oversight

Major Management Challenges and Program Risks: Department of Energy

Published by the Government Accountability Office on 2003-01-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

               United States General Accounting Office

GAO            Performance and Accountability Series




January 2003
               Major Management
               Challenges and
               Program Risks
               Department of Energy




GAO-03-100
               a
A Glance at the Agency Covered in This Report
The Department of Energy is a multibillion-dollar enterprise with multiple, diverse
missions, including:
●       fostering secure and reliable energy systems that are environmentally and
        economically sustainable,
●       providing stewardship for the nation’s nuclear weapons and nuclear material,
●       cleaning up the environment to eliminate the legacy of early nuclear weapons
        development activities, and
●       supporting U.S. leadership in energy-related science and technology.
To carry out these missions, the department has more than 50 major facilities in 35
states, including national laboratories, nuclear weapons production facilities, and
facilities undergoing environmental cleanup.


The Department of Energy’s Budgetary and Staff Resources


Budgetary Resources a, b                                               Staff Resources b
Dollars in billions                                                    FTEs in thousands

40                                                                     20
                                                  32                                                                  17
                                                                             16        16        16       16
                                      31
30                           27                                        15
                   26
           25

20                                                                     10


10                                                                      5


    0                                                                   0
         1998     1999     2000      2001         2002                      1998      1999      2000     2001         2002
         Fiscal year                                                        Fiscal year
Source: Budget of the United States Government.

a Budgetary resources include new budget authority (BA) and unobligated balances of previous BA.

b Budget and staff resources are actuals for FY 1998-2001. FY 2002 are estimates from the FY 2003 budget, which
    are the latest publicly available figures on a consistent basis as of January 2003. Actuals for FY 2002 will be
    contained in the President’s FY 2004 budget to be released in February 2003.




This Series
This report is part of a special GAO series, first issued in 1999 and updated in
2001, entitled the Performance and Accountability Series: Major Management
Challenges and Program Risks. The 2003 Performance and Accountability Series
contains separate reports covering each cabinet department, most major
independent agencies, and the U.S. Postal Service. The series also includes a
governmentwide perspective on transforming the way the government does
business in order to meet 21st century challenges and address long-term fiscal
needs. The companion 2003 High-Risk Series: An Update identifies areas at high risk
due to either their greater vulnerabilities to waste, fraud, abuse, and
mismanagement or major challenges associated with their economy, efficiency, or
effectiveness. A list of all of the reports in this series is included at the end of
this report.
                                                    January 2003


                                                    PERFORMANCE AND ACCOUNTABILITY SERIES

                                                    Department of Energy
Highlights of GAO-03-100, a report to
Congress included as part of GAO’s
Performance and Accountability Series




In its 2001 performance and                         DOE has taken steps to address the specific performance and management
accountability report on the U.S.                   challenges that we previously identified. However, each of these challenges
Department of Energy (DOE), GAO                     requires more work and vigilance to be overcome. In addition, the agency
identified important issues facing                  must face emerging challenges to meet the nation’s energy needs and
the department as it works to carry                 upgrade DOE’s deteriorating infrastructure.
out its multiple, complex, and
highly diverse missions. The
information GAO presents in this                    •   Address security threats and problems. DOE has upgraded its
report is intended to help to sustain                   physical, cyber and document security. However, the terrorist attacks of
congressional attention on these                        September 11, 2001, changed the threat that DOE had planned for and
challenges and a departmental                           will likely require new security measures and additional resources.
focus on continuing to make
progress in addressing these                        •   Improve management of the nation’s nuclear weapons stockpile.
challenges and ultimately                               NNSA, an agency within DOE, continues to develop its new planning,
overcoming them. The report                             programming, and budgeting system and redesign its organization.
should help improve government                          However, both activities are far from complete and will need continued
for the benefit of the American
                                                        executive leadership to ensure that these major changes are effectively
public. This report is part of a
special series of governmentwide                        implemented.
and agency-specific issues.
                                                    •   Resolve problems in contract management that place DOE at high
                                                        risk for fraud, waste, and abuse. DOE has made progress in
                                                        implementing contract reforms by using alternative contract types,
GAO believes that DOE should:                           competing more contracts, and using performance-based requirements.
                                                        However, it is unclear whether these reforms have improved contractor
•    Continue its focus on security                     performance. To better ensure the effectiveness of its initiatives, DOE
     upgrades needed for meeting                        must establish clear goals, results-oriented outcome measures, and
     new terrorist threats.                             performance data.
•    Ensure that the National
     Nuclear Security Agency
     (NNSA) continues progress
                                                    •   Improve management for cleanup of DOE radioactive and
     with its major operational and                     hazardous wastes. DOE’s environmental management program has
     organizational reforms.                            begun initiatives to improve contract management, streamline business
•    Establish results-oriented                         practices, and increase the technical expertise of DOE staff. However,
     performance data to determine                      continued management leadership is needed to ensure that these
     if contractor performance has                      initiatives are implemented in a safe manner to accomplish program
     improved.                                          goals of accelerating risk reduction and reducing overall cleanup costs.
•    Complete initiatives to
     accelerate cleanup and reduce                  •   Enhance DOE leadership in meeting the nation’s energy needs.
     costs.                                             Our nation’s energy supply system is under stress and is a potential
•    Enhance efforts to ensure a
                                                        terrorist target. Enhanced DOE leadership is needed to research new
     stable, reliable energy supply.
•    Manage infrastructure upgrade                      energy technologies, help develop a competitive electricity generation
     projects effectively.                              system, and reduce the vulnerability of the U.S. economy to supply
                                                        disruptions of petroleum.
www.gao.gov/cgi-bin/getrpt?GAO-03-100.
                                                    •   Revitalize DOE’s infrastructure. DOE has a new program to spend
To view the full report, click on the link above.
For more information, contact Robert A.                 billions of dollars to upgrade its production facilities, research and
Robinson, at 202-512-3841, or                           development laboratories, and other infrastructure. DOE needs to
robinsonr@gao.gov.                                      ensure that these major projects are managed effectively and efficiently.
Contents



Transmittal Letter                                                                                                1


Major Performance                                                                                                  2

and Accountability
Challenges

GAO Contacts                                                                                                      28


Related GAO Products                                                                                              29


Performance and                                                                                                   34
Accountability and
High-Risk Series




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                       Page i                                       GAO-03-100 Department of Energy Challenges
A
United States General Accounting Office
Washington, D.C. 20548



           January 2003                                                                                             T
                                                                                                                    ransmL
                                                                                                                         ta
                                                                                                                          ileter




           The President of the Senate
           The Speaker of the House of Representatives

           This report addresses the major management challenges facing the U.S. Department of Energy (DOE)
           as it works to carry out its multiple and highly diverse missions. These missions include maintaining
           nuclear weapons, fostering a reliable energy supply, cleaning up environmental contamination from
           prior weapons activities, and promoting U.S. leadership in science. It is part of a special series
           entitled the Performance and Accountability Series: Major Management Challenges and Program
           Risks, which GAO has issued biennially since January 1999.

           This report discusses the actions that DOE has taken or are under way to address the challenges GAO
           reported in its series 2 years ago, in January 2001, and major events that have occurred that
           significantly influence the environment in which the department carries out its mission. Also, GAO
           summarizes the challenges that remain and new ones that have emerged.

           This analysis should help the new Congress and the administration carry out their responsibilities and
           improve government for the benefit of the American people. For additional information about this
           report, please contact Robert A. Robinson, Managing Director, Natural Resources and Environment,
           at (202) 512-3841 or at robinsonr@gao.gov.




           David M. Walker
           Comptroller General
           of the United States




                                     Page 1                                GAO-03-100 Department of Energy Challenges
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              The Department of Energy’s (DOE) diverse missions of maintaining the
              nation’s nuclear weapons stockpile, fostering a reliable and sustainable
              energy supply for the nation, cleaning up contamination from prior
              weapons activities, and promoting leadership in science are not only
              technically difficult and complex but also, in many cases, politically
              sensitive. In our 2001 report on management challenges and program risks
              we identified six areas, or challenges, that warranted the attention of DOE’s
              management. These issues were related to addressing security concerns,
              maintaining the nuclear weapons stockpile, improving contract
              management, cleaning up radioactive and hazardous wastes, achieving
              nonproliferation goals, and improving financial management. In that report
              we pointed out that many of those challenges are long-standing and that
              sustained management attention will be needed to correct the underlying
              weaknesses and implement needed improvements. We also pointed out
              that DOE has undertaken corrective action in all these areas, but because
              of the nature and difficulty of the challenges, achieving lasting
              improvements may take several years.

