oversight

Department of Energy: External Regulation Savings in Safety and Health Activities at DOE Science Laboratories

Published by the Government Accountability Office on 2003-05-14.

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

United States General Accounting Office
Washington, DC 20548




                                   May 14, 2003

                                   The Honorable David L. Hobson
                                   Chairman
                                   The Honorable Peter J. Visclosky
                                   Ranking Minority Member
                                   Subcommittee on Energy and Water Development
                                   Committee on Appropriations
                                   House of Representatives

                                   Subject:      Department of Energy: External Regulation Savings in
                                                 Safety and Health Activities at DOE Science Laboratories

                                   The Department of Energy (DOE) is unusual among federal agencies in
                                   that it regulates and inspects its own facilities to protect the safety and
                                   health of its workers and of the communities surrounding its vast complex
                                   of research laboratories. With few exceptions, all other federal facilities
                                   must comply with national standards set by the Nuclear Regulatory
                                   Commission (NRC) for nuclear safety and by the Occupational Safety and
                                   Health Administration (OSHA) for worker safety and health.

                                   DOE asserts that, for the most part, its safety and health standards meet or
                                   exceed those promulgated for facilities regulated by NRC and OSHA. At
                                   DOE’s 10 science laboratories, which are run by management and
                                   operating (M&O) contractors, the department and its contractors use a
                                   contract administration process to select standards appropriate to current
                                   worker hazards and public safety issues.1

                                   Both DOE and the M&O contractors are involved in safety and health
                                   activities.2 DOE’s field offices, most of which are located at the
                                   laboratories, provide continuous safety and health oversight of the M&O
                                   contractors. DOE headquarters offices provide policy guidance to the field
                                   offices and also conduct some oversight of the laboratories. Safety and



                                   1
                                    These science laboratories are also known as nonmilitary energy laboratories or non-
                                   defense science laboratories.
                                   2
                                     DOE and contractor safety and health personnel are involved in emergency preparedness,
                                   fire protection, industrial hygiene, industrial safety, occupational medical services, nuclear
                                   safety, radiation safety, transportation safety, and management of oversight and reporting
                                   on these safety and health activities.



                                   Page 1                                       GAO-03-633R External Regulation of DOE
health personnel working for the M&O contractors take actions to
comply with the safety and health standards and conduct their own
self-assessment activities. DOE’s field offices track contract compliance
through direct observations and through the review of safety and health
reports and other related information provided by the M&O contractors.

Over a decade ago, DOE began considering whether to end self-regulation
of its facilities to improve safety and public trust in the department, among
other reasons. However, after much study, the department concluded that
the costs of shifting to external regulation would exceed the potential
benefits of doing so. We have taken a position different from DOE. For
example, in a 2002 report, we observed that external regulatory agencies’
“greater independence, coupled with use of national nuclear and worker
safety standards and enforcement powers, would make them more
cost-effective regulators [than DOE].”3 In addition, any resource savings to
the department in shifting to external regulation could potentially be
redirected to other mission priorities.

The conference report accompanying the Energy and Water Development
Appropriations Act for fiscal year 2002 directed DOE to prepare an
implementation plan for shifting the department’s science laboratories to
external regulation.4 In July 2002, DOE presented a plan that was 1 month
late and lacked important information. A subsequent committee report
accompanying the 2003 appropriations bill criticized DOE for providing
the “grossly inadequate” plan.5 This report concluded that DOE “cannot be
relied upon to provide accurate and objective information in response to
Committee requests for information on this issue.” You therefore
requested us to determine (1) how much DOE spends on safety and health
activities at its science laboratories and (2) how much DOE might save
after shifting to external regulation of these facilities. To address these
objectives, we substantially relied on data collection instruments that we
sent to DOE and M&O contractor officials associated with the 10 science
laboratories. We briefed your offices on the results of our review on
March 28, 2003, using the enclosed slides. This is report summarizes the
results of that briefing.


3
 U.S. General Accounting Office, Department of Energy: Observations on Using External
Agencies to Regulate Nuclear and Worker Safety in DOE’s Science Laboratories, GAO-02-
868R (Washington, D.C.: June 26, 2002).
4
    H.R. Rep. No. 107-258, October 30, 2001, at 109-110.
5
    H.R. Rep. No. 107-681, September 24, 2002, at 133-134.




