To manage major construction projects, DOE project directors in EM and NNSA are required to follow specific DOE directives, policies, and guidance for contract and project management. Among these is DOE Order 413.3B, which provides direction for planning and executing projects. To oversee projects and approve critical decisions, DOE conducts its own reviews, often with the help of independent technical experts. For example, for large projects (i.e., projects with a total cost of greater than $100 million), DOE’s Office of Acquisition and Project Management is required to validate the accuracy and completeness of a project’s performance baseline as part of each important project step. NNSA’s largest ongoing construction project involves the disposition of surplus U.S. weapons-grade plutonium as part of the Plutonium Disposition Program. Under an agreement signed in 2000, the United States and Russia will each dispose of at least 34 metric tons of surplus weapons-grade plutonium by irradiating it as MOX fuel in nuclear reactors. A key part of the U.S. program includes the construction of two nuclear facilities at DOE’s Savannah River Site: a MOX facility that will produce MOX fuel for nuclear reactors and a Waste Solidification Building to dispose of the liquid waste from the MOX facility. A third nuclear facility had been planned for the Savannah River Site to disassemble nuclear weapon pits (i.e., the spherical central core of a nuclear weapon that is compressed with high explosives to create a nuclear explosion)—the Pit Disassembly and Conversion Facility—and to provide plutonium feedstock for fuel fabrication. NNSA canceled the facility in January 2012 and, instead, decided to meet its feedstock requirements through existing facilities at DOE’s Los Alamos National Laboratory and the Savannah River Site, including potentially the MOX facility. NNSA spent approximately $730 million on the design of this facility prior to its cancellation. A basic tenet of effective project management is the ability to complete projects on time and within budget. DOE has continued to experience management weaknesses in major projects (i.e., those costing $750 million or more). In response, since March 2009, DOE has undertaken a number of new reforms to improve its management of major projects, including those overseen by EM and NNSA. For example, DOE has updated program and project management policies and guidance in an effort to improve the reliability of project cost estimates, better assess project risks, and better ensure project reviews that are timely and useful and that identify problems early. Further, in November 2010, DOE took steps to enhance project management and oversight by requiring peer reviews and independent cost estimates for projects with values of more than $100 million. NNSA has also taken actions to improve the management of projects that it oversees. For example, in August 2012, the NNSA issued guidance calling for design work to be 90 percent complete before construction can begin to minimize design changes and associated cost increases and schedule delays. Our 2012 work examining DOE’s management of nonmajor projects— those costing less than $750 million—indicates that DOE’s reform efforts have helped in managing the department’s cost and schedule targets. In particular, in December 2012, we reported that EM and NNSA were making some progress in managing some of the 71 nonmajor projects that were completed or ongoing for fiscal years 2008 to 2012 and that had a total estimated cost of approximately $10.1 billion. For example, we identified some nonmajor projects that used sound project management practices, such as the application of effective acquisition strategies, to help ensure the successful completion of these projects. This was consistent with what we found in our October 2012 report on EM’s cleanup projects funded by the American Recovery and Reinvestment Act of 2009. Of the completed projects we examined, 92 percent met the performance standard of completing project work scope without exceeding the cost target by more than 10 percent, according to EM data. In recognition of these improvements in the management of nonmajor projects, we narrowed the focus of the designation of EM and NNSA on our 2013 high-risk list to major contracts and projects at EM and NNSA. DOE’s actions to improve project management are promising, but their impact on meeting cost and schedule targets is not yet clear. Because all ongoing major projects have been in construction for several years, neither EM nor NNSA has a major project that can demonstrate the impact of DOE’s recent reforms. As we have reported in the past few years, ongoing major projects continue to experience significant cost increases and schedule delays as shown in the following examples: In December 2012, we reported that the estimated cost to construct the Waste Treatment and Immobilization Plant in Hanford, Washington, had tripled to $12.3 billion since its inception in 2000 and that the scheduled completion date had slipped by nearly a decade to 2019. Moreover, we found that DOE’s incentives and management controls were inadequate for