Hanford Waste Treatment Plant: DOE Needs to Take Action to Resolve Technical and Management Challenges
Published: 2012-12-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In December 2000, DOE awarded Bechtel a contract to design and construct the WTP project at DOE's Hanford Site in Washington State. This project--one of the largest nuclear waste cleanup facilities in the world-- was originally scheduled for completion in 2011 at an estimated cost of $4.3 billion. Technical challenges and other issues, however, have contributed to cost increases and schedule delays. GAO was asked to examine (1) remaining technical challenges, if any, the WTP faces; (2) the cost and schedule estimates for the WTP; and (3) steps DOE is taking, if any, to improve the management and oversight of the WTP project. GAO reviewed DOE and contractor data and documents, external review reports, and spoke with officials from DOE and the Defense Nuclear Facilities Safety Board and with contractors at the WTP site and test facilities.
section_title: What GAO Found
paragraphs: The Department of Energy (DOE) faces significant technical challenges in successfully constructing and operating the Waste Treatment and Immobilization Plant (WTP) project that is to treat millions of gallons of highly radioactive liquid waste resulting from the production of nuclear weapons. DOE and Bechtel National, Inc. identified hundreds of technical challenges that vary in significance and potential negative impact and have resolved many of them. Remaining challenges include (1) developing a viable technology to keep the waste mixed uniformly in WTP mix tanks to both avoid explosions and so that it can be properly prepared for further processing; (2) ensuring that the erosion and corrosion of components, such as tanks and piping systems, is effectively mitigated; (3) preventing the buildup of flammable hydrogen gas in tanks, vessels, and piping systems; and (4) understanding better the waste that will be processed at the WTP. Until these and other technical challenges are resolved, DOE will continue to be uncertain whether the WTP can be completed on schedule and whether it will operate safely and effectively.
Since its inception in 2000, DOE's estimated cost to construct the WTP has tripled and the scheduled completion date has slipped by nearly a decade to 2019. GAO's analysis shows that, as of May 2012, the project's total estimated cost had increased to $13.4 billion, and significant additional cost increases and schedule delays are likely to occur because DOE has not fully resolved the technical challenges faced by the project. DOE has directed Bechtel to develop a new cost and schedule baseline for the project and to begin a study of alternatives that include potential changes to the WTP's design and operational plans. These alternatives could add billions of dollars to the cost of treating the waste and prolong the overall waste treatment mission.
DOE is taking steps to improve its management and oversight of Bechtel's activities but continues to face challenges to completing the WTP project within budget and on schedule. DOE's Office of Health, Safety, and Security has conducted investigations of Bechtel's activities that have resulted in penalties for design deficiencies and for multiple violations of DOE safety requirements. In January 2012, the office reported that some aspects of the WTP design may not comply with DOE safety standards. As a result, DOE ordered Bechtel to suspend work on several major WTP systems, including the pretreatment facility and parts of the high-level waste facility, until Bechtel can demonstrate that activities align with DOE nuclear safety requirements. While DOE has taken actions to improve performance, the ongoing use of an accelerated approach to design and construction--an approach best suited for well-defined and less-complex projects--continues to result in cost and schedule problems, allowing construction and fabrication of components that may not work and may not meet nuclear safety standards. While guidelines used in the civilian nuclear industry call for designs to be at least 90 percent complete before construction of nuclear facilities, DOE estimates that WTP is more than 55 percent complete though the design is only 80 percent complete. In addition, DOE has experienced continuing problems overseeing its contractor's activities. For example, DOE's incentives and management controls are inadequate for ensuring effective project management, and GAO found instances where DOE prematurely rewarded the contractor for resolving technical issues and completing work.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOE (1) not resume construction on WTPs pretreatment and high-level waste facilities until, among other things, the facilities design has been completed to the level established by nuclear industry guidelines; (2) ensure the departments contractor performance evaluation process does not prematurely reward contractors for resolving technical issues later found to be unresolved; and (3) take appropriate steps to determine whether any incentive payments were made erroneously and, if so, take actions to recover them. DOE generally agreed with the report and its recommendations.

section_title: Letter
paragraphs: The Department of Energy (DOE) is responsible for one of the world’s  largest environmental cleanup projects: the treatment and disposal of  millions of gallons of radioactive and hazardous waste at its 586-square- mile Hanford Site in southeastern Washington State. A total of nine  nuclear reactors––including the world’s first operating large-scale reactor,  developed as part of the Manhattan Project during World War II––were  built at Hanford and operated until the late 1980s. The primary mission of  these reactors was to produce plutonium and other special nuclear  materials for DOE’s nuclear weapons program. Some of the large  volumes of hazardous and radioactive waste that resulted from nuclear  materials production was deposited directly into the ground in trenches,  injection wells, or other facilities designed to allow the waste to disperse  into the soil, and some was packaged into drums and other containers  and buried. The most dangerous waste was stored in 177 large  underground storage tanks. The underground tanks currently hold more  than 56 million gallons of this waste—enough to fill an area the size of a  football field to a depth of over 150 feet.
The oldest 149 tanks, some of which date back to the 1940s, have single- layer walls, or shells; were built with a 20-year design life; and will be  almost 100 years old by the estimated end of waste treatment. DOE has  reported that 67 of these tanks are assumed or are known to have leaked  waste into the soil. Because some of this contamination has reached the  groundwater under the tanks, DOE officials are concerned that the  contamination is now making its way to the Columbia River, which  borders the Hanford Site for almost 50 miles. The Columbia River is the  second largest river in the United States and a source for hydropower  production, agricultural irrigation, drinking water, and salmon  reproduction. The site is also near the cities of Richland, Pasco, and  Kennewick, with a combined regional population of over 200,000. DOE,  the Environmental Protection Agency (EPA), and the Washington State  Department of Ecology have determined that containing, stabilizing, and  preparing this highly radioactive liquid waste for final disposal is one of  the highest priority cleanup activities at the Hanford site. It is also one of  the most complex cleanup activities and, as of August 2012, none of the  waste in the tanks had been treated for disposal because no treatment  facility was yet available.
