Nuclear and Worker Safety: Limited Information Exists on Costs and Reasons for Work Stoppages at DOE's Hanford Site
Published: 2009-05-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Energy's (DOE) Hanford Site in Washington State stores 56 million gallons of untreated radioactive and hazardous wastes resulting from decades of nuclear weapons production. DOE is constructing facilities at the site to treat these wastes before permanent disposal. As part of meeting health, safety, and other standards, work at the site has sometimes been suspended to address safety or construction quality issues. This report discusses (1) work stoppages from January 2000 through December 2008 and what is known about them, (2) the types of costs associated with work stoppages and who paid for them, and (3) whether more effective regulation or oversight could have prevented the work stoppages. GAO interviewed knowledgeable DOE and contractor officials about these events. When documentation was available, GAO obtained DOE and contractor accident and safety incident reports, internal DOE and independent external evaluations, and costs.
section_title: What GAO Found
paragraphs: DOE officials reported that from January 2000 through December 2008, activities to manage hazardous wastes stored in underground tanks and to construct a waste treatment facility have been suspended at least 31 times to address safety concerns or construction quality issues. Federal regulations governing contracts do not require contractors to formally report work stoppages and the reasons for them, and DOE does not routinely collect information on them. As a result, supporting documentation on work stoppages was limited. DOE reported that work stoppages varied widely in duration, with some incidents lasting a few hours, and others lasting 2 years or more. Officials reported that about half the work stoppages resulted from concerns about worker or nuclear safety and included proactive safety "pauses," which typically were brief and taken to address an unsafe condition that could potentially harm workers. The remainder of the work stoppages occurred to address concerns about construction quality at the waste treatment plant. Under the terms of the cost-reimbursement contracts for managing the tanks and constructing the waste treatment plant, DOE generally pays all costs associated with temporary work stoppages and does not require the contractor to separately track these costs, although DOE and the contractors do track some costs under certain circumstances. For example, the costs for cleaning up, investigating, and implementing corrective actions were collected for a July 2007 hazardous waste spill at one of the tank farms; these costs totaled over $8 million. The contractors, too, can face financial consequences, such as reduction in earned fee or fines and penalties assessed by DOE or outside regulators. For example, DOE may withhold payment of a performance award, called a fee, from contractors for failure to meet specified performance objectives or to comply with applicable environmental, safety, and health requirements. For the majority of DOE's reported work stoppages, supporting documentation was not available to evaluate whether better oversight or regulation could have prevented them. For 2 of 31 work stoppages where some information was available--specifically, accident investigations or prior GAO work--inadequate oversight contributed to the work stoppages. For example, the accident investigation report for the tank farm spill found that oversight and design reviews by DOE's Office of River Protection failed to identify deficiencies in the tanks' pump system design, which did not meet nuclear technical safety requirements. Similarly, in 2006, GAO found that DOE's failure to effectively implement nuclear safety requirements contributed substantially to schedule delays and cost growth at Hanford's waste treatment plant. With regard to regulations, however, officials from DOE, the Defense Nuclear Facilities Safety Board, and DOE's Office of Inspector General said they did not believe that insufficient regulation was a factor in these events.

section_title: Letter
paragraphs: The Department of Energy (DOE) is responsible for one of the world’s  largest environmental cleanup programs—the treatment and permanent  disposal of wastes created by the production of materials for the nation’s  nuclear weapons program. At the production sites, more than 5 decades of  nuclear weapons production left a legacy of chemical, hazardous, and  radioactive waste. DOE’s Hanford Site in southeastern Washington State  stores the majority of the untreated nuclear waste—about 56 million  gallons held in 177 large underground storage tanks clustered in areas  known as tank farms. DOE has estimated that it will take tens of billions  of dollars and decades to treat and permanently dispose of this waste.
DOE’s Office of River Protection oversees activities at the tank farms but  relies on contractors to carry out the work. At the Hanford Site, one  contractor, CH2M Hill Hanford Group (CH2M Hill) is responsible for  managing and operating the tank farms, which includes maintaining safe  storage of the waste and preparing it for eventual retrieval. A second  contractor, Bechtel National Inc. (Bechtel), is responsible for carrying out  a multibillion dollar construction project for new facilities, known as the  waste treatment plant, to treat the tank waste and prepare it for  permanent disposal. DOE spends about $1 billion annually on these two  contracts alone. In carrying out these activities, DOE and its contractors  must comply with health and safety standards to protect workers, the  public, and the environment.
As part of meeting health and safety standards, work activities have, at  times, been suspended over the past several years to address concerns  with worker safety or nuclear safety at the tank farms and during the  design and construction of waste treatment facilities. Such suspensions  vary in duration and allow for additional worker training or corrective  actions. In this report, we refer to these suspensions as work stoppages.  To provide a better understanding of these occurrences and potential  financial consequences, this report discusses (1) work stoppages from  January 2000 through December 2008 at DOE’s Hanford Site tank farms  and waste treatment plant and what is known about their nature, duration,  and scope; (2) the types of costs associated with work stoppages and what  portions were paid by the government and by the contractor; and  (3) whether more effective regulation or oversight might have prevented  the work stoppages.
