Recovery Act: Most DOE Cleanup Projects Appear to Be Meeting Cost and Schedule Targets, but Assessing Impact of Spending Remains a Challenge
Released: 2010-07-29T00:00:00

Letter

Background

Since the 1940s, DOE and its predecessor agencies have operated a nationwide complex of facilities used to research, design, and manufacture nuclear weapons and related technologies. DOE also conducts research in energy and sciences ranging from harnessing geothermal power as a renewable resource to the behavior of subatomic particles colliding at nearly the speed of light. Organizationally, DOE supports this broad range of activities with a diverse group of mission- based program elements. These include the Office of Science, charged with conducting basic science and technology research; the National Nuclear Security Administration, which oversees the nation’s nuclear weapons stockpile; and the Office of Environmental Management, which leads the department’s often complex and challenging effort to clean up nuclear, chemical, and other hazardous wastes. Environmental Management carries out its work at numerous DOE sites and facilities around the country, primarily through private entities that manage the facilities and work under contract to DOE. About 90 percent of DOE’s annual budget (which totaled about $27 billion in fiscal year 2010) goes to contracts with private firms. An extensive network of site offices directly oversees the work of these contractors.

In 1990, GAO designated DOE’s contract management, including both contract administration and project management, at high risk for fraud, waste, abuse, and mismanagement. In the following two decades, continued ineffective oversight and poor contract management led to substantial cost overruns and lengthy delays on many projects overseen by DOE, in particular, the Office of Environmental Management. DOE has faced difficulties in developing realistic cost and schedule targets and then achieving them, in part because of challenges addressing complex technical issues, negotiating contracts, complying with regulatory issues, and ensuring safety. Recently, for example, factors such as these have delayed completion of Hanford’s Waste Treatment and Immobilization Plant in Washington State. The project has been delayed by 8 years, while costs have escalated, more than doubling the initial estimate, from $4.3 to $12.2 billion. The treatment plant was one of nine major DOE construction projects, collectively valued at about $14 billion, that as of 2009 had exceeded both their original cost and schedule estimates. As we recently reported, DOE has taken steps to improve its contract and management activities, including in 2000 issuing its order 413.3A, which established a process for managing projects, from beginning to end. The order established five major milestones—or “critical decision points”—that span a project’s life, beginning with approval of need and ending with project completion. Order 413.3A specifies the requirements that must be met, along with the documentation necessary, to move past each milestone, including when a variety of independent reviews should occur to assess progress. Other steps DOE has taken include developing a root-cause analysis, a corrective action plan, and performance measures intended to help assess progress. Nevertheless, Environmental Management’s contract and project management activities remain on GAO’s list of programs or agencies at high risk for fraud, waste, abuse, and mismanagement.

The Recovery Act is intended to promote economic recovery, make investments, and minimize or avert reductions in state and local government services. The Congressional Budget Office estimated that the Recovery Act would increase employment by about 1.2 million to 3.6 million jobs by the end of 2010. Enacted on February 17, 2009, the act directed that priority be given to projects that could be started quickly. The administration referred to such projects as “shovel-ready.” Projects funded by the Recovery Act must comply with section 1512 of the act, which requires funding recipients to report quarterly on a number of measures, including the amount of funds expended or obligated to projects or activities, and the number of jobs created. The act generally requires that all awarded funding must be obligated by September 30, 2010. Funds must be expended by September 30, 2015.

In implementing environmental cleanup work under the Recovery Act, Environmental Management established several goals. These goals included creating jobs; reducing DOE’s “footprint,” or area with ongoing cleanup activity; reducing the life-cycle costs associated with hazardous waste cleanup; completing cleanup activities at three small sites; and meeting a number of regulatory cleanup deadlines that it might not otherwise meet. In addition, Environmental Management set an internal deadline to expend all Recovery Act funds and complete Recovery Act work by the end of fiscal year 2011.

For Recovery Act Funding, DOE Generally Selected “Shovel-Ready” Projects Whose Cost and Schedule Targets Had Been Developed and Needed Minimal Work to Finalize

DOE generally chose to use Recovery Act funds for cleanup projects that could be quickly started and finished. The majority of the projects selected also had existing contracts, which allowed the department to update and validate new cost and schedule targets within a short time frame.

Recovery Act Funding Enabled DOE to Implement Shovel-Ready Projects It Had Identified in Recent Planning Efforts

At the time the Recovery Act was passed, DOE was well positioned to select projects that could be implemented quickly with Recovery Act funding. DOE officials said they had planning efforts under way since 2006, which were aimed at identifying relatively low-risk cleanup projects that could reduce DOE’s cleanup footprint and speed overall site remediation. Such projects included, for example, facility demolition, groundwater or soil remediation, or finishing work that could help accelerate site closure. These projects generally had contracts, including cost and schedule targets, in place; they used proven technologies, had secured needed regulatory approvals, and were therefore considered “shovel-ready.” (According to DOE officials, this focus on discrete, low- risk projects stemmed in part from lessons learned during a 2002 cleanup acceleration attempt, which ultimately did not work well for complex and costly projects.) In addition to its internal deadline to expend all Recovery Act funds and complete work by the end of fiscal year 20 other criteria—including job creation and reducing environmental risk— ese also influenced DOE’s selection. DOE officials said that in selecting th projects, they had to balance competing goals. For example, to begin and complete work quickly, they chose a portfolio of cleanup projects that may ultimately reduce DOE’s footprint—its physical presence—on the national landscape by 372 square miles (approximately 40 percent) but would not address the most dangerously radioactive and hazardous wastes and the environmental risks these wastes present.

In all, DOE selected 84 projects at 17 DOE sites in 12 states for Recovery Act funding (see fig.1) with the majority of the money going to four sites— Hanford, Idaho National Laboratory, the Oak Ridge Reservation, and Savannah River (see app. III).

The vast majority of projects had been included in the sites’ own work plans, such as groundwater remediation at Los Alamos National Laboratory, but some projects also represented work newly transferred from other program offices, such as remediation and demolition of a former weapons facility at Oak Ridge Reservation. In general, projects chosen for Recovery Act funding fell into four main categories of work: Decontaminating and demolishing facilities: for example, decontaminating and demolishing the K-33 building at the Oak Ridge Reservation. A two-level structure that covers 32 acres (see fig. 2) was constructed in 1954 to process and enrich uranium for use in nuclear weapons. Although uranium enrichment operations ceased in 1985, the building’s piping and other equipment were not removed completely until 2005, and radiological and chemical contamination remains throughout the building. DOE had initially selected a different building for demolition, K- 27, which was also used to process and enrich uranium, but it found unexpectedly high levels of mercury contamination, complicating that cleanup. So in February 2010, DOE decided to instead demolish the K-33 building—a much larger building but a less-contaminated and less- complex cleanup project—at a cost of $65 million. Work began in April 2010. Given the delay in starting the project, site officials expect the project to be completed in 2012.

Removing contamination from soil and groundwater: for example, removing and disposing of radioactive and hazardous contaminants from soil and groundwater at the Mound Site, a former production site for explosives and other weapons’ components. Production at the site ceased in 1995. The site’s contractor declared the physical completion of environmental cleanup of the site in July 2006, although a landfill remained, which DOE planned to monitor for contamination. Congress, however, directed further remediation of the landfill at the site. The project includes excavating and disposing of contaminated soils and backfilling the site. Although work began with base funding, the funding was insufficient to complete removal of the contamination. Recovery Act funding of $19.7 million was applied to the project to complete remaining work, with an expected site closure date of September 2010.