Page 2                                         GAO-03-633R External Regulation of DOE
          In FY 2002, DOE spent about $145 million on safety and health activities at
Summary   its 10 science laboratories, and we believe that this spending level has not
          varied much during the last 4 years. This expenditure represented about
          16 percent of all safety and health costs department wide. Virtually the
          entire expenditure went to cover the more than 1,400 federal and M&O
          contractor personnel involved in safety and health activities—about
          95 percent of whom worked for the M&O contractors. The reported safety
          and health costs do not include any maintenance costs, which are
          accounted for separately.

          A shift to external regulation of the science laboratories could decrease
          DOE’s annual safety and health costs by up to about $41 million, or
          increase these costs up to about $5 million depending on the level of
          continued department oversight of these activities. Any potential savings
          in DOE safety and health costs, however, would likely be applied to
          reduce other costs associated with external regulation and would,
          therefore, not produce immediate overall budgetary savings. Costs would
          be incurred to bring the laboratories into compliance with national safety
          and health standards and to supplement the staffs of the external agencies
          to take on regulatory and inspection responsibilities for the numerous
          facilities at each science laboratory. In addition, both DOE and the M&O
          contractors might transfer safety and health personnel to other functional
          areas in their respective organizations rather than eliminate these
          positions to reduce overall operating costs. Further reductions in safety
          and health costs might be possible through staff reductions at DOE
          headquarters offices. However, these offices contend that personnel
          reductions are unlikely because staff will still be needed to self-regulate
          other facilities, such as the defense laboratories, and to interact with the
          external regulators.

          Any reduction in DOE safety and health costs after shifting to external
          regulation would stem from DOE altering its approach to overseeing safety
          and health activities. If DOE continues with its current oversight approach
          after regulatory authority shifts to NRC and OSHA, safety and health costs
          could actually increase up to about $5 million annually. These additional
          costs would result from DOE increasing its current safety and health
          staffing levels to interact with the external regulatory agencies, and the
          M&O contractors increasing their safety and health staffing levels to
          respond to reporting requirements and information requests from both the
          external regulators and DOE. We found that the DOE safety and health
          oversight approach, which drives staffing levels, is substantially reflected
          in the number of contractually required safety and health reports and
          frequent ad hoc information requests of the M&O contractors. Eliminating


          Page 3                              GAO-03-633R External Regulation of DOE
             redundant information requests and oversight after shifting to external
             regulation could justify a reduction in or redirection of safety and health
             personnel that would lower safety and health costs.


             External regulation of the science laboratories would provide a number of
Background   benefits. In a 2001 report, we found that eliminating DOE self-regulation
             of safety and health activities and taking other actions would improve the
             accountability of the department.6 For a 2002 report, our examination
             of federal and foreign laboratories comparable to DOE’s science
             laboratories suggested that “external regulators can potentially oversee
             [the laboratories] more efficiently and at less cost than DOE’s internal
             staff.”7 In a subsequent testimony, we concluded “the issue is not should
             DOE shift to external regulation of its science laboratories, but how.”8

             Shifting to external regulation of the science laboratories will entail
             federal government costs to bring the laboratories into compliance with
             national standards and annual cost increases for the regulatory agencies.
             Any potential reduction in safety and health costs within DOE and its M&O
             contractors is expected to help offset these other costs. To ascertain the
             greatest of these anticipated costs, the conference report on continuing
             appropriations for FY 2003 directed NRC and OSHA to conduct
             compliance audits of the 10 science laboratories, with funding support
             from DOE, and to cooperate with the department in preparing cost
             estimates to bring the laboratories into compliance with external
             regulations.9 The final DOE report is due no later than April 30, 2004.