In conducting our work, we obtained a listing of work stoppages at the  tank farms and waste treatment plant from officials at DOE’s Office of  River Protection. We attempted to independently verify any work  stoppages that occurred at the tank farms or waste treatment plant by  reviewing accident investigation reports and existing DOE reporting  systems for events that could have resulted in a temporary work stoppage.  Of the 31 work stoppages reported, only 3 had any supporting  documentation. For those 3 work stoppages, we reviewed and analyzed  the documents provided to obtain a more thorough understanding of the  events, causes, and corrective actions and whether DOE regulation or  oversight was a contributing factor. We also interviewed DOE officials  with the Office of River Protection, as well as DOE headquarters officials  with the Offices of Environmental Management; Health, Safety, and  Security; and General Counsel. We interviewed officials with regulatory  and oversight entities, including the Defense Nuclear Facilities Safety  Board, the Occupational Safety and Health Administration, and the  Nuclear Regulatory Commission. Further, we met with union  representatives at the Hanford Site to obtain union perspectives on work  stoppages and safety. A more detailed description of our scope and  methodology appears in appendix I. We conducted this performance audit  from June 2008 to April 2009, 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: Since plutonium production ended at the Hanford Site in the late 1980s,  DOE has focused on cleaning up the radioactive and hazardous waste  accumulated at the site. It has established an approach for stabilizing,  treating, and disposing of the site’s tank wastes. Its planned cleanup  process involves removing, or retrieving, waste from the tanks; treating  the waste on site; and ultimately disposing of the lower-activity radioactive  waste on site and sending the highly radioactive waste to a geologic  repository for permanent disposal. As cleanup has unfolded, however, the  schedule has slipped, and the costs have mounted. According to DOE’s  latest estimate in June 2008, treatment of the waste is not expected to  begin until late 2019 and could continue until 2050 or longer. The following  two figures show a tank farm and construction of waste treatment plant  facilities at the Hanford Site.
Most of the cleanup activities at Hanford, including the emptying of the  underground tanks, are carried out under the Hanford Federal Facility  Agreement and Consent Order among DOE, Washington State’s  Department of Ecology, and the federal Environmental Protection Agency.  Commonly called the Tri-Party Agreement, this accord lays out legally  binding milestones for completing the major steps of Hanford’s waste  treatment and cleanup processes. The agreement was signed in May 1989  and has been amended a number of times since then. A variety of local and  regional stakeholders, including county and local governmental agencies,  citizen and advisory groups, and Native American tribes, also have long- standing interests in Hanford cleanup issues.
Two primary contractors are carrying out these cleanup activities; one is  responsible for managing and operating the tank farms, and the other for  constructing the facilities to treat the tank waste and prepare it for  permanent disposal. During our review, these contractors were CH2M Hill  and Bechtel, respectively. Both contracts are cost-reimbursement  contracts, which means that DOE pays all allowable costs. In addition,  the contractors can also earn a fee, or profit, by meeting specified  performance objectives or measures. Applicable DOE orders and  regulations are incorporated into these contracts, either as distinct  contract clauses or by reference. For example, contractors are required to  use an accounting system that provides consistency in how costs are  accumulated and reported so that comparable financial transactions are  treated alike. Such a system is to include consistent practices for  determining how various administrative costs are assessed or how indirect  costs for labor are calculated. Contractors also are required to implement  an integrated safety management system, a set of standardized practices  that allow the contractor to identify hazards associated with a specific  scope of work, to establish controls to ensure that work is performed  safely, and to provide feedback that supports continuous improvement.  The system, which allows contractors to stop work when conditions are  unsafe, is intended to instill in everyone working at the site a sense of  responsibility for safety. This policy is reinforced by labor agreements  between the contractor and its workforce that explicitly allow work  stoppages as needed for safety and security reasons.
With few exceptions, DOE’s sites and facilities are not regulated by the  Nuclear Regulatory Commission or by the Occupational Safety and Health  Administration. Instead, DOE provides internal oversight at several  different levels. DOE’s Office of River Protection oversees the contractors  directly. In addition, the Office of Environmental Management provides  funding and program direction. DOE’s Office of Enforcement and other  oversight groups within the Office of Health, Safety, and Security oversee  contractors’ activities to ensure nuclear and worker safety. Finally, the  Defense Nuclear Facilities Safety Board, an independent oversight  organization created by Congress in 1988, provides advice and  recommendations to the Secretary of Energy to help ensure adequate  protection of public health and safety.
section_title: DOE Officials Reported Varied Reasons for Work Stoppages at Tank Farms and the Waste Treatment Plant, but Supporting Documentation Is Limited
paragraphs: DOE officials reported that from January 2000 through December 2008,  work on the Hanford tank farms and the waste treatment plant  temporarily stopped at least 31 times to address various safety or  construction concerns. These work stoppages ranged in duration from a  few hours to more than 2 years, yet little supporting documentation of  these occurrences exists.
subsections: section_title: Work Was Stopped to Address Safety or Construction Concerns
paragraphs: DOE reported that of the 31 work stoppages, 12 occurred at the tank farms  and 19 at the waste treatment plant. Sixteen of the work stoppages  reportedly resulted from concerns about safety. A complete listing of these  work stoppages is included in appendix II. These work stoppages were  initiated to respond directly to an event in which property was damaged or  a person injured, or they addressed an unsafe condition with the potential  to harm workers in the future. Four of these work stoppages were  relatively brief, lasting less than 2 days, and were characterized by DOE  and officials as proactive safety “pauses.” For example, in October 2007,  after a series of slips, trips, or falls during routine activities, contractor  managers stopped work at the waste treatment plant site for 1 hour to  refresh workers’ understanding of workplace hazards.
