DOE Real Property: Better Data and a More Proactive Approach Needed to Facilitate Property Disposal
Published: 2015-02-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Disposing of properties that are excess to DOE's current and future needs is complicated because many are contaminated as a result of their use supporting nuclear weapons development and nuclear energy research. As part of this disposal, DOE's EM oversees the environmental cleanup and for facilities, their D&D. GAO was asked to examine DOE's management of the disposal of these types of properties.
This report (1) describes the facilities for which EM completed D&D from 2003 through 2013, (2) assesses DOE's management of the disposal of EM properties, and (3) identifies challenges DOE faced in disposing of these properties and actions taken to address those challenges. GAO analyzed DOE data, reviewed relevant policies and guidance on real property management, and interviewed DOE officials at headquarters and at seven DOE sites selected to represent a variety of sizes, locations, and experiences with property disposal. GAO also interviewed stakeholders from CROs and local governments.
section_title: What GAO Found
paragraphs: From 2003 through 2013, the Department of Energy's (DOE) Office of Environmental Management (EM)—the office responsible for the deactivation and decommissioning (D&D) of the agency's contaminated facilities—disposed of nearly 2,000 facilities across 19 sites in 13 states, according to EM data. The majority of these facilities were disposed of through demolition because of their contamination levels. During this time, EM also disposed of a limited number of uncontaminated facilities and land parcels through transfer by sale. EM transferred by sale 21 properties—13 facilities and 8 land parcels—at the Oak Ridge Reservation in Oak Ridge, Tennessee to a community reuse organization (CRO)—an organization whose purpose is to facilitate the reuse of unneeded DOE properties—and the local government.
DOE's ability to manage its decentralized property-disposal process is impeded by data limitations and an unclear policy. DOE and EM each maintain a database that contains information on facilities that are undergoing or have completed D&D. However, neither system collects all the information DOE officials would need to effectively manage this subgroup of its real property portfolio, such as when D&D of a facility started or was completed. In addition, DOE's database, which serves as the agency's source of information on all real property holdings, is not always timely or complete, a shortcoming that limits the value to officials as a source of information for decision making. Furthermore, although DOE's policy requires that excess real properties appropriate for transfer for economic development purposes be identified and disposed of, it does not identify what entity is responsible for these tasks or when it should identify such properties. As a result, almost none of the officials GAO interviewed at headquarters and at the site-level was proactively or systematically identifying or disposing of these properties. Consequently, DOE may be forgoing opportunities to reduce its overall footprint and achieve efficiencies in the disposal process.
DOE officials at headquarters and the selected sites as well as stakeholders—representatives of CROs and local governments—identified several challenges to disposing of EM properties for reuse, including:
Facilities' characteristics, such as unique construction for a specific purpose, can limit reuse potential.
Facilities may require significant renovation prior to reuse due to their age and condition.
Properties located within the boundaries of secure sites may pose security concerns, making selling or leasing properties difficult.
Property disposal processes are lengthy and may limit reuse.
EM and DOE have taken some actions, such as instituting more flexible cleanup processes, to accelerate D&D and to develop strategies to improve the property disposal process. In addition, at one site, EM transferred properties by sale to the CRO and reported using the cost savings to direct additional funds to D&D, a step that in turn, accelerated the cleanup of the remaining facilities. DOE also established a task force in 2011 that provided sites an opportunity to share information about ways to improve property disposal processes and timelines.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOE (1) take steps to ensure its data systems provide timely and complete data that support sound decision making and (2) develop and document an approach to property transfer—including roles and responsibilities—consistent with DOE's policy to identify and transfer properties for economic development purposes. DOE concurred with GAO's recommendations and identified steps it plans to take to implement them.

section_title: Letter
paragraphs: In fiscal year 2012, the Department of Energy (DOE) reported that it held  approximately 1,000 excess facilities totaling 13.7 million square feet. In  addition, DOE holds land that may be excess to DOE’s current and future  mission needs. We have long noted problems with the federal  government’s management of its real property portfolio and have  designated federal real property management as a high-risk area. One  area of particular concern is that the government maintains costly excess  properties that are no longer needed because of significant changes in  the size and mission needs of federal agencies. Even with long-standing  efforts to improve the management of excess properties, federal agencies  continue to face many of the same challenges that we have reported for  over a decade. For example, property disposal costs can outweigh the  financial benefits of property disposal. In addition, legal requirements— such as those related to the environment—can make the disposal  process lengthy. In holding these properties—facilities and land—the  government forgoes potential revenue from sale proceeds or savings  from reduced maintenance costs. Even in those cases where costs to the  government are negligible—for vacant land parcels, for example—it is  possible that property could be disposed of through the process of  transferring it by sale or lease to the surrounding community and used for  economic development purposes. For DOE, however, disposing of these  properties, by demolition or transfer by sale or lease, is complicated in  part because many are highly contaminated as a result of their use in  supporting the development of nuclear weapons and nuclear energy  research. As part of their disposal, DOE’s Office of Environmental  Management (EM) becomes responsible for these properties and  oversees their environmental cleanup; for facilities, that cleanup process  is referred to as deactivation and decommissioning (D&D).
You asked us to examine issues related to DOE’s disposal of excess  properties that were EM’s responsibility, particularly those facilities that  have required D&D. This report (1) describes the number and  characteristics of facilities for which EM completed D&D from 2003  through 2013, (2) assesses DOE’s management of the disposal of  properties that were EM’s responsibility, and (3) identifies the challenges  DOE faced in disposing of these properties and actions it has taken to  address those challenges.
