Report to the Subcommittee on Energy

and Water Development, Committee on

Appropriations, House of

Representatives

United States General Accounting Office

GAO

December 2001 DEPARTMENT OF

ENERGY

Fundamental

Reassessment Needed

to Address Major

Mission, Structure,

and Accountability

Problems

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

Letter 1

Results in Brief 2

Background 4

DOE Initiated Major Reforms in the 1990s 7

Unresolved Management Weaknesses Contribute to Performance

Problems 10

Diverse Missions, Dysfunctional Structure, and Weak Culture of

Accountability Are Fundamental Impediments to Improvement 21

Conclusions 24

Recommendations for Executive Action 25

Agency Comments 25

Appendix I Scope and Methodology 29

Appendix II Documents Reviewed 31

Appendix III Comments From the Department of Energy 47

Appendix IV GAO Contacts and Staff Acknowledgments 58

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

December 21, 2001

The Honorable Sonny Callahan

Chairman

The Honorable Peter Visclosky

Ranking Minority Member

Subcommittee on Energy and Water Development

Committee on Appropriations

House of Representatives

Recurring problems in managing its programs and projects plagued the

Department of Energy (DOE) to such a degree in the late 1980s and early

1990s that some observers, including GAO, called for a rethinking of the

department’s missions and structure. Responding to calls for restructuring,

by 1995 DOE initiated “unprecedented” reforms that it said would

“fundamentally improve the efficiency and effectiveness of the

department.”

Created in 1977 from diverse agencies, DOE manages the nation’s nuclear

weapons production complex, cleans up the environmental legacy from

the production of nuclear weapons, and conducts research and

development on both energy and basic science. The relative emphasis

given to these missions has changed over time. Early emphasis by the

department on research and initiatives to cope with the global energy

crisis quickly shifted to accelerated nuclear weapons production.

However, by the late 1980s, DOE funding priorities again shifted to

cleaning up the legacy of waste generated by the weapons complex, and

this work remains DOE’s largest budget category. Since then, DOE has

placed increased emphasis on basic scientific research. DOE also has a

role in helping to ensure the security of the nation’s energy infrastructure.

The result is a department with complex and diverse missions. These

diverse missions are largely implemented by contractors to carry out

DOE’s program and project activities at government-owned facilities and

sites across the country. The department contracts out about 94 percent of

its budget and has established an extensive network of field offices to

directly oversee the work of these contractors and address other

departmental responsibilities.

Concerned about the progress that DOE has made to strengthen its

management in recent years, you asked us to

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-02-51 Department of Energy's Performance

• describe actions taken by DOE to improve its performance in the early to

mid-1990s,

• assess DOE progress since then in addressing management weaknesses

and improving performance, and

• identify any underlying impediments to more effective management and

improved performance at DOE.

To address these objectives, among other steps, we examined more than

200 audits and reviews conducted since 1995 on various aspects of DOE’s

activities. These reviews, which are listed in appendix II, were conducted

by DOE’s Inspector General, internal and external ad-hoc bodies and

consultants, and us. We supplemented our analysis by visiting and holding

discussions with officials in the DOE headquarters and field offices

responsible for each of the department’s major mission areas. (See app. I.)

In response to widespread criticisms of its performance, DOE initiated

several reforms in the early to mid-1990s to increase its efficiency and

effectiveness. These reforms were designed to, among other things, realign

the organizational structure; reduce the workforce; strengthen contracting

procedures by such means as competitive awards practices; streamline

oversight of activities; and delegate some departmental responsibilities to

the private sector. Many of these reforms achieved their immediate

objectives. For example, field offices have been realigned, overall staff

levels have been reduced, and 70 percent of DOE’s major facility contracts

have been reopened to competitive bidding since 1994.

Despite DOE’s many reforms, our review of more than 200 audit and

consulting reports issued since 1995 reveals that the department has

persistent management weaknesses that have led directly to a wide range

of performance problems, including major cost overruns and schedule

delays in a variety of noteworthy projects. For example, a DOE laser

facility in California is $2 billion over cost and 6 years behind schedule,

and a DOE tank-waste project in Washington is still in the design phase

after several false starts and a cost increase of over $4 billion. DOE

management weaknesses have also led to terminations of projects that

have already received substantial DOE funding, such as a waste treatment

plant in South Carolina that was suspended after DOE invested

$500 million. These and many other examples continue to erode public

confidence in the department and its contractors.

DOE’s performance problems persist because its past reforms were

piecemeal solutions whose effect has been muted by three underlying

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

impediments to fundamental improvement: the department’s diverse

missions, dysfunctional organizational structure, and weak culture of

accountability. These institutional impediments are interrelated, and

unless DOE addresses them in a comprehensive fashion, management

weaknesses and resulting performance problems will likely continue

despite the department's ongoing reforms. For example, DOE’s diverse

missions have resisted integration despite DOE management’s efforts at

strategic planning. Poorly integrated missions in turn have created major

organizational challenges for DOE; the department has not yet found an

effective organizational scheme that integrates the different operating

styles and requirements of its diverse missions of national security,

environmental cleanup, energy resources, and science. One symptom of

DOE’s dysfunctional organizational structure is continuing confusion

about the roles and responsibilities of headquarters and field staff. This

confusion has contributed to DOE’s weak culture of accountability, which

has long impeded its ability to oversee contractors. Improvements in

contracting practices made since 1994, when DOE launched its major

contract reforms, have had a limited effect because DOE has not been able

to develop a technically competent workforce to oversee its contractors,

nor has it been able to hold its own staff fully accountable for program and

project failures. Further, DOE continues to self regulate worker and

nuclear safety in its facilities despite opportunities to shift this

responsibility to outside regulators who have the skills and regulatory

tools to better hold contractors accountable at potentially lower cost.

While DOE should take immediate steps to strengthen accountability,

resolving the interrelated mission and structural problems will require

consultation with the Congress and other federal agencies. Certain DOE

missions might be managed better if located elsewhere, either combined

with other federal agencies that have similar responsibilities or delegated

to the private sector. The Congress made an initial step in this direction by

creating the National Nuclear Security Administration to manage DOE’s

national security mission. Although this new administration is off to a slow

start, similar attention is needed for the energy, science, and

environmental missions. Any reassessment of these missions and their

related programs will need to consider their potential implications for

homeland security. DOE programs that could play a role in ensuring

homeland security include critical infrastructure protection;

nonproliferation programs, which aid in keeping nuclear material and

weapons knowledge out of the hands of terrorists; research and

development; and emergency preparedness. Accordingly, this report is

recommending that the Secretary of Energy, working with other agencies

and the Office of Management and Budget, develop a strategy for
Page 4 GAO-02-51 Department of Energy's Performance

determining the best place for DOE’s diverse missions and take immediate

steps to improve accountability among both federal and contractor staff.

In commenting on a draft of our report, DOE said that it accepts many of

our points and has initiatives under way that it believes will enable the

department to achieve the “spirit” of our recommendations. However,

while it is too early to assess the effectiveness of these initiatives, we are

concerned that they may not adequately address the three root causes of

DOE’s recurring performance problems, particularly those related to it’s

diverse missions. Therefore, we reaffirm our recommendation that DOE

develop a strategy for realigning its missions, followed by a proposal to the

Congress.

The establishment of DOE brought together a collection of agencies with

diverse institutional cultures, structures, and procedures. Since its

inception, funding priorities for the department’s varied mission

responsibilities have shifted and new challenges have been added. Over

the years, DOE’s ability to effectively fulfill these responsibilities has been

repeatedly questioned, with calls for dismantling the department reaching

a highpoint in the mid-1990s. We concluded at the time that the Congress

and the administration needed to rethink DOE’s missions and structure.

DOE summarizes its many responsibilities in one mission statement:

To foster a secure and reliable energy system that is environmentally and economically

sustainable; to be a responsible steward of the Nation’s nuclear weapons; to clean up the

department’s facilities; to lead in the physical sciences and advance the biological,

environmental, and computational sciences; and to provide premier scientific instruments

for the Nation’s research enterprise.

DOE groups these responsibilities into four “business lines,” which DOE

describes as follows:

• Energy resources promotes the development and deployment of systems

and practices that provide energy that is clean, efficient, reasonably

priced, and reliable;

• National nuclear security enhances national security through military

application of nuclear technology and by reducing global danger from the

potential spread of weapons of mass destruction;

Background

Missions and Organization

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

• Environmental quality cleans up the legacy of nuclear weapons and

nuclear research activities, safely managing nuclear materials, and

disposing of radioactive wastes; and

• Science advances tools to provide the foundation for the department’s

applied missions and to provide remarkable insights into the physical and

biological world.

Supporting these mission-related business lines is a “corporate

management” function that constitutes a fifth “business line.” This

function includes putting in place an effective organizational structure;

efficient management practices and information systems; procedures to

ensure the safety and health of the department’s workforce and the public,

and to protect the environment; and practices to ensure accountability to

the public. According to DOE, “the department’s success within its diverse

portfolio of programs is largely dependent upon a strong and sound

corporate management function.”

DOE’s budget priorities have gradually shifted over the years from energy

policy to defense and now environmental cleanup. In fiscal year 2000, the

environmental quality business line was the department’s largest budget

category, accounting for approximately 34 percent (about $6.7 billion) of

its $19.7 billion budget. National nuclear security follows, with 25 percent

of the budget (about $5 billion). Science is allotted 16 percent of the

budget (about $3.2 billion), and energy resources, the original

responsibility of the department, accounts for 13 percent of the budget

(about $2.5 billion).

DOE has a workforce of almost 16,000 employees and over 100,000

contractor staff located at over 50 major installations in 35 states. Crucial

to DOE’s missions and performance are its 22 laboratories, 11 of which are

responsible for multiple programs. Although each of these 11

multiprogram laboratories conducts work in every DOE business line,

 3 concentrate on national security issues, 5 on basic science, 2 on

environment, and 1 on energy. DOE’s other laboratories are programspecific. The budgets for all 22 laboratories total nearly $8 billion annually.

DOE has a complex structure to manage its diverse missions. All staff and

support offices at headquarters report to the Secretary of Energy and a

deputy secretary, who serves as the chief operating officer. Below them

are two under secretaries: one for national nuclear security, who is also

the Administrator of the National Nuclear Security Administration

(NNSA), and the other for the energy, science, and environmental

missions. A variety of deputy administrators, directors, and assistant
Page 6 GAO-02-51 Department of Energy's Performance

secretaries are subordinate to the two under secretaries and oversee

individual program areas. DOE has an extensive set of field offices, which

are responsible for overseeing contractor performance. The field offices

include 11 “operations” offices and several smaller, affiliated “area” and

“site” offices, which are usually located at contractor sites. For example,

DOE has an area office in the Los Alamos National Laboratory that reports

to an operations office in Albuquerque, New Mexico. DOE also has other

field offices affiliated with the energy resources business line.

Contractors manage and operate DOE’s facilities and sites under the

supervision of department employees. Given that DOE spends most of its

budget through these contractors, the ability of DOE to direct, oversee,

and hold accountable its contractors is crucial for its mission success and

overall effectiveness. DOE’s contracting practices are rooted in the

development of the atomic bomb under the Manhattan Project during

World War II. Special contracting arrangements were developed by DOE’s

predecessor agencies, with participating industry and academic

organizations, to reimburse all of the contractors’ costs and to indemnify

contractors against any liability they might incur. Most of the current

contractors are for-profit companies that receive incentives for meeting

certain performance objectives. Several large contractors, however, are

nonprofit institutions, such as the University of California, which typically

operate research institutions for DOE. Some of these nonprofit

contractors also have financial incentives for achieving certain DOE goals.

