The Department of Energy (DOE) is one of the most complex, multifaceted departments within the federal government. Established in 1977 in response to the global energy crisis that disrupted U.S. and world markets and economies, DOE is an amalgam of various federal agencies that had energy and science responsibilities. The roots of the Department came from the Atomic Energy Commission that was established in 1947 to assume the responsibilities of the Manhattan Engineer District, which had developed the first atomic bombs. The Commission was responsible for developing and producing nuclear weapons; operating nuclear reactors, uranium enrichment plants and plutonium production plants; performing research and development on both military and civilian uses of nuclear energy; and promoting and funding nuclear and other sciences. DOE assumed these as well as other responsibilities, including energy technology research, development, and demonstration; fostering energy conservation and efficiency; managing federal petroleum reserves; and, more recently, cleaning up environmental contamination resulting from its past operations. To carry out these responsibilities, DOE continues a highly decentralized structure that began under the Atomic Energy Commission. This structure relies heavily on private contractors, either corporations or universities, to manage most of its operations and activities. DOE owns the facilities needed to conduct the work, but the private contractors manage and operate the facilities. DOE’s work force is composed primarily of contractors. As of mid-1996, DOE had about 12,500 federal employees and about 120,000 contract workers located at its headquarters and field facilities throughout the country. To support these facilities and workers, DOE receives substantial funding, which ranged from $19.0 billion in 1986 to $23.7 billion in 1990. For fiscal year 1996, DOE was authorized to spend $19.7 billion. More than most federal agencies, DOE’s activities involve projects that are usually long term and high cost. In many cases, the projects are first-of-a-kind and thus involve substantial risk. These projects generally involve substantial funding for construction, are conducted to address a specific mission need, and are often separate line items in DOE’s budget. For example: DOE’s science programs in high-energy physics and nuclear physics require the construction of accelerators, which are large machines that propel atomic particles near the speed of light. The collisions of these particles are studied to explore the properties of matter. These accelerators can range in cost from several hundred million dollars to several billion dollars, or more. For example, the Continuous Electron Beam Accelerator Facility in Virginia (recently renamed the Thomas Jefferson National Accelerator Facility), shown in figure 1.1, cost over $500 million. DOE’s nuclear weapons programs required the construction of nuclear reactors to produce the materials needed for nuclear weapons. Additionally, other large and specialized facilities are needed to process the materials and manufacture, assemble, and test nuclear weapons components. Any of these facilities can easily cost over a billion dollars. For example, just the design work and close-out costs for a nuclear reactor to produce tritium, a key component of nuclear weapons, were more than $1.2 billion. DOE’s environmental management programs require facilities and technologies to process nuclear waste into forms suitable for longer-term or permanent disposal. These programs also need technologies and equipment to remove nuclear and hazardous material contamination from existing facilities and sites. Some facilities at major DOE field sites will cost many billions of dollars. For example, the Defense Waste Processing Facility in South Carolina (to process high-level radioactive waste into a stable form for long-term storage), and the support facilities to prepare the waste for processing, shown in figure 1.2, cost over $4 billion. These large-scale projects account for a significant portion of DOE’s budget. Funds for many of the projects are requested by DOE as specific construction line items, and funding for such projects is identified in congressional committee reports. However, from a total budget standpoint, considerably more operating funds than construction funds are provided for DOE projects, and the operating funds provided for some projects cannot be as easily determined, particularly for older projects. Funds needed for conceptual design, management, start up, and other nonconstruction activities—which can be as much as 40 percent of a project’s total cost—are included as part of DOE’s operating funds. Furthermore, some projects are funded entirely with operating funds. For example, over $1 billion of the operating funds appropriated annually for DOE’s environmental restoration activities are used for large-scale clean-up projects. Office of Management and Budget (OMB) Circular A-109, dated April 5, 1976, recognized that certain projects and/or activities are crucial to an agency accomplishing its missions. The circular defined projects that are critical to fulfilling an agency mission, entail the allocation of relatively large amounts of resources, and warrant special management attention as major system acquisitions (MSA). The circular (1) required early communication with the Congress that