The following two examples, for which supporting documentation was  available, illustrate the types of work stoppages occurring at the Hanford  Site because of safety concerns:    Controlling worker exposure to tank farm vapors. Beginning in 2002, as  activities to transfer waste from leak-prone, single-shell tanks to more  secure double-shell tanks disturbed tank contents, the number of incidents  increased in which workers complained of illnesses, coughing, and skin  irritation after exposure to the tank vapors. The Hanford underground  storage tanks contain a complex variety of radioactive elements and  chemicals that have been extensively mixed and commingled over the  years, and DOE is uncertain of the specific proportions of chemicals  contained in any one tank. These constituents generate numerous gases,  such as ammonia, hydrogen, and volatile organic compounds, which are  purposely vented to release pressure on the tanks, although some gases  also escape through leaks. During the 1990s, the tank farm contractor  evaluated potential hazards and determined that if workers around the  tanks used respirators, they would be sufficiently protected from harmful  gases. DOE reported in 2004, however, that disturbing the tank waste  during transfers had changed the concentration of gases released in the  tanks and that no standards for human exposure to some of these  chemicals existed. To protect workers’ health, in 2004 the tank farm  contractor equipped workers with tanks of air like those used by  firefighters. Work at the tank farms stopped intermittently for about 2  weeks as a result, in part because the contractor had to locate and procure  sufficient self-contained air and equipment for all workers.
Accidental spill of radioactive and chemical wastes at tank S-102. In July  2007, as waste was being pumped out of a single-shell to a double-shell  tank, about 85 gallons of waste was spilled. DOE has been gradually  emptying waste from Hanford’s single-shell tanks into double-shell tanks  in preparation for treatment and permanent disposal, but because the tank  waste contains sludge and solids, waste removal has been challenging.  Because the tanks were not designed with specific waste retrieval  features, waste must be retrieved through openings, called risers, in the  tops of the tanks; technicians must insert specially designed pumps into  the tanks to pump the waste up about 45 to 60 feet to ground level. DOE  has used a variety of technologies to loosen the solids, including sprays of  acid or water to help break up the waste and a vacuum-like system to suck  up and remove waste through the risers at the top. On July 27, 2007, during  retrieval of radioactive mixed waste from a 758,000-gallon single-shell  tank, a pump failed, spilling 85 gallons of highly radioactive waste to the  ground. At least two workers were exposed to chemical vapors, and later  several workers reported health effects they believed to be related to the  spill. Retrieval operations for all single-shell tanks were suspended after  the accident, and DOE did not resume operations until June 2008, a delay  of 1 year, while the contractor cleaned up the spill and DOE and the  contractor investigated the accident to evaluate the cause, the contractor’s  response, and appropriate corrective action.
DOE officials reported that the remaining 15 work stoppages resulted from  concerns about construction quality and involved rework to address  nuclear safety or technical requirements that had not been fully met, such  as defective design, parts fabrication and installation, or faulty  construction. For example:    Outdated ground-motion studies supporting seismic design of the waste  treatment plant. In 2002, the Defense Nuclear Facilities Safety Board  began expressing concerns that the seismic standards used to design the  waste treatment facilities were not based on the most current ground- motion studies and computer models or on the geologic conditions  present directly beneath the construction site. After more than 2 years of  analysis and discussion, DOE contracted for an initial seismic analysis,  which confirmed the Defense Nuclear Facilities Safety Board’s concerns  that the seismic criteria were not sufficiently conservative for the largest  treatment facilities—the pretreatment facility and the high-level waste  facility. Revising the seismic criteria caused Bechtel to recalculate  thousands of engineering estimates and to rework thousands of design  drawings to ensure that tanks, piping, cables, and other equipment in these  facilities were adequately anchored. Bechtel determined that the portions  of the building structures already constructed were sufficiently robust to  meet the new seismic requirements. By December 2005, however, Bechtel  estimated that engineering rework and other changes to tanks and other  equipment resulting from the more conservative seismic requirement  would increase project costs substantially and add as much as 26 months  to the schedule. Ultimately, work on the two facilities was suspended for 2  years, from August 2005 until August 2007. About 900 workers were laid  off as a result.
section_title: Information on Work Stoppages Is Not Consistently Collected
paragraphs: DOE does not routinely collect or formally report information about work  stoppages, in part because federal regulations governing contracts do not  require contractors to track work stoppages and the reasons for them.  While federal acquisition regulations do require that contractors  implement a reliable cost-accounting system, the regulations do not  require contractors to centrally collect information on the specific  circumstances surrounding a work stoppage. Without a centralized system  for collecting explanatory data on work stoppages, the majority of  information DOE reported to us is based on contractors’ and DOE  officials’ recollections of those events or on officials’ review of detailed  logs maintained at each of the facilities.