In August 1995 we reported that a fundamental reevaluation of DOE was

warranted, based on prior reviews by us, DOE’s Inspector General and

other experts, and our survey of experts.1

 All of these reviews identified

serious management weaknesses at the department. Our report was

neither the first nor the last to recommend rethinking the department’s

structure and mission responsibilities.

Our August 1995 report said that DOE had gone through many

evolutionary changes since its creation, in part resulting from shifts in

 1

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

(GAO/RCED-95-197, Aug. 21, 1995). For this report, we surveyed 37 experts to obtain their

views about the need and proper place for the department’s missions. The experts included

four former Secretaries of Energy; former President Jimmy Carter, under whose

administration DOE was created; business leaders; and energy specialists from academic

and research institutions.

GAO’s Call for a New

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

priority among its diverse responsibilities. We concluded that even though

the department had embarked on some major restructuring, in line with

government-wide initiatives to reduce the federal workforce and become

more results-oriented, there was no assurance that these reforms would

fundamentally alter and improve the ways that DOE managed its missions.

We noted that attempting to resolve management weaknesses without first

evaluating and achieving consensus on missions was a risky approach to

restructuring the department.

Overwhelmingly, our survey of experts concurred that DOE must change.

While there was general consensus that DOE should retain and

concentrate on essential energy activities, opinions differed on where to

place other departmental responsibilities. Most experts considered moving

the weapons-related and environmental cleanup responsibilities to other

federal agencies and creating a new organizational structure for the

national laboratories, such as sharing them among federal agencies or, in

some cases, privatizing them. We concluded that the ultimate structure of

each mission should be determined by the option that encouraged the

most cost-effective practices, attracted necessary technical talent,

provided ample flexibility to react to changing conditions, and exhibited

the highest degree of accountability.

In the early to mid-1990s, newly appointed Energy Secretary Hazel O’Leary

initiated many reforms to address long-standing criticisms of how DOE

conducted its business. As part of this process, DOE commissioned

various study groups and panels to make recommendations intended to

fundamentally improve the department’s efficiency and effectiveness.

Based on these recommendations, DOE launched a series of reforms to

realign and downsize the agency, as well as address structural weaknesses

and improve its management and oversight of contractors. Many of these

reforms achieved their immediate objectives.

In 1993, DOE launched an internal initiative to improve safety and

awareness of good practices throughout all aspects of the department’s

work. The initiative included more attention to risk reduction, improving

the qualifications of the workforce, organizational realignment, and

moving to external regulation of facilities. In particular, outside reviewers

and DOE’s own senior managers questioned the continued justification for

the department’s self-regulation of its contractor operated facilities, given

that virtually all other federal facilities are externally regulated (including

some DOE facilities). In 1994, while legislation was proposed and the

Congress held hearings to assess the proposal to move to external

DOE Initiated Major

Reforms in the 1990s
Page 8 GAO-02-51 Department of Energy's Performance

regulation, no action was taken. A year later, a DOE advisory committee

concluded that secrecy had been used as a shield to deflect public scrutiny

of safety and health problems at these facilities, and that the widespread

environmental contamination at some facilities was clear evidence that

self-regulation had failed.

Also in 1993, the Energy Secretary told the Congress that DOE was not

adequately in control of its major facility and site contracts and, therefore,

“not in a position to ensure effective and efficient expenditures of

taxpayer dollars.”

2

 To improve this condition, the Secretary created the

Contract Reform Team. (We had previously designated DOE contracting

practices as high risk, making the department vulnerable to waste, fraud,

abuse, and mismanagement. It remains on our high risk list today.) DOE’s

contract reform team made more than 45 recommendations, including a

call for strengthening financial information systems, using performancebased contracts, and including performance criteria and incentives in

contracts. One significant recommendation urged DOE to shift from

making noncompetitive contract awards to adopting a full and open

competitive process.

DOE also commissioned two special task forces in 1993 to examine the

quality and effectiveness of the department’s laboratories and the

management of its energy research and development (R&D) mission. The

Secretary of Energy Advisory Board3

 chartered The Task Force on

Alternative Futures for the Department of Energy National Laboratories,

chaired by a former chairman of the Motorola Corporation, Robert Galvin,

to look at the laboratories. The task force’s final report, issued in February

1995, concluded that DOE’s laboratories were in “serious jeopardy, owing

to patterns of management and organization that have grown in

complexity, cost, and intrusiveness over a long period.” 4

 The report called

for a more disciplined research focus by the national laboratories and

recommended improvements in DOE management of these facilities,

 2

Testimony before the House of Representatives, Committee on Energy and Commerce,

Subcommittee on Oversight and Investigations (May 26, 1993).

3

The Secretary of Energy Advisory Board was established in January 1990 to provide the

Secretary with advice on issues such as basic and applied research, economic and national

security policy, educational issues, and laboratory management.

4

Alternative Futures for the Department of Energy National Laboratories, Secretary of

Energy Advisory Board Task Force on Alternative Futures for the Department of Energy

National Laboratories, DOE (Feb. 1995).
Page 9 GAO-02-51 Department of Energy's Performance

including moving to an independent management structure resembling a

government corporation. In response, DOE created the Laboratory

Operations Board, an advisory group whose purpose was to provide

dedicated management attention to laboratory issues.

The Secretary chartered The Task Force on Strategic Energy Research and

Development, chaired by energy analyst Daniel Yergin, to examine DOE’s

energy resources business line. The June 1995 report of this task force

assessed the rationale for the federal government’s support of energy

R&D, reviewed the priorities and management of the overall program, and

recommended ways to make it more efficient and effective.5

 The task force

recommended that DOE streamline its R&D management, develop a

strategic plan for energy R&D, eliminate duplicative laboratory programs

and research projects, and reorganize and consolidate the many dispersed

R&D programs at DOE laboratories.

The Galvin and Yergin reports led to many changes in how DOE interacts

with its contractors, including a streamlining of departmental orders and

procedures.

In addition to these improvement efforts, DOE also established a strategic

alignment initiative in the fall of 1994, following the results of its extensive

strategic planning process. The strategic plan was developed based on the

principles of “total quality management” and the desire to increase

“stakeholder” participation in decision-making. Under this plan, the

department organized itself by “business lines” that were essentially the

same as they are today.6

 The first phase of the strategic alignment initiative

was employee driven and aimed to identify better, more cost-effective

means of performing the core missions of the department as defined in the

strategic plan. In May 1995, DOE announced its plan to achieve $1.7 billion

in savings over the next 5 years by reducing overhead costs; closing or

consolidating field offices; realigning the organizational structure;

reducing federal employment; and initiating the delegation of some

departmental responsibilities to the private sector (referred to as

“privatization”). A portion of the overhead cost savings was to come from

 5

Energy R&D: Shaping our Nation’s Future in a Competitive World. Final Report of the

Task Force on Strategic Energy Research and Development, Secretary of Energy Advisory

Board, DOE (June 1995).

6

DOE briefly added “Industrial Competitiveness” as a business line in 1996 but dropped it in

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

externally regulating environment, safety, and health activities; reforming

contracting practices; and streamlining departmental oversight. In August

1995, DOE released the specifics of 45 implementation plans, developed in

the second phase of the initiative, to guide the cost-saving efforts and

improve the department’s performance and accountability.

DOE officials were well aware of the criticism aimed at their department

in the early 1990s. While maintaining that their own initiatives could

transform the department, DOE officials also recognized that others were

calling for more radical changes, ranging from organizing the national

laboratories under a corporate structure to completely dismantling the

department. DOE officials stated in response to our August 1995 report

that while there is “no assurance DOE’s initiatives will succeed, we know

that no alternative approach can provide that assurance either.” The

department continued to assert that its reforms, unprecedented in its

history, would transform the department into a “positive model of

organizational change and effectiveness.” According to the Deputy

Secretary at the time, the department’s initiative promised to

“fundamentally alter how we [DOE] look and how we conduct

business....”

Unresolved management weaknesses have led to recurring performance

problems within DOE. Our analysis of more than 200 audit and consultant

reports issued since 1995 that pertain to the department identified

persistent weaknesses in the integration of strategic plans and information

systems; clarification of the respective roles and responsibilities between

headquarters and field offices; maintenance of a technically qualified

workforce; and implementation of contract management reforms. While

many of DOE’s reforms have achieved their immediate objectives,

weaknesses persist and have been linked to wide-ranging performance

problems, including major cost overruns and schedule delays in a variety

of noteworthy projects.

DOE has steadily improved its strategic and annual performance plans in

response to past criticism. However, the department has not been able to

use its strategic plan and other corporate management tools, such as a

department-wide information system, to organize and integrate its

missions. According to DOE, its strategic plan is a composite of plans

guiding the activities of its major programs within the four business lines.

This approach has created some management problems that have been

identified in our past reports, in particular:

Unresolved

Management

Weaknesses

Contribute to

Performance

Problems

Strategic Plan Not Used to

Organize and Integrate

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

• Disconnects exist between the current strategic “business lines” and the

way the department is actually organized. While DOE’s strategic goals and

objectives are stated within the context of the business lines, the

department is organized and managed by its multiple programs. In some

cases, several programs contribute to the same business line without any

apparent integration. While we have called on DOE to rectify this

misalignment, it has not done so. DOE has asserted that its structure is

affected by external factors and that no single alignment will yield an

organization that eliminates crosscutting objectives. DOE told us that it

has therefore organized itself around budget decision units and set

program performance measures that are linked to each strategic plan

business line.

• Shortcomings persist in program planning and priority setting, as well as

in the use of strategic goals and measures to describe specific activities.

For example, we could not determine from DOE’s 1999 and 2000

accountability and performance reports what the department was trying to

accomplish. We also noted that DOE had not corrected the problems in its

strategic goals and measures that we identified 2 years ago.7

 According to

DOE, changes were made in the FY 2001 Annual Performance Plans to

track accomplishments by budget decision units rather than the strategic

plan.

• DOE has not been able to develop a single strategic plan that integrates its

vast laboratory network. The laboratories, particularly the multiprogram

ones, operate largely as separate entities. DOE has no central program

control over the laboratories, but has instead required that each report to a

lead headquarters program office since 1999. Integration into the strategic

plan is supposed to occur through the interests of the headquarters offices,

even though the major laboratories conduct work in all business lines.

• DOE does not have an integrating management information system to

consolidate its business, organizational, and operational information

throughout the department. In the absence of such an integrating system,

mission and program areas have developed their own systems and

procedures. A September 2000 DOE Office of Inspector General report

noted that duplicative systems existed or were under development at

virtually all organizational levels within the department. DOE has

acknowledged that a significant barrier to greater departmental

 7

Under the Government Performance and Results Act of 1993, federal agencies are to

prepare annual performance plans that establish performance goals and measures covering

a given fiscal year and that link agency’s long-term goals and day-to-day activities. The

annual accountability report addresses the degree to which the performance goals were

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

integration of information systems has been the Chief Information

Officer’s lack of control and influence over the program budgeting

processes.

• Problems continue with the validity and verifiability of the data used by

the information systems to provide a baseline from which to track

performance across many parts of the department.

