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

Letter

Background

The Department of Energy’s Office of Environmental Management is responsible for addressing nuclear and hazardous wastes, including some of the most dangerously radioactive wastes in the world, and special nuclear materials, such as plutonium, resulting from more than 50 years of nuclear weapons production. DOE has planned or implemented a variety of treatment and disposal approaches, depending on the nature and extent of the waste (see table 1).

Numerous legal and regulatory requirements govern various aspects of DOE’s cleanup effort. Many of the cleanup activities are governed by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, and the Resource Conservation and Recovery Act of 1976, as amended, through various agreements with regulators. Additional laws affecting high-level waste and transuranic wastes are the Nuclear Waste Policy Act of 1982, as amended, which establishes the program to develop a geologic repository for storing high-level waste and spent nuclear fuel, and the Waste Isolation Pilot Plant Land Withdrawal Act, which establishes the requirements for operation of a repository for transuranic wastes. In addition, under the Federal Facility Compliance Act of 1992, DOE has entered into agreements with federal and state regulators that establish milestones for accomplishing specified cleanup activities and a mechanism to obtain approval to change priorities and approaches. For example, under the agreement at Hanford, 10 percent of the tank waste is to be processed by 2018 and a report on the plans for the remaining 90 percent was due to regulators in January 2005, but now has been extended to June 30, 2006.

DOE, under the direction of the Secretary of Energy, carries out its environmental cleanup program under the leadership of the Assistant Secretary for Environmental Management and in consultation with a variety of stakeholders. In addition to U.S. Environmental Protection Agency and state environmental and health agencies that have regulatory authority in states where the sites are located, stakeholders include county and local governmental agencies, DOE community advisory groups, and Native American tribes. DOE’s Office of Environmental Management is primarily responsible for cleaning up the wastes, largely through the use of contractors overseen by DOE staff. In addition, DOE’s Office of Civilian Radioactive Waste Management is responsible for the high-level waste repository being developed at Yucca Mountain in Nevada, which is the repository where DOE plans to dispose of spent nuclear fuel and high-level waste. DOE’s Office of Legacy Management, created in 2003, is responsible for managing DOE’s postclosure responsibilities at its former nuclear weapons production sites to ensure the continued protection of human health and the environment.

Progress in Accelerating Cleanup at DOE’s Sites Has Been Mixed

Over 2 years after implementing the accelerated cleanup plan, DOE has made progress in a number of areas, but the most difficult cleanup challenges remain. By March 2005, DOE was ahead or on its planned schedule in 13 of 16 risk reduction activities. Activities that had met or were ahead of the accelerated schedule included packaging nuclear materials for disposition, disposing of low-level and low-level mixed waste, and removing buildings. In some cases where DOE was meeting or exceeding current risk reduction targets, only a small percentage of the overall work had been accomplished. In contrast, DOE was behind its schedule for key activities that will have a major impact on DOE’s overall cleanup goals. These activities involve some of the more complex cleanup activities, including disposing of transuranic waste, treating high-level liquid waste, and closing tanks that had contained radioactive wastes. These activities account for at least 30 percent of the total expenditures DOE expects on cleanup and more than half of the cost reductions it hopes to achieve under the accelerated cleanup plan. Finally, DOE has had problems with other treatment and disposal activities not reflected in its performance measures, such as significant delays in shipping plutonium from sites to final storage locations, and delays in design and construction of key facilities. Taken together, these results suggest that DOE may already be at risk of not achieving its accelerated cleanup goals.

Progress Has Been Made on Several Cleanup Activities, Such as Disposing of Low-Level Waste and Removing Buildings

DOE’s cleanup was ahead of its planned accelerated schedule for several activities, and other activities appeared to be on track. As of March 2005, DOE was ahead of schedule in 9 risk reduction measures that fell into the following cleanup categories—(1) tearing down and disposing of facilities, (2) packaging and disposing of special nuclear materials, (3) cleaning up low-level and low-level mixed waste, and (4) completing cleanup of specific locations where releases of contamination occurred. For example, in disposing of low-level and low-level mixed waste, DOE was more than 181,000 cubic meters—or 35 percent—ahead of its accelerated target goal. Table 2 shows the progress DOE has made in four categories, as of March 2005.

These risk reduction measures show that DOE has made progress at an accelerated pace for a variety of cleanup activities that often require more readily available technology or standard treatment processes. For example, facility disposal primarily involves decontaminating and tearing down a building, and disposing of the rubble at established disposal sites. In addition, DOE’s measures show that it had nearly completed its activity to package plutonium and uranium residues, a highly dangerous activity due to the potential for a nuclear accident or worker exposure.

While DOE has made progress in several areas, a significant part of the progress was due to accelerated activities at relatively few sites and reflects completion of only a small percentage of the overall work to be performed. For example, DOE’s Rocky Flats site alone accounted for more than 180,000 of the total 181,600 cubic meters of low-level and low-level mixed waste that DOE disposed of ahead of schedule. Similarly, more than half of the progress made ahead of schedule in remediating potential contamination areas was due to work performed at Rocky Flats. And although DOE made progress on many of its risk reduction measures, some individual sites did not make progress at an accelerated pace. For example, although DOE was ahead of schedule in disposing of low-level and low-level mixed waste, both the Oak Ridge site and the Lawrence Livermore National Laboratory were slightly behind their site targets on this measure. In addition, DOE’s progress in a few areas reflected achieving only a small portion of the overall work to be completed. The most extreme example shows that DOE was ahead in packaging depleted uranium; however, this reflects about 1 percent of the nearly 700,000 metric tons to be packaged. In tearing down and disposing of nuclear facilities, DOE had completed about 9 percent of the 515 facilities it has to clean up.

In addition to areas in which DOE was ahead of schedule, cleanup progress was on track or nearly on track for four risk reduction measures in the following cleanup categories: (1) packaging high-level waste for disposal, (2) cleaning up special nuclear materials, (3) packaging spent nuclear fuel for disposal, and (4) eliminating geographic sites (see table 3). These cleanup activities involve difficult and hazardous work.