To determine the number and characteristics of facilities for which D&D  was completed, we obtained and analyzed DOE and EM data about the  size, location, and disposal method of the facilities for which D&D was  completed from 2003 through 2013. We interviewed DOE and EM  officials about the completeness and limitations of the data. We  determined that the data were sufficiently reliable to use, in concert with  other sources, to describe the size, location, and disposal method of the  facilities of interest. We also collected information from DOE to describe  the number and location of properties that have been disposed of through  transfer by sale for reuse and reviewed relevant laws and regulations. To  assess DOE’s management of the disposal of facilities and land for which  EM was responsible, we reviewed relevant DOE policies and processes  on real property management and compared those processes against  DOE’s guidance and our standards for internal control in the federal  government. We also interviewed DOE officials at headquarters and  seven sites, four of which we visited in person, about their property  disposal practices. We selected the sites to provide variation in attributes,  including size, location, whether they were “closure” or “non-closure”  sites, and the extent to which the site’s property had been transferred for  reuse. Observations made from these sites are not generalizable to all  DOE properties; rather, they provide specific, detailed examples of issues  that were described in general terms by agency officials. To determine  challenges DOE faced in disposing of facilities that were EM’s  responsibility and actions to address those challenges, we interviewed  DOE officials at headquarters and the seven selected sites. We also  interviewed stakeholders—representatives of six community reuse  organizations (CRO), which are the primary non-federal recipients of  these properties, representatives of an organization that represents  multiple CROs, and officials from two local governments that acquired  DOE properties—about challenges to reusing DOE property.appendix I for more detailed information on our scope and methodology.
We conducted this performance audit from March 2014 to February 2015  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: DOE established EM in 1989 to address the environmental legacy of 50  years of nuclear weapons production and government-sponsored nuclear  energy research. The office is responsible for the cleanup of large  amounts of radioactive wastes, spent nuclear fuel, excess plutonium and  uranium, and contaminated soil and groundwater, as well as for the D&D  of thousands of excess contaminated facilities. Excess facilities are those  deemed by DOE program offices such as the Office of Science or the  Office of Nuclear Energy, or the National Nuclear Security Administration  (NNSA), a separately organized agency within DOE, as not required to  support respective program missions and by DOE as excess to the  agency’s needs. EM may be responsible for the disposal of an entire site  or of one or more facilities on a site managed by another program office  or NNSA. For example, at the Mound Site in Miamisburg, Ohio, where  DOE’s active mission had ceased, EM was responsible for disposing of  the entire site, including the uncontaminated facilities that did not require  D&D. On the other hand, at sites where DOE still has an active mission,  such as the Los Alamos National Laboratory site in Los Alamos, New  Mexico, managed by NNSA, EM is responsible for disposing of individual  excess contaminated facilities.
The D&D process encompasses the many stages of taking a facility to its  final end-state (see fig. 1). As such, disposal is one of the last steps in the  D&D process. Some of the initial steps in the process—operations  shutdown and stabilization, for example—may be completed before EM  takes responsibility for the facility. For example, NNSA may stabilize a  facility while it waits for EM to accept it. The D&D process can take from several months to several years to complete.
The potential end-states of facilities that require D&D include demolition,  entombment, and reuse (see fig. 2). In demolition, all structures and  waste are removed, and the facility is demolished. The land underneath  the facility may be remediated to brownfield, in which it is suitable for  limited, controlled, or industrial uses; or to greenfield, in which it is  suitable for unlimited reuse. Entombment, also referred to as in-situ  decommissioning, takes advantage of the facility’s structure as a  containment mechanism to ensure chemicals and reactive wastes are  encapsulated. For facilities that may be reused, contaminated systems  are removed and structural materials are decontaminated, but the  building remains and may be disposed of by transfer.
EM must clean up radioactive and hazardous substances in accordance  with specified standards and regulatory requirements under federal  environmental laws, such as the Comprehensive Environmental  Response, Compensation, and Liability Act, as amended (CERCLA) and  the Resource Conservation and Recovery Act (RCRA), as well as state   Environmental Protection Agency officials, as well as officials with  laws.environmental agencies in the states where EM sites are located, enforce  applicable federal and state environmental laws and oversee and advise  EM on its cleanup efforts. In some circumstances, tribal nations,  community groups, and the public provide input into cleanup decisions.
To dispose of real property—facilities and land—with reuse potential,  DOE may engage the General Services Administration (GSA) or, under  certain conditions, exercise its own authorities to transfer the property by  sale, lease, or other mechanism to a new owner (see table 1). The Atomic  Energy Act (AEA) of 1954 authorizes DOE to sell, lease, and dispose of  property. The National Defense Authorization Act for Fiscal Year 1998  (NDAA) required DOE to promulgate regulations for a process of  transferring by sale or lease defense nuclear facilities for the purpose of  economic development of the property. The NDAA also authorized DOE  to offer indemnification—protection against claims of injury resulting from  the release or threatened release of hazardous substances—to the  transferee. Other statutory provisions, referred to by DOE as “special” or  “specific” legislation, also authorize the disposition of DOE’s real property  at specific sites. For example, DOE was required to convey to the County  of Los Alamos certain properties at the Los Alamos National Laboratory,  as well as transfer to the Secretary of the Interior, in trust for the Pueblo  de San Ildefonso, administrative jurisdiction over certain parcels of land  without compensation.
The primary non-federal recipients of properties for which EM was  responsible are CROs, though some local governments have also  received EM property. To minimize the negative social and economic  impacts of the downsizing and closure of DOE sites, DOE is required to  develop a plan for restructuring the workforce at those sites in  consultation with various stakeholders such as community groups in  affected areas. DOE encouraged the affected communities to  participate through the creation of CROs which can receive assistance  from DOE for programs that mitigate the impacts of DOE’s workforce  restructuring. The principal purpose of the CROs is to facilitate the reuse  of former defense nuclear facilities and other unneeded property for  industrial, economic, commercial, or civic purposes. Today there are eight  active CROs, six of which are pursuing or are interested in pursuing real  property transfers at DOE sites (see table 2).
section_title: The Vast Majority of the Nearly 2,000 Facilities for Which EM Completed D&D Were Demolished
subsections: section_title: From 2003 through 2013, Most Facilities That Completed D&D Were Demolished Because They Were Highly Contaminated
paragraphs: According to EM data, from 2003 through 2013 EM disposed of 1,962  facilities across 19 sites in 13 states (see fig. 3). These data includes all  facilities—those that were contaminated and went through the D&D  process as well as uncontaminated facilities—EM disposed of through  demolition, entombment, sale or lease for reuse, or other means.