Since 1995, there have been a number of attempts to clarify roles and

responsibilities between headquarters and field staffs to improve lines of

authority and accountability. A resolution for this management issue has

been elusive because of the way DOE oversees its contractors. Typically,

field office managers sign contracts and rate contractors on their

performance, but direction on programs or project work comes from the

headquarters program offices. Additionally, at least in the past,

headquarters staff offices have been allowed to give direct orders to field

offices outside of the formal chain of command. The reports that we

reviewed frequently cited problems with such intermingled roles and

responsibilities.

• A 1997 study by the Institute for Defense Analyses revealed that the

coordination between DOE programs is an “undisciplined, uncoordinated,

essentially ad hoc process between the field managers and each of the

program assistant secretaries.” The institute concluded that there was no

assurance that resource decisions are weighed against each other in a

complete and consistent manner.

• A 1999 Panel to Assess the Reliability, Safety and Security of the United

States Nuclear Stockpile reported that DOE suffered from a diffusion of

functional responsibilities across a range of staff and line organizations

that has led to clouded lines of authority and blurred responsibilities and

accountability.

• In 1999, the President’s Foreign Intelligence Advisory Board reported that

DOE’s “decentralized structure, confusing matrix of cross cutting and

overlapping management, and shoddy record of accountability has

advanced scientific and technological progress, but at the cost of an

abominable record of security....” The board labeled DOE’s organization

as a “dysfunctional” structure that has too often resulted in

mismanagement of security in weapons-related activities and in a lack of

emphasis on counterintelligence. The board concluded that “for the past

two decades, the Department of Energy had embodied science at its best

and security at its worst.”

• A 1999 National Research Council review of DOE’s project management

problems found that DOE’s “organizational structure makes it much more

Roles and Responsibilities

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

difficult to carry out projects than in comparable private and public sector

organizations.” The council noted that by operating as an aggregate of

independent agencies amid various program and field operations offices,

DOE had failed to benefit from economies of scale.

• In 1999 and 2000, we attributed problems at DOE’s Spallation Neutron

Source project under construction in Oak Ridge, Tennessee, and at DOE’s

National Ignition Facility being built in Livermore, California, to, among

other problems, DOE’s complex management and organizational structure

and unclear lines of authority.

• A March 2000 National Academy of Public Administration report on DOE’s

Energy Efficiency and Renewable Energy Office found that the office had

suffered from unclear roles and responsibilities among various

organizational levels. The Academy noted that there are “significant

differences in [DOE managers’] understanding of the roles and

responsibilities for program and project management.”

Recognizing these problems, DOE has changed reporting relationships

between headquarters and field offices in an attempt to clarify lines of

authority and to strengthen accountability. The latest major realignment

occurred in 1999 with the assigning of field offices to lead program

secretarial offices at headquarters. In addition, a Field Management

Council was established to coordinate the direction given to the field by

program and support offices. DOE’s field offices now report to whichever

headquarters program office provides the most funding to the contractor

sites overseen by the field managers—an approach used without success

in the past. This realignment had to be modified slightly in late 2000 to

accommodate the establishment of NNSA. The current reporting

arrangement, however, has given rise to some new management problems.

We found, for example, that there is considerable uncertainty about

reporting relationships in situations where many different headquarters

programs support activities at shared facilities and complexes. This

problem is particularly acute at DOE’s multiprogram national security

laboratories, where work is conducted on all of DOE’s missions, yet field

management must report only to NNSA headquarters. Thus, non-NNSA

program staff in headquarters must work through NNSA management in

the field to accomplish work related to the science and environmental

missions. Conversely, some NNSA staff members work in field offices that

report to headquarters programs in science or environmental

management, even though they can receive direction only from NNSA.

Various memorandums of agreement have been created to sort out these

arrangements and to provide support services across business lines.

However, staff in some field offices that we visited told us that they are

unsure how the new reporting relationships will work.
Page 14 GAO-02-51 Department of Energy's Performance

The establishment of NNSA has yet to clarify roles and responsibilities

within the nuclear security business line and may have exacerbated

reporting relationships, at least temporarily. In early 2001, we and the

Panel to Assess the Reliability, Safety and Security of the United States

Nuclear Stockpile challenged NNSA to develop a plan for fundamentally

redefining roles and responsibilities among its headquartered and field

organizational units. The panel called on NNSA to “clarify functional

authority, reduce management layers, eliminate micromanagement [of the

laboratories], and downsize.” As late as April 2001, we found that NNSA

had not specified the roles and responsibilities of each of the headquarters

offices; the relationship between the headquarters and the field offices;

whether headquarters or field offices will direct and oversee contractors;

and the relationship between the NNSA staff and the rest of DOE. In

NNSA’s May 2001 interim report, the administration stated that it intended

to seek expert advice on clarifying relationships between headquarters

and the field, as well as on other issues in preparation for an October 2001

status report to the Congress. On June 26, 2001, in testimony before the

House Armed Services Committee, the chairman of the Panel to Assess the

Reliability, Safety and Security of the United States Nuclear Stockpile

noted that “some of the more fundamental management problems [with

DOE] still remain to be addressed.”

Lack of technically qualified staff within DOE is another long-standing

management weakness that has been linked to performance problems. We

have raised concerns about this weakness since 1991, and many other

external reviewers have echoed these concerns since then. For example, a

1997 report by the Institute for Defense Analyses pointed out deficiencies

in the technical capabilities of those DOE managers who had survived

departmental downsizing. In addition, the Defense Nuclear Facilities

Safety Board warned in 1997 that, given likely future reductions in DOE’s

budget, the department needed to make advance preparations to avert the

loss of technically competent safety personnel.

Responding to these and other concerns, the department announced a new

Workforce for the 21st Century Initiative to strengthen technical and

management capabilities for its mission requirements. In particular, a 1998

internal DOE study confirmed the need to develop programs to address

workforce management weaknesses in the procurement environment,

such as recruitment, retention, and succession planning. However, despite

these actions, additional internal and external reports that followed have

raised concerns about the qualifications of DOE’s workforce.

Lack of Qualified Staff Has

Impeded Effective

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

• We reported in 1999 that while the Spallation Neutron Source project

appeared to be on schedule, it had already exhibited warning signs of

failure because it lacked personnel with technical skills and managerial

experience.

• In 1999, the Commission on Maintaining United States Nuclear Weapons

Expertise found that DOE’s aging workforce, the tight market for talent,

the lack of a long-term hiring plan, and other constraints had raised

serious doubts that the department would be able to maintain its nuclear

weapons expertise in the future.

• In 1999, the National Research Council found that DOE did not have “the

necessary experience, knowledge, skills, procedures or abilities to prepare

good performance measures” for its contracts.

In its fiscal year 2001 Annual Performance Plan, the department stated that

it had “fully addressed” the lack of technical and management skills by

establishing a Corporate Education, Training and Development Plan in

fiscal year 1999. DOE pointed out that it had training programs in place for

procurement professionals, property managers, and information

management specialists, and that it was establishing a new program to

rebuild a talented and well-trained corps of R&D technical program

managers. In particular, DOE reported in March 2000 that it had initiated a

program to develop future leaders of the acquisition workforce. The

Defense Nuclear Facilities Safety Board’s 2000 report credited DOE with

taking steps to improve the technical capabilities of personnel at its

defense nuclear facilities, but pointed out the need for DOE’s leadership to

pay increased attention to this issue and to follow through with its

improvement plan. Notwithstanding these efforts, the department has now

acknowledged that its workforce weaknesses represent a much broader

challenge encompassing the larger arena of human capital management.8

In commenting on a draft of this report, DOE said it had additional efforts

in workforce restructuring. In support, DOE officials provided us with its

September 2001, “Five-Year Workforce Restructuring Plan,” prepared in

response to an Office of Management and Budget requirement of all

federal agencies. The plan describes itself as a “corporate roadmap” for,

among other things, reducing manager and organizational layers,

increasing spans of control, and redeploying positions.

 8

See DOE’s fiscal year 2000 Performance and Accountability Report.
Page 16 GAO-02-51 Department of Energy's Performance

DOE has made process improvements in its contracting by implementing

many of the 1994 contract reform team recommendations. For example,

DOE has increased competition, imposed greater contractor liability,

phased in performance-based incentives, and begun using results-oriented

statements of work. According to DOE, 26 of its 37 major site and facility

management contracts have now been competed, up from just 3 prior to

1994. All of these new contracts employ performance-based techniques in

defining contractor requirements, evaluating performance, and linking

financial incentives to results. In addition, according to DOE, there has

been an overhaul and standardization of contract regulations and the

issuance of guidance on proper contract administration. Nonetheless, the

department has been criticized for not fully implementing its contract

reforms, as noted in several reports.

• In an October 1997 report, DOE’s Inspector General reported problems

with performance-based contracting at DOE’s Nevada Operations Office.

The report found that performance-measurement milestones had been

estimated after the work had actually been completed. In addition,

performance measures associated with this aspect of the contract were

vague, leading DOE to reward performance that could not be objectively

validated.

• In May 1999, we reported that while DOE laboratory contracts we

examined had some performance-based features, there was a wide

variance in the number of performance measures and the types of fees

negotiated. We also found that DOE had not determined whether giving

higher fees to encourage superior performance by laboratory contractors

is advantageous to the government.

• The National Research Council’s 1999 report concluded that DOE has had

limited success in establishing and managing performance-based

contracts. In its 2001 follow-up report, the Council noted that DOE has yet

to devise and implement either a contract performance measurement

system or an information system that can track contracts and contractor

performance while cycling information back into key decisions.

• DOE’s Inspector General reported in April 2000 that performance-based

incentives in the contract for DOE’s Idaho National Engineering and

Environmental Laboratory had not been fully successful in improving

performance and reducing costs. For some incentives, performance

declined or remained unchanged. For other incentives, performance

improved, but the gains were overstated, the contractor was compensated

twice, improvements either could not be linked directly to actions taken

by the contractor during the incentive period or were made for a

disproportionately high fee, and the contractor could not demonstrate any

reduction in cost.

Contract Management

Reforms Not Fully

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

DOE’s Inspector General has also identified other areas where contract

reforms have not been fully implemented, including the following:

• A November 1998 audit determined that 16 of DOE’s 20 major for-profit

operating contracts did not incorporate liabilities provisions called for

under contract reform.

• A December 1999 audit concluded that the department’s award procedure

“effectively circumvented federal requirements designed to promote and

ensure the appropriate use of competition in contracting.”

• A January 2000 audit of outsourcing opportunities at the Los Alamos

National Laboratory determined that although the laboratory contractor

found that only 4 of 184 support services could potentially be obtained at

lower cost from outside entities, in fact at least 128 had outsourcing

potential.9

• A February 2000 audit found that only one of the four contractors

reviewed had fully met a requirement to prepare “make-or-buy” plans to

obtain supplies and services on a least-cost basis.

• A January 2000 summary report on management challenges facing DOE

pointed out that while incentives have been included in most contracts,

reviews show systemic weaknesses in the way these incentives have been

administered. Incentive fees have risen dramatically, but there has been no

commensurate increase in financial risk to DOE’s major contractors.

DOE has also struggled to effectively implement its privatization program,

which is intended to keep the department’s environmental cleanup

projects on schedule at budgeted costs. For example, the cleanup

contracts were terminated at two noteworthy privatization projects—the

Hanford tank-waste project and the Idaho Pit 9 cleanup project—because

of concerns with rapidly escalating costs and the contractor performance.

Finally, while DOE has increased the number of major site and facility

contracts that it awards competitively, several major contracts have not

been, including nine contracts with a combined value of $22 billion.