relates MSAs to agency mission needs and goals, (2) focuses top-level management attention on the determination of these mission needs and goals, and (3) requires an integrated approach to budgeting, contracting, and managing these projects. However, the specific criteria and dollar thresholds for determining which activities will be considered MSAs were left to the discretion of the individual agencies. In response to the OMB circular, DOE initially defined MSAs as systems or projects that had a total project cost in excess of $250 million and were specifically identified as mission critical. In 1990, DOE changed the cost threshold to $100 million. During the period 1980 through 1996, DOE conducted 80 different MSAs. These projects addressed many different program areas and activities, including the Superconducting Super Collider; nuclear reactors; uranium enrichment processes and facilities; fossil fuel demonstration plants; nuclear waste disposal facilities; and environmental cleanup efforts. According to current cost estimates, DOE has spent or plans to spend over $65 billion on these 80 MSAs. Successfully completing MSAs on time and within estimated dollar targets has proven difficult. Over the past few years, we have issued a number of reports that have discussed overall acquisition issues and problems in other federal agencies, as well as problems with individual projects. In a December 1992 report, we discussed problems with the Department of Defense’s major weapons acquisitions resulting in substantial cost overruns, delays in completing and fielding these acquisitions, and performance problems. Similarly, in an August 1996 report, we discussed the Federal Aviation Administration’s problems in acquiring new air traffic control system equipment within cost, schedule, and performance parameters. Both reports identified fundamental problems that inhibit the successful completion of these agencies’ major acquisitions. For example, we reported that Federal Aviation Administration officials acted in ways that did not reflect a strong commitment to the agency’s acquisition mission. They performed little or no mission needs analysis, set unrealistic cost and schedule estimates, and started production on the systems before having completed their development. Furthermore, in July 1995, we reported on governmentwide federal information technology acquisitions that cost more than anticipated, did not meet schedules, and did not meet mission needs. All of these acquisitions have suffered from a lack of advance planning and ineffective management oversight that has led to cost overruns and schedule slippages. Currently, 11 federal agencies have problems with information management or systems development that are serious enough that they have been listed by GAO, OMB, and/or the General Services Administration as high-risk programs. We have also discussed problems with specific DOE MSAs in many reports over the years. These reports address MSAs that range from the multibillion dollar Yucca Mountain Site Characterization Project in Nevada (a proposed repository for high-level radioactive waste), shown in figure 1.3, to the approximately $140 million Central Receiver Solar Thermal Power Plant in California, shown in figure 1.4. We have also reported on generic MSA management problems facing DOE, such as the agency’s frequent failure to ensure that critical management control documents for MSAs are prepared before projects are allowed to proceed beyond the conceptual design phase. The Chairman, Senate Committee on Governmental Affairs, asked us to review DOE’s acquisition management program and the past problems that have occurred. As agreed with the Chairman’s office, this report (1) assesses DOE’s performance in completing its MSAs, (2) identifies key factors that hinder the timely, cost-effective completion of the acquisitions; and (3) determines what DOE is doing to improve its performance. To respond to the Chairman’s request, we interviewed and obtained documents from DOE officials responsible for the Department’s overall MSA program and from DOE officials responsible for managing specific MSAs. We also obtained documents from officials of the National Academy of Sciences and the Defense Nuclear Facilities Board, which had experience reviewing DOE’s management of its MSAs. We also surveyed our managers who had prior experience in auditing specific DOE MSAs and reviewed the reports and other documents resulting from those audits. (See “Related GAO Products.”) We obtained listings identifying 80 MSAs conducted during the period 1980 through 1996 from DOE’s Office of Project and Fixed Asset Management under the Deputy Associate Secretary for Field Management. DOE has not retained a comprehensive cost and schedule history of its MSAs. As a result, the data used in this report had to be reconstructed from budget submissions, internal documents, and from officials of DOE’s Office of Project and Fixed Asset Management. We did not verify the data obtained from DOE. However, we did examine the reasonableness of these data based on information in prior GAO reports and audits. For this report, we used, wherever possible, the MSA’s “Total Project Cost,” which includes construction and operating funds. Where these costs were not available, we used the “Total Estimated Cost,” which includes construction costs. We have footnoted the latter. (See app. I, II, and III.)