Approximately 85 percent of those facilities were located at 5 sites: the  Hanford Site in Washington (29 percent); the Oak Ridge Reservation in  Tennessee (20 percent); the Savannah River Site (13 percent) in South  Carolina; the Idaho National Laboratory in Idaho (12 percent); and Rocky  Flats in Colorado (12 percent). EM is also responsible for completing the  disposition of approximately 2,900 additional facilities across 9 of the 19  sites. Approximately two-thirds of the facilities remaining are located at  two sites—the Hanford Site (38 percent) and the Savannah River Site (28  percent). By the end of fiscal year 2015, EM projects that it will have  completed the disposition of approximately half of the facilities for which it  accepted responsibility as of 2001.
According to DOE data, more than 94 percent of facilities—totaling more  than 19.6 million square feet—for which EM completed D&D from 2003  through 2013 were demolished. The remaining facilities were disposed  of through other mechanisms such as transfer to federal entities or sale to  local governments. Disposed facilities can also show statuses that reflect  other means of disposition, such as by entombment. As we will discuss  later in this report, DOE and EM maintain separate databases with  information on facilities for which D&D was completed. DOE’s data  contain information on the disposal method that is not captured in EM  data, but does not have records for a number of facilities that completed  D&D over this time period. As a result, information presented in this report  about disposal methods is for the 1,347 facilities DOE identified from its  data as having completed decommissioning from 2003 through 2013.  Nevertheless, according to EM officials, the vast majority of facilities for  which D&D was completed were demolished because they were highly  contaminated. EM officials as well as representatives from CROs we  interviewed told us that reusing facilities that required D&D was either not  possible or highly impractical due to high contamination levels and poor  condition. For example, EM officials at the Oak Ridge Reservation initially  identified facilities for reuse that they later determined should be  demolished. In addition, according to DOE officials, most of DOE’s  excess contaminated facilities are between 40 and 60 years old, have  had few, if any, upgrades since their construction, and are not conducive  to being remodeled for alternate uses. For example, one CRO  representative said it can be challenging to justify the high costs of  upgrading a facility’s infrastructure to make it usable, while another  concluded that the difficulties involved in redeveloping some properties  made reusing them not cost-effective.
section_title: EM Transferred by Sale a Limited Number of Uncontaminated Facilities and Land Parcels for Reuse
paragraphs: EM completed 21 property disposals through the process of transfer by  sale from 2003 through 2013, at no cost and with the provision of  indemnification. According to EM officials, from 2003 through 2013,  13 facilities totaling more than 331,000 square feet were transferred by  sale from the Oak Ridge Reservation in Oak Ridge, Tennessee to the  CRO or local government for economic development. (See appendix III  for information on completed facility transfers identified by EM.) None of  the facilities, which had been used for a variety of purposes including  office buildings and a warehouse, was contaminated and as a result did  not require D&D. For example, in addition to transferring 6 office buildings  totaling approximately 200,000 square feet to the CRO for reuse as  commercial office buildings, EM transferred to the City of Oak Ridge a  water treatment plant, which provides potable water and sewer services  to the East Tennessee Technology Park (ETTP)—an area of the Oak  Ridge Reservation that DOE designated for commercial reuse and set  aside for redevelopment. EM was responsible for disposing of these 13  facilities because they were located at ETTP.
According to DOE officials and CRO representatives, land held by DOE,  particularly uncontaminated land on or near buffer areas—large areas of  land meant to protect the public from hazardous incidents—generally has  more reuse potential than facilities or land located in operational areas on  sites being used to support DOE missions. According to EM officials, from  2003 through 2013, DOE transferred by sale 8 land parcels totaling  approximately 659 acres to non-federal entities for economic  development. Again, all 8 were located at ETTP which accounts for  approximately 2,200 acres of the approximately 34,000 acre Oak Ridge  Reservation and sits just inside its borders. ETTP can be accessed via a  public road. (See appendix III for information on completed land transfers  identified by EM).
section_title: Data Limitations and an Unclear Policy Impede DOE’s Ability to Effectively Manage Its Decentralized Property Disposal Process
subsections: section_title: DOE Does Not have Timely and Complete Data to Oversee Its Property Disposal Process
paragraphs: Limitations in its data on facilities that are undergoing or have completed  D&D may impede DOE’s ability to effectively manage its real property  assets, including their disposal. DOE and EM each maintain a database  that contains information on facilities that are undergoing or have  completed D&D. However, neither system collects all the information  DOE would need to effectively manage this subgroup of its real property  portfolio. Furthermore, the information that is collected is not always  timely and complete—data characteristics that we have previously found  necessary for successful asset management and sound decision  making. According to internal controls standards, only appropriate,  complete, relevant, and timely data can help the agency make informed  decisions regarding the allocation of resources and effectively manage its  assets.
The Facilities Information Management System (FIMS) is DOE’s central  database for managing its real property inventory. It includes information  on a facility’s size, location, annual maintenance costs, operating status,  and, for those facilities for which D&D has been completed, the facility’s  end-state—for example, whether the facility was demolished, transferred  to another federal agency, or sold. FIMS is used to prepare DOE’s  submission to the Federal Real Property Profile (FRPP)—the federal  government’s database that was developed to describe the nature, use,  and extent of federal real property holdings. In addition, according to  DOE policy, officials are to use FIMS data in day-to-day decision making  to support DOE’s short- and long-term strategic goals. However,  according to one DOE official, FIMS’s primary function is as an inventory  of DOE’s property holdings and it is used, for example, to assess DOE’s  position with regard to the Freeze the Footprint Initiative and determining  how much office or warehouse space DOE may acquire or of which it   Officials may not find the data in FIMS support sound  must dispose.decision making, in part, due to the following limitations.
