities to 

ensure quality control of contractors were placed under the responsibility 

of the DOE project manager who also had primary responsibility for 

meeting project cost and schedule targets. In late 2003, DOE began 

recognizing some of the nuclear safety problems on the project but many 

of these problems dated back to 2002, or earlier. Finally, in 2005 and 2006, 

according to the WTP project manager, DOE withheld a total of $800,000 

in performance fee from Bechtel for industrial and nuclear safety 

problems, but problems continued. In 2006, DOE assessed a civil penalty 

Page 14 GAO-06-602T 
of $198,000 for a number of nuclear safety violations. DOE also recently 

increased the number of staff assigned to oversee safety activities. 

Technical challenges. Constructing the waste treatment plant at the 

Hanford site is a massive, highly complex and technically challenging 

project. Problems in addressing these technical challenges have 

contributed to cost and schedule increases. 

A number of technical problems have continued to plague the project, 

including: 

• changing seismic standards that resulted in substantial re-engineering of 

the facility design; 

• problems with “pulse jet mixers” needed to keep waste constituents 

uniformly mixed while in various tanks in the facilities; 

• the potential buildup of flammable hydrogen gas in the waste treatment 

plant tanks and pipes; and 

• problems with radioactive and hazardous wastes plugging treatment plant

piping systems during operations. 

Bechtel estimated, in December 2005, that collectively these technical 

problems could add nearly $1.4 billion to the project’s estimated cost. 

In 2002, the Safety Board began expressing concerns that the seismic 

standards used to design the facilities were not based on the most current

ground motion studies and computer models, and were not based on 

geologic conditions present directly under the construction site. After 

more than 2 years of analysis and discussion, DOE contracted for a new 

seismic analysis that confirmed the Safety Board’s concerns that the 

seismic criteria were not “sufficiently conservative” for the two largest 

treatment facilities—the high-level waste facility and the pretreatment 

facility. Revising the seismic criteria caused Bechtel to recalculate 

thousands of engineering estimates and to rework thousands of design 

drawings to ensure that tanks, piping, cables, and other equipment in these 

facilities were adequately anchored. Bechtel determined that the portions 

of the building structures already constructed were sufficiently robust to 

meet the new seismic requirements. By December 2005, however, Bechtel

estimated that engineering rework and other changes to tanks and other 

equipment resulting from the more conservative seismic requirement 

Page 15 GAO-06-602T 
would increase project costs by about $750 million to $900 million and 

result in a 26 month schedule delay.

In 2003, potential problems with the pulse jet mixers caused project 

construction delays. Bechtel initially planned to rely on computer 

modeling to confirm that the mixer would successfully keep the tank 

waste uniformly mixed. However, because these mixers were designed to 

be placed in “black cells” in the pretreatment facility where they could not

be repaired or modified after operations began because of the high levels

of radiation in the cells, mixer failure was considered high risk. Given this

risk, in April 2003, just 9 months before the design configuration for the 

mixers was to be completed, Bechtel decided to conduct laboratory tests 

of the mixers to ensure that they would successfully mix the tank waste. 

Based on laboratory performance testing, Bechtel found that the mixers 

did not adequately work. Consequently, the mixers had to be re-designed.

The tanks that were to house the mixers also had to be redesigned with 

greater structural support to accommodate more forceful mixing pumps 

and other modifications. DOE spent about two years addressing problems 

with the pulse jet mixers. According to DOE’s project manager, Bechtel 

has completed the testing and design modifications for the mixers. As of 

May 2005, this problem had contributed more than $300 million to the 

project’s cost growth. 

In June 2004, we reported on the possibility of hydrogen gas building up in 

the plant’s tanks, vessels, and piping systems, and noted that the buildup 

of flammable gas in excess of safety limits could cause significant safety

and operational problems. Although DOE and Bechtel have been aware of

this problem since 2002, the problem has not been fully resolved. As of 

March 2006, Bechtel continued to assess how to resolve this technical 

problem but has not identified final solutions. In April 2005, Bechtel 

estimated that this problem contributed about $90 million to the project’s 

cost growth. 

