Nuclear Waste: Better Performance Reporting Needed to Assess DOE's Ability to Achieve the Goals of the Accelerated Cleanup Program
Published: 2005-07-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In February 2002, following years of rising costs to its nuclear waste cleanup program, the Department of Energy (DOE) announced a new initiative--the accelerated cleanup plan--and committed to reduce costs of cleanup by $50 billion, shorten the cleanup schedule by 35 years, and reduce risks to human health and the environment. GAO reviewed (1) the progress DOE has made under its accelerated cleanup plan, (2) the likelihood DOE will achieve its estimated $50 billion in cost reductions, and (3) whether DOE's performance reporting allows for a full understanding of progress toward achieving the accelerated plan goals.
section_title: What GAO Found
paragraphs: Since implementing its accelerated cleanup plan, DOE's progress in reducing environmental risks has been mixed. By March 2005, DOE was on track or ahead of schedule for many of the 16 cleanup activities it measures, including packaging nuclear materials for disposition, disposing of low-level waste, and removing buildings. In contrast, DOE was behind its accelerated schedule for 3 challenging and costly activities--disposing of transuranic and radioactive tank wastes and closing tanks that had contained radioactive wastes. These three cleanup activities had technical problems, such as developing waste separation technology, or regulatory issues, such as determining when a storage tank is clean enough to close. Furthermore, DOE has had problems with other treatment and disposal activities not reflected in its performance measures, such as delays in shipping plutonium from sites, resulting in additional costs to secure and store the material. DOE is not likely to achieve the full $50 billion estimated cost reduction, a key goal of the accelerated cleanup plan. First, DOE's method of calculating its $50 billion cost reduction likely overstated the potential reductions. Second, DOE based estimated cost reductions on assumed improvements that are highly uncertain, such as technology development, revised contracting strategies, and regulatory requirements. Third, while DOE expected cost reductions to come from most of its sites, key sites are already experiencing delays and, by the end of fiscal year 2004, had incurred cost increases. Recognizing these problems, DOE no longer cites its $50 billion estimate but still expects to achieve some cost reductions. DOE performance reporting does not allow for an adequate understanding of its progress toward achieving overall cleanup goals because of limitations in how DOE uses its performance measures. First, in its performance reporting, DOE does not clearly link accomplishments with the incurred costs. Second, DOE does not clearly highlight critical activities, such as preparing radioactive tank waste for disposal, that have the greatest impact on progress toward meeting overarching cleanup goals.

section_title: Letter
paragraphs: The Department of Energy (DOE) is responsible for one of the world’s  largest environmental cleanup programs. Decades of nuclear weapons  production have left a legacy of chemical, hazardous, and radioactive  wastes, including high-level and transuranic wastes to be cleaned up at  sites across the United States. In 1989, DOE established the Office of  Environmental Remediation and Waste Management (now the Office of  Environmental Management) to address the cleanup of these wastes. In  carrying out the cleanup program, DOE receives regulatory oversight from  various federal agencies, including the Environmental Protection Agency,  the Nuclear Regulatory Commission, and the Department of  Transportation, and the states where DOE’s sites are located.
During the 1990s, we and others criticized DOE’s nuclear waste cleanup  program for being expensive, slow, and lacking in commitment and  accountability. In response, DOE implemented or attempted to implement  a number of management initiatives to improve its performance and  address uncontrolled cost and schedule growth. These initiatives included  launching a major reform to its contracting practices in 1994, establishing  an initiative to privatize certain projects in 1995, and developing an  approach to close sites on a compressed schedule in 1996. These  initiatives affected how DOE approached the cleanup work, the agency’s  relationship with its contractors, and in some cases, the schedule for  completing cleanup work.
Despite these initiatives, DOE’s cleanup program continued to experience  cost and schedule growth. By 2001, DOE’s estimates of the total cost and  timeframes for completing its cleanup program had climbed to about $192  billion and up to 70 years to complete. DOE reported that after having  spent over $60 billion (current dollars) on nuclear waste cleanup since  1989, little progress had been made toward reducing risks to the public  and the environment. DOE concluded that without significant reform the  cleanup program would continue to experience uncontrolled cost and  schedule growth.
To address this cost and schedule growth, the Assistant Secretary for  Environmental Management announced a new initiative in February 2002,  to improve management of the program. This initiative—known as the  accelerated cleanup plan—had three main goals: rapidly reducing  environmental risks, decreasing the projected time to clean up sites, and  reducing the overall cost of the cleanup program. To implement the new  initiative, DOE took a number of steps including realigning the program to  focus on rapid reduction of environmental risks; improving contract  management; and restructuring how DOE managed the cleanup program  to better support an accelerated, risk-based approach. Other changes  included implementing procedures that require more discipline in  controlling costs and cleanup schedules and holding DOE managers more  accountable for achieving results.
DOE began implementing the accelerated cleanup plan late in 2002. In a  March 2003 congressional testimony before a House Appropriations  subcommittee, the department declared that its new strategy would  reduce the total cost of the program by an estimated $50 billion. DOE also  committed to a strict schedule for timely completion of its cleanup  activities by 2035, 35 years earlier than called for in previous plans. To  expedite the acceleration of activities under this new plan, DOE said it  would need increased funding for its cleanup program in the first 3 years  of the accelerated approach—from fiscal years 2003 through 2005—after  which funding would begin to decline. DOE estimated that by fiscal year  2008, it will have reduced its annual funding requirements by one-third, to  approximately $4.5 billion per year (constant 2003 dollars), although the  actual amounts requested in the budget would differ due to inflation.
To improve performance monitoring and reporting on its cleanup  activities, DOE developed and began reporting on progress toward  reducing environmental risks primarily through 16 risk reduction  measures that DOE refers to as “gold chart metrics.” These measures track  progress toward completing cleanup activities, such as the quantities of  waste disposed of and the number of buildings demolished at each DOE  site. DOE also uses an earned value management system to monitor  progress of about 60 large cleanup projects. Earned value provides DOE  managers with information about whether budgeted work was performed  within cost and schedule parameters. Following findings by the Office of  Management and Budget (OMB) in a performance review during fiscal  year 2005 stating that DOE had not developed adequate annual cost and  schedule performance measures to monitor progress towards completing  the cleanup program, DOE has been working to more fully implement its  earned value management system. This work includes ensuring all  mission-related projects are covered by earned value management and  monitoring these projects against their long-term costs, rather than the  contract period, as DOE currently does.
Given the significant cost of cleaning up DOE’s wastes and the importance  of effectively managing the cleanup effort, you asked us to review the  progress DOE has made under its accelerated cleanup plan. Specifically,  our report examines (1) the progress DOE has made in accelerating  cleanup at its sites, (2) the likelihood that DOE will achieve its estimated  $50 billion in cost reductions, and (3) whether DOE’s performance  reporting allows for a full understanding of progress toward achieving the  accelerated cleanup plan goals.