In 2000, DOE awarded a contract to Bechtel National, Inc. to design,  construct, and commission a Waste Treatment and Immobilization Plant  (WTP) to stabilize large quantities of this waste and prepare it for disposal  at a permanent national geologic repository that is yet to be identified.  The WTP is to consist of a pretreatment facility that separates waste into  high-level and low-activity radioactivity waste streams; two facilities to  treat these separated streams using a process called vitrification, where  waste is mixed with melted glass and poured into steel canisters where it  cools and hardens, to prepare it for final disposal; an analytical laboratory;  and a variety of supporting facilities. See figure 1 for a description of the  process that is to be used to treat and stabilize waste at the WTP and  prepare it for disposal.
To construct the facility, DOE and Bechtel adopted a fast-track, design- build approach. Using the unconventional design-build approach,  technology development activities, plant design, and construction occur  simultaneously. In a conventional construction approach, these activities  occur sequentially. As required by DOE’s project management directives,  approval to begin construction is granted when technology development  and design of the facility is essentially complete and after the  establishment and approval of a project’s performance baseline, which  represents DOE’s commitment to complete a project with a specific scope  at a certain cost and by a specific date. We and others have raised  concerns about DOE’s use of the design-build approach for the WTP  because some sections of this facility are constructed before designs are  complete and before technology issues are fully resolved, which has  led to significant cost increases and schedule delays.the contract was awarded in 2000 for the WTP, the contract for  constructing the WTP specified that the project would cost $4.3 billion and  would be completed in 2011. As a result of numerous problems with the  design and construction of WTP facilities, in 2006, DOE significantly  modified the project’s baseline. Despite the problems throughout the  construction process, however, DOE has continued with the design-build  approach. In the last 2 years, several WTP project engineers and  managers and the Defense Nuclear Facility Safety Board (Safety  Board)—an independent oversight agency created by Congress to  assess safety conditions and operations at defense nuclear facilities at  DOE’s sites—publicly criticized DOE and Bechtel for ignoring technical  and safety concerns that threaten the plant’s ability to operate safely once  constructed. In 2011, DOE reported that unresolved technical risks would  cause the cost and schedule estimates to slip further unless additional  funding was provided.
In this context, you asked us to evaluate DOE’s management of the WTP  project. Our objectives were to examine: (1) remaining technical  challenges, if any, the WTP faces; (2) cost and schedule estimates for the  WTP; and (3) steps DOE is taking, if any, to improve the management  and oversight of the WTP project.
To accomplish our objectives, we conducted our work at the Hanford Site,  including the WTP construction site; DOE’s Office of River Protection  (ORP)—which is responsible for DOE management of the construction of  the WTP; Bechtel’s WTP project office in Richland, Washington; and test  facilities at Mid Columbia Engineering. We interviewed, among others,  current and past DOE WTP project directors and officials from WTP  project support divisions, including the WTP Engineering Division, ORP  Engineering and Nuclear Safety Division, and ORP Environmental Safety  and Quality Division.
To identify any remaining technical challenges that the WTP is facing, we  reviewed DOE and Bechtel documents that provide a summary and  current status of technical issues, including criteria for addressing these  issues and a timeline for their resolution. We also examined independent  reviews on technical and safety issues and interviewed officials from  DOE’s Office of Engineering and Construction Management and Office of  Health, Safety, and Security; the Pacific Northwest National Laboratory  (PNNL); the Safety Board; and the Consortium for Risk Evaluation with  Stakeholder Participation—a group of engineering, scientific, and policy  experts from seven universities that advises DOE in its environmental  management activities. We also interviewed officials from the  Washington State Department of Ecology and EPA.
To examine the current cost and schedule estimates for the WTP, we  reviewed the most current estimates for the project that DOE prepared in  2006, DOE and Bechtel progress reports on the project’s adherence to  these cost and schedule estimates, and project risk management plans.  We also interviewed DOE officials to obtain information on recent efforts  to revise the project’s cost and schedule estimates.
To determine any steps DOE is taking to improve the management and  oversight of the WTP project, we reviewed DOE policies on project  management, examined regulatory requirements, and reviewed  agreements between DOE, EPA, and the state of Washington. We also  reviewed DOE WTP management documents, risk analysis reports, and  contractor project plans.
We conducted this performance audit from September 2011 to December  2012 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Established in 1943, Hanford produced plutonium for the world’s first  nuclear device. At the time, little attention was given to the resulting by- products—massive amounts of radioactive and chemically hazardous  waste—or how these by-products were to be permanently disposed of.  About 46 different radioactive elements represent the majority of the  radioactivity currently residing in Hanford’s tanks. Once Hanford tank  waste is separated by the WTP waste treatment process, the high-level  waste stream will contain more than 95 percent of the radioactivity but  constitute less than 10 percent of the volume to be treated. The low- activity waste stream will contain less than 5 percent of the radioactivity  but constitute over 90 percent of the volume. The tanks also contain large  volumes of hazardous chemical waste, including various metal  hydroxides, oxides, and carbonates. These hazardous chemicals are  dangerous to human health and can cause medical disorders including  cancer, and they can remain dangerous for thousands of years. Over the  years, the waste contained in these tanks has settled; today it exists in  the following four main forms or layers:
Vapor: Gases produced from chemical reactions and radioactive  decay occupies tank space above the waste.
Liquid: Fluids (supernatant liquid) may float above a layer of settled  solids or under a floating layer of crust; fluids may also seep into pore  spaces or cavities of settled solids, crust, or sludge.
Saltcake: Water-soluble compounds, such as sodium salts, can  crystallize or solidify out of wastes to form a salt-like or crusty  material.
Sludge: Denser water-insoluble or solid components generally settle  to the bottom of a tank to form a thick layer having the consistency  similar to peanut butter.