              Over the past 2 years, two events—the terrorist attacks of September 11,
              2001, and energy shortages in several western states—have further
              complicated DOE’s missions. DOE could be an appealing target for
              terrorist groups because of its role in maintaining the nation’s nuclear
              weapons stockpile and handling vast quantities of radioactive and
              hazardous materials. Heightened security will be needed at DOE facilities.
              DOE may also have to develop new security measures. Similarly, energy
              shortages have underscored the vulnerability of our energy supplies and
              raised questions about our almost exclusive reliance on petroleum in some
              sectors. A stable and reliable energy supply is critical for consumers, the
              U.S. economy, and our national security. DOE must address the
              ramifications of these events on its programs, in addition to addressing its
              ongoing management challenges and program risks.

              DOE continues to be an agency with multiple challenges. In this year’s
              report we identify six areas where DOE’s management attention is needed.
              Four of the areas are continued from 2001. These include addressing
              security concerns, managing the nuclear weapons stockpile, improving
              contract management, and cleaning up radioactive and hazardous wastes.
              For the most part these were continued because of the difficult nature of
              the challenge itself or because new issues arose within the challenge. In
              the case of contract management, for example, corrective action will take
              many years to be fully realized. In the case of DOE security, the September
              11 attacks raised new major security concerns for DOE to address. In



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                  addition, we are adding two new management challenges. One relates to
                  meeting the nation’s energy needs and reducing our dependence on foreign
                  oil. DOE can provide enhanced leadership in addressing this key national
                  issue. The other relates to revitalizing DOE’s infrastructure, which is in
                  poor condition or reaching the end of its design life. DOE’s performance in
                  addressing these challenges will significantly affect its ability to efficiently
                  and effectively carry out its missions. Two management challenges from
                  2001 were dropped. Financial management was dropped because, among
                  other things, DOE had no material internal control weaknesses and
                  received a clean opinion on its financial statements for fiscal year 2001.
                  Achieving nonproliferation goals was dropped because of improvement
                  DOE made to obtain better access to facilities and information in Russia,
                  verify the use of program funds, and better coordinate DOE’s
                  nonproliferation programs.



Performance and
Accountability
Challenges
                      Performance and
                      Accountability Challenges
                           Address security threats and problems

                           Improve management of the nation's nuclear weapons stockpile

                           Resolve problems in contract management that place DOE at high risk for
                           fraud, waste, and abuse

                           Improve management for cleanup of DOE radioactive and hazardous
                           wastes

                           Enhance DOE leadership in meeting the nation's energy needs

                           Revitalize DOE's infrastructure




                  Page 3                                       GAO-03-100 Department of Energy Challenges
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                       Challenges




Address Security       The terrorist attacks of September 11, 2001, brought into sharp focus the
                       necessity for all federal agencies to take threats to their facilities seriously.
Threats And Problems   For DOE and the National Nuclear Security Administration (NNSA), a
                       separately organized agency within DOE, the threats have taken on added
                       importance.1 DOE and NNSA facilities could be appealing targets to
                       terrorist groups because of, among other things, their role in maintaining
                       the nuclear weapons stockpile and handling vast quantities of radioactive
                       and hazardous materials. Addressing this threat will likely require
                       developing new security measures and committing significant additional
                       resources. DOE must address this new challenge while addressing existing
                       security problems that, in some instances, have plagued the department for
                       many years. Further, DOE must balance security issues and cooperative
                       scientific research with a variety of foreign countries.

                       As a result of the scope and magnitude of the September 11 attacks, DOE
                       and NNSA undertook a number of short-term efforts to improve security.
                       Immediately following the attacks, NNSA facilities instituted a heightened
                       state of alert in accordance with DOE orders. In conjunction with this
                       alert, security measures were enhanced to include additional barriers and
                       access controls, increased vehicle searches, and increased patrols of
                       perimeters and critical facilities. In addition, emergency operations
                       centers at DOE headquarters and the field were staffed. Threat
                       information on foreign intelligence activities was also distributed to field
                       personnel. These activities increased DOE’s security costs by many
                       millions of dollars.




                       1
                         NNSA’s primary responsibility is to maintain the safety and reliability of the nation’s
                       nuclear weapons stockpile through the Stockpile Stewardship Program.




                       Page 4                                          GAO-03-100 Department of Energy Challenges
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Figure 1: Adding Concrete Barriers That Secure an NNSA Storage Vault




Source: DOE.



DOE and NNSA also began several long-term activities to strengthen their
overall security structure and program. Each NNSA facility was evaluated
against various criteria including the possibility of nuclear detonation;
radiological dispersion; and loss of program capability, technical staff, and
life. Also, each site was asked to identify vulnerabilities and the projected
cost of correcting them. From this work, NNSA compiled a prioritized list
of needed security improvements. Work was also initiated to revise a key
DOE security document called the Design Basis Threat. The Design Basis
Threat describes the most credible and serious potential adversaries DOE
facilities are likely to face. Revisions to this document could have
significant consequences because it could change the security philosophy
at DOE and NNSA sites. Finally, DOE and NNSA reviewed the security and
assessed the vulnerability at each site, assessed nuclear materials
management practices, and reviewed personnel security and
transportation security. The results of these activities may, in the longer
term, fundamentally change security at DOE and NNSA sites.




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All of these efforts to respond to the September 11 attacks must be
coordinated with efforts to address previously identified security
weaknesses. Over the last several years, DOE began more than 70
initiatives to improve security. In a March 2002 report we pointed out that
many initiatives have been successfully implemented.2 These initiatives
have eliminated the backlog of security clearance investigations and
reinvestigations, strengthened controls over cyber security, and upgraded
the counterintelligence program. However, we also pointed out that
several initiatives are still in progress and some may take years to
implement fully. In addition, during the last couple of years, other security
problems or concerns have arisen.

In the March 2002 report we pointed out, among other things, that NNSA,
which was created in March 2000 in part to improve security, still did not
have a fully operational structure. The lines of authority from headquarters
through NNSA field offices to the contractors for security oversight had not
been clearly laid out. Also, there was still some confusion about the roles
and authorities of DOE and NNSA security offices. Some contractor and
NNSA field staff told us they had received differing guidance from DOE and
from NNSA security offices and were uncertain about which to follow. A
report by the Center for Strategic and International Studies,3 dated April
2002, found similar problems and recommended that DOE/NNSA clarify
lines of responsibility and authority for security. In particular, the study
wanted a more clearly defined chain of command. In December 2002,
NNSA announced its plans for implementing a new organizational
structure, which it expects to have in place in 2004.

In the information security area, we pointed out in an August 2001 report
that while DOE laboratories have taken steps to improve control over their
classified information, DOE could make further improvements.4 DOE’s
requirements for documenting when someone needs to know specific
classified information lack specificity, allowing laboratory managers wide


2
  U.S. General Accounting Office, Nuclear Security: Lessons to Be Learned from
Implementing NNSA’s Security Enhancements, GAO-02-358 (Washington, D.C.: Mar. 29,
2002).
3
 Center for Strategic and International Studies, Science and Security in the 21st Century: A
Report to the Secretary of Energy on the Department of Energy Laboratories (Washington,
D.C.: April 2002).
4
  U.S. General Accounting Office, Nuclear Security: DOE Needs to Improve Control Over
Classified Information, GAO-01-806 (Washington, D.C.: Aug. 24, 2001).




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discretion in interpretation and implementation. Some managers provided
long-term blanket approvals to hundreds of staff for all classified
information in a vault or computer system. We also found that recent
revisions to DOE’s Classified Matter Protection and Control Manual did not
include some security requirements that were in place prior to 1998. For
example, the revised manual did not require approving reproduction of top-
secret documents and maintaining an access list for each top-secret
document.

The cyber security area is another area where DOE has initiated upgrades,
but more improvements are warranted. The previously mentioned report
by the Center for Strategic and International Studies made a number of
recommendations to DOE to improve its cyber security. These included
placing a higher priority on the timely implementation of cyber security
solutions that are already developed and doing more to evaluate emerging
technologies that are being developed by other agencies and by the private
sector. DOE’s Inspector General pointed out in an August 2001 report5 that
while DOE had made improvements in its unclassified cyber security
program, the program did not adequately protect data and information
systems as required by the Government Information Security Reform Act.
It found problems in DOE’s contingency planning, computer incident
reporting, and training. According to the report, these weaknesses and
others increased the risk that critical systems could be compromised or
disabled by malicious or unauthorized users.




