DEPARTMENT OF 

ENERGY

Observations on DOE’s 

Management Challenges 

and Steps Taken to Address 

Them

Statement of David C. Trimble, Director 

Natural Resources and Environment

Testimony 

Before the Subcommittee on Oversight 

and Investigations, Committee on 

Energy and Commerce, House of 

Representatives

For Release on Delivery 

Expected at 10 a.m. EDT

Wednesday, July 24, 2013

GAO-13-767T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-767T, a testimony 

before the Subcommittee on Oversight and 

Investigations, Committee on Energy and 

Commerce, House of Representatives

July 24, 2013

DEPARTMENT OF ENERGY

Observations on DOE’s Management Challenges and 

Steps Taken to Address Them 

Why GAO Did This Study

DOE missions encompass energy 

resources, scientific and technological 

development, environmental cleanup, 

and nuclear security. Management of 

major projects and contracts within EM 

and NNSA, a separately organized 

agency within DOE, remain on GAO’s

list of areas at high risk of waste, fraud, 

abuse, and mismanagement, where 

they have been listed since 1990. 

Progress has been made, but GAO 

continues to identify management 

problems related to cost and schedule 

overruns on major environmental 

cleanup and nuclear projects and 

safety problems at DOE sites that have 

not been fully addressed. 

This testimony discusses DOE’s 

management challenges in (1) 

managing major projects and 

programs, (2) managing security and 

safety at DOE sites, and (3) producing 

reliable enterprise-wide information, 

including budget and cost data.

Over the past decade, GAO has made 

numerous recommendations in its 

reports to address challenges such as 

those identified in this testimony. DOE 

agreed with most of them and is taking 

steps toward implementing them. 

GAO’s work has also recognized some 

of the steps that DOE has taken to 

address these challenges. For 

example, in the most recent update of 

GAO’s high-risk series, GAO narrowed 

the focus of the high-risk designation of 

DOE’s contract management to EM’s 

and NNSA’s major contracts and 

projects (i.e., those costing $750 

million or more). GAO will continue to 

monitor DOE’s implementation of 

actions to resolve long-standing 

management challenges, including 

actions taken in response to GAO’s 

recommendations.

What GAO Found

As GAO has reported over the last decade, the Department of Energy’s (DOE) 

management of major projects and programs, security and safety at DOE sites, and 

reliable enterprise-wide management information, including budget and cost data, are 

among the most persistent management challenges the department faces. 

• Challenges managing major projects and programs. The Office of Environmental 

Management (EM) and the National Nuclear Security Administration (NNSA)

continue to face challenges managing major projects and programs, which have 

incurred significant cost increases and schedule delays. For example, GAO 

reported in July 2013 that the cost estimate range for a project to construct a 

modern Uranium Processing Facility (UPF) at DOE’s Y-12 National Security 

Complex in Oak Ridge, Tennessee, had increased five- to seven-fold to up to 

$6.5 billion since the project’s inception in 2004. Furthermore, the most recent 

cost estimate range may no longer be valid after the contractor reported in 

August 2012 that the UPF’s roof would have to be raised 13 feet. GAO is

currently assessing DOE cost estimating policies and practices and plans to 

issue a report based on this work later this year. DOE's actions to improve 

project management appear promising, but their impact on meeting cost and 

schedule targets may not be clear. Because all ongoing major projects have 

been in construction for several years, neither EM nor NNSA has a major project 

that can yet demonstrate the impact of DOE's recent reforms.

• Challenges managing security and safety. Reports about the July 2012 security 

breach at the Y-12 National Security Complex identified numerous, long-standing 

and systemic security issues across the nuclear security enterprise and 

significant safety problems at DOE sites that have not been fully addressed. A

NNSA Security Task Force and an independent panel convened at the request of 

the Secretary of Energy also found systemic security issues across the nuclear 

security enterprise, and found deficiencies in DOE’s security culture and 

oversight, which closely matched issues GAO identified a decade earlier. GAO 

has ongoing work assessing DOE security reforms and plans to issue a report 

based on this work later this year. GAO has also found that DOE management 

weaknesses have contributed to persistent safety problems at NNSA sites.

• Challenges in producing reliable enterprise-wide management information. GAO 

has reported that DOE does not have reliable enterprise-wide management data 

needed to, among other things, prepare its budget requests, identify the costs of 

its activities, and ensure the validity of its cost estimates. For example, in June 

2013, GAO reported that while different approaches are allowed by Cost 

Accounting Standards, NNSA’s management and operations contractors differ in 

how they classify and allocate indirect costs at NNSA laboratories, which limits 

NNSA’s ability to assess cost data and meaningfully compare cost management 

performance across laboratories. In addition, GAO reported in June 2010 that 

NNSA could not accurately identify the total costs to operate and maintain 

weapons facilities and infrastructure because of differences among contractors’ 

accounting practices. GAO is currently monitoring DOE’s ongoing efforts to 

improve its capability to produce reliable enterprise-wide information. 

