United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Military Procurement, Committee on

National Security, House of

Representatives

July 1995 DEPARTMENT OF

ENERGY

Savings From

Deactivating Facilities

Can Be Better

Estimated

GAO/RCED-95-183

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-260267 

July 7, 1995

The Honorable Duncan Hunter

Chairman, Subcommittee on

 Military Procurement

Committee on National Security

House of Representatives

Dear Mr. Chairman:

The Department of Energy (DOE) created the Nuclear Material and Facility

Stabilization (NMFS) program within the Office of Environmental

Management (EM) in July 1992. Since then, the program has grown to

become a major part of DOE’s environmental management efforts. At the

beginning of fiscal year 1995, DOE was planning to spend about

$813 million on managing surplus facilities that are waiting for

decontamination and decommissioning and on providing electrical,

transportation, and other landlord-type services at key environmental

management sites near Hanford, Washington; Idaho Falls, Idaho; and

Rocky Flats, Colorado.

DOE officials have repeatedly said they can reduce the NMFS program’s

future costs by deactivating surplus facilities—which involves removing

radioactive and hazardous materials that DOE must otherwise safeguard

and monitor until the facilities are decontaminated and

decommissioned—and by upgrading inefficient utilities and other services

at sites managed by the program. Interested in assuring that the program

achieves these goals, the former Chairman of the Committee’s Military

Application of Nuclear Energy Panel asked us to (1) determine the

proportion of the program’s fiscal year 1995 budget that is allocated to

projects that could reduce the program’s future costs,1

 (2) estimate the

difference between the savings that these projects could generate and the

costs DOE could incur to obtain these savings (i.e., net savings), and

(3) determine the reliability of DOE’s estimates for net savings that could

accrue from major deactivation projects. As agreed with the Committee,

we are sending the results of our work to you because your Subcommittee

now has jurisdiction over the program.

1

We defined an NMFS project as any activity or collection of activities that the program manages by

using a single EM Activity Data Sheet (ADS). ADSs are the office’s primary system for managing

projects.

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Results in Brief DOE is allocating about 31 percent, or $249 million, of the NMFS program’s

available fiscal year 1995 funding to projects that it expects will reduce the

program’s future costs. The $249 million allocation supports 24

deactivation, surveillance and maintenance, and landlord-type projects at

the program’s three key sites.

We estimated the net savings that DOE could realize for the 11 projects for

which sufficient data were available. These 11 projects could yield a

combined net savings of $458 million over their expected lives of 10 to 30

years.2

 The net savings from individual projects vary widely—two

deactivation projects could save several hundred million dollars in

surveillance and maintenance costs, while other projects may save

considerably less. We could not estimate savings for the remaining 13

projects because, while DOE expects savings to occur, it did not have

sufficient data available on the costs and potential savings associated with

the projects.

Despite the significant savings that some deactivation projects could

generate, DOE has not developed a process for consistently estimating the

net savings from deactivation projects. Consequently, DOE is not able to

develop reliable or complete estimates of the potential net savings from

these projects. DOE officials expect that the number of facilities managed

by the program may increase from 1,560 to an estimated 5,900

facilities—an increase of 278 percent—by October 1997 and that budget

constraints will tighten. As this occurs, using a reliable process to estimate

and compare net savings from deactivation projects, coupled with an

assessment of other factors, such as health and safety risks, would help

DOE target funds more effectively to those projects that will produce the

greatest reduction in future costs.

Background The NMFS program is becoming an increasingly important part of DOE’s

environmental management effort.

• Once EM accepts ownership of a surplus facility, the NMFS program

becomes responsible for surveillance and maintenance activities. These

activities include monitoring the nuclear and hazardous materials within

many surplus DOE buildings and other efforts needed to protect the health

and safety of workers, the public, and the environment. Surveillance and

2

Unless indicated otherwise, this report presents the projects’ cost and savings estimates in 1994

discounted dollars. App. IV explains how we estimated the projects’ costs and savings.

Page 2 GAO/RCED-95-183 Savings From Deactivating Facilities
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maintenance costs are high for a facility that contains large inventories of

nuclear and hazardous materials.

• The program is also responsible for deactivating surplus facilities, which is

the first phase of stabilizing and cleaning up contaminated facilities.

Deactivation includes removing nuclear and hazardous materials and

making structural repairs to a surplus facility so that DOE can minimize

health and safety risks and reduce surveillance and maintenance costs

until DOE starts final decontamination and decommissioning.

