Nuclear Nonproliferation: DOE Needs to Address Uncertainties with and Strengthen Independent Safety Oversight of Its Plutonium Disposition Program
Published: 2010-03-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The end of the Cold War left the United States with a surplus of weapons-grade plutonium, which poses proliferation and safety risks. Much of this material is found in a key nuclear weapon component known as a pit. The Department of Energy (DOE) plans to dispose of at least 34 metric tons of plutonium by fabricating it into mixed oxide (MOX) fuel for domestic nuclear reactors. To do so, DOE's National Nuclear Security Administration (NNSA) is constructing two facilities--a MOX Fuel Fabrication Facility (MFFF) and a Waste Solidification Building (WSB)--at the Savannah River Site in South Carolina. GAO was asked to assess the (1) cost and schedule status of the MFFF and WSB construction projects, (2) status of NNSA's plans for pit disassembly and conversion, (3) status of NNSA's plans to obtain customers for MOX fuel from the MFFF, and (4) actions that the Nuclear Regulatory Commission (NRC) and DOE have taken to provide independent nuclear safety oversight. GAO reviewed NNSA documents and project data, toured DOE facilities, and interviewed officials from DOE, NRC, and nuclear utilities.
section_title: What GAO Found
paragraphs: The MFFF and WSB projects both appear to be meeting their cost targets for construction, but the MFFF project has experienced schedule delays. Specifically, the MFFF and WSB projects are on track to meet their respective construction cost estimates of $4.9 billion and $344 million. However, the MFFF project has experienced some delays over the past 2 years, due in part to the delivery of reinforcing bars that did not meet nuclear quality standards. Project officials said that they expect to recover from these delays by the end of 2010 and plan for the start of MFFF operations on schedule in 2016. The WSB project appears to be on schedule. NNSA is reconsidering its alternatives for establishing a pit disassembly and conversion capability. However, it seems unlikely that NNSA will be able to establish this capability in time to produce the plutonium feedstock needed to operate the MFFF, due to the amount of time and effort needed to reconsider alternatives and construct a facility as well as the amount of uncertainty associated with NNSA's current plans. NNSA had previously planned to build a stand-alone facility near the MFFF construction site to disassemble pits and convert the plutonium into a form suitable for use by the MFFF. However, NNSA is now considering a plan to combine this capability with another project at an existing facility at the Savannah River Site. NNSA officials could not estimate when the agency will reach a final decision or establish more definitive cost and schedule estimates for the project. However, NNSA's new alternative depends on an aggressive, potentially unrealistic schedule. In addition, NNSA has not sufficiently planned for the maturation of critical technologies to be used in pit disassembly and conversion operations, some of which are being tested at the Los Alamos National Laboratory in New Mexico. NNSA has one potential customer for most of its MOX fuel, but outreach to other utilities may be insufficient. NNSA is in discussions with the Tennessee Valley Authority to provide MOX fuel for five reactors. NNSA plans to offer several incentives to potential customers, including offering to sell MOX fuel at a discount relative to the price of uranium fuel. In interviews with the nation's nuclear utilities, GAO found that while many of the utilities expressed interest in NNSA's proposed incentives, the majority of utilities also expressed little interest in becoming MOX fuel customers. This suggests that NNSA's outreach to utilities may not be sufficient. NRC is currently reviewing the MFFF's license application and has identified several issues related to construction. However, oversight of the MFFF and the WSB by DOE's independent nuclear safety entities has been limited. For example, DOE's Office of Health, Safety, and Security has not conducted any oversight activities or participated in any project reviews of the WSB, despite the WSB's status as a high-hazard nuclear facility. In addition, NNSA's Chief of Defense Nuclear Safety has not conducted any nuclear safety oversight activities for the MFFF project and has not conducted all oversight activities for the WSB project that are required by DOE order.

section_title: Letter
paragraphs: The end of the Cold War left a legacy of fissile material that the United  States no longer required for national security. This fissile material  includes large quantities of weapons-grade plutonium, such as the  plutonium used in the pit of a nuclear warhead. Plutonium is a man-made,  radioactive element that poses a danger of nuclear weapons proliferation  and a risk of environmental, safety, and health consequences. For  example, internal exposure in humans to plutonium through inhalation or  consumption poses an extremely serious health hazard by exposing organs  and tissues to ionizing radiation and increasing the risk of cancer.
In 1997, the Department of Energy (DOE) established a strategy to provide  for the disposition of surplus, weapons-grade plutonium. The National  Nuclear Security Administration (NNSA), a separately organized agency  within DOE, manages this program, now called the U.S. Plutonium  Disposition program. NNSA’s goal is to dispose of at least 34 metric tons of  surplus, weapons-grade plutonium by (1) combining it with uranium to  produce mixed oxide (MOX) fuel and (2) selling the MOX fuel to domestic  utilities that own nuclear reactors. Once the MOX fuel is irradiated in a  nuclear reactor, it would be rendered useless to potential proliferators.  According to NNSA officials, the sale of MOX fuel over a 15-year period  could return over $1 billion to the U.S. Treasury. To achieve this goal,  NNSA is currently constructing the following two facilities at the  Savannah River Site (SRS) in South Carolina:    MOX Fuel Fabrication Facility (MFFF)—The MFFF is projected to use up  to 3.5 metric tons of plutonium a year to fabricate about 1,700 MOX fuel  assemblies over a 15-year period. NNSA began construction on the MFFF  in August 2007. As we reported in March 2007, NNSA initially estimated  that the MFFF would cost about $1.4 billion and be completed by  September 2004. NNSA currently projects that the MFFF will cost about  $4.9 billion, be ready for operations by October 2016, and begin producing  MOX fuel assemblies in 2018.
A Waste Solidification Building (WSB) will process radioactive waste from  the MFFF and related facilities. NNSA began construction on the WSB in  December 2008, and it is projected to cost $344 million and to be ready for  operations by September 2013.
In addition, because NNSA expects to obtain the majority of the plutonium  from nuclear pits, it also plans to build a facility at SRS to disassemble pits  and convert the plutonium into a plutonium oxide form suitable for use in  MOX fuel.
Several entities oversee nuclear safety for the Plutonium Disposition  program. The National Defense Authorization Act of 1999 amended the  Energy Reorganization Act of 1974 to require the Nuclear Regulatory  Commission (NRC), an independent oversight agency, to regulate and  license the operation of the MFFF. DOE is responsible for regulating the  nuclear safety of the WSB and the planned Pit Disassembly and  Conversion Facility (PDCF), with NNSA taking the primary role. Several  other DOE offices and entities have provided independent nuclear safety  oversight for all three facilities, including the DOE Office of Health, Safety,  and Security (HSS); the NNSA Central Technical Authority; and the NNSA  Chief of Defense Nuclear Safety (CDNS).
This report assesses (1) the performance status of the MFFF and WSB  construction projects with respect to cost and schedule, (2) the status of  NNSA’s plans to establish a pit disassembly and conversion capability to  supply plutonium to the MFFF, (3) the status of NNSA’s plans to obtain  customers for MOX fuel from the MFFF, and (4) the actions that NRC and  DOE have taken to provide independent nuclear safety oversight of the  MFFF and WSB construction projects.
To assess the performance status of the MFFF and WSB construction  projects with respect to cost and schedule, we reviewed earned value  management (EVM) data and assessed the reliability of EVM data by  evaluating each project’s schedule against GAO’s scheduling best  practices. We also interviewed key NNSA and contractor officials and  reviewed data and key processes used to conduct a risk analysis of the  MFFF project’s schedule. To assess the status of NNSA’s plans to establish  a pit disassembly and conversion capability to supply plutonium to the  MFFF, we reviewed documentation provided by NNSA and its contractors  for the MFFF, WSB, and PDCF projects, including project execution plans,  project status reports, EVM data, and independent project reviews. We  also reviewed project plans and research and development data related to  the Advanced Recovery and Integrated Extraction System (ARIES) project  at DOE’s Los Alamos National Laboratory (LANL) in New Mexico; toured  site facilities at SRS and LANL; and interviewed DOE, NNSA, and  contractor officials. To assess the status of NNSA’s plans to obtain  customers for MOX fuel from the MFFF, we reviewed documentation  provided by NNSA and its contractors, including project plans, studies,  and MOX fuel production schedules. We also interviewed NNSA and  contractor officials. In addition, we analyzed responses to structured  interviews we administered to U.S. utilities that own nuclear reactors. We  received data from utility officials representing 22 of the 26 utilities, for a  response rate of 85 percent. Finally, to assess the actions that NRC and  DOE have taken to provide independent nuclear safety oversight of the  MFFF and WSB construction projects, we reviewed NRC and DOE  regulations related to nuclear safety, NRC inspection reports, and DOE  independent review reports. We also spoke with officials in NRC’s Office  of Nuclear Materials Safety and Safeguards and the Division of  Construction Projects; NNSA’s program offices responsible for the MFFF  and WSB projects; the CDNS; DOE’s HSS; and the Defense Nuclear  Facilities Safety Board to discuss their oversight roles in relation to the  MFFF and the WSB, respectively. Appendix I contains additional  information on our scope and methodology.
We conducted this performance audit from January 2009 to March 2010, 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: A number of events are important in the history of DOE’s U.S. Plutonium  Disposition program.
In 1994, the United States declared 38.2 metric tons of weapons-grade  plutonium as surplus to national security needs.
In 1997, DOE announced a plan to dispose of surplus, weapons-grade  plutonium through the following dual approach: (1) conversion into MOX  fuel and (2) immobilization in glass or ceramic material. According to  DOE, its approach would require the construction of three facilities—a pit  disassembly and conversion facility, a MOX fuel fabrication facility, and an  immobilization facility.
In 2000, the United States and Russia entered into a Plutonium  Management and Disposition Agreement, in which each country pledged  to dispose of at least 34 metric tons of surplus, weapons-grade plutonium,  including the disposition of no less than 2 metric tons of plutonium per  year.
In 2000, DOE announced in a record of decision that it would construct a  pit disassembly and conversion facility, a MOX fuel fabrication facility, and  an immobilization facility at SRS.
In 2002, NNSA canceled the immobilization portion of its surplus  plutonium disposition strategy due to budgetary constraints. In addition,  according to NNSA officials, NNSA canceled the immobilization portion  because (1) Russia would not dispose of its plutonium if the United States  adopted an immobilization-only approach and (2) the technology for MOX  fuel fabrication had been in use in Europe for three decades, whereas  immobilization of weapons-grade plutonium in glass or ceramic had never  before been demonstrated.
In 2003, NNSA announced that it was pursuing a MOX-only plutonium  disposition program to dispose of 34 metric tons of surplus, weapons- grade plutonium.
The majority of the 34 metric tons of surplus, weapons-grade plutonium is  in the form of pits, clean metal, and oxides. The remainder is in nonpit  forms, such as contaminated metal, oxides, and residues from the nuclear  weapons production process. While NNSA plans to build a pit disassembly  and conversion facility to obtain plutonium from pits, it also plans to use  the ARIES project—a technology development and demonstration project  for pit disassembly and conversion located at LANL—to obtain a small  amount of plutonium from pits. In addition, according to NNSA  documents, NNSA plans to obtain plutonium from nonpit forms in two  ways. First, the K-Area Facility at SRS is storing 4.1 metric tons of  plutonium in nonpit form that is already suitable for use by the MFFF.  Second, NNSA plans to prepare and process additional quantities of  plutonium (3.7 metric tons) already at the K-Area Facility or planned for  storage at the facility.
