Department of Energy: Continued Actions Needed to Address Management Challenges
Published: 2017-05-24T00:00:00

Fast Facts:
The Department of Energy's National Nuclear Security Administration manages the U.S. nuclear weapons stockpile and supports nonproliferation efforts. DOE's Office of Environmental Management addresses contamination at nuclear weapons production sites. We testified that
NNSA hasn’t aligned budgets with plans to modernize its nuclear weapons, which raises affordability concerns
NNSA has faced problems implementing its nonproliferation programs
DOE continues to face challenges managing its contracts and projects (e.g. for cleanup and weapons programs)
DOE's environmental cleanup responsibilities may cost billions more than anticipated

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOE's NNSA is responsible for managing the nuclear weapons stockpile and supporting nuclear nonproliferation efforts. DOE's Office of Environmental Management's mission includes decontaminating and decommissioning facilities that are contaminated from decades of nuclear weapons production.
Over the last few years, GAO has reported on a wide range of challenges facing DOE and NNSA. These challenges contribute to GAO's continuing inclusion of DOE's and NNSA's management of major contracts and projects on the list of agencies and program areas that are at high risk of fraud, waste, abuse, and mismanagement, or are in need of transformation. GAO also recently added the U.S. government's environmental liabilities to this list.
This statement is based on 13 GAO reports issued from May 2015 through May 2017 and discusses (1) challenges related to the affordability of NNSA's nuclear modernization plans, (2) the status of DOE's efforts to improve its management of contracts and projects, (3) challenges in addressing DOE's environmental liabilities, and (4) challenges facing NNSA's nonproliferation programs.
section_title: What GAO Found
paragraphs: The Department of Energy's (DOE) National Nuclear Security Administration (NNSA) faces challenges related to the affordability of its nuclear modernization programs. GAO found in April 2017 that these challenges were caused by a misalignment between NNSA's modernization plans and the estimated budgetary resources needed to carry out those plans. First, GAO found that NNSA's estimates of funding needed for its modernization plans sometimes exceeded the budgetary projections included in the President's planned near-term and long-term modernization budgets. Second, GAO found that the costs of some major modernization programs—such as for nuclear weapon refurbishments—may also increase and further strain future modernization budgets that currently do not anticipate these potential increases. GAO recommended in April 2017 that NNSA include an assessment of the affordability of its modernization programs in future versions of its annual plan on stockpile stewardship; NNSA neither agreed nor disagreed with that recommendation.
DOE has taken several important steps that demonstrate its commitment to improving contract and project management, but challenges persist. In recent reports, GAO has noted progress as DOE has developed and implemented corrective actions to identify and address root causes of persistent project management challenges and progress in its monitoring of the effectiveness and sustainability of corrective actions. However, DOE's recent efforts do not address several areas of contract and project management where the department continues to struggle. GAO has made several recommendations related to these issues, many of which DOE has not yet implemented.
DOE also faces challenges with addressing its environmental liabilities—the total cost of its cleanup responsibilities. In February 2017, GAO found that DOE was responsible for over 80 percent ($372 billion) of the U.S. government's estimated $450 billion environmental liability. However, this estimate does not reflect all of DOE's cleanup responsibilities. For example, in January 2017, GAO found that the cost estimate for DOE's proposal for separate defense and commercial nuclear waste repositories excluded the costs and time frames for key activities, and therefore full costs are likely to be billions of dollars more than DOE's reported environmental liabilities. To effectively address cleanup, GAO and other organizations have reported that DOE needs to take a nation-wide, risk-informed approach, which could reduce long-term costs as well as environmental risks more quickly. Since 1994, GAO has made at least 28 recommendations to address the federal government's environmental liabilities and 4 suggestions to Congress to consider changes to the laws governing cleanup activities. Of these, 13 recommendations remain unimplemented.
Finally, NNSA faces challenges in implementing its nonproliferation programs. For example, in June 2016, GAO found that NNSA's Nuclear Smuggling Detection and Deterrence program had developed a program plan, but NNSA could not measure progress because not all of the program's goals were measurable, and performance measures were not aligned with the goals. As a result, NNSA may not be able to determine when the program has fully achieved its mission. GAO has made several recommendations related to NNSA's nonproliferation programs, some of which NNSA has yet to implement.
section_title: What GAO Recommends
paragraphs: GAO is not making any new recommendations in this statement. GAO has suggested that Congress consider taking certain actions and that DOE continue to act on the numerous recommendations made to address these challenges. GAO will continue to monitor DOE's implementation of these recommendations.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss our recent work on some of the  pressing management challenges facing the Department of Energy  (DOE) and its National Nuclear Security Administration (NNSA). NNSA is  responsible for managing the nation’s nuclear security missions: ensuring  a safe, secure, and reliable nuclear deterrent; achieving designated  reductions in the nuclear weapons stockpile; and supporting the nation’s  nuclear nonproliferation efforts. To implement NNSA’s weapons  modernization plans, the agency’s February 2016 budget justification for  the Weapons Activities appropriations account included about $49.4  billion for fiscal years 2017 through 2021, of which about $9.2 billion was  for fiscal year 2017. In addition, DOE, through its Office of Environmental  Management (EM), is responsible for decontaminating and  decommissioning nuclear facilities and sites that are contaminated from  decades of nuclear weapons production and nuclear energy research.  Since its inception in 1989, EM has spent over $164 billion on cleanup  efforts, including to retrieve, treat, and dispose of nuclear waste.