• The program’s landlord activities fulfill a critical support role for DOE’s

other environmental programs. Landlord services include maintaining

roads, providing medical and fire services, and operating electricity and

other utilities at the Hanford, Idaho Falls, and Rocky Flats sites where EM

has designated the NMFS program as the sites’ “landlord.”

As shown in figure 1, surveillance and maintenance costs account for the

largest portion of the program’s costs. Appendix I provides additional

details on the program’s projected spending at key sites and EM

headquarters.

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Figure 1: NMFS Program’s Available

Fiscal Year 1995 Budget by Type of

Activity

17% • Deactivation

39% • Surveillance and Maintenance

27%•

Landlord

•17%

Program Management

The NMFS program’s available fiscal year 1995 budget totaled $812.8 million.

Source: GAO’s analysis of DOE’s data.

DOE Is Spending

About One-Third of

the Program’s

Available Funds on

Cost-Saving Projects

For fiscal year 1995, we estimate that the NMFS program is allocating about

31 percent ($249 million) of the program’s available funding to 24 projects

that program officials expect will reduce future costs at Hanford, Idaho

Falls, and Rocky Flats. Some of these same projects may also address

health and safety concerns at surplus facilities by reducing workers’

potential exposures to radiation and hazardous chemicals and by

eliminating conditions that could cause accidents and injuries.

The 24 cost-saving projects fall into two categories. The first category

includes 11 projects for which DOE has estimated deactivation, surveillance

and maintenance, or landlord costs from which we could derive estimated

savings. These projects include DOE’s deactivation efforts at Hanford’s

Plutonium-Uranium Extraction/Uranium Trioxide Plants (PUREX/UO3) and

Fast Flux Test Facility (FFTF) and landlord projects at Idaho Falls and

Rocky Flats. The second category includes deactivation activities that are

still in the early planning stages at Idaho Falls and Rocky Flats and

projects to upgrade landlord services at Idaho Falls and Hanford that, in

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some cases, were started before DOE transferred landlord responsibilities

to EM. We could not estimate savings for these projects either because DOE

had not determined the costs needed to complete a project or had not

estimated the savings that might result.

As shown in figure 2, DOE is allocating the largest proportion of the

program’s available fiscal year 1995 funds to projects that DOE generally

does not expect will reduce surveillance and maintenance or landlord

costs. These include projects to (1) conduct surveillance and maintenance

at facilities that are not currently being deactivated, (2) provide general

landlord services at the program’s three key sites, and (3) manage

activities at these major sites. Some of these projects also address health

and safety risks at the sites. (App. II gives the percentage of funding for

deactivation, surveillance and maintenance, and landlord projects in each

category.)

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Figure 2: Distribution of NMFS

Program’s Available Fiscal Year 1995

Funding by Savings Potential and

Number of Projects

17% • Savings estimated (11 projects)

14% • Savings to be determined (13

projects)

•

3%

Savings status unreviewed (10

projects)

66%•

No savings estimated (47 projects)

Note 1: The NMFS program’s available fiscal year 1995 budget totaled $812.8 million.

Note 2: The 3 percent of the available fiscal year 1995 budget that we did not review supports

activities at DOE headquarters and sites in California, Florida, Ohio, South Carolina, and

Tennessee.

Source: GAO’s analysis of DOE’s data.

The Director of the NMFS program’s Office of Integration and Assessment

stated that the program is actively seeking opportunities to reduce future

costs. However, he indicated that during fiscal years 1993 and 1994, the

program had just become responsible for the Idaho Falls and Rocky Flats

sites, had completed deactivation plans and was ready to start

deactivation at only a few facilities, and had limited staff to reshape

budget priorities. He believes that a major reason why more of the

available funding has not been directed to cost-saving projects is that 1995

Page 6 GAO/RCED-95-183 Savings From Deactivating Facilities
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was the first fiscal year in which the NMFS program could effectively

redirect funds to deactivation and landlord projects with potential savings.

Potential Net Savings

From Fiscal Year 1995

Activities Could Be

Significant

We estimate that the 11 fiscal year 1995 deactivation, surveillance and

maintenance, and landlord projects for which there was information on

cost savings could save a combined amount of $764 million over the

projects’ expected lives of 10 to 30 years. With the estimated costs to

complete all necessary work subtracted, the projects could save a net

amount of $458 million over this period. However, the actual savings from

these projects could vary depending on the projects’ final costs, DOE’s

decisions on when to decontaminate and decommission specific surplus

facilities, and other factors. Appendix III provides cost and savings

estimates and other information for the 11 individual projects.