Prior work by GAO has identified persistent problems with cost overruns  and schedule delays on the PDCF project. For example, in our March 2007  report on major DOE construction projects, we found that ineffective DOE  project oversight, poor contractor management, and external factors were  among the primary reasons for the cost increases and schedule delays  associated with the PDCF project. In addition, according to a May 2005  DOE Inspector General report, NNSA officials attributed schedule delays  for the PDCF to the disagreement between the United States and Russia  about liability for work performed by U.S. contractor personnel working in  Russia and a change in funding priorities.
NNSA project directors are responsible for managing the MFFF, WSB, and  PDCF projects and overseeing the contractors that design and construct  these facilities. In doing so, project directors follow specific DOE  directives, policies, and guidance for project management. Among these is  DOE Order 413.3A, which establishes protocols for planning and executing  a project. The protocols require DOE projects to go through a series of five  critical decisions as they enter each new phase of work. These decisions  are as follows:    Critical decision 0, which approves a mission-related need.
Critical decision 1, which approves the selection of a preferred solution to  meet a mission need and a preliminary estimate of project costs—an  approval that is based on a review of a project’s conceptual design.
Critical decision 2, which approves that a project’s cost and schedule  estimates are accurate and complete—an approval that is based on a  review of the project’s completed preliminary design.
Critical decision 3, which reaches agreement that a project’s final design is  sufficiently complete and that resources can be committed toward  procurement and construction.
Critical decision 4, which approves that a project has met its performance  criteria for completion or that the facility is ready to start operations.
To oversee projects and approve these critical decisions, DOE conducts its  own reviews, often with the help of independent technical experts. For  example, for large projects (with a total project cost of greater than $100  million), DOE’s Office of Engineering and Construction Management  (OECM) validates the accuracy and completeness of the project’s  performance baseline as part of the critical decision 2 process.
DOE Order 413.3A also requires projects to use EVM to measure and  report the progress of construction projects (with a total project cost of  greater than or equal to $20 million). EVM measures the value of work  accomplished in a given period and compares it with the planned value of  work scheduled for that period and with the actual cost of work  accomplished. Differences in these values are measured in both cost and  schedule variances. EVM provides information that is necessary for  understanding the health of a program and provides an objective view of  program status. As a result, EVM can alert program managers to potential  problems sooner than expenditures alone can, thereby reducing the  chance and magnitude of cost overruns and schedule delays.
The following DOE offices and entities provide independent nuclear safety  oversight:    HSS is responsible for policy development, independent oversight,  enforcement, and assistance in the areas of health, safety, the  environment, and security across DOE. Among its functions are periodic  appraisals of the environmental, safety, and health programs at DOE sites,  including evaluation of a sample of high-hazard nuclear facility at these  sites to determine whether the program offices and their contractors are  complying with DOE policies.
The NNSA Central Technical Authority is responsible for maintaining  operational awareness of nuclear safety on NNSA projects, especially with  respect to complex, high-hazard nuclear operations, and ensuring that  DOE’s nuclear safety policies and requirements are implemented  adequately and properly.
The CDNS is responsible for evaluating nuclear safety issues and  providing expert advice to the Central Technical Authority and other  senior NNSA officials. In particular, the CDNS is responsible for (1)  validating that efforts to integrate safety into a project’s design include the  use of a system engineering approach, (2) determining that nuclear  facilities have incorporated the concept of defense-in-depth into the  facility design process, and (3) validating that federal personnel assigned  to an integrated project team as nuclear safety experts are appropriately  qualified.
Finally, DOE considers assessments and recommendations from external  organizations, most prominently the Defense Nuclear Facilities Safety  Board—an independent, external organization that reviews nuclear safety  issues at DOE defense facilities and makes nonbinding recommendations  to DOE.
section_title: Construction Projects Appear to Be Meeting Cost Targets, but the MFFF Has Had Schedule Delays
paragraphs: The MFFF and WSB construction projects both appear to be meeting their  cost targets, but the MFFF project has experienced some delays over the  past 2 years. In accordance with DOE project management requirements,  both projects are using EVM to measure and report progress against their  established cost and schedule estimates (also known as performance  baselines) for construction. EVM provides a proven means for measuring  such progress and thereby identifying potential cost overruns and  schedule delays early, when their impact can be minimized. Differences  from the performance baseline are measured in both cost and schedule  variances. Positive variances indicate that activities are costing less or  are completed ahead of schedule. Negative variances indicate that  activities are costing more or are falling behind schedule. These cost and  schedule variances can then be used in estimating the cost and time  needed to complete the project.
Figure 1 presents information on both cumulative cost and schedule  variances for the MFFF project over the 2-year period ending November  2009. With respect to cost, the MFFF project has experienced fluctuating  variances during this period. Overall, these cost variances are relatively  small compared with the project’s average monthly expenditures of over  $20 million. In addition, it is normal for variances to fluctuate during the  course of a project.
However, with respect to the project’s schedule, the MFFF project has  experienced consistently negative variances for most of the past 2 years.  Specifically, as shown in figure 1, these schedule variances were  consistently negative for most of 2008, and, for much of 2009, the project  had not completed almost $40 million in scheduled work. According to the  data and project officials, delays during 2008 were due primarily to the  delivery of reinforcing bars that did not meet nuclear quality standards.  Specifically, in February 2008, NRC inspectors identified numerous pieces  of reinforcing bars—steel rods that are used in reinforced concrete—that  did not meet industry standards for nuclear facilities. At that point,  NNSA’s contractor, Shaw AREVA MOX Services, LLC (MOX Services), had  accepted delivery of about 10,000 tons of reinforcing bars on-site and had  installed almost 4,000 tons. Although NRC and MOX Services officials  determined that the error did not affect the safety of reinforcing bars  already installed, this issue had a major effect on the overall schedule for  pouring concrete and installing reinforcing bars in the structure during  2008. According to project officials, the project switched to a different  supplier of reinforcing bars in September 2008 and by April 2009 had a  sufficient supply of material to support the construction schedule.
Schedule delays in 2009 occurred primarily because project officials  decided that they had not allocated sufficient time in the existing schedule  to ensure the delivery of materials that would meet the stringent safety  and design standards for nuclear facilities. For example, according to  project officials, the project extended the amount of time needed to  produce concrete for the MFFF to provide additional assurance that the  concrete will meet nuclear quality standards. The rate of concrete  production will be gradually increased beginning in early 2010, according  to project officials. In addition, the project extended the amount of time  needed to fabricate and deliver slab tanks, which are used to hold liquid  fissile material, to provide additional assurance that these tanks meet  stringent safety and design standards.
In recent months, the MFFF project has improved its schedule  performance, so that it faced roughly $25 million in uncompleted work by  November 2009, compared with almost $40 million in uncompleted work  earlier in the year. According to project officials, this amount of negative  schedule variance is equivalent to about 2 to 3 week’s worth of work on  the project, and they expect to recover from this variance during 2010. In  comparison, these officials stated that the project’s schedule includes 16  month’s worth of contingency to mitigate any risks from additional delays  before the expected start of MFFF operations.
Figure 2 presents information on both cumulative cost and schedule  variances for the WSB project over a 11-month period ending in November  2009. With respect to cost, the WSB project has experienced consistently  positive cost variances. However, schedule variances have been  consistently negative over the same period. By November 2009, the project  had not completed over $4 million worth of scheduled work, compared  with average monthly expenditures of roughly $2 million during fiscal year  2009. According to the NNSA federal project director, the schedule  variances are due to a variety of factors, including delays in the  procurement of cementation equipment and in the installation of piping  due to inclement weather. However, the official said that he expects the  project to recover from these delays, and that none of these factors will  affect the overall construction schedule for the project.
The reliability of a project’s EVM system depends in large part on the  reliability of its underlying schedule. A reliable schedule specifies when  the project’s work activities will occur, how long they will take, and how  they relate to one another. We have previously identified nine key  practices necessary for developing a reliable schedule. In a March 2009  testimony before this subcommittee, we identified several instances in  which the MFFF project’s schedule did not adhere to these practices. In  particular, we found that MFFF project staff had not conducted a risk  analysis on their current schedule.
However, since our March 2009 testimony, MFFF project officials have  taken a number of steps to address our concerns. For example, project  officials conducted a risk analysis of the MFFF project schedule in the  summer of 2009 and used the results to update their risk management  plan. In addition, project officials stated that they have significantly  reduced the number of scheduled activities with long durations—that is,  activities with start-to-finish durations of over 200 days. On the basis of  these actions, we reevaluated the MFFF project’s schedule against the  nine key scheduling practices. We also evaluated the WSB project’s  schedule against these same practices. We found that both projects met  most of the key practices to a satisfactory degree. For example, one key  practice is to plan the schedule so that it can meet critical project dates.  To do so, project officials must logically sequence all planned activities in  the order that they are to be carried out. In particular, project officials  must identify both predecessor activities—which must finish prior to the  start of another activity—as well as successor activities—which cannot  begin until other activities are completed. We found that the MFFF project  had logically sequenced all scheduled activities, while the WSB project had  logically sequenced the vast majority of its scheduled activities. For the  complete results of our analysis of the projects’ schedules, see appendixes  II and III.
section_title: NNSA Is Reconsidering Alternatives for Its Pit Disassembly Mission That Could Delay Production of Material Needed for the MFFF
paragraphs: NNSA recently announced that it is considering a new alternative for its  pit disassembly and conversion mission. However, due to the amount of  time and effort needed to reconsider alternatives and construct a facility,  as well as the amount of uncertainty associated with the agency’s new  alternative, it seems unlikely that NNSA will be able to establish this  capability in time to produce the plutonium oxide feedstock needed to  operate the MFFF. As result of the likely delay in establishing a pit  disassembly and conversion capability, NNSA may need to expand the  ARIES project at LANL to provide additional interim plutonium feedstock  to the MFFF. However, NNSA has not sufficiently planned for such a  contingency. In addition, NNSA has not sufficiently planned for the  maturation of critical technologies to be used in pit disassembly and  conversion operations.
subsections: section_title: NNSA Recently Announced a New Alternative for Pit Disassembly, but the Alternative Depends on an Aggressive, Potentially Unrealistic Schedule
paragraphs: In 1997, DOE decided to establish a pit disassembly and conversion  capability as part of its strategy for plutonium disposition. Because about  two-thirds of the plutonium slated for disposition is contained in nuclear  weapon pit form, the ability to disassemble pits is critical to the success of  the program. In 2000, DOE decided to construct and operate a PDCF at  SRS. Through 2009, NNSA’s strategy has been to design and construct the  PDCF as a new, stand-alone facility on a site adjacent to the current  construction site of the MFFF. While NNSA has never established a  definitive cost and schedule estimate for the PDCF project, a 2009 NNSA  report estimated that the PDCF would cost $3.65 billion to construct and  be operational by April 2021.
However, DOE recently proposed a new alternative for establishing a pit  disassembly and conversion capability at SRS. In September 2008, DOE  authorized a study to review alternatives to the siting location of the PDCF  capability within existing facilities at SRS and, as a result, to potentially  improve its approach to disposition of surplus plutonium at SRS.  Specifically, the study looked at the feasibility of combining the  capabilities of the PDCF project with the Plutonium Preparation project,  another project at SRS being managed by DOE’s Office of Environmental  Management. The purpose of the Plutonium Preparation project, as  approved by DOE in June 2008, was to prepare for disposition of up to 13  metric tons of surplus, nonpit, plutonium-bearing materials that are either  at the SRS K-Area Facility or planned for storage at the facility. According  to DOE’s plans, the project would be installed in the K-Area Facility and  would prepare the plutonium-bearing materials for disposition via two  pathways: (1) converting some of the materials into plutonium oxide  feedstock for the MFFF and (2) immobilizing the rest of the materials with  high-level waste in glass using the Defense Waste Processing Facility at  SRS. According to DOE’s 2008 preliminary estimate, this project would be  operational in the 2013-2014 time frame at a cost of $340 million to $540  million.