Making progress on cleanup activities is an important step in reducing environmental risks and annual operating costs, and in demonstrating results under the accelerated cleanup plan. DOE officials told us that achieving cleanup results for these waste activities helps reduce future mortgage costs such as surveillance and maintenance of unneeded facilities, avoids potentially higher remediation costs in the future, and demonstrates actual cleanup progress. To achieve such progress in reaching its risk reduction goals, DOE took a number of steps including changing the sequence of some cleanup activities to complete tasks earlier than originally scheduled and reducing work scope where warranted for other activities. Site officials credited the achievements to remediating targeted areas such as contaminated burial grounds, waste sites, facilities, and plutonium production reactors along the Columbia River at Hanford and a variety of obsolete buildings at Idaho and Savannah River. According to DOE officials at these sites, many of these areas were scheduled for decommissioning and disposal in the future, but because they were no longer needed, they were disposed of earlier than originally planned. In addition, making progress in certain areas can free up funding for use on other, more complex projects. For example, at DOE’s Idaho National Laboratory, officials told us that completing disposal of most of its low-level and low-level mixed waste 2 years ahead of schedule has allowed them to apply the funds originally planned for managing this waste to other cleanup activities at the site.

Problems Have Occurred on Major Activities, Including Disposing of Transuranic Waste and Radioactive Tank Waste and Shipping Plutonium to Storage Locations

In contrast to progress on cleanup activities for which DOE is ahead of or on schedule, DOE is having difficulty with other cleanup work that could have a major impact on its accelerated cleanup goals. As of March 2005, DOE was falling behind in three risk reduction measures under two cleanup categories that account for a significant portion of the potential cost reductions DOE was expecting—radioactive tank waste and transuranic waste. See table 4 for a list of cleanup activities for the two waste types on which DOE has fallen behind since implementing the accelerated cleanup plan.

DOE efforts to treat and dispose of radioactive waste from its tanks are primarily at three DOE sites—Hanford, Idaho, and Savannah River. However, because the Hanford and Idaho sites have not yet begun to treat their liquid radioactive tank waste, the measure for eliminating liquid waste from underground tanks applies to the Savannah River Site. Although Savannah River has been processing radioactive tank waste sludge since 1996, it was behind in processing and eliminating from its tanks nearly 3 million gallons of liquid primarily because the site was still developing waste separation technology and lacked operational treatment facilities for disposing of liquid tank waste. While all three of DOE’s sites had performance goals for closing radioactive waste tanks through March 2005, no tanks have been closed since 1997. Plans to close tanks at the three sites have been delayed because DOE continues to work with regulators to reach agreement on closure requirements and due to a legal challenge to DOE’s tank closure strategy. DOE’s authority to proceed with its tank closure plans at its Savannah River Site and the Idaho National Laboratory was resolved by federal legislation enacted in 2004; however, the law excluded the Hanford Site. Even so, Savannah River and the Idaho National Laboratory are still behind schedule in preparing waste removal facilities and obtaining regulatory approval to close the tanks. Although DOE is preparing 12 of its 241 radioactive waste tanks for closure, no tanks have actually been closed since the accelerated cleanup plan was implemented in 2003.

Transuranic waste is present at several DOE sites, but lagging performance is due primarily to the Idaho National Laboratory. Disposing of transuranic waste involves specialized characterization and treatment, packaging, and shipping in specially designed containers to a repository in New Mexico. As of March 2005, DOE had fallen behind its accelerated schedule by about 6,500 cubic meters, achieving about 80 percent of the goal. Delays in Idaho’s transuranic waste disposal were primarily due to contractor performance problems in preparing the waste for shipment and difficulties in implementing a specially designed treatment technology.

The activities and projects for which DOE was falling behind the accelerated schedule involve technically complex and costly cleanup activities, and usually require specialized treatment technologies. Radioactive tank waste, for example, involves treating highly radioactive waste generated from the reprocessing of reactor fuel that contains a mix of hazardous and radioactive constituents, and requires relatively complex treatment technologies such as waste separation and vitrification. Cleaning up radioactive tank waste accounts for about 30 percent—or almost $40 billion—of DOE’s estimated total cleanup costs. To date, key facilities DOE needs to use to treat and dispose of this waste are still being designed and built, and waste treatment technologies continue to be developed and tested. Similarly, some of the greatest risks, cleanup costs, and technical challenges involve the disposal of transuranic waste. This waste often requires an extensive retrieval, characterization, and treatment process as well as repackaging in containers before it can be shipped to and disposed of in the designated geologic repository for transuranic waste in New Mexico. Transuranic waste disposal is behind schedule and DOE will have difficulties catching up if this activity continues to fall behind.

In addition to the cleanup activities that DOE measures, other cleanup activities not included in DOE’s risk reduction measures are experiencing problems further impacting overall cleanup progress. Although no comprehensive list of these cleanup activities was available from DOE, we found several examples, some of which are listed below, that involve constructing facilities critical to DOE’s cleanup mission and relocating certain wastes or nuclear materials (see table 5).

These cleanup activities can involve significant technical and operational problems. Even though DOE does not track the status of these problems in its risk reduction measures, DOE officials are aware of these problems and are working to resolve them. However, because these problems remain unresolved and their potential impact on the accelerated cleanup plan is uncertain, DOE may already be at risk of not achieving the kind of progress it predicted under its accelerated cleanup plan. For example, the Hanford Site must construct key facilities and test complex technologies before it can treat 55 million gallons of radioactive tank waste. Recently, work on this project has been delayed due to engineering and contractor performance problems, leading DOE to reevaluate its ability to complete the project under current cost and schedule constraints. DOE expects to revise project cost and schedule goals in fiscal year 2006. Despite these problems, DOE does not have a risk reduction measure that shows the progress of these activities or their potential impact on overall cleanup progress. Consequently, DOE will not be able to quantify progress in treating radioactive tank waste at Hanford until facilities are operational— now planned for 2011, or later. Similarly, DOE’s strategy under the accelerated cleanup plan to consolidate Hanford’s plutonium offsite has been deferred while long-term storage issues are being resolved. DOE Hanford officials estimate that if the plutonium remains on-site, the additional costs to continue storing and securing the material may amount to more than $2 billion. Despite this problem, DOE’s plutonium risk reduction measure, which focuses on completing stabilization and packaging of the material, shows that this cleanup activity was ahead of schedule.