In March 2006, an external technology review identified another 

technological problem called “line plugging,” involving the potential that 

solid and liquid radioactive and hazardous wastes could plug waste 

treatment facility piping systems during treatment operations.10 Described 

 10Comprehensive Review of the Hanford Waste Treatment Plant Flowsheet and

Throughput—Prepublication,” Assessment conducted by an Independent Team of 

External Experts, at the direction of the U.S. Department of Energy, Office of 

Environmental Management (Washington, D.C.: Mar. 17, 2006). 

Page 16 GAO-06-602T 
as the most serious problem the external group identified, the report 

emphasized that unless corrected, this flaw could prevent the plant from 

operating successfully. The review concluded that the treatment plant’s 

piping systems could begin plugging within days to a few weeks of 

operational start up. The external review did not estimate the potential 

cost and schedule impact of correcting this problem, but concluded that

DOE identify and consider the corrective actions needed to resolve the 

problem. Bechtel plans to address these actions in its final cost and 

schedule estimate due in late May 2006. 

To address underlying causes contributing to cost and schedule growth on 

the construction project, DOE and Bechtel have undertaken three main 

initiatives: (1) slowing construction to allow time to address technical and 

safety problems and to advance design activities further ahead of 

construction activities, (2) developing a more credible cost and schedule 

baseline, and (3) improving project management and oversight. 

Because of the scope of the technical problems on the project, especially

the need to apply more conservative seismic standards to the pretreatment 

and high-level waste facilities, in December 2004, DOE directed Bechtel to 

slow construction on these facilities. This allowed Bechtel to focus on 

addressing the technical problems and to advance plant design further 

ahead of construction activities. According to the DOE project manager, as 

of March 2006, the design for the waste treatment plant was about 60 

percent complete. DOE’s project manager told us that once construction 

starts again, he expects to have a gap of about one year between 

completing the design of specific building components and beginning 

construction of those components. Slowing the construction of project 

facilities has also allowed DOE and Bechtel to resolve some of the 

technical issues that contributed to cost and schedule growth. For 

example, according to DOE’s WTP project manager, seismic criteria have

been revised and are being incorporated into facility design. The Corps is 

reviewing Bechtel’s design rework to ensure that it meets the revised 

criteria. These criteria are scheduled to be confirmed by the Corps in early 

2007. Similarly, DOE’s WTP project manager said that problems with tank 

waste mixing pumps have apparently been resolved and changes are being 

incorporated into the revised design. However, issues involving the 

potential for hydrogen gas to build up in the waste treatment plant tanks 

DOE and Bechtel 

Have Taken Several 

Steps to Strengthen 

Management and 

Oversight of the 

Project 

Slowing construction to 

address technical 

problems and advance the 

design work 

Page 17 GAO-06-602T 
and piping systems have not yet been resolved, according to DOE’s project 

manager. 

Bechtel and DOE have taken steps to develop estimates they believe will 

better reflect the project’s true cost. Bechtel has been conducting a more

detailed review of cost and schedule elements than occurred in developing 

previous baselines. In the past, Bechtel relied more on estimating 

techniques to develop the baseline because the design was not sufficiently 

mature to more accurately estimate material and labor costs. Bechtel’s 

December 2005 baseline estimate of $10.5 billion was based on using 

detailed design drawings and a better understanding of the actual material 

and labor costs. According to Bechtel’s deputy project manager, the new 

estimate better defines risk on the project and assigns a more realistic 

contingency value to that risk. Bechtel also brought in outside experts and 

conducted two major corporate reviews of the estimates in April and 

December 2005. Bechtel is expected to submit a final revised cost and 

schedule estimate by the end of May 2006. 

In addition to Bechtel’s efforts, DOE has hired two external teams to 

review the revised estimates. First, DOE contracted with the Corps of 

Engineers to review the reasonableness of various aspects of Bechtel’s 

estimate. DOE expects the Corps of Engineers to validate such things as 

the revised ground motion criteria and other geophysical data, whether the 

ground motion criteria has been adequately incorporated into the plant 

design, and the reasonableness of material and labor cost estimates, 

including the amount of contingency funds needed for the project. DOE 

expects the Corps of Engineers to complete its review by July 2006. 