Data are not timely. FIMS data do not provide officials with reliable and  up-to-date information on the facilities in DOE’s portfolio, as intended. In  particular, while FIMS documents a facility’s status (e.g., whether it is  operating, shutdown, etc.), the status codes overlap and do not  correspond directly with the steps in the D&D process, such as whether  the facility is undergoing deactivation or decommissioning. For example,  based on our review of FIMS user guidance and a DOE presentation,  during the deactivation phase, one official may categorize a facility under  the status code “deactivation” while another official might categorize the  facility under the broader status of “D&D in progress.” As a result, FIMS  may not provide DOE officials with enough information to identify where  such facilities are in the D&D process. Furthermore, in the FIMS data we  reviewed for facilities for which EM completed D&D, most status codes  were outdated. Specifically, approximately 84 percent of the facilities that  DOE identified in FIMS as being disposed of after EM completed its D&D  had a final status that did not accurately reflect that D&D had taken place.  Instead, those records indicated that the facilities were being deactivated  or were shutdown for the purpose of eventual D&D. In those cases,  decision makers using FIMS would not have accurate, reliable, or timely  information about the status of those facilities. DOE’s policy on asset  management states that FIMS data must be maintained as complete and  current throughout the life cycle of a real property asset, but according to  DOE officials, FIMS data are often only updated as necessary to support  the agency’s annual FRPP submission. With regard to updating status  information, those officials explained that if EM started and completed  D&D of a facility within a single reporting year, FIMS may never indicate  that D&D of the facility was underway. Instead, FIMS would likely indicate  that the facility was awaiting D&D and then demolished. In April 2014, the  DOE Inspector General similarly found that sites were only adhering to  the minimal FIMS requirement of validating data annually or on an as- requested basis by DOE throughout the fiscal year. As a result, FIMS  may only provide decision makers with a snapshot of information on a  facility based on the prior year’s data and relying on prior year’s data  could impede DOE’s ability to make well-informed real property planning  and budgeting decisions.
In addition, FIMS does not contain certain key information that DOE  officials at headquarters may find useful to provide real property  management oversight of facilities that require D&D. For example, FIMS  does not contain information on when EM assumed responsibility for the  facility, started D&D, completed D&D, or started disposal activities.  According to DOE officials, FIMS was not created to and does not  function as a D&D management tool. Rather, it is a property management  tool and additional information is not collected because it is not required  to support the agency’s FRPP submission. Nevertheless, according to  one DOE official, such information could provide an added level of insight  and a more complete record of the facilities that comprise DOE’s real  property portfolio. Ready access to information about D&D work across  sites could allow DOE officials to better manage real property at an  agency level, collect information on timeframes for disposing of  contaminated excess properties that might be used to improve  management practices, and ensure that real property assets support  long-term plans.
Data are not complete. Finally, the information that FIMS should maintain  is not always recorded. For example, the system does not contain records  for all of the facilities for which EM completed D&D from 2003 through  2013. According to federal regulations, agencies must certify the  accuracy of real property information submitted to GSA for the Annual  Real Property Inventory program; however, according to DOE officials,  FIMS does not contain records for all facilities. For example, recent  validation efforts found that inventories of facilities were incomplete.  Specifically, in 2014, DOE identified facilities at the Hanford and  Savannah River Sites—both of which EM is responsible for disposing of   Incomplete information  in their entirety—which were missing from FIMS.about real property holdings impedes DOE’s ability to manage its portfolio  at a site and agency-wide level.
EM maintains a separate database with information on facilities for which  it has completed D&D and for which it is currently responsible. The  Integrated Planning, Accountability, and Budgeting System (IPABS) is  EM’s system for tracking and maintaining information about its activities.  According to EM officials, IPABS is a project management system that  tracks work—including D&D—and provides the data for EM’s annual  performance metrics. Data in IPABS are tracked by project units, which  summarize of the major characteristics of a cleanup project, including key  performance, scope, and cost information. One project unit may include  the D&D of one or more facilities on a site, or it may describe non-facility  projects, such as the remediation of groundwater. For performance  management purposes, IPABS notes how many facilities are in each  project unit and when those project units are completed. According to an  EM official, IPABS is the most accurate source of information on the  number of facilities EM has completed.
However, neither DOE nor EM officials can use IPABS data to gain  further insight into the facilities that require D&D or to oversee the  property-disposal process because the system does not provide  information at a sufficiently granular level to provide a basis for real  property decision making. Specifically, IPABS does not contain facility- level information; it does not track the status of work at individual facilities,  nor does it maintain information on an individual facility’s end-state or  expected end-state. This is because IPABS is a project management  system and not a property management system. As a result, EM could  not tell us definitively how many of the facilities for which it completed  D&D from 2003 through 2013 had been demolished, entombed, or made  available for reuse. In addition, IPABS could not be used in concert with  FIMS to develop a more complete understanding of the status of D&D  activities—including disposal—because until 2013, the project units in  IPABS did not contain enough detailed information to identify the specific  facilities in each unit. Though that information was added for many project  units, in order to provide information such as the expected end-state of  the facilities that are undergoing D&D, EM officials would still have to  manually compile information from IPABS, FIMS, and site-level field  reports. In 2010, when EM undertook an effort to provide DOE  management with an overview of EM’s D&D activities across sites,  officials compiled information from these sources, but noted that doing so  was resource intensive and not an efficient way to track a complex  program. Without up-to-date information on the status and projected end- states of facilities undergoing D&D, DOE officials may not have a  complete understanding of the status of disposal activities and may not  be able to make well-informed real property decisions, including those  aimed at reducing DOE’s overall footprint.
section_title: DOE Has Developed Guidance for Property Management but Does Not Have a Proactive Approach to Property Transfer
paragraphs: DOE has a decentralized approach for managing its real property assets.  According to DOE officials, each site is unique; even those sites with  similar missions are located in different geographic areas and have  varying relationships with the surrounding communities. As a result,  according to DOE officials, site-level officials are best situated to make  many real property decisions. Under this decentralized process, DOE  developed a common approach for sites to manage assets agency-wide  by issuing an order entitled, Real Property Asset Management, (“the  Order”), as well as a series of related guides and policy documents.Order’s objective is to define a consistent and shared approach across  sites by establishing the requirements and responsibilities for the  individuals and offices involved in real property management. For  example, officials at the site-level are responsible for preparing budget  requests, declaring property as excess, developing near- and long-term  real property plans, and disposing of excess properties. Officials at  headquarters are responsible for developing policies and procedures for  asset management—from planning to disposition—and for providing  oversight of tasks executed at the site level.