Since the end of the Cold War, key portions of the nuclear security  enterprise’s weapons production infrastructure have aged and become  outdated, prompting congressional and executive branch decision makers  to call on DOE to develop plans to modernize this infrastructure. The  Department of Defense’s (DOD) 2010 Nuclear Posture Review identified  long-term modernization goals and requirements, including sustaining a  safe, secure, and effective nuclear arsenal through increasing  investments to rebuild and modernize the nation’s nuclear infrastructure,  some of which dates back to the 1940s. In fiscal year 2011, the  administration pledged over $88 billion to NNSA over 10 years for  operations and modernization, including the refurbishment of weapons in  the current stockpile and the construction of facilities to support these  refurbishments. In January 2017, the President directed the Secretary of  Defense to initiate a new Nuclear Posture Review to ensure that the  United States nuclear deterrent is modern, robust, flexible, resilient,  ready, and appropriately tailored to deter 21st-century threats and  reassure our allies.
To support its modernization and cleanup missions, DOE relies primarily  on contractors to carry out its programs. DOE is the largest civilian  contracting agency in the federal government and spends approximately  90 percent of its $32 billion in funding (in fiscal year 2017) on contracts  and large capital asset projects. We designated DOE’s contract  management—which has included both contract administration and  project management—as a high-risk area in 1990 because DOE’s record  of inadequate management and oversight of contractors had left it  vulnerable to fraud, waste, abuse, and mismanagement.
Reports we have issued over the past several years have highlighted  various challenges that NNSA and EM continue to face in carrying out  their mission-related responsibilities, including challenges in contract and  project management that relate to NNSA’s modernization activities and  EM’s cleanup efforts. In our 2017 high-risk update, we reported that  NNSA and EM continued to demonstrate a strong commitment and top  leadership support to improve contract and project management—a key  criterion for removing agencies and program areas from our High-Risk  List. However, we also found that DOE still needs to make more  progress on the other four criteria for removal: organizational capacity,  corrective action planning, monitoring effectiveness, and demonstrating  progress. Our high-risk update also noted that NNSA and EM continued  to struggle to stay within cost and schedule estimates for some of their  major projects.
As NNSA works to modernize the nuclear security enterprise, EM must  address the legacy of 70 years of nuclear weapons production and  energy research by DOE and its predecessor agencies. These activities  generated large amounts of radioactive waste, spent nuclear fuel, excess  plutonium and uranium, and contaminated soil and groundwater. They  also resulted in thousands of contaminated facilities, including land,  buildings, and other structures and their systems and equipment. Various  federal laws, agreements with states, and court decisions require the  federal government to clean up environmental hazards at federal sites  and facilities—such as nuclear weapons production facilities. DOE’s  approaches to addressing its environmental liabilities and cleaning up the  contamination from past activities are often influenced by numerous site- specific factors, stakeholder agreements, and legal provisions. For years,  we and others have reported on shortcomings in DOE’s approach to  addressing its environmental responsibilities, including incomplete data  on the extent of cleanup needed, and in 2017 we added federal  environmental liabilities to our High-Risk List—over 80 percent of these  liabilities are DOE’s responsibility. In our 2017 high-risk update, we  reported that because of incomplete information and often inconsistent  approaches to making cleanup decisions, DOE does not always approach  environmental cleanup using a risk-informed approach to reduce health  and safety risks in a cost effective manner.
My testimony today discusses (1) challenges related to the affordability of  NNSA’s nuclear modernization programs, (2) the status of DOE’s efforts  to improve its management of contracts and projects, (3) challenges in  addressing DOE’s environmental liabilities, and (4) challenges facing  NNSA’s nonproliferation programs. My statement is based primarily on  information from 13 GAO reports issued from May 2015 to May 2017 (see  the end of the testimony for a list of related reports). For that work, we  reviewed agency documents and interviewed agency officials, among  other things. Detailed information about the scope and methodology we  used to conduct our prior work can be found in each of our issued reports.  The work upon which this testimony is based was conducted 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: Misalignment between NNSA’s Modernization Budget Estimates and Plans Raises Affordability Concerns
paragraphs: In April 2017, we issued our latest report on NNSA’s 25-year plans to  modernize the nation’s nuclear weapons stockpile and its supporting  infrastructure. In this report, we identified two areas of misalignment  between NNSA’s modernization plans and the estimated budgetary  resources needed to carry out those plans, which could result in  challenges to NNSA in affording its planned portfolio of modernization  programs. First, we found that NNSA’s estimates of funding needed for its  modernization plans sometimes exceeded the budgetary projections  included in the President’s planned near- and long-term modernization  budgets. In the near-term (fiscal years 2018 through 2021), we found that  NNSA may have to defer certain modernization work beyond that time  period in order to execute its program within the planned budget, which  could increase modernization costs and schedule risks. This is a pattern  we have previously identified as a “bow wave”—an increase in future  years’ estimated budget needs that occurs when agencies are  undertaking more programs than their resources can support. In the long- term (fiscal years 2022 through 2026), we found that NNSA’s  modernization program budget estimates sometimes exceeded the  projected budgetary resources planned for inclusion in the President’s  budget, raising additional questions about whether NNSA will be able to  afford the scope of its modernization program. Second, the costs of some  major modernization programs—such as for nuclear weapon  refurbishments—may also increase and further strain future  modernization budgets.
subsections: section_title: Misalignment between Estimates and Plans May Result in Increased Cost and Schedule Risks and Raises Affordability Concerns
paragraphs: As we reported in April 2017, NNSA estimates of funding needed for its  modernization plans sometimes exceeded the budgetary projections  included in the President’s planned near- and long-term modernization  budgets.
subsections: section_title: Near-term Misalignment between Modernization Plans and Estimated Budgetary Resources
paragraphs: We found that NNSA may have to defer certain modernization work  planned for fiscal years 2018 through 2021 beyond its current 5-year  planning period, called the Future-Years Nuclear Security Program  (FYNSP). As we reported in April 2017, this is caused by a misalignment  between NNSA’s budget estimates for certain nuclear modernization  programs and the President’s budgets for that period. We concluded that  this deferral could exacerbate a significant bow wave of modernization  funding needs that NNSA projects for the out-years beyond the FYNSP  and could potentially increase modernization costs and schedule risks. As  we have previously reported, such bow waves occur when agencies defer  costs of their programs to the future, beyond their programming periods,  and they often occur when agencies are undertaking more programs than  their resources can support. As NNSA’s fiscal year 2017 budget  materials show, its modernization budget estimates for fiscal years 2022  through 2026—the first 5 years beyond the FYNSP—may require  significant funding increases. For example, in fiscal year 2022, NNSA’s  estimates of its modernization budget needs are projected to rise about 7  percent compared with the budget estimates for fiscal year 2021, the last  year of the FYNSP, as shown in figure 1.
