Department of Energy: Improved Guidance, Oversight, and Planning Are Needed to Better Identify Cost-Saving Alternatives for Managing Low-Level Radioactive Waste
Published: 2005-10-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2004, the Department of Energy (DOE) disposed of more than 378,000 cubic meters of low-level radioactive waste (LLRW)--contaminated building rubble, soil, and debris. In 2002, DOE directed its sites to use life-cycle cost analysis to manage LLRW. Life-cycle cost analysis examines the total cost of various options to manage LLRW over its life, including its packaging, treatment, transport, and disposal, to identify the lowest-cost alternative. GAO determined whether (1) DOE sites use life-cycle cost analysis to evaluate LLRW management alternatives and (2) DOE has a strategy for cost-effectively managing LLRW departmentwide, including state actions that may affect this strategy.
section_title: What GAO Found
paragraphs: The six DOE sites we visited, representing more than 70 percent of the LLRW disposed of by DOE during 2003 and 2004, did not consistently use life-cycle cost analysis because of weak DOE guidance and a lack of oversight of contractors' implementation of this guidance. As a result, DOE cannot ensure that lowest-cost LLRW management alternatives are identified, so that managers make decisions that fully weigh costs against noncost factors, such as safety and schedule. For example, DOE contractors at two sites did not consistently consider alternative transportation modes or postclosure maintenance and surveillance costs of disposal sites in their analyses for fiscal year 2004 disposal decisions. GAO also could not always determine how contractors used cost analyses in disposal decisions because of incomplete documentation. While DOE's guidance requires each site to develop the mechanisms necessary to ensure use of life-cycle cost analysis, it does not specify, for example, (1) a systematic, consistent method of analyzing all cost elements to determine the lowest cost, or (2) when analyses should be performed. Also, no such guidance was incorporated into site contracts, and DOE site offices had not evaluated contractors' use of life-cycle cost analysis. DOE has recognized that its current approach--having each site responsible for developing mechanisms necessary to control costs--may result in cost inefficiencies and may limit its ability to meet departmentwide strategic objectives. As a result, DOE plans to begin implementing a national LLRW disposition strategy by March 2006 to better coordinate disposal efforts--specific schedules have not yet been established for when the strategy will be fully in place. However, DOE faces challenges in developing and implementing this strategy. First, it needs to gather complete data on the amount of LLRW needing disposal. Second, the fact that DOE's multiple program and site offices have differing missions and oversee many contractors presents coordination challenges. For example, one program office dismantled and disposed of a supercompactor used to reduce the volume of large LLRW items without a DOE-wide assessment of LLRW compacting needs and without considering other potential cost-effective uses for the supercompactor that might benefit other DOE sites. Third, DOE faces state actions that have restricted access to disposal facilities, making it more difficult to coordinate and integrate disposal departmentwide.

section_title: Letter
paragraphs: In fiscal year 2004, the Department of Energy (DOE) disposed of more than  378,000 cubic meters of low-level radioactive waste (LLRW)—enough to fill  a football field to the depth of a 19-story building. This waste included  radioactively contaminated building rubble, soil, and debris, as well as a  small volume of mixed waste, which is LLRW that is further contaminated  with chemicals and other hazardous waste. DOE disposes of such waste at  two federal facilities—the Hanford Site in Washington State and the  Nevada Test Site—and one commercial facility in Utah. Disposal actions at  these facilities are in some cases subject to regulation and licensing  decisions by the states in which they are located. DOE’s Office of  Environmental Management (EM) manages the majority of LLRW at  multiple sites where the department is cleaning up facilities that were  contaminated with radioactivity as a result of, for example, nuclear  weapons-related activities. Many factors must be taken into account in  managing this waste, including health and safety and the target dates for  cleaning up the sites. Cost is also an important factor. In 2000, we reported  that DOE spent more than $700 million to manage LLRW from 1997 through  1999.
One tool for evaluating LLRW management costs is life-cycle cost analysis.  Such analysis calculates the total cost to manage waste over its life,  including cost elements like waste packaging, treatment, transportation,  disposal, and monitoring of the disposal site after closure. The analysis is  valuable for comparing the total costs of various waste management  options leading up to and including disposal to identify the most cost- effective alternative. The results of such analyses can be used in making  LLRW management decisions that weigh cost against noncost factors such  as safety, health, and schedule. DOE’s use of complete, current, and well- documented life-cycle cost analyses in making LLRW management  decisions, if properly conducted, is consistent with the intent of DOE Order  430.1B on real property asset management. This order identifies  requirements for life-cycle management of real property assets, including  DOE land, improvements, facilities, and structures, from planning and  acquisition through disposal. The order is relevant to LLRW management  because many DOE facilities and structures that are considered real  property assets eventually become LLRW through EM cleanup efforts. The  proper use of life-cycle cost analysis is also consistent with Office of  Management and Budget Circular A-94, which provides guidance on  conducting cost-effective analyses of federal programs and projects.  Among other things, the circular states that a program is cost-effective if,  on the basis of life-cycle cost analysis of competing alternatives, it is  determined to have the lowest costs for a given amount of benefits.