5
  U.S. Department of Energy, The Department’s Unclassified Cyber Security Program,
DOE/IG–0519 (Washington, D.C.: Aug. 30, 2001).




Page 7                                     GAO-03-100 Department of Energy Challenges
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                          Another area of particular concern to DOE is physical security, especially
                          since September 11. In our aforementioned March 2002 report we found
                          that there was some confusion over who in DOE was responsible for
                          accelerating upgrades to physical security. In a December 2001 report,6
                          DOE’s Inspector General pointed out that improvements are needed at
                          Lawrence Livermore National Laboratory for the site to comply with its
                          overall security plan, protect certain types of nuclear material, and provide
                          clearer guidance for site protective-force operations. Another DOE
                          Inspector General report,7 dated March 2002, found that because of
                          problems with DOE’s clearance and badging controls, an unauthorized
                          individual could gain access to department headquarters.

                          New initiatives are likely to result from ongoing security evaluations
                          initiated in response to the September 11 attacks. As a result, additional
                          improvements are likely. However, our past work has shown that DOE has
                          had difficulty making lasting security improvements, and security problems
                          have recurred. In our view, this difficulty is in part due to DOE’s culture,
                          because, in some instances, there has been a pattern of behavior where
                          security is a secondary priority. Changing this culture, which has
                          developed over decades, will require sustained management attention.
                          Such attention will be needed to ensure that security improvements are
                          effectively and consistently built into DOE’s culture as it evolves to meet
                          new management challenges.



Improve Management        NNSA spends more than $5.5 billion per year to maintain the safety and
                          reliability of the nation’s nuclear weapons stockpile through the Stockpile
of the Nation’s Nuclear   Stewardship Program.8 NNSA was created to correct long-standing and
Weapons Stockpile         widely recognized management problems at DOE. NNSA has made
                          progress in developing a planning, programming, and budgeting system and
                          in clarifying its organization. However, NNSA needs to do more to have the
                          effective and efficient management structure necessary for accomplishing
                          its mission.


                          6
                            U.S. Department of Energy, Lawrence Livermore National Laboratory Protective Force
                          and Special Response Team, DOE/IG–0534 (Washington, D.C.: December 2001).
                          7
                            U.S. Department of Energy, Personnel Security Clearances and Badge Access Controls At
                          Department Headquarters, DOE/IG–0548 (Washington, D.C.: Mar. 26, 2002).
                          8
                            NNSA is also responsible for preventing the proliferation of weapons of mass destruction
                          and designing, building, and maintaining naval nuclear propulsion systems.




                          Page 8                                       GAO-03-100 Department of Energy Challenges
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Numerous studies have identified problems with DOE’s planning,
programming, and budgeting, which NNSA inherited. The problems
include the lack of a unified planning and programming process, the
absence of integrated long-range program plans, and the failure to fully link
existing plans to budgets and management controls. Without a sound,
integrated planning, programming, and budgeting process, it has been
difficult for officials to ensure that decisions with resource implications are
weighed against one another completely and consistently. In our
December 2000 report on the management of the Stockpile Stewardship
Program, we recommended that NNSA take action to improve and
integrate its planning processes and budgetary data to provide information
needed to manage this highly complex program.9 Overall, DOE agreed with
these recommendations.

In response to our report and recommendations, NNSA’s Administrator
changed NNSA’s planning, programming, and budgeting process by
instituting a process similar to that used by the Department of Defense.
The Administrator originally set a goal of having fully established NNSA’s
version of the Department of Defense’s process—referred to by NNSA as
the Planning, Programming, Budgeting, and Evaluation process—by the
fiscal year 2003 budget cycle. Subsequently, this date was pushed back to
the fiscal year 2004 budget cycle because development was taking longer
than expected.

As we reported in December 2001 and again in February 2002, while NNSA
has made some progress in implementing some elements of the planning
phase of the Planning, Programming, Budgeting, and Evaluation process
for the fiscal year 2004 budget cycle, work on the other phases of the
process has gone much more slowly. For example, NNSA has not finalized
how the programming and evaluation phases of the process will work.
NNSA is also just beginning to develop the automated systems needed to
support its process. In addition, except for budgeting personnel, NNSA
does not have sufficient personnel with the skills to conduct the analytical
functions typically associated with the multiple phases of the Planning,
Programming, Budgeting, and Evaluation process.




9
  U.S. General Accounting Office, Nuclear Weapons: Improved Management Needed to
Implement Stockpile Stewardship Program Effectively, GAO-01-48 (Washington, D.C.: Dec.
14, 2000).




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NNSA may face additional hurdles as it implements its Planning,
Programming, Budgeting, and Evaluation process for the fiscal year 2004
budget cycle. Rather than function as the fully implemented system
envisioned by the Administrator for the fiscal year 2004 cycle, NNSA’s
Planning, Programming, Budgeting, and Evaluation process should be
considered a prototype that will likely have to be refined and developed in
future years. Furthermore, it is too soon to tell whether the proposed
process, when fully implemented, will effectively address widely
recognized problems in NNSA’ s existing planning, programming, and
budgeting practices and whether the process will include effective
evaluation procedures.

With respect to organization, the Congress established NNSA, in part, to
correct confused lines of authority and responsibility within the nuclear
weapons complex that had contributed to a wide variety of problems, such
as cost overruns and schedule slippages. In February 2002, after several
delays and almost 2 years after its creation, NNSA announced a new
organizational structure that represents a significant step toward
addressing important, long-standing organizational problems by removing
excess management layers, streamlining and clarifying the relationship
between NNSA’s headquarters offices and its field structure, and potentially
holding federal and contractor staff more accountable.

However, NNSA’s reorganization is far from complete. As we noted in our
February 2002 testimony on NNSA’s proposed plans, NNSA’s proposal did
not address several key, long-standing organizational problems. For
example, NNSA’s proposal did not address the fact that the nuclear
weapons science function and nuclear weapons production function are
managed separately, although their work must be closely coordinated to
achieve mission goals. As we noted in our aforementioned December 2000
report on the management of the Stockpile Stewardship Program, this split
adversely affects coordination within the nuclear weapons complex. More
recently, in December 2002, NNSA announced its plans for implementing
its new organizational structure. While NNSA’s plans further clarify how
NNSA will implement the structure it announced in February 2002,
numerous important issues, such as how NNSA will achieve the 20 percent
federal staff reduction it promises while maintaining effective federal
oversight, remain to be resolved before September 2004, when the
reorganization is to be fully implemented. As NNSA implements its new
organization, it is vital that its chains of command are enforced and that
federal and contractor staff are held accountable. Otherwise, NNSA’s
reorganization could simply be one more in a long line of missed



Page 10                                GAO-03-100 Department of Energy Challenges
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                       opportunities. Underpinning NNSA’s efforts to improve the management of
                       the Stockpile Stewardship Program is the need to address its human capital
                       challenges. Numerous studies have pointed out the need to deal
                       comprehensively with the challenge of recruiting and training the next
                       generation of technical and managerial staff before the end of this decade.
                       However, as we pointed out in our December 2001 report on NNSA’s
                       implementation efforts, NNSA still lacked a long-term strategic approach
                       that can ensure a well-managed workforce. While NNSA managers agreed
                       that a strategic approach was needed, no timetable for developing one
                       existed because NNSA managers were waiting for the outcome of NNSA’s
                       reorganization process.

                       Finally, because the United States is no longer designing and building
                       nuclear weapons, extending the life of each of the nine weapon types in the
                       current stockpile is a key component of the Stockpile Stewardship
                       Program. To fully understand the cost of these life extension projects, the
                       Conference Report on the Energy and Water Development Appropriation
                       Act for Fiscal Year 2002 (P.L. 107-66) directed NNSA to develop a series of
                       cost reports known as Nuclear Weapon Acquisition Reports. In our July
                       2002 report we reviewed the Nuclear Weapon Acquisition Reports and
                       found that while they represented a good beginning, additional
                       information, such as the cost of associated research and development, was
                       needed to make them a more effective project management tool for NNSA
                       and the Congress.10 We made recommendations, which NNSA agreed with
                       in part, to improve the quality and usefulness of the Nuclear Weapon
                       Acquisition Reports.