             According to DOE, the transition costs to external regulation could be
             high, depending on the flexibility of the regulators in applying their
             standards to the department’s unique facilities without compromising
             safety. We have previously reported, however, that DOE would likely
             incur many of these costs anyway if the department were to bring the



             6
              U.S. General Accounting Office, Department of Energy: Fundamental Reassessment
             Needed to Address Major Mission, Structure, and Accountability Problems, GAO-02-51
             (Washington, D.C.: December 21, 2001).
             7
                 GAO-02-868R.
             8
              Department of Energy, Observations on Externally Regulating Nuclear and Worker
             Safety in DOE’s Science Laboratories, GAO-02-974T (Washington, D.C.: July 25, 2002).
             9
                 H.R. Rep. No. 108-10, February 12, 2003, at 898-899.




             Page 4                                         GAO-03-633R External Regulation of DOE
                        laboratories into compliance with DOE’s own safety and health standards.
                        The annual costs after transition are primarily associated with increasing
                        NRC and OSHA staffs to assume regulatory responsibilities for the science
                        laboratories. In a DOE implementation plan for external regulation
                        submitted to the Congress in July 2002,10 these agencies anticipated they
                        would need an additional $6.9 million annually for this purpose.11


                        In FY 2002, DOE spent $145.3 million on safety and health activities
DOE Spends About        associated with its 10 science laboratories. DOE data indicate that this
$145 Million Annually   level of spending has not changed much in the previous 4 years.12 This
                        expenditure represented about 16 percent of total department spending on
on Safety and Health    safety and health activities in FY 2002, compared to the 35 percent spent at
Activities              National Nuclear Security Administration sites and the 45 percent spent
                        at DOE environmental management sites.13 The reported expenditure
                        does not include corrective maintenance for the repair of failed or
                        malfunctioning equipment.

                        Of the safety and health costs for the science laboratories, the portion
                        spent on DOE oversight was about $8.6 million. This $8.6 million covered
                        primarily the cost of the approximately 74 full-time equivalent (FTE)
                        employees involved in safety and health policy development and oversight
                        of the laboratories, most of whom (approximately 89 percent) were
                        located in field offices.

                        The M&O contractors, however, incurred the vast majority of the
                        $145.3 million in safety and health costs. The cost of their safety and
                        health activities in FY 2002 was $136.7 million. For the most part, this
                        expenditure supported the nearly 1,334 FTEs involved in these activities,
                        comprising 3 to 9 percent of the laboratories’ workforces. As reported to
                        us, expenditures on safety and health activities by the M&O contractors
                        represented about 3 percent of their total budgets.


                        10
                          Department of Energy, Implementation Plan for External Regulation of Non-Defense
                        Science Laboratories. (Washington, DC: July 1, 2002).
                        11
                         The regulatory agencies anticipate the need for an additional 24 full-time employees at
                        NRC and an additional 19 at OSHA.
                        12
                          Based on data obtained from DOE’s Functional Cost Report of 30 Major DOE Contractor
                        Sites, the variation in safety and health costs since 1998 has been less than a 5 percent.
                        13
                          The remaining small percentage of total safety and health costs went to miscellaneous
                        activities.




                        Page 5                                     GAO-03-633R External Regulation of DOE
                      Table 1 summarizes the safety and health FTE levels and costs for DOE
                      and the M&O contractors and compares these costs with overall budgets.

                      Table 1: Safety and Health FTEs and Costs in Fiscal Year 2002

                          Dollars in millions
                                                         Safety and                Safety and                         Overall              Percent of
                          Location                      health FTEs               health costs                        budget                  budget
                          DOE field
                          offices                                   65.3                       $7.5                    $137.5                          5.4
                          DOE
                          headquarters                                8.5                        1.1                      98.3                         1.1
                          M&O
                          contractors                           1,333.8                      136.7                   4,201.3                           3.3
                          Total                                 1,407.6                     $145.3                 $4,437.2a                           3.3
                      Source: Figures for safety and health FTEs and costs were derived from responses to data collection instruments sent to cognizant
                      managers in these organizations. The overall budget figure for the DOE headquarters offices is based on their program direction
                      funding in fiscal year 2002. The budget figures for the DOE field offices affiliated with the 10 science laboratories and their M&O
                      contractors came from responses to our survey.
                      a
                      Total does not add up because of rounding.




