oversight

Recovery Act: Most DOE Cleanup Projects Are Complete, but Project Management Guidance Could Be Strengthened

Published by the Government Accountability Office on 2012-10-15.

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

               United States Government Accountability Office

GAO            Report to Congressional Committees




October 2012
               RECOVERY ACT

               Most DOE Cleanup
               Projects Are
               Complete, but Project
               Management
               Guidance Could Be
               Strengthened




GAO-13-23
                                             October 2012

                                             RECOVERY ACT
                                             Most DOE Cleanup Projects Are Complete, but
                                             Project Management Guidance Could Be
                                             Strengthened
Highlights of GAO-13-23, a report to
congressional committees




Why GAO Did This Study                       What GAO Found
The Recovery Act aimed to stimulate          From October 2009 through March 2012, the number of full-time equivalent
the economy and create jobs. DOE             (FTE) employees funded by the American Recovery and Reinvestment Act of
received $6 billion in Recovery Act          2009 (Recovery Act) and working on Department of Energy’s (DOE) Office of
funds that it is using to clean up 17        Environmental Management (EM) cleanup projects peaked at about 11,000 FTEs
sites contaminated by radioactive and        in the quarter ending September 2010, according to data on the federal
hazardous wastes from decades of             government’s Recovery Act website. By the second quarter of fiscal year 2012,
nuclear research and weapons                 as projects were completed, FTEs had decreased to about 1,400 FTEs; 12 of 17
production. The cleanup is primarily         sites reported no Recovery Act FTEs; and about $5.6 billion of a total $6 billion in
carried out by contractors. The
                                             Recovery Act funds had been spent.
National Defense Authorization Act for
Fiscal Year 2010 requires GAO to             According to EM data, as of April 30, 2012, 78 of the 112 Recovery Act-funded
periodically report on DOE’s Recovery        cleanup projects were complete, and 72 of the 78 projects met DOE’s
Act-funded EM cleanup projects. In           performance standard of completing project work scope without exceeding the
response to this mandate, GAO                cost target by more than 10 percent. According to EM officials, the completed
examined (1) the number of Recovery          Recovery Act projects have helped accelerate the cleanup at the sites. GAO,
Act-funded FTEs by quarter; (2) the          however, found several inconsistencies in how EM set and documented projects’
status and performance of cleanup            scope, cost, and schedule targets. Without clear scope, cost, or schedule targets
projects; and (3) project management         in performance baselines, it becomes difficult to assess project performance. For
issues, if any, that arose during project
                                             example, in some cases, EM set scope targets differently in different documents
implementation and any lessons
                                             and claimed project success even if key performance parameters were not
learned. In addition, the Recovery Act
requires GAO to comment and report           achieved. Current guidance on setting performance baselines is more
quarterly on estimates of jobs funded        comprehensive for capital asset projects, such as building or demolishing
and counted as measured by the               facilities or constructing remediation systems, than for projects known as
number of FTEs and to conduct                operation activity projects, such as operating a groundwater treatment plant. In
bimonthly reviews on the use of the          addition, capital asset projects costing under $10 million are classified as
act’s funds. GAO examined Recovery           operation activity projects.
Act FTEs, spending, project
                                             Some of EM’s long-standing project management problems occurred during its
performance data, and lessons learned
                                             implementation of several Recovery Act projects, primarily insufficient early
from Recovery Act projects; and
interviewed DOE and contractor
                                             planning before setting performance baselines. For example, a project to remove
officials.                                   wastes from a landfill at one site exceeded its $111 million cost target by $20
                                             million because, after beginning the project, officials determined that the site
What GAO Recommends                          would need to be excavated to a depth of almost double that planned. In
                                             addition, EM’s new initiative to reclassify projects as either capital asset or
GAO recommends, among other
                                             operation activity projects raised concerns about how projects were reclassified.
things, that DOE (1) clarify guidance
                                             EM does not have a clear policy that sets out under what conditions and how EM
on developing and documenting
project performance baselines and (2)        should break a capital asset project into smaller, discrete operation activity
issue a policy that sets out the criteria    projects. Project classification is important, however, because some
with greater specificity for reclassifying   requirements apply only to capital asset projects. EM’s guidance for projects
capital asset projects over $10 million      classified as operation activity projects under this initiative states that certain
into smaller operation activity projects     approval and reporting requirements will not be applied, and others will be
under $10 million. DOE agreed with           applied as appropriate. Some DOE and other officials expressed concern that
GAO’s recommendations.                       projects could be broken into smaller projects to avoid the requirements. For
                                             example, a $30 million project, partially funded with Recovery Act funds, was
                                             divided into 18 smaller projects, each below the $10 million threshold. The cost
                                             for one of these smaller projects eventually doubled—from $8 million to $16
View GAO-13-23. For more information,
contact Mark Gaffigan at (202) 512-3841 or   million—but was not reclassified as a capital asset project. EM has been
gaffiganm@gao.gov.                           gathering information on lessons learned from Recovery Act projects, some of
                                             which could be applied as corrective measures to other EM cleanup work.
                                                                                      United States Government Accountability Office
Contents