Resolve Problems in    DOE’s contract management represents a significant challenge to the
                       department. DOE is the largest civilian contracting agency in the federal
Contract Management    government. About 90 percent of its annual budget is spent on contracts.
That Place DOE at      DOE relies primarily on contractors to carry out its diverse missions and to
                       operate its facilities. Since 1990, we have designated DOE’s contract
High Risk for Fraud,   management, which we have broadly defined to include contract
Waste, and Abuse       administration and project management, as a high-risk area; we maintain
                       that designation in this year’s high-risk report. In our January 2001 report
                       on DOE’s major management challenges, we reported ongoing problems
                       with the department’s approach to selecting an appropriate contract type,

                       10
                        U.S. General Accounting Office, NNSA: Nuclear Weapon Reports Need to Be More
                       Detailed and Comprehensive, GAO-02-889R (Washington, D.C.: July 3, 2002).




                       Page 11                                   GAO-03-100 Department of Energy Challenges
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using competition to award contracts, incorporating performance-based
measures into contracts, and minimizing cost and schedule overruns on
major projects. Although DOE has made progress in addressing these
problems through contract reforms, it is a long-term effort, and many
challenges remain.

• With respect to selecting the appropriate contract type, we reported in
  2002 that DOE has encouraged the use of alternative contract types,
  such as fixed-price contracts, that are tailored to the required work and
  the financial and technical risks associated with that work.11 However,
  the department is still in the process of implementing a more systematic
  approach for determining the best contract type for a given situation.

• Regarding efforts to increase competition, DOE has increased the
  proportion of major site contracts awarded competitively to 56 percent
  as of 2001, up from 38 percent as of 1996. All but one of the 11 contracts
  that had not been competitively awarded as of 2001 were for managing
  research and development centers, including weapons laboratories, that
  are exempted by statute from mandatory competition. DOE has
  continued to noncompetitively extend most of these contracts,
  including some for contractors that have experienced performance
  problems, such as the University of California contract to manage and
  operate the weapons laboratories at Los Alamos and Livermore. It is
  unclear if DOE can successfully address the performance problems
  using contract mechanisms.




11
  U.S. General Accounting Office, Contract Reform: DOE Has Made Progress, but Actions
Needed to Ensure Initiatives Have Improved Results, GAO-02-798 (Washington, D.C.:
Sept. 13, 2002).




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• Regarding the use of performance-based measures in contracts, DOE
  has reported that all of its major site contracts now incorporate
  performance-based concepts to define requirements and measure
  results. In addition, DOE has increased the emphasis on performance-
  based contracting by increasing the percentage of available fee
  (available payment to the contractor) tied to objective performance
  measures. However, developing good performance measures has
  continued to be a challenge for the department. For example, a 2001
  DOE Office of Inspector General review of performance-based incentive
  measures at three sites concluded that the department did not use
  performance-based measures in a way that would consistently result in
  improved contractor performance.12 DOE acknowledges that it must
  make further progress in this area.

Despite this progress in implementing contract reforms, it is unclear
whether contractors’ performance has improved. Instead of measuring
outcome-oriented performance results, DOE has primarily gauged progress
by measuring its implementation of the contract reform initiatives and by
reviewing performance measures in individual contracts. Therefore,
objective performance information on overall results is scarce.

Nevertheless, there are indications that the performance of DOE’s
contractors may not have improved. For example, DOE continues to have
difficulty keeping some of its major projects on schedule and within
budget. In our September 2002 report, we found that in comparing cost and
schedule performance for ongoing major DOE projects there was no
significant improvement in performance for similar projects between 1996
and 2001. In both 1996 and 2001, more than half of the projects reviewed
had both schedule delays and cost increases. Furthermore, as shown in
table 1, the proportion of projects experiencing cost growth of more than
double the initial cost estimates or schedule delays of 5 years or longer
increased during the 6-year period.




12
 U.S. Department of Energy, Use of Performance-Based Incentives at Selected
Departmental Sites, DOE/IG-0510 (Washington, D.C.: July 9, 2001).




Page 13                                    GAO-03-100 Department of Energy Challenges
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Table 1: Comparison of Significant Cost Overruns and Schedule Delays for Ongoing
Projects in 2001 with Ongoing Projects in 1996
                                                    Number of projects
                                                                            1996                    2001
                                                                    a                        b
Number of projects reviewed                                      25                       16
Projects with a revised cost estimate more                         7       (28%)            6     (38%)
than double the initial cost estimate
Projects with schedule delays of 5 years or                        8       (32%)            6     (38%)
more
Source: DOE and GAO.
a
 We evaluated 34 projects in 1996 with estimated costs greater than $100 million. However, 9 of the
projects were environmental restoration projects, and DOE’s original and/or current cost estimates did
not estimate costs through project completion. In 1998, DOE divided these environmental restoration
projects into multiple projects at each site. Therefore, we excluded these projects from our current
analysis.
b
 There are 10 additional projects with total project costs greater than $200 million, but those projects
either have been recently started or have been suspended.


Recent cost and schedule overruns include the following:

• DOE’s original 1992 baseline for the Yucca Mountain Site
  Characterization Project, a high-level waste repository, estimated a total
  project cost of $6.3 billion and a completion date for submitting the
  license application of October 2001. According to the department’s
  latest estimate, the license application will not be submitted until
  December 2004, with an estimated cost of almost $8.4 billion. We
  reported in December 2001 that DOE had stopped using the baseline to
  manage the program in March 1997 and instead had been using revised
  estimates that had never been approved and incorporated into the
  official baseline for the project.13 Without developing a baseline cost
  and schedule estimate and using a formal procedure to approve cost and
  schedule changes, DOE cannot ensure that the project is being managed
  effectively.




13
 U.S. General Accounting Office, Nuclear Waste: Technical, Schedule, and Cost
Uncertainties of the Yucca Mountain Repository Project, GAO-02-191 (Washington, D.C.:
Dec. 21, 2001).




Page 14                                              GAO-03-100 Department of Energy Challenges
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• The Tritium Extraction Facility, which is being built at DOE’s Savannah
  River Site to produce a radioactive isotope crucial to the nation’s
  nuclear weapons program, was originally scheduled for completion by
  February 2006 at a cost of $401 million. DOE’s Office of Inspector
  General reported in June 2002 that the total project cost could increase
  to as much as $500 million, may not be completed until almost a year
  later than originally scheduled and may not contain all elements
  originally specified.14 The Inspector General found that inadequate
  project management controls resulted in the lack of a viable baseline for
  the project. The report added that, as a result, the department lacks
  assurance that the facility will be available when needed or that project
  funds are being expended efficiently. Delays in completing the project
  could adversely affect the overall performance of DOE’s Stockpile
  Stewardship Program.

• The National Ignition Facility will be a stadium-sized laser facility that
  may, for the first time, simulate in a laboratory the thermonuclear
  conditions created in nuclear explosions. Our August 2000 report noted
  that DOE estimates that the facility will cost almost $3.3 billion and will
  not be completed until 2008—more than $1 billion and 6 years later than
  originally estimated.15 Despite efforts by the department to make
  management improvements, when we revisited the National Ignition
  Facility project in June 2001, we found that DOE oversight problems
  persisted and that they continued to place the project at risk.




14
 U.S. Department of Energy, The Department of Energy’s Tritium Extraction Facility,
DOE/IG-0560 (Washington, D.C.: June 24, 2002).
15
  U.S. General Accounting Office, National Ignition Facility: Management and Oversight
Failures Caused Major Cost Overruns and Schedule Delays, GAO/RCED-00-271
(Washington, D.C.: Aug. 8, 2000).




Page 15                                    GAO-03-100 Department of Energy Challenges
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In an effort to improve cost and schedule performance on major projects,
DOE began an initiative in 1999 to implement recommendations in a
National Research Council review16 on improving project management. In
October 2000, DOE issued a new policy and guidance on managing and
controlling projects, and in 2001 it established a project tracking system
that required monthly status reporting on all projects with total costs over
$5 million. DOE has also, among other things, improved front-end planning
for projects, required baseline validation for every project with a cost over
$5 million, instituted an industry recognized management system for all
projects greater than $20 million, and developed a competency-based
career ladder for project managers. These are promising steps, which
could help DOE take corrective action on projects in a timely manner.
However, improvements may be difficult to achieve. For example, in its
November 2001 follow-up assessment, the National Research Council
found that change had been inordinately slow, and the Council found no
evidence that DOE’s project management practice and performance in the
field had actually improved.17

To better ensure the effectiveness of initiatives such as contract reform, we
recommended in our September 2002 report that DOE incorporate the best
management practices common in high-performing organizations. Such an
approach would help ensure that DOE sets clearly defined goals,
establishes results-oriented outcome measures, develops results-oriented
performance data to evaluate the effectiveness of its initiatives, and takes
corrective actions as needed. DOE has agreed to implement this
recommendation.