DOE’s deactivation of PUREX/UO3 and FFTF accounts for about 86 percent of

the potential net savings from the 11 fiscal year 1995 projects. At

PUREX/UO3, DOE intends to almost eliminate the need to perform safety

checks and operate safety systems by removing chemicals and nuclear fuel

left at the facilities when DOE stopped fuel reprocessing. We estimate that

these efforts could reduce total surveillance and maintenance costs at

PUREX/UO3 by about $244 million during deactivation and the 10-year

holding period that NMFS program officials expect before DOE starts

decontamination and decommissioning. Subtracting DOE’s estimated

deactivation costs produces an expected net savings of about $199 million.

At FFTF, DOE could reduce surveillance and maintenance costs by

$297 million during a comparable deactivation and 10-year holding period.

Subtracting the projected costs for removing nuclear fuel, draining coolant

from the reactor, and completing other deactivation work produces an

estimated net savings of $193 million.

Other fiscal year 1995 projects could generate smaller net savings. For

example, at Idaho Falls’ Separations and Fuel Dissolution Process

Facilities, DOE could receive $58 million in net savings from deactivating

parts of several buildings. Surveillance and maintenance costs for the

buildings can be reduced by only a fraction of the total costs because DOE

will continue to use other parts of the buildings for environmental work.

Consolidating security systems at Idaho Falls, upgrading utilities at Rocky

Flats, and conducting other landlord projects could generate from

$800,000 to $6.6 million in net savings over the projects’ 10- to 30-year

design lives.

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Two of the 11 projects could cost more than they could save. At Idaho

Falls, DOE’s electrical upgrades could cost a net $44 million. However,

according to DOE officials, the project is needed to reduce electrical

outages at facilities that store nuclear materials and to eliminate the threat

of electrocution and electrical overload at some facilities. At Hanford,

DOE’s project to deactivate a group of related nuclear fuel supply facilities

could cost $6 million more than the project’s expected savings in

surveillance and maintenance costs. By deactivating this group of

facilities, DOE will eliminate structural hazards at one building and prevent

accidental releases of hazardous materials to the environment at other

buildings.

Our savings estimates are sensitive to program officials’ assumption that

DOE will not start decontamination for at least 10 years after deactivation.

At PUREX/UO3, program officials are using a 10-year period to identify the

repairs needed to keep these facilities structurally sound until DOE starts

decontamination. However, DOE officials do not have a firm schedule for

starting decontamination of surplus facilities. If DOE starts

decontamination more than 10 years after completing deactivation, the net

savings from deactivating a facility could increase because DOE would

benefit from additional years of minimal surveillance and maintenance

costs. The additional surveillance and maintenance cost savings would be

reduced by the added cost of any unanticipated repairs to keep a facility

structurally sound for these additional years.

Our estimates also assume that DOE will complete the 11 projects on

schedule. If DOE completes projects earlier than expected, the projects’

discounted net savings could increase. For example, we estimate that

DOE’s discounted net savings from deactivating PUREX/UO3 could be higher

now than when DOE started planning the facility’s deactivation because DOE

has recently decided to pursue selling the nitric acid that remains at the

facility. By selling the nitric acid, DOE could deactivate the facility 1 year

sooner than anticipated. If DOE does not start decontamination and

decommissioning 1 year earlier than originally planned, completing

deactivation sooner increases the project’s discounted net savings by

about $7 million.

Page 8 GAO/RCED-95-183 Savings From Deactivating Facilities
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DOE Can Better

Estimate Potential

Savings for Major

Deactivation Projects

Since preparing the fiscal year 1995 budget, program officials have become

increasingly aware of the importance of considering net savings estimates

during the budget process. However, partly because DOE’s internal orders

for managing projects do not require NMFS program officials to prepare

overall cost savings estimates for deactivation projects, NMFS program

officials have not developed a process for consistently estimating

discounted net savings from deactivation projects. For deactivation

projects, estimating discounted net savings can involve the following:

• Calculating annual net savings during each year that DOE is deactivating a

facility and waiting to start decontamination and decommissioning.

Annual net savings are the difference between each year’s deactivation

costs and the resulting reductions in surveillance and maintenance costs.

• Discounting the annual net savings and computing a total estimate of

discounted net savings both during deactivation and during the period

until decontamination and decommissioning begins.