The Order also states that excess real properties that are appropriate for  economic development transfer must be identified and disposed of;  however, the policy is unclear as it does not identify who is responsible  for these tasks or when they should identify such properties. We found  that almost none of the officials we interviewed at the site-level nor  officials at headquarters was proactively or systematically identifying and  disposing of these properties. For example, neither all sites we selected  nor DOE maintain an inventory of properties suited for economic  development transfers. Instead, according to DOE and CRO officials,  transfers by sale or lease of EM properties that did take place from 2003  through 2013 were generally initiated by the recipient—the CRO or local  government. According to DOE officials and CRO representatives we  interviewed, the transfer process generally began with an informal inquiry  or request from the CRO or local government, at which point site-level  officials determined whether the property was appropriate and should be  made available for transfer. According to CRO representatives, most  have a good working relationship with site-level officials and are relatively  knowledgeable about the properties that may be available for transfer;  however, this was not the case at all sites. For example, representatives  from one CRO described learning that a facility it may have been  interested in acquiring was to be demolished only after demolition was  underway. Even representatives from CROs who were satisfied with their  relationship with DOE officials noted that they have different goals and, as  a result, different priorities regarding property disposals and transfers.  Specifically, the CROs sought to create economic development  opportunities for their communities whereas EM’s focus was the cleanup  of the contaminated properties for which it was responsible. At times, this  has caused frustration on the part of the CROs that have requested that  DOE make D&D decisions that support eventual reuse and sought DOE  assistance for funding economic impact studies. EM’s mission, though, is  not to promote economic development at the sites for which it is  responsible, but rather to safely clean up the environmental legacy of  nuclear weapons and energy production. Furthermore, according to DOE  officials, there is no funding available to support the transfer of EM  property holdings for economic development purposes. Nevertheless,  according to EM officials, they are the appropriate office to work with the  CROs given their extended interaction throughout the D&D process.
By not taking a proactive approach to identifying and transferring property  that is suitable for economic development purposes, DOE may forgo  opportunities to reduce its overall footprint and achieve efficiencies in the  disposal process. In particular, given the scope of DOE’s real property  holdings, it is possible that the land on which demolished facilities were  built as well as land that surrounds a site’s central campus may be  appropriate for sale or lease for the purpose of economic development.  For example, according to a representative we interviewed from one  CRO, most of the several hundred-square-mile site that his organization  is interested in reindustrializing is wilderness and has never been used for  operational purposes.economic development transfers as EM continues to D&D facilities and  DOE closes sites. Furthermore, if site-level officials proactively identified  unneeded land that was appropriate for transfer, they could potentially  bundle several land parcels together and conduct the required  environmental reviews for larger areas, thus avoiding multiple costly  environmental reviews. Officials at one site we visited said that the cost of  the necessary environmental reviews DOE must complete prior to  transfer was approximately the same regardless of the parcel size, and as  a result, bundling land parcels for transfer could be a cost effective  approach. However, DOE does not know the extent to which it could  decrease its real property holdings through economic development  transfers because it has not identified those properties that fit the criteria.
section_title: DOE Has Taken Some Actions to Address Property Disposal Challenges
subsections: section_title: Stakeholders Cited Renovation Costs, Security Restrictions, and Lengthy Processes as Challenges That Limit Property Disposals
paragraphs: DOE officials at headquarters and the site level, CRO representatives,  and local government officials we interviewed identified several  challenges to disposing of EM properties. For example, DOE officials  from headquarters and six of the seven selected sites, as well as four of  the nine stakeholders we interviewed reported that limited funding for  D&D and, related, long cleanup time frames were challenges to disposing  of these properties. We have previously found that when disposition is  deferred on excess contaminated facilities, their deterioration results in  continued surveillance and increased maintenance costs that can further  stress already limited budgets. In addition, a 2011 EM report found that  the longer facilities sit idle, the further they degrade, and the more  dangerous and costly they are to maintain or dispose.more directly challenges to completing D&D, they are inextricably linked  to property disposal in that disposal is the conclusion of the D&D process.
DOE officials and stakeholders we interviewed also identified several  challenges to disposing of EM properties through reuse—some specific to  contaminated DOE properties and some that we have identified  previously as challenges to property disposal generally across the federal  government. For example, DOE officials and stakeholders identified  challenges related to the condition of facilities for which EM is responsible  and the potential stigma associated with a property at a nuclear site.  Officials and stakeholders also noted that the location of the facilities on  secure sites can be a challenge for reuse—an issue that we have  previously found was an impediment to reuse of excess properties at  DOE sites. The following are challenges identified by DOE officials and stakeholders we interviewed as potential impediments to reuse of EM  properties:
Facility characteristics limit reuse potential of some properties.