Second, DOE directed Bechtel to hire an independent review team of 

experts from industry and academia to review the technical, cost, and 

schedule aspects of the project. The team’s preliminary report concluded

that the project’s cost estimate should be increased to $11.3 billion, plus 

contractor fee.11

In our view, while these reviews are a step in the right direction, given the 

Department’s past history in developing a credible project baseline, it is 

Developing a more reliable 

project baseline 

 11“Comprehensive Review of the Hanford Waste Treatment Plant Estimate at

Completion—Preliminary Draft,” Assessment Conducted by an Independent Team of

External Experts, at the direction of the U.S. Department of Energy, Office of 

Environmental Management (Washington, D.C.: Mar. 20, 2006). 

Page 18 GAO-06-602T 
too soon to tell whether these reviews will assist DOE and Bechtel in 

providing reliable cost and schedule estimates. 

Both Bechtel and DOE have undertaken several other actions to improve 

management and oversight of the project. Bechtel’s actions include (1) 

improving its cost and schedule performance tracking system, (2) making 

management and organizational changes, and (3) taking steps to improve 

quality and safety on the project. Regarding the cost and schedule 

performance tracking system—referred to as an earned value system—

DOE requires that a contractor’s system be certified to comply with 

industry standards. However, DOE had not certified Bechtel’s earned 

value system. Bechtel is now working to have its earned value 

management system certified by September 2006. In addition, to improve 

its management of the project, Bechtel has reorganized to provide greater 

control and oversight of facilities engineering work and greater 

standardization in purchasing material and supplies. According to 

Bechtel’s deputy project manager, the new organizational structure, along 

with selected personnel changes will strengthen oversight of this work. 

Finally, following a March 2006 nuclear safety enforcement action by DOE, 

Bechtel is in the process of developing a nuclear safety and quality culture

change initiative. This includes holding meetings to emphasize quality and 

safety, implementing new training requirements, and conducting employee 

focus groups to promote greater awareness of safety requirements. 

DOE has also taken steps to strengthen its management and oversight. To 

address organizational and staffing oversight issues, DOE formed a special 

headquarters task force, in late 2005, to study various aspects of the 

Hanford project and to advise the Secretary and the DOE project manager 

as the project goes forward. In addition, the Assistant Secretary for 

Environmental Management directed the DOE site manager to hire at least 

eight additional contracting staff to help administer the project, including

a director of procurement, a procurement attorney, two senior contracting 

officers, two senior contract specialists, and two contract specialists. DOE 

expects to fill these positions by spring 2006. DOE also established a new 

headquarters office—the Office of Project Recovery—to focus greater 

attention on projects, such as the waste treatment plant project, that have 

performance problems. This office, which reports directly to the Assistant 

Secretary for Environmental Management, is intended to work with field 

officials to help get projects in trouble back on track. 

To address project management and reporting concerns, DOE is 

improving the use of its earned value information—data DOE uses to 

Taking other steps to 

improve management and 

oversight 

Page 19 GAO-06-602T 
monitor cost and schedule performance on its projects. DOE is also 

requiring Bechtel to comply with DOE’s project management 

requirements, as defined in DOE Order 413.3. In our June 2004 report on 

the Hanford waste treatment project,12 we found that DOE awarded the 

original contract in December 2000, without putting in place these key 

project management requirements. We noted that this approach added 

significantly to project risk. Additionally, the Assistant Secretary for 

Environmental Management directed DOE’s Office of Engineering and 

Construction Management to provide more frequent assessments of the 

waste treatment project and, if necessary, initiate more external reviews of 

the project.