                      Up to about $41 million annually in DOE’s safety and health cost savings
Annual Safety and     might accrue after the department shifts to external regulation, depending
Health Savings of     on the level of continued departmental oversight of safety and health
                      activities. However, if DOE does not alter its oversight approach,
Up to $41 Million     especially through a reduction of contractual reporting requirements and
Possible, Depending   ad hoc information requests of the M&O contractors, shifting to external
                      regulation might require additional safety and health personnel, potentially
on Level of           increasing annual DOE safety and health costs by up to about $5 million.
DOE Oversight
                      Our data collection instruments included three scenarios that asked DOE
                      and M&O contractor safety and health managers how staffing levels might
                      change under various levels of DOE oversight after NRC and OSHA begin
                      regulating and inspecting the science laboratories. We developed a fourth
                      scenario to provide an independent assessment of potential safety and
                      health staff reductions for both DOE and its M&O contractors based on
                      the experiences of another federal agency and its science laboratory
                      which is already externally regulated. We selected the Jet Propulsion
                      Laboratory, owned by the National Aeronautics and Space Administration
                      (NASA), as a performance benchmark because DOE had already identified
                      it as a federally funded research and development center comparable to its
                      science laboratories. DOE has used the NASA interaction with the Jet
                      Propulsion Laboratory contractor to identify best management practices
                      for improving the overall efficiency and cost-effectiveness of its



                      Page 6                                                          GAO-03-633R External Regulation of DOE
    laboratories.14 The Jet Propulsion Laboratory concentrates its research on
    unmanned space operations, including solar system exploration, space
    and earth observing systems, robotic technology for space exploration,
    computational sciences for assimilation of large databases, and advanced
    instrumentation. The laboratory contractor holds all safety and health
    licenses with external regulators, and DOE considers this laboratory’s
    safety levels to be similar to that of its Lawrence Berkeley National
    Laboratory. In comparison to the Berkeley Lab and some other DOE
    science laboratories, however, the Jet Propulsion Laboratory has a small
    radioactive materials program, and it has no accelerator. On the other
    hand, the laboratory has about 30 percent more employees (about
    5,200 employees mostly at three sites in southern California) and over
    twice the operating budget (about $1.4 billion in fiscal year 2002)
    compared to the largest DOE science laboratory.

    The four scenarios of DOE oversight are:

•    Scenario 1: DOE holds all applicable licenses and permits with external
    regulators, eliminates the M&O contract requirements that duplicate those
    of the external regulatory agencies, but retains its current approach to
    contract performance oversight.
•    Scenario 2: The same as the first scenario, but the M&O contractor,
    instead of DOE, holds any licenses and permits issued by external
    regulatory agencies.
•    Scenario 3: The same as the second scenario, but DOE changes its
    approach to contract performance oversight, relying instead on best
    industry practices and norms for safety and health risk management.
•    Scenario 4: DOE adopts the safety and health management approach
    used by NASA at its Jet Propulsion Laboratory. This approach is
    essentially NASA’s application of scenario 3.

    Table 2 provides estimated changes in annual safety and health costs
    under the four scenarios for DOE oversight. The first scenario resulted in a
    projected increase in safety and health costs, while the other scenarios
    produced decreases in these costs through anticipated reductions in safety
    and health FTEs. Any reduction in annual DOE safety and health costs,
    however, might not produce overall budgetary savings, in part because the
    external agencies would need to supplement their staffs to regulate and
    inspect the science laboratories. In addition, there might not be immediate


    14
      Berkeley Lab. DOE Best Practices Pilot Study, LBNL/PUB-865 (Berkeley, CA:
    February 2002).




    Page 7                                   GAO-03-633R External Regulation of DOE
savings to DOE, given the transition costs to bring the laboratories into
compliance with national safety and health regulations, irrespective of
their present conditions relative to DOE’s own standards. Further, both
DOE and the M&O contractors might transfer safety and health personnel
to other functional areas in their respective organizations rather than
eliminate these positions to reduce overall operating costs. Nevertheless,
any savings in DOE safety and health personnel costs might be transferred
to NRC and OSHA to help defray their increased costs, and reducing the
safety and health personnel now required to meet the significant
information needs of DOE might allow the M&O contractors to shift some
of these resources to more science mission work or to needed
maintenance and infrastructure upgrades.