When considered together, the results of DOE’s risk reduction measures for two main types of cleanup activities—radioactive tank waste and transuranic waste, which are behind schedule and require additional cleanup activities—suggest that DOE may already be at risk of not achieving its overall risk reduction goals. Each of these problems represents a significant obstacle to DOE successfully completing cleanup activities under its accelerated plan. Success hinges on DOE’s ability to continue reducing risks by making cleanup progress and keeping costs and schedules within the constraints of DOE’s plan.

DOE Is Unlikely to Achieve Its Estimated $50 Billion in Cost Reductions

DOE’s accelerated plan is unlikely to achieve the $50 billion cost reduction goal for three main reasons. First, DOE’s method for calculating cost reductions has limitations that raise questions about its reliability. The actual cost reduction from the accelerated cleanup plan, if implemented as intended, would likely be much lower. Second, the accelerated plan is based on a number of key assumptions about improvements to the cleanup approach—such as shortened schedules and technology improvements—that may not occur as planned. Third, the three sites that account for most of the cost reduction are already facing challenges and have either increased their cost estimates or plan to increase their funding requests, raising doubts about DOE’s ability to achieve its full expected cost reductions. While DOE believes the accelerated cleanup plan will reduce costs, the actual amount of those cost reductions is uncertain.

DOE Estimates Overstated Potential Cost Reductions

DOE calculated its estimated $50 billion in cost reductions by comparing its fiscal year 2001 cost estimate for the program—the last cost estimate before DOE implemented its accelerated strategy—with its fiscal year 2003 cost estimate for the program—the first complete cost estimate under the new accelerated strategy. DOE’s 2001 cost estimate for the program was $192 billion, reflecting its prior approach to cleaning up its radioactive and hazardous wastes by 2070. The 2001 estimate represented forecasts generated by DOE’s field staff at each of its sites and for each of its activities. Aggregating these site-developed estimates, DOE arrived at its 2001 cost estimate for the program. In contrast, to develop its 2003 estimate—reflecting an accelerated approach—DOE provided several of the sites with target costs that the sites were to work towards meeting. These target costs were based on assumptions from the headquarters officials about how and when the work should be completed. Under this new strategy, DOE’s 2003 estimate for completing the cleanup work was $142 billion. DOE subtracted the 2003 estimate for the new strategy ($142 billion) from the 2001 estimate under the original strategy ($192 billion) to arrive at its $50 billion cost reduction estimate.

However, DOE’s estimated $50 billion in cost reductions from accelerating cleanup at its sites may not be fully reliable for several reasons: Pre-acceleration baseline cost estimate may be unreliable. In a February 2002 review of the cleanup program, DOE specifically acknowledged that its cost estimate of the program did not provide a reliable estimate of project costs. DOE officials explained that the site-level estimates of cleanup work were based on calculations that were highly uncertain beyond the life of the contracts. We and others have previously raised concerns that DOE’s cleanup cost estimates may not be fully reliable. In our prior work, we noted that in preparing baseline cost estimates, DOE lacked a standard methodology for sites to use. Further, in the past, DOE’s Office of Inspector General and the National Research Council have raised similar concerns about DOE’s estimates being incomplete and unreliable.

Estimates did not include contingency costs. Because of the high uncertainty surrounding the cleanup work, DOE computes additional uncertainty costs—called contingency estimates—which are added to the overall cleanup estimates in its annual financial statements. These costs are intended to cover any underestimated or unforeseen cleanup work. In 2001, DOE estimated that because of uncertainty related to the cleanup, it would add a contingency estimate equal to an additional 17 percent of its cleanup cost estimate. In contrast, following implementation of the accelerated plan, DOE estimated in 2003 that increased uncertainty called for nearly doubling the contingency estimate to 29 percent of the cleanup cost estimate. However, when calculating its expected cost reduction under the accelerated plan, DOE did not include either of these contingency estimates in its comparison of the two estimates. Doing so would likely have lowered the estimated cost reductions to below $50 billion.

No present value analysis was performed. DOE’s estimate of potential cost reductions did not consider the time value of money. As we noted in our previous report, according to standard economic analysis and guidance developed by OMB, cost-comparison analyses should be based on lifecycle costs of competing alternatives with future costs discounted to present value; that is, adjusted both for inflation and the time value of money. According to OMB’s cost-estimating guidance, DOE should have first converted the annual expected costs of cleanup for both its 2001 and its 2003 estimates to their present value in 2003, and then compared the two present-value costs. While DOE’s comparison of its estimates is based on values that are expressed in constant 2003 dollars (to account for inflation), DOE did not adjust its figures to account for the time value of future costs. Had DOE compared present value estimates for 2001 and 2003, the resulting cost reduction would likely have been much lower. For example, when we adjusted DOE’s estimated $20 billion cost reduction for the Hanford waste treatment project to consider the time value of money, the potential cost reduction decreased by about 40 percent—to about $12 billion.

Cost Reductions Were Based on Assumed Performance Improvements That May Not Occur

As part of its plan to reduce the expected cost of the cleanup and eliminate risks more quickly, DOE made several assumptions about ways to improve the cleanup work. These assumptions included (1) developing new technologies, such as a technology to allow more efficient vitrification of some wastes; (2) implementing new acquisition strategies that encourage and reward contractor efficiencies, such as performance- based contracts; (3) revising site cleanup agreements to simplify treatment and disposal requirements, such as reclassifying some wastes allowing for disposal on site rather than remotely; and (4) completing work sooner than planned thereby eliminating out-year costs.

Assumed improvements in DOE’s cleanup approach resulted in DOE’s estimated $50 billion in cost reductions (see figure 1).