The analysis in our April 2017 report showed that NNSA has shifted this  modernization bow wave to the period beyond the FYNSP time frame in  each of the past four versions of the annual Stockpile Stewardship and  Management Plan. For example, in the Fiscal Year 2014 Stockpile  Stewardship and Management Plan, NNSA’s budget estimates for its  modernization programs increased from a total of about $9.3 billion in  fiscal year 2018, the last year of the FYNSP, to about $10.5 billion in  fiscal year 2019, the first year after the FYNSP—an increase of about 13  percent. Similar patterns showing a jump in funding needs immediately  after the last year of the FYNSP are repeated in the funding profiles  contained in the fiscal year 2015, 2016, and 2017 plans. As we have  previously reported, deferring more work to future years can increase cost  and schedule risks and can put programs in the position of potentially  facing a backlog of deferred work that grows beyond what can be  accommodated in future years.
section_title: Long-term Misalignment between Modernization Plans and Estimated Budgetary Resources
paragraphs: The Fiscal Year 2017 Stockpile Stewardship and Management Plan  shows that NNSA’s overall modernization budget estimates for fiscal  years 2022 through 2026—the out-years beyond the FYNSP—may  exceed the projected funding levels in the President’s budgets for that  time period, raising further questions about the affordability of NNSA’s  nuclear modernization plans. According to NNSA’s data, the agency’s  estimated budget needed to support modernization totals about $58.4  billion for fiscal years 2022 through 2026, and the out-year funding  projections contained in the President’s fiscal year 2017 budget for the  same period total about $55.5 billion. The President’s out-year funding  projections, therefore, are approximately $2.9 billion, or about 5.2  percent, less than NNSA estimates it will need over the same time period.
Despite this potential shortfall, NNSA’s Fiscal Year 2017 Stockpile  Stewardship and Management Plan concludes that the modernization  program is generally affordable in the years beyond the FYNSP for two  reasons. First, the President’s out-year funding projections are sufficient  to support NNSA’s low-range cost estimates for its modernization  programs for fiscal years 2022 through 2026. Based on NNSA data, the  low-range cost estimates for fiscal years 2022 through 2026 total  approximately $54.4 billion and the President’s out-year funding  projections total about $55.5 billion. Figure 2 illustrates data from the  2017 plan showing NNSA’s nominal budget estimates, including high-  and low-range cost estimates for its modernization program, along with  the out-year funding projections from the President’s fiscal year 2017  budget, for fiscal years 2022 to 2026. Second, NNSA concludes that its  modernization programs are generally affordable beyond the FYNSP  because the agency’s estimated modernization budget needs will begin to  decrease in fiscal year 2027.
In our April 2017 report, we noted that NNSA’s conclusion—that its  modernization program is affordable because the President’s out-year  funding projections fall within NNSA’s modernization cost ranges—is  overly optimistic. This is because NNSA’s conclusion is predicated on  optimistic assumptions regarding the cost of the modernization program  beyond the FYNSP, particularly for fiscal years 2022 through 2026. For  the program to be affordable, NNSA’s modernization programs would  need to be collectively executed at the low end of their estimated cost  ranges. The plan does not discuss any options NNSA would pursue to  support or modify its modernization program if costs exceeded its low- range cost estimates. In addition, the Fiscal Year 2017 Stockpile  Stewardship and Management Plan states that the nominal cost of  NNSA’s modernization program is expected to decrease by  approximately $1 billion in fiscal year 2027. In that year, according to the  2017 plan, it is anticipated that NNSA’s estimated budgets for its  modernization program will begin to fall in line with projections of future  presidential budgets. However, as we noted in our April 2017 report, the  decrease that NNSA anticipates in its modernization funding needs  beginning in fiscal year 2027 may not be achievable if the projected  mismatch between NNSA’s estimates of its modernization budget needs  and the projections of the President’s modernization budget for fiscal  years 2022 through 2026 is not resolved. This mismatch creates  concerns that NNSA will not be able to afford planned modernization  costs during fiscal years 2022 through 2026 and will be forced to defer  them to fiscal year 2027 and beyond, continuing the bow wave patterns  discussed above.
section_title: Potential Rising Costs of Some Modernization Programs May Further Strain NNSA’s Modernization Budgets
paragraphs: Our April 2017 report identified misalignment between NNSA’s estimate  of its budget needs and NNSA’s internal cost range estimates for several  of its major modernization programs. Further, we found that the costs of  some major life extension programs (LEPs) may increase in the future,  which may further strain NNSA’s planned modernization budgets.
With respect to the alignment of NNSA’s estimate of its budget needs and  NNSA’s internal cost range estimates, we found that NNSA’s budget  estimates were generally consistent with NNSA’s high- and low-range  cost estimates. However, for some years, NNSA’s low-range cost  estimates exceeded the budget estimates for some of the programs,  suggesting the potential for a funding shortfall for those programs in those  years. Specifically, we found that the low-range cost estimates for the  W88 Alteration 370 program and all LEPs discussed in our April 2017  report exceeded their budget estimates for some fiscal years within the  10-year time period from fiscal year 2017 to 2026. As we reported in the  2013 and 2016, this misalignment indicates that NNSA’s estimated  budgets may not be sufficient to fully execute program plans and that  NNSA may need to increase funding for these programs in the future.