Furthermore, despite glaring performance problems at certain

laboratories, DOE has excluded its largest laboratories from full and open

competition. For example, DOE’s contracts with the University of

California to operate two national laboratories have not been opened to

 9

Since 1994, DOE has required its management and operating contractors to identify and

evaluate all of their services to determine whether they can be obtained at a lower cost

from an outside entity.
Page 18 GAO-02-51 Department of Energy's Performance

competitive bidding since they were awarded over 50 years ago, despite

reported security and project management problems at these laboratories.

In commenting on a draft of this report, DOE said that it has not been

required to competitively award these types of contracts (Federally

Funded Research and Development Centers) and that it “actively

considers the use of competitive procedures for such contracts and has

competed them where appropriate.” DOE also said that it retained its

contracts with the University of California based on “national security

considerations.”

Several of the unresolved management weaknesses that we identified have

been linked to recurring problems with the management of programs and

projects. In 1997, we documented that over a 16-year period, of 80 DOE

projects started that cost at least $100 million each, only 15 were

completed, with most of these experiencing scheduling delays and cost

overruns; 31 were terminated; and the 34 ongoing projects were exhibiting

scheduling delays and cost increases. Since 1995, DOE and its contractors

have drawn a litany of criticism for poor performance on several specific

projects, including the following.

• In 1997, we reported that cleanup of the Pit 9 waste area at DOE’s Idaho

National Engineering and Environmental Laboratory was at least

26 months behind schedule and that, if completed, total costs would more

than double, exceeding $400 million. We found that DOE staff lacked

adequate experience with nuclear materials and failed to successfully

execute design work and to provide oversight of project-related

environment, safety, and health activities.

• In 1998, we reported that phase one of DOE’s tank-waste project at

Hanford, Washington, faced a 10-year delay and a cost increase of over

$4 billion (from $4.3 billion to $8.9 billion). By 2000, cost estimates were

projected to exceed $15 billion, and the contract was terminated. We

found that while DOE had recognized the need for additional expertise to

manage and oversee this project, DOE had a history of not implementing

its plans for improvement.

• In 1998, after spending $500 million over 10 years, DOE suspended

development of a waste treatment plant to separate high-level radioactive

wastes from liquids stored in tanks at DOE’s Savannah River facility in

South Carolina. DOE then began efforts to develop an alternative

technology, which DOE projected would not likely be available until 2007

and could cost up to $3.5 billion. Thus, we reported that project

management problems could cause DOE to miss its deadline of 2022 for

cleanup of the Savannah River facility. In response, DOE stated that it had

Persistent Management

Weaknesses Contribute to

Project Management

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

revised its project management procedures to facilitate finding an

alternative solution.

• In 1998, we reported that the ineffective oversight and coordination of the

5-year, $50 million project to design and develop a replacement plutonium

pit container led to design flaws that later had to be corrected by a newer

container that was very expensive to produce.10

• In 1999, DOE first disclosed anticipated multimillion-dollar cost overruns

and multiyear scheduling delays in development of the National Ignition

Facility. We reported in 2000 and in 2001 that, while the facility was

originally expected to cost about $2.1 billion when completed in 2002, it

may instead cost more than $4 billion and will not be completed until at

least 2008. These projected cost overruns and delays could escalate

because substantial research and development is still incomplete. We

attributed project problems to several management weaknesses, including

unclear roles and responsibilities and unqualified staff, among other

deficiencies.

• In 1999, the National Research Council found that DOE was “one of the

most inefficient organizations in the federal government.” To illustrate this

inefficiency, the council asserted that if existing management practices

continued and project costs remained 50 percent more than necessary, the

department would spend more than $50 billion unnecessarily on waste

cleanup projects alone. The Council also found that

DOE projects commonly overrun their budgets and schedules, leading to pressures for

cutbacks that have resulted in facilities that do not function as intended, projects that are

abandoned before they are completed, or facilities that have been so long delayed that,

upon completion, they no longer serve any purpose. In short, DOE’s record calls into

question the credibility of its procedures for developing designs and cost estimates and

managing projects.

The Council not only reiterated a listing of past project failures, but also

noted that 26 major projects under review at the time of its study were

showing notable deficiencies in project management.11 The report

concluded that DOE’s prior efforts to solve project management problems

had been so unsuccessful that achieving improvements in this area would

require fundamental changes in organizational structures, documents,

 10Plutonium pits are used as triggers for nuclear weapons.

11The National Research Council report Improving Project Management in the

Department of Energy also contains a lengthy appendix listing sources of DOE project

reviews that document problems, including GAO reports.
Page 20 GAO-02-51 Department of Energy's Performance

policies and procedures, as well as drastic changes in the “culture” of the

department.

DOE acknowledged the persistence of problems in its project management

practices in the department’s fiscal year 2001 performance and

accountability report. DOE stated that “the results from 33 independent

external project reviews, undertaken this past year, indicate serious

systemic issues needing correction. Among the most prevalent problems

are inadequacies in technical scope, schedule planning and control, cost

estimating, and lack of clarity on roles and responsibilities.”

In response to the Council’s 1999 recommendations for improving project

management in DOE, the department created the central Office of

Engineering and Construction Management and affiliated support offices

in the three largest departmental program offices. These offices intend to

create new policies and procedures, conduct independent project reviews,

and train staff in project management practices. The department also

plans to create a career track for project managers. However, a follow-up

report by the Council in January 2001 raised concerns about DOE’s

leadership commitment to implementing the report’s recommendations,

particularly regarding the role of the Office of Engineering and

Construction Management.

In commenting on a draft of this report, DOE said that many of its projects

are "unique, one-of-a-kind" ventures that contain significant research and

development which can impact cost and schedule assumptions. We agree

with DOE that its projects are often challenging. We also agree that such

challenges are not an excuse for poor project management performance, a

common problem in many DOE activities.
Page 21 GAO-02-51 Department of Energy's Performance

The persistence of DOE management weaknesses and project problems,

despite the many actions taken by the department to improve its

performance, are indicative of underlying impediments that have not been

addressed. We found that the department’s diverse missions, dysfunctional

organizational structure, and weak culture of accountability impede

fundamental improvement at DOE. Unless these underlying and

interrelated impediments are addressed, DOE’s management and

performance problems will likely continue.

Fundamental improvement in DOE’s performance is impeded by the

difficulty of effectively integrating the management of the department’s

diverse missions. DOE’s energy, environmental, science, and national

nuclear security staffs operate largely as separate entities within the

department, maintaining their own operating styles and decision-making

practices. For example, some mission areas retain strong central control

over their programmatic actions, as in the science area, while others

delegate more of this responsibility to the field, as in the environmental

area. Uncoordinated and inconsistent direction from program

headquarters offices still places the burden of effectively integrating

varying goals, objectives, and management styles on the field managers

who must manage this diversity at shared facilities.

The National Research Council’s 1999 report on DOE project management

noted that “cultures, attitudes and organizational commitments have

shaped service delivery, and as DOE’s missions changed in response to

external conditions, the diversity of cultures inherited by the department’s

collection of agencies did not necessarily change with it.” This diversity of

mission cultures under one roof has long prevented DOE from developing

a consistent approach in its systems, structures, and interactions with

contractors. For example, DOE’s national security programs have a long

history of operating in secret, which leads to practices that are quite

different from DOE’s science programs, which are more open and

flexible—yet these programs operate at shared facilities. This clustering of

diverse programs has complicated lines of authority, thus diluting

accountability among staff, and has impeded DOE’s ability to oversee

contractors.

It has been difficult for DOE to meet all the priorities of its mission

programs and the requirements of the department staff offices. For

Diverse Missions,

Dysfunctional

Structure, and Weak

Culture of

Accountability Are

Fundamental

Impediments to

Improvement

Diverse Missions Resist

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

example, more management attention has sometimes been given to DOE

contractors meeting nuclear weapons program goals than to operating

safely and in an environmentally responsible manner. The widely

publicized security problems at the Los Alamos National Laboratory in

1999 and 2000 are another example. DOE’s contract with Los Alamos

contained few incentives for controlling classified material but many

rewards for high quality science work—yet this work was taking place in a

top-secret laboratory, whose primary mission is designing nuclear

weapons. As a result, although laboratory staff performed security tasks

poorly, such lapses had limited impact on the lab contractor’s overall DOE

rating and subsequent performance fee.

In the future, the task of integrating diverse missions will likely be

complicated by the need to place additional emphasis on DOE programs

that play a role in ensuring homeland security. Such programs include

critical infrastructure protection; nonproliferation programs, which aid in

keeping nuclear material and weapons knowledge out of the hands of

terrorists; R&D; and emergency preparedness.

A second basic impediment to improved management and performance is

the department’s organizational structure. DOE carries out its diverse

missions through a network of multilayered field offices that oversee

contractor activities at facilities and sites widely dispersed throughout the

country. The structure inherited by the department and the different

program cultures and management styles within that structure have

confounded DOE’s efforts to develop a more effective organization. The

difficulty of reforming this structure was noted in a 1999 report of the

Special Investigative Panel of the President’s Foreign Intelligence Advisory

Board, which stated,

Over the last decade or so, DOE has undertaken major departmental shake-ups every two

or three years. None have stemmed recurring fundamental problems and all have been

thwarted by institutional intransigence.

The most problematic organizational problems have involved the nuclear

weapons complex. Years of tinkering with reporting relationships between

the offices that have a role in national nuclear security and the

laboratories where most weapons-related work is performed have not

yielded many positive results. For example, the Special Investigative Panel

of the President’s Foreign Intelligence Advisory Board noted in its 1999

report that “convoluted, confusing, and often contradictory reporting

channels have made the relationships between DOE headquarters and the

Organizational Structure

Precludes Effective

Management and

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

laboratories, in particular, tense, internecine, and chaotic.” In addition, the

panel found that much of the confusion centered on the role and power of

the field offices. As the panel reported, “senior DOE officials often

described these offices as redundant operations that function as shadow

headquarters, often using their political clout and large payrolls to push

their own agendas and budget priorities in the Congress.”

To address long-standing security problems across the nuclear weapons

complex, the panel concluded that because “DOE was incapable of

reforming itself—bureaucratically and institutionally—in a lasting way,”

an autonomous structure should be established for the national nuclear

security business line, free of all other obligations imposed by DOE

management. Specifically, the panel recommended creation of a new

agency that is far more mission-focused and bureaucratically streamlined.

Instead, the semiautonomous NNSA was established within the

department.

DOE and NNSA officials are now attempting to develop and implement an

organizational plan that can operate effectively within DOE’s overall field

and headquarters structure. Historically, DOE’s efforts to reorganize

assumed that current missions will be retained under any new structure.

However, as DOE’s Laboratory Operations Board concluded in December

2000, the creation of NNSA will present organizational and management

challenges, especially maintaining a national laboratory system that can

meet the department’s current mission requirements. Making changes in

the current environment is further complicated by the need to consider

DOE’s potentially expanded role on homeland security matters on overall

departmental missions.

DOE’s lack of a strong culture of accountability is the third basic

impediment to improved performance. A number of factors have

weakened accountability in the department. DOE’s organizational

structure, which has blurred lines of authority, has made it difficult to hold

staff and contractors accountable for poor performance. In addition, DOE

has not taken action to improve the accountability of the organization in

other areas that were identified in the mid-1990s. These pertain to

contracting practices, health and safety regulation, and human capital

management.