Concerned that DOE may be relying too heavily on the Nevada Test Site  and Hanford facilities instead of considering other alternatives, such as  commercial disposal facilities, the House Committee on Appropriations  directed DOE to prepare a cost study analyzing the life-cycle costs of LLRW  management alternatives. DOE’s life-cycle cost study, sent to Congress in  July 2002, specified cost elements to include in life-cycle cost analysis,  defined some LLRW management alternatives, and highlighted the  potential for finding various cost differences among alternatives, among  other things. The study stressed that a thorough evaluation of all life-cycle  costs is crucial to identifying the lowest-cost alternative for LLRW  management. Although the study recommended that DOE sites consider all  life-cycle costs in evaluating alternatives for LLRW management, it  cautioned that DOE’s data collection and reporting processes needed to be  improved to make any departmentwide cost analyses useful.
In this context, you asked us to determine whether (1) DOE sites use life- cycle cost analysis to evaluate management alternatives for LLRW and (2)  DOE has a strategy for cost-effectively managing LLRW disposal  departmentwide, including state actions that may affect this strategy.
To determine whether DOE sites use life-cycle cost analysis to evaluate  management alternatives for LLRW, we obtained information from DOE  and contractor officials using structured interview guides, reviewed agency  documents on life-cycle cost analysis requirements and practices, and  reviewed analyses prepared at a nonprobability sample of six DOE sites  that generate LLRW. In selecting these waste generators for site visits, we  used LLRW disposal volumes reported by two disposal facilities—DOE’s  Nevada Test Site and a commercial disposal facility in Utah—to select  three waste generator sites under EM’s control: two EM sites that disposed  of the largest volume of LLRW in fiscal year 2004—Fernald, Ohio, and  Rocky Flats, Colorado—and one EM site with the largest projected volume  for fiscal year 2005—Paducah, Kentucky. To provide a DOE-wide  perspective, our nonprobability sample also included three waste  generator sites under non-EM program offices. Because multiple DOE  program activities can exist at a single non-EM site, and comprehensive,  departmentwide data on LLRW volumes needing disposal do not exist, we  selected our non-EM sites based on (1) the overall disposal volume of  LLRW sent to the Nevada Test Site and Envirocare of Utah in fiscal year  2004 and (2) judgments made by DOE officials regarding the amount of  newly generated LLRW volumes for which DOE’s National Nuclear Security  Administration (NNSA) is responsible. These three waste generator sites  we visited were the Office of Science’s Oak Ridge Reservation and East  Tennessee Technology Park, and NNSA’s Y-12 Plant—all in Oak Ridge,  Tennessee. We assessed the general reliability of the information on LLRW  disposal volumes by comparing data provided by waste generators with  data from disposal facilities, and determined that this information was  reliable enough for selecting sites. In total, the six sites we visited  constituted about 70 percent of DOE’s LLRW disposal volume for an 18- month period—October 1, 2003, through March 31, 2005.
To examine whether DOE has a strategy for integrating DOE-wide disposal  operations to ensure cost-effective disposal, we reviewed DOE’s draft plan  for a national LLRW disposition strategy and used structured interview  guides to obtain information from DOE and contractor officials at DOE  waste generator sites and disposal facilities. In addition, we spoke with  DOE officials from DOE program offices in Washington, D.C, including EM,  NNSA, the Office of Science, and the Office of Nuclear Energy, Science and  Technology. We also spoke with appropriate DOE and state officials to  identify state actions, such as regulatory and court actions, that have  affected DOE LLRW disposal options and to determine DOE’s response to  these actions. We performed our work between June 2004 and August 2005,  in accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: Under the LLRW Policy Act of 1980, as amended, the federal government is  responsible for the disposal of LLRW owned or generated by DOE. DOE  defines LLRW as all radioactive waste that does not fall within other  classifications, such as spent (used) nuclear fuel and other high-level  waste. Mixed waste is LLRW with hazardous components, such as lead and  mercury. LLRW can include material of varying levels of radioactivity, from  barely contaminated soil and debris to LLRW with enough radioactivity to  require remote handling. LLRW can include items such as contaminated  equipment, protective clothing, rags, and packing materials and is managed  at multiple sites under a variety of contractors. (See app. I for a list of DOE  sites that disposed of the majority of LLRW in fiscal years 2004 and 2005.)
DOE sites typically dispose of LLRW at (1) on-site facilities, if suitable  capacity is available, (2) DOE’s regional disposal facilities at the Hanford  Site or the Nevada Test Site, or (3) a commercial facility. The selection of  the disposal facility is based partly on the facility’s waste acceptance  criteria. These criteria specify the allowable types and amounts of  radioactive materials, and types of containers acceptable at the disposal  facility.
In 2000, we reported that DOE had not developed full life-cycle costs for its  disposal facilities or established guidance to ensure that its contractors  base their disposal decisions on departmentwide considerations of cost- effectiveness, among other things. We also reported in 2001 that cost  analyses concerning the use of DOE’s on-site disposal facilities should be  periodically updated to take into account changing economic conditions.  Subsequently, the House Committee on Appropriations directed DOE to  prepare an objective analysis of the life-cycle costs of LLRW disposal for  various federal and commercial disposal options. The committee was  concerned that DOE needed to include in its life-cycle cost analysis certain  cost elements, such as packaging, transportation, disposal, and postclosure  maintenance and surveillance.