Officials expressed concern that systematically monitoring all work  stoppages could send the message that work stoppages should be avoided,  possibly hampering effective implementation of DOE’s integrated safety  management policy. This policy explicitly encourages any employee to  “stop work” to address conditions that raise safety concerns. Officials said  they believe that work stoppages help bolster workplace safety and  construction quality because work can be halted and corrective action  taken before someone is seriously injured, property is seriously damaged,  or poor workmanship has compromised the quality and functionality of a  facility. Officials said that systematically monitoring all types of work  stoppages could ultimately discourage workers from halting activities  when unsafe conditions or construction problems emerge in the  workplace.
section_title: DOE Generally Pays Costs Associated with Work Stoppages
paragraphs: Under the terms of the cost-reimbursement contracts for the tank farms  and the waste treatment plant, DOE generally pays the costs for corrective  action or construction rework associated with temporary work stoppages  and does not require the contractor to separately track these costs.
subsections: section_title: Costs Associated with Work Stoppages Can Include Corrective Action and Lost Productivity
paragraphs: Various categories of costs can be associated with work stoppages, with  some easier to measure or separately identify than others. The category of  costs related to correcting a problem that precipitates a work stoppage,  such as the cost of investigating and cleaning up a hazardous waste spill or  the cost of rework to address improper construction, is usually more  easily measured. In contrast, lost productivity—expenditures for labor  during periods workers were not fully engaged in productive work or the  difference between the value of work that should have been accomplished  against the value of work that was accomplished—is more difficult to  quantify.
Most of the work stoppages reported by DOE officials involved some  corrective action or construction rework to address the problem  precipitating the work stoppage. These are costs that tend to be easier to  separately identify and track, and DOE has directed contractors to do so in  certain instances, as it did for the July 2007 tank waste spill. For the work  stoppages at the tank farms, corrective actions encompassed such  activities as investigating and cleaning up the July 2007 spill, monitoring  and testing vapors escaping from the tanks to determine the constituents,  and training contractor employees on required new procedures or  processes. For the work stoppages at the waste treatment plant, corrective  actions at times involved retraining workers or developing new  procedures to prevent future problems, although many of the work  stoppages at the waste treatment plant involved construction rework.  Construction rework can include obtaining new parts to replace  substandard parts or labor and materials to undo installations or  construction, followed by proper installation or construction—pouring  new concrete, for example, or engineering and design work to address  nuclear safety issues.
The cost of lost productivity associated with a work stoppage can be more  difficult to measure or separately identify, although under a cost- reimbursement contract, the government would generally absorb the cost.  While no generally accepted means of measuring lost productivity exists,  two methods have been commonly used. The first, a measure of the cost of  idleness, or doing nothing, calculates the expense incurred for labor and  overhead during periods that no productive work is taking place. These  were the types of costs associated with a July 2004 suspension, or “stand- down,” of operations at the Los Alamos National Laboratory, where a  pattern of mishaps led the contractor to stop most work at the facility for  many months to address safety and security concerns. Laboratory  activities resumed in stages, returning to full operations in May 2005.  Although officials with both the National Nuclear Security Administration,  which oversees the laboratory, and the Los Alamos contractor, tried to  measure lost productivity at the laboratory, each developed widely  differing estimates—of $370 million and $121 million, respectively—partly  because of difficulties measuring labor costs. According to DOE officials,  when work stopped at the Hanford Site tank farms, CH2M Hill reassigned  workers to other productive activities. Therefore, according to DOE  officials, no costs of idleness were incurred as a result of those work  stoppages. We were unable to verify, however, that tank farm workers had  been reassigned to other productive work after the S-102 tank waste spill  or during other tank farm work stoppages. During the period that work  stopped on the pretreatment and high-level waste facilities of the waste  treatment plant, in contrast, the contractor substantially reduced its  workforce. According to Bechtel officials and documents, about 900 of  1,200 construction workers were laid off during the work stoppage, and  the remaining workers were employed on the other facilities under  construction.
An alternative means of measuring lost productivity associated with  suspension of work activities is to measure the value of work planned that  should have been accomplished but was not. This method concentrates on  the work that was not done, as opposed to the cost of paying workers to  do little or nothing. This method of measuring lost productivity is typically  undertaken as part of a formal earned value management system, a project  management approach that combines the technical scope of work with  schedule and cost elements to establish an “earned value” for a specific set  of tasks. If the earned value of work accomplished during a given period is  less than the earned value of work planned for that period, then a loss in  productivity has occurred, and the cost is equal to the difference in value  between planned and finished work. DOE officials were unable to provide  this measure for the three work stoppages that had supporting  documentation, partly because the analyses of productivity under earned  value management techniques did not disaggregate activities in a manner  that could capture the three work stoppages. For example, with regard to  the tank farms, DOE measures the overall progress made on waste  stabilization and retrieval for all 177 storage tanks in aggregate but does  not measure the direct impact of setbacks at any one storage tank, such as  the spill at tank S-102.