Additionally, we found that the costs of two ongoing nuclear weapon  LEPs and the W88 Alteration 370 program may increase in the future,  based on NNSA information that was produced after the release of the  fiscal year 2017 budget materials. These potential cost increases could  further challenge the extent to which NNSA’s budget estimates support  the scope of modernization efforts. The LEPs facing potential cost  increases include:
B61-12 LEP. An independent cost estimate for the program  completed in October 2016 exceeded the program’s self-conducted  cost estimate (conducted in June 2016) by $2.6 billion. We are  conducting ongoing work to determine how NNSA has, if at all,  reconciled this difference.
W80-4 LEP. Officials from NNSA’s Office of Cost Policy and Analysis  told us that this program may be underfunded by at least $1 billion to  meet the program’s existing schedule.
W88 Alteration 370. According to officials from NNSA’s Office of Cost  Policy and Analysis, this program’s expanded scope of work may  result in about $1 billion in additional costs.
To help NNSA put forth more credible modernization plans, we  recommended in our April 2017 report that the NNSA Administrator  include an assessment of the affordability of NNSA’s portfolio of  modernization programs in future versions of the Stockpile Stewardship  and Management Plan, such as by presenting options (e.g., potentially  deferring the start of or canceling specific modernization programs) that NNSA could consider taking to bring its estimates of modernization  funding needs into alignment with potential future budgets. In commenting  on our report, NNSA neither agreed nor disagreed with our  recommendation.
section_title: DOE Has Taken Steps to Improve Contract and Project Management, but Challenges Persist, Particularly in Contract Management
paragraphs: The Secretary of Energy has taken several important steps that  demonstrate DOE’s commitment to improving contract and project  management. In our recent reports, we have noted progress as DOE has  developed and implemented corrective actions to identify and address  root causes of persistent project management challenges, as well as  progress in the department’s monitoring of the effectiveness and  sustainability of corrective actions. However, DOE’s recent efforts have  not fully addressed several areas where the department continues to  have shortcomings.
subsections: section_title: DOE Has Made Progress in Contract and Project Management
paragraphs: As we noted in our 2017 high risk report, DOE has taken several  important steps that demonstrate its commitment to improving project  management—steps that have been supported by senior leadership  within the department. Specifically, based in part on our December 2014  recommendation, DOE issued a revised project management order,  DOE Order 413.3B, in May 2016 and added the following requirements  for its program offices:
Develop cost estimates in accordance with industry best practices.
Conduct analyses of alternatives for projects consistent with industry  best practices and independent of the contractor organization  responsible for managing the construction or constructing a capital  asset project.
Ensure that major projects’ designs and technologies are sufficiently  mature before contractors are allowed to begin construction.
Conduct a root cause analysis if a major project is expected to exceed  its approved cost or schedule.
DOE also made significant efforts to monitor the effectiveness and  sustainability of corrective actions address project management  challenges. For example, the Secretary strengthened the Energy  Systems Acquisition Advisory Board by changing it from an ad hoc body  to an institutionalized board responsible for reviewing all capital asset  projects with a total project cost of $100 million or more. The Secretary  also created the Project Management Risk Committee, which includes  senior DOE officials and is chaired by a new departmental position—the  Chief Risk Officer. The committee is chartered to assess the risks of  projects across DOE and advise DOE senior leaders on cost, schedule,  and technical issues for projects.
Although DOE has taken these important actions, it is too early to tell  whether front-end planning problems persist. DOE has previously  acknowledged its longstanding problems with front-end planning, stating  that insufficient front-end planning has consistently contributed to DOE  projects not finishing on budget or schedule. Our recent work also  indicates that continued senior-level attention on front-end planning may  be warranted.
In August 2016, we found problems with DOE’s front-end project  planning at the Waste Isolation Pilot Plant (WIPP) for the new  permanent ventilation system. This system is being built to enable  DOE to resume full operations of the geological nuclear waste  repository, which were suspended after a radiological release  accident in February 2014. DOE did not follow all best practices in  analyzing and selecting an alternative for the new ventilation system  at WIPP, which DOE estimated will cost between $270 million and  $398 million to build and will be completed by the end of March 2021.  For example, DOE did not select the preferred alternative based on  assessing the difference between the life-cycle costs and benefits of  each alternative, as called for by best practices and now required by  DOE’s revised project management order. We recommended that  DOE require projects, including the WIPP ventilation system, to  implement recommendations from independent analysis of  alternatives reviews or document the reasons for not doing so. DOE  concurred with the recommendation and planned to incorporate  guidance in its updated project review guide on how DOE offices  should address recommendations from independent reviews.
In August 2016, we found that DOE did not follow project  management requirements in its front-end planning for an alternative  to the Chemistry and Metallurgy Research Replacement (CMRR)  project. After spending $450 million designing the project, NNSA  reversed its decision to build a large nuclear facility because of  projected excessive cost growth. Instead, NNSA revised the CMRR  project to use existing and smaller new facilities. We found that NNSA  did not define key parameters for one aspect of the new project,  including the capacity for analyzing plutonium that the project should  provide, as directed by NNSA policy. We made several  recommendations, including that NNSA identify the capacity for  analyzing plutonium for the revised CMRR project. NNSA neither  agreed nor disagreed with the recommendations.
section_title: Areas Where Challenges Continue to Persist
paragraphs: DOE’s recent efforts do not address several areas where it continues to  have shortcomings including (1) acquisition planning for its major  contracts, (2) the quality of enterprise-wide cost information available to  DOE managers and key stakeholders, (3) DOE’s need for a program  management policy, (4) how DOE’s new project management  requirements will be applied to its major legacy projects, and (5)  whistleblower protections.
subsections: section_title: Acquisition Planning for Major Contracts
paragraphs: During the acquisition planning phase for contracts, critical contract  decisions are made that have significant implications for the cost and  overall success of an acquisition. In August 2016, we examined DOE’s  use of management and operating (M&O) contracts. We found that DOE did not consider acquisition alternatives beyond continuing its  longstanding M&O contract approach for 16 of its 22 M&O contracts. We  concluded that without considering broader alternatives in the acquisition  planning phase, DOE cannot ensure that it is selecting the most effective  scope and form of contract, raising risks for both contract cost and  performance.