DOE’s ability to resolve problems with contract and project management
may also be affected by human capital concerns. In past reviews of major
DOE projects such as the National Ignition Facility and in our January 2001
report on DOE’s major management challenges, we have cited inadequate
oversight of contractors’ activities as a factor in poor performance on these
projects. Furthermore, DOE faces the same human capital challenges that
exist governmentwide—an aging workforce whose retirements over the
next decade will severely deplete the knowledge and skills required to
support DOE’s missions. DOE has efforts under way to address skill gaps

16
 National Research Council, Improving Project Management in the Department of Energy
(Washington, D.C.: June 1999).
17
 National Research Council, Progress in Improving Project Management at the
Department of Energy—2001 Assessment (Washington, D.C.: November 2001).




Page 16                                   GAO-03-100 Department of Energy Challenges
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                     Challenges




                     in its procurement and project management organizations and to develop
                     the necessary technical and managerial expertise for adequate oversight of
                     its contractors through training and certification programs.

                     Effective contract and project management are vital for DOE because the
                     department relies heavily on contractors to achieve its national security,
                     research, and environmental cleanup missions. Over the long term, DOE
                     may resolve all of the challenges in its contract management and become a
                     more effective department. Until then, DOE’s ongoing challenges in
                     contract management can increase costs and expose the government to
                     billions of dollars in financial risks.



Improve Management   DOE continues to face challenges in cleaning up the many DOE facilities
                     and sites that were contaminated with radioactive and hazardous wastes
for Cleanup of DOE   during more than 50 years of nuclear weapons research and production.18
Radioactive and      Although DOE has reported completing cleanups at 74 of its 114 sites, some
                     of the most complex and costly cleanup work remains to be done. For
Hazardous Wastes     example, DOE must develop and implement new technologies to retrieve
                     from aging storage tanks, process, and package millions of gallons of high-
                     level radioactive wastes for long-term storage or disposal. At one site alone
                     this is expected to cost over $50 billion.




                     18
                      Environmental cleanup includes addressing contaminated soil, groundwater, and surface
                     water, as well as treating and disposing of hazardous and radioactive wastes.




                     Page 17                                    GAO-03-100 Department of Energy Challenges
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Figure 2: Waste Storage Tank Under Construction at DOE’s Hanford Site, September
1947




Source: DOE.



DOE has estimated that the total cost of cleaning up its sites will exceed
$220 billion (an increase of over $70 billion in just 4 years) and take more
than 70 years to complete.19 However, only about one-third of the
environmental management budget is going toward actual cleanup
activities and risk-reduction work. The remainder is spent on maintenance,
fixed costs, and other activities required to support safety and security.




19
  The most recent estimate of $220 billion reflects the life-cycle costs of the cleanup
program through the year 2070. DOE’s Office of Environmental Management is responsible
for cleaning up radioactive and hazardous wastes at DOE sites.




Page 18                                    GAO-03-100 Department of Energy Challenges
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In February 2002, recognizing that since the program’s inception in 1989
more than $60 billion has been spent without a corresponding reduction in
actual risk, DOE’s Assistant Secretary for Environmental Management
reported the results of a “top to bottom review” of the environmental
management program and its management systems.20 The report
concluded that DOE’s financial liability under current cleanup plans would
continue to grow well beyond the estimated $220 billion if significant
changes to the program were not made. The report also stated that without
higher performance standards and breakthrough business processes, cost
growth and schedule delays will continue to obstruct cleanup, and the risk
to workers, the public, and the environment will not be reduced.

The report recommended a series of initiatives to address the problems
identified in the February 2002 review. These include developing an
accelerated, risk-based cleanup strategy; improving contract management
and establishing more meaningful performance measures for contractors;
improving project management; and streamlining business practices. In
addition, the report recommended implementing an effective human
capital strategy to increase the technical expertise of DOE staff and
improve accountability for results. Through these and other initiatives,
DOE hopes to rapidly reduce environmental risk to workers and the public,
shorten the overall cleanup time frame of 70 years by at least 30 years, and
reduce overall cleanup costs by tens of billions of dollars. DOE is in the
process of developing the specific steps to carry out these initiatives safely
and is now in the process of negotiating with its regulators at various sites
to determine the best way to implement the accelerated approach.

DOE’s initiatives following the February 2002 review are not DOE’s first
attempt to develop a risk-based approach to cleanup. In the past, the
Congress, GAO, and others have recommended that DOE implement such a
risk-based approach, and DOE has made several attempts to do so.
However, in our May 2002 report we noted that a 1999 study to evaluate
these efforts concluded that none of the attempts had been successful.21
Past problems included poor documentation of risks, inconsistent scoring


20
  U.S. Department of Energy, A Review of the Environmental Management Program
(Washington D.C.: Feb. 4, 2002).
21
 U.S. General Accounting Office, Waste Cleanup: Status and Implications of DOE’s
Compliance Agreement, GAO-02-567 (Washington, D.C.: May 30, 2002); Consortium for Risk
Evaluation with Stakeholder Participation, Peer Review of the U.S. Department of Energy’s
Use of Risk in Its Prioritization Process, (New Brunswick, N.J.: Dec. 15, 1999).




Page 19                                     GAO-03-100 Department of Energy Challenges
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of risks between sites, and DOE’s failure to integrate any of the risk-based
approaches into the decision-making process. We concluded that a major
challenge for DOE in successfully implementing its accelerated cleanup
initiative is to follow through on its plan to develop and implement a risk-
based method to prioritize various cleanup activities. DOE management
leadership and resolve are needed to overcome the barriers encountered in
past attempts at establishing a risk-based cleanup approach.

Some of the problems with the DOE’s environmental management program
that were highlighted in the February 2002 review have also been the
subject of GAO and DOE’s Inspector General reports during the past 2
years. For example, we reported in 2001 that to improve use of cleanup
resources, DOE would need to improve project baselines and integrate
activities among DOE sites. As we reported in January 2001, DOE has
made some progress in establishing project baselines, but has had
continuing difficulty integrating waste treatment and disposal activities
among its sites. For example, in our February 2001 report on the progress
of the closure of the Rocky Flats site, we stated that one of the significant
integration challenges was overcoming the limited number of
transportation casks available to ship huge quantities of radioactive waste.
Integrating waste treatment and disposal, as well as consolidating nuclear
materials, has taken on increased importance in the post September 11
environment. DOE plans to improve security by consolidating all special
nuclear materials in safeguarded facilities and accelerating disposal of
transuranic waste currently stored at numerous sites around the country.

Other examples of challenges the environmental management program
faces include managing complex cleanups, developing and deploying new
technologies, and developing meaningful performance measures. For
example, in 2001, we reported that the scheduled closure of the Rocky
Flats site by 2006 was unlikely because of technical concerns, equipment
limitations, uncertainty about contamination, and a variety of potential
safety issues. To improve the chance of achieving the target closure date
and cost, we recommended that DOE clarify the authority for reconciling
competing demands on resources and establish a process for reconciling




Page 20                                GAO-03-100 Department of Energy Challenges
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these competing demands in a timely manner. DOE agreed with and has
implemented this recommendation. In May 2001 and January 2002, DOE’s
Inspector General found that two Ohio sites, Miamisburg and Ashtabula,
were not on schedule to meet their established closure dates because the
cleanup was more difficult than originally anticipated, and DOE
understated both time and cost to complete it.22 In a 2002 report, DOE’s
Inspector General noted that performance measures for the cleanup
program focused more on discrete tasks or accomplishments, such as the
number of high-level waste canisters placed in storage, than on the overall
progress in site cleanup.23 As a result, DOE reported that the program was
generally successful in meeting its goals even though the cleanup program
had experienced substantial cost growth and schedule slippages. The
Inspector General concluded that the lack of adequate performance
measures deprived the department of a valuable tool that could have
helped identify problems resulting in cost growth and schedule slippages.
In response to this report, DOE’s Assistant Secretary for Environmental
Management pledged to require cleanup sites to identify the key
performance measures that will capture overall performance. These key
performance measures will be included in integrated project baselines that
will enable the sites to track cost and schedule progress.