For the fiscal year 1995 budget, NMFS program officials did not prepare

complete estimates of savings for specific deactivation projects because

they believed that they could effectively allocate funds among a limited

number of deactivation projects without such information. Program

officials determined fiscal year 1995 deactivation priorities after

considering such factors as (1) the health and safety risks that a facility

posed if DOE did not start deactivation, (2) DOE’s readiness to start

deactivation work at specific facilities, and (3) the potential difference

between a facility’s surveillance and maintenance costs during a

deactivation project’s first and last years.

Defining the general parameters of how the program can prepare and

compare savings estimates for deactivation projects is important because

DOE’s methodology for comparing projects can affect future budget

priorities. To illustrate the effect of using alternative approaches for

preparing savings estimates, we used two approaches to rank the potential

savings that DOE could receive from the five deactivation projects for

which DOE had sufficient data to estimate savings. Our first method

approximated DOE’s approach for estimating savings by (1) computing the

drop in surveillance and maintenance costs between a project’s first and

last years and (2) ranking the five projects according to the resulting

savings in surveillance and maintenance costs.3

 As table 1 indicates, the

result of the first approach was that the FFTF, PUREX/UO3, and Separations

3

We used DOE’s estimates of surveillance and maintenance costs from the projects’ original

implementation plans to compute the potential drop in costs. These plans expressed costs in current

dollars.

Page 9 GAO/RCED-95-183 Savings From Deactivating Facilities
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and Fuel Dissolution Process Facilities projects had the highest rankings.

Our second approach estimated each project’s savings by computing

surveillance and maintenance cost savings during deactivation and during

a 10-year waiting period and discounting each year’s costs and savings to

derive the total net savings. Using a ratio of discounted total costs to

discounted total savings to compare projects yields the following:

Hanford’s Building 308 project replaces the FFTF project as one of the

program’s top three projects.

Table 1: Results of Two Approaches

for Determining and Comparing

Savings From Deactivation Projects Project’s Rank

First-year to last-year

approach

Ratio of discounted coststo-savings approach

1 FFTF Building 308

2 PUREX/UO3 Separations and Fuel Dissolution

Process Facilities

3 Separations and Fuel

Dissolution Process

Facilities

PUREX/UO3

4 Building 308 FFTF

5 Fuel Supply Facilities Fuel Supply Facilities

If DOE received sufficient funds to support all five deactivation projects in

this example until they were completed, it would not matter what

approach DOE used to estimate and compare projects’ future savings.

However, if program managers have sufficient funds to support only a

limited number of projects, DOE’s approach for estimating and comparing

projects’ savings could alter DOE’s funding decisions.

As DOE continues to convert activities from weapons production and other

missions, the number of surplus DOE facilities will increase, placing

additional pressure on NMFS to effectively allocate funds among facilities.

At the beginning of fiscal year 1995, the program managed 1,560 facilities.

However, during early 1995, the program accepted responsibility for

managing more than 3,000 facilities, including buildings at DOE’s Rocky

Flats and Savannah River, South Carolina, sites. Program officials expect

to accept responsibility for additional facilities at smaller sites in Florida

and Ohio before the end of the fiscal year and for as many as 940

additional surplus facilities during fiscal years 1996 and 1997. If these

facilities are transferred as expected, the program will be responsible for

managing 5,900 facilities by October 1997—a 278-percent increase over the

number managed by the program in October 1994.

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For fiscal year 1996, the program’s budget request will increase to about

$1.68 billion. However, the request includes an almost constant level of

funding for the 1,560 facilities in the program before January 1995 and an

$826 million increase for newly transferred facilities at Savannah River

and other sites. Program officials expect that the program’s budget will

decrease over the next few years and that a relatively small amount of

resources will be transferred with surplus facilities to partially offset

increases in the program’s costs.

As budget constraints tighten and the NMFS inventory of surplus facilities

grows, program officials will begin to face difficult decisions about which

deactivation projects to fund. The projects’ potential savings, in addition

to the risks that are reduced, can become important factors in making

these decisions. In some cases, the benefits from reducing risks at a

facility may be sufficiently large to make the deactivation of the facility

crucial regardless of the monetary savings. However, when the risks

associated with several projects are approximately equal, reliable

information about these projects’ potential savings can enable DOE

managers to target funds to projects that will produce the greatest

reduction in future costs.

DOE has taken several steps to develop more complete cost information for

deactivation projects that DOE could use to estimate a project’s net savings.