DOE’s cleanup, treatment, and disposal of radioactive and hazardous  wastes are governed by a number of federal and state laws and  implemented under the leadership of DOE’s Assistant Secretary for  Environmental Management. Key laws include the Comprehensive  Environmental Response, Compensation, and Liability Act of 1980, as  amended, and the Resource Conservation and Recovery Act of 1976, as  amended. In addition, most of the cleanup activities at Hanford are  carried out under the Hanford Federal Facility Agreement and Consent  Order among DOE, the Washington State Department of Ecology, and  EPA. Commonly called the Tri-Party Agreement, this accord was signed  in May 1989 and has been amended a number of times since then to,  among other things, establish additional enforceable milestones for  certain WTP construction and tank waste retrieval activities. The  agreement lays out a series of legally enforceable milestones for  completing major activities in Hanford’s waste treatment and cleanup  process. A variety of local and regional stakeholders, including county  and local government agencies, citizen and advisory groups, and Native  American tribes, also have long-standing interests in Hanford cleanup  issues. These stakeholders make their views known through various  public involvement processes, including site-specific advisory boards.  DOE’s ORP administers Hanford’s radioactive liquid tank waste  stabilization and disposition project including the construction of the WTP.  The office has an annual budget of about $1 billion and a staff of 151  federal employees, of which 54 support the WTP project. Other cleanup  projects at Hanford are administered by DOE’s Richland Operations  Office.
DOE has attempted and abandoned several different strategies to treat  and dispose of Hanford’s tank wastes. In 1989, DOE’s initial strategy  called for treating only part of the waste. Part of this effort involved  renovating a World War II-era facility in which it planned to start waste  treatment. DOE spent about $23 million on this project but discontinued it  because of technical and environmental issues and stakeholder concerns  that not all the waste would be treated. In 1991, DOE decided to treat  waste from all 177 tanks. Under this strategy, DOE would have completed  the treatment facility before other aspects of the waste treatment program  were fully developed; however, the planned treatment facility would not  have had sufficient capacity to treat all the waste in a time frame  acceptable to EPA and the Washington State Department of Ecology.
DOE spent about $418 million on this strategy. Beginning in 1995, DOE  attempted to privatize tank waste cleanup. Under its privatization strategy,  DOE planned to set a fixed price and pay the contractor for canisters and  containers of stabilized tank waste that complied with contract  specifications. If costs grew as a result of contractor performance  problems, the contractor, not DOE, was to bear these cost increases. Any  cost growth occurring as a result of changes directed by DOE was to  result in an adjustment to the contract price and was to be borne by DOE.  Under the privatization strategy, DOE’s contractor would build a  demonstration facility to treat 10 percent of the waste volume and 25  percent of the radioactivity by 2018 and complete cleanup in 2028.  However, because of dramatically escalating costs and concerns about  contractor performance, DOE terminated the contract after spending  about $300 million, mostly on plant design. Following our criticisms of  DOE’s earlier privatization approach, DOE decided that a cost- reimbursement contract with incentive fees would be more appropriate  than a fixed-price contract using a privatization approach for the Hanford  project and would better motivate the contractor to control costs through  incentive fees. In total, since 1989 when cleanup of the Hanford site  began, DOE has spent over $16 billion to manage the waste and explore  possible ways to treat and dispose of it.
DOE’s current strategy for dealing with tank waste consists of the  construction of a large plant—the WTP—to treat and prepare the waste  for permanent disposal. Begun in 2000, the WTP project is over half  completed and covers 65 acres and is described by DOE as the world’s  largest radioactive waste treatment plant. As designed, the WTP project  is to consist of three waste processing facilities, an analytical laboratory,  and over 20 smaller supporting facilities to treat the waste and prepare it  for permanent disposal. The three waste processing facilities are as  follows (see fig. 2):
Pretreatment Facility – This facility is to receive the waste from the  tanks and separate it into high-level and low-activity components. This  is the largest of the WTP facilities––expected to be 12-stories tall with  a foundation the size of four football fields.
High-Level Waste Facility – This facility is to receive the high-level  waste from the pretreatment facility and immobilize it by mixing it with  a glass-forming material, melting the mixture into glass, and pouring  the vitrified waste into stainless-steel canisters to cool and harden.  The canisters filled with high-level waste were initially intended to be  permanently disposed of at a geological repository that was to be  constructed at Yucca Mountain in Nevada. However, in 2010, DOE  began taking steps to terminate the Yucca Mountain project and is  now considering other final disposal options. In the meantime, high- level waste canisters will be stored at Hanford.
Low-Activity Waste Facility – This facility is to receive the low-activity  waste from the pretreatment facility and vitrify it. The containers of  vitrified waste will then be permanently disposed of at another facility  at Hanford known as the Integrated Disposal Facility.
Constructing the WTP is a massive, highly complex, and technically  challenging project. For example, according to Bechtel documents, the  completed project will contain almost 270,000 cubic yards of concrete and  nearly a million linear feet of piping. The project also involves developing  first-of-a-kind nuclear waste mixing technologies that will need to operate  for decades with perfect reliability because, as currently designed, once  WTP begins operating, it will not be possible to access parts of the plant  to conduct maintenance and repair of these technologies due to high  radiation levels.
section_title: Significant Technical Challenges Remain Unresolved
paragraphs: Since the start of the project, DOE and Bechtel have identified hundreds  of technical challenges that vary in their significance and potential  negative impact, and significant technical challenges remain. Technical  challenges are to be expected on a one-of-a-kind project of this size, and  DOE and Bechtel have resolved many of them. However, because such  challenges remain, DOE cannot be certain whether the WTP can be  completed on schedule and, once completed, whether it will successfully  operate as intended.