View GAO-13-767T. For more information, 

contact David Trimble at (202) 512-3841 or 

trimbled@gao.gov.
Page 1 GAO-13-767T 

Chairman Murphy, Ranking Member DeGette, and Members of the 

Subcommittee:

Thank you for the opportunity to discuss our recent work on some of the 

pressing management challenges that the Department of Energy (DOE) 

faces. DOE is responsible for executing some of the nation’s most 

complex and technologically advanced missions, working to ensure the 

energy future of the United States, providing scientific and technological 

leadership, overseeing the nation’s nuclear security enterprise, and 

resolving the environmental legacy of the Cold War. DOE carries out 

these activities through mission-based program offices including the 

Office of Environmental Management (EM) and the separately organized 

National Nuclear Security Administration (NNSA).1 Collectively, these and 

other DOE offices operate dozens of government-owned, contractoroperated facilities throughout the United States.

Our prior testimonies before this Subcommittee in September 20122 and 

March 2013,3 as well as reports we have issued over the past decade, 

have highlighted various challenges that DOE components—principally 

EM and NNSA—face in carrying out their responsibilities.4 These 

testimonies and reports have highlighted management challenges 

concerning (1) EM and NNSA projects and programs; (2) security and 

safety at DOE sites; and (3) reliable enterprise-wide management 

information, including budget and cost data. Regarding project and 

program management, EM’s and NNSA’s management of major projects 

and contracts remains on our list of areas at high risk of waste, fraud, 

 1

Specifically, NNSA was created under Title 32 of the National Defense Authorization Act 

for Fiscal Year 2000, Pub. L. No. 106-65, § 3201 et seq.

2

GAO, Modernizing the Nuclear Security Enterprise: Observations on the National Nuclear 

Security Administration’s Oversight of Safety, Security, and Project Management, 

GAO-12-912T (Washington, D.C.: Sept. 12, 2012).

3

GAO, Modernizing the Nuclear Security Enterprise: Observations on DOE’s and NNSA’s 

Efforts to Enhance Oversight of Security, Safety, and Project and Contract Management, 

GAO-13-482T (Washington, D.C.: Mar. 13, 2013).

4

A list of recent GAO products assessing DOE’s management efforts is included at the 

end of this statement.
Page 2 GAO-13-767T 

abuse, and mismanagement, where they have been listed since 1990.5

Regarding security and safety management, we have frequently reported 

on security issues and safety incidents at DOE facilities—as when we 

testified before this Subcommittee in March 2013 on the temporary 

shutdown of facilities at Los Alamos National Laboratory in 2004 and, 

more recently, the security breach at the Y-12 National Security Complex 

in July 2012.6 Regarding reliable enterprise-wide management 

information, we have reported on matters such as the steps that DOE has 

taken to improve its budgeting and cost-estimating practices and the 

weaknesses that persist in these areas.

In addition to these issues, NNSA’s relationship with DOE has come 

under renewed scrutiny. Notably, the Fiscal Year 2013 National Defense 

Authorization Act created the Congressional Advisory Panel on the 

Governance of the Nuclear Security Enterprise to examine options and 

make recommendations for revising the governance structure, mission, 

and management of the nuclear security enterprise. As the new Secretary 

of Energy has alluded to in recent testimony, addressing the management 

challenges that we and other organizations have identified, as well as 

clarifying departmental roles and responsibilities, will be among his top 

priorities.

In this context, my testimony today discusses three of DOE’s most 

persistent management challenges: (1) management of projects and 

 5

GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013). 

We have shifted the focus of the high-risk designation of EM’s and NNSA’s contract 

management to major projects and away from nonmajor projects, those costing less than 

$750 million. As defined in the most recent update of our high-risk series, contract

management includes both contract administration and project management.

6

For additional information on the 2004 temporary shutdown of facilities at Los Alamos, 

see GAO, Stand-Down of Los Alamos National Laboratory: Total Costs Uncertain; Almost 

All Mission-Critical Programs Were Affected but Have Recovered, GAO-06-83

(Washington, D.C.: Nov. 18, 2005). During the security breach at the Y-12 National 

Security Complex, three trespassers gained access to the protected security area directly 

adjacent to one of the nation’s most critically important nuclear weapon–related facilities 

without being interrupted by the security measures in place. According to DOE’s Inspector 

General, this security incident was unprecedented and represented multiple system 

failures including failures to maintain critical security equipment, respond properly to 

alarms, and understand security protocols. The Inspector General found that contractor 

governance and federal oversight did not identify and correct early indications of these 

multiple system breakdowns. See GAO-13-482T and DOE, Office of Inspector General, 

Inquiry into the Security Breach at the National Nuclear Security Administration’s Y-12 

National Security Complex, DOE/IG-0868 (August 2012).
Page 3 GAO-13-767T 

programs, (2) management of security and safety at DOE sites, and (3) 

reliable enterprise-wide management information, including budget and 

cost data. It focuses on our reports issued from January 2007 to June 

2013. Detailed information about the scope and methodology used to 

conduct this work can be found in each of our issued reports. We 

conducted the performance audit work that supports this statement in 

accordance with generally accepted government auditing standards.