To determine what progress DOE has achieved under its accelerated  cleanup plan, we obtained and analyzed DOE’s cost, schedule, and earned  value data for each site and each project. In addition, we determined how  DOE developed its performance measures. We also obtained cost,  schedule, and performance information on selected projects from five  DOE sites chosen on the basis of location, cost, and type of waste—the  Hanford Site in Washington state; the Savannah River Site in South  Carolina; the Idaho National Laboratory in Idaho; the Miamisburg Closure  Project in Ohio, and the West Valley Demonstration Project in New York  state. To determine the basis of DOE’s estimated $50 billion in cost  reductions, we obtained and evaluated information regarding the changes  that DOE made to its cleanup program and DOE’s plan to implement those  changes. We also obtained and analyzed DOE’s cost estimates to  determine how, where, and when DOE expects to reduce the cost and  schedule for the cleanup work. We did not adjust the cost estimates to  correct for the time value of money or the effect of inflation. To evaluate  DOE’s performance measures, we reviewed reports and studies on  performance measurement and discussed with DOE officials how the  department develops and uses its performance measures. We also  reviewed and analyzed DOE’s most recent performance reports and  compared that information to the actual progress documented at various  DOE sites. To assess the reliability of the data provided by DOE, we  obtained and analyzed information about the methods for compiling cost,  schedule and performance data, and steps taken to ensure its accuracy  and completeness from the sites we included in our analysis. A more  detailed description of our scope and methodology is presented in  appendix I. We performed our work between June 2004 and July 2005 in  accordance with generally accepted government auditing standards,  including an assessment of data reliability.
subsections: section_title: Background
paragraphs: The Department of Energy’s Office of Environmental Management is  responsible for addressing nuclear and hazardous wastes, including some  of the most dangerously radioactive wastes in the world, and special  nuclear materials, such as plutonium, resulting from more than 50 years of  nuclear weapons production. DOE has planned or implemented a variety  of treatment and disposal approaches, depending on the nature and extent  of the waste (see table 1).
Numerous legal and regulatory requirements govern various aspects of  DOE’s cleanup effort. Many of the cleanup activities are governed by the  Comprehensive Environmental Response, Compensation, and Liability Act  of 1980, as amended, and the Resource Conservation and Recovery Act of  1976, as amended, through various agreements with regulators. Additional  laws affecting high-level waste and transuranic wastes are the Nuclear  Waste Policy Act of 1982, as amended, which establishes the program to  develop a geologic repository for storing high-level waste and spent  nuclear fuel, and the Waste Isolation Pilot Plant Land Withdrawal Act,  which establishes the requirements for operation of a repository for  transuranic wastes. In addition, under the Federal Facility Compliance Act  of 1992, DOE has entered into agreements with federal and state  regulators that establish milestones for accomplishing specified cleanup  activities and a mechanism to obtain approval to change priorities and  approaches. For example, under the agreement at Hanford, 10 percent of  the tank waste is to be processed by 2018 and a report on the plans for the  remaining 90 percent was due to regulators in January 2005, but now has  been extended to June 30, 2006.
DOE, under the direction of the Secretary of Energy, carries out its  environmental cleanup program under the leadership of the Assistant  Secretary for Environmental Management and in consultation with a  variety of stakeholders. In addition to U.S. Environmental Protection  Agency and state environmental and health agencies that have regulatory  authority in states where the sites are located, stakeholders include county  and local governmental agencies, DOE community advisory groups, and  Native American tribes. DOE’s Office of Environmental Management is  primarily responsible for cleaning up the wastes, largely through the use of  contractors overseen by DOE staff. In addition, DOE’s Office of Civilian  Radioactive Waste Management is responsible for the high-level waste  repository being developed at Yucca Mountain in Nevada, which is the  repository where DOE plans to dispose of spent nuclear fuel and high-level  waste. DOE’s Office of Legacy Management, created in 2003, is responsible  for managing DOE’s postclosure responsibilities at its former nuclear  weapons production sites to ensure the continued protection of human  health and the environment.
section_title: Progress in Accelerating Cleanup at DOE’s Sites Has Been Mixed
paragraphs: Over 2 years after implementing the accelerated cleanup plan, DOE has  made progress in a number of areas, but the most difficult cleanup  challenges remain. By March 2005, DOE was ahead or on its planned  schedule in 13 of 16 risk reduction activities. Activities that had met or  were ahead of the accelerated schedule included packaging nuclear  materials for disposition, disposing of low-level and low-level mixed  waste, and removing buildings. In some cases where DOE was meeting or  exceeding current risk reduction targets, only a small percentage of the  overall work had been accomplished. In contrast, DOE was behind its  schedule for key activities that will have a major impact on DOE’s overall  cleanup goals. These activities involve some of the more complex cleanup  activities, including disposing of transuranic waste, treating high-level  liquid waste, and closing tanks that had contained radioactive wastes.  These activities account for at least 30 percent of the total expenditures  DOE expects on cleanup and more than half of the cost reductions it  hopes to achieve under the accelerated cleanup plan. Finally, DOE has had  problems with other treatment and disposal activities not reflected in its  performance measures, such as significant delays in shipping plutonium  from sites to final storage locations, and delays in design and construction  of key facilities. Taken together, these results suggest that DOE may  already be at risk of not achieving its accelerated cleanup goals.
subsections: section_title: Progress Has Been Made on Several Cleanup Activities, Such as Disposing of Low-Level Waste and Removing Buildings
paragraphs: DOE’s cleanup was ahead of its planned accelerated schedule for several  activities, and other activities appeared to be on track. As of March 2005,  DOE was ahead of schedule in 9 risk reduction measures that fell into the  following cleanup categories—(1) tearing down and disposing of  facilities, (2) packaging and disposing of special nuclear materials, (3)  cleaning up low-level and low-level mixed waste, and (4) completing  cleanup of specific locations where releases of contamination occurred.  For example, in disposing of low-level and low-level mixed waste, DOE  was more than 181,000 cubic meters—or 35 percent—ahead of its  accelerated target goal. Table 2 shows the progress DOE has made in four  categories, as of March 2005.
These risk reduction measures show that DOE has made progress at an  accelerated pace for a variety of cleanup activities that often require more  readily available technology or standard treatment processes. For  example, facility disposal primarily involves decontaminating and tearing  down a building, and disposing of the rubble at established disposal sites.  In addition, DOE’s measures show that it had nearly completed its activity  to package plutonium and uranium residues, a highly dangerous activity  due to the potential for a nuclear accident or worker exposure.
While DOE has made progress in several areas, a significant part of the  progress was due to accelerated activities at relatively few sites and  reflects completion of only a small percentage of the overall work to be  performed. For example, DOE’s Rocky Flats site alone accounted for more  than 180,000 of the total 181,600 cubic meters of low-level and low-level  mixed waste that DOE disposed of ahead of schedule. Similarly, more than  half of the progress made ahead of schedule in remediating potential  contamination areas was due to work performed at Rocky Flats. And  although DOE made progress on many of its risk reduction measures,  some individual sites did not make progress at an accelerated pace. For  example, although DOE was ahead of schedule in disposing of low-level  and low-level mixed waste, both the Oak Ridge site and the Lawrence  Livermore National Laboratory were slightly behind their site targets on  this measure. In addition, DOE’s progress in a few areas reflected  achieving only a small portion of the overall work to be completed. The  most extreme example shows that DOE was ahead in packaging depleted  uranium; however, this reflects about 1 percent of the nearly 700,000  metric tons to be packaged. In tearing down and disposing of nuclear  facilities, DOE had completed about 9 percent of the 515 facilities it has to  clean up.
In addition to areas in which DOE was ahead of schedule, cleanup  progress was on track or nearly on track for four risk reduction measures  in the following cleanup categories: (1) packaging high-level waste for  disposal, (2) cleaning up special nuclear materials, (3) packaging spent  nuclear fuel for disposal, and (4) eliminating geographic sites (see table 3).  These cleanup activities involve difficult and hazardous work.