The task of cleaning up DOE’s contaminated sites and facilities is a
daunting one that has a huge price tag and could take a substantial portion
of the 21st century. DOE is in the process of changing its business and
contracting processes, as well as rethinking its cleanup approach at many
of its sites. In addition, DOE is seeking options that will accelerate risk
reduction and reduce the overall cleanup cost. Congressional, regulator,
and local community buy-in to new approaches is essential for success.
While the environmental management program initiatives are innovative,
successful results are not guaranteed. Continued management leadership
and focus will be needed to ensure that these initiatives are implemented in
a safe and cost-effective manner that provides for the accelerated cleanup
of DOE sites.



22
 U.S. Department of Energy, Remediation and Closure of the Miamisburg Environmental
Management Project, DOE/IG-0501 (Washington, D.C.: May 2, 2001) and U.S. Department of
Energy, Remediation and Closure of the Ashtabula Environmental Management Project,
DOE/IG-0541 (Washington, D.C.: Jan. 15, 2002).
23
 U.S. Department of Energy, Environmental Management Performance Measures,
DOE/IG-0561 (Washington, D.C.: June 27, 2002).




Page 21                                    GAO-03-100 Department of Energy Challenges
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Enhance DOE             Providing leadership in addressing the nation’s energy needs represents a
                        major challenge for the department because a stable and reliable energy
Leadership in Meeting   supply is critical for consumers, the U.S. economy, and our national
the Nation’s Energy     security. Today, our nation’s energy supply system is under stress. Figure 3
                        shows that total U.S. energy consumption has grown about 180 percent in
Needs                   the last 50 years and is expected to increase another 32 percent between
                        2000 and 2020.



                        Figure 3: Total U.S. Energy Consumption 1950 to 2020
                        140 Quadrillion BTUs

                        120

                        100

                        80

                        60

                        40

                        20

                         0
                               50




                                               60




                                                                70




                                                                       80




                                                                                  90




                                                                                             00




                                                                                                        10




                                                                                                                   20
                             19




                                             19




                                                              19




                                                                     19




                                                                                19




                                                                                           20




                                                                                                      20




                                                                                                                 20
                                    Consumed
                                    Projected consumed
                        Source: Energy Information Administration.



                        In some energy markets—such as electricity, natural gas, home heating oil,
                        and gasoline—demand has periodically outstripped available and reliable
                        supply. For example, in several western states unmet electrical demand led
                        to price increases and rolling blackouts. Moreover, the security of oil
                        supplies to meet the nation’s ever increasing needs is at risk. More than 50
                        percent of U.S. petroleum is imported, much of it from the volatile Persian
                        Gulf region where conflicts underscore the ease with which supplies can be
                        disrupted. More recently, these traditional energy supply issues have been
                        compounded by another threat—the vulnerability of the nation’s domestic
                        energy infrastructure to terrorist attacks. The large-scale infrastructure for
                        oil, gas, and electricity systems makes them difficult and expensive to




                        Page 22                                             GAO-03-100 Department of Energy Challenges
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protect. This concern has resonated after September 11, adding another
dimension to the challenge of providing reliable energy supplies.

DOE is in a unique position to help ensure that the nation’s energy needs
are met. First, because DOE is the federal agency responsible for energy
policy its leadership and direction will influence other federal agencies and
state and local activities, as well as the energy industry. DOE’s role is
important because the U.S. government is the nation’s single largest energy
user. Second, DOE plays a vital role in linking federal government research
and development and other government efforts with the energy industry in
the United States. This link helps ensure that industry produces adequate
energy supplies that are reliable, safe, affordable, diverse, innovative, and
environmentally friendly. While DOE is in a unique position, it cannot solve
the problem alone. This is because DOE does not control the economics or
environmental policies that can affect the marketplace.

In the past, DOE has undertaken numerous efforts to address energy
supply problems for all sources of energy. The nation’s current sources of
energy to meet consumption in 2001 are shown in figure 4.



Figure 4: U.S. Energy Consumption by Source, Fiscal Year 2001
                                               Nuclear electric
                                               Renewables




                                               Coal




                                               Natural gas




                                               Petroleum
Source: Energy Information Administration.




Page 23                                      GAO-03-100 Department of Energy Challenges
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In the future, DOE intends to play a major role in fostering U.S. energy
supplies by, among other things, helping to develop a competitive
electricity generation system, reducing the vulnerability of the U.S.
economy to potential disruptions in petroleum supply (e.g., by fully
developing the Strategic Petroleum Reserve), researching clean coal and
other fossil and renewable energy technologies to transition away from
petroleum, and making sure that the energy infrastructure serves the needs
of the public. DOE budgeted about $2.3 billion in 2002 to address this
issue, and nearly one-third of all the department’s general performance
goals relate to “energy resources.”24 In testifying on DOE’s fiscal year 2003
budget, Secretary Abraham stated that after September 11 our nation’s
energy security is national security. Furthermore, he laid out new priorities
for the department—centered on an overarching mission of national
security—and proposed the largest budget in the department’s history.

Over the past several years, in briefings, testimonies, and reports, GAO has
addressed a number of issues related to the energy supply challenge. Much
of this work points out ways for DOE to better meet its goals and more
effectively focus its budgetary resources on developing technologies that
are competitive in the marketplace. For example, in testimony on the
department’s attempts to reduce the consumption of petroleum in the
transportation sector, we pointed out that DOE’s recent involvement in a
$1.2 billion multiyear partnership with the automotive industry would not
develop a cost-competitive vehicle that consumers would buy.25 In another
instance, while DOE’s research and development efforts were focused at
developing large-scale wind turbines to produce electricity, we found that
other companies elsewhere in the marketplace had already fielded similar
turbines.

DOE has a history of achieving technical progress in the energy area.
However, many times it does not study the energy marketplace to ensure
that the results of its efforts ultimately address the energy supply
challenge. Given the department’s large budgetary outlays for research and
development, the importance of a reliable energy supply to the quality of


24
  In general, the energy resources area promotes the development and deployment of
energy systems and practices that will provide current and future generations with energy
that is clean, reasonably priced, and reliable.
25
  U.S. General Accounting Office, Research and Development: Lessons Learned from
Previous Research Could Benefit Freedom Car Initiative, GAO-02-810T (Washington, D.C.:
June 6, 2002).




Page 24                                      GAO-03-100 Department of Energy Challenges
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                   life, and the complex and evolving marketplace in which DOE must work,
                   this challenge will require enhanced management attention and
                   monitoring.



Revitalize DOE’s   DOE faces a major challenge in making the right investments to ensure that
                   it has world-class research and development facilities for supporting its
Infrastructure     national security, science, environmental, and energy missions. The
                   department’s physical infrastructure includes more than 50 major facilities
                   in 35 states, encompassing thousands of structures. Many of these facilities
                   are in poor condition, and others are reaching the end of their design life.
                   For example, DOE’s national laboratories were built during World War II
                   and the early Cold War. Over 60 percent of the laboratory space is more
                   than 30 years old, and 35 percent is more than 40 years old. DOE has begun
                   to receive funding from the Congress to improve its infrastructure, and its
                   offices are developing plans for improvements. The cost of upgrading
                   DOE’s infrastructure will exceed several billion dollars. DOE’s challenge
                   will be to spend this money effectively and efficiently, in a way that is
                   consistent with its most important missions.

                   DOE’s infrastructure problems and their effect on operations are well
                   known. For example, DOE noted in its 2000 Strategic Plan that the poor
                   condition of its facilities adversely impacts the safety, cost, and continuity
                   of research activities and hurts laboratories’ ability to attract and retain
                   highly qualified scientists to work on important mission needs.26 DOE’s
                   Inspector General has also reported on the poor condition of the
                   department’s infrastructure, noting that conditions are deteriorating at an
                   “alarming pace.” Facilities in poor condition are costly to maintain and
                   difficult to keep in regulatory compliance. In a September 2000 report, the
                   Inspector General said that the deteriorating conditions are causing some
                   Nuclear Weapons Stockpile Stewardship milestones and goals to slip,
                   restoration costs to increase, and future nuclear weapons production work
                   to be at risk.27




                   26
                     U.S. Department of Energy, Strategic Plan, DOE/CR-0070 (Washington, D.C.: September
                   2000).
                   27
                     U.S. Department of Energy, Management of the Nuclear Weapons Production
                   Infrastructure, DOE/IG-0484 (Washington, D.C.: September 2000).