Packaging and disposing of transuranic and other wastes: for example, characterizing and packaging transuranic wastes at multiple DOE sites for shipment to the department’s deep geologic repository for permanent disposal. (See fig. 3.) Transuranic wastes are typically discarded rags, tools, equipment, soils, or other solid materials that have been contaminated by radioactive elements, such as plutonium or americium. About 110,000 cubic meters of these wastes were generated mostly after 1970 and then stored at various DOE sites. Because these wastes remain radioactive for extremely long periods—hundreds of thousands of years in some cases—most are headed for disposal at the Waste Isolation Pilot Plant, a deep geologic repository near Carlsbad, New Mexico, designed for transuranic waste disposal. Idaho National Laboratory plans to ship 160 transuranic waste containers—those containers that because of their high radioactivity, must be handled remotely—to the Waste Isolation Pilot Plant.

Supporting the maintenance and treatment of liquid tank waste: for example, upgrading the infrastructure used to stabilize and maintain the tanks that store chemical and radioactive waste at the Hanford Site. Projects funded through the Recovery Act are accelerating specific upgrades, such as installing new ventilation systems to prevent the buildup of hazardous and volatile gases produced in the tanks. The waste is gradually being transferred from the oldest, deteriorating underground tanks to larger, newer tanks in preparation for processing in the waste treatment plant, which is expected to start operating in 2019.

DOE Updated and Validated Cost and Schedule Targets for Recovery Act Projects

To implement Recovery Act work, DOE updated (or, for new work, developed) cost and schedule targets for each project. Once these targets were established, DOE followed the process established by order 413.3A for reviewing and assessing the targets’ validity and the reasonableness of the price of the associated contract. Reviews fell into two general categories: Program reviews: Performed by DOE officials with no vested interest in a project, such reviews are to determine if a project’s scope, cost and schedules, safety, and technology are valid and appropriate. Program reviews for projects estimated to cost no more than $100 million are known as independent project reviews. Program reviews for projects estimated to cost $100 million or more are known as external independent reviews.

Cost reviews: These reviews verify that the contractors’ price estimates adequately reflect the programs’ scope and are reasonable for the work to be accomplished. Cost reviews for projects valued at $100,000 or more are known as independent government cost estimates. Cost reviews for projects valued at $5 million or more are known as independent reviews and validations.

Both of these categories of reviews serve to highlight any potential issues or problems with contracts, as well as offer an opportunity for DOE and its contractors to define and perform any needed corrective action. For example, the Savannah River Site’s external independent review to assess cost and schedule estimates and readiness to begin construction found that the contractor had not produced sound cost and schedule estimates or risk management plans nor clearly defined the scope of Recovery Act work to decommission certain buildings. The site’s contractor responded with a corrective action plan that spelled out actions to remedy these shortcomings. Reviews have also found contracts where information was missing. At Hanford, for example, the external independent review found that some of the Recovery Act projects had not fully defined the scope of their work or established cost and schedule targets at the time of the review. In other cases, the reviews found contracts that lacked sufficient “contingencies,” that is, sufficient cushions built into the cost and schedule estimates in case of unforeseen technical or programmatic problems. For example, Idaho National Laboratory did not initially include a contingency estimate in its schedule for the site’s Recovery Act activities. Reviews also uncovered concerns about project implementation, such as contractors’ inability to start work as quickly as planned. For instance, at the Moab Site, Utah, an initial program review found that the contractor’s procurement office was unable to acquire needed equipment to operate at full capacity, slowing work at the site.

In addition, DOE decided to disburse funding for Recovery Act cleanup projects in phases, requiring site officials to complete a series of steps before releasing the funds. For example, initial funding—equal to 30 percent of obligated funds—was released only after sites had certified that contracts were finalized for the Recovery Act projects.

DOE Has Begun Work on All Projects, Most Appear to Be Meeting Cost and Schedule Targets, and Spending Overall Has Been Slower Than Planned

DOE has begun work on all of its Recovery Act projects, spent over $1.9 billion of its $6 billion in Recovery Act funding, and created more than 5,600 jobs at the 17 cleanup sites selected for funding. DOE reported that the majority of Recovery Act projects were achieving cost and schedule targets, although about one-third were not. In addition, inconsistencies exist between some projects’ cost and schedule performance and progress shown by other performance measures, such cubic meters of soil remediated.

DOE Reported All 84 Recovery Act Projects Are Under Way, Creating About 5,600 Jobs, but Overall Spending Has Been Slower Than Planned

Work has begun on each of DOE’s 84 Recovery Act cleanup projects and, as of May 2010, each of the projects was still in progress. The first project planned for completion—an effort to remove contaminated soil and groundwater at the Mound Site in Ohio—is scheduled to finish in September 2010, according to DOE. According to DOE monthly reports, most of the other 83 projects are expected to be completed by September 2011, DOE’s internal target for completing all Recovery Act work. DOE’s monthly project reports from early 2010 indicated that 20 projects were scheduled for completion after fiscal year 2011, including 11 of the 14 projects at the Savannah River Site. More recently, however, DOE headquarters officials said that at least nine projects would not be completed before the September 2011 deadline. These projects include a project at Savannah River to clean up transuranic waste, which was delayed as the site awaited approval to ship its waste to the Waste Isolation Pilot Plant for permanent disposal, according to DOE; a project to demolish a uranium enrichment and processing facility at the Oak Ridge Reservation, which began late, according to DOE; and a facility-decommissioning project at Idaho National Laboratory, which was delayed because of technical difficulties.

In March 2010, DOE reported that Recovery Act cleanup work had resulted in more than 5,600 full-time-equivalent jobs at all 17 sites in 12 states. Over 80 percent of these jobs were located at the four sites— Hanford, Idaho National Laboratory, the Oak Ridge Reservation, and Savannah River—that together received 80 percent of Recovery Act funding. The number of full-time jobs created varied from site to site. For example, DOE reported that 5 jobs were created at the Energy Technology Engineering Center in California, a 90-acre site currently engaged in deactivation and decommissioning activities to clean up the nuclear waste generated during years of nuclear research, and nearly 1,400 jobs were created at Savannah River, a 310-square-mile site where a number of DOE cleanup activities are taking place, including the stabilization, treatment, and disposal of nuclear waste generated during decades of development and production of nuclear weapons and materials.