Making progress on cleanup activities is an important step in reducing  environmental risks and annual operating costs, and in demonstrating  results under the accelerated cleanup plan. DOE officials told us that  achieving cleanup results for these waste activities helps reduce future  mortgage costs such as surveillance and maintenance of unneeded  facilities, avoids potentially higher remediation costs in the future, and  demonstrates actual cleanup progress. To achieve such progress in  reaching its risk reduction goals, DOE took a number of steps including  changing the sequence of some cleanup activities to complete tasks earlier  than originally scheduled and reducing work scope where warranted for  other activities. Site officials credited the achievements to remediating  targeted areas such as contaminated burial grounds, waste sites, facilities,  and plutonium production reactors along the Columbia River at Hanford  and a variety of obsolete buildings at Idaho and Savannah River.  According to DOE officials at these sites, many of these areas were  scheduled for decommissioning and disposal in the future, but because  they were no longer needed, they were disposed of earlier than originally  planned. In addition, making progress in certain areas can free up funding  for use on other, more complex projects. For example, at DOE’s Idaho  National Laboratory, officials told us that completing disposal of most of  its low-level and low-level mixed waste 2 years ahead of schedule has  allowed them to apply the funds originally planned for managing this  waste to other cleanup activities at the site.
section_title: Problems Have Occurred on Major Activities, Including Disposing of Transuranic Waste and Radioactive Tank Waste and Shipping Plutonium to Storage Locations
paragraphs: In contrast to progress on cleanup activities for which DOE is ahead of or  on schedule, DOE is having difficulty with other cleanup work that could  have a major impact on its accelerated cleanup goals. As of March 2005,  DOE was falling behind in three risk reduction measures under two  cleanup categories that account for a significant portion of the potential  cost reductions DOE was expecting—radioactive tank waste and  transuranic waste. See table 4 for a list of cleanup activities for the two  waste types on which DOE has fallen behind since implementing the  accelerated cleanup plan.
DOE efforts to treat and dispose of radioactive waste from its tanks are  primarily at three DOE sites—Hanford, Idaho, and Savannah River.  However, because the Hanford and Idaho sites have not yet begun to treat  their liquid radioactive tank waste, the measure for eliminating liquid  waste from underground tanks applies to the Savannah River Site.  Although Savannah River has been processing radioactive tank waste  sludge since 1996, it was behind in processing and eliminating from its  tanks nearly 3 million gallons of liquid primarily because the site was still  developing waste separation technology and lacked operational treatment  facilities for disposing of liquid tank waste. While all three of DOE’s sites  had performance goals for closing radioactive waste tanks through March  2005, no tanks have been closed since 1997. Plans to close tanks at the  three sites have been delayed because DOE continues to work with  regulators to reach agreement on closure requirements and due to a legal  challenge to DOE’s tank closure strategy. DOE’s authority to proceed with  its tank closure plans at its Savannah River Site and the Idaho National  Laboratory was resolved by federal legislation enacted in 2004; however,  the law excluded the Hanford Site. Even so, Savannah River and the  Idaho National Laboratory are still behind schedule in preparing waste  removal facilities and obtaining regulatory approval to close the tanks.  Although DOE is preparing 12 of its 241 radioactive waste tanks for  closure, no tanks have actually been closed since the accelerated cleanup  plan was implemented in 2003.
Transuranic waste is present at several DOE sites, but lagging  performance is due primarily to the Idaho National Laboratory. Disposing  of transuranic waste involves specialized characterization and treatment,  packaging, and shipping in specially designed containers to a repository in  New Mexico. As of March 2005, DOE had fallen behind its accelerated  schedule by about 6,500 cubic meters, achieving about 80 percent of the  goal. Delays in Idaho’s transuranic waste disposal were primarily due to  contractor performance problems in preparing the waste for shipment and  difficulties in implementing a specially designed treatment technology.
The activities and projects for which DOE was falling behind the  accelerated schedule involve technically complex and costly cleanup  activities, and usually require specialized treatment technologies.  Radioactive tank waste, for example, involves treating highly radioactive  waste generated from the reprocessing of reactor fuel that contains a mix  of hazardous and radioactive constituents, and requires relatively complex  treatment technologies such as waste separation and vitrification.  Cleaning up radioactive tank waste accounts for about 30 percent—or  almost $40 billion—of DOE’s estimated total cleanup costs. To date, key  facilities DOE needs to use to treat and dispose of this waste are still being  designed and built, and waste treatment technologies continue to be  developed and tested. Similarly, some of the greatest risks, cleanup costs,  and technical challenges involve the disposal of transuranic waste. This  waste often requires an extensive retrieval, characterization, and  treatment process as well as repackaging in containers before it can be  shipped to and disposed of in the designated geologic repository for  transuranic waste in New Mexico. Transuranic waste disposal is behind  schedule and DOE will have difficulties catching up if this activity  continues to fall behind.
In addition to the cleanup activities that DOE measures, other cleanup  activities not included in DOE’s risk reduction measures are experiencing  problems further impacting overall cleanup progress. Although no  comprehensive list of these cleanup activities was available from DOE, we  found several examples, some of which are listed below, that involve  constructing facilities critical to DOE’s cleanup mission and relocating  certain wastes or nuclear materials (see table 5).
These cleanup activities can involve significant technical and operational  problems. Even though DOE does not track the status of these problems in  its risk reduction measures, DOE officials are aware of these problems and  are working to resolve them. However, because these problems remain  unresolved and their potential impact on the accelerated cleanup plan is  uncertain, DOE may already be at risk of not achieving the kind of  progress it predicted under its accelerated cleanup plan. For example, the  Hanford Site must construct key facilities and test complex technologies  before it can treat 55 million gallons of radioactive tank waste. Recently,  work on this project has been delayed due to engineering and contractor  performance problems, leading DOE to reevaluate its ability to complete  the project under current cost and schedule constraints. DOE expects to  revise project cost and schedule goals in fiscal year 2006. Despite these  problems, DOE does not have a risk reduction measure that shows the  progress of these activities or their potential impact on overall cleanup  progress. Consequently, DOE will not be able to quantify progress in  treating radioactive tank waste at Hanford until facilities are operational— now planned for 2011, or later. Similarly, DOE’s strategy under the  accelerated cleanup plan to consolidate Hanford’s plutonium offsite has  been deferred while long-term storage issues are being resolved. DOE  Hanford officials estimate that if the plutonium remains on-site, the  additional costs to continue storing and securing the material may amount  to more than $2 billion. Despite this problem, DOE’s plutonium risk  reduction measure, which focuses on completing stabilization and  packaging of the material, shows that this cleanup activity was ahead of  schedule.