The reluctance of past Secretaries to open all major DOE site and facility

contracts to competitive bidding has diluted accountability by weakening

the department’s position with its contractors. Only once has DOE fired a

Weak Culture of

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

contractor for performance problems (at Brookhaven National Laboratory

in May 1997), and rarely has it taken aggressive action to hold contractors

accountable, even in the face of major project failures.

DOE’s shifting policies on external regulation also reflect DOE

leadership’s ambivalence toward accountability. Despite the position of

former Secretary O’Leary—and her internal managers and consultants—

that external regulation would give DOE credibility and make its facilities

safer, subsequent leaders reversed course. At first, Secretary Federico

Peña, O’Leary’s successor, slowed the process by ordering a pilot program

of external regulation concepts. His cautious approach was meant to test

how regulators might treat DOE, and at what cost. His successor,

Secretary Bill Richardson, concluded that external regulation was not

worth pursuing because the costs would likely outweigh the benefits.

However, this position conflicted with DOE’s own pilot program results

and was inconsistent with conclusions reached by the Nuclear Regulatory

Commission and the Occupational Safety and Health Administration—

DOE’s likely regulators.

Finally, DOE’s leadership has not devoted enough attention to recruiting

and training a qualified technical workforce, even though these needs have

been known for over a decade. Without such staff, the department lacks

the expertise to direct and oversee contractors working on highly

technical matters and hold them accountable for poor performance.

Past DOE leadership has not succeeded in transforming the Department

into an effective agency, as shown by the persistence of management

weaknesses that have led to the performance problems documented in this

report. Historically, DOE has made piecemeal changes in response to

problems or criticisms without assessing the root causes of its

management weaknesses: DOE’s diverse missions, dysfunctional

organizational structure, and weak culture of accountability.

While DOE should take immediate steps to strengthen accountability,

addressing the impediments to improved performance stemming from its

diverse missions and dysfunctional organizational structure will require

consultation with the Congress and other federal agencies. Since 1995,

legislation has been introduced each year to eliminate DOE and transfer

its missions to other agencies, or to terminate some of its R&D programs

and laboratories. The establishment of NNSA might suggest opportunities

to reconfigure other business lines, as some have suggested for the Office

of Science. While the program activities of the department are important,

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

that does not mean that all can be best managed under one agency or that

each is inherently governmental.

DOE must also have an organizational structure that effectively meets the

needs of the department’s missions. However, given the current diversity

of these missions, the semi-autonomous status of the NNSA, and shifting

mission emphases, such as protecting energy infrastructure, establishing

an optimum structure embracing all of DOE’s missions may simply not be

possible. New leadership, ongoing organizational changes, and the need to

consider how DOE’s responsibilities contribute to homeland security

missions, make this an opportune time to address the root causes of

performance problems in DOE.

To address its diverse mission and organizational issues, we recommend

that the Secretary of Energy, in consultation with the Office of

Management and Budget and other federal agencies that might gain or lose

missions if DOE were reconstructed, develop a strategy for determining

whether some missions would be managed better if located elsewhere,

combined with other agencies, or privatized. Once this is accomplished,

the Secretary should report his findings and a proposal to realign the

various missions to the Congress.

Pending the results of a comprehensive review of DOE’s missions, the

Secretary of Energy should take immediate steps to improve the

department’s accountability. Such steps should include, for example,

ensuring that all contract-reform initiatives already under way are

completed, holding staff and contractors strictly accountable for

performance, ending self regulation of worker and nuclear safety in its

facilities, and developing a more technically competent workforce.

In commenting on a draft of our report, DOE said that the Secretary

"recognizes and accepts" many of our points and has already "instituted a

path forward for achieving his vision of excellence." DOE also noted that

its management challenges are "enormous" and efforts to resolve them

"will take time." An important effort under way, according to DOE, is its

"strategic mission review," for which a report is due in January 2002.

According to DOE, the purpose of this review is to focus the department

on activities that best support its "overarching national security mission."

DOE also listed several other steps that it said will help clarify roles and

responsibilities, streamline its organizational structure, and instill stronger

accountability among federal and contractor staff. Further, DOE said it

Recommendations for

Executive Action

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

has launched initiatives to "determine why previously identified problems

have not been addressed." Finally, the department said that the sum of its

ongoing initiatives should enable it to "achieve the spirit" of our

recommendations to improve mission, structure, and accountability.

DOE's many initiatives, if fully implemented, address several management

challenges that have long plagued the department. However, while it is too

early to assess the effectiveness of these initiatives, we are concerned that

they may not adequately address the root causes of DOE’s recurring

performance problems, particularly those related to the department's

diverse missions. For example, while we applaud the Secretary's efforts to

provide a strategic focus to guide all program activities, it is unclear how a

“national security” mission can subsume each of DOE’s highly diverse

programs in science, environmental quality, and energy resources.

Developing measurable national security objectives for environmental

management, DOE’s largest budget category, will be particularly

challenging.

Also, it appears that DOE's "strategic mission review" assumes that each of

its many missions is still best managed by the department. As we noted in

our report, many of DOE's structure and accountability problems stem

from the nearly impossible task of managing diverse (and sometime

conflicting cultures) within a common field structure. The role and

responsibility problems that result from this condition will likely persist,

absent a comprehensive evaluation of how and where best to manage each

mission. The creation of NNSA was an attempt to resolve some of these

issues internally, but the effectiveness of its management structure and

associated processes is still highly uncertain. In particular, DOE has still

not clearly defined roles and responsibilities for NNSA’s headquarters and

field units or relationships with the rest of the department.12 DOE's task of

developing an integrated department is made more difficult by an

expanding mission emphasis on safeguarding energy infrastructure and

enhancing homeland defense against terrorist threats. We believe that

with these new mission emphases and the persistent questions about how

NNSA will operate relative to other DOE programs, it is more important

than ever for a strategic mission review to focus on determining whether

some missions would be managed better if located elsewhere, combined

with other agencies, or privatized. As we explained in our report, a

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

Dec. 12, 2001).
Page 27 GAO-02-51 Department of Energy's Performance

comprehensive mission assessment would require the Secretary to consult

with the Office of Management and Budget and other federal agencies that

might gain or lose missions if DOE were restructured.

Many of the organizational changes cited by DOE are positive steps, such

as clarifying the roles of the deputy and undersecretary, and creating a

Field Management Council to facilitate cooperation among the

department’s diverse programs. However, past experience has shown that

such process changes have merely tinkered with a flawed structure.

Without a serious effort to consider each mission for its proper placement

in or out of DOE, the structural problems that have clouded roles and

responsibilities will likely persist. Therefore, we reaffirm our

recommendation that DOE develop a strategy for realigning its missions,

followed by a proposal to the Congress.

Finally, while DOE cited numerous initiatives to strengthen accountability,

it is too early to judge whether these and other efforts adequately address

our recommendation in this area. In particular, we note that none of the

initiatives cited by DOE would end self-regulation of nuclear and worker

safety in its facilities. Moreover, DOE leadership has not been able to fully

implement and sustain past initiatives aimed at improving accountability

among federal and contractor staff.

Appendix III includes the full text of DOE's comments and our response.

We conducted our review from November 2000 through September 2001 in

accordance with generally accepted government auditing standards.

Appendix I provides details about the scope and methodology of our

review.

As arranged with your offices, unless you publicly announce the contents

of this report earlier, we plan no further distribution of it until 15 days

from the date of this letter. We will then send copies to the Secretary of

Energy; the Director, Office of Management and Budget; appropriate

congressional committees; and other interested parties. We will also make

copies available to others on request.
Page 28 GAO-02-51 Department of Energy's Performance

If you or your staff have any questions about this report, please call me on

(202) 512-3841. Key contributors to this report are listed in appendix IV.

(Ms.) Gary L. Jones

Director, Natural Resources

 and Environment
Appendix I: Scope and Methodology

Page 29 GAO-02-51 Department of Energy's Performance

We conducted our analysis primarily through an assessment of more than

200 external and internal reviews of the Department of Energy (DOE)

since August 1995. We selected this date as a baseline because it coincides

with our first call to assess DOE’s structure and missions, based on a

series of prior reports on the department. In addition, we relied on

information from interviews and internal documents obtained previously

from DOE headquarters in Washington, D.C., and operations offices in the

field that are affiliated with the three largest program offices. These field

offices included the Oakland Operations Office in California, aligned with

the National Nuclear Security Administration (NNSA); the Chicago

Operations Office in Illinois, aligned with the Office of Science; and the

Savannah River Operations Office in South Carolina, aligned with the

Office of Environmental Management.

To describe actions taken by DOE to improve its performance by the

mid-1990s, we reexamined our 1995 report on a framework for

restructuring DOE and its missions. We also reviewed documents

pertaining to the reforms initiated by DOE at the time of our report,

including the results of several noteworthy task forces that were

established by the department. We relied primarily on the department’s

comments on our August 1995 report to represent DOE’s position on the

significance of its initiated reforms.

To assess DOE progress since the mid-1990s in addressing management

weaknesses and improving performance, we searched our database for

reviews of DOE that we published between August 1995 and May 2001. Of

the more than 225 reports identified, we selected 121 that addressed DOE

corporate management functions, including strategic planning;

information technologies; retaining, recruiting and training staff; security;

environment, safety and health practices; contracting; program and project

management; and national laboratory reform. We prepared summaries of

the observations and recommendations contained in each of these reports.

We chose not to include reports that addressed either independent

agencies within the department or issues that do not consume many DOE

resources. Specifically, we excluded reports on the Nuclear Regulatory

Commission, the Federal Energy Regulatory Commission, the Power

Marketing Administration, the Tennessee Valley Authority, and issues

related to global climate change. With the exception of our major

management challenges reports on DOE, the reports that we included

were limited in scope and addressed only specific issues under review.

The reports, therefore, do not cover all of the program and project

activities of the department. For example, there was limited review of the

department’s energy resources business line. To improve our coverage of

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 30 GAO-02-51 Department of Energy's Performance

the department, we searched other sources of reports to identify 87

additional documents that addressed the department’s performance since

1995. The Congressional Research Service, DOE’s Inspector General, the

National Research Council, the National Academy of Public

Administration, several DOE task forces and commissions, as well as the

department, were among those organizations that prepared these reports.

Appendix II lists the reports and other documents that we reviewed.

To identify any underlying impediments to more effective management

and improved performance at DOE, we reviewed our collection of reports

to determine the possible causes behind the recurring management

weaknesses. While there was no single source among the reports reviewed

that explicitly observed all three of our root causes, there were many

documents that mentioned one or two of them as contributing to a

departmental culture that resists fundamental change. We assessed the

strength and pervasiveness of these root causes, as well as the actions of

past DOE leadership, to draw our conclusions and recommendations.

We conducted our review from November 2000 through September 2001 in

accordance with generally accepted government auditing standards.
Appendix II: Documents Reviewed

Page 31 GAO-02-51 Department of Energy's Performance

Department of Energy: Views on the Progress of the National Nuclear

Security Administration in Implementing Title 32 (GAO-01-602T, Apr. 1,

2001).

Information Security: Safeguarding of Data in Excessed Department of

Energy Computers (GAO-01-469, Mar. 29, 2001).

Nuclear Cleanup: Progress Made at Rocky Flats, but Closure by 2006 Is

Unlikely, and Costs May Increase (GAO-01-284, Feb. 28, 2001).

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

Major Management Challenges and Program Risks: Department of

Energy (GAO-01-246, Jan. 2001).

Nuclear Weapons: Improved Management Needed to Implement Stockpile

Stewardship Program Effectively (GAO-01-48, Dec. 14, 2000).