The assumptions enabled DOE to develop revised cleanup cost estimates at most sites that reflected cost reductions (see figure 2).

Although these assumed improvements may have the potential to reduce cleanup costs, many of them are still uncertain and may not occur. For example, Technology improvements. DOE assumed that significant cost reductions would result from improved technologies that would allow treatment and disposal of waste faster and at lower costs. Nearly all of the estimated cost reduction pertains to improvements in the technologies at the Idaho National Laboratory and Hanford sites. For example, DOE expected a $4.7 billion cost reduction at the Idaho National Laboratory by using a technology for separating a portion of the tank waste, but that technology has still not been successfully tested and implemented on DOE tank waste. Similarly, at the Hanford site, DOE is testing a technology that officials estimated would speed up the stabilization of some low-activity wastes reducing costs by an estimated $8.9 billion. However, the technology has not been fully implemented or tested on Hanford’s unique waste, and costs of operating the new technology are not yet known, so the extent of cost reductions DOE assumed could be incorrect. For example, an official for the contractor developing the pilot plant to test this technology said the project is already projecting cost increases and is currently estimated to begin operating about 6 months late.

Contract reform. DOE estimated that revised contracting strategies would also result in significant cost reductions. However, at two of DOE’s largest sites—Savannah River and Hanford—DOE will not award some major new contracts until 2006. Until then, the final price of DOE’s new contracts and any potential cost reductions associated with them are uncertain. For example, DOE has assumed it will reduce overall costs by more than 20 percent under its new Savannah River Site contract. However, the details and final cost of the contract will not be finalized until the contract is awarded. External auditors acknowledged this uncertainty at Hanford in their assessment of DOE’s fiscal year 2004 environmental liabilities estimate, noting that it was “not appropriate” to assume cost reductions from future contracts since those reductions are “neither probable nor susceptible of reasonable estimation.”

Revisions to cleanup agreements. DOE estimated additional cost reductions would result from revising site-specific waste cleanup agreements with federal and state regulators. However, regulators have not agreed to or are resisting revisions to agreements that accounted for most (at least 75 percent) of these expected cost reductions. For example, DOE expected to be able to determine that some radioactive tank waste is not high-level waste but transuranic waste, thereby allowing DOE to ship the treated waste to the Waste Isolation Pilot Plant for permanent disposal and reducing costs by $1.5 billion. However, in late 2004, the head of New Mexico’s Environment Department—the state regulator for the repository—said the state would refuse to accept DOE’s tank waste for disposal at the repository because New Mexico considers that waste to be high-level, not transuranic, waste. In addition, because of the uncertainty about the disposal path for this radioactive tank waste, the state of Idaho—which has a regulatory agreement with DOE to treat and dispose of the waste out of the state—prefers that DOE apply more extensive high- level waste treatment technologies.

Work completed sooner. DOE also expected cost reductions resulting from completing work sooner through improvements that, in many cases, also depend on the assumptions discussed above. Because of the uncertainty surrounding assumed improvements in its cleanup operations, DOE’s anticipated cost reductions from completing work sooner are also in jeopardy. For example, DOE estimated approximately $2.8 billion in cost reductions at its Savannah River Site from accelerating the cleanup of radioactive tank waste. However, that reduction depends on implementing a new waste treatment technology that has not yet been fully tested outside a laboratory. As a result, the uncertainties surrounding technological improvements raise doubts about DOE’s ability to accelerate its schedule. In addition, several of the projects that DOE expects to complete in less time are already experiencing problems. For example, DOE estimated that an approximately $2.8 billion cost reduction would result, in part, from revising its schedule for shipping transuranic waste to the repository in New Mexico. However, as we noted above, transuranic waste packaging and shipping is already behind schedule.

Nearly All of the Cost Reductions Were to Occur at Three Sites Where DOE Is Having Significant Technical, Regulatory, or Management Challenges

DOE expected cost reductions to occur at nearly all of its cleanup sites, but most of the total estimated cost reduction was expected from 3 sites that account for the largest portion of DOE’s overall cleanup costs— Hanford, Savannah River, and Idaho National Laboratory. However, these sites are already facing challenges to their cleanup efforts which may jeopardize DOE’s ability to achieve its estimated $50 billion cost reduction. Although it is impossible to precisely predict the impact that these challenges will have on DOE’s overall cleanup costs, any cost increases at these sites could offset cost reductions at other sites and lower the potential for overall cost reductions from the accelerated plan.

The types of challenges that could increase cleanup costs at these three DOE sites include the following: Delays in disposing of highly radioactive wastes. In early 2005, DOE reported that a slip in the scheduled opening of DOE’s planned repository at Yucca Mountain, Nevada would delay shipment of waste by at least 2 years—and possibly for as long as 7 years—due to technical and regulatory issues. As a result, sites now storing high-level waste and spent nuclear fuel have been reevaluating their waste disposal plans and associated cost and schedule estimates. The sites potentially affected include Hanford, Idaho National Laboratory, Savannah River, and West Valley. Most sites expect costs to increase as disposal schedules slip. In its fiscal year 2006 budget request, DOE estimated that a five year delay in opening the Yucca Mountain repository could increase costs by as much as $720 million at its three largest sites. This includes building additional storage buildings and added operating costs.

Legal obstacles preventing DOE from implementing aspects of its cleanup approach. DOE faces challenges to its planned treatment strategy at the Hanford Site that could potentially increase costs. A 2002 lawsuit challenged DOE’s plans to separate and determine that a portion of its waste could be treated and disposed of as other than high-level waste, and to DOE’s plans to close tanks leaving some radioactive residual in the tanks. In October 2004, a federal appeals court overturned a district court ruling against DOE and held that it was premature to rule on the matter until DOE implemented its strategy. Federal legislation passed in October 2004 provided authority for DOE to carry out its acceleration completion strategy at its Savannah River Site and Idaho National Laboratory. However, the law excluded the Hanford Site. If similar authority is not provided for the Hanford Site, costs at the site could increase significantly—up to $67 billion, according to DOE’s estimate. Similarly, uncertainty surrounds Hanford’s ability to accept waste from other DOE sites as the result of two ongoing lawsuits: one involving a challenge by the state of Washington to DOE’s plan to ship low-level, low-level mixed, and transuranic waste into the state, and one concerning a recent Washington state citizens’ initiative that could prohibit Hanford from accepting additional waste until existing waste is cleaned up. Although DOE believes it will ultimately prevail in these lawsuits, some cleanup activities at the other sites may face delays and increased storage costs until the issue is resolved.