When considered together, the results of DOE’s risk reduction measures  for two main types of cleanup activities—radioactive tank waste and  transuranic waste, which are behind schedule and require additional  cleanup activities—suggest that DOE may already be at risk of not  achieving its overall risk reduction goals. Each of these problems  represents a significant obstacle to DOE successfully completing cleanup  activities under its accelerated plan. Success hinges on DOE’s ability to  continue reducing risks by making cleanup progress and keeping costs  and schedules within the constraints of DOE’s plan.
section_title: DOE Is Unlikely to Achieve Its Estimated $50 Billion in Cost Reductions
paragraphs: DOE’s accelerated plan is unlikely to achieve the $50 billion cost reduction  goal for three main reasons. First, DOE’s method for calculating cost  reductions has limitations that raise questions about its reliability. The  actual cost reduction from the accelerated cleanup plan, if implemented as  intended, would likely be much lower. Second, the accelerated plan is  based on a number of key assumptions about improvements to the  cleanup approach—such as shortened schedules and technology  improvements—that may not occur as planned. Third, the three sites that  account for most of the cost reduction are already facing challenges and  have either increased their cost estimates or plan to increase their funding  requests, raising doubts about DOE’s ability to achieve its full expected  cost reductions. While DOE believes the accelerated cleanup plan will  reduce costs, the actual amount of those cost reductions is uncertain.
subsections: section_title: DOE Estimates Overstated Potential Cost Reductions
paragraphs: DOE calculated its estimated $50 billion in cost reductions by comparing  its fiscal year 2001 cost estimate for the program—the last cost estimate  before DOE implemented its accelerated strategy—with its fiscal year  2003 cost estimate for the program—the first complete cost estimate  under the new accelerated strategy. DOE’s 2001 cost estimate for the  program was $192 billion, reflecting its prior approach to cleaning up its  radioactive and hazardous wastes by 2070. The 2001 estimate represented  forecasts generated by DOE’s field staff at each of its sites and for each of  its activities. Aggregating these site-developed estimates, DOE arrived at  its 2001 cost estimate for the program. In contrast, to develop its 2003  estimate—reflecting an accelerated approach—DOE provided several of  the sites with target costs that the sites were to work towards meeting.  These target costs were based on assumptions from the headquarters  officials about how and when the work should be completed. Under this  new strategy, DOE’s 2003 estimate for completing the cleanup work was  $142 billion. DOE subtracted the 2003 estimate for the new strategy ($142  billion) from the 2001 estimate under the original strategy ($192 billion) to  arrive at its $50 billion cost reduction estimate.
However, DOE’s estimated $50 billion in cost reductions from accelerating  cleanup at its sites may not be fully reliable for several reasons:    Pre-acceleration baseline cost estimate may be unreliable. In a February  2002 review of the cleanup program, DOE specifically acknowledged that  its cost estimate of the program did not provide a reliable estimate of  project costs. DOE officials explained that the site-level estimates of  cleanup work were based on calculations that were highly uncertain  beyond the life of the contracts. We and others have previously raised  concerns that DOE’s cleanup cost estimates may not be fully reliable. In  our prior work, we noted that in preparing baseline cost estimates, DOE  lacked a standard methodology for sites to use. Further, in the past,  DOE’s Office of Inspector General and the National Research Council have  raised similar concerns about DOE’s estimates being incomplete and  unreliable.
Estimates did not include contingency costs. Because of the high  uncertainty surrounding the cleanup work, DOE computes additional  uncertainty costs—called contingency estimates—which are added to the  overall cleanup estimates in its annual financial statements. These costs  are intended to cover any underestimated or unforeseen cleanup work. In  2001, DOE estimated that because of uncertainty related to the cleanup, it  would add a contingency estimate equal to an additional 17 percent of its  cleanup cost estimate. In contrast, following implementation of the  accelerated plan, DOE estimated in 2003 that increased uncertainty called  for nearly doubling the contingency estimate to 29 percent of the cleanup  cost estimate. However, when calculating its expected cost reduction  under the accelerated plan, DOE did not include either of these  contingency estimates in its comparison of the two estimates. Doing so  would likely have lowered the estimated cost reductions to below $50  billion.
No present value analysis was performed. DOE’s estimate of potential  cost reductions did not consider the time value of money. As we noted in  our previous report, according to standard economic analysis and  guidance developed by OMB, cost-comparison analyses should be based  on lifecycle costs of competing alternatives with future costs discounted  to present value; that is, adjusted both for inflation and the time value of  money. According to OMB’s cost-estimating guidance, DOE should have  first converted the annual expected costs of cleanup for both its 2001 and  its 2003 estimates to their present value in 2003, and then compared the  two present-value costs. While DOE’s comparison of its estimates is based  on values that are expressed in constant 2003 dollars (to account for  inflation), DOE did not adjust its figures to account for the time value of  future costs. Had DOE compared present value estimates for 2001 and  2003, the resulting cost reduction would likely have been much lower. For  example, when we adjusted DOE’s estimated $20 billion cost reduction for  the Hanford waste treatment project to consider the time value of money,  the potential cost reduction decreased by about 40 percent—to about $12  billion.
section_title: Cost Reductions Were Based on Assumed Performance Improvements That May Not Occur
paragraphs: As part of its plan to reduce the expected cost of the cleanup and  eliminate risks more quickly, DOE made several assumptions about ways  to improve the cleanup work. These assumptions included (1) developing  new technologies, such as a technology to allow more efficient  vitrification of some wastes; (2) implementing new acquisition strategies  that encourage and reward contractor efficiencies, such as performance- based contracts; (3) revising site cleanup agreements to simplify treatment  and disposal requirements, such as reclassifying some wastes allowing for  disposal on site rather than remotely; and (4) completing work sooner  than planned thereby eliminating out-year costs.
Assumed improvements in DOE’s cleanup approach resulted in DOE’s  estimated $50 billion in cost reductions (see figure 1).
The assumptions enabled DOE to develop revised cleanup cost estimates  at most sites that reflected cost reductions (see figure 2).
Although these assumed improvements may have the potential to reduce  cleanup costs, many of them are still uncertain and may not occur. For  example,    Technology improvements. DOE assumed that significant cost reductions  would result from improved technologies that would allow treatment and  disposal of waste faster and at lower costs. Nearly all of the estimated cost  reduction pertains to improvements in the technologies at the Idaho  National Laboratory and Hanford sites. For example, DOE expected a $4.7  billion cost reduction at the Idaho National Laboratory by using a  technology for separating a portion of the tank waste, but that technology  has still not been successfully tested and implemented on DOE tank waste.  Similarly, at the Hanford site, DOE is testing a technology that officials  estimated would speed up the stabilization of some low-activity wastes  reducing costs by an estimated $8.9 billion. However, the technology has  not been fully implemented or tested on Hanford’s unique waste, and costs  of operating the new technology are not yet known, so the extent of cost  reductions DOE assumed could be incorrect. For example, an official for  the contractor developing the pilot plant to test this technology said the  project is already projecting cost increases and is currently estimated to  begin operating about 6 months late.
Contract reform. DOE estimated that revised contracting strategies would  also result in significant cost reductions. However, at two of DOE’s largest  sites—Savannah River and Hanford—DOE will not award some major new  contracts until 2006. Until then, the final price of DOE’s new contracts and  any potential cost reductions associated with them are uncertain. For  example, DOE has assumed it will reduce overall costs by more than 20  percent under its new Savannah River Site contract. However, the details  and final cost of the contract will not be finalized until the contract is  awarded. External auditors acknowledged this uncertainty at Hanford in  their assessment of DOE’s fiscal year 2004 environmental liabilities  estimate, noting that it was “not appropriate” to assume cost reductions  from future contracts since those reductions are “neither probable nor  susceptible of reasonable estimation.”