The size and duration of DOE’s M&O contracts—22 M&O contracts with  an average potential duration of 17 years, representing almost three- quarters of DOE’s spending in fiscal year 2015—underscore the  importance of planning for every M&O acquisition. According to DOE  officials, one of the primary reasons DOE uses this type of contract is  because it is less burdensome to manage. According to DOE officials,  such contracts are easier to manage with fewer DOE personnel because  they are less frequently competed and have broadly written scopes of  work, among other attributes. Moreover, a 2013 study found that, on  average, each NNSA M&O procurement employee was associated with  about $287 million in contract spending, compared with a federal  government average of $9 million per procurement employee. We made  two recommendations in that report, including that DOE establish a  process to analyze and apply its experience with contracting alternatives.  DOE generally concurred with our recommendations.
section_title: Quality of Enterprise-Wide Information
paragraphs: The effectiveness of DOE’s monitoring of its contracts, projects, and  programs depends upon the availability of reliable enterprise-wide  information on which to base oversight activities. For example, reliable  enterprise-wide cost information is needed to identify the cost of activities,  ensure the validity of cost estimates, and provide information to Congress  to make budgetary decisions. However, meaningful cost analyses across  programs, contractors, and sites are not possible because NNSA’s  contractors use different methods of accounting for and tracking costs.  NNSA developed a plan to improve and integrate its cost reporting  structures; however, we found in our January 2017 report that this plan  did not provide a useful road map for guiding NNSA’s effort. For  example, NNSA did not define strategies and identify resources needed  to achieve its goals, which is a leading practice for strategic planning.  NNSA’s plan contained few details on the elements it must include, such  as its feasibility assessment, estimated costs, expected results, and an  implementation timeline. We concluded that, until a plan is in place that  incorporates leading strategic planning practices, NNSA cannot be  assured that its efforts will result in a cost collection tool that produces  reliable enterprise-wide cost information that satisfies the information  needs of Congress and program managers. We recommended that  NNSA develop a plan for producing cost information that fully  incorporates leading planning practices. NNSA agreed with our  recommendation.
In addition, quality data is needed for DOE to manage its risk of fraud.  The Fraud Reduction and Data Analytics Act of 2015 establishes  requirements aimed at improving federal agencies’ controls and  procedures for assessing and mitigating fraud risks through the use of  data analytics. In our March 2017 report, however, we found that because  DOE does not require its contractors to maintain sufficiently detailed  transaction-level cost data that are reconcilable with amounts charged to  DOE, it is not well positioned to employ data analytics as a fraud  detection tool. The data were not suitable either because they were not  for a complete universe of transactions that was reconcilable with  amounts billed to DOE or because they were not sufficiently detailed to  determine the nature of costs charged to DOE. We concluded that,  without requiring contractors to maintain such data, DOE will not be well  positioned to meet the requirements of the Fraud Reduction and Data  Analytics Act of 2015 and manage its risk of fraud and other improper  payments. We recommended that DOE require contractors to maintain  sufficiently detailed transaction-level cost data that are reconcilable with  amounts charged to the government. DOE did not concur with our  recommendation. Specifically, DOE stated that the recommendation  establishes agency-specific requirements for DOE contractors that are  more prescriptive than current federal requirements and that its M&O  contractors, not DOE, are responsible for performing data analytics and  determining what data are needed to do so. We are concerned that  DOE’s response demonstrates that it does not fully appreciate its  responsibility for overseeing contractor costs. We continue to believe that  the use of data-analytic techniques by DOE employees could help  mitigate some of the challenges that limit the effectiveness of DOE’s  approach for overseeing M&O contractor costs. However, effectively  applying data-analytics is dependent upon the availability of complete and  sufficiently detailed contractor data. Therefore, we continue to believe that  DOE needs to implement our recommendation and require contractors to  maintain sufficiently detailed transaction-level cost data that are  reconcilable with amounts charged to the government.
section_title: Program Management
paragraphs: Program management can help ensure that a group of related projects  and activities are managed in a coordinated way to obtain benefits not  available from managing them individually. This approach helps federal  agencies get what they need, at the right time, and at a reasonable price.  However, in 2016 we found that DOE had not established a department- wide program management policy and that DOE had not established a  career development program for program managers. Specifically,  In an August 2016 report examining NNSA’s plans to build the CMRR,  we found that the agency had not clarified whether the project would  satisfy the mission needs of other NNSA and DOE programs. NNSA  might have been better able to clarify this project’s mission needs if  DOE and NNSA had been operating under a DOE-wide program  management policy incorporating leading practices. DOE and NNSA  officials said they recognize the importance of establishing a program  management policy, but at the time DOE had not done so. We  recommended that DOE establish a program management policy that  addresses internal control standards and leading practices. DOE  provided no comments on our recommendation. After we issued our  report, the President signed the 2016 Program Management  Improvement Accountability Act, which requires the development of  standards, policies, and guidelines for program and project  management across the federal government. We will continue to  monitor and report on the Act’s implementation as part of our biennial  high risk updates, and we will also include an assessment of the  effectiveness of the standards, policies, and guidelines that are to be  developed.
