This section describes DOE’s requirements and guidance for AOA; DOE and NNSA offices responsible for conducting AOAs for capital asset projects; and NNSA’s recent projects that have completed, or are nearing completion of, an AOA. DOE’s mandatory requirements and optional guidance for identifying, analyzing, and selecting alternatives when conducting AOAs also apply to NNSA. DOE’s requirements for the AOA process are outlined in Order 413.3B governing the Program and Project Management for the Acquisition of Capital Assets (hereafter referred to as Order 413.3B). This order includes requirements for the acquisition of capital assets, with the stated goal of delivering fully capable projects within the planned cost, schedule, and performance baseline. In addition to the order’s requirements, DOE has guidance for identifying, analyzing, and selecting alternatives (hereafter referred to as “guidance”) that is found throughout seven guides associated with the order. DOE states at the beginning of each of these guides that they include nonmandatory approaches for meeting requirements, that guides are not requirements documents, and that they are not to be construed as requirements in any audit for appraisal of compliance with the parent policy or order. DOE’s Order 413.3B establishes five critical decision processes of project development that each end with a major approval milestone—or “critical decision point”; these decision processes cover the life of a project. Under Order 413.3B, an AOA occurs during the span of the first two critical decision processes—the preconceptual design process (CD-0) and the conceptual design process (CD-1)—with the majority of the AOA being conducted during the conceptual design process and ending with CD-1 approval. Figure 1 illustrates when DOE conducts the analysis of alternatives as part of its project management process. DOE’s Order 413.3B and its associated guides include the AOA-related requirements and guidance listed below, among others. Appendix II includes a full description of DOE’s requirements and guidance for conducting an AOA. As part of the preconceptual design (CD-0) approval process, the mission need—which DOE defines in Order 413.3B as a credible gap between current capabilities and those required to meet the goals articulated in the strategic plan—and functional requirements—the general parameters that the selected alternative must have to address the mission need—must be identified. The mission need must be independent of a particular alternative, and the program office responsible for the capital asset project must explore a variety of alternatives. As part of the conceptual design (CD-1) approval process, reliable cost and schedule range estimates for the alternatives considered must be developed, and whatever figure or range is provided at the CD-0 and CD-1 stages must explicitly note relevant caveats concerning risks and uncertainties inherent in early estimates. In addition, a conceptual design report must be developed that includes, among other things, a clear and concise description of the alternatives analyzed, the basis for the selected alternative, how the selected alternative meets the mission need, the functional requirements that define the alternative and demonstrate that the alternative can be successful, and life-cycle cost assumptions. During the CD-0 and CD-1 approval process, several independent reviews must be conducted, depending on the estimated cost of the project, related to two aspects of the AOA process: validation of (1) the mission need statement and (2) the cost estimates. As a project moves toward approval of CD-2, if the top end of the approved CD-1 cost range for the selected alternative grows by more than 50 percent, the program office must reassess alternatives by conducting another AOA and obtaining another CD-1 approval. DOE’s guides suggest summarizing a planned approach to conduct an analysis of alternatives; considering at least three viable alternatives for analysis, including one that represents the status quo; developing cost estimates that are explicit ranges instead of point estimates; including life-cycle cost estimates of the alternatives being considered; quantifying the benefits of alternatives over their life cycle; adjusting life-cycle cost and benefit estimates for risk; considering various selection criteria for the alternatives; weighting the selection criteria for relative importance; and comparing alternatives using net present value.The guidance suggests that, at the end of the analysis, the AOA team present the recommended alternative based on the preceding analysis in an integrated form, summarizing why an alternative is preferred and supporting the recommendation of the preferred alternative with facts from the analysis. In addition, DOE’s guidance suggests that the program office review the alternative selection and cost range to assess whether the AOA process (1) evaluates a range of appropriate attributes for each alternative, including cost, risks, safety, technology and regulatory requirements, and (2) is reasonable and provides best value to the government. Order 413.3B also requires prior to CD-1 approval that DOE conduct a separate analysis of alternatives under the National Environmental Policy Act of 1969 (NEPA). Under