In response, in its 2002 report to Congress on life-cycle cost analysis of  LLRW disposal, DOE listed among its next steps for EM sites to consider  the cradle-to-grave costs as they make LLRW management decisions. On  July 18, 2002, EM issued guidance directing each site office to develop the  mechanisms necessary to ensure that contractors’ LLRW disposal  decisions include the best estimate of full cradle-to-grave costs and  analysis of alternatives. Several other documents on life-cycle cost  analyses are also available. For example, DOE has a cost-estimating guide,  developed in the mid-1990s, that provides a chapter dedicated to life-cycle  cost analysis, including definitions, processes, limitations, common errors  made in life-cycle cost analysis, methods, examples, and diagrams. In  addition, although not directly applicable to LLRW management, guidance  and manuals prepared by other federal agencies for other DOE programs  may be useful to the sites in explaining life-cycle cost analysis methods.  For example, the National Institute of Standards and Technology has  published two documents on life-cycle cost analysis that are applicable to  DOE’s Federal Energy Management Program.
section_title: DOE Sites Do Not Consistently Use Life- Cycle Cost Analysis in Managing LLRW
paragraphs: DOE sites prepare various types of cost analyses in making LLRW  management decisions, but these analyses do not consistently use  complete, current, or well-documented life-cycle cost analysis to ensure  that the lowest-cost LLRW management alternatives are identified. As a  result, the decisions the sites make may not take into account the most  cost-effective alternative. These inconsistencies have occurred, in large  part, because DOE’s guidance lacks necessary detail and its oversight of  contractor practices is weak.
subsections: section_title: Site Cost Analyses Are Not Always Complete, Current, or Well Documented
paragraphs: Complete life-cycle cost analysis is cradle to grave and includes all costs  associated with the management and disposal of LLRW. As DOE’s 2002  report to Congress explained, the costs preceding disposal vary greatly and  can be significantly greater than the actual cost of disposal. As a result,  DOE concluded it is essential to consider pre-disposal costs as well as  disposal costs. Table 1 shows the cost elements of a complete life-cycle  cost analysis, according to DOE’s 2002 report.
DOE LLRW generator sites we visited did not always include all life-cycle  costs—including the postclosure costs of long-term maintenance and  surveillance of the disposal site—and did not always consider alternative  actions when deciding on how to manage and dispose of LLRW. For  example, despite DOE’s guidance to include all disposal costs in its life- cycle cost analyses, DOE contractors at two sites—Rocky Flats, Colorado,  and Paducah, Kentucky—did not consistently consider postclosure costs in  the analyses supporting their LLRW disposal decisions for fiscal year 2004.  In contrast, the contractor at Fernald, Ohio, prepared a life-cycle cost  analysis that included estimated postclosure costs for both the Nevada Test  Site and for Envirocare of Utah, a commercial disposal facility. Nevada Test  Site officials told us they do not include these future costs in their disposal  fees because they operate on an annual appropriated funds basis. Nevada  Test Site officials estimated that if they were to include postclosure costs in  their fee, these costs would add an additional $2.38 per cubic foot of waste  to the fee. Envirocare of Utah, on the other hand, includes the estimated  postclosure costs in its disposal fees, as required by the state of Utah.
Costs for certain LLRW activities vary widely among disposal sites and  should be considered in preparing life-cycle cost analysis. For example,  EM’s 2002 report to Congress found that costs for one predisposal cost  element—waste characterization—can be higher for wastes shipped to the  Nevada Test Site and the Hanford Site for disposal than for wastes sent to  Envirocare of Utah. Waste characterization costs for the two DOE sites  ranged from $130 to $2,400 per cubic meter, while these same costs ranged  from $30 to $880 per cubic meter at Envirocare of Utah. The major factors  contributing to this cost differential are (1) required procedures for  accepting, handling, and disposing of LLRW with higher levels of  radioactivity at the Nevada Test Site and Hanford and (2) the higher cost to  the generator of characterizing wastes that are shipped in containers to the  Nevada Test Site and Hanford Site for disposal. Although waste  characterization is an important element in life-cycle cost analysis, the  Rocky Flats contractor did not include the costs of these activities in its  cost analysis.
In addition, waste generators do not always include potential lower-cost  alternatives when making LLRW decisions. For example, in fiscal year  2004, the Paducah contractor shipped 600 cubic meters of LLRW in trucks  to Envirocare of Utah. Although in its preliminary analysis, the site  contractor believed that using rail could save 25 percent in transportation  costs, contractor officials indicated they did not validate these preliminary  assumptions or complete a formal cost analysis of the rail option.
DOE contractors’ cost analyses are not always current. Despite DOE’s 2002  recommendation that cost estimates should be revisited periodically, one  DOE waste generator disposed of large volumes of LLRW in fiscal year  2004 on the basis of cost studies completed several years earlier.  Specifically, the contractor at Fernald acknowledged shipping over 100,000  cubic meters of LLRW to Envirocare of Utah in fiscal year 2004, using a  cost analysis completed in 1994. This analysis, while considering all life- cycle cost elements, had not been updated during this 10-year period to  account for any changes that might have occurred in cost elements, such as  changes in disposal rates, costs for packaging, treatment, or transportation.  For example, disposal rates charged by Envirocare of Utah can change  from year to year, based on price discounts offered for larger LLRW  disposal volumes.