In a November 2016 report, we found that DOE and NNSA had not  established training programs, such as a career development  program, for program managers. Program managers are  responsible for interacting with project managers to provide support  and guidance on individual projects, but they also must take a broad  view of program objectives and organizational culture. In contrast,  DOE had established a training program for project managers, which  DOE said was open to program managers. In the absence of a  current DOE or NNSA training program for program managers, most  of the NNSA program managers we interviewed did not have training  related to program management. As a result, we concluded that  NNSA may have difficulty developing and maintaining a cadre of  professional, effective, and capable program managers. We  recommended that DOE establish a training program for program  managers. DOE provided no comments on this report.
section_title: Major Legacy Projects
paragraphs: DOE has instituted project management reforms that—if fully  implemented—will help ensure that future projects are not affected by the  challenges that have persisted for DOE’s major legacy projects.  Specifically, DOE has taken action on certain major projects, but has not  consistently applied these reforms, and in particular, DOE has not applied  such reforms to its largest legacy cleanup project at its Hanford Site in  Washington state. As we found in a May 2015 report, DOE continues to  allow construction of certain Waste Treatment and Immobilization Plant  (WTP) facilities at DOE’s Hanford Site before designs are 90 percent  complete. This contrasts with DOE’s revised project management order  that now requires a facility’s design to be at least 90 percent complete  before establishing cost and schedule baselines and cost and schedule  estimates that meet industry best practices. The WTP is DOE’s largest  project, and it has faced numerous technical and management challenges  that have added decades to its schedule and billions of dollars to its cost.  We recommended in May 2015 that DOE (1) consider whether to limit  construction on the WTP until risk mitigation strategies are developed to  address known technical challenges, and (2) determine the extent to  which the quality problems exist, in accordance with its quality assurance  policy, for the facilities’ systems that have not been reviewed to determine  if additional vulnerabilities exist. However, as of September 2016, DOE  has not yet implemented our recommendations. Notably, after we issued  our report, DOE announced in December 2016 that the cost estimate for  one portion of the WTP—the part needed to treat a fraction of the low- activity waste—had increased to nearly $17 billion. This cost estimate  does not include the costs for a majority of the WTP’s waste treatment  scope, including high-level waste treatment. In light of longstanding  challenges with major projects, such as with the WTP, we believe DOE  must begin to apply project management reforms to the projects that  need them the most.
section_title: Whistleblower Protections
paragraphs: Having the right people and resources is necessary to mitigate risks, but it  is not always sufficient to ensure that risks are identified and appropriately  addressed. As we have previously reported, management must foster a  culture in which staff are encouraged to identify risks and use their  expertise to proactively mitigate them. In July 2016, we examined DOE’s  effort to evaluate the environment for raising concerns without fear of  reprisal. We found, among other things, that DOE used flawed and  inconsistent methodologies to evaluate the environment for raising safety  and other concerns and therefore could not reliably judge its openness or  ensure that appropriate action was taken in response to evaluation  results. We noted that several factors may limit the use and effectiveness  of mechanisms for contractor employees to raise concerns and seek  whistleblower protections. We also found that DOE infrequently used its  enforcement authority to hold contractors accountable for unlawful  retaliation against whistleblowers, issuing just two violation notices in the  past 20 years. Additionally, in 2013, DOE determined that it did not have  the authority to enforce a key aspect of policies that prohibit retaliation for  nuclear safety-related issues—despite having taken such enforcement  actions in the past. In response to our recommendations, DOE has started the process of updating its Integrated Safety Management policies  and guidance, but it is too early to tell whether the updated regulation will  address the concerns we raised in our July 2016 report.
section_title: DOE Annually Spends Billions on Environmental Cleanup, but the Cost of Its Liabilities Continues to Increase
paragraphs: DOE also faces challenges with addressing its environmental liabilities. In  February 2017, we added the federal government’s environmental  liabilities to our High-Risk List. Specifically, we found that the federal  government’s environmental liability has been growing for the past 20  years—and is likely to continue to increase—and that DOE is responsible  for over 80 percent ($372 billion) of the nearly $450 billion reported  environmental liability. Notably, this estimate does not reflect all of the  future cleanup responsibilities that DOE may face. In addition, DOE has  not consistently taken a risk-informed approach to decision-making for  environmental cleanup, and DOE may therefore be missing opportunities  to reduce costs while also reducing environmental risks more quickly. Our  recent work in this area has also identified opportunities where DOE may  be able to save tens of billions of dollars.
DOE’s total reported environmental liability has generally increased over  time. Since 1989, EM has spent over $164 billion to retrieve, treat, and  dispose of nuclear and hazardous waste and to date has completed  cleanup at 91 of 107 sites across the country (the 91 sites were generally  viewed by DOE as the smallest and least contaminated sites to address).  Despite billions spent on environmental cleanup, DOE’s environmental  liability has roughly doubled from a low of $176 billion in fiscal year 1997  to the fiscal year 2016 estimate of $372 billion. In the last 6 years alone,  EM has spent $35 billion, primarily to treat and dispose of nuclear and  hazardous waste and construct capital asset projects to treat the waste  (see figure 3 for EM’s annual spending and growing environmental  liability). According to documents related to DOE’s fiscal year 2016  financial statements, 50 percent of DOE’s environmental liability resides  at two cleanup sites: the Hanford Site in Washington State and the  Savannah River Site in South Carolina.
In its fiscal year 2016 financial statement, DOE attributed recent  environmental liability increases to (1) inflation adjustments for the current  year; (2) improved and updated estimates for the same scope of work,  including changes resulting from deferral or acceleration of work; (3)  revisions in technical approach or scope for cleanup activities; and (4)  regulatory and legal changes. Notably, in recent annual financial reports,  DOE has cited other significant causes for increases in its liability. Other  causes have included the lack of a disposal path for high-level radioactive  waste—because of the termination of the Yucca Mountain repository  program —and delays and scope changes for major construction projects  at the Hanford and Savannah River sites.