section_title: Contractors Are Not Ordinarily Required to Track Work Stoppage Costs Separately
paragraphs: The contracts for the tank farms and the waste treatment plant do not  generally require the contractors to separately track costs associated with  work stoppages. Contractors must use an accounting system adequate to  allow DOE to track costs incurred against the budget in accordance with  federal cost-accounting standards. These standards permit a contractor to  establish and use its own cost-accounting system, as long as the system  provides an accurate breakdown of work performed and the accumulated  costs and allows comparisons against the budget for that work. For the  tank farm and waste treatment plant contracts, the contractors must  completely define a project by identifying discrete physical work  activities, essentially the steps necessary to carry out the project. This  “work breakdown structure” is the basis for tracking costs and schedule  progress. Corrective action and rework associated with work stoppages  are generally not explicitly identified as part of a project’s work  breakdown structure, although these costs are generally allowable and  contractors do not have to account for them separately.
Despite the lack of a requirement to track costs associated with work  stoppages, DOE and contractors sometimes do track these costs  separately, as in the following three circumstances:    DOE can request the contractor to separately track costs associated with  corrective action when DOE officials believe it is warranted. DOE  specifically asked CH2M Hill to separately track costs associated with  addressing the July 2007 tank spill because of the potential impacts on  tank farm operations, workers, and the environment and because of  heightened public and media attention to the event.
Contractors may voluntarily track selected costs associated with a work  stoppage if they believe that a prolonged suspension of work will alter a  project’s cost and schedule. Contractors may want to collect this  information for internal management purposes or to request an adjustment  of contract terms in the future. For example, Bechtel estimated costs for  both redesign work and lost productivity resulting from a change in  seismic standards for the waste treatment plant.
DOE may require a contractor to track particular costs associated with  investigating an incident that it believes may violate DOE nuclear safety  requirements or the Atomic Energy Act of 1954, as amended (these  violations are referred to as Price-Anderson Amendment Act violations).  DOE’s Office of Enforcement notifies the contractor in a “segregation  letter” that an investigation of the potential violation will be initiated and  that the contractor must segregate, or separately identify, any costs  incurred in connection with the investigation. These are not costs of  corrective action or rework. The costs incurred in connection with the  investigation are generally not allowable. Not all such investigations  involve a work stoppage, however.
Of the 31 work stoppages reported to us by DOE officials, costs are  available only for the July 2007 spill at the tank farm, since DOE  specifically required the contractor to separately identify and report those  costs. The costs of that incident totaled $8.1 million and included  expenditures for cleaning up contamination resulting from the spill,  investigating the causes of the accident, investigating health effects of the  accident on workers, administrative support, and oversight of remediation  activities. These were all considered allowable costs, and DOE has  reimbursed the contractor for them. Although a subsequent investigation  took place to determine whether nuclear safety rules had been violated,  the costs to participate in that investigation ($52,913) were segregated as  directed by DOE’s Office of Enforcement and were not billed to the  government.
Although DOE officials said that none of the reported work stoppages  involved lost-productivity costs, the work stoppage to address the tank  spill could well contribute to delays and rising costs for tank waste  retrieval activities over the long run. Given that DOE was emptying only  about one tank per year when we reported on Hanford tanks in June  2008, the 1-year suspension of waste retrieval activities, without  additional steps to recover lost time, may contribute to delayed project  completion. Many factors already contribute to delays in emptying the  tanks. DOE has acknowledged that it will not meet the milestones agreed  to with Washington State and the Environmental Protection Agency in the  Tri-Party Agreement. We found that DOE’s own internal schedule for tank  waste retrieval, approved in mid-2007, reflects time frames almost 2  decades later than those in the agreement. Ultimately, delays contribute to  higher costs because of ongoing costs to monitor the waste until it is  retrieved, treated, and permanently disposed of, and estimated costs for  tank waste retrieval and closure have been growing. DOE estimated in  2003 that waste retrieval and closure costs from 2007 onward—in addition  to the $236 million already spent to empty the first seven tanks—would be  about $4.3 billion. By 2006, this estimate had grown to $7.6 billion.  Because of limitations in DOE’s reporting systems, however, we were  unable to determine the specific effect of the tank spill on overall tank  retrieval costs beyond the $8.1 million in corrective action costs.
In addition, although specific costs were not available for the 2-year  suspension of construction activities at two of the facilities in the waste  treatment plant, we have previously reported on some of the potential  impacts. In an April 2006 testimony, we reported on the many technical  challenges Bechtel had encountered during design and construction of the  waste treatment plant. These ongoing technical challenges included  changing seismic standards that resulted in substantial reengineering of  the design for the pretreatment and high-level waste facilities, problems at  the pretreatment plant with “pulse jet mixers” needed to keep waste  constituents uniformly mixed while in various tanks, and the potential  buildup of flammable hydrogen gas in the waste treatment plant tanks and  pipes. In December 2005, Bechtel estimated that these technical problems  could collectively add nearly $1.4 billion to the project’s estimated cost.
section_title: DOE Generally Pays All Costs, but Contractors Can Face Some Financial Consequences
paragraphs: Under the cost-reimbursement contracts for the tank farms and the waste  treatment plant, costs associated with work stoppages, such as the costs  of corrective action or construction rework, generally are allowable costs.  As such, DOE generally pays these costs, regardless of whether they are  separately identified or whether they are included in the overall costs of  work performed.