We also found that three of the five DOE sites that had expanded on-site  facilities since 2002 did not complete an analysis comparing the life-cycle  costs of on-site and off-site disposal alternatives. A 2001 congressional  conference report requires DOE to perform such an analysis “before  proceeding with any new on-site disposal cell.” DOE asserts that the  report language does not apply to ongoing facility development or  expansion. Officials at two sites indicated they did not believe they needed  to complete such a life-cycle cost analysis because the expansion of their  on-site disposal facility was already accounted for in the initial facility  design, completed before 2002. The third site completed a life-cycle cost  analysis of LLRW waste streams for its on-site facility. However, site  officials did not complete a life-cycle cost analysis of off-site disposal  because they assumed that the costs of off-site transportation and disposal  would be significant enough to preclude the off-site option. Although the  remaining two sites completed life-cycle cost studies comparing on-site  and off-site disposal costs, these studies were not submitted to the  congressional appropriations committees.
DOE contractors’ cost analyses are not always well documented. In some  cases, we could not determine how contractors incorporated cost analyses  into their disposal decisions because documentation was incomplete.  According to DOE and contractor site officials at Rocky Flats, disposal  decisions were at times based on noncost factors, such as schedule or  safety. For example, a 2003 cost study determined that using trucks to  transport building debris to a nearby rail loading area less than 1 mile away  would be more cost-effective than extending a rail line to the building.  However, contractor officials told us they decided to build a rail extension  to the building being demolished because the extra traffic at the site caused  by trucks hauling the LLRW to the rail line could endanger the health and  safety of the workers. This decision, however, was not documented.  Contractor officials at Rocky Flats agreed that such LLRW management  decisions were not consistently documented to show the rationale for how  cost was balanced against other factors.
At other sites, cost analyses were informal and not documented. For  example, contractor officials responsible for LLRW disposal at Paducah  told us that they made some disposal decisions informally because they  believed their knowledge of the factors involved made it unnecessary to  complete a formal analysis. In addition, Oak Ridge contractor officials  coordinating the removal of LLRW from the site told us they did not  complete a formal analysis of disposal options for each waste stream  because their contract did not require such an analysis.
section_title: DOE’s 2002 Guidance Lacks Necessary Detail
paragraphs: DOE sites have not consistently used life-cycle cost analysis, in part  because EM’s 2002 guidance memo on life-cycle cost analysis lacks the  necessary detail for how and when to use it. Consequently, each site was  responsible for deciding how to incorporate cost into its LLRW  management decisions. For example, although EM’s guidance directed  sites “to develop mechanisms necessary to establish that its LLRW disposal  decisions include the best estimate of full ‘cradle to grave’ costs and  analysis of alternatives,” the guidance did not do the following things:  Lay out a systematic, consistent method for (1) analyzing all cost  elements or (2) comparing key alternatives within these cost elements  to determine the lowest cost. Consequently, as we found, analyses often  did not include cost elements that might have altered a disposal  decision.
Specify when or under what circumstances sites should prepare cost  analyses. As we found, some sites did not update their analyses to show  that their original LLRW management decisions were still supported by  current economic conditions;   Refer sites to relevant DOE orders, manuals, or other reference  materials that could provide consistent direction on life-cycle cost  analysis. Such references could include, for example, the DOE order for  real property asset management, the DOE manual on preparing life- cycle cost estimates, Office of Management and Budget guidance for  completing a cost-effective analysis, and the National Institute of  Standards and Technology guidance for completing life-cycle cost  analysis, or portions of these documents.
Lay out how final LLRW management decisions should be documented.
For example, the guidance does not explain how sites should weigh  disposal costs against noncost factors such as safety and health. As we  found, without adequate documentation at some of the sites we visited,  it was difficult for site contractors to justify the decisions they had  made.
section_title: DOE Has Not Taken Steps to Oversee Contractors’ Use of Life-Cycle Cost Analysis, Relying Instead on Incentive-Based Contracts to Ensure Cost-Effective LLRW Decisions
paragraphs: DOE site offices were ineffective in overseeing contractors’ use of life- cycle cost analysis, which also contributed to ineffective implementation of  the guidance. At the sites we visited, neither DOE nor the contractors had  taken identifiable steps to implement the guidance on life-cycle cost  analysis.
First, DOE has not incorporated life-cycle cost guidance into contracts.  Most of the incentive-based contracts at the sites we visited require  contractors to comply with DOE Order 430.1A on life-cycle asset  management, which requires the use of life-cycle cost analysis. However,  neither that order, nor its successor, DOE Order 430.1B, provide sufficient  detail on life-cycle cost analysis definitions, methods, examples, or  diagrams that would be useful in preparing such analyses. In contrast,  DOE’s cost-estimating guide provides a chapter dedicated to life-cycle cost  analysis. This chapter includes definitions, processes, limitations, a list of  common errors made in life-cycle cost analysis, methods, examples, and  diagrams. However, the estimating guide is not explicitly cited in DOE  Order 430.1A or 430.1B, or in the site contracts. As a result, the contractor  official responsible for controlling LLRW costs at Rocky Flats, for example,  could not tell us whether the contractor used DOE’s cost-estimating guide,  particularly the chapter on life-cycle cost analysis in LLRW management  decisions, because he was not familiar with the guide.
Second, DOE field offices have not taken steps to implement guidance or to  evaluate contractors’ use of life-cycle cost analysis. For example,  contractor officials at Paducah were not aware of EM’s July 18, 2002,  guidance memo on life-cycle cost analysis until we showed a copy to them  at the time of our visit. In addition, in October 2002, DOE’s Rocky Flats  Field Office sent a memo to its contractor, Kaiser-Hill Company, concerning  this EM guidance. According to the memo, the department was already  aware that the contractor used licensed commercial disposal facilities and  that disposal decisions considered technical acceptability, schedule, and  cost benefit; the field office therefore concluded that the mechanisms to  establish cost-effective disposal decisions by Kaiser-Hill were already in  place and thus satisfied the intent of the EM guidance. However, we found  no indication at any of the sites we visited that DOE officials had  specifically assessed the contractor’s use of life-cycle cost analysis in  making LLRW management decisions.