Letter                                                                                      1
               Background                                                                   4
               EM Recovery Act-Funded Jobs Peaked at about 11,000 FTE
                 Employees Late in Fiscal Year 2010                                       10
               EM Has Completed Most Projects, but Inconsistent Data Make
                 Assessing Project Performance Difficult                                  15
               Project Management Problems Occurred on EM Recovery Act
                 Projects, and EM Is Taking Steps to Identify Lessons Learned             24
               Conclusions                                                                34
               Recommendations for Executive Action                                       35
               Agency Comments and Our Evaluation                                         36

Appendix I     Objectives, Scope and Methodology                                          40



Appendix II    Administratively Completed Recovery Act Projects Available for
               GAO Analysis as of April 30, 2012                                          44



Appendix III   Comments from the Department of Energy                                     47



Appendix IV    GAO Contact and Staff Acknowledgments                                      51



Tables
               Table 1: EM FTEs Funded by the Recovery Act in the Fourth
                        Quarter of Fiscal Year 2010 and Second Quarter of Fiscal
                        Year 2012                                                         12
               Table 2: EM’s Recovery Act Funds and Spending through Second
                        Quarter of Fiscal Year 2012                                       14


Figures
               Figure 1: The Amount of Recovery Act Funds Provided for Cleanup
                        Projects at 17 Sites                                                5
               Figure 2: Views Before and After the Demolition of Building K-33,
                        East Tennessee Technology Park, Oak Ridge Reservation               7


               Page i                              GAO-13-23 DOE Recovery Act Cleanup Projects
Figure 3: Workers Packaging Transuranic Waste, Savannah River
         Site                                                                              7
Figure 4: FTEs Funded by the Recovery Act by Quarter, First
         Quarter Fiscal Year 2010 through Second Quarter Fiscal
         Year 2012                                                                        11
Figure 5: FTEs and Recovery Act Spending for EM Cleanup
         Projects, First Quarter of Fiscal Year 2010 through Second
         Quarter of Fiscal Year 2012                                                      13
Figure 6: Percentages that the Projects’ Final Costs Are Over or
         Under their Targets for 78 Administratively Completed
         Recovery Act Projects, as of April 2012                                          17




Abbreviations

DOE                        Department of Energy
EM                         Office of Environmental Management
FTE                        full-time equivalent
IPABS                      Integrated Planning, Accountability, and Budgeting
                           System
OMB                        Office of Management and Budget
Recovery Act               American Recovery and Reinvestment Act of 2009



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Page ii                                     GAO-13-23 DOE Recovery Act Cleanup Projects
United States Government Accountability Office
Washington, DC 20548




                                   October 15, 2012

                                   Congressional Committees

                                   Since the 1940s, the Department of Energy (DOE) and its predecessor
                                   agencies have operated a nationwide complex of facilities used to
                                   research, design, and manufacture nuclear weapons and related
                                   technologies. Organizationally, DOE supports a wide range of activities
                                   managed by mission-based offices. These include the Office of
                                   Environmental Management (EM), which leads the department’s often
                                   complex and challenging program to clean up nuclear, chemical, and
                                   other hazardous wastes. EM carries out its work at numerous DOE sites
                                   and facilities around the country, and like other offices in DOE, EM carries
                                   out its work primarily through contractors that manage the facilities and
                                   work under contract to DOE. DOE has estimated that the total cost to
                                   clean up these sites could exceed $300 billion and take several decades.

                                   In addition to its annual appropriations, EM received $6 billion under the
                                   American Recovery and Reinvestment Act of 2009 (Recovery Act). 1 The
                                   act is intended to promote economic recovery, make investments, and
                                   minimize or avert reductions in state and local government services.
                                   Enacted on February 17, 2009, the act directed that priority be given to
                                   projects that could be started quickly. The administration referred to such
                                   projects as “shovel-ready.” EM is using its $6 billion to expand and
                                   accelerate cleanup activities at 17 sites. EM set as one of its Recovery
                                   Act cleanup goals to reduce EM sites’ footprint of 931 total square miles
                                   by 40 percent (or 372 square miles) by the end of fiscal year 2011. EM
                                   defined this as remediating an area to meet all regulatory requirements.
                                   According to EM officials, EM met its footprint reduction goal in April
                                   2011, and had reduced its footprint by 70 percent by the end of April
                                   2012.

                                   The National Defense Authorization Act for Fiscal Year 2010 requires that
                                   GAO review and periodically report on EM’s efforts to carry out Recovery
                                   Act projects. As a result, we have been periodically providing—every 120
                                   days—information to EM’s authorizing and appropriating committees on



                                   1
                                    Pub. L. No. 111-5, 123 Stat. 115 (2009). EM also received about $6 billion to spend
                                   under its 2009 annual appropriation.




                                   Page 1                                      GAO-13-23 DOE Recovery Act Cleanup Projects
the progress of these projects. This report primarily serves as a periodic
update, as required by the mandate. In addition, the Recovery Act
requires us to comment and report quarterly on estimates of jobs funded
and counted as measured by the number of full-time equivalent (FTE)
employees that were reported by recipients of Recovery Act funds 2 and to
conduct bimonthly reviews of how the act’s funds are used. This is one of
a series of GAO reports that comment on recipient job estimates and
reports on our reviews of the use of funds made available under the
act. 3, 4

In response to these mandates, we examined (1) the number of FTEs
that EM funded quarterly with Recovery Act funds from October 2009
through March 2012; (2) the status of EM’s Recovery Act-funded cleanup
projects and the extent to which completed projects met performance
baselines (i.e., cost, schedule, and scope targets); and (3) project
management issues, if any, that arose during the implementation of EM’s
Recovery Act projects and any lessons EM has learned that it could apply
to other cleanup efforts.