                   Page 25                                    GAO-03-100 Department of Energy Challenges
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Many factors contribute to DOE’s infrastructure deficiencies, including
deferred maintenance. For example, the Inspector General’s September
2000 report also noted that the department has deferred substantial
maintenance and upgrades on its nuclear weapons production facilities.
Table 2 shows the total amount of building maintenance that DOE has
deferred as of September 2002.



Table 2: Number of DOE Buildings and Estimated Deferred Maintenance as of
September 2002
                            Number of Average Age of      Deferred Maintenance
Program Office               Buildings       Buildings           (in thousands)
Environmental                          3,176                 29                  $411,145
Management
Fossil Energy                           430                  16                       479
National Nuclear Security              4,101                 33                   782,562
Administration
Nuclear Energy                          293                  30                     8,771
Power Administrations                   663                  28                       133
Science                                1,740                 32                   580,668
Other                                   304                  34                     9,758
     Total                          10,707                   31                $1,793,515
Source: DOE and GAO.


The Inspector General also pointed out that DOE had not implemented a
process to fully link workload, production capacity, and budget data to
nuclear weapons production facility requirements, placing at risk current
and future goals of the Stockpile Stewardship Program. Other factors
contributing to infrastructure deficiencies have been pointed out by DOE’s
Office of Science, which reports that its unfunded backlog of capital
investment projections and deferred maintenance are due to aging of the
laboratories, changing technology and mission activities, and insufficient
capital investment and maintenance spending in the past. For example, the
department allocates about 0.7 percent of replacement plant value for
maintenance of the science laboratories, as compared with 1.5 percent to 3
percent for industry and academia and as suggested in guidelines from the
National Research Council for federal facilities.28 The Office of Science’s


28
  U.S. Department of Energy, Infrastructure Frontier: A Quick Look Survey of the Office of
Science Laboratory Infrastructure (Washington, D.C.: April 2001).




Page 26                                        GAO-03-100 Department of Energy Challenges
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April 2001 report on laboratory infrastructure noted that inadequate
maintenance could lead to scientific mission failure, occupational health
and safety risks, lost productivity, and expensive emergency repairs.

DOE’s deteriorating infrastructure threatens mission accomplishment and
will require substantial funding to ameliorate. DOE’s Inspector General
reports that DOE and Department of Defense officials estimated that $5
billion to $8 billion over current budgeted amounts will need to be invested
over the next 10 years to offset the effects of delayed or neglected
infrastructure activities in the nuclear weapons complex.29 For science
laboratories, DOE estimates that over $300 million in deferred maintenance
has been cataloged.

DOE recognizes the critical problems caused by the crumbling
infrastructure and is making changes. The department has various
infrastructure improvement initiatives underway, has pledged to improve
internal processes for identifying needs and linking budgets to
infrastructure requirements, and has made infrastructure needs a special
management focus. For example, in fiscal year 2001, NNSA obtained new,
increased, and direct appropriations to initiate a Facilities and
Infrastructure Recapitalization Program to address an integrated, complex-
wide priority list of maintenance and infrastructure investment activities
above the current base operating levels supported by the much larger
Readiness and Technical Base and Facilities Program (which is nearly
25 percent of NNSA’s budget). Funding is anticipated to be $200 million to
$500 million a year for the next 10 years. DOE’s Office of Science obtained
$10 million in fiscal year 2002 for a new Facilities and Infrastructure
Program to eliminate and clean up excess space. However, the seriousness
of the infrastructure deficiencies, combined with competing needs from
existing and emerging missions such as homeland security and historical
weaknesses in project management, make implementing plans for
infrastructure revitalization a management challenge for the department.




29
  U.S. Department of Energy, Management of the Nuclear Weapons Production
Infrastructure, DOE/IG-0484 (Washington, D.C.: September 2000).




Page 27                                   GAO-03-100 Department of Energy Challenges
GAO Contacts




               Subject(s) covered in this report         Contact person
               Address New Security Threats and Old      (Ms.) Gary L. Jones, Director
               Security Concerns                         Natural Resources and Environment
                                                         (202) 512-3464
               Improve Management of Maintaining the     jonesgl1@gao.gov
               Nation’s Nuclear Weapons Stockpile

               Resolve Problems in Contract Management
               that Place DOE at High Risk for Fraud,
               Waste, and Abuse

               Improve Management for Cleanup of DOE
               Radioactive and Hazardous Wastes

               Revitalize DOE’s Infrastructure through
               Major Investments
               Establish DOE Leadership in Meeting the   Jim Wells, Director
               Nation’s Energy Needs                     Natural Resources and Environment
                                                         (202) 512-6877
                                                         wellsj@gao.gov




               Page 28                                   GAO-03-100 Department of Energy Challenges
Related GAO Products



Address Security Threats    Nuclear Security: Lessons to Be Learned from Implementing NNSA’s
and Problems                Security Enhancements. GAO-02-358. Washington D.C.: March 29, 2002.

                            Department of Energy: NNSA Restructuring and Progress in
                            Implementing Title 32. GAO-02-451T. Washington D.C.: February 26, 2002.

                            Nuclear Security: DOE Needs to Improve Control Over Classified
                            Information. GAO-01-806. Washington D.C.: August 24, 2001.

                            Department of Energy: Views on the Progress of the National Nuclear
                            Security Administration in Implementing Title 32. GAO-01-602T.
                            Washington D.C.: April 4, 2001.



Improve Management of the   NNSA: Nuclear Weapon Reports Need to Be More Detailed and
Nation’s Nuclear Weapons    Comprehensive. GAO-02-889R. Washington D.C.: July 3, 2002.
Stockpile
                            Department of Energy: NNSA Restructuring and Progress in
                            Implementing Title 32. GAO-02-451T. Washington D.C.: February 26, 2002.

                            NNSA Management: Progress in the Implementation of Title 32.
                            GAO-02-93R. Washington D.C.: December 12, 2001.

                            Nuclear Weapons: Status of Planning for Stockpile Life Extension.
                            GAO-02-146R. Washington D.C.: December 7, 2001.

                            Department of Energy: Follow-up Review of the National Ignition
                            Facility. GAO-01-677R. Washington D.C.: June 1, 2001.

                            Department of Energy: Views on the Progress of the National Nuclear
                            Security Administration in Implementing Title 32. GAO-01-602T.
                            Washington D.C.: April 4, 2001.

                            Nuclear Weapons: Improved Management Needed to Implement Stockpile
                            Stewardship Program Effectively. GAO-01-48. Washington D.C.: December
                            14, 2000.




                            Page 29                             GAO-03-100 Department of Energy Challenges
                             Related GAO Products




Resolve Problems in          Contract Reform: DOE Has Made Progress, but Actions Needed to Ensure
Contract Management That     Initiatives Have Improved Results. GAO-02-798. Washington D.C.:
                             September 13, 2002.
Place DOE at High Risk For
Fraud, Waste, and Abuse      Department of Energy: Contractor Litigation Costs. GAO-02-418R.
                             Washington D.C.: March 8, 2002.

                             Department of Energy: NNSA Restructuring and Progress in
                             Implementing Title 32. GAO-02-451T. Washington D.C.: February 26, 2002.

                             Nuclear Waste: Technical, Schedule, and Cost Uncertainties of the Yucca
                             Mountain Repository Project. GAO-02-191. Washington D.C.: December 21,
                             2001.

                             Department of Energy: Fundamental Reassessment Needed to Address
                             Major Mission, Structure, and Accountability Problems. GAO-02-51.
                             Washington D.C.: December 21, 2001.

                             NNSA Management: Progress in the Implementation of Title 32. GAO-02-
                             93R. Washington D.C.: December 12, 2001.

                             National Laboratories: Better Performance Reporting Could Aid
                             Oversight of Laboratory-Directed R&D Program. GAO-01-927. Washington
                             D.C.: September 28, 2001.

                             Department of Energy: Status of Achieving Key Outcomes and
                             Addressing Major Management Challenges. GAO-01-823. Washington D.C.:
                             June 29, 2001.

                             Department of Energy: Follow-Up Review of the National Ignition
                             Facility. GAO-01-677R. Washington D.C.: June 1, 2001.