Even though the contractors are being reimbursed for the costs associated  with work stoppages, they can experience financial consequences, either  through loss of performance fee or fines and penalties assessed by DOE or  its regulators. For example, DOE may withhold payment of a performance  award, called a fee, from contractors for failure to meet specified  performance objectives or measures or to comply with applicable  environmental, safety, and health requirements. The tank farm and waste  treatment plant contractors both lost performance fee because of work  stoppages as follows:    For the July 2007 spill at the tank farms, under CH2M Hill’s “conditional  payment of fee” provision, DOE reduced by $500,000 the performance fee  the contractor could have earned for the year. In its memo to the  contractor, DOE stated that the event and the contractor’s associated  response were not consistent with the minimum requirement for  protecting the safety and health of workers, public health, and the  environment. Nevertheless, DOE did allow CH2M Hill to earn up to  $250,000, or half the reduction amount, provided the contractor fully  implement the corrective action plan developed after the accident  investigation, with verification of these actions by DOE personnel.
Bechtel also lost performance fee because of design and construction  deficiencies at the waste treatment plant facilities and the 2-year delay on  construction of the pretreatment and high-level waste facilities. Overall,  DOE withheld $500,000 in Bechtel’s potential performance fee for failure  to meet construction milestones. In addition, DOE withheld $300,000  under the “conditional payment of fee” provision in the contract after a  number of serious safety events and near misses on the project.
Furthermore, in addition to having potential fee reduced for safety  violations and work stoppages, DOE and other federal and state regulators  may also assess fines or civil penalties against contractors for violating  nuclear safety rules and other legal or regulatory requirements. These  fines and penalties are one of the categories of costs that are specifically  not allowed under cost-reimbursement contracts, and these costs are  borne solely by the contractor. For example, DOE’s Office of Enforcement  can assess civil penalties for violations of nuclear safety and worker safety  and health rules. Both contractors were assessed fines or civil penalties  for the events associated with their work stoppages.
Fines and penalties assessed against CH2M Hill for the July 2007 tank spill  totaled over $800,000 and included (1) civil penalties of $302,500 assessed  by DOE’s Office of Enforcement for violation of nuclear safety rules, such  as long-standing problems in ensuring engineering quality and deficiencies  in recognizing and responding to the spill; (2) a Washington State  Department of Ecology fine of $500,000 for inadequacies in design of the  waste retrieval system and inadequate engineering reviews; and (3) a fine  of $30,800 from the Environmental Protection Agency for delays in  notification of the event. The contractor was required to notify the agency  within 15 minutes of the spill but instead took almost 12 hours.
From March 2006 through December 2008, DOE’s Office of Enforcement  issued three separate notices of violation to Bechtel, with civil penalties  totaling $748,000. These violations of nuclear safety rules were associated  with procurement and design deficiencies of specific components at the  waste treatment plant. In its December 2008 letter to the contractor, DOE  stated that significant deficiencies in Bechtel’s quality-assurance system  represented weaknesses that had also been found in the two earlier  enforcement actions.
section_title: Inadequate Oversight Cited as Contributing to Some Work Stoppages
paragraphs: For the majority of DOE’s reported work stoppages, no supporting  documentation was available to evaluate whether better oversight or  regulation could have prevented them. For two incidents for which  documentation was available—internal investigations and prior GAO  work—a lack of oversight contributed to both. These two work stoppages  occurred at the tank farms and the waste treatment plant, and both  resulted from engineering-design problems. In a third case—efforts to  address potentially hazardous vapors venting from underground waste  storage tanks—DOE’s efforts to enforce worker protections were found to  have been inadequate, although this lack of oversight does not appear to  have directly caused the work stoppage associated with the vapors  problem.
Insufficient oversight was a factor in these three events as follows:    Accidental spill of radioactive and chemical wastes at tank S-102.
Specifically, the accident investigation report for the tank farm spill found  that oversight and design reviews by DOE’s Office of River Protection  failed to identify deficiencies in CH2M Hill’s tank pump system, which did  not meet nuclear safety technical requirements. The Office of River  Protection failed to determine that this pump system did not have a  needed backflow device to prevent excessive pressure in one of the hoses  serving a tank, ultimately causing it to fail and release waste, which then  overflowed from the top of this tank and spilled to the ground. In addition,  the investigation found that CH2M Hill failed to respond to the accident in  a timely manner and failed to ensure that nuclear safety requirements had  been met.