Among others, the significant technical challenges DOE and Bechtel are  trying to resolve include the following:
Waste mixing—One function of the WTP will be to keep the waste  uniformly mixed in tanks so it can be transported through the plant  and to prevent the buildup of flammable hydrogen and fissile material  that could inadvertently result in a nuclear criticality accident. The  WTP project has been developing a technology known as “pulse jet  mixers” that uses compressed air to mix the waste. Such devices  have previously been used successfully in other materials mixing  applications but have never been used for mixing wastes with high  solid content like those to be treated at the WTP. In 2004 and again in  2006, we reported that Bechtel’s inability to successfully demonstrate  waste mixing technologies was already leading to cost and schedule  delays. Our 2004 report recommended that DOE and Bechtel resolve  this issue before continuing with construction. DOE agreed with our  recommendation, slowed construction on the pretreatment and high- level waste facilities and established a path forward that included  larger-scale testing to address the mixing issue. In 2010, following  further testing by Bechtel, DOE announced that mixing issues had  been resolved and moved forward with construction. However,  concerns about the pulse jet mixers’ ability to successfully ensure  uniform mixing continued to be raised by the Safety Board, PNNL,  and DOE engineering officials on site. As a result, in late 2011, DOE  directed Bechtel to demonstrate that the mixers will work properly and  meet the safety standards for the facility. According to DOE officials,  no timeline for the completion of this testing has been set.
Preventing erosion and corrosion of WTP components—Excessive  erosion or corrosion of components such as mixing tanks and piping  systems in the WTP is possible. Such excessive erosion and  corrosion could be caused by potentially corrosive chemicals and  large dense particles present in the waste that is to be treated. This  excessive erosion and corrosion could result in the components’  failure and lead to disruptions of waste processing. Bechtel officials  first raised concerns about erosion and corrosion of WTP components  in 2001, and these concerns were echoed in 2006 by an independent  expert review of the project. Following further testing, DOE project  officials declared the issue closed in 2008. However, DOE and  Bechtel engineers recently voiced concerns that erosion and  corrosion of components is still a significant risk that has not been  sufficiently addressed. Furthermore, in January 2012, the Safety  Board reported that concerns about erosion in the facility had still not  been addressed, and that further testing is required to resolve  remaining uncertainties. Bechtel has agreed to do further work to  resolve technical challenges surrounding erosion and corrosion of the  facilities internal components; however, DOE and Bechtel have not  yet agreed upon an overall plan and schedule to resolve this  challenge.
Preventing buildup of flammable hydrogen gas—Waste treatment  activities in the WTP’s pretreatment and high-level waste facilities can  result in the generation of hydrogen gas in the plant’s tanks and piping  systems. The buildup of flammable gas in excess of safety limits could  cause significant safety and operational problems. DOE and Bechtel  have been aware of this challenge since 2002, and Bechtel formed an  independent review team consisting of engineers and other experts in  April 2010 to track and resolve the challenge. This team identified 35  technical issues that must be addressed before the hydrogen buildup  challenge can be resolved. Bechtel has been working to address  these issues. However, a 2011 DOE construction project review noted  that, while Bechtel continues to make progress resolving these issues,  the estimated schedule to resolve this challenge has slipped.  According to DOE and Bechtel officials, Bechtel is still conducting  analysis and is planning to complete the work to resolve this  challenge by 2013.
Incomplete understanding of waste—DOE does not have  comprehensive data on the specific physical, radiological, and  chemical properties of the waste in each underground waste tank at  Hanford. In the absence of such data, DOE has established some  parameters for the waste that are meant to estimate the range of  waste that may go through the WTP in an effort to help the contractor  design a facility that will be able to treat whatever waste––or  combination of wastes—is ultimately brought into the WTP. In 2006,  an independent review team stated that properly understanding the  waste would be an essential key factor in designing an effective  facility. In 2010, the Consortium for Risk Evaluation with Stakeholder  Participation, PNNL, and the Safety Board reviewed the status of  DOE’s plans to obtain comprehensive data on the characteristics of  the waste, and each concluded that DOE and Bechtel did not have  enough information about the waste and would therefore need to  increase the range of possible wastes that the WTP is designed to  treat in order to account for the uncertainty. Officials at PNNL reported  that not having a large enough range is “a vulnerability that could lead  to inadequate mixing and line plugging.” The Safety Board reported  that obtaining representative samples of the waste is necessary to  demonstrate that the WTP can be operated safely, but that DOE and  its contractors have not been able to explain how those samples will  be obtained. In its 2011 review of the WTP project, a DOE  headquarters construction project review report notes that progress  has been made on including additional information and uncertainties  in the efforts to estimate and model the waste that will be fed to the  WTP. However, DOE officials stated that more sampling of the waste  is needed. An expert study is under way that will analyze the gap  between what is known and what is needed to be known to design an  effective facility. This study is expected to be completed in August  2014.
The risks posed by these technical challenges are exacerbated because  once the facility begins operating, certain areas within the WTP  (particularly in the pretreatment and high-level waste facilities) will be  permanently closed off to any human intervention in order to protect  workers and the public from radioactive contamination. To shield plant  workers from intense radiation that will occur during WTP operations,  some processing tanks will be located in sealed compartments called  “black cells.” These black cells are enclosed rooms where inspection,  maintenance, repair, or replacement of equipment or components is  extremely difficult because high radiation levels prevent access into them.  As a result, plant equipment in black cells must last for WTP’s 40-year  expected design life without maintenance. According to a recent review  conducted by the DOE Inspector General, premature failure of these  components could result in radiation exposure to workers, contaminate  large portions of the WTP and/or interrupt waste processing for an  unknown period. Significant failures of components installed in the WTP  once operations begin could render the WTP unusable and unrepairable,  wasting the billions of dollars invested in the WTP. In August 2012, DOE  announced that it was asking a team of experts to examine the WTP’s  capability to detect problems in the black cells and the plant’s ability to  repair equipment in the black cells, if necessary. According to DOE  officials, the team will, if needed, recommend design changes to improve  the operational reliability of the black cells and the WTP. In addition, the  Secretary of Energy has been actively engaged in the development of a  new approach to managing WTP technical challenges and has  assembled subject matter experts to assist in addressing the technical  challenges confronting the WTP.