To conduct our work, we reviewed pertinent provisions of the American
Recovery and Reinvestment Act of 2009; and Office of Management and
Budget (OMB) and DOE policies, procedures, and guidance on Recovery
Act implementation. To describe the number of FTEs that EM funded with
Recovery Act monies, we examined data on FTEs—the units specified by
OMB’s guidance for reporting Recovery Act jobs. 5 To understand the


2
 Pub. L. No. 111-5 § 1512(e), 123 Stat. 115, 288. FTE data provide insight into the use
and impact of the Recovery Act funds, but recipient reports cover only direct jobs funded
by the Recovery Act. These reports do not include the employment impact on suppliers
(indirect jobs) or on the local community (induced jobs). Both data reported by recipients
and other macroeconomic data and methods are necessary to understand the overall
employment effects of the Recovery Act.
3
    See http://www.gao.gov/recovery for related GAO products.
4
 In addition to conducting our analyses of EM Recovery Act cleanup projects, we
continued, as in prior reports, to perform edit checks and analyses on all prime recipient
reports to assess data logic and consistency and identify unusual or atypical data.
5
 OMB Memorandum “Updated Implementing Guidance for the American Recovery and
Reinvestment Act of 2009,” Apr. 3, 2009, called for cumulative FTE counts each calendar
quarter for all reporting quarters. OMB, Memorandum, “Updated Guidance on the
American Recovery and Reinvestment Act – Data Quality, Non-Reporting Recipients, and
Reporting of Job Estimates,” Dec.18, 2009 asked recipients of Recovery Act funding to
report job estimates on a purely quarterly, rather than cumulative, basis.




Page 2                                       GAO-13-23 DOE Recovery Act Cleanup Projects
accuracy of FTE data, we discussed DOE’s review process with DOE and
EM officials. To assess the status and performance of EM projects funded
by the Recovery Act, we reviewed project documentation and analyzed
information in EM’s database for managing Recovery Act projects. We
analyzed the performance of projects that were administratively complete
by the end of April 2012 (i.e., when an authorized official approves the
projects’ closure, which occurs after completion of cleanup activities). To
assess the reliability of the data that EM used to assess projects’
performance, we interviewed officials in EM’s Recovery Act program
office about the Recovery Act data in the Integrated Planning,
Accountability, and Budgeting System (IPABS) database—which EM
uses to capture data for all Recovery Act projects—and found these data
sufficiently reliable for purposes of this report. We also interviewed these
officials to determine how EM evaluates these data to assess project
performance and reviewed its performance analysis of completed
projects. We interviewed officials in DOE’s Office of Project Management
to discuss DOE’s project management policy and the assessment of
project performance. 6 We selected a nonprobability sample of two EM
cleanup sites to visit in order to better understand how sites manage their
Recovery Act projects. 7 To examine project management issues that
arose during the implementation of EM’s Recovery Act projects and any
lessons EM has learned that it could apply to other cleanup efforts, we
reviewed lessons learned that site officials had documented or reported
and interviewed Recovery Act officials. We also reviewed DOE
documents, such as DOE’s root cause analysis and corrective action
plan, both of which identified the department’s and EM’s project
management issues, to determine whether these issues also arose during
Recovery Act projects. Appendix I presents a more detailed description of
our objectives, scope, and methodology.

We conducted this performance audit from May 2011 to October 2012 in
accordance with generally accepted government auditing standards.



6
 As the result of reorganization, effective May 2012, the responsibility for project
management policy in DOE’s Office of Engineering and Construction Management was
placed in the Office of Project Management, which is within the Office of Acquisitions and
Project Management that is under the Office of Management. In this report, we refer only
to the Office of Project Management.
7
 Because this was a nonprobability sample, the information derived from our site visits is
not generalizeable to all EM cleanup sites but provides illustrative examples of how sites
manage their Recovery Act projects.




Page 3                                      GAO-13-23 DOE Recovery Act Cleanup Projects
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             EM selected projects at 17 DOE sites in 12 states for Recovery Act
Background   funding, with 4 sites receiving most of the money—the Hanford Site in
             Washington State, the Savannah River Site in South Carolina, the Oak
             Ridge Reservation in Tennessee, and the Idaho National Laboratory (see
             fig. 1). Recovery Act funds must be expended by the end of fiscal year
             2015, but EM initially planned to expend these funds and complete work
             by the end of fiscal year 2011. In developing these projects, EM
             establishes a baseline against which it measures project performance.
             This performance baseline includes targets for work scope, or key work
             activities that should be completed; cost; and schedule.




             Page 4                             GAO-13-23 DOE Recovery Act Cleanup Projects
Figure 1: The Amount of Recovery Act Funds Provided for Cleanup Projects at 17 Sites




                                        The cleanup projects EM selected for Recovery Act funding fall into the
                                        following four major categories:

                                        •   Decontaminating and demolishing facilities. For example, EM used
                                            the funding to remove hazardous contamination and demolish the K-
                                            33 building at the Oak Ridge Reservation, which was a two-level
                                            structure that covered 32 acres and was constructed in 1954 to
                                            process and enrich uranium for use in nuclear weapons. (See fig. 2.)