In November 2008, DOE issued a report stating that it would be feasible  to combine the two projects at the K-Area Facility. According to NNSA’s  preliminary estimates, the combined project would cost about $3.65 billion  and would be constructed in two phases. The first phase would include the  design and installation of equipment in one area of the K-Area Facility to  provide the capability (formerly associated with the Plutonium  Preparation project) to process 3.7 metric tons of surplus, nonpit  plutonium, which would be used as an early source of plutonium oxide  feedstock to the MFFF. The second phase would include the modification  of a different area within the facility and the design and installation of  equipment to provide the pit disassembly and conversion capability. In  December 2008, NNSA suspended many of the activities associated with  the PDCF project while it performed additional analyses, and DOE  suspended activities associated with the Plutonium Preparation project.  Finally, in November 2009, DOE approved the “pursuing” of the combined  project approach, noting several potential benefits, such as greater funding  flexibility, greater flexibility regarding DOE’s secure transportation  system, the avoidance of expenditures associated with constructing a new  facility, and the avoidance of costs associated with decontaminating and  decommissioning two Category 1 nuclear facilities, among others.
However, it appears unlikely that NNSA will be able to establish a pit  disassembly and conversion capability in time to produce the plutonium  feedstock needed to operate the MFFF beginning in 2021, due to the  amount of time and effort needed to reconsider alternatives and construct  a facility as well as the amount of uncertainty associated with the agency’s  new proposal. First, according to NNSA officials, they do not expect to  make a decision in the near future on which approach—either the PDCF  as a stand-alone facility or the K-Area Facility combination project—they  will ultimately approve. Specifically, officials told us that prior to making  any decision, NNSA must first select its preferred alternative as part of the  DOE critical decision 1 process. To prepare for critical decision 1, NNSA  will need to develop and manage numerous details, including (1) the  appropriate review and documentation pursuant to the National  Environmental Policy Act; (2) a transfer by the Secretary of Energy from  the Office of Environmental Management to NNSA of the necessary  materials, functions, and facilities to carry out the preferred alternative;  and (3) issues related to federal and contractor program management,  contract management, project management, and budget/financial  management. As a result, NNSA officials said that they are still developing  plans and schedules for the combination project and cannot provide any  specific project schedule dates at this time. In addition, they stated that  once NNSA makes a final decision on its strategy for pit disassembly and  conversion as part of the critical decision 1 process, it will take several  additional years to develop definitive cost and schedule estimates for its  final approach as part of the critical decision 2 process.
Second, a number of issues with NNSA’s new proposal raise doubts  regarding whether the agency will be able to construct a facility in time to  provide the plutonium feedstock necessary to operate the MFFF. For  example:    According to NNSA documents, the K-Area Facility combined project will  require an aggressive, near-term acquisition strategy and project  development effort to design, construct, and start a pit disassembly and  conversion capability under the current time constraints. Phase 1 of the  project is scheduled to be operational by 2014 to provide an early source  of feedstock (from nonpit plutonium sources) to the MFFF, and phase 2  must be operational by 2021 to provide the bulk of the plutonium oxide  feedstock that the MFFF will require to meet its planned production  schedule.
According to NNSA documents, the existing schedule for the K-Area  Facility combined project is at an early stage of development and lacks  any quantified schedule contingency.
The project will require construction within an existing, secure, operating  facility. Specifically, the project will need to excavate material from  existing walls and floors in numerous locations to install piping and  utilities, among other things. According to NNSA, during these  excavations, the project may encounter conditions that have not been  documented in existing design drawings for the K-Area Facility.  Construction of a new facility, the original plan for the PDCF project,  carries fewer risks of encountering unknown conditions—such as  undocumented electrical wiring or other physical interfaces.
The project will require substantial coordination between NNSA and the  Office of Environmental Management, as well as various contractor  organizations, to address competing missions and out-year issues. As a  result, according to NNSA, DOE may require additional federal resources  and interface agreements between its various offices to ensure the proper  integration and execution of the project.
section_title: NNSA Has Not Sufficiently Planned for an Expansion of the ARIES Project If Pit Disassembly Operations Are Delayed
paragraphs: NNSA’s new alternative assumes that the K-Area Facility combined project  will become operational by the 6th year of MFFF operations (2021).  However, if the design and construction of the project are delayed, NNSA  may have to rely on the ARIES project at LANL to provide additional  plutonium oxide feedstock for the MFFF. The ARIES project includes (1)  laboratory facility preparation activities, (2) the acquisition of  gloveboxes, (3) the design and assembly of a control system to operate  the demonstration modules, (4) the preparation of all system  documentation requirements, (5) the demonstration of the disassembly  and conversion of all types of surplus nuclear weapon pits, (6) material  control and accountability, and (7) measurements of personnel radiation  exposure from all surplus pit types. LANL conducts activities associated  with the ARIES project at its Plutonium Facility 4 building, which was  constructed in 1978 as a multiuse plutonium research and development  facility. NNSA’s current production mission for the ARIES project is to  produce about 2 metric tons of plutonium oxide feedstock. Specifically,  LANL is to produce 50 kilograms of plutonium oxide by the end of fiscal  year 2010, ramp up to a target rate of 300 kilograms per year in fiscal year  2012, and sustain this rate through fiscal year 2017. However, this  material—along with additional quantities of plutonium in nonpit form  currently stored at the K-Area Facility—will only be enough for the first 5  years of the MFFF production schedule.
NNSA has examined the possibility of expanding the ARIES project at  LANL to provide additional plutonium oxide feedstock to the MFFF.  Specifically, in May 2008, NNSA published a report that estimated NNSA  might need as much as 12 metric tons of plutonium oxide feedstock to  bridge a time gap between the startup of operations at the MFFF and the  PDCF. The report’s authors evaluated several potential scenarios for  increasing the amount of equipment and the number of work shifts at  LANL and estimated that ARIES could produce up to 16.7 metric tons of  plutonium oxide at a cost of over $700 million. In conducting its analysis,  the report’s authors made a number of assumptions, including that space  would be available within the Plutonium Facility 4 building to  accommodate an expanded ARIES mission, and that LANL would be able  to provide the necessary vault space to accommodate an expanded ARIES  mission. However, recent GAO work raises questions about the validity of  these assumptions. Specifically, in May 2008, we assessed NNSA’s plans  to expand pit manufacturing operations within the Plutonium Facility 4  building. We found that NNSA would not be able to substantially increase  its pit manufacturing capacity in the building for the foreseeable future  because of several major constraints, including (1) limited vault space in  the Plutonium Facility 4 building for storing pits and associated wastes  and (2) competition for available floor space in the building due to the  presence of other NNSA and DOE programs. For example, we found that  vault space was one of the major limiting factors for pit production in  fiscal year 2007, and that the vault was operating at 120 percent of its  originally designed capacity.
In a more recent study, NNSA concluded that LANL would not be a viable  option to perform the entire pit disassembly and conversion mission.  Specifically, in a November 2009 report, NNSA stated that the ARIES  project would be unable to sustain the annual output of plutonium oxide  feedstock necessary to support MFFF operations for a number of reasons.  For example, the report stated that because the Plutonium Facility 4  building is a one-of-a-kind, mission-critical facility for national defense,  national defense missions in the facility will continue to take precedence  over other programs—including the pit disassembly and conversion  mission—for the foreseeable future. In addition, the report pointed out  several of the same constraints to expanding operations in the Plutonium  Facility 4 building that we described in our prior report on pit  manufacturing.
NNSA’s November 2009 report also concluded that LANL continues to be a  viable option to produce some additional plutonium oxide material to fill a  potential gap if the PDCF project is delayed further. However, the report  did not update the prior 2008 report to determine what additional amount  of material it would be feasible for the ARIES project to produce. The  report also did not provide estimates for how much an expanded ARIES  mission would cost or when LANL would be able to produce additional  plutonium oxide material. Instead, the report noted that NNSA would need  to prepare and validate a detailed, resource-loaded, integrated schedule  for an expanded ARIES mission. As a result, it remains uncertain whether  ARIES could fill a potential gap if NNSA’s main pit disassembly and  conversion operations are delayed.
In March 2010, DOE stated that NNSA does not plan on expanding the  current mission of the ARIES project until LANL demonstrates that it can  sustain a production rate of 300 kilograms of plutonium oxide a year over  an extended period of time. In addition, DOE stated that NNSA is  evaluating other options to provide plutonium oxide feedstock to the  MFFF prior to the start of pit disassembly and conversion operations.  These options included (1) the use of 1.4 metric tons of fuel-grade  plutonium—material originally not intended for use by the MFFF—already  in storage at the K-Area Facility and (2) starting up “limited but sufficient”  pit disassembly processes.
section_title: NNSA Has Not Sufficiently Planned for the Maturation of Critical Technologies
paragraphs: NNSA’s current strategy relies on a number of technologies that are  critical to establishing a pit disassembly and conversion capability. These  technologies include the following systems and components:    Pit disassembly—includes a lathe, manipulators, and grippers to cut pits,  extract the plutonium, and prepare it for oxidation.
Hydride dehydride—includes two furnaces to separate plutonium from  other pieces of material.
Direct metal oxidation—includes a furnace to convert plutonium and  uranium metal into plutonium and uranium oxide.
Oxide product handling—includes mill rollers and a blender to size and  blend the plutonium oxide product.
Product canning—includes an automated bagless transfer system to  package the final product.
Sanitization—includes a microwave furnace to melt components that do  not contain plutonium or uranium.
To demonstrate the viability of these technological components, DOE  started the ARIES project at LANL in 1998. In addition, four other  organizations are conducting testing and development activities in support  of some of the critical technologies for pit disassembly and conversion:  DOE’s Savannah River National Laboratory, DOE’s Pacific Northwest  National Laboratory, the Clemson Engineering Technologies Laboratory,  and a commercial vendor.
Assessing technology readiness is crucial at certain points in the life of a  project. Within DOE’s critical decision framework, such assessments are  crucial at critical decision 2—acceptance of the preliminary design and  approval of the project’s cost and schedule estimates as accurate and  complete—and at critical decision 3—acceptance of the final design as  sufficiently complete so that resources can be committed toward  procurement and construction. Proceeding through these critical decision  points without a credible and complete technology readiness assessment  can lead to problems later in the project. Specifically, if DOE proceeds  with a project when technologies are not yet ready, there is less certainty  that the technologies specified in the preliminary or final designs will work  as intended. Project managers may then need to modify or replace these  technologies to make them work properly, which can result in costly and  time-consuming redesign work.
DOE has endorsed the use of the technology readiness level (TRL) process  for measuring and communicating technology readiness in cases where  technology elements or their applications are new or novel. In March 2008,  DOE’s Office of Environmental Management published guidance on  conducting technology readiness assessments and developing technology  maturation plans. According to the guidance, staff should conduct  technology readiness assessments using the TRL framework. Specifically,  staff are to use a nine-point scale to measure TRLs. This scale ranges from  a low of TRL 1 (basic principles observed) to a midlevel of TRL 6  (system/subsystem model or prototype demonstration in relevant  environment) to a high of TRL 9 (total system used successfully in project  operations). According to the guidance, for any critical technologies that  did not receive a TRL of 6 or higher during such an assessment, staff  should develop a technology maturation plan, which is supposed to  describe planned technology development and engineering activities  required to bring immature technologies up to the desired TRL of 6 or  higher. This plan should include preliminary schedule and cost estimates  to allow decision makers to determine the future course of technology  development. In addition, the guidance stated that once a project reached  the critical decision 2 stage, all critical technologies should have reached a  TRL of 6.