Other pressures increasing costs at key sites. By the end of fiscal year 2004, the total cost estimate of the cleanup work at two of DOE’s largest sites had already increased above cost targets established in 2003. At the Savannah River Site and Idaho National Laboratory overall cleanup estimates in 2004 were over $2.0 billion higher than in 2003. Similarly, officials at DOE’s Hanford Site indicated in recent public meetings that they are requesting cleanup funding above previously established funding targets for fiscal year 2007, which, if approved, will also add to the plan’s total cost. According to the site officials, the additional funds are being requested primarily to address higher than expected waste management and treatment costs.

Because of the limitations and uncertainties discussed above, DOE’s $50 billion cost reduction goal is unlikely to occur. Recognizing that achieving the full $50 billion in cost reductions may be in jeopardy, DOE officials recently stopped citing any specific estimate in connection with the accelerated plan. However, DOE continues to believe it will achieve some cost reductions with its accelerated strategy.

DOE’s Performance Reporting Does Not Clearly Reflect Progress Made toward Achieving the Overarching Goals of the Accelerated Cleanup Plan

DOE’s performance reporting does not present a clear understanding of progress toward meeting the $129 billion cost target and 2035 completion date of the accelerated cleanup plan. While DOE performance measures, as discussed earlier in this report, provide useful information about the current status of cleanup activities, there are two main shortcomings in the way DOE uses these measures to report its progress toward meeting the overarching goals of the accelerated plan. First, in reporting on its performance, DOE does not clearly relate cleanup accomplishments with their associated costs. Second, DOE reports its performance in a way that does not highlight key cleanup activities or events that have significant implications for achieving overall cleanup goals. These shortcomings make it difficult for the Congress and the public to fully understand how likely DOE will be able to achieve its accelerated cleanup cost target and completion date.

Performance Reporting Practices Make It Difficult to Clearly Understand the Relationship Between Cleanup Progress and Cost Performance

We and others have emphasized the importance of ensuring that reporting on program performance allows a clear understanding of how well a program is meeting goals; that is, linking performance goals with program costs. In a February 2005 study, we noted that federal accountability laws—the Government Performance and Results Act of 1993 (GPRA) and the Chief Financial Officers Act of 1990—emphasize the importance of linking program performance information with financial information as a key feature of sound management and an important element in presenting to the public a useful and informative perspective on federal spending. Additionally, OMB indicated to federal agencies that annual performance budgets should clearly link performance goals with costs for achieving those goals, both long-term and annual performance goals.

DOE’s performance reporting does not provide for a clear understanding of how well the cleanup program is performing. In reporting on its progress, DOE does not establish how accomplishments made in addressing wastes—which DOE measures through its risk reduction measures—are associated with the costs incurred—which DOE measures through its cost performance measures. Rather, DOE reports separately on the waste treatment and disposal goals it has achieved using one measure and reports on whether cleanup activities are being performed within cost parameters using another measure. These separate measures are organized around different categories and have different units of measure, making it difficult to link the information the two measures provide (see table 6).

The difficulty of understanding the relationship between cleanup accomplishments and cost performance can be illustrated by comparing the performance information available on transuranic waste. DOE’s risk reduction measure provides useful information about how much transuranic waste was processed and disposed of, but DOE does not separately report cost information related to transuranic waste accomplishments. Instead, DOE includes costs associated with transuranic waste activities as part of a larger project category titled “solid waste stabilization and disposition.” Therefore, DOE and others generally do not have a complete picture of performance for this activity, such as the impact on cost and schedule of falling behind in processing and disposing of the waste. For example, as of March 2005, DOE’s Idaho National Laboratory was more than one year—or more than 1,000 shipments—behind its planned number of shipments of transuranic waste to the federal repository. However, DOE reports no corresponding cost performance measure to indicate the impact of this delay on cost and schedule (see table 7). During the same time period, Idaho’s solid waste stabilization and disposition cost performance score indicated the project category was “green,” or remaining within cost and schedule goals.

However, because of the delays in transuranic waste shipments, DOE is significantly behind schedule, has recently ended the contract, and is now in the process of determining the cost impact of these delays.

The importance of directly linking progress on cleanup with cost performance has been recognized by OMB. In a fiscal year 2005 program review of DOE, OMB found that DOE’s cleanup program had not developed annual cost and schedule performance measures to monitor progress towards completing the cleanup mission. OMB officials said that better linking cleanup progress and cost performance in DOE’s performance reporting would allow for tracking DOE’s performance against its long term goals.

DOE acknowledged that its performance reporting practices currently do not directly link progress on cleanup with performance against cost and schedule targets. According to a senior DOE adviser to the Principal Deputy Assistant Secretary for Environmental Management, the Department’s earned value management system could eventually provide this linkage, but DOE is still working to fully implement the system and to ensure that it provides reliable data. He said that DOE’s earned value management system will eventually produce information on the cost, schedule, and work completed over the lifecycle of all projects related to its cleanup mission, and may eventually provide an aggregate earned value score for the entire cleanup program.

While these steps may be useful, for DOE’s performance reporting using earned value to provide for a full understanding of cleanup performance, DOE will need to also report on the linkage between cost, schedule, and performance data by (1) generating comparable cost, schedule, and performance data at an activity level, such as processing and disposing of transuranic waste and (2) ensuring that the cost data is reported in relation to lifecycle cost targets, not just for a specific year or contract period. While DOE is working toward including lifecycle cost targets and performance in its earned value data, it is not taking steps to directly link risk reduction measures with cost performance at the activity level. According to a senior adviser to the Principal Deputy Assistant Secretary for Environmental Management, the department has been focused on ensuring that site cost estimates are reliable and that all mission-related projects are covered under the earned value system. However, unless this linkage is established, DOE performance reporting will not provide for a full understanding of progress being made by individual cleanup activities or whether it is on track with its overall $129 billion cost target for completing the cleanup program.