                                        Page 5                                  GAO-13-23 DOE Recovery Act Cleanup Projects
•   Removing contamination from soil and groundwater. For example, EM
    used the funding to remove and dispose of radioactive and hazardous
    contaminants from soil and groundwater at the Mound Site, a former
    production site for explosives and other weapons’ components.

•   Packaging and disposing of transuranic and other wastes. 8 For
    example, EM used Recovery Act funding to characterize and package
    transuranic wastes at multiple DOE sites for shipment to the
    department’s deep geologic repository for permanent disposal. 9 (See
    fig. 3.) Transuranic wastes typically consist of discarded rags, tools,
    equipment, soils, or other solid materials that have been contaminated
    by radioactive elements, such as plutonium or americium.

•   Supporting the maintenance and treatment of liquid tank waste. For
    example, EM used the funds to upgrade the infrastructure used to
    stabilize and maintain the tanks that store chemical and radioactive
    waste at the Hanford Site.




8
 Transuranic waste is waste containing more than 100 nanocuries of alpha-emitting
transuranic elements (radiation) per gram with half-lives greater than 20 years with certain
exceptions. A half-life is the amount of time required for an element to decay by half, and
nanocuries are a measure of radioactivity. Alpha-emitting radiation cannot pass through
objects, including human skin, but it is extremely dangerous if inhaled or ingested.
9
 Because these wastes remain radioactive for extremely long periods—hundreds of
thousands of years in some cases—most are headed for disposal at the Waste Isolation
Pilot Plant, a deep geologic repository near Carlsbad, New Mexico, designed for
transuranic waste disposal.




Page 6                                       GAO-13-23 DOE Recovery Act Cleanup Projects
Figure 2: Views Before and After the Demolition of Building K-33, East Tennessee Technology Park, Oak Ridge Reservation




                                        Figure 3: Workers Packaging Transuranic Waste, Savannah River Site




                                        Page 7                                  GAO-13-23 DOE Recovery Act Cleanup Projects
In 1990, we first designated DOE’s contract management, including both
contract administration and project management, at high risk for fraud,
waste, abuse, and mismanagement. 10 In the decades that followed, DOE
has taken steps to improve its project and contract management. For
example, in 2000, DOE issued, and has periodically updated, Order
413.3, which established a management process with five major
milestones—or critical decision points—that span the life of a project,
from the identification of need through project completion. 11 However, we
have consistently reported that EM faced difficulties in developing and
achieving realistic cost and schedule targets for its cleanup activities, in
part because of challenges in addressing complex technical issues,
negotiating contracts, coordinating with regulators, and ensuring safety. 12

In 2009, EM developed a new initiative to improve project management,
called the new management framework. Under this initiative—which was
first applied to Recovery Act projects—EM separated large projects—
which are composed of a mix of projects at various stages between
planning and completion that could overall last for decades—into smaller
discrete projects of shorter duration that the agency deemed easier to
oversee and manage. The smaller cleanup projects are classified into two
major types as follows:




10
  GAO designated DOE’s contract management as high risk in 1990 and then evaluated
and reported on the fundamental causes of problems in this high-risk area in: High-Risk
Series: Department of Energy Contract Management, GAO/HR-93-9 (Washington, D.C.:
December 1992).
11
  Critical decision 2, for instance, marks the approval of the project’s performance
baseline, specifying the planned scope (particularly, specific requirements known as key
performance parameters); cost; and schedule that should be met at project completion. At
this critical decision point, DOE completes its preliminary design and develops a definitive
cost estimate for the work.
12
  See, GAO, Department of Energy: Actions Needed to Develop High-Quality Cost
Estimates for Construction and Environmental Cleanup Projects, GAO-10-199
(Washington, D.C.: Jan. 14, 2010); GAO, Department of Energy: Major Construction
Projects Need a Consistent Approach for Assessing Technology Readiness to Help Avoid
Cost Increases and Delays, GAO-07-336 (Washington, D.C.: Mar. 27, 2007); GAO,
Department of Energy: Further Actions Are Needed to Strengthen Contract Management
for Major Projects, GAO-05-123 (Washington, D.C.: Mar. 18, 2005); GAO, Hanford Waste
Treatment Plant: Contractor and DOE Management Problems Have Led to Higher Costs,
Construction Delays, and Safety Concerns, GAO-06-602T (Washington, D.C.: Apr. 6,
2006).




Page 8                                       GAO-13-23 DOE Recovery Act Cleanup Projects
•     Capital asset projects. These projects cost $10 million or more and
      include construction, such as the expansion of a waste disposal
      facility; environmental remediation construction, such as digging wells
      to remove contaminated groundwater; and cleanup activities, such as
      excavating contaminated soil or demolishing facilities contaminated
      with hazardous chemical or radioactive substances.