ensuring effective project management, and that DOE had in some instances prematurely rewarded the contractor for resolving technical issues and completing work. In March 2012, we reported that NNSA’s project to design and construct the Chemistry and Metallurgy Research Replacement Nuclear Facility—a new plutonium facility at NNSA’s Los Alamos National Laboratory—was expected to cost between $3.7 billion to $5.8 billion—nearly a six-fold increase from the initial estimate. In February 2012, NNSA deferred construction of the facility by at least an additional 5 years, bringing the total delay to between 8 and 12 years from NNSA’s initial plan. A number of major problems contributed to this increase, including infrastructure-related design changes. GAO, Modernizing the Nuclear Security Enterprise: New Plutonium Research Facility at Los Alamos May Not Meet All Mission Needs, GAO-12-337 (Washington, D.C.: Mar. 26, 2012). In November 2010, we reported that NNSA’s plans to construct a modern Uranium Processing Facility at its Y-12 National Security Complex in Oak Ridge, Tennessee, had experienced significant cost increases. More recently, in September 2011, NNSA estimated that the facility would cost from $4.2 billion to $6.5 billion to construct—a nearly seven-fold cost increase from the original estimate. In addition, NNSA has delayed the expected completion date by 11 years, to 2023. In the November 2010 report, as well as in a January 2010 report, we found a number of major problems that contributed to this increase, including preparation of a cost estimate in 2007 that did not meet all cost estimating best practices. Also, 6 of 10 technologies to be used in the facility were not sufficiently mature, which could lead to cost and schedule delays if the technologies do not perform as intended. In regard to nonmajor projects, while we reported in December 2012 on progress by EM and NNSA in managing nonmajor projects, we also found that of the 71 nonmajor projects that EM and NNSA completed or had under way from fiscal years 2008 to 2012, 23 projects did not meet or were not expected to meet one or more of their three performance targets for scope, cost, and completion date. We also noted that, for 27 projects, many had insufficiently documented performance targets for scope, cost, or completion date, which prevented us from determining whether they met their performance targets. As we noted in our February 2013 high-risk report, while we have shifted our focus to major contracts and projects, we will continue to monitor the performance of these nonmajor projects. In these reports and others, we have made recommendations calling on DOE to ensure that project management requirements are consistently followed, to improve oversight of contractors, and to strengthen accountability, among others. DOE has generally agreed with these recommendations and has taken action to address many of them. We will continue to monitor DOE’s project management and its implementation of their actions to resolve project management weaknesses. Our ongoing review of NNSA’s Plutonium Disposition Program, including examining recent problems with the ongoing construction of the MOX facility—a major project—and the Waste Solidification Building—a nonmajor project—has resulted in some preliminary observations that highlight the need for continued efforts by DOE to improve contract and project management. DOE is currently forecasting an increase in the total project cost for the MOX facility from $4.9 billion to $7.7 billion and a delay in the start of operations from October 2016 to November 2019. Specifically, DOE is evaluating a project baseline change proposal prepared by NNSA’s contractor for the MOX facility. The cost increase and schedule delay will not be known until DOE completes its review of the contractor’s proposal and DOE’s project oversight office completes an independent cost estimate. DOE currently plans to complete its review and approve a new project baseline by September 2013. With regard to the Waste Solidification Building, DOE approved in December 2012 a revised performance baseline to increase the cost from the initial estimate of $344.5 million to $414.1 million and a delay in the start of operations from September 2013 to August 2015. Our ongoing work is focused on several areas, including the following: Critical system components’ design adequacy. According to NNSA officials and the contractor for the MOX facility, one of the primary reasons for the proposed cost increase and schedule delay is due to inadequately designed critical system components, such as the gloveboxes used in the facility for handling plutonium and the infrastructure needed to support these gloveboxes. According to these officials, although the design of the facility is based on a similar facility in France, the cost of adapting the French design to the design needs of this project was not well understood when the project was approved for construction. The performance baseline for the MOX facility was also set several years before NNSA issued guidance in 2012 to set cost and schedule baselines only after design work is 90 percent complete.