DOE’s missions encompass energy resources, scientific and 

technological development, environmental cleanup, and nuclear security. 

DOE established EM in 1989 to carry out the mission to clean up 

radioactive wastes, spent nuclear fuel, excess plutonium and uranium, 

contaminated facilities, and contaminated soil and groundwater that 

resulted from nuclear weapons production and government-sponsored 

nuclear energy research. NNSA, a separately organized agency within 

DOE, has primary responsibility for ensuring the safety, security, and

reliability of the nation’s nuclear weapons stockpile, including life 

extension programs for multiple weapon types in the U.S. stockpile,7 for 

promoting nuclear nonproliferation, and for naval reactor programs. In 

fiscal year 2013, EM and NNSA received about $17 billion to support 

these programs and related activities, which is approximately 60 percent 

of DOE’s total budget. Figure 1 shows the fiscal year 2013 funding for 

EM, NNSA, and other DOE programs and activities.

 7

The end of the Cold War caused a dramatic shift in how the nation maintains nuclear 

weapons. Instead of designing, testing, and producing new nuclear weapons, the strategy 

shifted to maintaining the existing nuclear weapons stockpile indefinitely. Life extension 

programs extend, through refurbishment, the operational lives of weapons in the nuclear 

stockpile by 20 to 30 years and certify these weapons’ military performance requirements 

without underground nuclear testing. GAO, Nuclear Weapons: NNSA and DOD Need to 

More Effectively Manage the Stockpile Life Extension Program, GAO-09-385

(Washington, D.C.: Mar. 2, 2009).

Background
Page 4 GAO-13-767T 

Figure 1: Funding of DOE Programs and Activities, Fiscal Year 2013

Note: Funding numbers represent the annualized amount programs are authorized to obligate, prior 

to any adjustment for sequestration.

Contractors operate DOE sites and often conduct their work under 

management and operating (M&O) contracts.8 These contracts provide 

the contractor with discretion in carrying out the mission of the particular 

contract. Currently, DOE spends 90 percent of its annual budget on 

contracts, making it the largest non–Department of Defense contracting 

agency in the government.

 8

M&O contracts are agreements under which the government contracts for the operation, 

maintenance, or support, on its behalf, of a government-owned or –controlled research, 

development, special production, or testing establishment wholly or principally devoted to 

one or more of the major programs of the contracting federal agency. Federal Acquisition 

Regulation, 48 C.F.R. § 17.601.
Page 5 GAO-13-767T 

As we have reported in the past decade, DOE continues to face 

challenges managing its major projects and programs, which have 

incurred significant cost increases and schedule delays in several 

instances. Some recent examples include:

• As we reported earlier this month, NNSA estimates that the project to 

build the Uranium Processing Facility (UPF) at the Y-12 National 

Security Complex in Oak Ridge, Tennessee, will cost between five 

and seven times more than previously thought and will be completed 

over a decade behind schedule.9 NNSA estimated in 2004 that the 

UPF would cost from $600 million to $1.1 billion to construct and 

would start operating in 2012. As of June 2012, estimates were 

revised to a cost range from $4.2 billion to $6.5 billion and a 2023 

date for the start of operations. In June 2012, the Deputy Secretary of 

Energy approved the latter cost range and schedule and deferred 

significant portions of the original project scope. Two months later, the 

UPF contractor concluded that UPF’s roof would have to be raised 13 

feet and that the start of construction would be further delayed, 

resulting in approximately $540 million in additional costs. As we 

reported, these problems occurred because the contractor did not 

adequately manage and integrate the design work subcontracted to 

four other contractors. Given these additional costs and DOE’s stated 

plan to pay for these additional costs from its contingency fund, it is 

unclear if the cost range estimate approved in June 2012 remains 

valid.

• In March 2013, we reported preliminary observations from our 

ongoing review of NNSA’s Plutonium Disposition Program that 

highlight the need for continued efforts by DOE to improve contract 

and project management.10 We reported DOE is currently forecasting 

an increase in the total project cost for the MOX Fuel Fabrication 

Facility at the Savannah River Site in South Carolina from $4.9 billion 

to $7.7 billion and a delay in the start of operations from October 2016 

 9

GAO, Nuclear Weapons: Factors Leading to Cost Increases with the Uranium Processing 

Facility, GAO-13-686R (Washington, D.C.: July 12, 2013).

10A key part of the Plutonium Disposition Program includes the construction of two nuclear 

facilities at DOE’s Savannah River Site: a facility that will produce mixed oxide (MOX) fuel 

–a mix of plutonium and uranium--for nuclear reactors and a Waste Solidification Building 

to dispose of the liquid waste from the MOX facility.