•     Operation activity projects. These projects can either be “project like,”
      with definable start and end dates, discrete scopes of work, and
      measurable accomplishments or routine or recurring operations,
      according to EM’s operations protocol. 13 For example, operation
      activity projects include construction and cleanup projects that are
      similar to capital asset projects but that cost less than $10 million;
      operation activities, such as packaging, storing, transporting, and
      disposing of waste and nuclear materials; operating a groundwater
      treatment plant; and program activities, such as maintaining and
      repairing inactive facilities. 14

In February 2011, recognizing improvements DOE had made, we
narrowed the focus of the high-risk designation but retained EM’s contract
and project management on our high-risk list because DOE had not yet
consistently improved EM’s contract and management performance. 15 In
particular, we reported that DOE must ensure that the corrective action
measures it is taking to improve its cost-estimating policies and
procedures ultimately result in cost estimates for its major projects that
are more accurate and reliable.




13
    Office of Environmental Management, Operations Activities Protocol, February 28, 2012.
14
  DOE does not consider operation activities, as discussed in this report, to be “projects”
as designated under the DOE order that is applicable for capital asset projects. However,
for purposes of this report, we refer to these operation activities as projects because we
are collectively referring to all Recovery-Act funded efforts as projects.
15
    GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011).




Page 9                                       GAO-13-23 DOE Recovery Act Cleanup Projects
                      From October 2009 through March 2012, the number of FTEs EM funded
EM Recovery Act-      with Recovery Act funds peaked at a high of 11,000 FTEs in the last
Funded Jobs Peaked    quarter of fiscal year 2010 and decreased to about 1,400 FTEs in the
                      second quarter of fiscal year 2012, 16 according to the data on the federal
at about 11,000 FTE   government’s Recovery Act website. In fiscal year 2011, the number of
Employees Late in     FTEs fluctuated from about 8,000 to 10,000 FTEs per quarter, as some
Fiscal Year 2010      projects were completed and other projects (called buy-back projects)
                      were started with excess funds from those completed. 17 According to EM
                      officials, these excess funds resulted when contractors performed work
                      more efficiently or avoided potential problems that would have required
                      spending management reserves or contingency funds. 18 In the first
                      quarter of fiscal year 2012, the number of FTEs dropped sharply—to
                      about 2,700—as EM completed more projects. (See fig. 4.) These trends
                      were largely in line with EM’s initial plan to start Recovery Act projects
                      quickly and to generally complete them by the end of fiscal year 2011.
                      The number of FTEs is expected to continue to decline through fiscal year
                      2013, as EM completes the last of the projects funded by the Recovery
                      Act.




                      16
                        Under OMB guidance, agencies should calculate FTEs by totaling the number of hours
                      that workers charge to Recovery Act projects in a given quarter of the fiscal year and
                      dividing the sum by the total number of work hours representing a full-time work schedule.
                      OMB, Memorandum, “Updated Guidance on the American Recovery and Reinvestment
                      Act – Data Quality, Non-Reporting Recipients, and Reporting of Job Estimates,” Dec.18,
                      2009.
                      17
                        By the end of the second quarter of fiscal year 2012, DOE had started a total of 20 buy-
                      back projects.
                      18
                        A management reserve is a portion of the contract price managed by the contractor and
                      is available to address realized risks that are within the scope of the contract. A
                      government contingency fund, which is controlled by the government and is not part of the
                      contract price, is used to manage risks affecting cost and schedule, such as changed
                      requirements and delays in government-furnished services, equipment, and items; and
                      other influences outside the contractor’s control.




                      Page 10                                     GAO-13-23 DOE Recovery Act Cleanup Projects
Figure 4: FTEs Funded by the Recovery Act by Quarter, First Quarter Fiscal Year
2010 through Second Quarter Fiscal Year 2012




a
 Since the third quarter of fiscal year 2010, EM’s prime, or chief, contractors for projects at each site
have been required to report quarterly on the number of FTEs—their own as well as the FTEs of
subcontractors they hired to perform specific portions of the work—funded with Recovery Act funds.
Before that time, only prime contractor FTEs were reported. As a result, comparable information is
not available for the first and second quarters of fiscal year 2010. EM sites reported subcontractor
FTEs for these quarters, which are shown in red.


As of the end of the second quarter of fiscal year 2012, the 17 EM
cleanup sites were in different stages of reducing their number of
Recovery Act-funded FTEs. Twelve of the 17 EM cleanup sites reported
no FTEs, 19 and 5 sites—Argonne National Laboratory, Richland Office at



19
  Some of these 12 sites reported less than one-half FTE for the quarter, which rounds to
zero FTE.




Page 11                                             GAO-13-23 DOE Recovery Act Cleanup Projects
the Hanford Site, Idaho National Laboratory, Oak Ridge Reservation, and
Savannah River Site—continued to report FTEs, but their FTEs had
decreased significantly from the fourth quarter of fiscal year 2010 when
the overall number of EM FTEs peaked. (See table 1.)