NEPA, federal agencies must identify and assess the likely environmental effects of proposed projects, and reasonable alternatives, using an environmental assessment or, if the projects likely would significantly affect the quality of the human environment, a more detailed environmental impact statement. Recognizing the need for better integration between the AOA conducted under Order 413.3B and the AOA conducted under NEPA, in early 2012, DOE established a multidisciplinary team of NEPA-compliance and program- and project-management specialists, and in June 2012, the Secretary of Energy issued a memo highlighting the importance of integrating these two AOAs. DOE officials who were part of this team stated that DOE has not yet decided how to connect the NEPA process with the AOA process under Order 413.3B. Within DOE and NNSA, several groups are responsible for various aspects of conducting an AOA: DOE Office of Acquisition and Project Management (DOE APM). This office is responsible for, according to DOE APM officials, writing DOE’s project management Order 413.3B and its associated guides, including requirements and guidance for conducting an AOA, and for reviewing some DOE projects. NNSA Office of Acquisition and Project Management (NNSA APM). This office is responsible for managing construction of capital asset projects within approved cost and schedule estimates, and for conducting at least yearly reviews of the construction projects to evaluate technical, cost, scope, and other aspects of the projects. According to NNSA APM’s Concept of Operations, this office leads the development of the analysis of alternatives for NNSA projects. NNSA program offices. Program offices are responsible for the projects that fall within their portfolios. For projects, according to NNSA APM’s Concept of Operations, the program offices lead the development of the mission needs and functional requirements, support the analysis of alternatives, and lead the selection of the preferred alternative. NNSA Office of Cost Estimating and Program Evaluation. The National Defense Authorization Act for Fiscal Year 2014 mandated the permanent establishment of this office to provide an independent review of cost estimates and to advise the NNSA Administrator on AOA policies and procedures, among other responsibilities. NNSA officials stated that they expected this office to work with other NNSA offices to define its roles and responsibilities as they relate to conducting AOAs during fiscal year 2015. The following describes the three recent NNSA projects that we reviewed that had completed, or are nearing completion of an AOA. This project is intended to replace and upgrade existing facilities used for NNSA’s high explosive manufacturing support, surveillance, testing, and technology development program. NNSA began conducting the AOA in November 2011 and expects to complete the AOA process by obtaining CD-1 approval in December 2014. As of September 2014, NNSA estimated that the total project cost would range from $100 million to $155 million at an 85 percent confidence level. This project is intended to replace an existing facility at the Los Alamos National Laboratory to treat and dispose of two types of radioactive waste. According to this project’s mission need statement document, the existing facility was nearing its designed life span and had suffered numerous failures. NNSA completed an initial AOA in 2006, selecting the alternative to place the treatment capabilities for both types of waste in the same structure. NNSA estimated in 2006 that the total project cost would likely range between $82 million and $104 million. After significant cost increases were incurred during the preliminary design process of the project, NNSA completed a reassessment of alternatives in September 2013, which we examine in this report. NNSA indicated in this reassessment that the existing facility was beyond its designed life span. The selected alternative for this reassessment separates treatment capabilities into two separate structures, and NNSA estimated that the revised total project cost would likely range between $168 million and $220 million. This project is intended to replace existing facilities for enriched uranium capabilities that, according to this project’s mission need statement document, require intensive maintenance and are experiencing escalating operating costs. NNSA completed an initial AOA in 2007, selecting the alternative to construct a new building with full capability to process enriched uranium. NNSA estimated in 2007 that the total project cost would likely range between $1.4 billion and $3.5 billion. During the preliminary design phase, the estimated cost of the project increased significantly, and NNSA completed a reassessment of alternatives in June 2012. This second AOA, which we examine in this report, selected a new alternative to construct the same building, but included fewer capabilities, while deferring significant portions of the project’s original scope to be added in the facility at a later time. The approved estimated cost increased to a range of $4.2 billion to $6.5 billion. This independent cost estimate was requested under the National Defense Authorization Act of 2013. The $9.8 billion is a point estimate and not the full cost range.