We also reported in February 2017 that DOE’s estimated liability does not  include billions in expected costs. According to federal accounting  standards, environmental liability estimates should include costs that are  probable and reasonably estimable, meaning that costs that cannot yet  be reasonably estimated should not be included in total environmental  liability. Examples of costs that DOE cannot yet estimate include the  following:
DOE has not yet developed a cleanup plan or cost estimate for the  Nevada National Security Site and, as a result, the cost of future  cleanup of this site was not included in DOE’s fiscal year 2015  reported environmental liability. The nearly 1,400-square-mile site has  been used for hundreds of nuclear weapons tests since 1951. These  activities have resulted in more than 45 million cubic feet of  radioactive waste at the site. According to DOE’s financial statement,  since DOE is not yet required to establish a plan to clean up the site,  the costs for this work are excluded from DOE’s annually reported  environmental liability.
DOE’s reported environmental liability includes an estimate for the  cost of a permanent nuclear waste repository, but these estimates are  highly uncertain and likely to increase. In March 2015, in response to  the termination of the Yucca Mountain repository program, DOE  proposed separate repositories for defense high-level and commercial  waste. In January 2017, we reported that the cost estimate for DOE’s  new approach excluded the costs and time frames for key activities.  As a result, the full cost of these activities is likely billions of dollars  more than what is reflected in DOE’s environmental liability. In our  annual report on Fragmentation, Overlap, and Duplication in the  federal government that we issued in May 2017, we reported that  DOE may be able to save billions of dollars by reassessing the  rationale for its March 2015 proposal. In April 2017, the House of  Representatives Committee on Energy and Commerce disseminated  a discussion draft of legislation that could result in renewed efforts to  open the Yucca Mountain repository.
In addition, DOE may have insufficient controls in place to accurately  account for its environmental liabilities. In January 2017, the DOE  Inspector General reported a significant deficiency in internal controls  related to the reconciliation of environmental liabilities.
Moreover, DOE does not consistently take a risk-informed decision- making approach to its environmental cleanup mission to more efficiently  use resources. As our and other organizations’ reports issued over the  last 2 decades have found, DOE’s environmental cleanup decisions have  not been risk-based, and there have been inconsistencies in the  regulatory approaches followed at different sites. We and others have  pointed out that DOE needs to take a nation-wide, risk-based approach to  cleaning up these sites, which could reduce costs while also reducing  environmental risks more quickly.
In 2006, the National Research Council reported that the nation’s  approach to cleaning up nuclear waste—primarily carried out by  DOE—was complex, inconsistent, and not systematically risk- based. For example, the National Research Council noted that the  current regulatory structure for low-activity waste is based primarily on  the waste’s origins rather than on its actual radiological risks. The  National Research Council concluded that by working with regulators,  public authorities, and local citizens to implement risk-informed  practices, waste cleanup efforts can be done more cost-effectively.  The report also suggested that statutory changes were likely needed.
In 2015, a review organized by the Consortium for Risk Evaluation  with Stakeholder Participation reported that DOE was not optimally  using available resources to reduce risk. According to the report,  factors such as inconsistent regulatory approaches and certain  requirements in federal facility agreements caused disproportionate  resources to be directed at lower-priority risks. The report called for a  more systematic effort to assess and rank risks within and among  sites, including through headquarters guidance to sites, and to  allocate federal taxpayer monies to remedy the highest priority risks  through the most efficient means.
In May 2017, we reported on DOE’s efforts to treat a significant  portion of the tank waste at the Hanford Site. We found that DOE  chose different approaches to treat the less radioactive portion of its  tank waste—which DOE refers to as “low-activity waste” (LAW)—at  the Hanford and Savannah River Sites. At the Savannah River Site,  DOE has grouted about 4 million gallons of LAW since 2007. DOE  plans to treat a portion of the Hanford Site’s LAW with vitrification, but  it has not has not yet treated any of Hanford’s LAW and faces  significant unresolved technical challenges in doing so. In addition,  we found that the best available information indicates that DOE’s  estimated costs to grout LAW at the Savannah River Site are  substantially lower than its estimated costs to vitrify LAW at Hanford,  and DOE may be able to save tens of billions of dollars by  reconsidering its waste treatment approach for a portion of the LAW at  Hanford. Moreover, according to the 21 experts that attended our  meeting convened by the National Academies of Sciences,  Engineering, and Medicine, both vitrification and grout could  effectively treat Hanford’s LAW. Experts at our meeting also stated  that developing updated information on the effectiveness of treating a  portion of Hanford’s waste, called supplemental LAW, with other  methods, such as grout, may enable DOE to consider waste  treatment approaches that would accelerate DOE’s tank waste  treatment mission, thereby potentially reducing certain risks and  lifecycle treatment costs. We recommended that DOE (1) develop  updated information on the performance of treating supplemental  LAW with alternate methods, such as grout, before it selects an  approach for treating supplemental LAW; and (2) have an  independent entity develop updated information on the lifecycle costs  of treating Hanford’s supplemental LAW with alternate methods. DOE  agreed with both recommendations.
Since 1994, we have made at least 28 recommendations related to  addressing the federal government’s environmental liability and 4  recommendations to Congress to consider changes to the laws governing  cleanup activities. Of these, 13 recommendations remain unimplemented.  If implemented, these steps would improve the completeness and  reliability of the estimated costs of DOE’s future cleanup responsibilities  and lead to more risk-based management of the cleanup work. We  believe these recommendations are as relevant, if not more so, today.
section_title: NNSA Faces Nonproliferation Performance and Program Management Challenges
paragraphs: NNSA also faces challenges implementing its nonproliferation programs  under its Office of Defense Nuclear Nonproliferation (DNN). Specifically,  in recently completed reviews of DNN programs, we have identified  several challenges NNSA faces in how it measures performance and  conducts program management of these efforts.