For example, during June 1994, DOE released a project management plan

for PUREX/UO3 that contained detailed estimates of surveillance and

maintenance and deactivation costs for the project. Using the PUREX/UO3 as

a model, DOE issued a similar plan in November 1994 with detailed cost

estimates for the deactivation of FFTF. NMFS program officials are also

preparing guidance for headquarters and field staff that defines key

decision points and information needed for managing other large

deactivation projects and encourages DOE officials to compare cost

estimates with potential savings.

NMFS program officials have also started to discuss with EM management

general information on and strategies for reducing costs. For example,

during the fiscal year 1996 budget process, NMFS program managers for the

first time compared projects by assigning points to them on the basis of,

among other things, the projects’ potential for reducing the program’s

future costs. The program’s fiscal year 1996 effort to consider potential

savings in budget decisions did not require that program managers use

discounted net savings estimates to compare projects and assigned 1 out

of a maximum of 25 points to each project that might reduce future costs.

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During March 1995, NMFS program officials also briefed EM’s Assistant

Secretary on a strategy for reducing future surveillance and maintenance

costs by quickly deactivating large surplus facilities. As a part of this

effort, program officials have determined the approximate net savings and

return on investment for several ongoing and planned deactivation

projects at EM sites. However, program officials acknowledged that EM

sites do not consistently report data for deactivation projects. Without

consistent cost information, savings calculations for projects are not

always comparable.

NMFS program officials also acknowledge that they have not developed a

process to ensure that project managers consistently estimate the

complete savings from each deactivation project. In his February 1995

guidelines for developing EM’s fiscal year 1997 program, EM’s Assistant

Secretary emphasized the importance of achieving cost savings and stated

that one of EM’s guiding principles should be to fund projects that

significantly reduce future costs. Despite this, the program’s new guidance

on project management does not (1) define how program officials are to

estimate net savings during deactivation and the years between

deactivation and decontamination and decommissioning or (2) require

that program officials use net savings estimates during the budget process.

Conclusions If the NMFS program completes them on schedule, the 11 fiscal year 1995

projects that we analyzed could reduce the program’s net costs by

$458 million over the next 10 to 30 years. However, the potential savings

from individual projects vary widely. The range of savings reflects inherent

differences in the size and condition of facilities and the cost for

surveillance and maintenance at these facilities before and after

deactivation.

Partly because the program is relatively new, DOE does not have a process

in place to consistently determine the relative savings among projects.

However, as the program grows, DOE is likely to face future budget

constraints that will make it necessary to choose between competing

deactivation projects. Knowledge of the potential savings that may accrue

from each deactivation project, coupled with an assessment of other

factors such as health and safety risks, would help the Department target

its funds more effectively in deactivating surplus facilities.

The Assistant Secretary’s guidelines and the program’s recent efforts to

improve its awareness of cost-saving opportunities are steps in the right

Page 12 GAO/RCED-95-183 Savings From Deactivating Facilities
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direction. However, these efforts do not specifically address, for

deactivation projects, the development of reliable net savings estimates

that will help managers compare the relative benefits of alternative

projects. Because different methods of estimating savings can produce

different results, issuing guidance that explains how to consistently

prepare and compare net savings estimates for future deactivation

projects would improve the quality of information available to help NMFS

program managers allocate funds among competing projects.

Recommendations To improve the reliability of DOE’s estimates of potential net savings from

deactivation projects and the quality of information that DOE managers

consider when setting priorities for these projects, we recommend that the

Secretary of Energy

• issue guidance that defines how to prepare reliable and complete

estimates of potential net savings from deactivation projects and

• require EM officials to use estimates of projects’ potential net savings, in

addition to other information such as health and safety risks, to determine

priorities for deactivating facilities.

Agency Comments In written comments on a draft of this report, DOE stated that the report

was comprehensive and accurately described the status of the NMFS

program’s cost estimating for deactivation projects. DOE also commented

that the report’s conclusions and recommendations will enhance its ability

to estimate and document the program’s potential cost savings. The

Department’s comments and suggestions to clarify technical matters

discussed in the report are presented in appendix V. We have incorporated

these suggested changes into the report.

We performed our work from June 1994 through June 1995 in accordance

with generally accepted government auditing standards. Appendix IV

provides detailed information on our scope and methodology.

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from the

date of this letter. At that time, we will send copies of this report to the

appropriate congressional committees; the Secretary of Energy; and the

Director, Office of Management and Budget. We will also make copies

available to others upon request.