Financial Management: Billions in Improper Payments Continue to

Require Attention (GAO-01-44, Oct. 27, 2000).

Reinventing Government: Status of NPR Recommendations at 10

Federal Agencies (GAO/GGD-00-145, Sept. 21, 2000).

Government Performance and Results Act: Information on Science

Issues in the Department of Energy’s Accountability Report for Fiscal

Year 1999 and Performance Plans for Fiscal Years 2000 and 2001

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

National Ignition Facility: Management and Oversight Failures Caused

Major Cost Overruns and Schedule Delays (GAO/RCED-00-271, Aug. 8,

2000).

Department of Energy: Uncertainties and Management Problems Have

Hindered Cleanup at Two Nuclear Waste Sites (GAO/T-RCED-00-248,

July 12, 2000).

Nuclear Security: Information on DOE’s Requirements for Protecting

and Controlling Classified Documents (GAO/T-RCED-00-247, July 11,

2000).

Appendix II: Documents Reviewed

GAO Reports
Appendix II: Documents Reviewed

Page 32 GAO-02-51 Department of Energy's Performance

Observations on the Department of Energy’s Fiscal Year 1999

Accountability Report and Fiscal Year 2000/2001 Performance Plan

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

Nuclear Waste Cleanup: DOE’s Cleanup Plan for the Paducah, Kentucky,

Site Faces Uncertainties and Excludes Costly Activities

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

Department of Energy: National Security Controls Over Contractors

Traveling to Foreign Countries Need Strengthening (GAO/RCED-00-140,

June 26, 2000).

Nuclear Waste: Observations on DOE’s Privatization Initiative for

Complex Cleanup Projects (GAO/T-RCED-00-215, June 22, 2000).

Information Security: Vulnerabilities in DOE’s Systems for Unclassified

Civilian Research (GAO/AIMD-00-140, June 9, 2000).

Nuclear Waste: DOE’s Advanced Mixed Waste Treatment Project:

Uncertainties May Affect Performance, Schedule, and Price

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

Nuclear Waste Cleanup: DOE’s Paducah Plan Faces Uncertainties and

Excludes Costly Cleanup Activities (GAO/RCED-00-96, Apr. 28, 2000).

Federal Research: DOE Is Providing Independent Review of the

Scientific Merit of Its Research (GAO/RCED-00-109, Apr. 25, 2000).

Low-Level Radioactive Wastes: Department of Energy Has Opportunities

to Reduce Disposal Costs (GAO/RCED-00-64, Apr. 12, 2000).

Department of Energy: Views on Proposed Civil Penalties, Security

Oversight, and External Safety Regulation Legislation

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

Nuclear Security: Security Issues at DOE and Its Newly Created

National Nuclear Security Administration (GAO/T-RCED-00-123,

Mar. 14, 2000).

Nuclear Nonproliferation: Limited Progress in Improving Nuclear

Material Security in Russia and the Newly Independent States

(GAO/RCED/NSIAD-00-82, Mar. 6, 2000).
Appendix II: Documents Reviewed

Page 33 GAO-02-51 Department of Energy's Performance

Department of Energy: Views on DOE’s Plan to Establish the National

Nuclear Security Administration (GAO/T-RCED-00-113, Mar. 2, 2000).

Nuclear Security: Improvements Needed in DOE’s Safeguards and

Security Oversight (GAO/RCED-00-62, Feb. 24, 2000).

Occupational Safety and Health: Federal Agencies Identified as

Promoting Workplace Safety and Health (GAO/HEHS-00-45R, Jan. 31,

2000).

Nuclear Weapons: Challenges Remain for Successful Implementation of

DOE’s Tritium Supply Decision (GAO/RCED-00-24, Jan. 2000).

Nuclear Waste: DOE’s Hanford Spent Nuclear Fuel Storage Project—

Cost, Schedule, and Management Issues (GAO/RCED-99-267, Sept. 20,

1999).

Department of Energy: Uncertain Future for External Regulation of

Worker and Nuclear Facility Safety (GAO/T-RCED-99-269, July 22, 1999).

Observations on the Department of Energy’s Fiscal Year 2000

Performance Plan (GAO/RCED-99-218R, July 20, 1999).

Department of Energy: Problems in the Management and Use of

Supercomputers (GAO/T-RCED-99-257, July 14, 1999).

Department of Energy: Need to Address Longstanding Management

Weaknesses (GAO/T-RCED-99-255, July 13, 1999).

Nuclear Safety: Department of Energy Should Strengthen Its

Enforcement Program (GAO/T-RCED-99-228, June 29, 1999).

Nuclear Weapons: DOE Needs to Improve Oversight of the $5 Billion

Strategic Computing Initiative (GAO/RCED-99-195, June 28, 1999).

Department of Energy: DOE’s Nuclear Safety Enforcement Program

Should Be Strengthened (GAO/RCED-99-146, June 10, 1999).

Department of Energy: Cost Estimates for the Hanford Tank Waste

Remediation Project (GAO/RCED-99-188R, May 19, 1999).

National Laboratories: DOE Needs to Assess the Impact of Using

Performance-Based Contracts (GAO/RCED-99-141, May 7, 1999).
Appendix II: Documents Reviewed

Page 34 GAO-02-51 Department of Energy's Performance

Nuclear Waste: DOE’s Accelerated Cleanup Strategy Has Benefits but

Faces Uncertainties (GAO/RCED-99-129, Apr. 30, 1999).

Department of Energy: Accelerated Closure of Rocky Flats: Status and

Obstacles (GAO/RCED-99-100, Apr. 30, 1999).

Nuclear Waste: Process to Remove Radioactive Waste From Savannah

River Tanks Fails to Work (GAO/RCED-99-69, Apr. 30, 1999).

Department of Energy: Key Factors Underlying Security Problems at

DOE Facilities (GAO/T-RCED-99-159, Apr. 20, 1999).

DOE Management: Opportunities for Saving Millions in Contractor

Travel Costs (GAO/RCED-99-107, Apr. 1, 1999).

Department of Energy: Usefulness of Performance Plan Could Be

Improved (GAO/T-RCED-99-134, Mar. 24, 1999).

Department of Energy: Challenges Exist in Managing the Spallation

Neutron Source Project (GAO/T-RCED-99-103, Mar. 3, 1999).

Nuclear Nonproliferation: Concerns With DOE’s Efforts to Reduce the

Risks Posed by Russia’s Unemployed Weapons Scientists

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

Department of Energy: Actions Necessary to Improve DOE’s Training

Program (GAO/RCED-99-56, Feb. 12, 1999).

Major Management Challenges and Program Risks: Department of

Energy (GAO/OGC-99-6, Jan. 1999).

Nuclear Weapons: Key Nuclear Weapons Component Issues Are

Unresolved (GAO/RCED-99-1, Nov. 9, 1998).

Department of Energy: Management of Excess Property

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

Department of Energy: DOE Needs to Improve Controls Over Foreign

Visitors to Its Weapons Laboratories (GAO/T-RCED-99-28, Oct. 14, 1998).

Nuclear Waste: Department of Energy’s Hanford Tank Waste Project—

Schedule, Cost, and Management Issues (GAO/RCED-99-13, Oct. 8, 1998).
Appendix II: Documents Reviewed

Page 35 GAO-02-51 Department of Energy's Performance

Nuclear Waste: Schedule, Cost, and Management Issues at DOE’s

Hanford Tank Waste Project (GAO/T-RCED-99-21, Oct. 8, 1998).

Department of Energy: Problems in DOE’s Foreign Visitor Program

Persist (GAO/T-RCED-99-19, Oct. 6, 1998).

Nuclear Waste: Further Actions Needed to Increase the Use of Innovative

Cleanup Technologies (GAO/RCED-98-249, Sept. 25, 1998).

Department of Energy: DOE Lacks an Effective Strategy for Addressing

Recommendations From Past Laboratory Advisory Groups

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

Department of Energy: Uncertain Progress in Implementing National

Laboratory Reforms (GAO/RCED-98-197, Sept. 10, 1998).

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

Information Technology: Department of Energy Does Not Effectively

Manage Its Supercomputers (GAO/RCED-98-208, July 17, 1998).

Financial Management: Fostering the Effective Implementation of

Legislative Goals (GAO/T-AIMD-98-215, June 18, 1998).

DOE Management: Functional Support Costs at DOE Facilities

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

DOE Fiscal Year 1999 Budget Request for Energy Efficiency and

Renewable Energy and Financial Management Issues

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

Department of Energy: Alternative Financing and Contracting

Strategies for Cleanup Projects (GAO/RCED-98-169, May 29, 1998).

Results Act: Observations on DOE’s Annual Performance Plan for Fiscal

Year 1999 (GAO/RCED-98-194R, May 28, 1998).

Department of Energy: Clear Strategy on External Regulation Needed for

Worker and Nuclear Facility Safety (GAO/T-RCED-98-205, May 21, 1998).

Department of Energy: Clear Strategy on External Regulation Needed for

Worker and Nuclear Facility Safety (GAO/RCED-98-163, May 21, 1998).
Appendix II: Documents Reviewed

Page 36 GAO-02-51 Department of Energy's Performance

Nuclear Waste: Management Problems at the Department of Energy’s

Hanford Spent Fuel Storage Project (GAO/T-RCED-98-119, May 12, 1998).

Department of Energy: DOE Contractor Employee Training

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

Department of Energy: Problems and Progress in Managing Plutonium

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

Results Act: DOE Can Improve Linkages Among Plans and Between

Resources and Performance (GAO/RCED-98-94, Apr. 14, 1998).

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

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

Nuclear Waste: Understanding of Waste Migration at Hanford Is

Inadequate for Key Decisions (GAO/RCED-98-80, Mar. 13, 1998).

Best Practices: Elements Critical to Successfully Reducing Unneeded

RDT&E Infrastructure (GAO/NSIAD/RCED-98-23, Jan. 8, 1998).

Department of Energy: Subcontracting Practices (GAO/RCED-98-30R,

Nov. 24, 1997).

Department of Energy: Information on the Tritium Leak and Contractor

Dismissal at the Brookhaven National Laboratory (GAO/RCED-98-26,

Nov. 4, 1997).

Department of Energy: Clearer Missions and Better Management Are

Needed at the National Laboratories (GAO/T-RCED-98-25, Oct. 9, 1997).

Department of Energy: DOE Needs to Improve Controls Over Foreign

Visitors to Weapons Laboratories (GAO/RCED-97-229, Sept. 25, 1997).

Results Act: Observations on the Department of Energy’s August 15,

1997, Draft Strategic Plan (GAO/RCED-97-248R, Sept. 2, 1997).

Results Act: Observations on Federal Science Agencies

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

Nuclear Waste: Department of Energy’s Pit 9 Cleanup Project Is

Experiencing Problems (GAO/T-RCED-97-221, July 28, 1997).
Appendix II: Documents Reviewed

Page 37 GAO-02-51 Department of Energy's Performance

Nuclear Waste: Department of Energy’s Project to Clean Up Pit 9 at

Idaho Falls Is Experiencing Problems (GAO/RCED-97-180, July 28, 1997).

Results Act: Comments on Selected Aspects of the Draft Strategic Plans of

the Departments of Energy and the Interior (GAO/T-RCED-97-213, July

17, 1997).

Results Act: Observations on the Department of Energy’s Draft Strategic

Plan (GAO/RCED-97-199R, July 11, 1997).