Table 2: Estimated Savings in Annual Safety and Health Costs

    Dollars in millions
    Location                             Scenario 1              Scenario 2               Scenario 3              Scenario 4
    DOE field offices                  ($1.1 to $1.2)                    $0.2            $0.2 to $0.8                   $5.9
    M&O contractors                       (2.9 to 4.0)             0.4 to 0.8              7.4 to 8.7                   35.2
                                                                            a                                              a
    Total                              ($4.0 to $5.2)           $0.6 to $0.9             $7.6 to $9.5                 $41.2
Source: Negative or positive savings estimates were derived from responses to data collection instruments sent to cognizant managers
in these organizations. DOE headquarters offices indicated no staffing changes for the first three scenarios and we did not estimate
them in the fourth scenario.

Note: Dollar values were derived by multiplying the number of FTEs (either projected safety and
health position increases in scenario 1, or position decreases in the other scenarios) by the average
cost of an FTE as reported for each location.
a
Totals do not add up because of rounding.


Projected changes in safety and health costs for the first three scenarios
were derived from responses to our survey of DOE field offices and M&O
contractors. Headquarters offices did not project any staffing changes
under the first three scenarios. For scenario 4, we calculated changes in
DOE’s field staff by applying NASA’s safety and health staffing approach
(i.e., reducing safety and health field FTEs to one per laboratory). In
calculating potential changes for M&O contractor staff, we determined
that the Jet Propulsion Laboratory’s safety and health staffing levels were
about 28 percent less than at DOE’s Lawrence Berkeley National
Laboratory, even after DOE had adjusted staffing figures downward to
account for differences in personnel functions at the two laboratories.15


15
  In the DOE Best Practices Pilot Study report, DOE adjusted the safety and health
staffing figure downward from 150 to 41 at the Berkeley Lab and from 50 to 40 at
Jet Propulsion Laboratory.




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For example, DOE excluded its own safety and health personnel involved
in radiation safety and environmental radiation monitoring, health
services, and fire protection because it was determined that these
functions were not performed by the safety and health personnel at the Jet
Propulsion Laboratory. We then applied the 28 percent reduction to each
of the 10 DOE science laboratories to estimate potential savings, although
the potential for this reduction would vary among the laboratories,
depending on the circumstances presented. We did not calculate any staff
changes for DOE headquarters.

Implementing scenario 4 could potentially provide the greatest savings to
offset the transition costs and the annual cost increases anticipated for
additional NRC and OSHA personnel under external regulation.
Implementing this scenario, however, would also require the most
dramatic changes in DOE’s oversight culture, particularly in contract
administration and the responsibilities placed on safety and health
personnel. Our analysis suggests that, to a large extent, the safety and
health staffing levels across DOE field offices and the M&O contractors
are driven by the need to monitor and respond to the numerous safety and
health contractual reporting requirements and ad hoc information
requests. Eliminating unnecessary information requests after shifting to
external regulation could justify a reduction or redirection of safety and
health personnel that would lower safety and health costs.

DOE has recognized the need to fundamentally change its contract
administration process to improve contractor efficiency and effectiveness
and to enhance accountability. In April 2002, DOE formulated principles to
guide the development of pending contracts with three science
laboratories.16 The management practices at NASA’s Jet Propulsion
Laboratory were used to support these principles. One of the principles
calls for reliance on national standards to establish contractor
requirements and performance criteria, while minimizing the use of DOE
orders and directives that place administrative and operational
requirements on the contractor. Applying this principle alone, in
conjunction with adopting external regulation, would help to move DOE
toward the potential safety and health savings projected in scenario 4.




16
 Memorandum for Heads of Departmental Elements, the Under Secretary of Energy,
Robert G. Card, Principles for Office of Science Laboratory Contracts, Department of
Energy: April 30, 2002.