To address continuing problems in nuclear safety and quality, DOE 

recently initiated an enforcement action, including a civil penalty of 

$198,000, against Bechtel for the continuing recurrence of quality and

safety violations. In its March 16, 2006 Preliminary Notice of Violation 

letter, DOE listed several areas where Bechtel had violated nuclear safety

requirements, including non-adherence to procedures, inadequate training 

for staff, and emphasizing meeting cost and schedule requirements over 

quality and safety. In its March 16 letter, DOE noted that past actions by 

Bechtel to correct these long-standing problems had not been effective. 

DOE plans to meet with Bechtel in June 2006 to discuss the contractor’s 

progress in improving nuclear safety on the project and determine what 

additional steps will be necessary to ensure safety and quality on the 

project. 

Despite the actions taken by DOE and Bechtel to address technical, safety,

and other management problems on the project, we have continuing 

concerns about the current strategy for going forward. Our main concerns

include: 

• the continued use of a fast-track, design-build approach to the remaining 

work on the construction project, 

Observations About 

Selected Issues DOE 

Will Need to Address 

in Going Forward on 

the Project 

• the reliability of the project baseline and whether it will fully account for 

remaining uncertainties, and 

 12U.S. General Accounting Office, Nuclear Waste: Absence of Key Management Reforms on

Hanford’s Cleanup Project Adds to Challenges of Achieving Cost and Schedule Goals, 

GAO-04-611 (Washington, D.C.: June 9, 2004).

Page 20 GAO-06-602T 
• the adequacy of project incentives and management controls for ensuring 

effective project management and oversight. 

It is unclear whether DOE plans to go forward with the fast-track 

approach and allow Bechtel to work concurrently on technology, design, 

and construction activities. Although design and construction activities 

will be less “close-coupled” than before, the work schedule will still not 

fully comply with nuclear industry guidelines to complete at least 90 

percent of the design before constructing the facilities. DOE is continuing 

with this fast-track, design-build approach to try and stay as close as 

possible to milestone dates agreed to in the Tri-Party Agreement, and 

because DOE believes that doing so will help to control costs on the 

project. However, the myriad of technical, safety, and management 

problems that have already occurred on the project make it clear that a

more systematic approach to the project is needed. Indeed, many of those 

problems have not yet been fully resolved. Continuing with a fast-track, 

design-build approach under these conditions increases the risk that the 

completed facilities may require major rework to operate safely and 

effectively, which could further increase costs. In our view, proceeding

with a project construction plan more closely aligned with nuclear 

industry guidelines for complex nuclear facilities will provide the best 

chance of successfully completing the project and controlling the final

cost and completion date. 

None of the estimates Bechtel has developed so far have been reliable. 

Estimates of material and labor costs have been inadequate and Bechtel 

has not included sufficient contingencies in the project baseline to 

account for the high risk, technical complexities, and managerial 

challenges it has faced. As DOE’s project management guidance states, the 

key is to develop a project baseline estimate that is fully achievable. Rebaselining the project is a time-consuming and costly effort. Bechtel’s 

December 2005 baseline proposal is contained in a roughly 44,000 page 

document that according to Bechtel’s deputy project manager required the 

efforts of about 200 staff over a 6-month period and cost about $10 million 

to develop. Furthermore, outside reviews and baseline validations have 

cost DOE an additional $20 million since 2003. 

Bechtel has indicated that the project’s revised cost and schedule 

estimates will be comprehensive enough to account for known 

uncertainties, such as what it might take to address the problem of 

hydrogen gas building up in facility pipes as well as any less predictable 

The use of a fast-track, 

design-build approach to 

the project 

The reliability of the 

revised project estimates 

Page 21 GAO-06-602T 
unknowns that might occur, such as a shortage of a key commodity. While 

we are encouraged that Bechtel is taking a more systematic approach to 

developing the project estimates, we have some remaining concerns. In 

particular, the project estimate must not only account for constructing the 

facilities but also commissioning—-when DOE and Bechtel will 

demonstrate that the facilities are safe and ready to operate. In the past, to

try and achieve milestone dates agreed to for beginning facility operations, 

DOE and Bechtel reduced the amount of time in the baseline schedule 

allocated to facility commissioning and testing activities from about 58 

months to 42 months. In our June 2004 report, we expressed a concern 

that shortening the commissioning schedule may affect the reliability of 

the completed facilities. We also contacted former DOE and contractor 

officials and industry technology development managers who told us that 

the commissioning approach in the 2003 baseline could result in 

significant problems being overlooked. 