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

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

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

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

Department of Energy: Opportunity for Enhanced Oversight of Major

System Acquisitions (GAO/RCED-97-146R, Apr. 30, 1997).

Department of Energy: Information on the Distribution of Funds for

Counterintelligence Programs and the Resulting Expansion of These

Programs (GAO/RCED-97-128R, Apr. 25, 1997).

Department of Energy: Funding and Workforce Reduced, but Spending

Remains Stable (GAO/RCED-97-96, Apr. 24, 1997).

Department of Energy: Plutonium Needs, Costs, and Management

Programs (GAO/RCED-97-98, Apr. 17, 1997).

Department of Energy: Improving Management of Major System

Acquisitions (GAO/T-RCED-97-92, Mar. 6, 1997).

Department of Energy: Management and Oversight of Cleanup Activities

at Fernald (GAO/RCED-97-63, Mar. 14, 1997).

High-Risk Series: Department of Energy Contract Management

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

Nuclear Waste: DOE’s Estimates of Potential Savings From Privatizing

Cleanup Projects (GAO/RCED-97-49R, Jan. 31, 1997).

Nuclear Waste: Impediments to Completing the Yucca Mountain

Repository Project (GAO/RCED-97-30, Jan. 17, 1997).
Appendix II: Documents Reviewed

Page 38 GAO-02-51 Department of Energy's Performance

Department of Energy: Contract Reform Is Progressing, but Full

Implementation Will Take Years (GAO/RCED-97-18, Dec. 10, 1996).

Department of Energy: Opportunity to Improve Management of Major

System Acquisitions (GAO/RCED-97-17, Nov. 26, 1996).

DOE Security: Information on Foreign Visitors to the Weapons

Laboratories (GAO/T-RCED-96-260, Sept. 26, 1996).

Department of Energy: Observations on the Future of the Department

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

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

Nuclear Weapons: Improvements Needed to DOE’s Nuclear Weapons

Stockpile Surveillance Program (GAO/RCED-96-216, July 31, 1996).

Information Management: Energy Lacks Data to Support Its

Information System Streamlining Effort (GAO/AIMD-96-70, July 23,

1996).

Energy Management: Technology Development Program Taking Action

to Address Problems (GAO/RCED-96-184, July 9, 1996).

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

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

Energy Research: Opportunities Exist to Recover Federal Investment in

Technology Development Projects (GAO/RCED-96-141, June 26, 1996).

Department of Energy: Progress Made Under Its Strategic Alignment

and Downsizing Initiative (GAO/T-RCED-96-197, June 12, 1996).

Federal Facilities: Consistent Relative Risk Evaluations Needed for

Prioritizing Cleanups (GAO/RCED-96-150, June 7, 1996).

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

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

Energy Downsizing: While DOE Is Achieving Budget Cuts, It Is Too Soon

to Gauge Effects (GAO/RCED-96-154, May 13, 1996).
Appendix II: Documents Reviewed

Page 39 GAO-02-51 Department of Energy's Performance

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

DOE Cleanup: Status and Future Costs of Uranium Mill Tailings

Program (GAO/T-RCED-96-167, May 1, 1996).

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

Environmental Protection: Issues Facing the Energy and Defense

Environmental Management Programs (GAO/T-RCED/NSIAD-96-127,

Mar. 21, 1996).

Nuclear Weapons: Status of DOE’s Nuclear Stockpile Surveillance

Program (GAO/T-RCED-96-100, Mar. 13, 1996).

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

Nuclear Nonproliferation: Concerns With the U.S. International Nuclear

Materials Tracking System (GAO/T-RCED/AIMD-96-91, Feb. 28, 1996).

Uranium Mill Tailings: Status and Future Costs of Cleanup

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

Energy’s Financial Resources and Workforce (GAO/RCED-96-69R,

Feb. 28, 1996).

Nuclear Waste: Management and Technical Problems Continue to Delay

Characterizing Hanford’s Tank Waste (GAO/RCED-96-56, Jan. 26, 1996).

Uranium Mill Tailings: Cleanup Continues, but Future Costs Are

Uncertain (GAO/RCED-96-37, Dec. 15, 1995).

Department of Energy: A Framework for Restructuring DOE and Its

Missions (GAO/RCED-95-197, Aug. 21, 1995).

Report to Congress on the Plan for Organizing the National Nuclear

Security Administration (Department of Energy, National Nuclear

Security Administration, May 3, 2001).

Special Report: Performance Measures at the Department of Energy

(Department of Energy, Office of Inspector General, DOE/IG-0504,

May 2001).

Other Reports
Appendix II: Documents Reviewed

Page 40 GAO-02-51 Department of Energy's Performance

Prepared Testimony of John A. Gordon, Under Secretary of Energy and

Administrator for Nuclear Security, National Nuclear Security

Administration, U.S. Department of Energy, Before the Senate

Appropriations Committee, Energy & Water Subcommittee (Apr. 26, 2001).

Statement of John A. Gordon, Under Secretary of Energy and

Administrator for Nuclear Security, National Nuclear Security

Administration, U.S. Department of Energy, Before the Special Oversight

Panel on Department of Energy Reorganization, Committee on Armed

Services, U.S. House of Representatives (Apr. 4, 2001).

Audit Report: Bechtel Jacobs Company LLC’s Management and

Integration Contract at Oak Ridge (Department of Energy, Office of

Inspector General, DOE/IG-0498, Mar. 21, 2001).

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

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

Department of Energy: Performance and Accountability Report Fiscal

Year 2000 (Department of Energy/CR-0071, Feb. 16, 2001).

Federal Managers’ Financial Integrity Act (Department of Energy,

Memorandum for the Secretary of Energy from Gregory H. Friedman,

Inspector General, CR-L-01-06, Feb. 8, 2001).

FY 2000 Report to Congress of the Panel to Assess the Reliability, Safety,

and Security of the United States Nuclear Stockpile (Feb. 1, 2001).

Eleventh Annual Report to Congress (Defense Nuclear Facilities Safety

Board, Feb. 2001).

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

2001).

Interim Letter Report for the Improved Project Management in the

Department of Energy (The National Academies, Jan. 17, 2001).

The Department of Energy’s Tritium Production Program

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

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

2001).
Appendix II: Documents Reviewed

Page 41 GAO-02-51 Department of Energy's Performance

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

The National Ignition Facility: Management, Technical, and Other

Issues (Congressional Research Service-RL30540, Jan. 4, 2001).

Department of Energy Research and Development Budget for FY 2001:

Description and Analysis (Congressional Research Service-RL30445,

Jan. 3, 2001).

Annual Performance Plan for FY 2001

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

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

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

DOE Science for the Future: A Discussion Paper (Academic Panel,

Dec. 14, 2000).

Performance-Based Management at the Department of Energy (External

Members of the Laboratory Operations Board, Dec. 7, 2000).

Contributions and Value of the Laboratory Operations Board

(Department of Energy, Memorandum from Ernest Moniz and John

McTague to Bill Richardson, Secretary of Energy, Dec. 7, 2000).

Special Report: Management Challenges at the Department of Energy

(Department of Energy, Office of Inspector General, DOE/IG-0491,

Nov. 28, 2000).

United States Department of Energy: Fact Book FY 2000 (Department of

Energy, Office of Management and Administration, Office of Management

and Operations Support, Nov. 2000).

Establishing the National Nuclear Security Administration: A Year of

Obstacles and Opportunities (Special Oversight Panel on Department of

Energy Reorganization, Committee on Armed Services, U.S. House of

Representatives, Oct. 13, 2000).

DOE’s Civilian Information Technology Program (Congressional

Research Service-RS20626, Oct. 5, 2000).
Appendix II: Documents Reviewed

Page 42 GAO-02-51 Department of Energy's Performance

Field Restructuring (Department of Energy, Memorandum for Heads of

Departmental Elements from T. J. Glauthier, Sept. 26, 2000).

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

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

The Department of Energy’s Spallation Neutron Source Project:

Description and Issues (Congressional Research Service-RL30385,

Sept. 12, 2000).

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

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

Audit Report: Security Overtime at the Oak Ridge Operations Office

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

2000).

Roles and Responsibilities Guiding Principles (Department of Energy,

Memorandum from T. J. Glauthier to Under Secretary, Energy, Science,

and Environment and Acting Administrator for Nuclear Security, June 2,

2000).

Audit Report: Central Shops at Brookhaven National Laboratory

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

2000).

Audit Report: Performance Incentives at the Idaho National Engineering

and Environmental Laboratory (Department of Energy, Office of

Inspector General, WR-B-00-05, Apr. 3, 2000).

Statement of Dan W. Reicher, Assistant Secretary for Energy Efficiency

and Renewable Energy, U.S. Department of Energy, Before the

Subcommittee on Interior and Related Agencies, Committee on

Appropriations, U.S. House of Representatives Oversight Hearing on

Energy Conservation Financial Management Procurement (Mar. 30, 2000).

Charitable Giving Requirements in Department of Energy Contracts

(Department of Energy, Memorandum From the Inspector General to the

Deputy Secretary, HQ-L-00-01, Mar. 14, 2000).

A Review of Management in the Office of Energy Efficiency and

Renewable Energy (National Academy of Public Administration,

Mar. 2000).
Appendix II: Documents Reviewed

Page 43 GAO-02-51 Department of Energy's Performance

Audit Report: The Department’s Management and Operating Contractor

Make-or-Buy Program (Department of Energy, Office of Inspector

General, DOE/IG-0460, Feb. 17, 2000).

Tenth Annual Report to Congress (Defense Nuclear Facilities Safety

Board, Feb. 2000).

Strength Through Science—U.S. Department of Energy FY 2001 Budget

Request to Congress—Budget Highlights (Department of Energy, Office of

Chief Financial Officer, Feb. 2000)

Congress and the Fusion Energy Sciences Program: A Historical

Analysis (Congressional Research Service-RL30417, Jan. 31, 2000).

Audit Report: Follow-up Audit of Program Administration by the Office

of Science (Department of Energy, Office of Inspector General,

DOE/IG-0457, Jan. 24, 2000).

Audit Report: The Management of Tank Waste Remediation at the

Hanford Site (Department of Energy, Office of Inspector General,

DOE/IG-0456, Jan. 21, 2000).

Audit Report: Outsourcing Opportunities at the Los Alamos National

Laboratory (Department of Energy, Office of Inspector General,

WR-B-00-03, Jan. 18, 2000).

Research and Development Budget of the Department of Energy for

FY2000: Description and Analysis (Congressional Research ServiceRL30054, Dec. 16, 1999).

Inspection Report: Inspection of Alleged Improprieties Regarding

Issuance of a Contract (DOE/IG-INS-O-00-02, Dec. 16, 1999).

Contractor Make or Buy Plan Implementation (Department of Energy,

Memorandum from Richard Hopf, Director, Office of Procurement and

Assistance Management, to Heads of Contracting Activities, Dec. 6, 1999).

Stockpile Stewardship Program: 30-Day Review (Department of Energy,

Nov. 23, 1999).

FY 1999 Report of the Panel to Assess the Reliability, Safety, and

Security of the United States Nuclear Stockpile (Nov. 8, 1999).
Appendix II: Documents Reviewed

Page 44 GAO-02-51 Department of Energy's Performance

Department of Energy: Programs and Reorganization Proposals

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

DOE Security: Protecting Nuclear Material and Information

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

Glauthier Announces DOE Project Management Reforms (Department of

Energy Press Release, June 25, 1999).