DOE Faces 

Challenges Managing 

Its Major Projects and 

Programs
Page 6 GAO-13-767T 

to November 2019.11 According to NNSA officials and the contractor 

for the MOX facility, inadequately designed critical system 

components, such as the gloveboxes to be used for handling 

plutonium and the infrastructure needed to support these gloveboxes, 

are among the primary reasons for the proposed cost increase and 

schedule delay. The performance baseline for the MOX facility was 

set several years before NNSA issued guidance in 2012 to set cost 

and schedule baselines only after design work is 90 percent 

complete.12 As part of our ongoing review of NNSA’s Plutonium 

Disposition Program, we are evaluating whether such guidance would 

have been useful for NNSA to apply to the MOX facility, as well as the 

potential impact this guidance might have had on mitigating cost 

increases and schedule delays.

• In December 2012, we reported that the estimated cost to construct 

the Waste Treatment and Immobilization Plant in Hanford, 

Washington, had tripled to $12.3 billion since its inception in 2000 and 

that the scheduled completion date had slipped by nearly a decade to 

2019.13 We reported that DOE’s incentives and management controls 

were inadequate for ensuring effective project management, and DOE 

had in some instances prematurely rewarded the contractor for 

resolving technical issues and completing work. DOE generally 

agreed with the several recommendations we made to improve Waste 

Treatment and Immobilization Plant projects and contract 

management. In May 2013, we reported that significant technical 

challenges at the Waste Treatment Plant remained unresolved, 

contributing to uncertainty as to whether the project will operate safely 

and effectively.14

• We also reported in December 2012 on progress by EM and NNSA in 

managing nonmajor projects (i.e., those costing less than $750 

 11GAO, Department of Energy: Concerns with Major Construction Projects at the Office of 

Environmental Management and NNSA, GAO-13-484T (Washington, D.C.: Mar. 20, 

2013).

12A project’s performance baseline consists of the project’s cost, schedule, and scope (the 

activities needed to achieve project goals).

13GAO, Hanford Waste Treatment Plant: DOE Needs to Take Action to Resolve Technical 

and Management Challenges, GAO-13-38 (Washington, D.C.: Dec. 19, 2012).

14GAO-13-510T. 
Page 7 GAO-13-767T 

million).15 We found that of the 71 nonmajor projects that EM and 

NNSA completed or had under way from fiscal years 2008 to 2012, 21 

met or are expected to meet their performance targets for scope, cost, 

and completion date. However, 23 projects did not meet or were not 

expected to meet one or more of those three performance targets. We 

also noted that, for 27 projects, many had insufficiently documented 

performance targets for scope, cost, or completion date, which 

prevented us from determining whether they met their performance 

targets. As a result, we recommended, among other things, that EM 

and NNSA clearly define, document, and track the scope, cost, and 

completion date targets for each of their nonmajor projects. EM and 

NNSA agreed with our recommendations. As we noted in our 

February 2013 high-risk update,16 we have shifted our focus to major 

contracts and projects, but we will continue to monitor the 

performance of nonmajor projects.

• In April 2010, we reported that weak management by DOE and NNSA 

had allowed the cost, schedule, and scope of ignition-related activities 

at the National Ignition Facility to increase substantially.17 We reported 

that, since 2005, ignition-related costs have increased by around 25 

percent—from $1.6 billion in 2005 to over $2 billion in 2010—and that 

the planned completion date for these activities had slipped from the 

end of fiscal year 2011 to the end of fiscal year 2012 or beyond. We 

made several recommendations to address program management 

weaknesses—which NNSA agreed with—and we are currently 

monitoring their implementation. Ten years earlier, in August 2000, we 

had reported that poor management and oversight of the National 

Ignition Facility construction project at Lawrence Livermore National 

Laboratory had increased the facility’s cost by $1 billion and delayed 

its scheduled completion date by 6 years.18

 15GAO, Department of Energy: Better Information Needed to Determine if Nonmajor 

Projects Meet Performance Targets, GAO-13-129 (Washington, D.C.: Dec. 19, 2012).

16GAO-13-283.

17Ignition-related activities consist of the efforts separate from the facility’s construction 

that have been undertaken to prepare for the first attempt at ignition—the extremely 

intense pressures and temperatures that simulate on a small scale the thermonuclear 

conditions created in nuclear explosions. See GAO, Nuclear Weapons: Actions Needed to 

Address Scientific and Technical Challenges and Management Weaknesses at the 

National Ignition Facility, GAO-10-488 (Washington, D.C.: Apr. 8, 2010).