Under Bechtel’s most recent proposal, the timeframe for commissioning 

and testing activities has been increased to about 46 months, including 

about 21 months of component testing before commissioning with 

simulated and actual waste begins. However, Bechtel does not yet have a 

detailed plan for the commissioning activities that demonstrates a 46 

month period is adequate. Furthermore, one independent review has 

concluded that the commissioning phase will be the most difficult aspect 

of the entire construction project.13 Given the nuclear safety problems 

Bechtel has encountered so far on the project, and the complexity and size 

of the waste treatment plant, the commissioning phase portion of the 

schedule will need to be long enough to allow full testing of the facilities 

and sufficient time to identify and address any remaining problems before 

operations begin. 

One of the remaining management uncertainties is how DOE will modify 

contract incentives once the new baseline is finalized. Due to cost 

increases and schedule delays that have occurred, the incentive fees in the 

current contract are no longer meaningful. Those incentives included 

more than $300 million for meeting cost and schedule goals or

construction milestones, and about $111 million for building a plant that 

The adequacy of project 

management and oversight 

 13LMI Government Consulting, Hanford Waste Treatment and Immobilization Plant 

Project: After-Action Fact Finding Review, January 2006.

Page 22 GAO-06-602T 
operates effectively. This greater focus on cost and schedule milestones 

may help explain why DOE has found a less than adequate concern for 

nuclear safety on the project. Another issue, however, is that modifying 

the contract to provide new incentives could be viewed as rewarding 

Bechtel’s past performance. Overall, it remains to be seen whether DOE 

can finally put in place a combination of performance incentives and 

management controls that will support the successful treatment of the 

Hanford tank wastes over the next few decades.

By just about any measure, the Hanford waste treatment project is in 

disarray, as evidenced by ever-increasing cost estimates, construction 

delays, and more recently, safety concerns. In our view, what is happening 

is uncharacteristic of a well-planned and well-managed construction 

project. Project costs are increasing rapidly and we do not know what the 

facilities will ultimately cost or when they will be operational. Of great 

concern to us is the fact that many nuclear safety and other technical 

problems have occurred on the project. We believe that it is imperative 

that Bechtel and DOE discover any and all safety problems and 

immediately address them. In going forward, it is unclear whether DOE 

plans to continue using a fast-track approach that we have found is 

inappropriate for this unique, complex nuclear facility. We believe that 

DOE needs to follow nuclear industry construction guidelines and take a 

more conservative approach to design and construction activities that 

avoids carrying out these activities concurrently. Furthermore, the revised 

baseline must be robust enough to adequately address remaining 

uncertainties and allow sufficient time for testing the facilities during the 

commissioning phase. Unless the revised baseline fully reflects all 

remaining uncertainties, especially problems that may occur during facility 

commissioning, DOE will be unable to ensure that no further re-baselining 

of the project will be necessary. Furthermore, it is unclear how DOE will 

modify contract incentives or carry out its revised plan for overseeing the 

project. We believe that DOE needs to develop contract incentives that 

better balance cost and schedule incentives and incentives to ensure that 

the facilities operate safely and effectively as well as improve the 

department’s management and oversight of contractor activities. In our 

view, if DOE takes these actions the project will have a better chance of 

being successfully completed. 

We recommend that the Secretary of Energy take the following three 

actions: 

Conclusions 

Recommendations 

Page 23 GAO-06-602T 
1. Discontinue using a fast-track, design-build approach to completing 

the project and consider the feasibility of completing at least 90 

percent of the facility design or facility component design before 

restarting construction, and ensure that the project’s major technical 

and safety problems have been addressed before restarting 

construction. 