Revisions to cleanup agreements. DOE estimated additional cost  reductions would result from revising site-specific waste cleanup  agreements with federal and state regulators. However, regulators have  not agreed to or are resisting revisions to agreements that accounted for  most (at least 75 percent) of these expected cost reductions. For example,  DOE expected to be able to determine that some radioactive tank waste is  not high-level waste but transuranic waste, thereby allowing DOE to ship  the treated waste to the Waste Isolation Pilot Plant for permanent disposal  and reducing costs by $1.5 billion. However, in late 2004, the head of New  Mexico’s Environment Department—the state regulator for the  repository—said the state would refuse to accept DOE’s tank waste for  disposal at the repository because New Mexico considers that waste to be  high-level, not transuranic, waste. In addition, because of the uncertainty  about the disposal path for this radioactive tank waste, the state of  Idaho—which has a regulatory agreement with DOE to treat and dispose  of the waste out of the state—prefers that DOE apply more extensive high- level waste treatment technologies.
Work completed sooner. DOE also expected cost reductions resulting from  completing work sooner through improvements that, in many cases, also  depend on the assumptions discussed above. Because of the uncertainty  surrounding assumed improvements in its cleanup operations, DOE’s  anticipated cost reductions from completing work sooner are also in  jeopardy. For example, DOE estimated approximately $2.8 billion in cost  reductions at its Savannah River Site from accelerating the cleanup of  radioactive tank waste. However, that reduction depends on implementing  a new waste treatment technology that has not yet been fully tested  outside a laboratory. As a result, the uncertainties surrounding  technological improvements raise doubts about DOE’s ability to accelerate  its schedule. In addition, several of the projects that DOE expects to  complete in less time are already experiencing problems. For example,  DOE estimated that an approximately $2.8 billion cost reduction would  result, in part, from revising its schedule for shipping transuranic waste to  the repository in New Mexico. However, as we noted above, transuranic  waste packaging and shipping is already behind schedule.
section_title: Nearly All of the Cost Reductions Were to Occur at Three Sites Where DOE Is Having Significant Technical, Regulatory, or Management Challenges
paragraphs: DOE expected cost reductions to occur at nearly all of its cleanup sites,  but most of the total estimated cost reduction was expected from 3 sites  that account for the largest portion of DOE’s overall cleanup costs— Hanford, Savannah River, and Idaho National Laboratory. However, these  sites are already facing challenges to their cleanup efforts which may  jeopardize DOE’s ability to achieve its estimated $50 billion cost reduction.  Although it is impossible to precisely predict the impact that these  challenges will have on DOE’s overall cleanup costs, any cost increases at  these sites could offset cost reductions at other sites and lower the  potential for overall cost reductions from the accelerated plan.
The types of challenges that could increase cleanup costs at these three  DOE sites include the following:    Delays in disposing of highly radioactive wastes. In early 2005, DOE  reported that a slip in the scheduled opening of DOE’s planned repository  at Yucca Mountain, Nevada would delay shipment of waste by at least 2  years—and possibly for as long as 7 years—due to technical and  regulatory issues. As a result, sites now storing high-level waste and spent  nuclear fuel have been reevaluating their waste disposal plans and  associated cost and schedule estimates. The sites potentially affected  include Hanford, Idaho National Laboratory, Savannah River, and West  Valley. Most sites expect costs to increase as disposal schedules slip. In its  fiscal year 2006 budget request, DOE estimated that a five year delay in  opening the Yucca Mountain repository could increase costs by as much  as $720 million at its three largest sites. This includes building additional  storage buildings and added operating costs.
Legal obstacles preventing DOE from implementing aspects of its  cleanup approach. DOE faces challenges to its planned treatment strategy  at the Hanford Site that could potentially increase costs. A 2002 lawsuit  challenged DOE’s plans to separate and determine that a portion of its  waste could be treated and disposed of as other than high-level waste, and  to DOE’s plans to close tanks leaving some radioactive residual in the  tanks. In October 2004, a federal appeals court overturned a district court  ruling against DOE and held that it was premature to rule on the matter  until DOE implemented its strategy. Federal legislation passed in October  2004 provided authority for DOE to carry out its acceleration completion  strategy at its Savannah River Site and Idaho National Laboratory.  However, the law excluded the Hanford Site. If similar authority is not  provided for the Hanford Site, costs at the site could increase  significantly—up to $67 billion, according to DOE’s estimate. Similarly,  uncertainty surrounds Hanford’s ability to accept waste from other DOE  sites as the result of two ongoing lawsuits: one involving a challenge by  the state of Washington to DOE’s plan to ship low-level, low-level mixed,  and transuranic waste into the state, and one concerning a recent  Washington state citizens’ initiative that could prohibit Hanford from  accepting additional waste until existing waste is cleaned up. Although  DOE believes it will ultimately prevail in these lawsuits, some cleanup  activities at the other sites may face delays and increased storage costs  until the issue is resolved.
Other pressures increasing costs at key sites. By the end of fiscal year  2004, the total cost estimate of the cleanup work at two of DOE’s largest  sites had already increased above cost targets established in 2003. At the  Savannah River Site and Idaho National Laboratory overall cleanup  estimates in 2004 were over $2.0 billion higher than in 2003. Similarly,  officials at DOE’s Hanford Site indicated in recent public meetings that  they are requesting cleanup funding above previously established funding  targets for fiscal year 2007, which, if approved, will also add to the plan’s  total cost. According to the site officials, the additional funds are being  requested primarily to address higher than expected waste management  and treatment costs.
Because of the limitations and uncertainties discussed above, DOE’s $50  billion cost reduction goal is unlikely to occur. Recognizing that achieving  the full $50 billion in cost reductions may be in jeopardy, DOE officials  recently stopped citing any specific estimate in connection with the  accelerated plan. However, DOE continues to believe it will achieve some  cost reductions with its accelerated strategy.
section_title: DOE’s Performance Reporting Does Not Clearly Reflect Progress Made toward Achieving the Overarching Goals of the Accelerated Cleanup Plan
paragraphs: DOE’s performance reporting does not present a clear understanding of  progress toward meeting the $129 billion cost target and 2035 completion  date of the accelerated cleanup plan. While DOE performance measures,  as discussed earlier in this report, provide useful information about the  current status of cleanup activities, there are two main shortcomings in  the way DOE uses these measures to report its progress toward meeting  the overarching goals of the accelerated plan. First, in reporting on its  performance, DOE does not clearly relate cleanup accomplishments with  their associated costs. Second, DOE reports its performance in a way that  does not highlight key cleanup activities or events that have significant  implications for achieving overall cleanup goals. These shortcomings  make it difficult for the Congress and the public to fully understand how  likely DOE will be able to achieve its accelerated cleanup cost target and  completion date.
subsections: section_title: Performance Reporting Practices Make It Difficult to Clearly Understand the Relationship Between Cleanup Progress and Cost Performance
paragraphs: We and others have emphasized the importance of ensuring that reporting  on program performance allows a clear understanding of how well a  program is meeting goals; that is, linking performance goals with program  costs. In a February 2005 study, we noted that federal accountability  laws—the Government Performance and Results Act of 1993 (GPRA) and  the Chief Financial Officers Act of 1990—emphasize the importance of  linking program performance information with financial information as a  key feature of sound management and an important element in presenting  to the public a useful and informative perspective on federal spending.  Additionally, OMB indicated to federal agencies that annual performance  budgets should clearly link performance goals with costs for achieving  those goals, both long-term and annual performance goals.