18GAO, National Ignition Facility: Management and Oversight Failures Caused Major Cost 

Overruns and Schedule Delays, GAO/RCED-00-271 (Washington, D.C.: Aug. 8, 2000).
Page 8 GAO-13-767T 

• In March 2009, we reported that NNSA and the Department of 

Defense had not effectively managed cost, schedule, and technical 

risks for the B61 nuclear bomb and the W76 nuclear warhead 

refurbishments.19 For the B61 life extension program, NNSA was only 

able to stay on schedule by significantly reducing the number of 

weapons undergoing refurbishment and abandoning some 

refurbishment objectives. We made a number of recommendations to 

improve the management of the nuclear weapons refurbishment 

process. NNSA agreed with these recommendations, and we are 

monitoring their implementation.

We are currently assessing DOE cost estimating policies and practices 

and plan to issue a report based on this work later this year. DOE’s 

actions to improve project management appear promising, but their 

impact on meeting cost and schedule targets may not be clear. Because 

all ongoing major projects have been in construction for several years, 

neither EM nor NNSA has a major project that can yet demonstrate the 

impact of DOE’s recent reforms.

As we testified before this Subcommittee in March 2013,20 reviews of the

July 2012 security breach at the Y-12 National Security Complex 

identified numerous, long-standing, and systemic security issues across 

the nuclear security enterprise, and significant safety problems remain at 

DOE sites that have not been fully addressed. Some examples from our 

recent work include:

• With regard to security, as we testified in March 2013,21 investigations 

of the security breach at the Y-12 National Security Complex 

performed by NNSA, the DOE Office of Inspector General, and the 

DOE Office of Independent Oversight found problems with NNSA’s 

and its contractors’ performance, including problems with the 

complex’s physical security systems, such as alarms, and the training 

and response of the heavily armed guards supplied by NNSA’s 

protective force contractor. In addition, both a NNSA Security Task 

Force and an independent panel convened at the request of the 

 19GAO-09-385.

20GAO-13-482T.

21GAO-13-482T.

DOE Faces 

Challenges Managing 

Security and Safety
Page 9 GAO-13-767T 

Secretary of Energy and composed of three former executives from 

federal agencies and the private sector found systemic security issues 

across the nuclear security enterprise. Both the Secretary’s panel and 

the NNSA Security Task Force’s leader found deficiencies in DOE’s 

security culture and oversight, with some of these being closely 

matched to issues we identified a decade earlier. DOE took a number 

of actions in response to the security breach and the findings of the 

panel and task force. These actions included, among other things, 

immediate actions to repair security equipment, as well as longer-term 

actions that aim to improve NNSA and DOE oversight of security. As 

we testified in March 2013, in assessing DOE’s actions regarding 

security and NNSA’s new security oversight process, a central 

question will be whether they lead to sustained improvements in 

security at the Y-12 National Security Complex and across the nuclear 

security enterprise. We have ongoing work assessing DOE security 

reforms and plan to issue a report based on this work later this year.

• With regard to safety, in September 2012 we testified before this 

Subcommittee about NNSA management weaknesses that have 

contributed to persistent safety problems at NNSA sites, including lax 

attitudes toward safety procedures, inadequacies in identifying and 

addressing safety programs with appropriate corrective actions, and 

inadequate oversight by NNSA site offices.22 We stated in our 

testimony that in March 2010, in an effort to address safety problems 

across the nuclear security enterprise, the Secretary of Energy 

announced a reform effort aimed at modifying DOE’s oversight 

approach in order to “provide contractors with the flexibility to tailor 

and implement safety and security programs without excessive 

federal oversight or overly prescriptive departmental requirements.” 

As we noted in the testimony, DOE’s safety reforms did not fully 

address continuing safety concerns and, in fact, may have actually 

weakened independent oversight. We noted, for example, that DOE’s 

Office of Independent Oversight staff must coordinate its assessment 

activities with NNSA site office management to maximize the use of 

resources, raising concerns about whether Office of Independent 

Oversight staff would be sufficiently independent from site office 

 22GAO-12-912T.
Page 10 GAO-13-767T 

management.23 In our April 2012 report, we recommended that DOE 

analyze the costs and benefits of its safety reform effort and identify 

how the effort will help address safety concerns. DOE agreed with our 

recommendations.

Moreover, since our September 2012 testimony, DOE’s Office of 

Independent Oversight has raised concerns about ongoing safety issues, 

including reluctance by workers at NNSA’s Pantex Plant to raise safety 

problems for fear of retaliation and a perception that cost took priority 

over safety, as well as inadequate controls to protect workers or the 

public in the case of earthquake, fires, or radiation exposures at the Y-12 

National Security Complex. In addition, a March 2013 independent 

evaluation of safety culture at DOE’s Office of Health, Safety, and 

Security (HSS)—which generally provides policy direction and 

independent oversight of safety and security at DOE sites—found that 

HSS staff raised concerns that the shift in recent years toward a more 

collaborative oversight relationship with site management had weakened 

HSS’s effectiveness in providing independent oversight and 

enforcement.24

 23Within DOE’s Office of Health, Safety, and Security (HSS), the Office of Independent 

Oversight conducts periodic appraisals of the environment, safety, and health programs at 

DOE’s sites to determine if DOE officials and contractors are complying with DOE’s safety 

regulations and directives. During the review that led to our September 2012 report, the 

Office of Independent Oversight merged with the Office of Enforcement, forming the Office 

of Enforcement and Oversight. See GAO, Nuclear Safety: DOE Needs to Determine the 

Costs and Benefits of Its Safety Reform Effort GAO-12-347, (Washington: D.C.: Apr. 20, 

2012).