2. Develop a revised project baseline that fully reflects the remaining 

uncertainties, including potential problems that may be encountered 

during the commissioning phase, before presenting it as a reliable 

estimate of the project’s cost and schedule. 

3. Establish improved management controls, including revising contract 

incentives and strengthening accountability for performing oversight 

activities. 

Thank you, Mr. Chairman and Members of the Subcommittee. That 

concludes my testimony. I would be pleased to respond to any questions 

that you may have. 

For further information on this testimony, please contact Mr. Gene Aloise 

at (202) 512-3841. Individuals making key contributions to this testimony 

included Chris Abraham, John Delicath, Nancy Kintner-Meyer, Jeff Larson, 

Tom Perry, and Bill Swick. 

Contacts and 

Acknowledgments 

Page 24 GAO-06-602T 
Page 25 GAO-06-602T 

Appendix I: Additional Information on 

Hanford’s Tank Wastes 

DOE has a vast complex of sites across the nation dedicated to the nuclear

weapons program, but the high-level waste stemming from reprocessing 

spent nuclear fuel to produce weapons material such as plutonium and 

uranium has been limited mainly to three sites—the Savannah River site, 

South Carolina; the Idaho National Laboratory near Idaho Falls, Idaho; and 

the Hanford site near Richland, Washington.1

 The underground storage 

tanks that store the high-level waste at the Hanford site consist of 149 

single shell steel tanks and 28 double shell tanks encased in concrete. 

Most of these tanks have already exceeded their design life. DOE has 

concluded, based on tank monitoring data and other techniques used to 

detect contamination in soil under the tanks, that 67 of the single shell 

tanks have leaked about 1 million gallons of high-level waste into the soil.

DOE does not believe that the double shell tanks have leaked any waste. 

The waste in these tanks contains radioactive components that emit 

dangerously intense radiation. Because of the intense radiation emitted 

from high-level waste, the waste must be isolated and handled remotely 

behind heavy shielding such as a layer of concrete in order to protect 

humans and the environment. In addition to intense radioactivity, some 

radioactive components are highly mobile in the environment and can 

quickly migrate to contaminate the soil and groundwater if not 

immobilized. In addition to radioactive components, DOE’s high-level 

waste also generally contains hazardous components added during the 

process of dissolving used nuclear fuel to remove plutonium and other 

nuclear materials or to stabilize the waste for storage. These hazardous 

components include solvents, acids, caustic sodas, and toxic heavy metals

such as chromium and lead. Radioactive waste components, when 

combined with hazardous components, are referred to as “mixed wastes.” 

High-level waste generally exists in a variety of physical forms and layers 

inside the underground tanks, depending on the physical and chemical 

properties of the waste components. The waste in the tanks takes three 

main forms:

• Sludge: The denser, water insoluble components generally settle to the 

bottom of the tank to form a thick layer known as sludge, which has the 

consistency of peanut butter. 

 1

DOE also agreed to clean up high-level waste at another site—the West Valley 

Demonstration Project at West Valley, New York—where the state sponsored reprocessing

of both commercial and DOE spent nuclear fuel. DOE completed treatment and 

preparation of this waste for disposal in September 2002. 
• Saltcake: Above the sludge may be water-soluble components such as 

sodium salts that crystallize or solidify out of the waste solution to form a 

moist sand-like material called saltcake. 

• Liquid: Above or between the denser layers may be liquids comprised of 

water and dissolved salts called supernate. 

The treatment and disposal of high-level waste produced at DOE facilities 

is governed by a number of federal laws, including laws that define the 

roles of DOE and the Nuclear Regulatory Commission (NRC) in waste 

management. The Atomic Energy Act of 1954 (AEA) and the Energy 

Reorganization Act of 1974 established responsibility for the regulatory 

control of radioactive materials including DOE’s high-level wastes. Under 

amendments the Federal Facility Compliance Act of 1992 made to the 

Resource Conservation and Recovery Act of 1976 (RCRA), DOE generally

must develop waste treatment plans for its sites that contain mixed 

wastes.2

 These plans are approved by states, including the state of 

Washington, that EPA has authorized to administer RCRA or by EPA in 

those states that have not been so authorized. 