According to DOE officials at headquarters and all seven of the  selected sites, as well as all nine stakeholders we interviewed, facility  characteristics limit the reuse potential for some EM facilities.  Specifically, many of these facilities were built for a unique purpose  and their construction makes reuse for other purposes difficult. For  example, the K-31 complex is a 1.5 million-square-foot facility formerly  used for uranium enrichment processing at ETTP on the Oak Ridge  Reservation (see fig. 4). According to an EM site official, its size and  location—accessible via public roads—theoretically make it attractive  as a commercial warehouse; however, specialized, densely packed  steel support beams needed to support heavy enrichment equipment  would make reuse as a warehouse difficult. As such, DOE decided  not to pursue reuse options and is in the process of demolishing the  facility. In addition, according to some CRO representatives, EM  properties may have limited reuse potential because of the stigma  associated with their prior use in developing or housing nuclear or  radiological materials. For example, according to one CRO  representative, a German manufacturing company that initially  expressed interest in land held by DOE later decided it did not want to  be associated with a former nuclear site. Similarly, one CRO  representative said that financing and insurance for projects in  formerly contaminated areas can be difficult to obtain without the  protection of indemnification, which can make selling property for  reuse challenging.
Facilities require significant renovation prior to reuse. DOE officials  from headquarters, EM officials from six of the seven selected sites,  and four of nine stakeholders we interviewed stated that facilities held  by EM were generally old, in poor condition, and would require  significant renovations prior to reuse. In many cases, facilities would  need extensive improvements to meet modern building-code  standards. According to one CRO representative, though EM  transferred them by sale at no cost, his organization spent more than  $1.5 million on necessary aesthetic and mechanical improvements to  four facilities before it could market them to private sector entities. A  representative from another CRO also noted that his organization had  to renovate the interiors of EM facilities his organization acquired in  order to attract commercial tenants.
Selling or leasing properties within the boundaries of secure sites may  pose security concerns. DOE officials from headquarters, EM officials  from four selected sites, and three stakeholders reported that security  restrictions at some sites reduce opportunities for non-federal entities  to reuse both land and facilities. According to EM officials at one site  we visited, previous DOE commitments to state environmental  regulators stipulated that for security and safety reasons, there would  be no modifications to the site’s perimeter. As a result, no facilities or  land parcels located within the existing fence-line, other than portable  structures such as trailers, were suitable for transfer by sale to non- federal entities. Though officials also said while there have been  preliminary discussions about the future possibility of moving the  fence to allow access to some uncontaminated facilities via public  roads—potentially making them available for reuse to non-federal  entities—DOE did not foresee doing so in the near future. According  to an official from the associated CRO, it was for this reason his  organization has not requested any non-portable facilities for transfer  and reuse at the site.
Lengthy property-disposal process limits reuse. According to DOE  officials from four of the selected sites and all nine stakeholders we  interviewed, the length of the process was a challenge to transferring  properties available for economic development purposes. According  to EM-provided information, on average, it took 2.8 years between the  date when a CRO or local government submitted a formal request for  property and when it assumed ownership for the property. Long and  uncertain disposal timeframes made it difficult for some CROs to  secure tenants. For example, one CRO representative we interviewed  reported that he is often unable to give potential tenants a reliable  estimate of the time it will take for the CRO to acquire a property. As a  result, some potential commercial partners have lost interest, and the  community has lost economic development opportunities. In one  instance, the CRO and DOE initially considered approximately 25  facilities to be appropriate for reuse at the outset of the D&D process,  but the condition of those facilities deteriorated as they proceeded  through D&D, and the companies on whose behalf the CRO had been  seeking approximately 8 of those properties sought options  elsewhere.
DOE officials and CRO representatives said the length of the transfer  process for economic development purposes was related to (1)  implementation of environmental requirements and (2) reviews by DOE  headquarters of the conditions of proposed transfers by sale or lease.  Before a property can be disposed of, certain environmental reviews and  radiological surveys must be completed, certifying the safety of the  property for reuse. According to three stakeholders we interviewed, the  steps involved in meeting environmental requirements contribute to the  length of the transfer process. In particular, the scope of cleanup analysis  is determined by the intended use of the site—for example, whether the  site will be used for industrial or residential purposes. Completing these  reviews can be difficult, particularly if the future use of the site is  unknown. According to one CRO representative we interviewed, the  organization’s request to lease DOE property for economic development  did not advance due in part to difficulties in negotiations with DOE over  the scope of the cleanup review necessary. Specifically, to appropriately  scope the cleanup review, site officials wanted information on the type of   However, the CRO could not  industry that would be using the property.supply that information because it was seeking to acquire the property  before it had a tenant, and as part of that effort was pursuing different  types of industrial clients based on a reuse study that had previously  identified several potential uses for the property, including nuclear-related  projects.
In addition, the DOE headquarters’ reviews of the proposals for transfers  by sale or lease can lengthen the disposal process. Site-level officials  propose the terms and conditions of the real property transaction, which  is then forwarded to headquarters for approval. According to DOE  officials, the duration of the disposal process is highly situational, and if  DOE needs more information from the site or the requesting CRO or if the  CRO amends its original request, the process may be delayed. For  example, in response to a 2010 CRO proposal request for the transfer by  sale of 1,300 acres for economic development, DOE headquarters  responded that the requester had not provided all the documentation  needed to process the proposal request. In another instance, in response  to a 2008 proposal to transfer by sale a parcel of land in a buffer area at  the Oak Ridge Reservation to the CRO, DOE headquarters requested in  2013 that the site consider using disposal authorities other than DOE’s,  including by using GSA as the disposal agent. During the review,  according to EM officials at Oak Ridge, officials at headquarters began to  reconsider the practice of transferring uncontaminated properties by sale   According to site-level officials,  at no-cost and providing indemnification.similar properties—land from the site’s buffer areas—had previously been  approved for disposal through the process of transferring property by sale  for the purpose of economic development at no cost and with the  provision of indemnification. According to site-level officials, the absence  of established practices on disposing of this type of property slowed the  disposal process. Since then, officials at the site-level, in concert with  officials at headquarters have developed a site-specific strategy  enumerating when property will be disposed of using DOE’s authorities  and when property will be disposed of by engaging GSA. Ultimately, the  property that prompted the review was transmitted to GSA for a targeted  asset review in May 2014, more than 6 years after it was formally  requested for transfer by the CRO.that review, in which cultural resource issues were identified, the  requesting organization indicated it was no longer interested in the  property. DOE plans to continue maintaining the property, and as of  December 2014, disposing of it was not a priority for the site.