Table 1: EM FTEs Funded by the Recovery Act in the Fourth Quarter of Fiscal Year
2010 and Second Quarter of Fiscal Year 2012
                                                                                            a
                                                                           FTEs funded
                                                                   th                       nd
                                                                  4 quarter             2        quarter
    Sites                                                           FY 2010                     FY 2012
    1. Argonne National Laboratory (IL)                                     86                       42
    2. Brookhaven National Laboratory (NY)                                  97                        0
                                                       b
    3. Energy Technology Engineering Center (CA)                            12                        0
    4. Hanford Site
        Office of River Protection (WA)                                    581                        0
        Richland Office (WA)                                             3,114                      316
    5. Idaho National Laboratory (ID)                                      949                      160
    6. Los Alamos National Laboratory (NM)                                 382                        0
    7. Moab UMTRA Site (UT)                                                230                        0
    8. Mound Site (OH)                                                      32                        0
    9. Nevada National Security Site (NV)                                   76                        0
    10. Oak Ridge Reservation (TN)                                       2,240                      302
    11. Paducah Site (KY)                                                  193                        0
    12. Portsmouth Site (OH)                                               399                        0
    13. Savannah River Site (SC)                                         1,997                      572
    14. Separations Process Research Unit (NY)                              94                        2
    15. SLAC National Accelerator Laboratory (CA)                           35                        0
    16. Waste Isolation Pilot Plant (NM)                                   323                        0
    17. West Valley Demonstration Project (NY)                             103                        0
            c
    Other                                                                   89                       10
                                                                                 d                     d
    Total                                                               11,030                   1,405
Source: GAO analysis of DOE data.


Note: Overall, FTEs peaked in the fourth quarter of fiscal year 2010. FTEs for sites reporting less than
one-half of an FTE were rounded to zero.
a
FTEs funded include both prime contractor and subcontractor FTEs.
b
 At the Energy Technology Engineering Center, DOE works in a partnership with the Environmental
Protection Agency (EPA). According to DOE officials, the FTEs for EPA’s efforts are separately
reported and are not included in the counts in this table.




Page 12                                           GAO-13-23 DOE Recovery Act Cleanup Projects
c
 Other includes FTEs for managing the direction of the Recovery Act program, which are at DOE sites
as well as DOE headquarters, according to an EM official, and FTEs associated with the Title X
uranium and thorium reimbursement program.
d
    The total number of FTEs may not equal the sum of all sites’ FTEs because of rounding.

EM’s spending on Recovery Act projects has largely been consistent with
EM’s plan to start Recovery Act projects quickly. As figure 5 shows, EM’s
quarterly spending has generally tracked the rise and fall of FTEs. Its
quarterly Recovery Act spending peaked at $668 million in the fourth
quarter of fiscal year 2010 and thereafter quarterly spending generally fell
as EM completed projects.

Figure 5: FTEs and Recovery Act Spending for EM Cleanup Projects, First Quarter
of Fiscal Year 2010 through Second Quarter of Fiscal Year 2012




EM had initially expected to spend all Recovery Act funds by the end of
fiscal year 2011 but, according to an EM document, had actually spent 88
percent of the funds by that time. By the end of the second quarter of
fiscal year 2012, EM had spent about $5.6 billion of its $6 billion of
Recovery Act funds, leaving about 6 percent to be spent. According to




Page 13                                            GAO-13-23 DOE Recovery Act Cleanup Projects
                                         EM officials, EM now expects to spend its remaining Recovery Act funds
                                         by the end of fiscal year 2013.

                                         According to an EM official, three factors contributed to slower than
                                         expected spending. First, EM recognized early in the program that
                                         technical and contracting award delays required extending some projects’
                                         completion beyond fiscal year 2011. 20 Second, as projects were being
                                         undertaken, EM recognized that performance issues at some sites would
                                         delay projects and thus spending. Third, EM was planning new buy-back
                                         projects but generally had to complete the original projects before it could
                                         use excess funds from them to begin buy-back projects.

                                         Sites have spent all or almost all of their allotted Recovery Act funds (see
                                         table 2). By the end of the second quarter of fiscal year 2012, six sites
                                         reported spending 100 percent of their Recovery Act allotted funds; eight
                                         other sites spent from 96 to 99 percent of their funds; and three sites
                                         spent from 85 to 90 percent of their funds.

Table 2: EM’s Recovery Act Funds and Spending through Second Quarter of Fiscal Year 2012

Dollars in thousands
                                                                                      Allotted funds that have been spent
                                                               Total Recovery
                                                             Act funds allotted                      Amount      Percentage
1. Argonne National Laboratory (IL)                                     $79,000                      $70,302               89
2. Brookhaven National Laboratory (NY)                                   70,810                        70,808             100
3. Energy Technology Engineering Center (CA)                             51,675                        51,675             100
4. Hanford Site
    Office of River Protection (WA)                                     326,035                      326,000              100
    Richland Office (WA)                                              1,634,500                     1,613,912              99
5. Idaho National Laboratory (ID)                                       467,875                      451,310               96
6. Los Alamos National Laboratory (NM)                                  211,975                      211,748              100
7. Moab UMTRA Site (UT)                                                 108,350                      108,204              100
8. Mound Site (OH)                                                       17,900                        17,526              98



                                         20
                                           Technical delays included discovery of unanticipated wastes or the inability to obtain
                                         needed materials or equipment in a timely manner. For example, DOE officials stated that
                                         containers needed to ship transuranic waste to the Waste Isolation Pilot Plant were not
                                         issued a certification of compliance by the Nuclear Regulatory Commission until June
                                         2010, thus delaying project progress.