DOE’s spending on Recovery Act projects has been slower than the department had planned. As of May 2010, a little over a year into the program, DOE had obligated about $5.5 billion (92 percent) of the $6 billion in Recovery Act cleanup funding and had spent about $1.9 billion of those funds—slightly less than the $2.3 billion DOE had expected to spend through May 2010. Spending rates varied across sites, from 76 percent of obligated funds spent at the Energy Technology Engineering Center in California to 23 percent at Argonne National Laboratory in Illinois. On a project-by-project basis, as of March 2010, amounts spent ranged from less than 1 percent of total estimated project cost (a $142 million project to decommission a reactor at Savannah River) to 84 percent of estimated project cost (a $17 million project to decommission a reactor at Brookhaven National Laboratory). In some cases, according to DOE officials, the slower spending at a site or on a given project resulted from technical and management challenges that may have slowed progress. In other cases, however, DOE had planned to spend less money early on: for example, DOE estimated slower spending during the first several months of a project to remediate contaminated soil and groundwater at Hanford because fewer workers were needed for the work’s first, less complex phase, according to a site official. DOE’s plans for that project show an increase in the rate of spending Recovery Act funds beginning in May 2010, once excavating the contaminated soil is under way. Table 1 shows Recovery Act spending on DOE cleanup projects through May 2010. In commenting on a draft of this report, DOE stated that the initial project spend plans for the Recovery Act were developed prior to finalizing the contracts for the work. Now, with the exception of nine projects for which the scope of work changed, DOE officials expect to spend over 95 percent of project funds by the end of fiscal year 2011.

A Majority of Recovery Act-Funded Projects Appear to Be Meeting Cost and Schedule Targets, Although Inconsistencies Exist between Some Targets and Performance Measures

A key set of metrics DOE uses to determine whether projects, including those funded by the Recovery Act, are meeting their cost and schedule targets comes from DOE contractors’ earned value management system. Earned value is a project management tool that combines measurements of scope, schedule, and cost in a single integrated system that can be used by DOE contractors to manage programs. According to DOE headquarters and site officials, DOE monitors this earned value information monthly from headquarters, as well as weekly or daily at some sites. Using these data, DOE reported that, as of March 2010, 57 of the 84 Recovery Act projects—about two-thirds—were meeting both cost and schedule targets. About 20 percent of projects were meeting either their cost or schedule target, but not both, and the remaining 11 percent had missed both targets altogether. Projects meeting and missing targets spanned the range of project types, including facility demolitions, groundwater remediation, and infrastructure upgrades. Appendix IV provides performance information by project number for Recovery Act projects.

In addition to tracking earned value metrics, DOE also evaluates project performance by reviewing project-specific performance measures. As of March 2010, DOE reported that across the complex, progress on five of seven selected performance measures was meeting or exceeding targets (see fig. 4). These measures relate to the specific cleanup activities under way at a given site, such as cubic meters of waste disposed of or the number of radioactive facilities decommissioned. Historically, DOE has used such measures to track cleanup progress complexwide. DOE developed several new performance measures specific to Recovery Act projects. These include, for example, cubic meters of transuranic waste that have been prepared and certified for shipment to the Waste Isolation Pilot Plant, a measure that supplements existing measures tracking only the amount of transuranic waste actually disposed of. Some sites have also developed site- or project-specific cleanup measures, such as the Savannah River Site, which is measuring cubic yards of grout (a cementlike material) poured into decommissioned reactor facilities, and the Hanford Site, which is measuring the number of waste tank systems that are upgraded.

While DOE is using performance measures to track progress on most of its 84 Recovery Act projects, progress on 31 projects has not been tracked using any performance measures, for two main reasons. First, 18 of the 31 projects do not yet have any corresponding performance measures assigned. According to a DOE Recovery Act Program official, performance measures are being developed for most of these 18 projects. Five of the 18 projects will not be assigned any performance measures, however, because the work does not lend itself to meaningful performance measures, the work is almost complete, or earned value data are deemed sufficient to track the projects’ progress, according to DOE. For example, DOE will rely primarily on earned value measures to track progress on a project to maintain and monitor the physical condition of inactive facilities at the Savannah River Site. Second, the remaining 13 of 31 projects currently have performance measures assigned for tracking progress, but the planned work associated with those measures has not begun. For example, for a particular project at the Hanford Site to identify and dispose of contaminated soil, the performance measure is cubic meters of soil disposed of. But because work during the project’s first several months involved identifying the extent of the contamination (before beginning actual excavation of contaminated soil), this particular performance measure will not be useful for tracking progress until the first planned disposal of contaminated soil in October 2010.

For the remaining 53 projects that had performance measures in place as of March 2010, results were mixed. Of these projects, DOE reported in its monthly reports that 38 were meeting all their performance measure targets, and 15 were missing some or all of their targets (see fig 5). For example, a project at the Savannah River Site to treat and dispose of several types of solid waste had five performance measures tracking progress, as of March 2010, including metric tons of depleted uranium packaged for disposal, number of waste drums disposed of, and cubic meters of debris and soil disposed of. As of March 2010, the project was falling short on three of its five performance measures. Among other aims, the project was supposed to prepare about 11,600 metric tons of depleted uranium for disposal, but only about 4,000 metric tons had actually been prepared because of a delayed start on the project, according to site officials.

In reviewing projects’ earned value cost and schedule target data and projects’ associated performance measures, we found that the results as assessed by performance measures were sometimes inconsistent with the results shown by earned value data for cost and schedule targets. A given project might have met cost and schedule targets but have nevertheless fallen short in meeting performance measure targets. For example, at the Hanford Site, a project to dispose of contaminated soil and debris met or bettered its cost and schedule targets, but a related performance measure showed that none of the contaminated material had been disposed of as planned. Conversely, earned value data for a project to demolish contaminated buildings at Idaho National Laboratory showed that the project was not meeting its cost and schedule targets but was meeting all of its performance measures, such as square footage of facilities demolished. In commenting on a draft of this report, DOE officials stated that earned value scores and other project performance information are intended to provide complementary insights into overall performance. Officials said that when differences among the indicators arise, headquarters officials follow up with federal and contractor officials at the site to determine the reasons for these differences.

DOE Has Taken Steps to Help Address Potential Problems but Continues to Face Key Challenges in Managing Projects and Measuring Their Impact

DOE’s Recovery Act work is well into its second year, and the department faces familiar challenges. While DOE has taken steps to strengthen project management activities, as of March 2010, about one-third of projects did not achieve cost or schedule targets, or both. According to DOE officials, many schedule delays and cost problems could be traced to the same types of issues that have troubled DOE in the past—technical challenges, regulatory issues, and contracting delays. In addition, it is unclear how Recovery Act funding has affected job creation and the department’s environmental cleanup goals or, in particular, to what degree this additional funding will reduce DOE’s footprint, related environmental risks, and future cleanup costs.

DOE Has Taken Steps to Help Projects Achieve Cost and Schedule Targets, Although Some Project Management Issues Remain

To help Recovery Act projects achieve their cost and schedule targets, DOE has taken steps to strengthen project management and oversight, such as adding federal oversight staff, increasing project reporting requirements, and placing tighter controls on when and how funds are disbursed to cleanup sites. First, DOE created a management structure to oversee Recovery Act projects separately from its cleanup projects funded by annual appropriations. At the headquarters level, DOE created an Environmental Management Recovery Act program office, where experienced DOE staff oversee site reporting and project review requirements for Recovery Act work. In addition, DOE assigned a certified on-site federal project director to oversee each Recovery Act project. All federal project directors for Recovery Act projects are senior managers certified by the Project Management Career Development Program Certification Review Board. DOE also created a new position for cleanup sites—a Recovery Act site representative—who reports project status to DOE’s headquarters’ Recovery Act program office and the Office of Environmental Management’s Consolidated Business Center. Recovery Act site representatives are expected to monitor and report to the Recovery Act program office on technical, programmatic, regulatory, environmental, safety and health, and fiscal issues and concerns. The business center provides project management support, such as assistance in cost estimating and analysis.