According to DOE officials, following  Finally, some CRO representatives expressed concern that DOE reviews  of transfer requests may take longer due to the removal in November  2013 of a 90-day response time requirement from the regulations  governing DOE transfers by sale or lease for economic development.  DOE officials told us that they do not expect the removal of the regulatory  requirement will extend overall time frames to transfer properties by sale  or lease—rather, the steps of the process are reordered. Prior to the  change, a CRO would request a property and within 90 days DOE would  respond whether it thought the transfer could potentially occur. At that  point, DOE would start the environmental and radiological safety review  process and the two parties would develop transfer documents to create  a package for headquarters review. Now that the response requirement  has been removed, DOE may respond to a request after the required  environmental and radiological safety reviews have been completed.  According to DOE officials, the response-time requirement was removed  because it was unclear to which part of the process it applied and to  allow DOE to complete the required reviews. This could potentially allow  DOE to make better-informed transfer decisions. Since the length of time  necessary for completing the environmental and radiological reviews  remains unchanged, DOE officials said DOE does not expect the overall  transfer time frames to be affected.
section_title: EM and DOE Have Taken Steps to Address Some Cited Disposal Challenges
paragraphs: EM and DOE have taken some actions to accelerate the D&D and  property disposal processes. Officials at some sites have instituted  processes to allow for accelerated D&D, steps that they said saves on  maintenance and other costs, and have created more flexible cleanup  processes that they said have resulted in quicker disposal. For example,  at one site, EM reprioritized its project list to more quickly complete D&D  on a facility with a collapsing roof. Officials said that taking the building  down sooner than planned allowed EM to avoid spending operating funds  maintaining a facility that would later be demolished. Similarly, as part of  a reindustrialization program at ETTP, EM transferred by sale 13 facilities  and 8 land parcels to the CRO for economic development. The intent of  the reindustrialization program was to establish a commercial industrial  park at ETTP and to accelerate cleanup of DOE facilities at a reduced  cost by making facilities that had previously been leased to the CRO  available for transfer by sale. DOE reported that the reindustrialization  program has resulted in cost savings that have allowed EM to direct  additional funds to clean up, and therefore accelerate D&D at Oak Ridge.  Specifically, DOE reported in May 2013 that the program resulted in  about $110 million in cost savings from, among other things, $37.1 million  in avoided facility surveillance and maintenance and $12.6 million in  avoided facility demolition. Finally, by instituting the “Mound 2000”  process at DOE’s former Mound Site, DOE and site regulators focused  cleanup efforts on small parcels of land and individual buildings identified  for industrial reuse. EM officials and representatives of the CRO said this  allowed groups of properties to be strategically transferred as they were  deemed clean, resulting in quicker reuse time frames than would have  been accomplished by transferring the whole site only after it was cleaned  in its entirety.
DOE has also taken steps to develop strategies to improve property  disposal, but does not plan to require implementation or changes to its  processes. DOE established the Asset Revitalization Initiative Task Force  in 2011 to identify opportunities to promote more efficient business  practices and encourage public-private collaboration for the reuse of  assets on and near DOE sites. Task force members developed proposals  for improving the property disposal approval and notification processes,  as well as disposal timelines, and for exploring additional steps DOE  could take toward improvement in these areas. According to DOE  officials, there was never the intention to require implementation of the  task force’s proposals about potential ways to address challenges across  DOE. Instead, DOE officials described the task force, with members from  several DOE sites as well as headquarters and NNSA, as an effort for  sites to learn from one another.
section_title: Conclusion
paragraphs: Though federal agencies have taken steps to improve the management of  excess properties, they continue to face many of the same challenges  that we have reported for over a decade. For DOE, those challenges are  compounded by the fact that some of its excess properties have been  contaminated as a result of their use in supporting the development of  nuclear weapons and nuclear energy research. DOE’s ability to manage  the disposal of these properties is impeded by its reliance on data that are  not always timely or complete. Without up-to-date information on the  status of all facilities undergoing D&D, of their projected end-state, or  major milestones DOE may not be able to make well-informed decisions  about this subgroup of its property holdings.
In addition, though the vast majority of these contaminated facilities are  disposed of via demolition, there is potential for other facilities—such as  the uncontaminated facilities for which EM is responsible—and some land  that EM holds to be disposed of via transfers by sale for economic  development. While disposing of unneeded land may not produce  significant cost-savings since it does not require large amounts of  resources to maintain, continuing to hold real property that may no longer  be needed does not present a positive image of the federal government in  local communities, particularly if another entity may be able to put the  property to better use. Although DOE’s policy is to identify and dispose of  properties that are appropriate for economic development, currently,  neither officials at headquarters nor the site-level have taken a proactive  or systematic approach to implementing this policy. As a result, DOE  does not have a consolidated inventory of properties that might be  appropriate for this type of disposal. A fuller understanding of the size and  scope of the properties that fit this category could facilitate a more  proactive disposal approach and reduce DOE’s overall property holdings  as well as assist economic development in selected areas.
section_title: Recommendations for Executive Action
paragraphs: To help DOE make more informed decisions regarding its management  and disposal of real property held by EM, we recommend that the  Secretary of Energy take the following actions:
DOE should take steps to ensure that its real property data systems  provide timely and complete data on the status and major milestones  of facilities undergoing D&D at a level of detail that supports sound  decision making.
DOE should develop and document an approach to property transfer  consistent with DOE’s policy to identify and transfer properties  appropriate for economic development, including clearly defining who  is responsible for identifying those properties, when they should be  identified, and how.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Secretary of Energy for review  and comment. DOE concurred with our recommendations and provided  technical clarifications, which we incorporated as appropriate. DOE’s  comments are discussed below and the written response is reprinted in  appendix II.