Technology Transfer to China: An Overview of the Cox Committee

Investigation Regarding Satellites, Computers, and DOE Laboratory

Management (Congressional Research Service-RL30231, June 11, 1999).

Science at its Best, Security at its Worst: A Report on Security Problems

at the U.S. Department of Energy (A Special Investigative Panel,

President’s Foreign Intelligence Advisory Board, June 1999).

Changes to the Departmental Management Structure (Department of

Energy, Memorandum from the Secretary of Energy to Heads of

Departmental Elements, Apr. 21, 1999).

Commission on Maintaining United States Nuclear Weapons Expertise:

Report to the Congress and Secretary of Energy (Mar. 1, 1999).

Ninth Annual Report to Congress (Defense Nuclear Facilities Safety

Board, Feb. 1999).

Audit Report: The U.S. Department of Energy’s Implementation of the

Government Performance and Results Act (Department of Energy, Office

of Inspector General, DOE/IG-0439, Feb. 4, 1999).

U.S. National Security and Military/Commercial Concerns with the

People’s Republic of China (Select Committee, United States House of

Representatives, Jan. 3, 1999).

Department of Energy: Accountability Report Fiscal Year 1999

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

Improving Project Management in the Department of Energy (National

Research Council, 1999).

U.S. Department of Energy Strategic Alignment Initiative, Fiscal Year

1998 Status Report (Department of Energy, 1999).
Appendix II: Documents Reviewed

Page 45 GAO-02-51 Department of Energy's Performance

Audit Report: The U.S. Department of Energy’s Efforts to Increase the

Financial Responsibility of Its Major For-Profit Operating Contractors

(Department of Energy, Office of Inspector General, DOE/IG-0432,

Nov. 20, 1998).

Audit Report: Project Hanford Management Contract Costs and

Performance (Department of Energy, Office of Inspector General,

DOE/IG-0430, Nov. 5, 1998).

Audit Report: The U.S. Department of Energy’s Prime Contractor Fees on

Subcontractor Costs (Department of Energy, Office of Inspector General,

DOE/IG-0427, Sept. 11, 1998).

Unlocking Our Future: Toward a New National Science Policy (A Report

to Congress by the House Committee on Science, Sept. 24, 1998).

Audit Report: The Cost Reduction Incentive Program at the Savannah

River Site (Department of Energy, Office of Inspector General,

ER-B-98-08, May 29, 1998).

Inspection Report: The Fiscal Year 1996 Performance Based Incentive

Program at the Savannah River Operations Office (Department of

Energy, Office of Inspector General, May 1998).

Assessing the Need for Independent Project Reviews in the DOE

(National Research Council, 1998).

Audit of Support Services Subcontracts at Argonne National Laboratory

(Department of Energy, Office of the Inspector General, DOE/IG-0416,

Dec. 23, 1997).

Departmental Reporting Relationships (Department of Energy,

Memorandum from J. M. Wilcynski, Manager, Idaho Operations Office, to

the Deputy Secretary and Under Secretary, Nov. 26, 1997).

Audit Report: Audit of the Contractor Incentive Program at the Nevada

Operations Office (Department of Energy, Office of Inspector General,

DOE/IG-0412, Oct. 20, 1997).

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

(Congressional Research Service-IB97012, Oct. 15, 1997).
Appendix II: Documents Reviewed

Page 46 GAO-02-51 Department of Energy's Performance

External Members of the Laboratory Operations Board Analysis of

Headquarters and Field Structure Issues (Secretary of Energy Advisory

Board, Oct. 2, 1997).

DOE Laboratory Restructuring Legislation in the 104th Congress

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

The Organization and Management of the Nuclear Weapons Program:

120-Day Study (Institute for Defense Analysis, Feb. 27, 1997).

Seventh Annual Report to Congress (Defense Nuclear Facilities Safety

Board, Feb. 1997).

Department of Energy Strategic Alignment Initiative Status Report—

Fiscal Year 1996 (DOE, Dec. 1996).

How to Close Down the Department of Energy (The Heritage Foundation,

Nov. 9, 1995).

Department of Energy Abolition? Implications for the Nuclear Weapons

Program (Congressional Research Service-95-1020F, Sept. 29, 1995).

Strategic Alignment: Tracking Our Progress (Department of Energy,

Sept. 5, 1995).

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

(Final Report of the Task Force on Strategic Energy Research and

Development, June 1995).

Alternative Futures for the DOE National Laboratories (Task Force on

Alternative Futures for the National Laboratories (Secretary of Energy

Advisory Board, Feb. 1995).
Appendix III: Comments From the

Department of Energy

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

Appendix III: Comments From the

Department of Energy

Note: GAO comments

supplementing those in

the report text appear at

the end of this appendix.

See comment 1.
Appendix III: Comments From the

Department of Energy

Page 48 GAO-02-51 Department of Energy's Performance
Appendix III: Comments From the

Department of Energy

Page 49 GAO-02-51 Department of Energy's Performance
Appendix III: Comments From the

Department of Energy

Page 50 GAO-02-51 Department of Energy's Performance
Appendix III: Comments From the

Department of Energy

Page 51 GAO-02-51 Department of Energy's Performance
Appendix III: Comments From the

Department of Energy

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

See comment 3.

See comment 2.
Appendix III: Comments From the

Department of Energy

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

See comment 8.

See comment 7.

See comment 6.

See comment 4.

See comment 5.
Appendix III: Comments From the

Department of Energy

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

See comment 8.
Appendix III: Comments From the

Department of Energy

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

The following are GAO's comments on the Department of Energy's letter

dated November 30, 2001.

1. Our response is included in the body of the report.

2. In our report, we acknowledge and support DOE’s efforts to

implement performance-based contracting practices and to

competitively award more of its contracts. As suggested, we have

revised our report to note that the department has not been required

to compete contracts to manage its Federally Funded Research and

Development Centers.

3. As we state in our report, our concern is that some of DOE's largest

contracts, notably those with the University of California to manage

several national laboratories, have never been opened to competitive

bidding. According to DOE, the decisions related to the most recent

contract extension with this university were based on "national

security considerations " and were not "contract management

decisions ..." The benefits of competing contracts are widely accepted

and espoused by DOE in its own policies. Recent interest shown by

another university in competing for the Sandia National Laboratory

contract when it expires in 2003 suggests that there may be other

capable competitors, and that national security considerations do not

inhibit DOE from attracting new performers.

4. We agree that DOE sponsors many "unique" projects that contain

significant research and development that can impact cost and

schedule assumptions, and we have incorporated this comment in our

report. Nevertheless, we concur with DOE that this circumstance

should not be used as "an excuse for the poor performance in project

management" that was cited in our report.

5. We do not concur with DOE that the department’s strategic planning

process has worked effectively to organize and integrate its diverse

missions. As we said in our report, DOE told us that its strategic plan

is a composite of plans that guides the program activities of the

department's four "business lines," each of which establishes its own

objectives and management systems. Acknowledging the unfocused

nature of the department, the Secretary is just now taking steps to

define an overarching departmental objective for all programs and to

expand NNSA’s new Planning, Programming, Budgeting and

GAO Comments
Appendix III: Comments From the

Department of Energy

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

Evaluation system department-wide. He is also creating a new office

under the Chief Financial Officer that "will analyze and evaluate plans,

programs and budgets in relation to the department's objectives..."

The department said that it expects this office will serve as the

"linchpin" for making improvements in strategic planning in the future.

6. We reported in 19981

 that DOE's Strategic Laboratory Missions plan,

which was published in 1996, was essentially a descriptive summary of

current laboratory activities; it did not direct change. Nor did the plan

tie DOE's or the laboratories' missions to the annual budget process.

As we previously reported, when we asked laboratory officials about

strategic planning, most discussed their own planning capabilities, and

some laboratories provided us with their own self-generated strategic

planning documents. None of the officials at the multiprogram

laboratories we visited at the time mentioned DOE's Strategic

Laboratory Missions plan as an essential document for their own

strategic planning.

7. We noted in our report that DOE is attempting to clarify roles and

responsibilities. We also noted that DOE's 1999 reorganization was

similar to steps the department had taken previously without success.

While we have not assessed the effectiveness of the new Field

Management Council, we noted in our report that the establishment of

the NNSA appears to have created, at least temporarily, additional

confusion regarding roles, responsibilities, and reporting relationships

within the department.

8. We noted in our report that the department has been taking steps to

address its workforce problems since the early 1990s, and it continues

to do so today. As we said, we are concerned by the lack of

succession planning and progress by DOE in addressing known

human capital deficiencies. We have revised our report, however, to

reflect that DOE published, in September 2001, its "Five-Year

Workforce Restructuring Plan." According to DOE, the plan responds

to an OMB requirement of all federal agencies and presents a

"corporate roadmap" for reducing manager and organizational layers,

increasing spans of control, and redeploying staff. The plan describes

a variety of ongoing and planned actions. Regarding DOE's discussion

 1 Department of Energy: Uncertain Progress in Implementing National Laboratory

Reforms (GAO/RCED-98-197, Sept. 10, 1998).
Appendix III: Comments From the

Department of Energy

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

of the many underlying factors affecting its staffing, we agree that

building a quality workforce is very challenging. As DOE notes, these

challenges are made more difficult by the constant changes in mission

focus that characterize DOE's history.
Appendix IV: GAO Contacts and Staff

Acknowledgments

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

Gary L. Jones, (202) 512-3841

Gary R. Boss, (202) 512-6964

In addition to those named above, Tom Laetz, Dan Feehan, William

Lanouette, Tom Kingham, Linda Chu, James Charlifue, and Cynthia Norris

made key contributions to this report.

Appendix IV: GAO Contacts and Staff

Acknowledgments

GAO Contacts

Staff

Acknowledgments

(360005)
The General Accounting Office, the investigative arm of Congress, exists to

support Congress in meeting its constitutional responsibilities and to help

improve the performance and accountability of the federal government for the

American people. GAO examines the use of public funds; evaluates federal

programs and policies; and provides analyses, recommendations, and other

assistance to help Congress make informed oversight, policy, and funding

decisions. GAO’s commitment to good government is reflected in its core values

of accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents is through the

Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-text files of

current reports and testimony and an expanding archive of older products. The

Web site features a search engine to help you locate documents using key words

and phrases. You can print these documents in their entirety, including charts and

other graphics.

Each day, GAO issues a list of newly released reports, testimony, and

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site

daily. The list contains links to the full-text document files. To have GAO E-mail

this list to you every afternoon, go to our home page and complete the easy-to-use

electronic order form found under “To Order GAO Products.”

The first copy of each printed report is free. Additional copies are $2 each. A

check or money order should be made out to the Superintendent of Documents.

GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a

single address are discounted 25 percent. Orders should be sent to:

U.S. General Accounting Office

P.O. Box 37050

Washington, D.C. 20013

To order by phone: Voice: (202) 512-6000

TDD: (301) 413-0006

Fax: (202) 258-4066

GAO Building

Room 1100, 700 4th Street, NW (corner of 4th and G Streets, NW)

Washington, D.C. 20013

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm,

E-mail: fraudnet@gao.gov, or

1-800-424-5454 (automated answering system).

Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800

U.S. General Accounting Office, 441 G. Street NW, Room 7149,

Washington, D.C. 20548

GAO’s Mission

Obtaining Copies of

GAO Reports and

Testimony

Order by Mail or Phone

Visit GAO’s Document

Distribution Center

To Report Fraud,

Waste, and Abuse in

Federal Programs

Public Affairs