When we brought our concerns to EM officials on the inconsistent use of  life-cycle cost analysis at the sites, they responded that EM has relied on  the use of incentive-based contracts to ensure contractors are making cost- effective LLRW management decisions, rather than encouraging the use of  life-cycle cost analysis. Incentive-based contracts provide specific  incentives for specified performance outcomes, often driven by site- specific goals and objectives in areas such as health, safety, schedule, cost,  or other areas, as negotiated between DOE and the contractor. We  recognize that incentive-based contracts might help DOE meet goals such  as accelerated cleanup and that these contracts may, in some cases, reduce  overall site costs. However, their use may not necessarily identify lowest- cost waste management alternatives, unless the contract provides this  specific focus. Since the department relies on incentive-based contracts, it  is critical that the contract’s total estimated cost be based on, among other  things, life-cycle cost analyses of LLRW management alternatives and that  the contract specify the proper use of life-cycle cost analysis.
Without the proper use of life-cycle cost analysis in establishing and  overseeing incentive-based contracts, DOE cannot be assured that the  contractor has identified the lowest life-cycle cost alternatives for LLRW  management. For example, the Rocky Flats contractor, operating under an  incentive-based contract, prepared various analyses of transportation  alternatives from 2000 to 2003, but these analyses did not comprehensively  address sitewide LLRW disposal needs because they were incomplete and  not updated. Specifically, two DOE contractor draft studies in 1999 and  2000 indicated that adding rail as an alternative for shipping LLRW from  Rocky Flats to off-site disposal facilities could save millions of dollars in  transportation costs. Despite this cost-saving potential, the contractor  decided in 2000 to rely exclusively on trucks for all Rocky Flats LLRW  shipments. Subsequently, in 2002, the contractor analyzed transportation  alternatives specifically for shipping certain contaminated LLRW soil off- site. Although the analysis concluded that using rail to transport this soil  alone could save up to $216,000, the contractor continued using trucks  exclusively in fiscal year 2003 and most of fiscal year 2004 to transport this  waste to Envirocare of Utah. In 2003 the contractor determined that the  total volume of this LLRW soil would be significantly higher than  previously estimated, further increasing the cost-saving potential of using  rail, but nevertheless did not update or formalize the analysis. Instead, the  contractor decided to send the soil by rail only after determining that it  would use rail for shipping debris from an altogether separate LLRW  project at Rocky Flats. In September 2004, the site began to transport the  LLRW soil by rail, after it had already sent over 4,200 truck shipments of  soil to Utah in fiscal years 2003 and 2004. Use of rail instead of trucks to  ship the LLRW soil might have saved the site over $4 million during fiscal  year 2004. Comprehensive, complete, and current analyses of  transportation alternatives for sitewide LLRW disposal needs might have  better identified the lowest-cost transportation alternative, therefore  providing an opportunity for reducing LLRW management costs for the site.
In April 2005, as part of our ongoing engagement, we briefed the  Subcommittee on Energy and Water Development, House Committee on  Appropriations, on the preliminary results of our work. We stated that DOE  LLRW generators were not consistently using life-cycle cost analyses in  their disposal decisions because of poor guidance and weak oversight. One  month later, in its report to accompany the fiscal year 2006 energy and  water appropriations bill, the full Appropriations Committee emphasized  its intention to have DOE use life-cycle cost analysis in LLRW management  decisions. Using our preliminary findings, the committee noted its concern  with the department’s reliance on incentive-based contracts as a  mechanism for ensuring cost-effective decision making rather than using  life-cycle cost analyses, as directed.
According to the committee, while contractors should pursue cost- effective cleanup activities at their sites, it is up to the federal management  responsible for those contractors to provide guidance and make decisions  that benefit the whole DOE complex. As such, the committee directed the  Secretary of Energy to report to the committee within 30 days of enactment  of the 2006 Energy and Water Development Appropriations Act, on the  specific steps the department will take to ensure that contractors use life- cycle cost analysis in considering LLRW options, and that DOE maintains a  viable oversight function to oversee the implementation of such guidance.  The committee further recommended that a third of EM’s budget for  managing the cleanup program, or $82,924,000, be withheld until after the  Secretary of Energy delivers a report to the committee.
section_title: DOE Faces Challenges in Developing a National LLRW Disposition Strategy
paragraphs: To better coordinate disposal efforts among sites and program offices,  increase efficiencies, and minimize life-cycle costs, DOE has begun  developing a national LLRW disposition strategy. Although DOE expects to  begin implementing this strategy by March 2006, specific schedules have  not yet been established for when the strategy will be fully in place, and it  faces several significant challenges. These include developing a database  that can be used to manage LLRW complexwide and overcoming  organizational obstacles created by the department’s varied missions.