section_title: Substantial Additional Cost Increases and Schedule Delays Are Likely
paragraphs: The estimated cost to construct the WTP has almost tripled since the  project’s inception in 2000, its scheduled completion date has slipped by  nearly a decade, and additional significant cost increases and schedule  delays are likely to occur because DOE has not fully resolved the  technical challenges faced by the project. In addition, DOE recently  reported that Bechtel’s actions to take advantage of potential cost savings  opportunities are frequently delayed and, as a result, rising costs are  outpacing opportunities for savings.
subsections: section_title: DOE Has Not Yet Fully Estimated the Cost and Schedule Impact of Resolving Technical Challenges
paragraphs: DOE’s original contract price for constructing the WTP, approved in 2000,  stated that the project would cost $4.3 billion and be completed in 2011.  In 2006, however, DOE revised the cost baseline to $12.3 billion, nearly  triple the initial estimate, with a completion date of 2019. As we reported  in 2006, contractor performance problems, weak DOE management, and  technical challenges resulted in these cost increases and schedule  delays. A 2011 DOE headquarters review report on the WTP projected  additional cost increases of $800 million to $900 million over the revised  2006 cost estimate of $12.3 billion and additional delays to the project  schedule. Furthermore, in November 2011, the Department of Justice  notified the state of Washington that there is a serious risk that DOE may  be unable to meet the legally enforceable milestones required by legal  agreement, for completing certain activities in Hanford’s WTP  construction and startup activities, as well as tank waste retrieval  activities. The Department of Justice did not identify the cause of the  delay or specify the milestones that could be affected. As of May 2012,  according to our analysis, the project’s total estimated cost had increased  to $13.4 billion, and additional cost increases and schedule delays are  likely, although a new performance baseline has not yet been developed  and approved.
DOE ORP officials warn that cost increases and schedule delays will  occur as a result of funding shortfalls and will prevent the department  from successfully resolving technical challenges the WTP project faces.  However, from fiscal years 2007 to 2010, the project was appropriated  the $690 million that DOE requested in its annual congressional budget  request. In fiscal years 2011 and 2012, DOE received approximately  $740 million each year––a $50 million increase over fiscal year 2010  funding. DOE project management officials and Bechtel representatives  told us that $740 million for fiscal year 2012 was not enough to support  planned work and, as a result, project work would slow down and project  staffing levels would be reduced. However, according to senior DOE  officials, including the acting Chief Financial Officer, the primary cause of  the increasing costs and delayed completion has been the difficulty in  resolving complex technical challenges rather than funding issues.
DOE and Bechtel have not yet fully estimated the effect of resolving these  technical challenges on the project’s baseline. In February 2012, DOE  directed Bechtel to develop a new, proposed cost and schedule baseline  for the project and, at the same time, to begin a study of alternatives that  includes potential changes to the WTP’s design and operational plans to  resolve technical challenges faced by the project. The study is to also  identify the cost and schedule impact of these alternatives on the project.  For example, according to a DOE official, one alternative Bechtel is  studying is to construct an additional facility that would process the tank  waste by removing the largest solid particles from the waste before it  enters WTP’s pretreatment facility. This advance processing would  reduce the risks posed by insufficient mixing of the waste in the  pretreatment facility by the pulse jet mixers. A DOE official told us that  this alternative could add $2 to $3 billion to the overall cost of the project  and further delay its completion by several years.
According to DOE officials, other alternatives being studied involve  reducing the total amount of waste the WTP treats or operating the WTP  at a slower pace for a longer period of time to accomplish its waste  processing mission. However, these alternatives could delay the total  time needed to process Hanford’s waste and add billions of dollars to the  total cost to treat all of Hanford’s tank waste. Further delays constructing  the WTP could also result in significant cost increases to treat all of  Hanford’s waste. For example, DOE has estimated that a 4-year delay in  the WTP start-up date could add an additional $6 to $8 billion to the total  cost of the Hanford Site tank waste treatment mission.
In June 2012, DOE announced that the new cost and schedule baseline  Bechtel is developing would not include the pretreatment and high-level  waste facilities. According to DOE officials, additional testing and analysis  is needed to resolve the facilities’ technical challenges before a  comprehensive new cost and schedule baseline can be completed. DOE  officials responsible for overseeing the WTP project are uncertain when  the new baseline for these facilities will be completed. As a result, our  May 2012 cost estimate of $13.4 is highly uncertain and could grow  substantially if the technical challenges that the project faces are not  easily and quickly resolved.
section_title: Project Cost and Schedule Increases Could Be Partially Offset by Opportunities for Savings
paragraphs: DOE and Bechtel have identified some opportunities for cost savings, but  these opportunities are not always pursued in a timely fashion. For  example, Bechtel has identified an estimated $48 million in savings that  could be achieved over the life of the project by accelerating specific  areas of the project scope. Specifically, some of these savings could be  achieved by acquiring material and equipment in bulk to maintain the  pace of construction activities and avoid delays. In addition, another $24  million in savings could be achieved by reducing the amount of steel,  pipe, wire, and other materials needed in remaining design work. DOE  reported in March 2012, however, that Bechtel’s actions to take  advantage of potential cost savings opportunities are frequently delayed  and, as a result, rising costs have outpaced opportunities for savings. For  example, DOE reported that Bechtel continues to perform poorly in  meeting planned dates for material delivery due to delayed identification  and resolution of internal issues impacting procurement of plant  equipment. Specifically, DOE noted that, of 95 needed project equipment  deliveries scheduled for July 2011 through October 2011, 42 were  delivered on time and that this poor performance trend is expected to  continue.