24DOE HSS reports directly to the Secretary of Energy and is independent of DOE 

program offices and NNSA. See Dr. Sonja B. Haber, et al. An Independent Evaluation of 

Safety Culture at the U.S. Department of Energy Office of Health, Safety and Security—

Headquarters (HSS) (Mar. 29, 2013).
Page 11 GAO-13-767T 

For more than a decade, we have reported that DOE has not produced 

reliable enterprise-wide management data needed to, among other 

things, prepare its budget requests, identify the costs of its activities and 

ensure the validity of its cost estimates. Some recent examples include:

• In June 2013, we reported that NNSA’s M&O contractors differ in how 

they classify and allocate indirect costs at NNSA laboratories.25

Although different approaches are allowed by Cost Accounting 

Standards, these differences limit NNSA’s ability to assess cost data 

and meaningfully compare cost management performance across 

laboratories, potentially impeding NNSA’s efforts to oversee M&O

contractors’ costs. This work built on the report we issued in June 

2010,26 in which we found that NNSA could not accurately identify the 

total costs to operate and maintain weapons facilities and 

infrastructure because of differences among contractors’ accounting 

practices. We concluded that, without the ability to consistently 

identify program costs, NNSA did not have the ability to adequately 

justify future presidential budget requests and risked being unable to 

identify both the return on investment of planned budget increases 

and opportunities for cost savings. As a result, we recommended that 

NNSA require M&O contractors report to NNSA annually on the total 

costs (i.e., both direct and indirect costs) to operate and maintain 

weapons facilities and infrastructure.

• In July 2012, we reported that NNSA did not comply with DOE’s order 

that defines budget formulation because the agency believed the 

order expired in 2003 and no longer applied to NNSA budget 

activities.27 DOE’s order on budget formulation outlines the 

 25GAO, National Nuclear Security Administration: Laboratories' Indirect Cost Management 

Has Improved, but Additional Opportunities Exist, GAO-13-534 (Washington, D.C.: June 

28, 2013). M&O contractor costs include both direct costs—costs that can be directly 

identified with specific cost objectives such as a program or project—and indirect costs—

costs of activities that cannot be specifically identified with a specific cost objective but 

which indirectly support a program, such as management, administrative, and facility 

costs.

26GAO, Nuclear Weapons: Actions Needed to Identify Total Costs of Weapons Complex 

Infrastructure and Research and Production Capabilities, GAO-10-582 (Washington, D.C.: 

June 21, 2010).

27GAO, Modernizing the Nuclear Security Enterprise: NNSA’s Reviews of Budget 

Estimates and Decisions on Resource Trade-offs Need Strengthening, GAO-12-806

(Washington, D.C.: July 31, 2012).

DOE Has Not 

Produced Reliable 

Enterprise-Wide 

Management Data
Page 12 GAO-13-767T 

requirements for the department’s annual budget formulation process, 

including that budget requests shall be based on cost estimates that 

have been thoroughly reviewed and deemed reasonable. However, 

we found that NNSA is guided by its own policy for its planning, 

programming, budgeting, and evaluation (PPBE) process and its 

associated activities, and found significant deficiencies in NNSA’s 

implementation of the process. For example, we found that NNSA did 

not have a thorough, documented process for assessing the validity of 

its budget estimates prior to their inclusion in the President’s budget 

submission to Congress, thereby limiting the reliability and credibility 

of the budget submission, but rather conducted informal, 

undocumented reviews of contractor-submitted budget estimates. In 

addition, we found that NNSA’s annual budget validation review 

process occurred too late in the budget cycle to inform agency or 

congressional budget development or appropriations decisions. As a 

result, we made a number of recommendations to DOE and NNSA to 

improve the budget review process. The agencies agreed with most of 

these recommendations.

• In January 2012, we reported that costs for contractor-provided 

support functions at NNSA and DOE Office of Science sites—such as 

procuring goods, managing human resources, and maintaining 

facilities—were not fully known for fiscal years 2007 through 2011 

because DOE changed its data collection approach beginning in 2010 

to improve its data and, as a result, did not have complete and 

comparable cost data for all years.28 We reported that the data for 

fiscal year 2011 were more complete but that changes to DOE’s 

definitions for support functions made it difficult to compare costs 

across all years. We recommended several actions to streamline 

contractor-provided support functions at NNSA and DOE sites. NNSA 

and DOE agreed with these recommendations.