NNSA has undertaken a number of assessments of technological maturity  and readiness for pit disassembly and conversion over the past decade as  part of the ARIES project. For example, the PDCF project team carried out  an evaluation of the maturity of ARIES equipment in 2003. According to  project officials, the TRL framework was first used to assess the maturity  of pit disassembly and conversion technologies in November 2008, in  accordance with the Office of Environmental Management’s 2008  guidance. In addition, as part of an independent review of the PDCF  project, NNSA issued a report in January 2009 that included a technology  readiness assessment of the ARIES equipment and other critical  technologies. The results of this assessment, as well as the earlier  assessment conducted in 2008, are shown in table 1.
As table 1 shows, there are a number of key technologies for pit  disassembly and conversion that had not attained a TRL of 6. In  accordance with the guidance on TRLs, NNSA should have a technology  maturation plan in place to describe the planned technology development  and engineering activities required to bring immature technologies up to  the desired TRL of 6 or higher. According to NNSA officials, LANL had  developed such a plan. However, we found that LANL’s plan lacked  several key attributes of a technology maturation plan as described by  DOE’s guidance. Specifically, we found the following problems with  LANL’s plan:    A technology maturation plan is supposed to be developed to bring all  immature critical technologies up to an appropriate TRL. However, LANL’s  plan only addressed the technologies under development at LANL as part  of the ARIES project. The plan did not address technologies, such as the  oxide product handling equipment, being tested by the four other  organizations.
For each technology assessed at less than TRL 6, a technology maturation  plan should include preliminary schedule and cost estimates to allow  decision makers to determine the future course of technology  development. However, LANL’s plan did not include preliminary estimates  of cost and schedule.
LANL’s plan is dated November 2007. However, NNSA has conducted or  sponsored two technology readiness assessments of the PDCF critical  technologies since that date. As a result, LANL’s plan is out of date and  does not take into account the current state of maturity of its critical  technologies.
NNSA officials told us that while they recognize some of the problems  with the project’s existing technology maturation plan, they have already  prepared budget and schedule estimates for technology development  activities in a number of separate documents (including the overall PDCF  project schedule). However, they still have not updated the current  technology maturation plan in accordance with DOE guidance. Until such  an update is completed, it is uncertain whether these technologies will be  sufficiently mature in time to meet the current, aggressive schedule for  establishing a PDCF capability.
section_title: NNSA Has One Potential Customer for Most of Its MOX Fuel, but Outreach to Others May Be Insufficient
paragraphs: NNSA has offered several incentives to attract customers for its MOX fuel  and is working toward a formal agreement for the Tennessee Valley  Authority (TVA) to purchase most of this fuel. However, NNSA’s outreach  to other utilities may not yet be sufficient to inform potential customers of  incentives to use MOX fuel.
subsections: section_title: NNSA Has Taken Steps to Attract Customers and Is in Negotiations with TVA
paragraphs: NNSA and its contractor for the MFFF project, MOX Services, have  established a production schedule for the fabrication of MOX fuel  assemblies from surplus, weapons-grade plutonium. According to the  current production schedule, the MFFF is to produce 8 MOX fuel  assemblies in 2018, the initial year of production. The MFFF’s production  rate is then to increase over the next 5 years up to a maximum rate of 151  fuel assemblies per year (see fig. 3). The MFFF is expected to produce  1,700 fuel assemblies during its production run. In addition, according to  NNSA’s plans, these fuel assemblies will be designed for use in pressurized  water nuclear reactors, which are the most common type of nuclear  reactor in use in the United States.
In June 2000, Duke Power (now Duke Energy Carolinas, LLC, or Duke), a  power utility that operates seven pressurized water reactors in North  Carolina and South Carolina, signed a subcontract with NNSA’s contractor  for the MFFF project, MOX Services. According to NNSA officials, this  subcontract gave the utility the option to purchase up to three-fourths of  the MOX fuel produced by the MFFF at a discount relative to the price of  normal reactor fuel, which uses low enriched uranium. According to the  officials, the subcontract also obligated MOX Services to compensate  Duke if the MOX fuel was not delivered by December 2007. However, as  project delays continued to push back the start of construction, Duke,  MOX Services, and NNSA began discussions in 2005 to renegotiate the  subcontract. After nearly 3 years of discussions, Duke and MOX Services  were unable to reach agreement by the negotiation deadline, and the  subcontract automatically terminated on December 1, 2008.
As negotiations with Duke came to an end, MOX Services, at NNSA’s  direction, issued a request to nuclear utilities in October 2008 to express  their interest in the MOX fuel program. The request outlined a number of  possible incentives to mitigate the risks to utilities in using MOX fuel— risks that include the need to modify reactors and obtain an operating  license amendment from NRC to use MOX fuel. For example, the request  discussed the possibility of (1) selling MOX fuel at a discount relative to  the price of uranium fuel and (2) paying for costs associated with  modifying a reactor and obtaining an operating license amendment from  NRC. Furthermore, in January 2009, DOE reserved 12.1 metric tons of  highly enriched uranium from its stockpile and hired a contractor to  downblend this amount into 155 to 170 metric tons of low enriched  uranium to serve as a backup supply of fuel if MOX fuel deliveries to  customers are delayed. As of December 2009, NNSA and MOX Services  were still working on an agreement on liability if fuel is not delivered on  time.
According to NNSA officials, three utilities have responded to MOX  Services’ request and have expressed interest in the MOX fuel program.  Notably, in February 2010, NNSA and TVA executed an interagency  agreement to fund TVA studies on the use of MOX fuel in five of TVA’s  reactors. Under the agreement, TVA will perform work on core design,  licensing, modifications, and other related activities to evaluate the use of  MOX fuel in its reactors. According to an NNSA official, using MOX fuel in  five of TVA’s reactors could account for up to 85 percent of the MFFF’s  output. The official also stated that an agreement with TVA to become a  customer could be signed by the fall of 2010. TVA officials stated that they  believed that familiarity gained by working with DOE during the Blended  Low Enriched Uranium would help them work with DOE during the MOX  program and cited this factor in their decision to begin discussions about  becoming a customer for MOX fuel. Aside from TVA, NNSA officials  characterized their contact with two other utilities as in the preliminary  stages, and they could not estimate when or if they would secure them as  customers for MOX fuel.
Because utilities typically contract with fuel suppliers at least 5 years in  advance, NNSA and MOX Services will need to secure customers several  years before they deliver MOX fuel to them. NNSA officials said that their  goal is to obtain at least one customer by the end of fiscal year 2010, in  part because the 5-year period during which the MFFF will increase its  production capacity will allow them additional time to secure more  customers. Furthermore, if TVA agrees to be a customer and uses MOX  fuel in five of its reactors, these officials said that NNSA may only need  one additional utility to account for the remainder of the MFFF’s planned  production of MOX fuel assemblies.
However, NNSA faces two main obstacles in obtaining TVA as its primary  customer. First, some of TVA’s reactors that would be candidates for using  MOX fuel may not be permitted to use the fuel due to their status as  backup reactors in DOE’s tritium production program. According to NNSA  officials, the 2000 U.S.-Russian plutonium disposition agreement could be  interpreted as precluding reactors involved in weapons production from  being used to dispose of MOX fuel. TVA officials told us that they are  working with DOE to transfer tritium production responsibilities to  another TVA reactor that is not presently a candidate for the MOX  program. Second, although NNSA currently plans to produce MOX fuel  assemblies for use in pressurized water reactors, three of TVA’s reactors  that are candidates for burning MOX fuel are boiling water reactors.  NNSA officials told us that they are studying how the MFFF can be  reconfigured to produce fuel assemblies for boiling water reactors. In  particular, they stated that the MFFF’s design is based on a French MOX  Facility, which can switch production between fuel assemblies for  pressurized water reactors and for boiling water reactors in about 10 to 20  days. However, the officials also stated that they might need to conduct  additional tests on using MOX fuel assemblies in boiling water reactors  before producing the fuel assemblies in large quantities, and that it was  unclear whether such tests would delay the MOX production schedule.
In March 2010, DOE stated that NNSA is evaluating several options for  providing alternative sources of plutonium oxide material to the MFFF  prior to the start of pit disassembly and conversion operations. One option  under consideration is to adjust the “quantity and timing in providing  initial fuel deliveries” to potential customers.
section_title: NNSA’s Proposed Incentives Might Attract Customers, but Current Outreach May Be Insufficient
paragraphs: We interviewed fuel procurement officials at 22 of the nation’s 26 nuclear  utilities to determine the extent to which nuclear utilities are interested in  participating in DOE’s MOX fuel program and to evaluate what factors  may influence their interest. The factors we asked about were based on  input we received from industry experts, DOE officials, and former utility  officials. (For a list of the structured interview questions that we asked  utilities, see app. IV.) As shown in table 2, utility officials most often  identified the following factors as very or extremely important when  assessing their level of interest in participating in the MOX fuel program:    consistent congressional funding of the program,    DOE’s ability to ensure timely delivery of MOX fuel,    DOE’s ability to ensure the timely delivery of a backup supply of uranium  the cost of MOX fuel relative to the cost of reactor fuel, and the opportunity to test MOX fuel in their reactors prior to full-scale use.
We then asked utilities about possible incentives—some of which have  already been proposed by NNSA and DOE—that may affect their interest  in becoming program participants. We also asked about scenarios in  which DOE offered a discount of 15 percent and 25 percent for MOX fuel  relative to the price of regular reactor fuel. As shown in table 3, DOE’s  payment for costs associated with reactor modifications and NRC  licensing to use MOX fuel—two incentives DOE has actually proposed to  utilities—resulted in the largest number of utilities expressing increased  interest in participating in the MOX fuel program.
However, despite the incentives offered, as of October 2009 the majority of  the utilities that we interviewed expressed little or no interest in becoming  MOX fuel customers. Specifically, 12 utilities reported they were either not  interested or not very interested in becoming MOX fuel customers, 8  utilities were somewhat interested, and only 2 utilities indicated that they  were currently very interested or extremely interested in the program.  Three utilities indicated that they were currently interested enough to  consider contacting DOE about becoming MOX fuel customers. When  asked to consider the proposed incentives, however, 8 utilities expressed  such interest. NNSA officials stated that they have communicated their  willingness to provide incentives to potential customers. However, neither  NNSA nor MOX Services has provided additional outreach or information  to utilities in general since the October 2008 request for expression of  interest. Furthermore, 11 utilities responded in our interviews that they  had heard or read very little about the MOX fuel program, while 5  responded that they had received no information. In our view, the fact that  so few utilities expressed sufficient interest in even contacting NNSA and  MOX Services suggests that NNSA’s outreach may not be sufficient.
section_title: NRC Has Been Providing Oversight for the MFFF, but DOE’s Independent Oversight of the MFFF and the WSB Has Been Limited
paragraphs: NRC has primary regulatory responsibility for nuclear safety at the MFFF,  and NRC’s activities to date have included authorizing construction,  identifying safety-related issues with construction, and reviewing the  license application for the operation of the facility. DOE has primary  regulatory responsibility for nuclear safety at the WSB and has looked at  some aspects of nuclear safety for both the MFFF and the WSB as part of  its management reviews. However, oversight by DOE’s independent  nuclear safety entities has been limited.
subsections: section_title: NRC Has Been Reviewing the MFFF’s License Application and Has Identified Issues with Construction Practices
paragraphs: NRC is responsible for licensing the MFFF to produce fuel for commercial  nuclear reactors. To do so, NRC is using a two-stage review and approval  process: the first stage is construction authorization, and the second stage  is license application approval. The construction authorization stage began  in February 2001, when the MFFF contractor submitted an application to  begin construction. As part of the construction authorization review, NRC  reviewed key documents, including the project’s preliminary safety  designs, environmental impact statement, and quality assurance plan. NRC  approved the facility’s construction authorization request in March 2005.