section_title: DOE Is Taking Steps to Address Some Management and Oversight Problems but Continues to Face Challenges to Completing the WTP
paragraphs: DOE is taking steps to improve its management and oversight of  Bechtel’s activities, including levying penalties on the contractor for  quality and safety problems but continues to face challenges to  completing the WTP project within budget and on schedule. For example,  DOE’s continued use of a fast-track, design-build management approach  where construction on the project has moved forward before design  activities are complete has resulted in costly reworking and schedule  delays.
subsections: section_title: DOE Is Taking Steps to Improve the Management and Oversight of the WTP Project
paragraphs: DOE is taking steps to improve its management and oversight of  Bechtel’s activities. For example, in November 2011, DOE’s Office of  Enforcement and Oversight started an investigation into Bechtel’s  potential noncompliance with DOE’s nuclear safety requirements.  Specifically, this DOE office is investigating Bechtel’s processes for  designing, procuring, and installing structures, systems, and components  and their potential noncompliance with DOE nuclear safety requirements.  If the contractor is found to not be complying with DOE requirements,  DOE’s Office of Enforcement and Oversight is authorized to take  appropriate action, including the issuance of notices of violations and  proposed civil penalties against Bechtel. Since 2006, DOE’s Office of  Enforcement and Oversight has conducted six investigations into  Bechtel’s activities at WTP that resulted in civil penalty against Bechtel.  Five of the six investigations involved issues related to the design and  safe operation of the WTP. For example, in 2008, DOE’s Office of  Enforcement and Oversight investigated Bechtel for circumstances  associated with procurement and design deficiencies of equipment for the  WTP and identified multiple violations of DOE nuclear safety  requirements. This investigation resulted in Bechtel receiving a $385,000  fine.
In addition, in January 2012, DOE’s Office of Health, Safety, and Security  reported that some aspects of the WTP design may not comply with DOE  safety requirements. Specifically, under DOE safety regulations, Bechtel  must complete a preliminary documented safety analysis—an analysis  that demonstrates the extent to which a nuclear facility can be operated  safely with respect to workers, the public, and the environment. However,  Bechtel’s preliminary documented safety analyses have not always kept  pace with the frequently changing designs and specifications for the  various WTP facilities and DOE oversight reviews have highlighted  significant deficiencies in the project’s safety analyses. In November  2011, according to DOE officials, DOE ordered Bechtel to suspend work  on design, procurement, and installation activities for several major WTP  systems including parts of the pretreatment facility and high-level waste  facility until the contractor demonstrates that these activities are aligned  with DOE nuclear safety requirements. This suspension remains in effect.
DOE has also taken steps to address concerns about the project’s safety  culture. According to DOE’s Integrated Safety Management System  Guide, safety culture is an organization’s values and behaviors modeled  by its leaders and internalized by its members, which serves to make safe  performance of work the overriding priority to protect workers, the public,  and the environment. In 2011, the Safety Board issued the results of an  investigation into health and safety concerns at WTP. The investigation’s  principal conclusion was that the prevailing safety culture of the WTP  project effectively defeats DOE’s policy to establish and maintain a strong  safety culture at its nuclear facilities. The Safety Board found that both the  DOE and Bechtel project management behaviors reinforce a subculture  at WTP that deters the timely reporting, acknowledgement, and ultimate  resolution of technical safety concerns. In addition, the Safety Board  found a flawed safety culture embedded in the project at the time had a  substantial probability of jeopardizing the WTP mission. As a result of  these findings, the Safety Board made a series of recommendations to  DOE to address WTP project safety problems. DOE has developed  implementation plans to address the Safety Board’s recommendations. In  addition, DOE itself has raised significant concerns about WTP safety  culture. In 2011 DOE’s Office of Health, Safety, and Security conducted  an independent assessment of the nuclear safety culture and  management of nuclear safety concerns at the WTP. As a result of this  assessment, DOE determined that most DOE and Bechtel WTP staff at  the WTP believed that safety is a high priority. However, DOE also  determined that a significant number of DOE and Bechtel staff expressed  reluctance to raise concerns about safety or quality of WTP facilities  design because WTP project management does not create an  atmosphere conducive to hearing concerns or for fear of retaliation.  Employees’ willingness to raise safety concerns without fear of retaliation  is an essential element of a healthy safety culture and creating an  atmosphere where problems can be identified. DOE’s assessment also  determined that DOE has mechanisms in place to address safety culture  concerns. For example, according to a January 2012 issued DOE Office  of Health, Safety, and Security report on the safety culture and safety  management of the project, the project has an employee’s concerns  program and a differing professional opinion program that assist staff to  raise safety concerns. In addition, the January 2012 issued report stated  that several DOE reviews of the WTP project have been effective in  identifying deficiencies in WTP designs and vulnerabilities that could  impact the future operation of waste treatment facilities.
section_title: DOE’s Fast-Track, Design- Build Management Approach and Other Management and Oversight Problems Have Led to Cost Increases and Schedule Delays
paragraphs: DOE has taken some steps to improve its management and oversight of  Bechtel’s activities, but some problems remain. For example, DOE’s  ongoing use of a fast-track, design-build approach continues to result in  cost and schedule problems. As we reported in 2006, DOE’s  management of the project has been flawed, as evidenced by DOE’s   decision to adopt a fast-track, design-build approach to design and  construction activities, and its failure to exercise adequate and effective  oversight of contractor activities, both of which contributed to cost and  schedule delays. According to DOE officials, DOE’s current project  management orders will not allow the use of the fast-track, design-build  approach for first-of-its-kind complex facilities such as the WTP.However, DOE was able to start the project using the fast-track, design- build approach before this order was in place. In a February 2012 written  statement, DOE defended the fast-track, design-build management  approach for the WTP project by stating that: (1) it allows for a single  contract that gives the contractor responsibility for designing, building,  and commissioning the facility, thus helping ensure that the design works  as expected; (2) it allows the contractor to begin construction on parts of  the facility for which design was complete; and (3) doing so would  encourage construction to be completed faster.