subsections: section_title: DOE Expects to Begin Implementing a Departmentwide Strategic Plan for Disposing of LLRW in 2006
paragraphs: DOE has recognized that its current approach---having each site  responsible for developing mechanisms necessary to control costs—may  result in cost inefficiencies and could limit its ability to meet  departmentwide strategic objectives, such as accelerated waste cleanup  and site closure. To overcome these problems, EM has begun developing a  National Disposition Strategy, which it plans to implement in 2006. EM  plans to use the strategy to evaluate predisposal, storage, treatment, and  disposal options across the department. The focus of the strategy will be on  DOE LLRW that is shipped off-site for disposal and on waste for which  DOE currently has no treatment or disposal options. EM hopes to make  specific recommendations regarding waste without treatment or disposal  options, develop a LLRW database, and reduce predisposal costs. To  implement a successful strategy, EM expects to integrate sites’ waste  disposition plans by (1) identifying and quantifying LLRW by waste  category and site, (2) developing potential treatment and disposal options,  and (3) identifying federal and commercial site capabilities for disposal of  LLRW. DOE has not yet established specific schedules for when the  strategy will be fully in place.
EM plans to develop this national disposition strategy in two phases. In  Phase I, EM will examine those DOE sites that now have significant  quantities of EM LLRW, including Oak Ridge, Savannah River, Idaho  National Laboratory, Hanford (including the Office of River Protection),  Fernald, Portsmouth (in Ohio), and Paducah (in Kentucky). DOE will also  take into account LLRW requiring disposal from fiscal year 2005 to about  fiscal year 2035. In Phase II, EM will examine the LLRW managed by other  DOE program offices, such as NNSA and the Office of Science. Efforts in  Phase II will require considerable coordination among different DOE  program offices.
section_title: DOE Lacks Departmentwide Data on Its LLRW Inventory
paragraphs: To develop and implement its national strategy for LLRW disposition, DOE  needs basic data—both current and forecasted—from individual sites on  their disposition plans. However, EM does not have complete data, either  for its own sites or for non-EM sites with LLRW. Although DOE continues  to report progress in disposing of LLRW, the LLRW volumes it reports as  needing disposal are not complete. EM’s databases do not include all LLRW  expected to be generated in the future as part of ongoing environmental  cleanup or waste produced by non-EM generators. This information may be  time-consuming and costly to obtain from the different program offices.  For example, when we sought information on current and forecasted LLRW  volumes from the Office of Science, NNSA, and the Office of Nuclear  Energy, Science, and Technology (Nuclear Energy), only the Office of  Science provided the requested information. NNSA and Nuclear Energy did  not provide this information because, according to officials from each of  these program offices, the information was not readily available.
Regarding cost information, EM’s 2002 report to Congress recommended  that DOE sites consider all life-cycle costs in evaluating alternatives for  LLRW management, but it cautioned that DOE’s data collection and  reporting processes needed to be improved to make any departmentwide  cost analyses useful. EM officials stated that they will consider LLRW costs  in their National Disposition Strategy. Currently, according to EM, DOE  does not have uniform requirements for defining, monitoring, and reporting  waste disposal costs, and sites may differ significantly in their protocols for  collecting cost information. However, EM agrees that if DOE is to use life- cycle cost analysis to improve the bases for sites’ disposal decisions,  standardized protocols for collecting and reporting the data would have to  be established.
DOE recognizes these problems and has begun to develop some  information it needs to support the evolving disposition strategy.  Specifically, DOE is determining (1) what data it needs; (2) whether it can  use the data in existing databases or has to develop a new database; and (3)  how these data should be organized in a database.
section_title: DOE’s Organization and Multiple Missions Pose Challenges to Developing a National Strategy
paragraphs: EM’s ability to develop an integrated strategy for managing LLRW is further  complicated by the fact that DOE has multiple program and site offices  with different missions, and these offices oversee a variety of site  contractors who manage waste with many different characteristics.
DOE’s experience with the use of a supercompactor at its Oak Ridge site  illustrates the difficulty EM faces in developing a waste disposition strategy  that covers multiple program offices. At this site, EM and NNSA program  offices have their own contractors that are responsible for various  activities, including managing or disposing of LLRW. In 1997, DOE awarded  BNFL a 6-year fixed-price contract to decontaminate and decommission  three buildings once used to enrich uranium at the Oak Ridge gaseous  diffusion plant. These buildings comprised more than 4.8 million square  feet and housed more than 328 million pounds of material. To dispose of  this waste, BNFL had constructed a supercompactor, the largest of its type  in the nuclear industry. Using this supercompactor, the contractor was able  to reduce the volume of several thousand tons of LLRW by 75 percent and  save an estimated $100 million in LLRW management and disposal costs.  Despite the supercompactor’s potential for reducing LLRW volumes and  lowering costs for the other program offices at the Oak Ridge site, the  contractor, with the approval of the DOE site office, decided in 2004 to  dismantle the supercompactor and ship it as LLRW to Envirocare of Utah  for disposal.
According to NNSA officials at the Y-12 Plant, also located at the Oak Ridge  site, they have contaminated buildings that need to be dismantled and  disposed of, but neither DOE nor the contractor consulted with NNSA  officials about the potential use of the supercompactor for NNSA’s ongoing  compacting needs. Similarly, contractor officials at EM’s Paducah Site in  Kentucky, which is about 300 miles away, stated that they might have  benefited from the use of the supercompactor but were not given the  opportunity to consider alternatives to its disposal. For example, Paducah  had about 37,000 tons of remaining scrap metal, as of June 26, 2005, that its  current on-site compactor is incapable of crushing, according to a  contractor official at the Paducah site.