Outdated ground-motion studies supporting seismic design of the waste  treatment plant. Lax oversight was also a factor in a second event at the  waste treatment plant. GAO in 2006 found that DOE’s failure to effectively  implement nuclear safety requirements, including requirements that all  waste treatment plant facilities would survive a potential earthquake,  contributed substantially to delays and growing costs at the plant. The  Defense Nuclear Facilities Safety Board first expressed concerns with the  seismic design in 2002, believing that the seismic standards followed had  not been based on then-current ground-motion studies and computer  models or on geologic conditions directly below the waste treatment plant  site. It took DOE 2 years to confirm that the designs for two of the  facilities at the site—the pretreatment and the high-level waste facilities— were not sufficiently conservative. Revising the seismic criteria required  Bechtel to recalculate thousands of design drawings and engineering  estimates to ensure that key components of these facilities would be  adequately anchored. Work was halted at the two facilities for 2 years as a  result.
Controlling worker exposure to tank farm vapors. In 2004, DOE’s then  Office of Independent Oversight and Performance Assurance (today  reorganized as DOE’s Office of Health, Safety, and Security) investigated  vapor exposures at the Hanford tank farms and the adequacy of worker  safety and health programs at the site, including the adequacy of DOE  oversight. Investigators were unable to determine whether any workers  had been exposed to hazardous vapors in excess of regulatory limits but  found several weaknesses in the industrial hygiene (worker safety)  program at the site, in particular, hazard controls and DOE oversight.  According to the investigation, the Office of River Protection had not  effectively overseen the contractor’s worker safety program; had failed to  provide the necessary expertise, time, and resources to adequately  perform its management oversight responsibilities at the tank farms; and  had failed to ensure corrective action for identified problems. After the  investigation, DOE stepped up its monitoring efforts at the tank farms, and  the contractor provided tank farm workers with supplied air, an action   that slowed or halted work at the tank farms for about 2 weeks while  supplied air equipment was secured and workers were trained to use it.
With regard to regulations, however, officials we interviewed from DOE,  the Defense Nuclear Facilities Safety Board, and the Office of Inspector  General said they did not believe that insufficient regulation was a factor  in these two events. Officials from the Nuclear Regulatory Commission  declined to comment on the sufficiency of regulations.
section_title: Conclusions
paragraphs: The final cost to the American public of cleaning up the Hanford Site is  expected to reach tens of billions of dollars. Consequently, factors that can  potentially escalate costs—including work stoppages—matter to  taxpayers, DOE, and Congress. Depending on what causes a work  stoppage and how long it lasts, some stoppages could increase already  substantial cleanup costs. Although prudent oversight would seem to call  for DOE to understand the reasons for work stoppages and the effects of  these work stoppages on costs, neither law nor regulation requires that  this information be systematically recorded and reported. DOE and other  stakeholders have expressed reservations that collecting information on  work stoppages could send a message that work stoppages should be  minimized, thus discouraging managers or workers from reporting  potential safety or construction quality issues. We recognize that the  opportunity for any manager or worker to call a work stoppage when  worker safety or construction quality is at stake is an integral part of  DOE’s safety and construction management strategies and should not be  stifled. Yet DOE has also recognized the importance of cost information  and in one recent case—the 2007 tank waste spill—required the contractor  to separately track detailed cost information. In addition, we previously  recommended that DOE require contractors to track the costs associated  with future work stoppages, similar to the one at Los Alamos National  Laboratory in 2004, and DOE agreed with this recommendation. While  acknowledging these competing pressures, we believe that systematically  collecting cost information on selected work stoppages can increase  transparency and yet balance worker and public safety.
section_title: Recommendations for Executive Action
paragraphs: To provide a more thorough and consistent understanding of the potential  effect of work stoppages on project costs, we recommend that the  Secretary of Energy take the following two actions: (1) establish criteria  for when DOE should direct contractors to track and report to DOE the  reasons for and costs associated with work stoppages, ensuring that these  criteria fully recognize the importance of worker and nuclear safety, and  (2) specify the types of costs to be tracked.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Secretary of Energy for review  and comment. In written comments, the Chief Operations Officer for  Environmental Management generally agreed with our recommendations,  stating that they will be accepted for implementation within the  Environmental Management program. The comments (which are  reproduced in app. III) were silent on whether the recommendations will  be implemented in other DOE programs.
In its comments, DOE expressed concern that readers of appendix II could  misconstrue the information in the column labeled “Duration” as  representing a delay in the entire listed project, not simply the time  required to resolve the specific issue in question; DOE maintains that  during this time, workers were shifted to other work activities. We found,  however, that some of the short work stoppages, which DOE termed  “safety pauses,” were specifically called to allow the contractor to refresh  workers’ understanding of workplace hazards; in these cases, which were  essentially training exercises, workers were not reassigned to other work  activities. Other work stoppages may have led to workers’ assignment to  other activities, but we were unable to verify to what extent reassignment  occurred because the documentation available on work stoppages was  limited. Finally, during the 2-year delay due to seismic concerns in waste  treatment plant construction, work on two facilities—the pretreatment  plant and high-level waste facility—was ultimately suspended from August  2005 until August 2007, and about 900 workers were laid off, not  reassigned. We added a footnote to table 1 to clarify the “Duration”  column.