As I testified last year, NNSA proposed in its fiscal year 2017  congressional budget request to terminate its Mixed Oxide (MOX)  Fuel Fabrication Facility, which has been under construction since  2007 and for which NNSA has already spent approximately $4.6  billion on design and construction. NNSA’s request stated that its  MOX fuel approach for disposing of 34 tons of weapons-grade  plutonium will be significantly more expensive than anticipated and  will require approximately $800 million to $1 billion annually for  decades. Instead, NNSA proposed to focus on a new alternative to  dilute the surplus plutonium and dispose of the material in a geologic  repository. We have ongoing work examining the MOX facility and the  extent to which WIPP has sufficient capacity to dispose of this  quantity of plutonium. Specifically, we are assessing the extent to  which DOE’s revised $17.2 billion cost estimate for completing  construction of the MOX facility, and the $56 billion revised life-cycle  estimate for completing the Plutonium Disposition Program using the  MOX approach, met cost-estimating best practices. In addition, we  are examining the status of NNSA’s development of a life-cycle cost  estimate for completing the Plutonium Disposition Program using the  dilute and dispose approach. Our review will also assess the extent to  which DOE has sufficient disposal space and statutory capacity at  WIPP to dispose of all defense transuranic waste, including the  diluted plutonium resulting from the dilute and dispose approach.
In June 2016, we found that the Nuclear Smuggling Detection and  Deterrence (NSDD) program had developed a program plan, but that  NSDD could not measure its progress towards activities and goals  because its goals were not all measurable and performance  measures were not aligned with its goals. Under this program,  NSDD may not be able to determine when it has fully accomplished  its mission and risks continuing to deploy equipment past the point of  diminishing returns. NSDD also faces challenges in performing its  work that are outside of its control, such as the changing conditions in  partner countries from conflict or political upheaval. We recommended  that NSDD develop a more detailed program plan that articulates  when and how it will achieve its goals, including completing key  activities such as the deployment of radiation detection equipment to  partner countries and having these countries fully fund the  sustainment and maintenance of this equipment. NNSA agreed with  this recommendation.
In February 2017, we found that NNSA was unable to demonstrate  the full results of its research and development technology for  preventing nuclear proliferation. Specifically, we reported that DNN’s  Research and Development program does not consistently track and  document projects that result in technologies being transitioned or  deployed. Furthermore, we found that DNN’s Research and  Development project performance is difficult to interpret because the  program’s performance measures do not define criteria or provide  context justifying how the program determined that it met its targets.  This, in turn, could hinder users’ ability to determine the program’s  progress. NNSA officials said that final project reports do not  document their assessment of performance against baseline targets  and that there is no common template for final project reports. We  noted that documenting assessments that compare final project  performance results against baseline targets for scope of work and  completion date could enhance NNSA’s ability to manage its  programs in accordance with these standards. More consistently  tracking and documenting the transitioned and deployed technologies  that result from DNN’s projects could also facilitate knowledge sharing  within DNN, and would provide a means by which to present valuable  information to Congress and other decision makers about the  programs’ results and overall value. We recommended that NNSA  consistently track and document results of DNN Research and  Development projects and document assessments of final project  results against baseline performance targets. NNSA agreed to take  actions in response to both recommendations.
Chair Fischer, Ranking Member Donnelly, 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.
section_title: GAO Contact and Staff Acknowledgements
paragraphs: If you or your staff members have any questions about this testimony,  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 statement. GAO staff who made key  contributions to this testimony are Nathan Anderson, Assistant Director;  Allison Bawden; Natalie Block, Antoinette Capaccio; William Hoehn;  Amanda Kolling; and Diane LoFaro.
section_title: Selected GAO Products
paragraphs: The following is a selection of GAO’s recent work assessing the National  Nuclear Security Administration’s and the Department of Energy’s Office  of Environmental Management’s management efforts:  Nuclear Waste: Opportunities Exist to Reduce Risks and Costs by  Evaluating Different Waste Treatment Approaches at Hanford.  GAO-17-306. Washington, D.C.: May 3, 2017.
National Nuclear Security Administration: Action Needed to Address  Affordability of Nuclear Modernization Programs. GAO-17-341.  Washington, D.C.: April 26, 2017.
Department of Energy: Use of Leading Practices Could Help Manage the  Risk of Fraud and Other Improper Payments. GAO-17-235. Washington,  D.C.: March 30, 2017.
Nuclear Nonproliferation: Better Information Needed on Results of  National Nuclear Security Administration’s Research and Technology  Development Projects. GAO-17-210. Washington, D.C.: February 3,  2017.
Nuclear Waste: Benefits and Costs Should Be Better Understood Before  DOE Commits to a Separate Repository for Defense Waste.  GAO-17-174,.Washington, D.C.: January 31, 2017.
National Nuclear Security Administration: A Plan Incorporating Leading  Practices Is Needed to Guide Cost Reporting Improvement Effort.  GAO-17-141. Washington, D.C.: January 19, 2017.
Program Management: DOE Needs to Develop a Comprehensive Policy  and Training Program. GAO-17-51. Washington, D.C.: November 21,  2016.
Department of Energy: Actions Needed to Strengthen Acquisition  Planning for Management and Operating Contracts. GAO-16-529.  Washington, D.C.: August 9, 2016.
DOE Project Management: NNSA Needs to Clarify Requirements for Its  Plutonium Analysis Project at Los Alamos. GAO-16-585. Washington,  D.C.: August 9, 2016.
Nuclear Waste: Waste Isolation Pilot Plant Recovery Demonstrates Cost  and Schedule Requirements Needed for DOE Cleanup Operations.  GAO-16-608. Washington, D.C.: August 4, 2016.
Department of Energy: Whistleblower Protections Need Strengthening.  GAO-16-618. Washington, D.C.: July 11, 2016.
Combating Nuclear Smuggling: NNSA’s Detection and Deterrence  Program is Addressing Challenges but Should Improve Its Program Plan.  GAO-16-460. Washington, D.C.: June 17, 2016.
Hanford Waste Treatment: DOE Needs to Evaluate Alternatives to  Recently Proposed Projects and Address Technical and Management  Challenges. GAO-15-354. Washington, D.C.: May 7, 2015.
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