A DOE official at the Oak Ridge site stated that it would probably not be  cost-effective to ship debris to the supercompactor from other sites, and  the supercompactor could not cost-effectively be relocated. However,  neither DOE nor contractor officials provided any documentation of cost  analysis to support this statement. Although the dismantling, shipping, and  disposal of the supercompactor may have been the correct decision, DOE  did not conduct a departmentwide assessment of volume reduction needs  and capabilities, and the costs or potential obstacles associated with  maintaining or moving the supercompactor under various LLRW  management alternatives. Consequently, DOE may have missed a potential  cost-saving opportunity. Oak Ridge officials told us that they are currently  developing an integrated disposition plan to better coordinate LLRW  management activities specifically for the Oak Ridge site. According to  DOE, other integrated activities underway at Oak Ridge include, among  other things, a pilot program between EM and the Office of Science to  dispose of LLRW that needs no further storage or processing.
section_title: Litigation and State Actions Can Affect DOE’s Waste Management Options
paragraphs: As a result of lawsuits and state regulatory and legislative actions in two  states—Washington and Nevada—DOE cannot currently rely on either of  its federal disposal facilities—Hanford or the Nevada Test Site—to dispose  of mixed LLRW. Consequently, DOE is incurring increased costs for storage  and treatment. Texas may provide DOE with new disposal options, but not  sooner than December 2007. Specifically:  In July 2004, Washington state asked a U.S. district court to prohibit  DOE from sending LLRW from other DOE sites to Hanford for  disposal. DOE voluntarily suspended LLRW shipments pending the  court’s decision. In May 2005, the court ruled in favor of the state,  issuing a preliminary injunction prohibiting DOE from sending LLRW  from other sites to Hanford for disposal. In addition, in November  2004, Washington state voters passed an initiative, now incorporated in  Washington state law, that would prohibit DOE from accepting out-of- state waste until existing waste at Hanford is cleaned up. The scope  and constitutionality of the initiative are currently being litigated in  federal district court. DOE officials told us that its inability to ship  mixed LLRW to Hanford from other states is increasing costs and may  delay cleanup and closure plans at several sites. For example, at Rocky  Flats, approximately 1,000 cubic meters of mixed LLRW, intended for  disposal at Hanford, instead had to be shipped off-site for commercial  treatment, temporary storage, and eventual disposal at Envirocare of  Utah to avoid delaying site cleanup; the Rocky Flats contractor  estimates incremental storage, handling, treatment, and disposal costs  of this LLRW may exceed $8 million.
In Nevada, as of August 2005, DOE was still awaiting approval from  state regulators for a permit to dispose of, at the Nevada Test Site,  mixed LLRW from other sites. After DOE filed its permit application in  December 2000, Nevada objected to DOE’s planned method of disposal.  DOE is working with the state regulators to achieve a mutually  agreeable resolution, and state officials indicate this issue could be  resolved by the end of 2005. Until DOE receives this permit, DOE cannot  dispose of mixed LLRW generated at other sites at the Nevada Test Site.
In 2004, the Nevada Attorney General objected to DOE’s plan to ship  certain LLRW from DOE’s Fernald, Ohio, site for disposal at the Nevada  Test Site, asserting in a letter to DOE that the plan violated federal law  and regulations. Pending a resolution of these issues, DOE signed a $7.5  million contract in April 2005 with a commercial facility in Texas to  temporarily store 6,800 cubic meters of this LLRW for up to 2 years.
Texas may provide DOE with additional storage options. In February  2005, the state approved a license amendment for Waste Control  Specialists to enlarge its LLRW storage facility. In addition, the state has  begun a technical review of WCS’s application for a LLRW disposal  facility license, which could be issued by December 2007.
section_title: Conclusions
paragraphs: Given the large volumes of LLRW generated by DOE activities, it is  imperative that DOE recognize the importance of life-cycle cost analysis in  identifying the most cost-effective alternatives for managing LLRW and  then weighing the cost of these alternatives against noncost factors, such  as safety and schedule. However, EM’s July 2002 guidance on life-cycle cost  analysis did not include information on how or when such an analysis  should be completed. Moreover, the department has not performed  oversight to ensure that contractors are completing life-cycle cost analyses.  EM has elected not to encourage the use of life-cycle cost analysis in  making LLRW management decisions, relying instead on incentive-based  contracts to ensure contractors are making cost-effective decisions.  However, we believe that this contract mechanism does not necessarily  ensure that contractors identify the lowest-cost LLRW management  options. Without complete, well-documented life-cycle cost analysis, EM  may be overlooking cost-saving opportunities that could have resulted  from pursuing alternative disposal options. Furthermore, this lack of  transparency diminishes confidence in DOE’s ability to ensure that  contractors have considered life-cycle costs, regardless of whether the  lowest-cost alternative is selected.
Although DOE has been disposing of LLRW for decades, it still lacks an  integrated national strategy for doing so. Such a departmentwide strategy  is crucial for ensuring that LLRW management needs throughout DOE are  identified and addressed in a cost-effective manner that also meets other  departmental goals, such as timely site cleanup. Specifically, an integrated  approach could help consolidate similar types of LLRW to obtain  economies of scale and lower per-unit disposal costs across the complex.  DOE will need to develop basic information on LLRW volumes  departmentwide and by program office, and to overcome the challenges  posed by DOE’s complex organization and multiple missions, and recent  state actions.
section_title: Recommendations for Executive Action
paragraphs: To promote cost-effective LLRW management, we are recommending that  the Secretary of Energy take the following four actions:  Prepare comprehensive guidance on life-cycle cost analysis that, at a  minimum, specifies (1) a systematic, consistent method of analyzing all  cost elements or of comparing key alternatives within these cost  elements to determine the lowest cost; (2) when and under what  circumstances sites should prepare cost analyses; (3) relevant DOE  orders, manuals, or other reference materials that should be consulted  to provide consistent direction on how and when to perform the  analysis; and (4) how final LLRW management decisions should be  documented to demonstrate that life-cycle cost factors were adequately  weighed against noncost factors, such as safety, health, or schedule.