Second, DOE increased oversight via new and more frequent reporting requirements for Recovery Act work. In addition to reporting the number of jobs funded by the act, sites report to Environmental Management’s Recovery Act program office—on a monthly, rather than quarterly, basis— projects’ progress toward cost and schedule targets, as well as progress on performance measures. Sites also are to report whether contractors are completing certain tasks (milestones) on time, or whether contractors have missed their targets. Third, DOE has disbursed Recovery Act funding to sites in phases and required site officials to complete and document a series of tasks before funding can be released at each phase. For those cases where a site does not satisfactorily complete these tasks, DOE officials said they are prepared to withhold additional funding until the site has complied with the requirements. For example, one of the requirements for receiving funding is that a project receives a favorable project review, which involves an assessment of cost and schedule targets and project management plans. At the Savannah River Site, because a July 2009 external independent review of a decontamination and decommission project found that the contractor had failed to produce sound cost and schedule estimates or risk management plans as required, DOE shifted $200 million it had intended to allocate to that contractor to a different project managed by a second contractor at the site. DOE subsequently implemented corrective actions at the site, including management changes. DOE has not taken similar steps to increase oversight of projects within its broader environmental cleanup program, and it is uncertain how or whether the actions taken to strengthen project management and oversight of Recovery Act projects will benefit management of DOE’s larger portfolio of cleanup projects.

As of March 2010, nearly one-third of Recovery Act projects were facing cost or schedule difficulties or both—despite DOE’s efforts to choose low- risk, straightforward, shovel-ready projects for funding and to increase oversight—and overall spending was somewhat slower than expected. About halfway through DOE’s planned Recovery Act program, slightly less than one-third of the department’s $6 billion allocation had been spent. Officials attributed these difficulties to technical, regulatory, safety, and contracting problems—some of the same issues that have challenged DOE’s project management in the past. For instance: Technical challenges: Some Recovery Act projects faced technical problems, such as the discovery of unanticipated wastes that require additional time and effort to remediate or an inability to obtain necessary materials or equipment in a timely manner. For example, unexpected levels of contamination—discovered after cost and schedule targets under the Recovery Act had been established—have delayed the decommissioning and demolition of the former Experimental Breeder Reactor II (one of 52 nuclear reactors at Idaho National Laboratory). In determining the extent of contamination at the facility and planning the decommissioning effort, DOE discovered that a portion of the reactor contained a layer of asbestos insulation between the reactor’s outer steel shell and its inner concrete lining and that the concrete lining was also filled with asbestos. As of May 2010, according to DOE officials, the contractor had to slow the work to figure out how to best address this unexpected contamination, and as a result, this $118 million project is not expected to be completed by September 2011. At the Savannah River Site, a $304 million project to accelerate disposal of 5,000 cubic meters of transuranic waste cannot be completed until 2012 because of problems obtaining the proper containers for shipping the waste to the Waste Isolation Pilot Plant. When the site could not obtain large containers in a timely manner, workers instead packaged the waste into smaller containers—a process that was time-consuming and costly, officials said. In early June 2010, DOE officials said the Nuclear Regulatory Commission issued a certification of compliance for the large containers. According to a Savannah River Site official, the new containers will enable workers to package the waste more efficiently and at lower cost. Still, as a result of this delay, the project is expected to be completed in 2012, later than planned.

Regulatory issues: Some sites have also faced regulatory issues that require additional time to address. For example, DOE is working on a $38 million Recovery Act cleanup project at the Energy Technology Engineering Center—which was once involved in nuclear reactor development and testing—in partnership with the Environmental Protection Agency (EPA). Under an interagency agreement between EPA and DOE, EPA has responsibility for conducting a comprehensive characterization of radioactivity at the site, in accordance with Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) processes. When this CERCLA characterization is completed, DOE can develop an environmental impact statement and proceed with facility demolition and groundwater and soil cleanup. According to site officials, however, EPA’s characterization activities are taking longer than expected.

Safety issues: Safety concerns also affected project progress. For example, a project at the West Valley Demonstration Project in New York to process transuranic wastes for disposal is not meeting either cost or schedule expectations, according to site officials, because of safety issues that have slowed progress. DOE site officials said that after work started on the project, air monitors showed that contamination in the work area exceeded allowable limits. Although the workers were already wearing respirators, the air monitors’ warning prompted site officials to require workers to wear additional protective gear to complete the work. This additional gear, which includes bubble suits, is more cumbersome and contributed to slower-than-expected progress. Nevertheless, DOE expects the $4.2 million effort to be completed by December 2010 as planned.

Contracting delays: Delays in finalizing new contracts or contract modifications have also led to cost and schedule difficulties. For example, three of the four indefinite-delivery/indefinite-quantity contracts at the Oak Ridge site in Tennessee have not been finalized. (Such contracts constitute standing arrangements for goods and services and introduce greater flexibility into the contracting process.) The four projects involve cleaning up contaminated soil and decontaminating or demolishing excess facilities, including demolishing a radioisotope development laboratory, a wooden building originally constructed in the 1940s for a variety of processing and research activities. Unoccupied since 1998, the dilapidated building contains both radioactive and hazardous materials. The contract has not been finalized for this project and, as a result, work cannot begin. Site officials at Oak Ridge Reservation said that finalizing this type of contract often takes longer than they expect or plan for. In addition, one of the contracts for the Oak Ridge site was protested by prospective contractors, also delaying the projects.

Recovery Act Impact on Job Creation and Environmental Cleanup Goals Is Unclear

In reporting the number of jobs created as a result of Recovery Act spending, DOE has reported three substantially different figures, which can be confusing and potentially misleading. Also unclear is how much impact Recovery Act spending will have on the department’s environmental cleanup goals, such as reducing environmental risks from nuclear and hazardous wastes and long-term costs of maintaining excess facilities and monitoring stored wastes and contaminated soil and groundwater.

Determining Impact of Recovery Act Spending on Job Creation Is Problematic Because DOE Calculates Jobs Created Using Three Different Methodologies

DOE has wrestled with calculating and reporting jobs created—a requirement of the Recovery Act—publicly reporting three vastly different figures. Recovery Act reporting requirements direct agencies to count hours worked under a prime contractor—the nonfederal entity that receives Recovery Act funding directly from the federal government. OMB guidance states that agencies are to report jobs created as full-time equivalents (FTE) calculated by totaling the number of hours charged by workers to Recovery Act projects in a given quarter and dividing the sum by the total number of work hours representing a full work schedule.

While DOE has used this required figure, it has also chosen to calculate and publicize two additional figures that represent jobs created: (1) the sum of both prime contractor and subcontractor FTEs and (2) the number of people who have charged time to Recovery Act activities—without regard to the number of hours worked—which DOE refers to as “head count” or “lives touched.” DOE officials stated that because the department relies largely on subcontractors to carry out the cleanup work, reporting only prime contractor FTEs substantially understates the employment impact of DOE’s Recovery Act program. The number of prime contractor FTEs DOE reported to OMB as of March 2010 was 5,655, while the sum for both prime contractors and subcontractors for the same period was nearly twice that, at 10,018. The head count, or number of workers engaged for any length of time in Recovery Act work, was substantially higher still (see table 2).