                             Nuclear Waste: Agreement Among Agencies Responsible for the West
                             Valley Site Is Critically Needed. GAO-01-314. Washington D.C.: May 11,
                             2001.

                             Department of Energy: Views on the Progress of the National Nuclear
                             Security Administration in Implementing Title 32. GAO-01-602T.
                             Washington D.C.: April 4, 2001.




                             Page 30                             GAO-03-100 Department of Energy Challenges
                            Related GAO Products




                            Nuclear Cleanup: Progress Made at Rocky Flats, but Closure by 2006 Is
                            Unlikely, and Costs May Increase. GAO-01-284. Washington D.C.: February
                            28, 2001.

                            National Ignition Facility: Management and Oversight Failures Caused
                            Major Cost Overruns and Schedule Delays. GAO/RCED-00-271.
                            Washington, D.C.: August 8, 2000.



Improve Management for      Waste Cleanup: Implications of Compliance Agreements on DOE’s
Cleanup of DOE              Cleanup Program. GAO-02-852T. Washington D.C.: July 19, 2002.
Radioactive and Hazardous
                            Waste Cleanup: Status and Implications of DOE’s Compliance
Wastes                      Agreements. GAO-02-567. Washington D.C.: May 30, 2002.

                            Nuclear Waste: Uncertainties About the Yucca Mountain Repository
                            Project. GAO-02-765T. Washington D.C.: May 23, 2002.

                            Nuclear Waste: Uncertainties About the Yucca Mountain Repository
                            Project. GAO-02-539T. Washington D.C.: March 21, 2002.

                            Nuclear Waste: Technical, Schedule, and Cost Uncertainties of the Yucca
                            Mountain Repository Project. GAO-02-191. Washington D.C.: December 21,
                            2001.

                            Department of Energy: Fundamental Reassessment Needed to Address
                            Major Mission, Structure, and Accountability Problems. GAO-02-51.
                            Washington, D.C.: December 21, 2001.

                            Nuclear Cleanup: DOE Should Reevaluate Waste Disposal Options Before
                            Building New Facilities. GAO-01-441. Washington D.C.: May 25, 2001.

                            Nuclear Waste: Agreement Among Agencies Responsible for the West
                            Valley Site Is Critically Needed. GAO-01-314. Washington D.C.: May 11,
                            2001.

                            Nuclear Cleanup: Progress Made at Rocky Flats, but Closure by 2006 Is
                            Unlikely, and Costs May Increase. GAO-01-284. Washington D.C.: February
                            28, 2001.




                            Page 31                             GAO-03-100 Department of Energy Challenges
                              Related GAO Products




Enhance DOE Leadership in     Restructured Electricity Markets: California Market Design Enabled
Meeting the Nation’s Energy   Exercise of Market Power. GAO-02-828. Washington D.C.: June 21, 2002.
Needs                         Energy Markets: Concerted Actions Needed by FERC to Confront
                              Challenges That Impede Effective Oversight. GAO-02-656. Washington
                              D.C.: June 14, 2002.

                              Research and Development: Lessons Learned from Previous Research
                              Could Benefit Freedom Car Initiative. GAO-02-810T. Washington D.C.:
                              June 6, 2002.

                              Restructured Electricity Markets: Three States’ Experience in Adding
                              Generating Capacity. GAO-02-427. Washington D.C.: May 24, 2002.

                              California Electricity Market Options for 2001: Military Generation and
                              Private Backup Possibilities. GAO-01-865R. Washington D.C.: June 21,
                              2001.

                              Fossil Fuel R&D: Lessons Learned in the Clean Coal Technology
                              Program. GAO-01-854T. Washington D.C.: June 12, 2001.

                              Government Performance and Results Act: Information on Science Issues
                              in the Department of Energy’s Accountability Report for Fiscal Year 1999
                              and Performance Plans for Fiscal Year 2000 and 2001. GAO/RCED-00-
                              268R. Washington D.C.: August 25, 2000.

                              Observations on the Department of Energy’s Fiscal Year 1999
                              Accountability Report and Fiscal Year 2000/2001 Performance Plans.
                              GAO/RCED-00-209R. Washington D.C.: June 30, 2000.

                              Cooperative Research: Results of U.S.-Industry Partnership to Develop a
                              New Generation of Vehicles. GAO/RCED-00-81. Washington D.C.: March 30,
                              2000.

                              Energy Policy Act of 1992: Limited Progress in Acquiring Alternative
                              Fuel Vehicles and Reaching Fuel Goals. GAO/RCED-00-59. Washington
                              D.C.: February 11, 2000.




                              Page 32                             GAO-03-100 Department of Energy Challenges
                   Related GAO Products




Revitalize DOE’s   Department of Energy: Observations on Using External Agencies to
Infrastructure     Regulate Nuclear and Worker Safety in DOE’s Science Laboratories. GAO-
                   02-868R. Washington D.C.: June 23, 2002.

                   Department of Energy: Fundamental Reassessment Needed to Address
                   Major Mission, Structure, and Accountability Problems. GAO-02-51.
                   Washington D.C.: December 21, 2001.

                   Department of Energy: Views on the Progress of the National Nuclear
                   Security Administration in Implementing Title 32. GAO-01-602T.
                   Washington D.C.: April 1, 2001.

                   Nuclear Weapons: Improved Management Needed to Implement Stockpile
                   Stewardship Program Effectively. GAO-01-48. Washington D.C.: December
                   14, 2000.

                   Department of Energy: Uncertainties and Management Problems Have
                   Hindered Cleanup at Two Nuclear Waste Sites. GAO/T-RCED-00-248.
                   Washington D.C.: July 12, 2000.




                   Page 33                            GAO-03-100 Department of Energy Challenges
Performance and Accountability and High-
Risk Series

              Major Management Challenges and Program Risks: A Governmentwide
              Perspective. GAO-03-95.

              Major Management Challenges and Program Risks: Department of
              Agriculture. GAO-03-96.

              Major Management Challenges and Program Risks: Department of
              Commerce. GAO-03-97.

              Major Management Challenges and Program Risks: Department of
              Defense. GAO-03-98.

              Major Management Challenges and Program Risks: Department of
              Education. GAO-03-99.

              Major Management Challenges and Program Risks: Department of
              Energy. GAO-03-100.

              Major Management Challenges and Program Risks: Department of
              Health and Human Services. GAO-03-101.

              Major Management Challenges and Program Risks: Department of
              Homeland Security. GAO-03-102.

              Major Management Challenges and Program Risks: Department of
              Housing and Urban Development. GAO-03-103.

              Major Management Challenges and Program Risks: Department of the
              Interior. GAO-03-104.

              Major Management Challenges and Program Risks: Department of
              Justice. GAO-03-105.

              Major Management Challenges and Program Risks: Department of
              Labor. GAO-03-106.

              Major Management Challenges and Program Risks: Department of State.
              GAO-03-107.

              Major Management Challenges and Program Risks: Department of
              Transportation. GAO-03-108.




              Page 34                           GAO-03-100 Department of Energy Challenges
Performance and Accountability and High-
Risk Series




Major Management Challenges and Program Risks: Department of the
Treasury. GAO-03-109.

Major Management Challenges and Program Risks: Department of
Veterans Affairs. GAO-03-110.

Major Management Challenges and Program Risks: U.S. Agency for
International Development. GAO-03-111.

Major Management Challenges and Program Risks: Environmental
Protection Agency. GAO-03-112.

Major Management Challenges and Program Risks: Federal Emergency
Management Agency. GAO-03-113.

Major Management Challenges and Program Risks: National
Aeronautics and Space Administration. GAO-03-114.

Major Management Challenges and Program Risks: Office of Personnel
Management. GAO-03-115.

Major Management Challenges and Program Risks: Small Business
Administration. GAO-03-116.

Major Management Challenges and Program Risks: Social Security
Administration. GAO-03-117.

Major Management Challenges and Program Risks: U.S. Postal Service.
GAO-03-118.

High-Risk Series: An Update. GAO-03-119.

High-Risk Series: Strategic Human Capital Management. GAO-03-120.

High-Risk Series: Protecting Information Systems Supporting the
Federal Government and the Nation’s Critical Infrastructures. GAO-03-
121.

High-Risk Series: Federal Real Property. GAO-03-122.




Page 35                                    GAO-03-100 Department of Energy Challenges
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