DOE agreed with our recommendation that it should ensure that its real  property data systems provide timely and complete data on the status  and major milestones of facilities undergoing D&D. DOE stated that it  intends to address this recommendation by (1) making revisions to its  data system to ensure that the range of status options covers the entire  lifecycle of an asset and does not overlap; (2) proposing to its data  system governance bodies new data elements for each asset, where  applicable; and (3) applying data entry processes consistent with internal  accounting guidance.
With regard to our recommendation that DOE develop and document an  approach to property transfer consistent with its policy to identify and  transfer properties appropriate for economic development purposes, DOE  responded that it will issue a policy memorandum that will (1) assign  responsibility for identifying such properties and (2) include the timeframe  and manner of identification and any resulting notification. DOE indicated  it will include portions of the guidance, as appropriate, in future updates to  any related directives.
We are sending copies of this report to the appropriate congressional  committees and the Secretary of Energy. In addition, the report will be  available at no charge on GAO’s website at http://www.gao.gov.
If you or your staff have any questions, please contact me at (202) 512- 2834 or wised@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  GAO staff who made key contributions to this report are listed in appendix  IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) describe the number and characteristics of  facilities for which the Department of Energy’s (DOE) Office of  Environmental Management (EM) completed the deactivation and  decommissioning (D&D) process from 2003 through 2013, (2) assess  DOE’s management of the disposal of properties that were EM’s  responsibility, and (3) identify the challenges DOE faced in disposing of  these properties and actions it has taken to address those challenges.  The focus of this report was DOE’s management of the disposal of  facilities that required D&D once they had reached their end-state. We did  not assess or examine DOE’s management of the D&D process itself in  this report. For example, we did not assess the process or DOE’s  decision making regarding the selection of a facility’s end-state or  prioritizing D&D work.
To describe the facilities for which EM completed D&D from 2003 through  2013, we obtained and analyzed DOE and EM data for that period. From  DOE, we obtained data from the Facilities Management Information  System (FIMS), the agency’s central real property database. To identify  facilities for which EM completed D&D from 2003 through 2013, DOE  officials queried FIMS for facility records that met two criteria: (1) the  record indicated that the facility was deactivated, shutdown pending the  start of D&D, or that D&D was in progress at any point during that time  period and (2) the record for that facility was archived in a subsequent  year, which indicated that the facility had been disposed of and thus  implying D&D was complete. Using data from this query we developed  summary statistics to describe the facilities of interest. We posed  questions to knowledgeable DOE officials about data collection and  reporting practices and reviewed related documentation. We identified a  number of shortcomings of FIMS data related to their completeness and  use as a management tool; however, we determined that the data were  sufficiently reliable to use, in concert with other data sources, to describe  the size and disposition of the facilities of interest. To supplement  information gathered from FIMS, we also obtained and analyzed data  from EM’s Integrated Planning, Accountability, and Budgeting System  (IPABS). We used the annual performance metrics produced from that  system to develop a comprehensive understanding of the total number of  facilities for which EM had completed disposal from 2003 through 2013  and their location, as well as the scope and location of future disposal  efforts. Similarly, we posed questions to knowledgeable EM officials  about data collection and reporting practices and reviewed related  documentation, and we determined that the data were sufficiently reliable  for the descriptive purposes for which they were used. To gather  additional information about these facilities and DOE’s approach to their  disposal, we reviewed relevant laws and regulations and interviewed  DOE officials at headquarters and seven sites (see table 3). We visited  four of those sites in person and collected and reviewed supporting  documentation as necessary. We selected sites to visit that would provide  variation in site attributes, including size, location, whether it was a  closure or non-closure site, and the extent to which property at the site  had been transferred by sale for reuse. Observations made from these  sites are not generalizable to all DOE properties; rather, they provide  specific, detailed examples of issues that were described in general terms  by agency officials.
To assess DOE’s management of the disposal of properties that were  EM’s responsibility, we analyzed DOE’s policies and guidance related to  real property management and interviewed officials at headquarters and  at the site level about the disposal of these properties in practice. We also  interviewed representatives of the six active community reuse  organizations (CRO) that received, requested, or were interested in  requesting EM properties—the primary non-federal recipients of these  properties—as well as an organization that represents a coalition of  CRO’s and two local governments that had been the recipients of DOE  properties (see table 4). We then compared those practices with (1)  GAO’s Standards for Internal Control in the Federal Government and (2)
DOE’s policies on real property management, including Real Property  Asset Management.
To identify the challenges, if any, that DOE faced in disposing of EM  properties and the actions it was taking to address those challenges, we  interviewed officials at DOE headquarters and at the seven selected sites  and conducted 9 stakeholder interviews with representatives from the  active CROs and local governments. As previously mentioned, we also  conducted four site visits to observe the properties of interest and gather  additional context for the challenges DOE faced.
We conducted this performance audit from March 2014 to February 2015  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: Comments from the Department of Energy
section_title: Appendix III: Completed Facility and Land Transfers by the Department of Energy’s Office of Environmental Management, 2003 through 2013
paragraphs: We asked officials from the Department of Energy’s Office of  Environmental Management (EM) to provide information on real  property—facilities and land—held by EM that was transferred by sale to  non-federal entities from 2003 through 2013 (see table 5). All 21  properties that were transferred by sale during this time period were at  the East Tennessee Technology Park, a collection of facilities designated  for commercial reuse and land set aside for redevelopment that is EM’s  responsibility at the Oak Ridge Reservation in Tennessee.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Nancy Lueke, Assistant Director;  Gary Guggolz, Delwen Jones, Joshua Ormond, Alexander Ray, Jack  Wang, Crystal Wesco, Jessica Wintfeld, and Elizabeth Wood made key  contributions to this report.