Performance Reporting Does Not Highlight Critical Activities that Are Best Indicative of Overall Performance

Performance reporting should provide for a clear understanding by the Congress and the public of how an agency is progressing in achieving its program goals. In assessing how various government agencies reported on their progress, we noted in a 2004 report that agencies need to consider the needs of the information’s user and best tailor performance information so that a clear picture of the agency’s progress is presented. We found that an agency’s performance data can have real value only if the data are used to highlight actual performance against an agency’s planned goals.

DOE publicly reports on its progress toward achieving accelerated cleanup plan goals through various means, including providing information to the Congress in annual budget submissions, reporting progress against selected annual goals in the agency’s annual performance and accountability report, and making information accessible on the department’s Web site. In all three cases, DOE primarily relies on the risk reduction measures as the indicator of cleanup progress. For example, in its fiscal year 2006 budget request to the Congress, DOE provided information on all 16 risk reduction measures, including the amount of work estimated to be completed through fiscal year 2006, such as number of buildings torn down, and the estimated total amount of work to accomplish. In the budget request, DOE also included a variety of other program information, such as general cleanup achievements to date, and identified 7 risk reduction measures it would use to assess progress at the end of the fiscal year. Similarly, in accordance with federal reporting requirements, DOE provides performance information each year in its annual performance and accountability report that accompanies the department’s annual financial statement. In the performance and accountability report, DOE describes the general goals of the cleanup program, external factors that could affect DOE’s ability to achieve those goals, and its progress against selected performance goals for the year. Finally, on its Web site, DOE provides descriptive information for its 16 risk reduction measures, including how much work has been accomplished to date for each measure and the estimated total amount of work to accomplish for each measure.

Although this information is useful, DOE’s performance reporting does not present a complete picture of progress toward accelerated cleanup plan goals. For example, DOE has, up to now, reported on its progress as measured against annual goals, rather than its progress in meeting its overall $129 billion cost target and 2035 completion date. By doing so, DOE provided a different picture of the department’s progress than if progress was compared with longer term goals. Two examples from the agency’s performance reporting in its 2004 Performance and Accountability Report illustrate this point. In its 2004 report, DOE reported it met less than 80 percent of its annual goal of closing 9 liquid waste tanks in fiscal year 2004. In fact, DOE met 0 percent of its goal, has closed no tanks since 1997, and is currently significantly behind its estimated lifecycle target for this activity. To regain its performance schedule, DOE would need to complete the regulatory process and close 19 waste tanks by the end of fiscal year 2005. However, this is an unlikely achievement given the length of time of remediation and regulatory work that is required before the tanks can be closed. In a second example, DOE reported it had met less than 80 percent of its annual planned target for packaging plutonium and uranium residues because it was 175 kilograms behind its accelerated schedule. However, calculating DOE’s performance for this activity against the estimated lifecycle target indicates that DOE was actually 33 kilograms ahead of its cumulative goal by the end of 2004. According to a senior DOE adviser to the Principal Deputy Assistant Secretary in the Office of Environmental Management, DOE plans to begin reporting its progress against lifecycle goals in the department’s fiscal year 2005 performance and accountability report.

Another area of concern is that DOE’s performance reporting does not highlight performance on critical cleanup activities that could best provide information about whether the department is on track to meet its $129 billion cost target. Among DOE’s various performance measures, certain ones are more important for indicating whether DOE is on track with its overall accelerated cost and schedule goals, and may provide a different picture of progress than DOE is currently reporting. In the longer term, to provide an indication of progress toward overall accelerated goals, projects that account for a large portion of DOE’s spending—and correspondingly contribute the most towards cost reductions—can serve as key indicators of progress. For example, DOE expects a significant portion of accelerated plan cost and schedule reductions to be achieved from two waste types that are the most difficult to address—radioactive tank waste and transuranic waste. DOE’s radioactive tank waste program alone accounts for nearly 60 percent—almost $30 billion—of DOE’s estimated cost reductions under the accelerated plan. Highlighting performance in these areas would provide a better indication of how well DOE is progressing toward its longer term accelerated cleanup goals. As previously discussed, both radioactive tank waste and transuranic waste are the two areas where DOE’s progress has fallen behind. In three of four risk reduction measures the department uses to track progress of its radioactive tank waste and transuranic waste activities, DOE has experienced delays that could impact cost. Furthermore, work on DOE’s $5.7 billion waste treatment construction project at Hanford—an activity not tracked by a risk reduction measure—has been delayed, creating potentially significant cost and schedule increases. While DOE includes radioactive tank waste and transuranic waste in its performance reporting, the department does not identify the significance of these cleanup activities for meeting overall cleanup cost and schedule goals.

In the short term, closure sites and key activities that are contributing to planned budget declines over the next few years may provide a good indication of whether DOE is currently on track to meet its planned accelerated cost target. DOE’s accelerated plan calls for a decrease in annual funding requirements between 2005 and 2008. That is, DOE’s annual funding requirement is planned to drop from about $7.3 billion in fiscal year 2005, to about $4.5 billion by 2008—or a decline of about $2.8 billion. Almost 90 percent of this decline is attributable to 10 sites scheduled to be closed in 2006, and progress on eight key projects. Currently, the indicators for these sites and projects show that at least half are behind in some or all cleanup activities. For example, DOE’s Miamisburg, Fernald, and Lawrence Livermore Laboratory sites—all scheduled to complete cleanup by 2006—are behind in at least one risk reduction activity. Similarly, DOE’s spent nuclear fuel project at Hanford was in danger of exceeding its cost target as of April 2005. Providing aggregate information on the potential cost increases or schedule delays in this group of sites could help gauge DOE’s ability to achieve a funding decline over the next few years.