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Please call me at (202) 512-3841 if you or your staff have any questions.

Major contributors to this report are listed in appendix VI.

Sincerely yours,

Victor S. Rezendes,

Director, Energy and

 Science Issues

Page 14 GAO/RCED-95-183 Savings From Deactivating Facilities
Page 15 GAO/RCED-95-183 Savings From Deactivating Facilities
Contents

Letter 1

Appendix I 

Funding for NMFS

Program, Fiscal Year

1995

18

Appendix II 

Percentage of NMFS

Program’s Available

Fiscal Year 1995

Funding and Number

of Projects That Could

Reduce Future Costs

19

Appendix III 

NMFS Program’s

Fiscal Year 1995

Projects That May

Reduce Future Costs

20

Appendix IV 

Scope and

Methodology

21

Appendix V 

Comments From the

Department of Energy

24

Page 16 GAO/RCED-95-183 Savings From Deactivating Facilities
Contents

Appendix VI 

Major Contributors to

This Report

27

Tables Table 1: Results of Two Approaches for Determining and

Comparing Savings From Deactivation Projects

10

Table I.1: NMFS Program’s Fiscal Year 1995 Available Funding by

Site and Budget Function

18

Table I.2: Percentage of NMFS Program’s Fiscal Year 1995

Available Funding by Site and Budget Function

18

Figures Figure 1: NMFS Program’s Available Fiscal Year 1995 Budget by

Type of Activity

4

Figure 2: Distribution of NMFS Program’s Available Fiscal Year

1995 Funding by Savings Potential and Number of Projects

6

Abbreviations

ADS Activity Data Sheet

DOE Department of Energy

EM Office of Environmental Management

FFTF Fast Flux Test Facility

GAO General Accounting Office

NMFS Nuclear Material and Facility Stabilization (program)

PUREX/UO3 Plutonium-Uranium Extraction/Uranium Trioxide Plants

Page 17 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix I 

Funding for NMFS Program, Fiscal Year

1995

Table I.1: NMFS Program’s Fiscal Year

1995 Available Funding by Site and

Budget Function

Dollars in millions

Budget

function

Idaho

Falls Hanford

Rocky

Flats

Threesite

subtotala

Other

locations

NMFS

totala

Deactivation $8.1 $41.4 $84.3 $133.8 $3.4 $137.1

Surveillance and

maintenance

30.0 139.2 138.5 307.6 5.7 313.3

Landlord 75.2 45.4 99.1 219.7 0.0 219.7

Program management 31.1 73.5 19.8 124.4 18.2 142.6

Totala $144.4 $299.4 $341.8 $785.5 $27.3 $812.8

Legend

NMFS = Nuclear Material and Facility Stabilization (program).

aTotals may not add because of rounding.

Table I.2: Percentage of NMFS

Program’s Fiscal Year 1995 Available

Funding by Site and Budget Function

Budget function

Idaho

Falls Hanford

Rocky

Flats

Threesite

subtotala

Other

locations

NMFS

totala

Deactivation 1.0 5.1 10.4 16.5 0.4 16.9

Surveillance and

maintenance

3.7 17.1 17.0 37.8 0.7 38.6

Landlord 9.3 5.6 12.2 27.0 0.0 27.0

Program management 3.8 9.0 2.4 15.3 2.2 17.5

Totala 17.8 36.8 42.0 96.6 3.4 100.0

Legend

NMFS = Nuclear Material and Facility Stabilization (program).

aTotals may not add because of rounding.

Source for tables I.1 and I.2: GAO’s analysis of DOE’s data.

Page 18 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix II 

Percentage of NMFS Program’s Available

Fiscal Year 1995 Funding and Number of

Projects That Could Reduce Future Costs

Percentage of funding at major sites

Budget function

For projects with

savings partially

estimated

For projects with

savings to be

determined

For projects

without estimated

savings

Percentage of

funding at other

locationsa Program totalsb

Deactivation 2.9 5.2 8.4 0.4 16.9

Surveillance and maintenance 12.1 6.1 19.6 0.7 38.6

Landlord 2.0 2.2 22.8 0.0 27.0

Program management 0.1 0.1 15.1 2.2 17.5

Totalb 17.1 13.6 66.0 3.4 100.0

Number of projectsc 11 13 47 10 81

Legend

NMFS = Nuclear Material and Facility Stabilization (program).

aIncludes funding for projects at headquarters and sites other than Hanford, Idaho Falls, and

Rocky Flats. We did not evaluate potential savings at these locations because the locations

account for only 3.4 percent of the program’s fiscal year 1995 budget.

bTotals may not add because of rounding.

cAs discussed in the report, we defined an NMFS project to be any activity or collection of

activities that the NMFS program manages using a single Office of Environmental Management

Activity Data Sheet.