Incorporate the revised life-cycle cost guidance into new or existing site  contracts or into the departmental orders cited in those contracts.
Direct DOE to oversee contractors to ensure that site contractor  officials properly use life-cycle cost analyses in evaluating LLRW  management alternatives.
Actively promote and monitor the development of a timely, national  LLRW management strategy that is based on departmentwide data on  LLRW needing disposal, and ensure that the implementation of the  strategy is fully carried out.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided DOE with a draft of this report for review and comment.  Overall, DOE generally agreed with our conclusions and thanked us for the  recommendations, but disagreed with or wanted to clarify certain  statements in the draft report and provided technical comments, which we  incorporated as appropriate. Specifically, DOE agreed that its sites are not  consistently using life-cycle cost analysis in making LLRW management  decisions. It also agreed that its current guidance and oversight in the area  of life-cycle cost analysis for LLRW management decisions should be  strengthened and noted that it is currently reevaluating its guidance  documents and their implementation. In addition, DOE expressed  appreciation for our support of an effective National Disposition Strategy  for LLRW management, and expects this strategy to be available by March  2006.
DOE also provided comments on several specific statements in our report.  First, DOE disagreed with our statement on the lack of an effective,  integrated approach for LLRW management at Oak Ridge and offered  examples of integration, which we have incorporated into our report.
Nonetheless, we found that not all LLRW activities at Oak Ridge were  integrated into a sitewide LLRW management strategy. For example, NNSA  officials told us their future need to decontaminate and decommission  numerous buildings on the site had not yet been included in any sitewide  LLRW management strategy.
Second, in its technical comments, DOE stated that our discussion of the  supercompactor at Oak Ridge was misleading and did not agree that cost  savings would have been realized if the supercompactor had been retained  and redeployed to another site. We believe that our discussion of the  supercompactor is accurate. It was intended to illustrate the difficulty EM  faces in developing a waste disposition strategy that covers multiple  program offices. In its technical comments, DOE told us that the contractor  at Oak Ridge completed a cost analysis and decided that the  supercompactor should not be reused. Nevertheless, neither DOE nor  contractor officials provided us with any documentation of a cost analysis  to support the dismantling and disposition of the supercompactor. DOE  also told us that the contractor who owned the supercompactor and Oak  Ridge management “openly solicited” other contractors in the complex  about potentially reusing the supercompactor but did not find any interest.  However, NNSA officials at Oak Ridge told us that neither DOE nor the  contractor consulted with them about the potential use of the  supercompactor, and the contractor at Paducah told us that it might have  benefited from the supercompactor but was not given the opportunity to  consider alternatives to its disposal.
Finally, DOE also stated that the lack of consistency that we found in  implementing cost guidance and preparing formal documentation should  not be interpreted to mean that the department’s waste disposal systems  are necessarily inefficient or overly expensive, and asserted that flexibility  is needed in the level of detailed cost analysis required. However, we did  not conclude that the lack of consistent implementation and the lack of  documentation was indicative of an inefficient or overly costly LLRW  management system. Rather, we stated that we could not determine how  contractors incorporated costs analyses into their disposal decisions  because documentation did not exist or was incomplete. Conclusions  cannot be drawn about the cost-effectiveness of LLRW management  decisions if contractors do not adequately document their decisions for not  using life-cycle cost analysis and DOE does not require them to do so.  While we would agree that flexibility may be important in determining the  level of cost analyses required, we believe this flexibility should be  accompanied by proper documentation to support the level of analysis  completed and the degree to which life-cycle cost principles were followed.
DOE’s comments on our draft report are presented in appendix II.
We are sending copies of the report to the Secretary of Energy, the Director  of the Office of Management and Budget, and appropriate congressional  committees. We will make copies available to others on request. In  addition, the report will also be available at no charge on the GAO Web site  at http://www.gao.gov.
If you or your staff have any questions about this report, please call me at  (202) 512-3841. Contact points for our Office of Congressional Relations  and Public Affairs may be found on the last page of this report. Other staff  contributing to this report are listed in Appendix III.
section_title: Disposed Waste Volume by Major DOE Generator Sites, Fiscal Year 2004 through Second Quarter, Fiscal Year 2005
paragraphs: Knolls Atomic Power  Laboratory/Nuclear  Fuel Services Brookhaven National  Lab/ Brookhaven  Science Associates Oak Ridge National  Laboratory/ University of  Tennessee/Battelle West Valley/West  Valley Nuclear  Services Remaining generator  sites (27)
section_title: Comments from the Department of Energy
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Daniel Feehan, Doreen  Feldman, Thomas Kingham, Mehrzad Nadji, Omari Norman, Christopher  Pacheco, Judy Pagano, Carol Herrnstadt Shulman, and Peter Zwanzig made  key contributions to this report.