Page 9                                    GAO-03-633R External Regulation of DOE
                  We provided a draft of this report to DOE for its review and comments.
Agency Comments   Written comments are presented and evaluated below and are reprinted in
                  enclosure II. In commenting on our report, the Deputy Secretary of Energy
                  expressed several concerns about our analysis and the need to shift to
                  external regulation. For example, DOE commented that because our cost
                  estimates were not independently verified, they are not “decision-quality
                  information.” Other comments pertained to our estimates of department
                  savings in safety and health costs after shifting to external regulation of
                  the science laboratories. For example, DOE questioned our calculation of
                  potential reductions in safety and health costs and the level of information
                  necessary to monitor these activities. Finally, DOE raised some concerns
                  about transition costs and other potential costs associated with shifting to
                  external regulation. While we agree that our assessment of safety and
                  health costs for the department was hindered by limitations in the
                  availability of budget quality data, our method of estimating these costs
                  was reasonable. Further, given the uncertainties about future roles,
                  responsibilities and interactions among DOE and its M&O contractor
                  safety and health personnel after shifting to external regulation, providing
                  a range of savings estimates based on a combination of survey responses
                  from the individuals responsible for these activities and our own
                  calculations, make us confident that our assessment is independent and
                  credible. Finally, while we were not asked to assess the transition costs
                  and other potential costs and benefits of shifting to external regulation in
                  this report, we have discussed these issues in previous reports. At this
                  point, with the analysis undertaken on this issue over the years, it seems to
                  us that philosophical opposition rather than data limitations is the main
                  stumbling block to the department’s shift to external regulation. Our
                  specific comments to each of the concerns raised by DOE are in
                  enclosure II.


                  To obtain information on the cost of safety and health activities and on the
Scope and         potential for reductions under different DOE oversight scenarios, we
Methodology       relied for the most part on data collection instruments that we sent to
                  DOE and M&O contractor officials associated with the 10 science
                  laboratories. We also visited NASA’s Jet Propulsion Laboratory, a federally
                  funded research and development center that we selected because it is
                  comparable to DOE’s science laboratories and because the department
                  has already used it as a performance benchmark. In addition, we obtained
                  safety and health cost data from centralized data systems to compare with
                  our survey data. We did not independently verify the accuracy of the self-
                  reported data, nor did we undertake an independent study of the current
                  and proposed safety and health staffing levels for DOE and its contractors,


                  Page 10                             GAO-03-633R External Regulation of DOE
or of the proposed additions to NRC and OSHA staffs. We did, however,
compare responses among the laboratories and follow up with
respondents when necessary. We also encouraged narrative explanations
of the responses. To obtain additional information, we spoke with DOE
headquarters and field office officials. We conducted our work between
August 2002 and March 2003 in accordance with generally accepted
government auditing standards.


As agreed with your offices, we will make copies of this report available to
others upon request. In addition, the report will be available at no charge
on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me
at (202) 512-3841 or Dan Feehan, Assistant Director, at (303) 572-7352.
Major contributors to this report include Joel Grossman, Thomas Laetz,
Mehrzad Nadji, Cynthia Norris and Michael Sagalow.




Robin Nazzaro
Director, Natural Resources
 and Environment

Enclosure




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                    Enclosure I: Briefing Slides
Enclosure I: Briefing Slides




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          Enclosure I: Briefing Slides




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          Enclosure I: Briefing Slides




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          Enclosure I: Briefing Slides




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          Enclosure I: Briefing Slides




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          Enclosure I: Briefing Slides




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          Enclosure I: Briefing Slides




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          Enclosure I: Briefing Slides




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                                      Enclosure II: Comments from
Enclosure II: Comments from the       the Department of Energy



Department of Energy

Note: GAO comments
appear at the end of this
appendix.




                            Page 35                                 GAO-03-633R External Regulation of DOE
          Enclosure II: Comments from
          the Department of Energy




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          Enclosure II: Comments from
          the Department of Energy




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          Enclosure II: Comments from
          the Department of Energy




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          Enclosure II: Comments from
          the Department of Energy




Page 39                                 GAO-03-633R External Regulation of DOE
               Enclosure II: Comments from the Department of Energy




               The following are GAO’s comments on the Department of Energy’s letter dated
               April 28, 2003. The number associated with each of our comments corresponds to the
               numbered DOE statement in this enclosure.