DOE’s performance reporting does not provide for a clear understanding  of how well the cleanup program is performing. In reporting on its  progress, DOE does not establish how accomplishments made in  addressing wastes—which DOE measures through its risk reduction  measures—are associated with the costs incurred—which DOE measures  through its cost performance measures. Rather, DOE reports separately on  the waste treatment and disposal goals it has achieved using one measure  and reports on whether cleanup activities are being performed within cost  parameters using another measure. These separate measures are  organized around different categories and have different units of measure,  making it difficult to link the information the two measures provide (see  table 6).
The difficulty of understanding the relationship between cleanup  accomplishments and cost performance can be illustrated by comparing  the performance information available on transuranic waste. DOE’s risk  reduction measure provides useful information about how much  transuranic waste was processed and disposed of, but DOE does not  separately report cost information related to transuranic waste  accomplishments. Instead, DOE includes costs associated with  transuranic waste activities as part of a larger project category titled “solid  waste stabilization and disposition.” Therefore, DOE and others generally  do not have a complete picture of performance for this activity, such as  the impact on cost and schedule of falling behind in processing and  disposing of the waste. For example, as of March 2005, DOE’s Idaho  National Laboratory was more than one year—or more than 1,000  shipments—behind its planned number of shipments of transuranic waste  to the federal repository. However, DOE reports no corresponding cost  performance measure to indicate the impact of this delay on cost and  schedule (see table 7). During the same time period, Idaho’s solid waste  stabilization and disposition cost performance score indicated the project  category was “green,” or remaining within cost and schedule goals.
However, because of the delays in transuranic waste shipments, DOE is  significantly behind schedule, has recently ended the contract, and is now  in the process of determining the cost impact of these delays.
The importance of directly linking progress on cleanup with cost  performance has been recognized by OMB. In a fiscal year 2005 program  review of DOE, OMB found that DOE’s cleanup program had not  developed annual cost and schedule performance measures to monitor  progress towards completing the cleanup mission. OMB officials said that  better linking cleanup progress and cost performance in DOE’s  performance reporting would allow for tracking DOE’s performance  against its long term goals.
DOE acknowledged that its performance reporting practices currently do  not directly link progress on cleanup with performance against cost and  schedule targets. According to a senior DOE adviser to the Principal  Deputy Assistant Secretary for Environmental Management, the  Department’s earned value management system could eventually provide  this linkage, but DOE is still working to fully implement the system and to  ensure that it provides reliable data. He said that DOE’s earned value  management system will eventually produce information on the cost,  schedule, and work completed over the lifecycle of all projects related to  its cleanup mission, and may eventually provide an aggregate earned value  score for the entire cleanup program.
While these steps may be useful, for DOE’s performance reporting using  earned value to provide for a full understanding of cleanup performance,  DOE will need to also report on the linkage between cost, schedule, and  performance data by (1) generating comparable cost, schedule, and  performance data at an activity level, such as processing and disposing of  transuranic waste and (2) ensuring that the cost data is reported in  relation to lifecycle cost targets, not just for a specific year or contract  period. While DOE is working toward including lifecycle cost targets and  performance in its earned value data, it is not taking steps to directly link  risk reduction measures with cost performance at the activity level.  According to a senior adviser to the Principal Deputy Assistant Secretary  for Environmental Management, the department has been focused on  ensuring that site cost estimates are reliable and that all mission-related  projects are covered under the earned value system. However, unless this  linkage is established, DOE performance reporting will not provide for a  full understanding of progress being made by individual cleanup activities  or whether it is on track with its overall $129 billion cost target for  completing the cleanup program.
section_title: Performance Reporting Does Not Highlight Critical Activities that Are Best Indicative of Overall Performance
paragraphs: Performance reporting should provide for a clear understanding by the  Congress and the public of how an agency is progressing in achieving its  program goals. In assessing how various government agencies reported on  their progress, we noted in a 2004 report that agencies need to consider  the needs of the information’s user and best tailor performance  information so that a clear picture of the agency’s progress is presented.  We found that an agency’s performance data can have real value only if the  data are used to highlight actual performance against an agency’s planned  goals.
DOE publicly reports on its progress toward achieving accelerated  cleanup plan goals through various means, including providing  information to the Congress in annual budget submissions, reporting  progress against selected annual goals in the agency’s annual performance  and accountability report, and making information accessible on the  department’s Web site. In all three cases, DOE primarily relies on the risk  reduction measures as the indicator of cleanup progress. For example, in  its fiscal year 2006 budget request to the Congress, DOE provided  information on all 16 risk reduction measures, including the amount of  work estimated to be completed through fiscal year 2006, such as number  of buildings torn down, and the estimated total amount of work to  accomplish. In the budget request, DOE also included a variety of other  program information, such as general cleanup achievements to date, and  identified 7 risk reduction measures it would use to assess progress at the  end of the fiscal year. Similarly, in accordance with federal reporting  requirements, DOE provides performance information each year in its  annual performance and accountability report that accompanies the  department’s annual financial statement. In the performance and  accountability report, DOE describes the general goals of the cleanup  program, external factors that could affect DOE’s ability to achieve those  goals, and its progress against selected performance goals for the year.  Finally, on its Web site, DOE provides descriptive information for its 16  risk reduction measures, including how much work has been  accomplished to date for each measure and the estimated total amount of  work to accomplish for each measure.
Although this information is useful, DOE’s performance reporting does not  present a complete picture of progress toward accelerated cleanup plan  goals. For example, DOE has, up to now, reported on its progress as  measured against annual goals, rather than its progress in meeting its  overall $129 billion cost target and 2035 completion date. By doing so,  DOE provided a different picture of the department’s progress than if  progress was compared with longer term goals. Two examples from the  agency’s performance reporting in its 2004 Performance and  Accountability Report illustrate this point. In its 2004 report, DOE  reported it met less than 80 percent of its annual goal of closing 9 liquid  waste tanks in fiscal year 2004. In fact, DOE met 0 percent of its goal, has  closed no tanks since 1997, and is currently significantly behind its  estimated lifecycle target for this activity. To regain its performance  schedule, DOE would need to complete the regulatory process and close  19 waste tanks by the end of fiscal year 2005. However, this is an unlikely  achievement given the length of time of remediation and regulatory work  that is required before the tanks can be closed. In a second example, DOE  reported it had met less than 80 percent of its annual planned target for  packaging plutonium and uranium residues because it was 175 kilograms  behind its accelerated schedule. However, calculating DOE’s performance  for this activity against the estimated lifecycle target indicates that DOE  was actually 33 kilograms ahead of its cumulative goal by the end of 2004.  According to a senior DOE adviser to the Principal Deputy Assistant  Secretary in the Office of Environmental Management, DOE plans to begin  reporting its progress against lifecycle goals in the department’s fiscal year  2005 performance and accountability report.