NRC began its review of the MFFF project’s application for a license to  possess and use radioactive materials in December 2006. NRC has divided  the license review into 16 areas, including criticality/safety, chemical  processing, and fire protection. NRC has issued requests for additional  information for each of the 16 review areas. According to NRC officials,  once NRC staff obtain all of the necessary information in a given area, they  prepare a draft section for that area to be included in the draft Safety  Evaluation Report for the facility. As shown in table 4, NRC had drafted  sections for 6 of the 16 review areas as of January 2010. Once all of the  draft sections are complete, NRC staff will prepare a draft safety  evaluation report and, after concurrence from NRC management, will  submit them to NRC’s Advisory Committee on Reactor Safeguards—a  committee of experts that is independent of the staff and that reports  directly to NRC’s commissioners—for review and comment. NRC staff are  then to incorporate, at their discretion, the committee’s comments into the  license approval document and issue a final safety evaluation report for  the facility, which NRC expects to occur in December 2010. Once NRC  completes the licensing review and verifies that MOX Services has  completed construction of the primary structures, systems, and  components of the MFFF, it may issue the license. NRC officials stated  that they could issue the license by 2014 or 2015, depending on the  construction status of the facility.
One issue that NRC raised during its review of the MFFF project is the  design of safety controls to prevent a chemical reaction known as a “red  oil excursion.” Specifically, in January 2004, during the construction  authorization stage, a senior NRC chemical safety reviewer stated that the  MFFF’s planned safety controls to prevent a red oil excursion differed  from those recommended by DOE and the Defense Nuclear Facilities  Safety Board. In response, NRC convened a panel in March 2005 to  evaluate the reviewer’s concerns. The panel issued a report in February  2007 concluding that although NRC’s construction authorization of the  MFFF did not need to be revisited, there was wide agreement among NRC  staff and the Advisory Committee on Reactor Safeguards that significant  technical questions remained unanswered about the MFFF’s planned  safety controls. To address these technical questions, NRC has taken a  number of actions, including the following:    NRC engaged the assistance of the Brookhaven National Laboratory to  provide two independent assessments of the risk of a red oil excursion at  the facility. Brookhaven National Laboratory issued an initial report in  March 2007 and a follow-up report in August 2009 in which it examined  updated safety information provided by MOX Services. The second of the  two reports concluded that the risk of a red oil excursion at the facility is  highly unlikely.
During the current licensing application stage, NRC officials have  requested and received additional information from MOX Services related  to planned safety controls to prevent a red oil excursion. However, as of  our review, NRC staff had not completed their draft safety evaluation  report for this area.
NRC’s oversight responsibilities also include inspecting the construction  of the MFFF as well as the project’s own quality assurance plan. NRC’s  Division of Construction Projects, based in NRC’s Region II headquarters  in Atlanta, conducts periodic inspections of the MFFF that assess the  design and installation of the facility’s principal structures, systems, and  components and verify that the project’s quality assurance program is  adequately implemented. These inspections involve document reviews and  site inspections over several weeks and can include specialty reviews in  welding, concrete, and other construction subject areas. NRC evaluates  the MFFF’s construction against standards set by the American Concrete  Institute and the American Society of Mechanical Engineers, among  others. In addition to the Region II inspections, NRC maintains one  resident inspector at the construction site who conducts day-to-day  inspection activities, such as walk-throughs. NRC also plans to hire an  additional full-time resident inspector for the MFFF in fiscal year 2010.
As part of its ongoing inspection of the construction of the MFFF, NRC has  issued 16 notices of violation against MOX Services since the start of  construction in August 2007 related to various subjects, including quality  assurance and control over design changes. (See app. V for a complete list  and description of NRC notices of violation.) Although NRC has classified  all of the violations to date as severity level IV, the lowest safety- significant designation in its four-category scale, the violations have had  an effect on the project’s schedule.
In addition to its regular construction reviews, NRC issues periodic  assessments of the contractor’s performance. In its latest assessment,  released in November 2009, NRC concluded that MOX Services had  conducted its overall construction activities at the MFFF in an acceptable  manner. However, NRC also determined that MOX Services must improve  its control over changes to the MFFF’s design and increase its attention to  its quality assurance oversight of vendors. NRC identified several  examples of deficiencies associated with performing, verifying, and  documenting design changes and noted failures on the part of MOX  Services to adequately translate requirements into design and construction  documents. In addition, NRC concluded that its finding of a violation  related to MOX Services’ vendor oversight indicates “a challenge to [MOX  Services’] quality assurance staff to provide effective oversight of vendors  that perform work on, fabricate, or supply components and equipment for  use at the MFFF.” In its assessment, NRC stated that it will conduct  additional inspections to assess the effectiveness of MOX Services’  corrective actions. In response to NRC’s assessment, MOX Services stated  that it is taking steps to strengthen its design control process, such as  increasing training for quality control supervisors; introducing quality  control checklists into its subcontractor and construction procedures; and  conducting oversight visits to vendors.
section_title: DOE Included Nuclear Safety in Management Reviews of the Projects, but Oversight by DOE’s Independent Nuclear Safety Entities Has Been Limited
paragraphs: Although DOE has incorporated elements of nuclear safety in management  reviews of the MFFF and the WSB projects that were conducted as part of  its critical decision review process, DOE’s independent nuclear safety  entities were minimally involved. As part of the critical decisions 2 and 3  review process for the MFFF project, OECM conducted a review of the  MFFF project during April and May, 2006, which included nuclear safety  as one of several review areas. A review team comprising independent  consultants and former DOE officials evaluated, among other things, the  integration of nuclear safety into the project’s environmental, safety, and  health programs, as well the contractor’s process for addressing issues  found by NRC. The review identified one finding related to safety, noting  that the ongoing revision of the project contract could introduce conflicts  with NRC regulations. NNSA accepted the review’s recommendation to  develop a memorandum of understanding with NRC to resolve this issue.
Regarding the WSB project, OECM conducted a review during September  2008—as part of the critical decision 2 process—that included nuclear  safety as one of several review areas. The review team examined key WSB  documents related to nuclear safety, including the facility’s safety  evaluation report, preliminary documented safety analysis, and the design  hazard analysis report. The review team recommended that an additional  hazard analysis for one system be performed but determined that overall,  the hazard analyses and safety assessments for the WSB were  comprehensive and complete. In addition, NNSA’s Office of Project  Management and Systems Support conducted another review of the WSB  project during September 2008 as part of the critical decision 3 process.  Because it was almost simultaneous with OECM’s review, NNSA’s review  was less comprehensive and focused specifically on the WSB’s ability to  protect against a red oil excursion. This review resulted in a single  recommendation, that is, for additional justification for the inclusion of  certain equipment in the facility’s design. In response to the  recommendation, the WSB project team submitted a revised safety  evaluation report justifying the equipment.
subsections: section_title: Oversight by HSS Has Been Limited
paragraphs: HSS is responsible for policy development, enforcement, and independent  oversight in the areas of health, safety, the environment, and security  across DOE. To accomplish this responsibility, this office performs  appraisals to verify, among other things, that the department’s employees,  contractors, the public, and the environment are protected from hazardous  operations and materials. However, these appraisals are designed to  complement, not duplicate, program office oversight and self-assessments.  In particular, HSS conducts visits to DOE sites and reviews a sample of  facilities at those sites, including construction activities for new facilities.  In addition, according to HSS officials, the office assists DOE’s program  offices by conducting reviews of documents supporting the safety basis— which is a technical analysis that helps ensure the safe design and  operation of DOE’s nuclear facilities—of a sample of high hazard nuclear  facilities at a DOE site. For example, in response to our October 2008  report, which found that HSS was not conducting reviews of the safety  basis of new, high-hazard nuclear facilities, HSS issued a new appraisal  process guide in July 2009 that emphasized increased focus on the safety  basis at such facilities. Finally, HSS has other oversight and advisory  responsibilities related to nuclear safety during critical decision reviews  for major DOE facilities. These responsibilities are spelled out in DOE’s  Order 413.3A, which provides direction on program and project  management for the acquisition of capital assets, and include the following  actions:    participating on the Energy Systems Acquisition Advisory Board—a body  comprising senior DOE officials who advise DOE’s Secretarial Acquisition  Executive in critical decisions regarding major projects and facilities;    advising the DOE Secretarial Acquisition Executive on environmental,  safety, and security matters related to all critical decision approvals;   serving on independent project reviews as a team member at the request  of the Secretarial Acquisition Executive or program officials; and   participating on external independent reviews as an observer at OECM’s  request.
Regarding the MFFF project, HSS has provided limited oversight.  According to HSS officials, a more limited amount of oversight is  appropriate for the MFFF because of the National Defense Authorization  Act of 1999, which gave NRC responsibility for regulating nuclear safety at  the MFFF. HSS has conducted some inspection activities at the MFFF,  including reviewing reinforced concrete and structural steel at the facility  during site visits to SRS in August and September, 2009. However, HSS  officials said that these activities did not include a review of documents  supporting the MFFF’s safety basis. In addition, while HSS officials stated  that personnel from HSS’s predecessor office participated in the critical  decisions 2 and 3 reviews for the MFFF project during 2006, HSS was  unable to provide any documentation to substantiate this statement.  According to department officials, HSS had limited resources for  conducting reviews and needed to focus its resources on facilities that  were not subject to external regulation.
Regarding nuclear safety oversight of the WSB project, which is solely  regulated by DOE, we found that HSS had not conducted any oversight  activities or participated in any critical decision reviews. Specifically, HSS  officials told us that they have not reviewed any documents supporting the  WSB’s safety basis, nor have they conducted any inspection activities at  the WSB construction site. Despite the issuance of HSS’s new appraisal  process guide, which contains inspection protocols for new and  unfinished high-hazard nuclear facilities, an HSS official told us that the  office has yet to determine when they will inspect the WSB. An HSS  official told us that he was uncertain whether a WSB inspection would  occur in 2010 because an ongoing internal DOE review has delayed the  development of the office’s 2010 inspection schedule. However, if HSS’s  initial visit occurs later than 2010, NNSA will have already completed at  least half of the WSB’s construction, according to the project’s schedule.
Additionally, HSS did not participate in any of the critical decision reviews  for the WSB project because of existing DOE guidelines. Specifically,  although the WSB is considered a category 2 (high-hazard) nuclear facility,  it is categorized as a nonmajor project. According to DOE’s order, HSS is  not required to participate on the review board for a nonmajor project. In  addition, neither OECM nor NNSA requested HSS to participate on the  project reviews conducted for critical decisions 2 and 3.
section_title: Oversight by CDNS Has Been Limited
paragraphs: DOE’s Order 413.3A calls for the NNSA Central Technical Authority to  maintain operational awareness regarding complex, high-hazard nuclear  operations, and to ensure that DOE’s nuclear safety policies and  requirements are implemented adequately and properly. The order also  directs the CDNS to support the Central Technical Authority in this effort  by    participating as part of the Energy Systems Acquisition Advisory Board for  major facilities, or similar advisory boards for minor facilities;    providing support to both the Central Technical Authority and the  Acquisition Executive regarding the effectiveness of efforts to integrate  safety into design at each of the critical decisions, and as requested during  other project reviews;    determining that nuclear facilities have incorporated the concept of  defense-in-depth into the facility design process;   validating that the integration of design and safety basis activities includes  the use of a system engineering approach tailored to the specific needs  and requirements of the project; and   validating that federal personnel assigned to projects as nuclear safety  experts are appropriately qualified.