GAO Comments
               1. We agree that any reductions in safety and health costs under the first three
                  oversight scenarios would at best offset anticipated increases in staffing at NRC
                  and OSHA. However, we disagree that these estimates are questionable. Our
                  estimates were derived directly from survey responses provided to us by DOE and
                  M&O contactor safety and health managers who are in the best position to
                  provide these data. The fourth scenario, which did not rely on survey responses
                  conditioned by DOE’s oversight culture, yielded much higher potential reductions
                  in safety and health costs. These savings would go well beyond offsetting
                  increases in NRC and OSHA costs, but only if they are not shifted to other
                  functional areas of the department and its M&O contractors.

               2. We agree with the two propositions extracted by DOE from our report that are
                  behind the potential savings of up to $41 million calculated in scenario 4. We
                  believe that these propositions are reinforced by DOE’s current policy guidance
                  for developing new science laboratory contracts. This guidance underscores the
                  use of national standards to establish contractor requirements and performance
                  criteria, while minimizing the use of DOE orders and directives as mechanisms for
                  placing administrative and operational requirements on the contractors.

               3. We agree that our report did not include any specific examples of “unnecessary”
                  DOE reporting requirements. However, we disagree that there was no analysis to
                  support our claim that these requirements and ad hoc information requests drive
                  the apparent high levels of safety and health staffing. We compared the number of
                  information requests from NASA to its Jet Propulsion Laboratory with those from
                  DOE to its 10 science laboratories. The Jet Propulsion Laboratory had
                  significantly fewer information requests than the DOE laboratories because NASA
                  essentially relies on the information requested by external regulators, and their
                  oversight, as well as the Jet Propulsion Laboratory’s self-assessments for safety
                  assurances. If this laboratory’s total information demand equaled the information
                  requested of DOE’s M&O contractors, one would expect that the number of staff
                  necessary to respond to these requests would be similar. However, the Jet
                  Propulsion Laboratory and the NASA Management Office at this laboratory have
                  far fewer safety and health personnel as a proportion of their workforces than at a
                  comparable DOE science laboratory and its associated field offices.




               Page 40                                 GAO-03-633R External Regulation of DOE
Enclosure II: Comments from the Department of Energy




4. DOE’s concern that three entities (DOE, NRC, and OSHA) will each request
   information under external regulation gets at a root concern expressed by most of
   the M&O contractors that the department will not fundamentally alter its
   oversight approach even with the presence of external regulators. Scenario 4
   shows that the Jet Propulsion Laboratory is able to respond to the information
   requests of its external regulators and NASA overseers with 28 percent fewer
   safety and health personnel than a comparable DOE science laboratory, even after
   significantly reducing the number of pertinent DOE laboratory personnel (i.e.,
   from 150 to 41) to account for differences in the types of hazards overseen in the
   respective laboratories. And, as reported by DOE, the Jet Propulsion Laboratory
   does this while maintaining comparable levels of safety to its Lawrence Berkeley
   National Laboratory.

5. We agree that DOE can address to some extent the issue of “unnecessary”
   information requests under existing self-regulation. However, we disagree that
   shifting to external regulation is “far from the most plausible mechanism through
   which unnecessary information requests may be eliminated.” (See response to
   comment 6.)

6. We disagree that shifting to external regulation will make it harder rather than
   easier to eliminate unnecessary information requests. Shifting to external
   regulation should help clarify what DOE reporting requirements and other
   information requests are duplicative of the information needs of external
   regulators. Applying a NASA-type oversight approach will also help uncover those
   administrative mechanisms to ensure a safe and healthy work environment that
   are unnecessary given the presence of external regulators.

7. We pointed out in our report that the potential for a 28 percent reduction in safety
   and health personnel would vary among the laboratories, depending on the
   circumstances presented. That is, for some laboratories a higher percent
   reduction in M&O contractor safety and health personnel might be achieved, and
   for other laboratories a lower percent reduction would be possible. Applying this
   percentage to reduce safety and health costs across the 10 laboratories is actually
   more conservative than the 30 percent reduction in costs estimated by DOE’s
   major M&O contractors in one of our previous reports. We were told that this
   latter estimate is only achievable if DOE relinquishes its oversight to external
   regulators. It also takes into consideration the Oak Ridge National Laboratory,
   which would likely have the greatest regulatory presence of NRC under external
   regulation.