                                         Page 14                                    GAO-13-23 DOE Recovery Act Cleanup Projects
Dollars in thousands
                                                                                                 Allotted funds that have been spent
                                                                           Total Recovery
                                                                         Act funds allotted                         Amount        Percentage
9. Nevada National Security Site (NV)                                               44,325                            44,301                100
10. Oak Ridge Reservation (TN)                                                     755,110                          640,991                  85
11. Paducah Site (KY)                                                               80,400                            79,705                 99
12. Portsmouth Site (OH)                                                           119,800                          118,393                  99
13. Savannah River Site (SC)                                                      1,615,400                       1,459,872                  90
14. Separations Process Research Unit (NY)                                          58,575                            58,033                 99
15. SLAC National Accelerator Laboratory (CA)                                       14,300                            14,300                100
16. Waste Isolation Pilot Plant (NM)                                               172,175                          169,385                  98
17. West Valley Demonstration Project (NY)                                          62,875                            61,570                 98
        a                                                                                                                                      a
Other                                                                              108,920                            95,237
        b
Total                                                                            $6,000,000                     $5,663,271                 94%
                                             Source: GAO analysis of DOE data.

                                             Note: Numbers are as provided by DOE and are not adjusted for inflation. Because of rounding, some
                                             percentages show 100 percent even if the allotted and spent amounts are not equal.
                                             a
                                              Other includes DOE’s Title X uranium and thorium reimbursement program, which is funded with
                                             Recovery Act funds, as well as funding for management and oversight of the Recovery Act program.
                                             DOE was unable to provide us with spending data for $11 million of the nearly $109 million allotted
                                             because, according to a DOE official, DOE combines these Recovery Act funds with other funds for
                                             department-level management and oversight of Recovery Act programs and does not separately
                                             track them.
                                             b
                                              Because DOE was unable to provide us with spending data for $11 million of the allotted funds in the
                                             other category, we did not report any spending for these funds. If DOE has spent all of the funds, total
                                             spending could actually be as high as $5,674 million, or 95 percent, of the $6 billion of Recovery Act
                                             funds.



                                             According to EM data, as of April 2012, EM had administratively
EM Has Completed                             completed 78 of the 112 Recovery Act-funded projects, but inconsistent
Most Projects, but                           data on projects’ scope, cost, and schedule targets make it difficult to
                                             assess the extent to which completed projects met performance
Inconsistent Data                            baselines.
Make Assessing
Project Performance
Difficult




                                             Page 15                                           GAO-13-23 DOE Recovery Act Cleanup Projects
EM’s Analysis of Reported   Of the 112 Recovery Act-funded projects, 78 projects were completed
Data Indicate That Most     and approved for closure, called administrative completion, as of April
Recovery Act Projects       2012, according to EM data (see app. II for a list of the completed
                            projects). EM expects to complete the remaining projects by the end of
Were Completed,             fiscal year 2013. According to EM officials, the Recovery Act projects
Generally Below Planned     have helped accelerate the cleanup of contaminated facilities and land,
Costs                       including the completion of EM’s cleanup responsibilities at the Mound
                            site and the SLAC National Accelerator Laboratory. EM analyzed project
                            performance using information in project closure documents and the
                            IPABS database and concluded that 72 of the 78 projects (92 percent)
                            met scope and cost targets. DOE’s standard for performance is to
                            complete all scope targets without exceeding the cost targets by more
                            than 10 percent. For the remaining 6 projects, some ended without
                            completing all scope targets and some of the projects’ exceeded their
                            cost targets by more than 10 percent. For example, a project to
                            accelerate the demolition of a graphite research reactor at Brookhaven
                            National Laboratory in New York State exceeded its original estimated
                            cost by over 25 percent. EM demolished the remaining portion—
                            approximately 37 percent—of one structure using a project funded with
                            annual appropriations.

                            As shown in figure 6, most projects finished significantly below their cost
                            targets. Specifically, EM documents show that 42 of these 78 projects (54
                            percent) were completed more than 10 percent under their cost targets,
                            with 22 finishing from 20 to 70 percent under their cost targets.




                            Page 16                             GAO-13-23 DOE Recovery Act Cleanup Projects
Figure 6: Percentages that the Projects’ Final Costs Are Over or Under their Targets
for 78 Administratively Completed Recovery Act Projects, as of April 2012




DOE and EM officials told us that Recovery Act-funded projects could be
completed under their cost targets for any number of reasons. According
to EM officials, when projects come in under their cost targets, it is
generally because contractors found more efficient ways of completing
the project scope and did not encounter risks that required the use of
management reserves or contingency funds. In addition, some EM
officials stated that the Recovery Act projects may have been budgeted
with assumptions supporting the higher end of reasonably estimated
costs to ensure that projects did not go over cost targets. For instance,
site officials at the Savannah River Site in South Carolina told us that one
project included infrastructure work in its budget, such as roadway
projects that would be required to support the additional Recovery Act
work at the site. Upon the project’s completion, officials found that $32
million of the planned funding for these infrastructure projects was not
needed, in part because less roadwork was needed than assumed.