 2

42 U.S.C. 6939c(b). 

Page 26 GAO-06-602T 
Page 27 GAO-06-602T 

Appendix II: Scope and Methodology 

To determine how costs and schedule for DOE’s waste treatment plant 

located at the Hanford site near Richland, Washington have changed, and 

the primary causes for those changes since the contract was awarded in 

2000, we reviewed previous GAO reports on the project from 1993 to 2005. 

In addition we reviewed several internal and external reports addressing 

cost, schedule, technology, and other issues on the project, including two 

studies by the Army Corps of Engineers, and a study conducted for DOE 

by LMI Government Consulting—a private engineering consulting firm. We 

also reviewed both the April and December 2005 Estimates at Completion 

prepared by Bechtel and two March 2006 reports prepared by external 

review teams to assess the impact of a variety of technical issues on the 

project and Bechtel’s estimated cost estimate for completing the project. 

Both of these reports were prepared under the direction of the 

department’s Office of Environmental Management. While we did not 

independently verify the accuracy of the data presented in these reports, 

based on our review of much of the supporting documentation cited in the 

reports, we determined the data to be of sufficient reliability use in our 

report. To assist in evaluating these reports and other technical issues on 

the project, we obtained assistance from our technical consultant, Dr. 

George Hinman, who has a Ph. D. in physics and serves as Professor 

Emeritus at Washington State University. Dr. Hinman has extensive 

nuclear energy experience in industry, government, and academia. 

We also discussed the problems and underlying causes of cost and 

schedule growth with DOE and contractor officials at the site as well as 

DOE officials in its Office of Environmental Management, Office of 

Engineering and Construction Management, and Office of Budget. We 

discussed the project’s cost and schedule changes with outside experts, 

including officials from the Defense Nuclear Facilities Safety Board. To 

document the primary causes for changes in the cost and schedule 

estimates, we relied on these documents as well as interviews with key 

project and program officials. We quantified the cost impact of each of the 

main causes for cost growth and schedule increases from information 

provided in Bechtel’s April 2005 estimate and the Corps of Engineers’ May 

2005 report. These estimates were based on an estimated contract price of

$9.3 billion. However, even though Bechtel updated its cost and schedule 

estimates to reflect a potential contract price of nearly $11 billion as of 

December 2005, it does not plan to finalize its estimate until late May 2006. 

As a result, we were not able to quantify the impact of each of the main 

causes we cited for cost and schedule changes to reflect the most recent 

cost estimate. 
To determine the steps DOE and Bechtel are taking to improve 

management and oversight of the project, we reviewed several documents, 

including a letter by the Assistant Secretary for Environmental 

Management directing that a number of management improvements be 

made. We reviewed DOE policy and procedure documents, and discussed 

DOE’s strategy to manage the project with DOE headquarters officials in 

its Office of Environmental Management. We also discussed management 

improvement initiatives with senior Bechtel officials. In reviewing the role 

of fast track on the project, we obtained information from the nuclear 

industry to update current guidance on designing, licensing, and building 

nuclear facilities that may be equivalent in size, scope, and complexity to 

the Hanford waste treatment plant. 

To develop information on nuclear safety issues at the waste treatment 

plant and DOE’s enforcement action, we obtained numerous documents 

from DOE and Bechtel describing safety problems that had been identified 

over the years, analyses of the causes, and proposed actions to correct the 

problems. We discussed nuclear safety issues with DOE’s Director of 

Environmental Safety and Quality at Hanford as well as Bechtel’s Quality 

Assurance Manager and Price-Anderson Amendments Act Coordinator. To 

understand the significance of safety violations raised in DOE’s March 17, 

2006 enforcement action, we discussed the Proposed Notice of Violation 

with the Director of the Office of Enforcement in DOE’s Office of 

Environmental Safety and Health. We also discussed safety concerns with 

officials from the Defense Nuclear Facilities Safety Board and with state 

regulators. 

Page 28 GAO-06-602T (360665) 
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