8. We agree that safety and health cost information is based primarily on responses
   to our data collection instruments. We relied on survey data because DOE does
   not have budget quality information on safety and health costs. We disagree with
   DOE that our cost information does not represent decision-quality information;
   given the steps we took to determine the reasonableness of the data, including


Page 41                                 GAO-03-633R External Regulation of DOE
Enclosure II: Comments from the Department of Energy




    making cost adjustments where necessary based on follow-up conversations with
    respondents.

9. We agree that it would be difficult to determine how much of the transition costs
   to bring the laboratories into compliance with NRC and OSHA standards could be
   attributable to upgrading these laboratories to meet DOE’s own standards. DOE
   stated that there was no basis for assuming that much of the transition costs
   would be needed to meet the department’s own standards and that any such
   determination could not be verified. DOE also contends that its safety and health
   standards meet or exceed those of NRC and OSHA, but that it achieves acceptable
   levels of safety by means other than those that would be imposed under external
   regulation. We acknowledge that the full cost of transitioning to external
   regulation cannot be ascertained until the completion of comprehensive
   compliance audits involving DOE, NRC, and OSHA for the 10 science laboratories.
   However, based on previously reported information, we believe that some of the
   transition costs will be associated with complying with DOE’s own regulations.
   DOE even stated in its Implementation Plan for External Regulation of the Non-
   Defense Science Laboratories that some of the transition costs would be
   necessary to cover the backlog of preventive facility maintenance that presumably
   are in noncompliance with its own standards.

10. A review of DOE’s Integrated Safety Management System was beyond the scope
    of our report. We note, however, that officials at the Jet Propulsion Laboratory
    told us that they also have an established integrated safety management system
    operating within the context of external regulation. We believe that the
    reasonable application of regulations to reflect activities and hazards associated
    with a particular work environment is appropriate and not automatically
    eliminated with external regulation, as seen at the Jet Propulsion Laboratory. We
    have also reported that NRC claims it would be flexible in applying its standards
    to DOE’s unique facilities without compromising safety, and OSHA has concluded
    that any deficiencies identified at the laboratories would be similar to levels found
    in the private sector and, therefore, manageable.

11. We agree that characterizing the laboratories under the stewardship of DOE’s
    Office of Science as military or nonmilitary does not fully capture the scope of
    research taking place at them. However, we provided the questioned footnote to
    clarify for some readers that the science laboratories have been referred to in
    other ways. For example, the current version of H.R. 6 – The Energy Policy Act of
    2003, uses the phrase “nonmilitary energy laboratories.” However, because DOE
    has itself referred to the science laboratories as “nondefense” science laboratories
    in its implementation plan for external regulation, we have further clarified the
    footnote by adding “nondefense science” laboratories.

12. We did not perform a cost benefit analysis of shifting to external regulation of the
    science laboratories in this report, and we still question the need to do so. As we


Page 42                                 GAO-03-633R External Regulation of DOE
           Enclosure II: Comments from the Department of Energy




               previously reported, in our view “DOE has sufficient information and has had
               ample time to move forward on external regulation.” At this point, it appears to us
               that philosophical opposition rather than data limitations is the principal
               impediment to a shift to external regulation. Besides, while some costs and
               potential beneficial savings are reasonably quantifiable, others are not. For
               example, attempting to quantify the cost of any potential decrease in our national
               security by shifting to external regulation would be as difficult as trying to
               quantify the benefits of increased public trust in DOE that might be gained by
               eliminating self-regulation of safety and health functions. As to national security
               concerns, we would add that we previously reported that officials at comparable
               foreign defense and nondefense laboratories, all of which accept the presence of
               external regulators, indicated that they do not share DOE’s concern that external
               regulation poses a threat to their national security. In addition, our present report
               identifies at least one oversight scenario that might yield significant savings in
               safety and health costs that could potentially help support additional research to
               enhance our national security.




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           Page 43                                 GAO-03-633R External Regulation of DOE
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