DOE’s job creation calculations are problematic because they are confusing and potentially misleading. DOE frequently publicizes all three figures to represent the employment impact of Recovery Act funding on communities near DOE cleanup sites, without explaining how the figures were calculated. But only FTEs for prime contractors are counted in a manner that can be compared with other federal recipients of Recovery Act funds. It is this number that DOE reports on the federal Web site FederalReporting.gov. DOE officials said they had tried to gain permission from OMB to include subcontractor FTEs in this official count, but OMB has not changed its guidance. In commenting on a draft of this report, however, DOE stated that federal acquisition regulations have changed and, effective with the third quarter of fiscal year 2010, DOE will report both prime contractor and subcontractor FTEs. Further, DOE’s calculation of head count is potentially misleading for two reasons. First, counting the number of people carrying out Recovery Act work, rather than the time they have actually spent in such work, implies that one person engaged in 2 hours of work per week is equivalent to one person engaged in 40 hours of work per week. The economic benefits to the worker, however, differ significantly. Second, the estimate includes a count of those people who contributed to the manufacture of materials or equipment purchased by prime contractors and subcontractors to support Recovery Act work, an estimate that is difficult to verify, according to site officials.

The Impact of Recovery Act Spending on Cleanup and Other Goals Remains Unclear

In addition to inconsistencies in how the department measures job creation, DOE has no clear means of determining how cleanup work funded by the act will reduce environmental risk, if at all. While a key departmental goal for the funding is to reduce DOE’s footprint, or area of ongoing cleanup activity, just what this goal entails is unclear. DOE is using a comprehensive list of existing measures to assess environmental cleanup performance, including additional measures developed under its Recovery Act program. Existing measures include such metrics as amount of hazardous material packaged or disposed of, number of facilities demolished, number of sites for which remediation has been completed, and number of sites closed. Recovery Act project-specific measures are similar to department measures, although more specific, such as number of groundwater wells installed or square feet of facilities demolished. These project-specific performance measures, however, focus on outputs and are not directly linked to long-term outcomes such as reducing risks. For example, the performance measures do not indicate what impact installing groundwater wells or demolishing facilities will have on reducing risks to human health and the environment. Moreover, the way progress is measured is sometimes inconsistent, and many projects have no performance measures established to date. As a result, project-specific performance measures reveal very little about the outcomes DOE intends to achieve with Recovery Act funding, in particular, how DOE will measure the impact that Recovery Act funding will have on the long-term condition of large tracts of land under DOE management or on DOE’s footprint. Headquarters officials defined footprint reduction as “physical completion of activities with petition for regulatory approval to follow.” Some federal cleanup site officials, however, said they were confused by DOE’s footprint reduction goal and uncertain how they are to take credit for having achieved it. For example, it is not clear whether footprint reduction includes total square footage of facilities owned by DOE, acres of land surrounding those facilities and owned or controlled by DOE, contaminated soil and groundwater beneath the facilities, some combination of all of these things, or something else entirely. Without a clearly defined and consistent measure of its footprint, it will be difficult for DOE to report whether or how Recovery Act funding has affected progress toward this key DOE cleanup goal.

Furthermore, it is also uncertain how much DOE can expect to save in life- cycle costs of its environmental cleanup program as a result of Recovery Act funding. DOE Recovery Act program officials estimated that as much as $4 billion in life-cycle savings would be realized by doing the work under Recovery Act funding sooner rather than later, as originally planned. Officials stated that savings are to be achieved by avoiding costs such as those for long-term maintenance, security, and waste monitoring. DOE’s $4 billion estimate, however, includes an estimate for savings that could be achieved because of inflation—by avoiding the higher costs of materials and labor in the future. In addition, DOE’s estimates do not take into account the time value of money. That is, they do not account for the fact that costs incurred in the future are worth less than costs incurred sooner. According to standard economic analysis, OMB guidance on benefit-cost analysis, as well as DOE’s guidance on life-cycle cost analysis, life-cycle analyses should be based on cost adjusted for both inflation and the time value of money—that is, on cost in present-value dollars. In contrast, DOE’s comparison of its base program life-cycle cost estimate and its Recovery Act program estimate is based on current dollars and does not correct for either the effect of inflation on prices or the time value of money. Our analysis of DOE’s cost savings, taking the appropriate factors into account, found that DOE’s $4 billion savings estimate may be overstated by as much as 80 percent. GAO has previously taken issue with DOE’s method of calculating savings in life-cycle costs. DOE officials have said that when estimating life-cycle cost savings from Recovery Act work, they prefer to use current dollars, which take into account increasing costs due to inflation. An official said that using current dollars provides for a more direct comparison with DOE’s budget submission to Congress.

Conclusions

DOE expected that Recovery Act funding would help it achieve several goals, including accelerating the cleanup effort and reducing the footprint of facilities and contamination at 17 of its sites, creating jobs, and reducing total remaining cleanup costs. As the halfway mark in DOE’s Recovery Act work approaches, the department has made progress toward completing cleanup projects and the majority, although not all, of these projects appear to be meeting cost and schedule targets. In carrying out its Recovery Act work, DOE has implemented additional steps to address familiar contract and project management challenges, by providing stricter controls over how and when funds are disbursed to cleanup sites, increasing reporting requirements, and paying greater attention to project oversight. Although we do not yet know what effects each of these additional steps to improve project management and increase oversight of Recovery Act projects will ultimately have on DOE’s ability to meet projects’ cost and schedule targets, some of the steps could be found useful for Recovery Act cleanup work, as well as carry the potential to be beneficial for projects funded under annual appropriations. The department has been less successful in implementing steps to better assess the results of its Recovery Act work. Specifically, DOE faces challenges in accurately assessing the effects of Recovery Act spending on job creation, environmental risk, footprint reduction, and long-term cleanup costs. Regarding jobs created, OMB requires that job creation figures be calculated and reported using a standard methodology. DOE, however, has chosen to also use two additional methodologies to calculate and publicly report job creation figures, which potentially provides a misleading picture of actual jobs created. DOE sites also do not have a means of determining how cleanup funded by the act will reduce environmental risk, if at all, or how DOE will measure progress toward its goals for footprint reduction. Further, DOE is not following OMB’s or its own internal guidance in calculating cost savings that might accrue from completing cleanup projects sooner using Recovery Act funding. The methodology chosen by the department appears to significantly overstate savings from Recovery Act spending. Without clear performance goals and consistent and meaningful methodologies for measuring outcomes stemming from Recovery Act spending, it will be difficult for the department or others to accurately assess the benefits gained from the $6 billion of Recovery Act funding directed to the department.

Recommendations for Executive Action

To help ensure successful completion of Recovery Act projects and apply lessons learned to DOE’s larger cleanup effort, we recommend that the Secretary of Energy direct the Assistant Secretary of Environmental Management to take the following four actions: Determine whether additional project management and oversight steps adopted for Recovery Act projects, such as more frequent reporting, have proven beneficial and whether these steps would be effective and appropriate for DOE’s cleanup projects funded under annual appropriations.

Clarify the methodology used to calculate any supplemental job creation figures in addition to prime contractor and subcontractor FTEs, such as head count—that is workers who have charged any amount of time to Recovery Act projects—so that users of this information fully understand what each number represents and its significance and limitations.