The CDNS’s manual for implementing DOE Order 413.3A provides  additional guidance, such as establishing the responsibilities of CDNS staff  for evaluating safety activities at nuclear facilities. The manual also directs  the head of the CDNS to participate in relevant staff meetings for NNSA  projects that are requesting a decision from the Energy Systems  Acquisition Advisory Board, an activity that may not be delegated for  major projects.
However, according to the head of the CDNS, his office has not  participated in any safety review activities at the MFFF because NRC is  regulating nuclear safety at the facility. The head of the CDNS  acknowledged that his office’s approach to overseeing nuclear safety for  the MFFF project does not follow the guidance set out in DOE orders and  related manuals and has not been formally adopted by NNSA. He stated  this approach is necessary to make more efficient use of CDNS resources  by focusing oversight activities on facilities regulated entirely by DOE.  According to NNSA officials, DOE Order 413.3A does not explicitly  exempt the CDNS from overseeing facilities regulated by NRC. Agency  officials stated that NNSA is working with the Department to have that  exemption inserted into the order during an upcoming revision of the  order. NNSA officials stated that, historically, there was never an intention  that the CDNS would have responsibilities for facilities regulated by NRC,  and that this needs to be clarified in the order.
The CDNS has provided some oversight of the WSB project, but according  to the head of the CDNS, this oversight has been limited, due in part to  difficulty in applying DOE’s guidance to the WSB and staffing issues. The  CDNS participated as an observer on the advisory board for the WSB  project during the project’s critical decisions 2 and 3 processes. However,  the head of the CDNS said that he had no record of whether his office  participated in or evaluated the results of OECM’s review during the  critical decision 2 process, which included several lines of inquiry related  to nuclear safety. During the critical decision 3 process for the WSB  project, CDNS staff reviewed key project safety documents to determine  how the facility would protect against a red oil excursion and determine  the qualifications of the federal staff person assigned to the project as a  nuclear safety expert.
Despite these efforts, the head of the CDNS told us that during the critical  decision 3 review, his office experienced some difficulty in implementing  the guidance established in DOE orders for the WSB project. The office’s  current policy is to review a project’s safety documentation early in the  design process and determine whether it conforms to DOE’s relevant  safety standard for integrating safety into design and incorporating  defense-in-depth. The WSB project had completed its design work before  DOE issued its current standard, and before the CDNS implemented a  systematic approach to fulfilling its functions. Consequently, the CDNS did  not perform a systematic review of WSB safety documentation. The CDNS  head characterized the WSB review as being an ad hoc, qualitative  assessment of some of the project’s safety documentation. Additionally,  the CDNS has not evaluated the qualifications of the nuclear safety expert  that replaced the one evaluated as part of the critical decision 3 review.  However, according to the head of the CDNS, his office only plans to  evaluate the qualifications of new staff during technical reviews of the  project, not after every change to the project team’s composition.
The head of the CDNS told us that his office has begun developing a more  systematic approach to evaluating the design safety of DOE facilities. In  addition, he stated that he would like to conduct additional safety reviews  of facilities currently in design and construction. However, he said that  these efforts have been hampered, in part due to staffing shortages. For  example, the CDNS had a staff of 13 people in 2007. As of December 2009,  however, only 4 people remained on the CDNS staff due to attrition and  NNSA’s decision to transfer some of the personnel into other program  offices. The head of the CDNS stated that current staffing levels have led  the CDNS to focus its attention on projects that are still in the design  phase. He said that it was doubtful that the CDNS would return to the WSB  to ensure that safety basis controls are fully integrated during its  construction. Concerns over CDNS staffing issues also were raised by the  Defense Nuclear Facilities Safety Board. Specifically, in its March 2009  letter to the Secretary of Energy, the safety board noted that reduced staff  levels and the transfer of CDNS personnel into NNSA’s program offices  have reduced the effectiveness of the office.
section_title: Conclusions
paragraphs: NNSA is already over 2 years into its construction schedule for the MFFF  and expects the facility to become operational by 2016. It has also  established a production schedule for fabricating up to 151 MOX fuel  assemblies per year at full production. However, the agency faces  uncertainty as to (1) its ability to supply the MFFF with sufficient  quantities of plutonium oxide feedstock to meet its planned production  schedule of MOX fuel and (2) the demand for MOX fuel assemblies from  potential customers.
Regarding the supply of plutonium oxide feedstock, NNSA only has a  limited quantity of feedstock on hand to supply the MFFF prior to the start  of pit disassembly operations. However, NNSA has not established a  definitive strategy for pit disassembly operations, nor does it expect to do  so in the near future. As a result, it appears unrealistic that NNSA will be  able to meet its current production schedule for MOX fuel without  obtaining additional sources of plutonium oxide. NNSA has stated that  while it does not plan on expanding the current mission of the ARIES  project until LANL demonstrates a sustained production rate over an  extended period of time, it is evaluating other options to address this  potential shortfall of plutonium oxide. These options include (1) the use of  1.4 metric tons of fuel-grade plutonium already in storage at the K-Area  Facility, (2) starting up “limited but sufficient” pit disassembly processes,  and (3) adjusting the “quantity and timing” in delivering MOX fuel to  potential customers. We have concerns with these options, including:    NNSA’s use of a “wait-and-see” approach to the ARIES project, and the  implications this may have on the ability of the ARIES project to meet its  current and future production goals;   the implications of the use of fuel-grade plutonium on the design and  safety of the MFFF, and the extent to which DOE has adequately  determined how much additional material throughout the DOE complex  may be suitable and available for use by the MFFF;     how DOE plans to establish limited pit disassembly processes given the  current lack of a definitive strategy for pit disassembly operations; and    how DOE plans to adjust the MOX fuel production schedule, and the  implications this may have on the cost and schedule for operating the  MFFF and DOE’s ability to attract potential MOX fuel customers.
In addition to these concerns, while NNSA’s strategy relies on critical  technologies currently under development at LANL and other sites for pit  disassembly and conversion operations, its current technology maturation  plan does not meet DOE’s current guidance because the plan is outdated  and incomplete. Without a plan that provides more details on the options  DOE has mentioned to increase the supply of plutonium oxide, or a  comprehensive technology maturation plan, it is uncertain whether NNSA  will be able to meet the MFFF’s planned production schedule.
Regarding obtaining customers for MOX fuel assemblies, our survey of  utilities indicated that some utilities might be interested in becoming  customers but appear unaware of the incentives NNSA and DOE are  offering. Without additional outreach, NNSA may not be able to obtain  sufficient customers for the MOX fuel it plans to produce, which would  leave the agency with nuclear material it cannot dispose of and the U.S.  Treasury with a forgone opportunity for revenue.
Although DOE incorporated some aspects of nuclear safety oversight in its  management reviews of the MFFF and WSB projects, oversight by HSS  and the CDNS has been limited. Specifically, HSS has conducted limited  oversight activities at the MFFF but has played no role in the WSB project  because of its designation as a nonmajor project. Conversely, the CDNS  has played no role in the MFFF project and has provided some elements of  nuclear safety oversight for the WSB project. However, it has not fully met  the responsibilities laid out for it by DOE order, in part due to a lack of a  formal, standardized approach for reviewing project safety documents. We  believe that HSS’s exclusion from the WSB project reviews, as well as the  limited involvement of the CDNS in the WSB project reviews, creates a gap  in oversight of the WSB and similar facilities.
section_title: Recommendations for Executive Action
paragraphs: We are making the following five recommendations.
To address uncertainties associated with NNSA’s plans to establish a pit  disassembly and conversion capability, we recommend that the  Administrator of the National Nuclear Security Administration take the  following three actions:    Develop a plan to mitigate the likely shortfall in plutonium oxide feedstock  for the MFFF prior to the start of pit disassembly operations. This plan  should include, at a minimum, the following five items: (1) the actions  needed to ensure that the ARIES project will meet its existing production  goals, and the cost and schedule associated with any needed expansion of  the project; (2) an assessment of how much additional plutonium material,  including fuel-grade plutonium, is available within the DOE complex for  use as feedstock for the MFFF; (3) an assessment of the effect on the  design and safety of the MFFF from the use of fuel-grade plutonium as  feedstock; (4) an assessment of potential changes to the MOX fuel  production schedule and the effect of these changes on the cost and  schedule for operating the MFFF; and (5) an assessment of the cost and  schedule associated with obtaining a limited but sufficient pit disassembly  process to produce feedstock for the MFFF.
Develop a technology maturation plan for the pit disassembly and  conversion mission that (1) includes all critical technologies to be used in  pit disassembly and conversion operations and (2) provides details  (including preliminary cost and schedule estimates) on planned testing  and development activities to bring each critical technology up to a  sufficient level of maturity.
Conduct additional outreach activities to better inform utilities about the  MOX fuel program and related incentives.
To ensure that the WSB and similar projects receive consistent nuclear  safety oversight that is independent from the DOE program offices, we  make the following two recommendations:    The Secretary of Energy should revise DOE Order 413.3A to provide that  HSS participate in key project reviews for the WSB and similar high-hazard  facilities prior to the beginning of construction activities regardless of  their status as nonmajor projects.
The Administrator of NNSA should ensure that the CDNS conducts  oversight activities to the extent called for by DOE Order 413.3A and  establishes a formal, standardized approach to reviewing safety  documentation.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the Department of Energy, the National Nuclear Security  Administration, and the Nuclear Regulatory Commission with a draft of  this report for their review and comment. In commenting on the draft  report, the NNSA Associate Administrator for Management and  Administration said that DOE agreed with the report and its  recommendations.
However, we have concerns about DOE’s response to one of our  recommendations. Specifically, in commenting on our recommendation in  a draft report that NNSA should develop a plan for expanding the ARIES  project to produce additional quantities of plutonium oxide feedstock for  the MFFF, DOE stated that NNSA is also evaluating other options for  producing additional feedstock material for the MFFF, including (1) the  use of 1.4 metric tons of fuel-grade plutonium already in storage at the K- Area Facility, (2) starting up “limited but sufficient” pit disassembly  processes, and (3) adjusting the “quantity and timing” in delivering MOX  fuel to potential customers. This information was not disclosed to us  during our review, and we have a number of concerns about these options.  For example, regarding the option to process fuel-grade plutonium, the  MFFF was designed to process weapons-grade plutonium, not fuel-grade  plutonium. As a result, we are concerned about the implications of this  option on the design and safety of the MFFF. We are also concerned about  the extent to which DOE has adequately determined how much additional  material might be available throughout the DOE complex for use as an  alterative source of feedstock for the MFFF. To address these concerns,  we revised our conclusions and expanded our original recommendation to  ensure that NNSA establishes a plan to more clearly explain its strategy for  mitigating the likely shortfall in plutonium oxide feedstock for the MFFF  prior to the start of pit disassembly operations.