In conclusion, while DOE’s management challenges are significant, we 

have noted in our recent work areas of progress. We have made 

numerous recommendations in our reports to address challenges such as 

those identified in this testimony, and DOE has agreed with and 

 28GAO, Department of Energy: Additional Opportunities Exist to Streamline Support 

Functions at NNSA and Office of Science Sites, GAO-12-255 (Washington, D.C.: Jan. 31, 

2012). DOE’s Office of Science has been the nation’s single largest funding source for 

basic research in the physical sciences, supporting research in energy sciences, 

advanced scientific computing, and other fields.
Page 13 GAO-13-767T 

implemented most of them. In addition, our work has recognized steps 

that DOE has taken to address these challenges.29 For example, in the 

most recent update of our high-risk series in February 2013, we narrowed 

the focus of the high-risk designation of DOE’s contract management to 

EM’s and NNSA’s major contracts and projects.30 We did so to 

acknowledge progress made in managing EM’s and NNSA’s nonmajor 

projects, noting that DOE continued to demonstrate strong commitment 

and top leadership support for improving contract and project 

management in EM and NNSA. We also noted that DOE had taken steps 

to enhance oversight, such as requiring peer reviews and independent 

cost estimates for projects with values of more than $100 million, as well 

as to improve the accuracy and consistency of data in DOE’s central 

repository for project data.

Over the past several years, management challenges such as those 

discussed here have prompted some to call for removing NNSA from 

DOE and either move it to another department or establish it as an 

independent agency. However, as we have previously stated for the 

record, it is our view that few, if any, of NNSA’s management challenges 

stem from the organizational relationship between NNSA and DOE.31 As 

the new Secretary of Energy considers needed reforms in these areas, 

we note that DOE’s management of projects and programs, security and 

safety, and enterprise-wide data must improve—regardless of the 

department’s structure. We will continue to monitor DOE’s implementation 

of actions to resolve its long-standing management challenges, including 

actions that we have recommended to facilitate the resolution of these 

challenges.

 29 A list of recent GAO products assessing DOE’s management efforts is included at the 

end of this statement.

30GAO-13-283. In addition, an earlier high-risk update removed DOE’s Office of Science 

from the scope of our high-risk area to acknowledge progress that office made in 

addressing human capital and resource issues and meeting projects’ cost and schedule 

targets. See GAO, High-Risk Series: An Update, GAO-09-271 (Washington, D.C.: January 

2009).

31As we noted in response to questions for the record, a dramatic organizational change, 

such as making NNSA an independent agency, may be disruptive. Currently, DOE 

provides NNSA with a large number of services, such as personnel and headquarters 

building security, office space, payroll, and information technology. An independent NNSA 

would have to devote substantially more effort to create and then maintain these overhead 

functions. 
Page 14 GAO-13-767T 

Chairman Murphy, Ranking Member DeGette, and Members of the 

Subcommittee, this completes my prepared statement. I would be 

pleased to respond to any questions you may have at this time.

If you or your staff have any questions about this testimony, please 

contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for 

our Office of Congressional Relations and Public Affairs may be found on 

the last page of this statement. GAO staff who made key contributions to 

this testimony are Jonathan Gill, Assistant Director, and Rob Grace, 

Nancy Kintner-Meyer, Michelle Munn, Cheryl Peterson, Jeff Rueckhaus,

Rebecca Shea, and Kiki Theodoropoulos.

GAO Contact and 

Staff 

Acknowledgments
Selected Recent GAO Products Assessing the 

Department of Energy’s Management Efforts

Page 15 GAO-13-767T 

The following is a selection of GAO’s recent work assessing the 

Department of Energy’s management efforts.

National Nuclear Security Administration: Laboratories’ Indirect Cost 

Management Has Improved, but Additional Opportunities Exist, 

GAO-13-534 (Washington, D.C.: June 28, 2013).

Department of Energy: Observations on Project and Program Cost 

Estimating in NNSA and the Office of Environmental Management, 

GAO-13-510T (Washington, D.C.: May 8, 2013).

Modernizing the Nuclear Security Enterprise: Observations on DOE’s and 

NNSA’s Efforts to Enhance Oversight of Security, Safety, and Project and 

Contract Management, GAO-13-482T (Washington, D.C.: Mar. 13, 2013).

High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 

2013).

Recovery Act: Most DOE Cleanup Projects Are Complete, but Project 

Management Guidance Could Be Strengthened, GAO-13-23

(Washington, D.C.: Oct. 15, 2012).

Department of Energy: Better Information Needed to Determine If 

Nonmajor Projects Meet Performance Targets, GAO-13-129

(Washington, D.C.: Dec. 19, 2012).