According to DOE officials, construction of the WTP is currently more  than 55 percent complete, though the design is only about 80 percent  complete. Nuclear industry guidelines suggest that design should be  complete to at least 90 percent before starting construction of nuclear  facilities. Furthermore, according to current DOE orders, construction  should not begin until engineering and design work on critical  technologies is essentially complete, and these technologies have been  tested and proven to work. According to DOE’s analysis in 2007, several  years after the beginning of WTP construction, several critical  technologies designed for the WTP had not yet reached this level of   In addition, current DOE guidance states that the design- readiness. build approach can be used most successfully with projects that have  well-defined requirements, are not complex, and have limited risks.
DOE measures technology readiness using Technology Readiness Levels, which range  from 1 to 9; where 9 represents a fully tested and proven technology. DOE guidance  indicates that critical technologies should be at Technology Readiness Level 6 or higher  before construction begins. However, in 2007, the last time DOE assessed Technical  Readiness Levels for the entire project, DOE found that 14 out of 21 critical technologies  assessed were at a Technology Readiness Level lower than 6. keep pace with the construction schedule, Bechtel fabricated 38 vessels  containing pulse jet mixers and installed 27 of them into the WTP  pretreatment and high-level waste facilities. However, according to DOE  officials, Bechtel has been forced to halt construction on the pretreatment  facility and parts of the high-level waste facility because it was unable to  verify that several vessels would work as designed and meet safety  requirements. Bechtel is currently analyzing potential alternatives that  include, among other things, scrapping 5 to 10 already completed vessels  and replacing them with vessels with more easily verifiable designs,  according to DOE officials. The cost and schedule impact of these  alternatives has not yet been fully estimated.
DOE has also experienced continuing problems overseeing its contractor’s  activities. For example, DOE’s incentives and management controls are  inadequate for ensuring effective project management and oversight of the  WTP project to ensure that the WTP project is completed within budget and  on schedule. As we reported in 2006, DOE did not ensure adherence to  normal project reporting requirements and as a result, status reports  provided an overly optimistic assessment of progress on the project. We  also questioned the adequacy of project incentives for ensuring effective  project management. Specifically, because of cost increases and schedule  delays, we noted that the incentive fees in the original contract—including  more than $300 million in potential fees for meeting cost and schedule  goals or construction milestones—were no longer meaningful. Since that  time, some problems have continued. For example, Bechtel’s current  contract, which was modified in 2009, allows the contractor to receive  substantial incentives, such as an award fee for achieving specified project  objectives, and DOE has paid this fee, although events subsequently  revealed that the project was likely to exceed future cost and schedule  estimates. Since 2009, DOE has paid Bechtel approximately $24.2 million  or 63 percent of its $38.6 million incentive fee based, in part, on Bechtel’s  adherence to cost and schedule targets and its resolution of technical  challenges associated with waste mixing. However, the WTP project is now  at serious risk of missing major future cost and schedule targets, and it was  subsequently determined by DOE that the waste mixing technical  challenges were not resolved after all. According to DOE officials,  substantial further effort is needed that will take at least an additional 3  years of testing and analysis until project scientists and engineers can fully  resolve this challenge. In the current contract, there is no contractual  mechanism for recovering an incentive fee that was paid to a contractor for  work that was subsequently determined to be insufficient, according to  DOE officials.
Furthermore, under its project management order, DOE is to incorporate  and manage an appropriate level of risk—including critical technical,  performance, schedule, and cost risks—to ensure the best value for the  government. However, DOE has no assurance that the incentives  included in the WTP construction contract are assisting in the effective  management of these risks. The contract provides that “incentives are  structured to ensure a strong financial motivation for the Contractor to  achieve the Contract requirements.” However, the contract  requirements have been, and continue to be, revised to provide for a  longer schedule and higher cost. For example, DOE has already  announced that the project will not be completed within the 2006  performance baseline and has directed the contractor to prepare a  revised performance baseline. Further, since 2009, DOE has awarded  $15.6 million in incentive fees to Bechtel for meeting periodic schedule  and cost goals, even though the WTP’s schedule has slipped, and  construction costs have continued to increase. Bechtel has estimated,  as of May 2012, that costs to complete the project are currently more than  $280 million over the amount specified in the construction contract.
DOE’s Inspector General has also found that DOE may have awarded  Bechtel fees without the contractor adequately fulfilling work. A 2012 DOE  Office of Inspector General report notes that DOE may have overpaid $15  million of potentially $30 million in incentive fees for the delivery and  installation of vessels into the WTP facility. When DOE learned that one of the vessels did not have quality assurance records and therefore did  not conform to contract requirements, it instructed Bechtel to return $15  million of the performance fee. However, according to the DOE Office of  Inspector General report, neither DOE nor Bechtel could provide  evidence that the fee was returned to DOE.
DOE’s oversight of Bechtel’s activities may also be hampered because  project reviews, such as external independent reviews or independent  project reviews—which are a key oversight mechanism—are only  required by DOE’s project management order to occur at major decision  points in a project. These reviews examine a project’s estimated cost,  scope, and schedule and are intended to provide reasonable assurance  that the project can be successfully executed on time and within budget.  For example, these independent reviews are to occur when a cost and  schedule baseline is completed for the project or when construction is  authorized to begin. A 2006 review conducted by the U.S. Army Corps of  Engineers, for example, identified serious problems with Bechtel’s  progress on the WTP project and indicated that the project would  significantly exceed both cost and schedule targets. In 2009, the Office  of Project Management also conducted an external independent review.  Such reviews are an important mechanism for overseeing DOE contractor  activities. In a large, complex, multiyear project such as WTP, however,  many years can pass between these critical decision points and the  associated independent reviews. DOE officials noted that other reviews,  such as Construction Project Reviews, were also completed between  2009 and 2011 for the WTP project. While officials stated that these  reviews did examine the project’s cost and schedule, they noted that the  reviews were not as extensive as the 2006 and 2009 reviews.