It is not clear what impact the challenges DOE faces will have on its overall ability to achieve near-term or longer-term cost reduction goals. However, DOE’s performance reporting does not highlight this information nor does DOE report which activities are the most significant to achieving its overall cost and schedule goals. DOE officials said that, in their view, the department’s current reporting of its performance in the annual performance and accountability report and in its budget submission is sufficient to provide an understanding of progress towards the program’s long-term goals. DOE officials also noted that, internally, senior DOE managers use a variety of performance measures to monitor more critical elements of the program that are not included in any public reporting of accelerated cleanup progress. Nevertheless, because DOE reporting methods do not identify critical indicators such as progress on key cleanup activities, the department is not providing the Congress and the public the basis for a full understanding of its progress toward achieving the goals of the accelerated cleanup plan.

Conclusions

DOE expected that its accelerated cleanup plan would allow it to clean up contaminated sites faster and at significantly lower cost than previously planned. While DOE has made progress toward its cleanup goals, important challenges remain and DOE is not likely to achieve its original goal of $50 billion in estimated cost reductions. While DOE’s performance reporting provides information on some aspects of cleanup progress, it does not provide for a full understanding of how the many uncertainties DOE faces could affect achieving cleanup goals and does not include a meaningful analysis of the significance of the data. Furthermore, because DOE’s reporting methods do not directly correlate cleanup results with the associated costs and fail to identify critical indicators, such as progress on key cleanup activities, DOE is not providing an adequate picture of its overall progress toward staying within the $129 billion total program cost and 2035 completion date goals. We believe that improving DOE’s performance reporting to address these limitations would provide more complete information and allow for a more accurate assessment of DOE’s progress toward achieving accelerated cleanup plan goals.

Recommendations for Executive Action

To help DOE and the Congress monitor progress toward meeting DOE’s accelerated cleanup plan cost and schedule goals, we recommend that the Secretary of Energy take the following two actions: Improve DOE’s performance reporting so that there is a clearer, discernable relationship at the activity level between cleanup accomplishments and the costs incurred in doing the work and Identify in DOE’s performance reporting to the Congress and others those performance measures that are the most critical to achieving cost and schedule goals, and summarize the progress on these measures and the potential impact of any problems that could affect achieving accelerated cleanup plan goals.

Agency Comments and Our Evaluation

We provided a draft of this report to DOE for review and comment. In written comments, DOE’s Principal Deputy Assistant Secretary for Environmental Management agreed with the report’s recommendations. The Principal Deputy Assistant Secretary also provided technical comments as an enclosure to the letter. We have incorporated these comments as appropriate. DOE’s written comments on our draft report are included in appendix III.

Regarding the report’s two recommendations, DOE agreed to improve its performance reporting so that there is a clearer, discernable relationship between cleanup accomplishments and the costs incurred in doing the work. DOE also agreed to identify and highlight in its progress reports to the Congress and others those performance measures that are the most critical to achieving cost and schedule goals, and summarize the progress on those measures and the potential impact of any problems that could affect achieving the goals. To aid in implementing these recommendations, DOE said it will continue to improve its earned value management system to serve as a link between performance measures and cost.

In technical comments to us accompanying the letter, DOE disagreed with our discussion in the report that it should use present value analysis in calculating the estimated cost reduction it expects to achieve under its accelerated cleanup plan. DOE stated that we have misinterpreted OMB Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs, regarding the use of present value analysis. DOE said that present value calculations are more applicable to cost-benefit analyses, particularly when attempting to analyze the costs and benefits to various options or alternatives. DOE emphasized that its cost estimating methodology was developed solely for the purpose of estimating the program’s environmental liability, and its cost reduction estimate is simply the difference between fiscal year 2001 and fiscal year 2003 environmental liability estimates. DOE believes that since it was not attempting to calculate benefits, a present value analysis is not appropriate.

In our view, our interpretation of the OMB circular is correct and, in fact, is supported by DOE’s own guidance, which recommends using present value analysis as a standard methodology for cost comparisons of different alternatives. OMB Circular A-94 (revised October 29, 1992), standard economic analysis, and DOE’s guidance (Report to Congress, July 2002, Appendix A–Lifecycle Cost Analysis) recommend present value analysis as the appropriate technique for analysis of alternative options even if the benefits from different approaches are the same or a comparison of the benefits is not possible. As we previously reported, although using current dollar estimates may be appropriate for budget purposes, present value analysis is the standard methodology to be used for comparing costs of different alternatives that occur at different times, such as comparing DOE’s accelerated and baseline cleanup alternatives.

We are sending copies to other interested congressional committees and to the Secretary of Energy. We will also make copies available to others upon request. In addition the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions on this report, please call me on (202) 512-3841. Contacts points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report. Other staff contributing to this report are listed in Appendix IV.

Appendix I: Scope and Methodology

To determine what progress DOE has achieved under its accelerated cleanup plan, we identified the measures DOE uses to monitor and report its performance. We found that DOE uses two primary measures to monitor progress: its “Gold Chart” metrics (risk reduction measures) and earned value metrics. For DOE’s risk reduction measures, we discussed with DOE officials—both at headquarters and at specific sites—how these measures were developed. We also discussed how these measures are used by DOE—both internally and for external reporting. We obtained and analyzed DOE’s current risk reduction measures to determine both current status and implications of out year requirements for the overall cleanup. In reviewing DOE’s efforts to develop earned value data, we reviewed various reports on DOE’s earned value system, including a recent GAO report discussing the data and a 2004 National Academy of Sciences report. We reported in March 2005, that for several major projects, earned value management principles had not been properly implemented at the department to measure cost and schedule performance. In addition, the National Research Council reported in 2004 that the quality of earned value management in the department was inconsistent and may not be completely accurate. We also discussed DOE’s earned value measures with DOE officials in its Environmental Management, Office of Performance Assessment and with DOE officials in the Office of Engineering and Construction Management. In part due to the concerns raised by GAO and others about the reliability of information from DOE’s earned value system and in part because DOE had not completed addressing these concerns by more fully implementing its earned value management system, we did not report on earned value data as a measure of DOE’s progress in achieving its accelerated goals.