Develop clear, quantifiable, and consistent measures for determining the impact of Recovery Act funding on environmental risk. As part of this effort, clearly define what the DOE footprint consists of, determine how changes to the footprint will be measured, and ensure that all DOE sites report changes to their footprint in a consistent and comparable manner.

Ensure that savings estimates over the life of the cleanup projects are calculated according to OMB and DOE guidance, so that these estimates accurately represent potential savings and reflect costs adjusted for both inflation and the time value of money.

Agency Comments and Our Evaluation

We provided a draft of this report to DOE for its review and comment. In written comments, the Assistant Secretary for Environmental Management stated that DOE concurred with our four recommendations contained in the report and indicated that some of the actions we are recommending have already been taken. Regarding the first recommendation—to evaluate the effectiveness of additional project management and oversight steps adopted for Recovery Act projects and determine if these steps would be effective for projects funded under annual appropriations—DOE indicated that some steps had been taken. These include requiring more frequent reviews of projects. DOE stated it is still evaluating the potential benefit to the base program of other steps taken to manage Recovery Act projects. In responding to the second recommendation on the methods used to calculate job creation figures, DOE stated that a recent change to federal acquisition regulations, which will result in the reporting of both prime contractor and subcontractor jobs in FederalReporting.gov, will negate GAO’s concern on the matter. Our concern, however, centered on ensuring that users of DOE’s three job creation figures—prime contractor FTEs, prime contractor and subcontractor FTEs, and head count—understand exactly what the figures represent. The head count figure is not reported into FederalReporting.gov and, as we note in our report, was a significantly higher figure than prime contractor or subcontractor job figures. In its detailed comments, DOE stated that it has posted guidance on its Web site regarding the methodologies used to calculate job creation figures and will also include a one-page explanation sheet with job numbers presented to stakeholders or the public. We have reworded this recommendation to enhance its clarity. Third, DOE stated that it agreed with GAO’s recommendation to have clear, quantifiable, and consistent measures of footprint reduction and has taken steps to better define this concept and communicate the definition to all its sites. While we agree that DOE has made progress on defining footprint reduction, the focus of our recommendation was broader, emphasizing the development of clear, quantifiable, and consistent measures for determining the impact of Recovery Act funding on environmental risk. While we recognize that DOE collects information related to project risks, as it stated in its response, the information collected concerns risks associated with successfully carrying out a project, not quantifying the reduction in environmental risks themselves. DOE went on to point out that its performance measures are focused on outputs that are directly tied to cleanup of the site. Outputs, such as cubic meters of soil remediated, do provide a measure of work performed, but they may not easily translate into the outcome in terms of environmental risk reduction due to Recovery Act funds spent at each site. We maintain that DOE needs to continue to develop measures for determining the impact of Recovery Act funding on reducing environmental risks. DOE also expressed concern over the method we used to determine project performance, as well as our assessment that inconsistencies exist between some projects’ cost and schedule performance and other measures. We modified the draft to address these concerns. In responding to our recommendation on calculating life-cycle cost savings, DOE agreed stating that it is currently following OMB and DOE guidance. As we noted in our report, however, the $4 billion in savings that DOE has stated will result from Recovery Act projects could be overstated by as much as 80 percent because the calculation does not take into account the time value of money and inflation.

DOE’s written comments are presented in appendix V. In addition, DOE provided detailed technical comments, which we incorporated as appropriate.

We are sending copies of this report to the appropriate congressional committees, the Secretary of Energy, and other interested parties. The report is also available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff members have any questions regarding this report, please contact me at (202) 512-3841 or aloisee@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VI.

Appendix I: Scope and Methodology

To determine how the Department of Energy (DOE) selected projects for funding under the American Recovery and Reinvestment Act of 2009 (Recovery Act) and developed cost, schedule, and performance targets, we reviewed key provisions of the Recovery Act and Office of Management and Budget (OMB) guidance regarding the act. We also reviewed various DOE guidance documents regarding project management and project reviews (orders 413.3A, 413.3-8 and 413.3-9), cost-estimating procedures (order 430.1-1), and the use of earned value management techniques (order 413.3-10). In addition, we reviewed key project planning and management documents. These included project operating plans, DOE assessments of project cost and schedule targets, and earned value management system certifications. We also reviewed OMB and DOE guidance on collecting and reporting data on jobs created and DOE’s most recent performance accountability annual reports. To gain a better understanding of how projects were selected and the steps officials took to develop cost and schedule targets, we interviewed DOE headquarters officials and officials at each of the 17 sites receiving Recovery Act funding—once after initial project implementation, and again several months later. We visited the four DOE cleanup sites receiving the bulk of the $6 billion in Recovery Act funding for environmental cleanup: (1) the Hanford Site, (2) Idaho National Laboratory, (3) the Oak Ridge Reservation, and (4) the Savannah River Site. For each site, we reviewed project documentation, interviewed officials, and observed Recovery Act work under way. We also selected a nonrandom sample of four of the costliest projects—including soil and groundwater remediation, facility demolition, and disposal of waste—to better understand how the cost estimates were developed and to assess the reliability of the estimates for these projects. Two projects were at the Hanford Site and two at the Savannah River Site. Further information on the four projects appears in appendix II.

To determine the status of the Recovery Act projects and the extent to which projects are achieving cost and schedule targets and performance measures, we used contractor data submitted to the Office of Environmental Management and assembled under its integrated planning, accounting, and budgeting system. Information we reviewed from this database consisted of cost and schedule targets; monthly cost and schedule performance; earned value management system data; and key agencywide, site, and project performance metrics. To assess the reliability of data we reviewed, we sent out questionnaires to DOE headquarters and site officials regarding the steps taken to ensure the accuracy of data related to measuring progress in meeting project cost and schedule targets, jobs created, and other project outcomes. Although in a few instances we found data of questionable reliability at some of the sites, we determined that, overall, these data were sufficiently reliable for the purposes of our report.

To determine what key challenges DOE faced and the steps officials have taken to address these challenges, we reviewed independent internal and external project reviews, program reviews, and corrective action plans. We attended an April 2010 Environmental Management conference at which site officials exchanged information on their experiences implementing Recovery Act cleanup projects. We reviewed DOE Office of Inspector General reports on the Recovery Act and conferred with Inspector General staff. We interviewed headquarters officials and officials at all 17 sites and reviewed responses to the data reliability questionnaires sent to and completed by contractor and federal project management officials for all 84 projects. To recalculate the life-cycle cost savings that would result from the Recovery Act, we obtained DOE’s life-cycle cost estimates for each project before and after the Recovery Act. We converted these estimates to constant dollars using the appropriate inflation factors for each project provided to us by DOE. We then converted those estimates to present value using real discount rates from OMB. For each project, we used the discount rate for the time period that most closely corresponded with the length of the project under consideration.

We conducted this performance audit from June 2009 to July 2010, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Description of Four Projects Reviewed in Depth

We selected four Recovery Act projects for an in-depth review of their cost and schedule estimates and the reliability of these estimates. These projects came from the list of projects funded at the two DOE’s sites receiving the most Recovery Act funding—the Hanford and Savannah River sites.