DOE’s written comments are reprinted in appendix VI, and NRC’s written  comments are reprinted in appendix VII. In addition, DOE and NRC  provided detailed technical comments, which we incorporated as  appropriate.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Energy, the Administrator of NNSA, and  other interested parties. We will also make copies available at no charge  on GAO’s 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. Key contributors to this report are listed in appendix VIII.
section_title: Appendix I: Scope and Methodology
paragraphs: To assess the performance status of the MOX Fuel Fabrication Facility  (MFFF) and the Waste Solidification Building (WSB) construction projects  regarding cost and schedule, we requested and analyzed earned value  management (EVM) data contained in the projects’ monthly reports and  variance reports, as well as EVM data for the MFFF project contained in  Excel spreadsheets. We assessed the adequacy of the MFFF project’s use  of EVM reporting by using a set of analysis tasks developed by GAO. In  addition, we assessed the reliability of the EVM data by evaluating each  project’s schedule against GAO’s scheduling best practices. We have  previously identified nine key practices necessary for developing a reliable  schedule. These practices are (1) capturing all activities, (2) sequencing  activities, (3) establishing the duration of activities, (4) assigning  resources to activities, (5) integrating activities horizontally and vertically,  (6) establishing the critical path for activities, (7) identifying the float time  between activities, (8) performing a schedule risk analysis, and (9)  monitoring and updating the schedule. To assist us in these efforts, we  contracted with Technomics, Inc., to perform an in-depth analysis of data  used in the MFFF’s integrated master schedule and the WSB’s current  schedule. For the MFFF project, we also conducted a review of the  project’s schedule risk analysis, which was performed during the summer  of 2009. We also interviewed officials from the Department of Energy’s  (DOE) National Nuclear Security Administration (NNSA) and MOX  Services regarding their use of EVM data, scheduling practices, and  schedule risk analyses for the two projects. Finally, we conducted tours of  the MFFF construction project at DOE’s Savannah River Site (SRS), and  met officials from the MFFF’s contractor, MOX Services, Inc.; and DOE’s  NNSA and Office of Engineering and Construction Management (OECM).
To assess the status of NNSA’s plan to establish a pit disassembly and  conversion capability to supply plutonium to the MFFF, we reviewed  documentation provided by NNSA and its contractors for the Pit  Disassembly and Conversion Facility (PDCF), Plutonium Preparation  Project, K-Area Complex, and MFFF projects, including project execution  plans, project status reports, EVM data, and independent project reviews.  We also requested information from NNSA on risks associated with the  development of technology used in pit disassembly and conversion. We  analyzed these risks using DOE guidance on assessing technology  readiness. We also reviewed project plans, testing and development data,  and feasibility studies related to the Advanced Recovery and Integrated  Extraction System (ARIES) project. We also toured the ARIES facility at  DOE’s Los Alamos National Laboratory (LANL) in New Mexico and  interviewed officials involved in the project.
To assess the status NNSA’s plans to obtain customers for mixed-oxide  (MOX) fuel from the MFFF, we reviewed project documents, including  interest requests communicated to utilities, descriptions of possible  incentives for participating in the MOX program, and analyses on the  expected return to the government from the sale of MOX fuel. We also  interviewed officials from NNSA and the Tennessee Valley Authority  (TVA) on current efforts to secure TVA as a customer for MOX fuel, as  well as officials from Duke on factors that caused the utility to end its  agreement with NNSA’s contractor to purchase MOX fuel. To further  identify factors affecting utilities’ interest in the MOX fuel program, we  conducted structured telephone interviews of U.S. nuclear utilities. We  chose to interview fuel procurement officers because they would be the  most knowledgeable respondents about factors affecting fuel purchasing  decisions, including considerations for MOX fuel. We asked fuel  procurement officers to provide information on their currents interest in  MOX fuel, important factors in the consideration of using MOX fuel, and  possible incentives for the adoption of MOX fuel. To develop the  structured interview questionnaire, GAO social science survey specialists  and GAO staff developed a draft of the questionnaire on the basis of  survey design principles and information obtained in interviews with DOE  and nuclear utility officials. The draft questionnaire underwent a blind  review by an additional social science survey specialist and was edited to  ensure consistency among questions and clearly defined terms. The  revised draft questionnaire was then pretested on three respondents, all of  whom were familiar with the nuclear fuel procurement process. During  the pretests, respondents were asked about their understanding of the  questions, how they would approach constructing their answers, and any  editorial concerns. The draft questionnaire underwent a final revision  before being used to conduct the structured telephone interviews.
Structured interviews were completed by fuel procurement officials from  22 of the 26 nuclear utilities in the United States, for an overall response  rate of 85 percent. All of the interviews were conducted during September  and October, 2009. Respondents were contacted in advance to schedule a  time to complete the interview. One of the 22 responding utilities elected  not to answer three of the interview questions, but the other 21 completed  the entire questionnaire. Data from the interviews were recorded and  entered by the interviewer. A social science analyst performed a 100  percent check of that data entry by comparing them with their  corresponding questionnaires, to ensure that there were no errors.
To examine the actions that NRC and DOE have taken to provide  independent nuclear safety oversight of the MFFF and WSB construction  projects, we reviewed oversight documentation and reports and  interviewed oversight officials from both agencies. In relation to NRC’s  oversight activities, we examined documents related to NRC’s approval of  the MFFF’s construction authorization request; information requests  submitted by NRC to MOX Services in support of NRC’s ongoing review of  the facility’s operating license application; and technical analyses  conducted by Brookhaven National Laboratory on behalf of NRC  examining the likelihood of a red oil excursion at the facility. We also  reviewed documents related to NRC’s construction inspection program,  including inspection guidance and procedures, inspection reports, periodic  assessments of MOX Services’ performance, and MOX Services’ responses  to inspection findings. We also interviewed officials from the Nuclear  Regulatory Commission’s Office of Nuclear Materials Safety and  Safeguards and the Region II Division of Construction Projects. In relation  to DOE’s inspection activities, we reviewed DOE project management and  nuclear safety oversight guidance, protocols for conducing facility  inspections, inspection reports, and records of decision related to reviews  conducted by DOE’s Office of Health, Safety, and Security (HSS) and the  Chief of Defense Nuclear Safety. We also reviewed reports by the Defense  Nuclear Facilities Safety Board on DOE oversight and interviewed Safety  Board officials. We interviewed officials from NNSA’s Office of Fissile  Materials Disposition, HSS’s Office of Independent Oversight, and the  Chief of Defense Nuclear Safety.
We conducted this performance audit from January 2009 to March 2010, 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: Extent to Which the MFFF Project’s Schedule Used Key Practices
subsections: section_title: Capturing all activities The schedule should reflect all activities as defined in the
paragraphs: program’s work breakdown structure, including activities to  be performed by both the government and its contractors.
The project has provided evidence  that the schedule reflects both  government and contractor activities,  such as the building and testing of  software components, as well as key  milestones for measuring progress.
Sequencing activities  The schedule should be planned so that it can meet critical  program dates. To meet this objective, activities need to be  logically sequenced in the order that they are to be carried  out. In particular, activities that must finish prior to the start  of other activities (i.e., predecessor activities), as well as  activities that cannot begin until other activities are  completed (i.e., successor activities), should be identified.  By doing so, interdependencies among activities that  collectively lead to the accomplishment of events or  milestones can be established and used as a basis for  guiding work and measuring progress. The schedule should  avoid logic overrides and artificial constraint dates that are  chosen to create a certain result.
Of the approximately 22,000 normal  activities, all are logically  sequenced—that is, the schedule  identifies interdependencies among  work activities that form the basis for  guiding work and measuring  progress.
The schedule should realistically reflect how long each  activity will take to execute. In determining the duration of  each activity, the same rationale, historical data, and  assumptions used for cost estimating should be used.  Durations should be as short as possible and have specific  start and end dates. In particular, durations of longer than  200 days should be minimized.
Of the 22,000 normal activities, only  569 have durations of over 200  days. In addition, the schedule  includes 38 activities with a  remaining duration over 500 days  and 10 activities with remaining  duration over 1,000 days (3.9 years).
The schedule should reflect what resources (e.g., labor,  material, and overhead) are needed to do the work, whether  all required resources will be available when needed, and  whether any funding or time constraints exist.
Of the 22,000 normal activities,  resources are placed on 3,124 of  these, and 13,988 of these have no  resources. However, the program  does have all resources captured in  an alternate software package.
According to DOE, the current  baseline reflects $2.2 billion.
The schedule should be horizontally integrated, meaning  that it should link the products and outcomes associated  with other sequenced activities. These links are commonly  referred to as “handoffs” and serve to verify that activities  are arranged in the right order to achieve aggregated  products or outcomes. The schedule should also be  vertically integrated, meaning that traceability exists among  varying levels of activities and supporting tasks and  subtasks. Such mapping or alignment among levels enables  different groups to work to the same master schedule.
Due to concerns about total float  values discussed below in  “identifying float between activities,”  the schedule has not fully integrated  key activities horizontally. The  schedule has sufficiently integrated  key activities vertically.
Using scheduling software, the critical path—the longest  duration path through the sequenced list of key activities— should be identified. The establishment of a program’s  critical path is necessary for examining the effects of any  activity slipping along this path. Potential problems that  might occur along or near the critical path should also be  identified and reflected in the scheduling of the time for high- risk activities.
The project has established a  number of critical paths by using the  scheduling software to identify  activities with low or zero float, as  well as by identifying high-risk  activities. Project officials said that  they conduct weekly meetings to  keep track of critical path activities.
The schedule should identify float time—the time that a  predecessor activity can slip before the delay affects  successor activities—so that schedule flexibility can be  determined. As a general rule, activities along the critical  path typically have the least amount of float time. Total float  time is the amount of time flexibility an activity has that will  not delay the project’s completion (if everything else goes  according to plan). Total float that exceeds a year is  unrealistic and should be minimized.
Partially  The schedule contains 8,600  activities with total float exceeding  400 days (1.5 years) and 669  activities with total float exceeding  1,000 days (3.9 years). Many of the  activities with large total float values  are tied to completion milestones,  rather than to an intermediate  successor.
A schedule risk analysis should be performed using  statistical techniques to predict the level of confidence in  meeting a program’s completion date. This analysis focuses  not only on critical path activities but also on activities near  the critical path, since they can potentially affect program  status.
Project officials conducted a  schedule risk analysis during the  summer of 2009. This analysis was  performed using statistical  techniques and focused on critical  path and near-the-critical-path  activities. Officials said that this  analysis has provided important  overall project risk information to  management.
The schedule should be continually monitored to determine  when forecasted completion dates differ from the planned  dates, which can be used to determine whether schedule  variances will affect downstream work. Individuals trained in  critical path method scheduling should be responsible for  ensuring that the schedule is properly updated. Maintaining  the integrity of the schedule logic is not only necessary to  reflect true status, but is also required before conducting a  schedule risk analysis.
Project officials said that they update  the schedule on a weekly basis. In  particular, project controls staff are  associated with each engineering  group and provide a status update  on a weekly basis.
section_title: Appendix III: Extent to Which the WSB Project’s Schedule Used Key Practices
subsections: section_title: Capturing all activities The schedule should reflect all activities as defined in the
paragraphs: program’s work breakdown structure, including activities to  be performed by both the government and its contractors.
The project’s schedule reflects both  government and contractor activities,  such as the building and testing of  cementation equipment, as well as  key milestones for measuring  progress.
The schedule should be planned so that it can meet critical  program dates. To meet this objective, activities need to be  logically sequenced in the order that they are to be carried  out. In particular, activities that must finish prior to the start of  other activities (i.e., predecessor activities), as well as  activities that cannot begin until other activities are  completed (i.e., successor activities), should be identified. By  doing so, interdependencies among activities that collectively  lead to the accomplishment of events or milestones can be  established and used as a basis for guiding work and  measuring progress. The schedule should avoid logic  overrides and artificial constraint dates that are chosen to  create a certain result.