section_title: Conclusions
paragraphs: DOE is responsible for one of the world’s largest environmental cleanup  projects in which it must stabilize large quantities of hazardous and  radioactive waste and prepare it for disposal at a permanent national  geologic repository that has yet to be identified. By just about any  definition, DOE’s WTP project at Hanford has not been a well-planned,  well-managed, or well-executed major capital construction project.  Daunting technical challenges that will take significant effort and years to  resolve combined with a near tripling of project costs and a decade of  schedule delays raise troubling questions as to whether this project can  be constructed and operated successfully. Additional cost increases  amounting to billions of dollars and schedule delays of years are almost  certain to occur. DOE and Bechtel officials have stated that the most  recent cost increases and schedule delays are the result of, among other  things, Congress not providing the required funding to resolve technical  issues. In our view, however, the more credible explanation continues to  be DOE’s decision to build what the department itself describes as the  world’s largest and most complex nuclear waste treatment plant using a  fast-track, design-build strategy that is more appropriate for much simpler,  smaller scale construction projects. Where nuclear industry guidelines  suggest completing 90 percent of design prior to beginning construction,  DOE instead began construction when design of the facility was in the  early stages and insisted on developing new technologies and completing  design efforts while construction was ongoing. The result has been  significant design rework, and some already procured and installed  equipment to possibly be removed, refabricated, and reinstalled.
The technical challenges are especially acute in the WTP’s pretreatment  and high-level waste facilities. Technologies for these facilities require  perfect reliability over the plant’s 40-year lifetime because no maintenance  or repair will be possible once waste treatment begins. According to DOE’s  analysis, several critical technologies designed for the WTP have not been  tested and verified as effective. Additional expensive rework in the  pretreatment and high-level waste facilities, particularly in the area of waste  mixing, is likely to occur. Further, an additional facility to treat tank waste  before the waste arrives at the WTP’s pretreatment facility may be  required. This additional facility could add billions to the cost of treating  Hanford’s waste. All the while, DOE and outside experts continue to raise  safety concerns, and Bechtel continues to earn incentive fees for meeting  specific project objectives even as the project’s costs and timelines balloon  far beyond the initially planned goals. DOE’s recent actions to identify cost  savings opportunities and to hold Bechtel accountable for the significant  deficiencies in its preliminary documented safety analyses and requiring  the contractor to comply with DOE’s nuclear safety regulations are steps in  the right direction. However, we continue to have serious concerns not only  about the ultimate cost and final completion date for this complex project,  but whether this project can successfully accomplish its waste treatment  mission given that several critical technologies have not been tested and  verified.
section_title: Recommendations for Executive Action
paragraphs: To improve DOE’s management and oversight of the WTP project, we  recommend that the Secretary of Energy take the following three actions:
Do not resume construction on the WTP’s pretreatment and high-level  waste facilities until critical technologies are tested and verified as  effective, the facilities’ design has been completed to the level  established by nuclear industry guidelines, and Bechtel’s preliminary  documented safety analyses complies with DOE nuclear safety  regulations.
Ensure the department’s contractor performance evaluation process  does not prematurely reward contractors for resolving technical issues  later found to be unresolved. For example, DOE could seek to modify  its contracts to withhold payment of incentive fees until the technical  challenges are independently verified as resolved.
Take appropriate steps to determine whether any incentive payments  made to the contractor for meeting project milestones were made  erroneously and, if so, take appropriate actions to recover those  payments.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided DOE with a draft of this report for its review and comment.  DOE generally agreed with the report and its recommendations. In its  written comments, DOE described actions under way to address the first  recommendation, as well as additional steps it plans to take to address  each of the report’s recommendations.
DOE stated that it has recently taken action that is, in part, aligned with  the first recommendation. Specifically, it issued guidance to the  contractor, which directed the contractor to address remaining WTP  technical and management issues sufficient to produce a high confidence  design and baseline for the pretreatment and high-level waste facilities of  the WTP. DOE also established a limited construction activity list for the  high-level waste facility, as well as a much more limited set of  construction activities in the pretreatment facility, which DOE stated will  allow it to complete construction of some portions of the facilities while  taking into account the unresolved technical issues. DOE stated that it  believes this approach balances the intent of the recommendation and  the need to continue moving forward with the project and preparations to  remove waste from Hanford waste storage tanks. While this approach  appears reasonable, we would caution that DOE should sufficiently  monitor the construction activities to ensure that additional construction  beyond the activities specifically named on the approved list not be  undertaken until the technical and management issues are satisfactorily  resolved. DOE also noted that the Secretary of Energy has been actively  engaged in the development of a new approach to managing the WTP  and, together with a group of independent subject matter experts, is  working to resolve long-standing technical issues. As requested by DOE,  we did incorporate information into the report to indicate the Secretary’s  personal involvement in addressing the WTP issues and the technical  teams assembled to help resolve these persistent technical issues. In  addition, DOE stated that the department and the contractor have  implemented a plan to assure that the WTP documented safety analysis  will meet the department’s nuclear safety requirements and DOE  established a Safety Basis Review Team that will provide a mechanism  for reviewing the documented safety analyses for each facility to ensure it  meets nuclear safety requirements. DOE’s planned actions to address the  recommendations in this report are discussed more fully in DOE’s letter,  which is reproduced in appendix I. DOE also provided technical  clarifications, which we incorporated into the report as appropriate.
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If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made major contributions to  this report are listed in appendix II.
section_title: Appendix I: Comments from the Department of Energy
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Ryan T. Coles and Janet  Frisch, Assistant Directors; Gene Aloise; Scott Fletcher; Mark Gaffigan;  Richard Johnson; Jeff Larson; Mehrzad Nadji; Alison O’Neill; Kathy  Pedalino; Tim Persons; Peter Ruedel; and Ron Schwenn made key  contributions to this report.