Hanford

DOE’s Hanford Site in southeastern Washington State was established in 1943 to produce nuclear materials for the nation’s defense. Although DOE stopped producing nuclear material at Hanford in 1989, millions of gallons of high-level radioactive waste from production still remain on site. The primary mission at Hanford is site cleanup, including waste removal and containment and soil and groundwater remediation to protect the nearby Columbia River. The Richland Operations Office at the Hanford Site received $1.6 billion from the Recovery Act for cleanup activities and is funding 10 projects. The projects are to demolish nuclear and support facilities, clean up waste sites and contaminated groundwater, and retrieve solid waste from burial grounds. Recovery Act funding to accelerate cleanup of facilities, waste sites, and groundwater along the Columbia River will help the site decrease its active area of cleanup from 586 to 75 square miles or less by 2015, which is more than 5 years ahead of the current schedule. We selected the following two Hanford projects for in- depth cost and schedule reliability review: U Plant D&D: The U Plant is a former processing facility on the site’s Central Plateau, where special nuclear materials were recovered and converted for shipment to other sites for weapons manufacture and assembly. Plant facilities were built in 1944 and operated until 1964. Other than minor decontamination work, the facility has been unused and deserted since operations ceased. The Recovery Act project’s scope includes preparing the U Plant for decommissioning by clearing the facility of equipment and grouting the reactor’s cells, as well as deactivating, decommissioning, decontaminating, and demolishing 16 ancillary facilities. The project is expected to be completed by September 2011, at a cost of $257 million. 100 K Area remediation: The 100 K Area comprises two former plutonium production reactors along the Columbia River. None of the reactors is still operational, and contamination from the former production processes and facilities is a key cleanup objective. The scope of this Recovery Act project includes decontaminating and demolishing 30 industrial and radiological facilities associated with the reactors within the 100 K area, as well as cleaning up or characterizing 23 waste sites. The project is expected to be completed by September 2011, at a cost of $203 million.

On the basis of our in-depth reviews, DOE partially met industry best practices for ensuring that the estimates were accurate, comprehensive, well documented, and credible as detailed in GAO cost estimating guide. While DOE carried out many best practices for developing its estimates, in some instances, it did not. For example, when preparing estimates for both of these projects, DOE did not create a plan to ensure that the estimates were developed by people with expertise in cost and schedule estimating and did not test the reasonableness of its estimates against known costs for similar activities.

Savannah River

The Savannah River Site was constructed in the early 1950s to produce tritium and plutonium for use in nuclear weapons. Historically the site has supported five nuclear reactors, two chemical separation plants, a heavy- water extraction plant, a nuclear fuel and target fabrication facility, a tritium extraction facility, and waste management facilities. Although the site no longer produces plutonium, some of its missions continue, such as the extraction of tritium for nuclear warheads. The site received $1.6 billion under the Recovery Act, which is funding 14 projects. Overall, Recovery Act projects at Savannah River are expected to accelerate transuranic waste disposal by 4 years, and the decommissioning of the nuclear facilities by at least 5 years. We selected two of Savannah River’s Recovery Act projects for in-depth cost and schedule estimate and reliability review: Accelerated transuranic waste disposition: The purpose of this project is to accelerate the characterization, packaging, and disposal of 4,200 cubic meters of transuranic waste from the site’s former production of nuclear weapons. The waste will then be shipped to DOE’s Waste Isolation Pilot Plant for permanent disposal. In addition, the project’s current scope includes repackaging of 800 cubic meters of transuranic waste into smaller containers in preparation for shipment. The project is expected to be completed in September 2012, at a cost of $304 million.

P&R Area completion general plant projects and operations: “P&R Area” refers to the P and R reactors, two of the site’s first nuclear production reactors, which started operating in 1953 and 1954, respectively. The buildings and associated infrastructure, such as railroad tracks used to transfer radioactive material from the reactors to other site facilities, have remained unused since the facilities ceased operations in 1964 (R reactor) and 1988 (P reactor). The scope of the Recovery Act project includes decommissioning the two reactors, as well as removing the railroad tracks. The project also includes remediation of contaminated soil under the tracks. The project is expected to advance completion of the P and R area cleanup by 5 to 6 years.

On the basis of our in-depth reviews of these two projects, DOE partially met best practices for ensuring that the estimates were credible, comprehensive, and well documented and minimally met best practices associated with ensuring that the estimates were accurate. For example, DOE did not compare its cost and schedule estimates to an independent cost estimate, a step that helps ensure accuracy. Instead, the department relied on internal project reviews, which were not as rigorous.

Appendix III: Recovery Act Project Cost Data through March 2010

Project description

(percentage of total cost)

1. CH-ANLE-0040.NEW.R1.1 D&D:Building 310 $1,602 (11%)

2. CH-ANLE-0040.NEW.R1.2 D&D: Building 330 2,459 (7%)

3. CH-ANLE-0040.NEW.R1.3 D&D: Alpha-Gamma Hot Cell Facility 4,042 (15%)

4. CH-ANLE-0040.NEW.R1.4 TRU waste processing 7,458 (32%) 15,561 (16%)

Brookhaven National Laboratory (NY)

D&D: Brookhaven Graphite Research Reactor 14,378 (84%)

D&D: High Flux Beam Reactor 8,842 (42%)

D&D: High Flux Beam Reactor 3,469 (82%) 26,689 (63%)

Energy Technology Engineering Center (CA)

D&D: EPA radiological characterization 2,775 (7%) 3,332 (21%) 6,107 (11%)

Hanford Site: Office of River Protection (WA)

Tank waste support: Tank farm infrastructure upgrades 20,968 (21%)

Tank waste support: Other infrastructure upgrades 3,473 (13%)

Tank waste support: Facility upgrades 13,808 (15%)

Tank waste support: Waste feed infrastructure upgrades 9,093 (15%)

Tank waste support: SY transfer line upgrade 988 (6%) 48,330 (16%)

Hanford Site: Richland Operations Office (WA)

D&D: Plutonium Finishing Plant 79,470 (24%)

Solid waste disposal: Mixed low-level waste treatment 20,873 (41%) 57,159 (32%)

Soil and groundwater cleanup: Treatment and monitoring 44,267 (30%)

D&D: U Plant/other 70,579 (28%)

D&D: Outer Zone 15,222 (13%)

D&D: 100 K Area 44,293 (17%)

D&D: Disposal facility expansion 25,412 (69%)

D&D: Remedial action/footprint reduction 7,896 (6%)

D&D: 618-10 burial grounds 11,345 (15%) (percentage of total cost) 376,516 (24%) 16,935 (56%) 39,501 (40%)

Soil and groundwater cleanup: Buried waste 3,860 (18%)

Soil and groundwater cleanup: In-situ grouting 1,693 (7%)

Soil and groundwater cleanup: Operations 17,520 (80%)

D&D: 39 facilities 30,314 (63%)

D&D: 29 facilities 18,518 (35%)

D&D: Nuclear Energy facilities 21,110 (18%) 159,451 (34%)

Los Alamos National Laboratory (NM)

Soil and groundwater cleanup: Material Disposal Area B 17,820 (19%)

Soil and groundwater cleanup: Groundwater wells 16,272 (36%)

D&D: Defense-related facilities 11,681 (20%)

D&D: Nondefense-related facilities 4,315 (29%) 50,088 (24%)

Soil and groundwater cleanup: Mill tailings 38,214 (35%) 38,214 (35%)

Soil and groundwater cleanup: Operable Unit 1 9,242 (47%) 9,242 (47%) 20,024 (44%) 20,024 (44%) 31,578 (25%)