Another area of concern is that DOE’s performance reporting does not  highlight performance on critical cleanup activities that could best provide  information about whether the department is on track to meet its $129  billion cost target. Among DOE’s various performance measures, certain  ones are more important for indicating whether DOE is on track with its  overall accelerated cost and schedule goals, and may provide a different  picture of progress than DOE is currently reporting. In the longer term, to  provide an indication of progress toward overall accelerated goals,  projects that account for a large portion of DOE’s spending—and  correspondingly contribute the most towards cost reductions—can serve  as key indicators of progress. For example, DOE expects a significant  portion of accelerated plan cost and schedule reductions to be achieved  from two waste types that are the most difficult to address—radioactive  tank waste and transuranic waste. DOE’s radioactive tank waste program  alone accounts for nearly 60 percent—almost $30 billion—of DOE’s  estimated cost reductions under the accelerated plan. Highlighting  performance in these areas would provide a better indication of how well  DOE is progressing toward its longer term accelerated cleanup goals. As  previously discussed, both radioactive tank waste and transuranic waste  are the two areas where DOE’s progress has fallen behind. In three of four  risk reduction measures the department uses to track progress of its  radioactive tank waste and transuranic waste activities, DOE has  experienced delays that could impact cost. Furthermore, work on DOE’s  $5.7 billion waste treatment construction project at Hanford—an activity  not tracked by a risk reduction measure—has been delayed, creating  potentially significant cost and schedule increases. While DOE includes  radioactive tank waste and transuranic waste in its performance reporting,  the department does not identify the significance of these cleanup  activities for meeting overall cleanup cost and schedule goals.
In the short term, closure sites and key activities that are contributing to  planned budget declines over the next few years may provide a good  indication of whether DOE is currently on track to meet its planned  accelerated cost target. DOE’s accelerated plan calls for a decrease in  annual funding requirements between 2005 and 2008. That is, DOE’s  annual funding requirement is planned to drop from about $7.3 billion in  fiscal year 2005, to about $4.5 billion by 2008—or a decline of about $2.8  billion. Almost 90 percent of this decline is attributable to 10 sites  scheduled to be closed in 2006, and progress on eight key projects.  Currently, the indicators for these sites and projects show that at least half  are behind in some or all cleanup activities. For example, DOE’s  Miamisburg, Fernald, and Lawrence Livermore Laboratory sites—all  scheduled to complete cleanup by 2006—are behind in at least one risk  reduction activity. Similarly, DOE’s spent nuclear fuel project at Hanford  was in danger of exceeding its cost target as of April 2005. Providing  aggregate information on the potential cost increases or schedule delays in  this group of sites could help gauge DOE’s ability to achieve a funding  decline over the next few years.
It is not clear what impact the challenges DOE faces will have on its  overall ability to achieve near-term or longer-term cost reduction goals.  However, DOE’s performance reporting does not highlight this  information nor does DOE report which activities are the most significant  to achieving its overall cost and schedule goals. DOE officials said that, in  their view, the department’s current reporting of its performance in the  annual performance and accountability report and in its budget  submission is sufficient to provide an understanding of progress towards  the program’s long-term goals. DOE officials also noted that, internally,  senior DOE managers use a variety of performance measures to monitor  more critical elements of the program that are not included in any public  reporting of accelerated cleanup progress. Nevertheless, because DOE  reporting methods do not identify critical indicators such as progress on  key cleanup activities, the department is not providing the Congress and  the public the basis for a full understanding of its progress toward  achieving the goals of the accelerated cleanup plan.
section_title: Conclusions
paragraphs: DOE expected that its accelerated cleanup plan would allow it to clean up  contaminated sites faster and at significantly lower cost than previously  planned. While DOE has made progress toward its cleanup goals,  important challenges remain and DOE is not likely to achieve its original  goal of $50 billion in estimated cost reductions. While DOE’s performance  reporting provides information on some aspects of cleanup progress, it  does not provide for a full understanding of how the many uncertainties  DOE faces could affect achieving cleanup goals and does not include a  meaningful analysis of the significance of the data. Furthermore, because  DOE’s reporting methods do not directly correlate cleanup results with the  associated costs and fail to identify critical indicators, such as progress on  key cleanup activities, DOE is not providing an adequate picture of its  overall progress toward staying within the $129 billion total program cost  and 2035 completion date goals. We believe that improving DOE’s  performance reporting to address these limitations would provide more  complete information and allow for a more accurate assessment of DOE’s  progress toward achieving accelerated cleanup plan goals.
section_title: Recommendations for Executive Action
paragraphs: To help DOE and the Congress monitor progress toward meeting DOE’s  accelerated cleanup plan cost and schedule goals, we recommend that the  Secretary of Energy take the following two actions:  Improve DOE’s performance reporting so that there is a clearer,  discernable relationship at the activity level between cleanup  accomplishments and the costs incurred in doing the work and  Identify in DOE’s performance reporting to the Congress and others  those performance measures that are the most critical to achieving  cost and schedule goals, and summarize the progress on these  measures and the potential impact of any problems that could affect  achieving accelerated cleanup plan goals.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOE for review and comment. In  written comments, DOE’s Principal Deputy Assistant Secretary for  Environmental Management agreed with the report’s recommendations.  The Principal Deputy Assistant Secretary also provided technical  comments as an enclosure to the letter. We have incorporated these  comments as appropriate. DOE’s written comments on our draft report are  included in appendix III.
Regarding the report’s two recommendations, DOE agreed to improve its  performance reporting so that there is a clearer, discernable relationship  between cleanup accomplishments and the costs incurred in doing the  work. DOE also agreed to identify and highlight in its progress reports to  the Congress and others those performance measures that are the most  critical to achieving cost and schedule goals, and summarize the progress  on those measures and the potential impact of any problems that could  affect achieving the goals. To aid in implementing these recommendations,  DOE said it will continue to improve its earned value management system  to serve as a link between performance measures and cost.
In technical comments to us accompanying the letter, DOE disagreed with  our discussion in the report that it should use present value analysis in  calculating the estimated cost reduction it expects to achieve under its  accelerated cleanup plan. DOE stated that we have misinterpreted OMB  Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis  of Federal Programs, regarding the use of present value analysis. DOE  said that present value calculations are more applicable to cost-benefit  analyses, particularly when attempting to analyze the costs and benefits to  various options or alternatives. DOE emphasized that its cost estimating  methodology was developed solely for the purpose of estimating the  program’s environmental liability, and its cost reduction estimate is simply  the difference between fiscal year 2001 and fiscal year 2003 environmental  liability estimates. DOE believes that since it was not attempting to  calculate benefits, a present value analysis is not appropriate.
In our view, our interpretation of the OMB circular is correct and, in fact,  is supported by DOE’s own guidance, which recommends using present  value analysis as a standard methodology for cost comparisons of different  alternatives. OMB Circular A-94 (revised October 29, 1992), standard  economic analysis, and DOE’s guidance (Report to Congress, July 2002,  Appendix A–Lifecycle Cost Analysis) recommend present value analysis as  the appropriate technique for analysis of alternative options even if the  benefits from different approaches are the same or a comparison of the  benefits is not possible. As we previously reported, although using current  dollar estimates may be appropriate for budget purposes, present value  analysis is the standard methodology to be used for comparing costs of  different alternatives that occur at different times, such as comparing  DOE’s accelerated and baseline cleanup alternatives.
We are sending copies to other interested congressional committees and  to the Secretary of Energy. We will also make copies available to others  upon request. In addition the report will be available at no charge on the  GAO Web site at http://www.gao.gov.