Source: GAO’s analysis of DOE’s data.

Page 19 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix III 

NMFS Program’s Fiscal Year 1995 Projects

That May Reduce Future Costs

Fiscal year

funding

Project data discounted to 1994 dollars

Dollars in millions

Project Site Begins Ends

Project

costa

Total cost

reduction

(savings)b

Net cost

(savings)c

Total cost

reduction to

project cost

ratiod

Deactivation projects

Building 308 shutdown Hanford 1994 1998 $2.5 $(37.5) $(35.0) 14.8

Separations and Fuel Dissolution Process

Facilities

Idaho Falls 1993 1995 8.7 (66.2) (57.5) 7.6

Plutonium-Uranium Extraction/Uranium Trioxide

Plants (PUREX/UO3) shutdown

Hanford 1994 1997 44.7 (243.9) (199.2) 5.5

Fast Flux Test Facility (FFTF) Hanford 1994 2001 104.0 (297.3) (193.3) 2.9

300 Area Fuel Supply Facilities shutdown Hanford 1994 2000 35.1 (28.7) 6.4 0.8

Surveillance and maintenance projects

Surveillance procedures update Rocky Flats 1995 1995 1.0 (11.2) (10.2) 11.2

Landlord projects

North Firing Range roof construction Rocky Flats 1994 1995 1.3 (4.6) (3.3) 3.6

Transportation Complex Idaho Falls 1992e 1995 14.7 (21.3) (6.6) 1.5

Security Facilities upgrade and consolidation Idaho Falls 1993e 1999 19.4 (21.9) (2.5) 1.1

Electrical system upgrades Rocky Flats 1994 1997 7.4 (8.2) (0.8) 1.1

Electrical and utility systems upgrades Idaho Falls 1993 2002 67.4 (22.9) 44.4 0.3

Totalf $306.2 $(763.9) $(457.7) 2.5

Legend

NMFS = Nuclear Material and Facility Stabilization (program).

aProject costs include the cost of deactivation activities and do not include surveillance and

maintenance costs.

bTotal cost reduction (savings) includes reduction in surveillance and maintenance costs or

landlord service (e.g., electricity) costs.

cNet cost may not equal total savings less project cost because of rounding.

dRatios in this column were calculated before project data shown in the table were rounded.

eYear that ongoing project was transferred to the NMFS program.

f

Totals may not add because of rounding.

Source: GAO’s analysis of DOE’s data.

Page 20 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix IV 

Scope and Methodology

To determine the proportion of the Nuclear Material and Facility

Stabilization (NMFS) program’s available fiscal year 1995 budget allocated

to projects that will reduce the future cost of managing the Department of

Energy’s (DOE) inactive facilities,1

 we discussed fiscal year 1995 efforts to

fund cost-saving projects with the program’s Associate Deputy Assistant

Secretary and the Director of the Office of Integration and Assessment. At

the NMFS program’s headquarters, we also interviewed the office directors

and program managers who helped set the fiscal year 1995 budget

priorities for the program’s three major sites—Hanford, Washington; Idaho

Falls, Idaho; and Rocky Flats, Colorado. We asked NMFS program managers

to identify the fiscal year 1995 projects that they expected would reduce

the program’s operational costs. We excluded from our analysis savings

expected from productivity improvements, changes in the scope of

projects, or improvements in the program’s management efficiency. Using

information provided by NMFS program managers, we assigned projects to

one of three categories that represented our understanding of each

project’s savings potential. The categories included projects for which DOE

(1) either had prepared at least partial estimates of savings or could

provide sufficient data for us to compute estimated savings; (2) expected

savings but had not yet developed savings estimates; and (3) did not

expect significant savings or projects for which DOE did not plan to

estimate savings. To better understand why projects belonged in specific

categories, we visited the program’s three major sites and interviewed DOE

field and contractor officials concerning each project’s potential for

reducing future costs. After we determined the savings potential of each

project, we asked program managers at DOE headquarters to verify that we

had allocated projects to the correct savings category.