Hanford Waste Treatment Plant: DOE Needs to Take Action to Resolve 

Technical and Management Challenges, GAO-13-38 (Washington, D.C.: 

Dec. 19, 2012).

Modernizing the Nuclear Security Enterprise: Observations on the 

National Nuclear Security Administration’s Oversight of Safety, Security, 

and Project Management, GAO-12-912T (Washington, D.C.: Sept. 12, 

2012).

Modernizing the Nuclear Security Enterprise: Observations on the 

Organization and Management of the National Nuclear Security 

Administration, GAO-12-867T (Washington, D.C.: June 27, 2012).

Modernizing the Nuclear Security Enterprise: NNSA’s Reviews of Budget 

Estimates and Decisions on Resource Trade-offs Need Strengthening, 

GAO-12-806 (Washington, D.C.: July 31, 2012).

Selected Recent GAO Products Assessing the 

Department of Energy’s Management Efforts
Selected Recent GAO Products Assessing the 

Department of Energy’s Management Efforts

Page 16 GAO-13-767T 

Spent Nuclear Fuel: Accumulating Quantities at Commercial Reactors 

Present Storage and Other Challenges, GAO-12-797 (Washington, D.C.: 

Aug. 15, 2012).

Nuclear Safety: DOE Needs to Determine the Costs and Benefits of Its 

Safety Reform Effort, GAO-12-347 (Washington, D.C.: Apr. 20, 2012).

Modernizing the Nuclear Security Enterprise: New Plutonium Research 

Facility at Los Alamos May Not Meet All Mission Needs, GAO-12-337

(Washington, D.C.: Mar. 26, 2012).

Department of Energy: Additional Opportunities Exist to Streamline 

Support Functions at NNSA and Office of Science Sites, GAO-12-255

(Washington, D.C.: Jan. 31, 2012).

Nuclear Fuel Cycle Options: DOE Needs to Enhance Planning for 

Technology Assessment and Collaboration with Industry and Other 

Countries, GAO-12-70 (Washington, D.C.: Oct. 17, 2011).

High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 

2011).

Commercial Nuclear Waste: Effects of a Termination of the Yucca 

Mountain Repository Program and Lessons Learned, GAO-11-229

(Washington, D.C.: Apr. 8, 2011).

Nuclear Weapons: National Nuclear Security Administration’s Plans for Its 

Uranium Processing Facility Should Better Reflect Funding Estimates and 

Technology Readiness, GAO-11-103 (Washington, D.C.: Nov. 19, 2010).

Recovery Act: Most DOE Cleanup Projects Appear to Be Meeting Cost 

and Schedule Targets, but Assessing Impact of Spending Remains a 

Challenge, GAO-10-784 (Washington, D.C.: July 29, 2010).

Nuclear Weapons: Actions Needed to Identify Total Costs of Weapons 

Complex Infrastructure and Research and Production Capabilities, 

GAO-10-582 (Washington, D.C.: June 21, 2010).

Department of Energy: Actions Needed to Develop High-Quality Cost 

Estimates for Construction and Environmental Cleanup Projects, 

GAO-10-199 (Washington, D.C.: Jan. 14, 2010).
Selected Recent GAO Products Assessing the 

Department of Energy’s Management Efforts

Page 17 GAO-13-767T 

Nuclear Weapons: Actions Needed to Identify Total Costs of Weapons 

Complex Infrastructure and Research and Production Capabilities, 

GAO-10-582 (Washington, D.C.: June 21, 2010).

Nuclear Waste Management: Key Attributes, Challenges, and Costs for 

the Yucca Mountain Repository and Two Potential Alternatives,

GAO-10-48 (Washington, D.C.: Nov. 4, 2009).

Information Security: Actions Needed to Better Manage, Protect, and 

Sustain Improvements to Los Alamos National Laboratory’s Classified 

Computer Network, GAO-10-28 (Washington, D.C.: Oct. 14, 2009).

Nuclear Security: Better Oversight Needed to Ensure That Security 

Improvements at Lawrence Livermore National Laboratory Are Fully 

Implemented and Sustained, GAO-09-321 (Washington, D.C.: Mar. 16, 

2009).

Nuclear Weapons: NNSA and DOD Need to More Effectively Manage the 

Stockpile Life Extension Program, GAO-09-385 (Washington, D.C.: Mar. 

2, 2009).

Nuclear and Worker Safety: Actions Needed to Determine the 

Effectiveness of Safety Improvement Efforts at NNSA’s Weapons 

Laboratories, GAO-08-73 (Washington, D.C.: Oct. 31, 2007).

Nuclear Safety: Department of Energy Needs to Strengthen Its 

Independent Oversight of Nuclear Facilities and Operations, GAO-09-61

(Washington, D.C.: Oct. 23, 2008).

National Nuclear Security Administration: Additional Actions Needed to 

Improve Management of the Nation’s Nuclear Programs, GAO-07-36

(Washington, D.C.: Jan.19, 2007).

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