To determine how DOE implemented its accelerated strategy, we reviewed several documents at DOE headquarters providing the status of 10 restructuring initiatives implemented when the accelerated initiative was started. We reviewed DOE policy and procedure documents, and discussed DOE’s strategy to implement its accelerated plan with DOE headquarters officials in its Office of Environmental Management. We further reviewed site performance management plans—a document laying out each site’s strategy for implementing the accelerated initiative.

To understand how the accelerated cleanup plan was being implemented at the site level and progress made, we selected a nonprobability sample of 5 sites to review, based on several criteria. We started with a list given to us by DOE that contained all DOE cleanup sites, each site’s expected completion date, each site’s 2003 estimated lifecycle target, and each site’s contribution to cost reductions under the accelerated initiative. We eliminated from consideration any site that (1) had completed cleanup by 2004; (2) had a 2003 estimated lifecycle target less than $1 billion, and (3) contributed less than $100,000 in cost reductions to DOE’s overall $50 billion estimated cost reductions from implementing its accelerated initiative. This gave us a list of sites, which we placed into three categories, based on DOE’s budget accounts: (1) sites expected to close by 2006, (2) sites expected to close by 2012, and (3) sites expected to close by 2035. We selected a minimum of one site from each category. In making our selection, we considered the following factors: geographic dispersion of the sites, the site’s estimated contribution to DOE’s annual budget, the diversity of waste types represented at the site, and contribution to DOE’s estimated $50 billion cost reduction from acceleration. Applying these criteria, we selected the following five sites: Hanford Site—both DOE’s Office of River Protection and Richland Operations Office; Savannah River Site; Idaho National Laboratory; the West Valley Demonstration Project, and DOE’s Miamisburg Closure Project. For each site we selected, we reviewed and obtained information regarding cost, schedule, and performance under DOE’s risk reduction measures. We independently verified, to the extent possible, the dollar figures and waste cleanup performance data provided to us by DOE, by taking various steps. For example, we analyzed budget formulation documents, documented waste cleanup assumptions, and obtained information on cost validation procedures. We determined that these data were sufficiently reliable for purposes of this report. In addition, at each site, we discussed with site officials implementation of the accelerated cleanup plan, progress toward meeting cost and performance goals, and any obstacles to meeting those goals.

To develop information on the key assumptions underlying the Department of Energy’s accelerated cleanup plan, we analyzed information and documents provided by DOE officials and contractors at DOE headquarters and various sites. For many of the sites, we reviewed the performance management plans to assess how their approach to site cleanup would change under the accelerated plan. To determine how those assumptions affected achieving the accelerated cleanup goals, we evaluated site estimates of how the proposed changes under acceleration would impact site cleanup activities. Analyzing the reports provided by DOE, we determined the key contributors to the planned cost reductions. We then assessed through review of various reports and interviews with responsible officials the status of the key initiatives. We also discussed the progress of the plan with state regulators and Environmental Protection Agency officials, DOE headquarters officials, including the acting Assistant Secretary for Environmental Management, and officials from other headquarters offices.

In order to assess the reliability of the gold chart metrics and the cost and schedule data provided to us by DOE, we took several steps. First, we obtained and reviewed selected site baselines. These included reviews by DOE’s Office of Engineering and Construction Management, as well as DOE’s Office of Environmental Management. We also obtained and examined the review of DOE’s fiscal year 2004 environmental liability estimate by DOE’s independent auditor, KPMG. KPMG audits DOE’s environmental liability estimate as part of its annual audit of DOE’s financial statements. In addition to these steps, for the sites we visited, we obtained information on data reliability procedures from site and contractor officials to determine internal controls used to ensure accurate, complete, and timely data. Finally, we developed and administered a data reliability form to each site we reviewed, obtaining information including what types of tests are administered in database systems to ensure the accuracy and completeness of data entered into the system, if and how frequently data are reviewed by independent parties, and how DOE ensures risk reduction measures are independently verified. The forms were completed by DOE and contractor officials. We asked follow-up questions whenever necessary. Based on the information we obtained and our analysis of the information provided, we determined that the reliability of the data provided was adequate for the purposes of this report. As we noted throughout the report, we found methodological problems with DOE’s reporting of cost data and estimation of cost reductions. In reporting its cost data, DOE incorrectly added cost numbers in actual (current) dollars for years prior to 2001 to cost numbers in constant 2003 dollars for years post-2001. DOE also incorrectly estimated cost reductions of $50 billion without adjusting for the time value of money. Since in our previous work we demonstrated the effect of these problems by correcting and re-estimating DOE’s cost reductions, we did not do so again in this report. Therefore, we used DOE’s estimates throughout as reported by DOE with no further correction. We conducted our review from June 2004 through July 2005 in accordance with generally accepted government auditing standards.

Appendix II: DOE’s Estimated Cost Reductions under the Accelerated Cleanup Plan

Appendix II: DOE’s Estimated Cost Reductions under the Accelerated Cleanup Plan term stewardship) stewardship)$453,820 FY03 Lifecycle Cost (does not include long-term term stewardship) stewardship)

Rocky Flats Environmental Technology Site Because of the difficulty in separating long-term stewardship and cleanup activities from the pre- accelerated cost estimates, DOE included both when calculating the cost change under the new plan.

The FY03 lifecycle cost estimate includes cleanup costs only since most long-term stewardship costs were transferred to other offices under the accelerated plan.

Includes operations office costs.

Because of work transfers within Environmental Management, some costs changed in 2003 at sites that closed before 2003.

Includes Headquarters and Program Direction costs.

Appendix III: Comments from the Department of Energy

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the individual named above, Chris Abraham, John Delicath, Doreen Eng, Doreen Feldman, Nancy Kintner-Meyer, Jeffrey Larson, Gregory Marchand, Mehrzad Nadji, Judy Pagano, Thomas Perry, and Bill Swick made key contributions to this report.