D&D: East Tennessee Technology Park 18,885 (16%)

D&D: Y-12 facility 2,417 (48%)

D&D: Y-12 remediation preparation 14,326 (33%)

D&D: Disposal facility expansion 16,026 (36%)

D&D: Y-12 excess material 41,025 (28%)

D&D: Y-12 biology complex 7,224 (24%)

D&D: Y-12 9206 filter house 3,503 (50%) (percentage of total cost)

D&D: Defense legacy material removal 170 (2%)

D&D: Defense facility demolition 12,366 (32%)

D&D: Defense remedial actions 7,868 (9%)

D&D: Nondefense legacy material removal 649 (2%)

D&D: 2000 complex 4,968 (38%)

D&D: Misc. facility demolition 3,493 (16%) 164,498 (23%)

D&D: C-410 3,001 (27%)

D&D: C-340 8,319 (23%)

D&D: C-746-A 9,212 (29%) 20,532 (26%)

Solid waste disposal: UMC disposition 4,767 (30%)

D&D: X-701B plume remediation 15,191 (31%)

D&D: X-533 5,456 (26%)

D&D: X-633 6,381 (37%)

D&D: X-760 2,282 (14%) 34,077 (29%)

TRU waste processing: Canyon complex support 25,692 (76%) 167,678 (52%) 82,830 (27%)

Tank waste support: Waste systems recapitalization 24,958 (14%)

Tank waste support: Contractor pension payment 4,919 (19%)

D&D: P and R Area completion 85,393 (52%)

D&D: P reactor 1,052 (1%)

D&D: P ash basin 5,188 (17%)

D&D: R reactor 3,727 (2%)

D&D: R ash basin 3,668 (31%)

D&D: M and D Area completion 8,255 (48%)

D&D: Sitewide completion 94,260 (43%)

D&D: Test reactor decommissioning 708 (7%)

D&D: Surveillance and maintenance 2,567 (44%) 510,895 (32%) (percentage of total cost)

Separations Process Research Unit (NY)

D&D: Building G2 and H2 13,274 (36%)

D&D: Contaminated soil removal, North Field 4,829 (33%) 18,103 (35%)

SLAC National Accelerator Laboratory (CA)

5,225 (66%) 5,225 (66%) 17,953 (34%) 31,660 (31%) 2,248 (14%) 51,861 (30%)

West Valley Demonstration Project (NY)

2,234 (53%)

D&D: Main plant 11,802 (28%)

D&D: Other facilities 7,961 (29%) 21,997 (30%) $1,577,410 (27%)

Appendix IV: Recovery Act Project Performance through March 2010

Brookhaven National Laboratory (NY)

Energy Technology Engineering Center (CA)

Hanford Site: Office of River Protection (WA)

Hanford Site: Richland Operations Office (WA)

Los Alamos National Laboratory (NM)

Separations Process Research Unit (NY)

SLAC National Accelerator Laboratory (CA)

West Valley Demonstration Project (NY)

D&D: Main plant D&D: Other facilities Legend: = Positive, = Negative, = Performance measure with no planned work Positive cost performance means that the value of work performed is greater than what the work actually cost to accomplish. For example, if the earned value of work completed by a contractor is $5 million, and the work actually cost $5 million or less to complete, then cost performance is considered positive. Schedule performance is also measured in dollars, but in this case, positive performance means that the value of the work completed in a given period is greater than what had been planned. For example, if the contractor is given 1 month to complete $5 million of work and completes that earned value of work by that deadline or earlier, then schedule performance is considered positive. DOE considers cost and schedule targets to be positive until they drop below 90 percent of the target. That is, work could come slightly under expectations—but not less than 90 percent of the target—and still be considered positive.

Negative cost performance means that the value of work performed is less than what the work actually cost to accomplish. For example, if the earned value of work completed by a contractor is $5 million, but the work actually cost $6.7 million, cost performance would be considered negative. Schedule performance is also measured in dollars, but in this case, negative performance means that the value of the work completed in a given period is less than what had been planned. For example, if the contractor is given 1 month to complete $10 million of work but completes only $5 million in earned value of work by that deadline, then schedule performance is considered negative.

Performance measures are currently in place for the associated projects, but the planned work associated with these measures has not yet begun. As a result, these measures do not yet provide a meaningful way to monitor progress made on the projects. DOE considers performance targets to be positive until they drop below 90 percent of the target. That is, work could come slightly under expectations—but not less than 90 percent of the target—and still be considered positive.

Appendix V: Comments from the Department of Energy

Appendix VI: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the individual named above, Janet Frisch, Assistant Director; Antoinette Capaccio; Ellen W. Chu; Heather Dowey; Jennifer Echard; Jeff Larson; Mehrzad Nadji; John G. Smale Jr.; Stacey Steele; Kiki Theodoropoulos; and Ginny Vanderlinde made key contributions to this report.

Related GAO Products

Department of Energy: Actions Needed to Develop High-Quality Cost Estimates for Construction and Environmental Cleanup Projects. GAO-10-199. Washington, D.C.: January 14, 2010.

Nuclear Waste: Uncertainties and Questions about Costs and Risks Persist with DOE’s Tank Waste Cleanup Strategy at Hanford. GAO-09-913. Washington, D.C.: September 30, 2009.

Department of Energy: Contract and Project Management Concerns at the National Nuclear Security Administration and Office of Environmental Management. GAO-09-406T.Washington, D.C.: March 4, 2009.

Nuclear Waste: Action Needed to Improve Accountability and Management of DOE’s Major Cleanup Projects. GAO-08-1081. Washington, D.C.: September 26, 2008.

Nuclear Waste: DOE Lacks Critical Information Needed to Assess Its Tank Management Strategy at Hanford. GAO-08-793. Washington, D.C.: June 30, 2008.

Department of Energy: Office of Science Has Kept Majority of Projects within Budget and on Schedule, but Funding and Other Challenges May Grow. GAO-08-641. Washington, D.C.: May 30, 2008.

Hanford Waste Treatment Plant: Department of Energy Needs to Strengthen Controls over Contractor Payments and Project Assets. GAO-07-888. Washington, D.C.: July 20, 2007.

Department of Energy: Consistent Application of Requirements Needed to Improve Project Management. GAO-07-518. Washington, D.C.: May 11, 2007.

Department of Energy: Major Construction Projects Need a Consistent Approach for Assessing Technology Readiness to Help Avoid Cost Increases and Delays. GAO-07-336. Washington, D.C.: March 27, 2007.

Hanford Waste Treatment Plant: Contractor and DOE Management Problems Have Led to Higher Costs, Construction Delays, and Safety Concerns. GAO-06-602T. Washington, D.C.: April 6, 2006.

Nuclear Waste: Better Performance Reporting Needed to Assess DOE’s Ability to Achieve the Goals of the Accelerated Cleanup Program. GAO-05-764. Washington, D.C.: July 29, 2005.

Department of Energy: Further Actions Are Needed to Strengthen Contract Management for Major Projects. GAO-05-123. Washington, D.C.: March 18, 2005.

Nuclear Waste: Absence of Key Management Reforms on Hanford’s Cleanup Project Adds to Challenges of Achieving Cost and Schedule Goals. GAO-04-611. Washington, D.C.: June 9, 2004.