Mostly  Of 2,066 activities that are currently  in progress or have not yet started,  80 are not logically sequenced—that  is, the schedule does not identify  interdependencies among work  activities that form the basis for  guiding work and measuring  progress.
The schedule should realistically reflect how long each  activity will take to execute. In determining the duration of  each activity, the same rationale, historical data, and  assumptions used for cost estimating should be used.  Durations should be as short as possible and have specific  start and end dates. In particular, durations of longer than  200 days should be minimized.
Mostly  Ninety-eight of the 2,066 activities  that are currently in progress or have  not yet started have durations of 100  days or more. While durations should  be as short as possible and have  specific start and end dates to  objectively measure progress,  project officials provided a valid  rationale for the duration of these  activities.
The schedule should reflect what resources (e.g., labor,  material, and overhead) are needed to do the work, whether  all required resources will be available when needed, and  whether any funding or time constraints exist.
The schedule reflects $336 million in  resource costs. The project’s cost  baseline is $344 million. According to  project officials, they are aware of  this discrepancy. They stated that  while all of the project resources are  reflected in the schedule, a software  problem has caused some of these  resources to not show up. Project  officials are working to correct this  software problem.
The schedule should be horizontally integrated, meaning that  it should link the products and outcomes associated with  other sequenced activities. These links are commonly  referred to as “handoffs” and serve to verify that activities are  arranged in the right order to achieve aggregated products or  outcomes. The schedule should also be vertically integrated,  meaning that traceability exists among varying levels of  activities and supporting tasks and subtasks. Such mapping  or alignment among levels enables different groups to work  to the same master schedule.
Project officials provided evidence  that the schedule is sufficiently  integrated.
Using scheduling software, the critical path—the longest  duration path through the sequenced list of key activities— should be identified. The establishment of a program’s critical  path is necessary for examining the effects of any activity  slipping along this path. Potential problems that might occur  along or near the critical path should also be identified and  reflected in the scheduling of the time for high-risk activities.
A critical path has been established.  The critical path dates are driven by  the logic of the schedule.
The schedule should identify float time—the time that a  predecessor activity can slip before the delay affects  successor activities—so that schedule flexibility can be  determined. As a general rule, activities along the critical  path typically have the least amount of float time. Total float  time is the amount of time flexibility an activity has that will  not delay the project’s completion (if everything else goes  according to plan). Total float that exceeds a year is  unrealistic and should be minimized.
Mostly  The schedule contains 1,482  activities that have a float time of  over 100 days. However, project  officials provided a valid rationale for  having activities with large float  times.
A schedule risk analysis should be performed using  statistical techniques to predict the level of confidence in  meeting a program’s completion date. This analysis focuses  not only on critical path activities but also on activities near  the critical path, since they can potentially affect program  status.
Project officials stated that they  conducted a schedule risk analysis  using statistical techniques in July  2008 on the baseline schedule.
The schedule should be continually monitored to determine  when forecasted completion dates differ from the planned  dates, which can be used to determine whether schedule  variances will affect downstream work. Individuals trained in  critical path method scheduling should be responsible for  ensuring that the schedule is properly updated. Maintaining  the integrity of the schedule logic is not only necessary to  reflect true status, but is also required before conducting a  schedule risk analysis.
Project officials conduct weekly  meetings to review and update the  project schedule.
section_title: Appendix IV: Summary Results of Interviews with 22 Utilities
paragraphs: Appendix IV: Summary Results of Interviews  with 22 Utilities 1. How much information have you heard or read about DOE’s MOX fuel program?
A great deal of information  2. Does your utility own any reactors that are compatible with AREVA fuel designs?  3. Taking into account your current reactor fleet, what is your utility’s current level of  interest in participating in the MOX fuel program? (Choose One)  4. What kinds of reactors owned by your utility do you think would be the most likely  candidates for MOX fuel if your utility decided to participate in the MOX fuel program?  Please choose only one answer.
7 5. How important is this factor in your assessment of your utility’s current level of interest  in participating in the MOX fuel program?  6. If DOE would sell MOX fuel to your utility at a 15% discounted price relative to the  market price for uranium fuel, what do you think your utility’s level of interest in  participating in the MOX program would be?  7. If DOE would sell MOX fuel to your utility at a 25% discounted price relative to the  market price for uranium fuel, what do you think your utility’s level of interest in  participating in the MOX program would be?  8. How important is this factor in your assessment of your utility’s current level of interest  in participating in the MOX fuel program?
12 9. If DOE would cover the costs associated with reactor modifications for compatibility with  MOX fuel, what do you think your utility’s level of interest in participating in the MOX  program would be?  10. How important are the costs associated with NRC licensing requirements, in terms of  monetary outlays and staff time, to your utility’s current level of interest in participating in  the MOX fuel program?  11. If DOE would cover the costs associated with obtaining NRC licenses, what do you  think your utility’s level of interest in participating in the MOX program would be?  12. Another factor that may affect your level of interest is the ability to test the quality and  safety of MOX fuel at your reactor. How important is this factor in your assessment of your  utility’s current level of interest in participating in the MOX fuel program?  15 13. If DOE offered to fund a demonstration program of MOX fuel at your reactor, what do  you think your utility’s level of interest in participating in the MOX program would be?   14. Another factor that may affect your level of interest is DOE’s ability to ensure the  timely delivery of MOX fuel (i.e. – Delivery occurs at an interval that meets a reactor’s  needed timeline to prepare prior to a refueling outage). How important is this factor in your  assessment of your utility’s current level of interest in participating in the MOX fuel  program?   15. Another factor that may affect your level of interest is DOE’s ability to provide a  compatible backup supply of uranium fuel as assurance in case of delays in the delivery of  MOX fuel. How important is this factor in your assessment of your utility’s current level of  interest in participating in the MOX fuel program?  11 16. Another factor that may affect your level of interest is the storage of MOX fuel at your  reactor site for longer than the interval that meets a reactor’s needed timeline prior to a  refueling outage. How important is this factor in your assessment of your utility’s current  level of interest in participating in the MOX fuel program?  17. Another factor that may affect your level of interest is public opinion regarding the use  of MOX fuel. How important is this factor in your assessment of your utility’s current level  of interest in participating in the MOX fuel program?  18. DOE’s MOX fuel program relies on annual Congressional appropriations. Another  factor that may affect your level of interest is the consistency of funding for the program  through 2033. How important is this factor in your assessment of your utility’s current level  of interest in participating in the MOX fuel program?  12 19. In addition to the factors described above, are there any other factors or issues that  we have not discussed that affected your assessment of your utility’s current interest in  participating in the MOX fuel program?
Open ended responses are not presented in this appendix.  20. How interested in participating do you think your utility would have to be to actually  submit such an expression of interest?  21. The MOX Fuel Fabrication Facility is expected to begin delivery of MOX fuel in 2018  and continue supplying fuel through 2032. How confident are you in DOE’s ability to  deliver MOX fuel on time throughout this period?  22. How confident are you in DOE’s ability to ensure that a compatible backup supply of  uranium fuel is delivered on time in the case of MOX fuel delays?
section_title: Appendix V: Nuclear Regulatory Commission’s Notices of Violation for the MFFF
subsections: section_title: MOX Services failed to ensure that design considerations were considered during installation of structures.
paragraphs: To be determined.
MOX Services’ design control procedures did not  require that the method of design verification, or the  results, be adequately documented when design  verifications were performed.
To be determined.
MOX Services failed to provide a technical justification  for an engineering change request.
To be determined.
MOX Services failed to include a sequential  description of work to be performed in implementing  documents.
To be determined.
September 11, 2009  MOX Services failed to promptly identify, evaluate,  correct, and document conditions adverse to quality,  including incorrect placement of a floor and failure to  document a rebar deficiency in the corrective action  program.
MOX Services conducted a root cause analysis for the  conditions that led to each of the findings in NRC’s  September 11, 2009, inspection report and instituted  actions, including improving communications between  engineering, construction, and quality control  personnel; adopting checklists for changes; and  adding additional training for engineering personnel.  NRC stated that the actions appeared adequate, and  that it will verify implementation during later  inspections.
September 11, 2009  MOX Services failed to perform quality-affecting  activities in accordance with approved drawings and  specifications.
MOX Services conducted a root cause analysis for the  conditions that led to each of the findings in NRC’s  September 11, 2009, inspection report and instituted  actions, including improving communications between  engineering, construction, and quality control  personnel; adopting checklists for changes; and  adding additional training for engineering personnel.  NRC stated that the actions appeared adequate, and  that it will verify implementation during later  inspections.
September 11, 2009  MOX Services failed to provide and adequate  documented justification for changes to final designs.
MOX Services conducted a root cause analysis for the  conditions that led to each of the findings in NRC’s  September 11, 2009, inspection report and instituted  actions, including improving communications between  engineering, construction, and quality control  personnel; adopting checklists for changes; and  adding additional training for engineering personnel.  NRC stated that the actions appeared adequate, and  that it will verify implementation during later  inspections.
MOX Services failed to correctly translate applicable  requirements into design documents.
MOX Services initiated corrective actions to address  these issues.
Suppliers were found to fail to meet a basic NQA-1  requirement, indicating that MOX Services failed to  ensure that services were controlled to ensure  conformance with specified technical and QA  requirements.
NRC determined that MOX Services’ oversight of its  contractors was acceptable, despite numerous  examples of failures to meet the QA requirements.
Testing documentation for two separate tests did not  include the required information.
MOX Services revised documentation procedure to  include the necessary information.
On two separate occasions, the contractor failed to  incorporate an approved design change in project  documents, and later did not verify a field drawing,  which resulted in failure to identify that the drawing did  not implement design requirements.
MOX Services took steps to ensure that  documentation was appropriately revised, and added  the design change into the corrective action plan to  initiate correction before concrete placement.
NRC found that some design reviews did not ensure  that design inputs were correctly incorporated into field  drawings.
MOX Services revised the design drawings to match  the as-built drawings after completing an analysis of  the structure.
Contractor failed to identify certain conditions adverse  to quality assurance plan requirements, including  those related to incorrectly poured concrete.
MOX Services placed the matter into its corrective  action program and took steps to ensure adequate  pouring of concrete.
Contractor failed to take corrective action for  conditions adverse to quality, including providing  adequate resolution to justify the use of reinforcing  steel splices that did not meet industry standards.
NRC reviewers concluded that MOX Services  implemented appropriate actions to control purchase  of items from the reinforcing bar vendor.
Contractor failed to ensure that numerous pieces of  reinforcing bar met industry standards for bend radius.
NRC reviewers concluded that MOX Services  implemented appropriate actions to control purchase  of items from the reinforcing bar vendor.
NRC found that MOX Services had not followed  quality insurance procedures, including, for example,  ensuring that a vendor provided clear instructions for  operating a concrete batch plant, which resulted in  improperly mixed concrete.
MOX Services took over concrete testing and took  corrective actions, including revising procedures and  bringing in independent experts to make  recommendations for improvement.
section_title: Appendix VI: Comments from the Department of Energy
section_title: Appendix VII: Comments from the Nuclear Regulatory Commission
section_title: Appendix VIII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Daniel Feehan, Assistant  Director; Steve Carter; Antoinette Capaccio; Tisha Derricotte; Jennifer  Echard; Jason Holliday; and Ben Shouse made key contributions to this  report.