We used the Office of Environmental Management’s (EM) system of

Activity Data Sheets (ADSs), which represents EM’s basic structure for

managing projects, to count the number of NMFS projects and the

proportion of fiscal year 1995 funding allocated to projects within each of

our categories. For example, DOE classified the Fast Flux Test Facility

(FFTF) project within our first savings category and funded the facility’s

deactivation, surveillance and maintenance, and project management

under one ADS. We counted the FFTF activities as one project and included

the project’s total funding within our first savings category. We then

calculated the proportion of funds that could generate future cost savings

by summing the fiscal year 1995 funding for projects in each category.

1

When it was created in July 1992, the Nuclear Material and Facility Stabilization program was called

the Facility Transition and Management program.

Page 21 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix IV 

Scope and Methodology

We made two exceptions to this approach. First, DOE uses one ADS to fund

deactivation work at Idaho’s Chemical Processing Plant, although the

effort includes three related facilities that are being deactivated—the

Separations and Fuel Dissolution Process Facilities, the Rover Dry

Process, and the Old Waste Calcine Facility. We counted the three efforts

as separate projects because DOE has prepared or is preparing separate

implementation plans, cost estimates, and schedules for each. Second,

Rocky Flats funds all of the site’s surveillance and maintenance activities

under one ADS. Although we counted Rocky Flats’ total surveillance and

maintenance effort as one project, we separated the funding into two

portions. The first portion of about $1 million is allocated to the savings

estimated category and is related to efforts to review and update

procedures that produce a net savings in surveillance and maintenance

costs at the site. The second portion of about $137 million is not directly

associated with an identifiable savings effort and is allocated to the no

savings expected category.

To obtain information for estimating the potential cost reduction or

savings from specific projects, we (1) reviewed DOE’s project plans,

briefing documents, and budget support documents; (2) interviewed NMFS

program headquarters and field managers; and (3) observed projects at the

three key sites that DOE believes will generate future cost savings. We also

interviewed DOE and contractor officials concerning DOE’s timetable for

decontaminating and decommissioning these facilities. These officials

informed us that DOE could wait a minimum of 10 years to decontaminate

and decommission facilities that the NMFS program has deactivated and

confirmed that savings in surveillance and maintenance costs would

continue during this waiting period. We used this information as the basis

for our assumption that DOE would continue to accrue savings from

deactivating facilities during a 10-year holding period after deactivation.

We asked program managers at DOE headquarters to review the accuracy

of our data on each project’s costs and savings and the reasonableness of

our assumptions. Using the verified data, we discounted each project’s

annual costs and reductions in surveillance and maintenance or landlord

costs to 1994 dollars and computed discounted net savings. We used the

discounted data to compute a total-savings-to-cost ratio for individual

projects to illustrate an approach for identifying which projects provide

the greatest amount of estimated savings in relation to the project’s costs.

To assess the general reliability of the NMFS program’s process for

estimating savings from major deactivation projects, we interviewed NMFS

Page 22 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix IV 

Scope and Methodology

program headquarters and field officials to determine (1) how DOE

prepares savings estimates for deactivation projects and (2) how NMFS

program officials could use savings estimates in the budget process to

choose between competing projects. We also reviewed DOE’s internal

guidance on managing and estimating the costs of major projects and

discussed DOE’s initiatives to revise this guidance with officials in the NMFS

program’s Office of Integration and Assessment and DOE’s Office of Field

Management.

Page 23 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix V 

Comments From the Department of Energy

Page 24 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix V 

Comments From the Department of Energy

Now on p. 2.

Now on p. 2.

Now on p. 4.

Now on p. 11.

Now on p. 10.

Page 25 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix V 

Comments From the Department of Energy

Now on p. 11.

Page 26 GAO/RCED-95-183 Savings From Deactivating Facilities
Appendix VI 

Major Contributors to This Report

Resources,

Community, and

Economic

Development

Division, Washington,

D.C.

Bernice Steinhardt, Associate Director

James Noël, Assistant Director

Robert P. Lilly, Evaluator-in-Charge

Delores Parrett, Senior Evaluator

Frederick A. Harter, Senior Evaluator

Mehrzad Nadji, Assistant Director for Economic Analysis

Earl P. Williams, Jr., Communications Analyst

Seattle Regional

Office

William R. Swick, Regional Energy Issue Manager

John E. Cass, Staff Evaluator

Angela M. Sanders, Staff Evaluator

(302123) Page 27 GAO/RCED-95-183 Savings From Deactivating Facilities
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