If you or your staff have any questions on this report, please call me on  (202) 512-3841. Contacts points for our Office of Congressional Relations  and Public Affairs may be found on the last page of this report. Other staff  contributing to this report are listed in Appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine what progress DOE has achieved under its accelerated  cleanup plan, we identified the measures DOE uses to monitor and report  its performance. We found that DOE uses two primary measures to  monitor progress: its “Gold Chart” metrics (risk reduction measures) and  earned value metrics. For DOE’s risk reduction measures, we discussed  with DOE officials—both at headquarters and at specific sites—how these  measures were developed. We also discussed how these measures are  used by DOE—both internally and for external reporting. We obtained and  analyzed DOE’s current risk reduction measures to determine both current  status and implications of out year requirements for the overall cleanup. In  reviewing DOE’s efforts to develop earned value data, we reviewed  various reports on DOE’s earned value system, including a recent GAO  report discussing the data and a 2004 National Academy of Sciences  report. We reported in March 2005, that for several major projects, earned  value management principles had not been properly implemented at the  department to measure cost and schedule performance. In addition, the  National Research Council reported in 2004 that the quality of earned  value management in the department was inconsistent and may not be  completely accurate. We also discussed DOE’s earned value measures  with DOE officials in its Environmental Management, Office of  Performance Assessment and with DOE officials in the Office of  Engineering and Construction Management. In part due to the concerns  raised by GAO and others about the reliability of information from DOE’s  earned value system and in part because DOE had not completed  addressing these concerns by more fully implementing its earned value  management system, we did not report on earned value data as a measure  of DOE’s progress in achieving its accelerated goals.
To determine how DOE implemented its accelerated strategy, we reviewed  several documents at DOE headquarters providing the status of 10  restructuring initiatives implemented when the accelerated initiative was  started. We reviewed DOE policy and procedure documents, and  discussed DOE’s strategy to implement its accelerated plan with DOE  headquarters officials in its Office of Environmental Management. We  further reviewed site performance management plans—a document laying  out each site’s strategy for implementing the accelerated initiative.
To understand how the accelerated cleanup plan was being implemented  at the site level and progress made, we selected a nonprobability sample of  5 sites to review, based on several criteria. We started with a list given to  us by DOE that contained all DOE cleanup sites, each site’s expected  completion date, each site’s 2003 estimated lifecycle target, and each site’s  contribution to cost reductions under the accelerated initiative. We  eliminated from consideration any site that (1) had completed cleanup by  2004; (2) had a 2003 estimated lifecycle target less than $1 billion, and (3)  contributed less than $100,000 in cost reductions to DOE’s overall $50  billion estimated cost reductions from implementing its accelerated  initiative. This gave us a list of sites, which we placed into three  categories, based on DOE’s budget accounts: (1) sites expected to close by  2006, (2) sites expected to close by 2012, and (3) sites expected to close by  2035. We selected a minimum of one site from each category. In making  our selection, we considered the following factors: geographic dispersion  of the sites, the site’s estimated contribution to DOE’s annual budget, the  diversity of waste types represented at the site, and contribution to DOE’s  estimated $50 billion cost reduction from acceleration. Applying these  criteria, we selected the following five sites: Hanford Site—both DOE’s  Office of River Protection and Richland Operations Office; Savannah River  Site; Idaho National Laboratory; the West Valley Demonstration Project,  and DOE’s Miamisburg Closure Project. For each site we selected, we  reviewed and obtained information regarding cost, schedule, and  performance under DOE’s risk reduction measures. We independently  verified, to the extent possible, the dollar figures and waste cleanup  performance data provided to us by DOE, by taking various steps. For  example, we analyzed budget formulation documents, documented waste  cleanup assumptions, and obtained information on cost validation  procedures. We determined that these data were sufficiently reliable for  purposes of this report. In addition, at each site, we discussed with site  officials implementation of the accelerated cleanup plan, progress toward  meeting cost and performance goals, and any obstacles to meeting those  goals.
To develop information on the key assumptions underlying the  Department of Energy’s accelerated cleanup plan, we analyzed  information and documents provided by DOE officials and contractors at  DOE headquarters and various sites. For many of the sites, we reviewed  the performance management plans to assess how their approach to site  cleanup would change under the accelerated plan. To determine how  those assumptions affected achieving the accelerated cleanup goals, we  evaluated site estimates of how the proposed changes under acceleration  would impact site cleanup activities. Analyzing the reports provided by  DOE, we determined the key contributors to the planned cost reductions.  We then assessed through review of various reports and interviews with  responsible officials the status of the key initiatives. We also discussed the  progress of the plan with state regulators and Environmental Protection  Agency officials, DOE headquarters officials, including the acting Assistant  Secretary for Environmental Management, and officials from other  headquarters offices.
In order to assess the reliability of the gold chart metrics and the cost and  schedule data provided to us by DOE, we took several steps. First, we  obtained and reviewed selected site baselines. These included reviews by  DOE’s Office of Engineering and Construction Management, as well as  DOE’s Office of Environmental Management. We also obtained and  examined the review of DOE’s fiscal year 2004 environmental liability  estimate by DOE’s independent auditor, KPMG. KPMG audits DOE’s  environmental liability estimate as part of its annual audit of DOE’s  financial statements. In addition to these steps, for the sites we visited, we  obtained information on data reliability procedures from site and  contractor officials to determine internal controls used to ensure accurate,  complete, and timely data. Finally, we developed and administered a data  reliability form to each site we reviewed, obtaining information including  what types of tests are administered in database systems to ensure the  accuracy and completeness of data entered into the system, if and how  frequently data are reviewed by independent parties, and how DOE  ensures risk reduction measures are independently verified. The forms  were completed by DOE and contractor officials. We asked follow-up  questions whenever necessary. Based on the information we obtained and  our analysis of the information provided, we determined that the reliability  of the data provided was adequate for the purposes of this report. As we  noted throughout the report, we found methodological problems with  DOE’s reporting of cost data and estimation of cost reductions. In  reporting its cost data, DOE incorrectly added cost numbers in actual  (current) dollars for years prior to 2001 to cost numbers in constant 2003  dollars for years post-2001. DOE also incorrectly estimated cost reductions  of $50 billion without adjusting for the time value of money. Since in our  previous work we demonstrated the effect of these problems by correcting  and re-estimating DOE’s cost reductions, we did not do so again in this  report. Therefore, we used DOE’s estimates throughout as reported by  DOE with no further correction. We conducted our review from June 2004  through July 2005 in accordance with generally accepted government  auditing standards.
section_title: Appendix II: DOE’s Estimated Cost Reductions under the Accelerated Cleanup Plan
paragraphs: Appendix II: DOE’s Estimated Cost  Reductions under the Accelerated Cleanup  Plan term stewardship) stewardship)$453,820 FY03 Lifecycle  Cost  (does not include  long-term  term stewardship) stewardship)
Rocky Flats Environmental  Technology Site  Because of the difficulty in separating long-term stewardship and cleanup activities from the pre- accelerated cost estimates, DOE included both when calculating the cost change under the new plan.
The FY03 lifecycle cost estimate includes cleanup costs only since most long-term stewardship costs  were transferred to other offices under the accelerated plan.
Includes operations office costs.
Because of work transfers within Environmental Management, some costs changed in 2003 at sites  that closed before 2003.
Includes Headquarters and Program Direction costs.
section_title: Appendix III: Comments from the Department of Energy
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Chris Abraham, John Delicath,  Doreen Eng, Doreen Feldman, Nancy Kintner-Meyer, Jeffrey Larson,  Gregory Marchand, Mehrzad Nadji, Judy Pagano, Thomas Perry, and Bill  Swick made key contributions to this report.