Regarding our discussion of the role of oversight in several work  stoppages, DOE acknowledged that inadequate oversight was a factor in  the cited work stoppages and stated that the Office of Environmental  Management has implemented corrective actions to address these  contributing factors. Evaluating these actions and the resulting outcomes,  if any, however, was beyond the scope of our report. We incorporated  other technical comments in our report as appropriate.
As agreed with our offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of Energy  and interested congressional committees. The report also will be available  at no charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-3841 or aloisee@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 IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine the number of times work was suspended at the Hanford  site, we obtained from the Department of Energy’s (DOE) Office of River  Protection officials a listing of work stoppages occurring from January  2000 through December 2008 at either the waste treatment plant or the  tank farms. We did not review other work stoppages that may have  occurred elsewhere at the Hanford Site during this period.
We sought to independently verify the 31 work stoppages identified by  DOE and to uncover additional information about them, including the  nature of the event and the duration and the scope of each, by reviewing  the following:    DOE’s Occurrence Reporting and Processing System, a database of  reportable accidents and other incidents affecting worker, public, and  environmental safety;   DOE’s database of investigation reports on accidents causing serious  injury to workers or serious damage to the facility or the environment;   DOE citations issued against contractors for violating nuclear safety    Defense Nuclear Facilities Safety Board reports addressing Hanford Site    Bechtel National Inc. and CH2M Hill Hanford Group Problem Evaluation  Requests, internal reports of incidents or accidents involving safety issues.
We were unable to independently verify DOE’s list of work stoppages from  these sources, however, because in most cases, the reporting systems did  not indicate whether safety incidents had halted work or, if so, for how  long. In addition, these reporting systems focus on safety incidents and do  not specifically address construction rework and design problems, which  represent about half the work stoppages reported by DOE.
Of the 31 work stoppages reported, however, we were able to obtain  additional information from other sources for three specific events. These  were (1) ongoing problems protecting workers from potentially harmful  vapors venting from the tank farms, (2) a radioactive waste spill from tank  S-102 in July 2007, and (3) the seismic redesign from August 2005 to  August 2007 of the waste treatment plant pretreatment and high-level  waste facilities. To obtain a more thorough understanding of these three  work stoppages, what caused them, and how problems were corrected, we  reviewed DOE, contractor, and Office of the Inspector General evaluations  of these events, including official accident reports, external independent  investigations, and our 2006 testimony on cost and schedule problems at  the Hanford waste treatment plant.
To determine the types of costs associated with work stoppages, we  reviewed Federal Acquisition Regulation reporting requirements for cost- reimbursement contracts and Defense Contract Audit Agency guidance on  auditing incurred costs. To gain a better understanding of the costs  associated with lost productivity resulting from a work stoppage, we  reviewed cost-estimating guidance from the Association for the  Advancement of Cost Engineering International and earned value  management guidance by GAO and by the National Research Council. To  develop an understanding of the costs paid by the government, compared  with those absorbed by the contractor, we reviewed Bechtel National Inc.  and CH2M Hill Hanford Group requests to DOE for equitable adjustments  to their respective contracts to recover lost productivity and other costs  linked to work stoppages. We reviewed the Atomic Energy Act of 1954, as  amended, and the letters sent from DOE to contractors requesting that  they segregate costs incurred in connection with investigations of  potential violations of the law and DOE nuclear safety requirements. We  reviewed assessments by Washington State, DOE, and federal regulators  fining Bechtel and CH2M Hill Hanford Group for safety violations and  other problems at the Hanford Site since 2000. Finally, we interviewed  contractor and Office of River Protection finance officials to determine  cost-accounting requirements and practices.
To determine whether more-effective regulation or oversight might have  prevented the work stoppages, we relied primarily on Office of River  Protection and Bechtel officials’ assessments of these events because  supporting documentation was generally unavailable. For 3 of the 31 work  stoppages, we reviewed numerous internal DOE, external independent,  and contractor evaluations to assess whether lack of oversight was a  contributing factor. To gain further perspective on how lack of oversight  or regulations might have played a role in these work stoppages, we  interviewed DOE headquarters officials with the Offices of Environmental  Management; Health, Safety, and Security; and General Counsel. We  interviewed officials with regulatory and oversight entities, including the  Defense Nuclear Facilities Safety Board, the Occupational Safety and  Health Administration, and the Nuclear Regulatory Commission. We also  interviewed union representatives at the Hanford Site to obtain the union’s  and workers’ perspectives on work stoppages and safety.
We conducted this performance audit from June 2008 to April 2009, 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.
section_title: Appendix II: Work Stoppages Identified by the Office of River Protection
paragraphs: We obtained and reviewed information on 31 work stoppages that  occurred at the Hanford Site from January 2000 to December 2008; these  are summarized in table 1.
section_title: Appendix III: Comments from the Department of Energy
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Janet Frisch, Assistant Director;  Carole Blackwell; Ellen W. Chu; Brenna McKay; Mehrzad Nadji; Timothy  M. Persons, Chief Scientist; Jeanette Soares; Ginny Vanderlinde; and  William T. Woods made key contributions to this report.