For projects that were more than 20 percent under their cost targets,
however, EM and other DOE officials told us that, typically, cost



Page 17                                  GAO-13-23 DOE Recovery Act Cleanup Projects
                             efficiencies and risk avoidance could not explain why these projects were
                             so far under their cost targets. Instead, these projects were likely to have
                             had their scope significantly altered or had their scope completed in an
                             entirely different way than was considered when the cost targets were
                             established. However, there was no complex-wide information to explain
                             why these projects were completed so far below cost targets. The EM
                             Consolidated Business Center, which is responsible for ensuring that EM
                             cost and schedule estimates are reliable, was unable to provide additional
                             information on why final costs were below those in the performance
                             baselines. Officials at the center told us that they track final project costs
                             to improve future estimates but do not compare targets and final costs.
                             According to Office of Project Management officials, DOE does not
                             currently designate a project’s performance as unsuccessful if its final
                             cost fell too far below its cost targets. However, these officials did say that
                             it is a poor project management practice to obligate significantly more
                             funding to projects than required. These funds could be put to a more
                             productive use by assigning them to other projects that require additional
                             funding or by beginning additional cleanup work. Under EM’s Recovery
                             Act program, when original projects were completed or both the
                             headquarters and site office teams were certain the originally funded
                             effort could be completed, any excess funds then became available to
                             fund additional cleanup projects, which allowed another 20 Recovery Act
                             projects to begin by mid-April 2012.


Problems with                In analyzing EM data, we identified a variety of issues with how EM
Establishing Scope, Cost,    established and documented scope, cost, or schedule targets. Scope
or Schedule Targets Raise    targets were not consistently set and documented for some capital asset
                             and operation activity projects; cost targets were flexibly set for operation
Questions about Actual       activity projects; and schedule completion targets for both capital asset
Project Performance          and operation activity projects were typically set for the end of a fiscal
                             year, regardless of when a project was actually expected to be
                             completed. Without clear scope, cost, or schedule targets in performance
                             baselines, it becomes difficult to assess project performance.

Inconsistencies in How EM    For both capital asset and operation activity projects, our analysis showed
Established and Documented   that scope targets—or the key performance parameters that are to be
Projects’ Scope Targets      completed in order for a project to be deemed complete and successful—
                             were neither consistently established nor consistently used by EM to
                             measure project completion and success. At times, key performance
                             parameters were articulated in very general terms (e.g., demolish a
                             building); at other times, they were articulated in specific terms
                             (e.g., remove 1.6 million cubic yards of soil). Such variability in key


                             Page 18                               GAO-13-23 DOE Recovery Act Cleanup Projects
performance parameters can make it difficult to accurately determine
when a project has truly been completed or whether it has successfully
achieved its goals. Examples include the following:

•   A project at the Paducah Site in Kentucky included only a single
    general key performance parameter requiring the demolition of one
    building. This parameter did not describe what activities the demolition
    was to entail, such as the removal of the building’s foundation,
    removal of equipment, or cleanup of the site. Even though many of
    these activities were described in a separate description of the
    project’s scope, the key performance parameter itself did not explicitly
    specify any of these activities as being required for the project to be
    determined complete or successful. By not doing so, the key
    performance parameter did not identify what successful demolition
    would actually entail when completed.

•   A project to expand a waste disposal facility at the Hanford Site in
    Washington State, on the other hand, included a key specific
    performance parameter for excavating 1.6 million cubic yards of soil,
    but the project’s design specifications defined the project in terms of
    the size of the pit from which soil was to be removed. EM determined
    that the project was complete when the pit met the dimensions stated
    in the design document (1,000 feet long by 500 feet wide by 70 feet
    deep) even though the amount of soil removed was 1.5 million cubic
    yards. EM officials told us that the original key performance parameter
    of 1.6 million cubic yards was a planned-for approximation, not a
    hard-and-fast functional requirement for project completion.

Capital asset projects are subject to specific requirements set forth in
Order 413.3B, whereas operation activity projects are not. This order
requires that scope targets incorporating key performance parameters are
to be documented in a critical decision memorandum usually issued at
the end of a planning period. Nevertheless, we found that either key
performance parameters were not specified in critical decision
memorandums or project success at closure was assessed against more
than one scope target. Specifically, over one-third (13 out of 33) of
completed Recovery Act capital asset projects did not specify scope
targets or key performance parameters and, in other cases, projects were
assessed against more than one scope target description. Following are
some examples:

•   For a project to expand a waste disposal facility at the Oak Ridge
    Reservation in Tennessee, neither the critical decision memorandum



Page 19                              GAO-13-23 DOE Recovery Act Cleanup Projects
    nor the execution plan specified scope targets or key performance
    parameters. Yet on the basis of other documents—design drawings
    and specifications—the project closure report stated that all key
    performance parameters had been completed. Office of Project
    Management officials told us that when a critical decision
    memorandum lacks key performance parameters, such parameters
    sometimes cannot be reconstructed to establish scope targets. In
    such cases, they said, no audit trail exists to compare planned key
    performance parameters with those cited at project completion,
    making it difficult to demonstrate the extent to which projects were
    successfully completed.

•   For a waste remediation project at the Hanford Site, two different
    scope targets were used as measures of success. One project plan
    called for the complete remediation of 24 waste sites [emphasis
    added], whereas another project plan called for the remediation of
    53,000 cubic meters of soil at 18 sites. The closure report for this
    project pieced together both of these scope targets, stating that 1 of
    24 sites was not completely remediated because unexpected
    contamination was found, and remediating that contamination would
    have exceeded 53,000 cubic meters of soil. Thus, depending on
    which source is used to describe the project scope, the project could
    be assessed as having failed to completely remediate 24 sites or as
    having successfully remediated 18 sites plus 6 more sites, to the
    called-for maximum amount of soil.

Because operation activity projects are not subject to Order 413.3B, EM
has greater flexibility in terms of when it sets scope targets and where
targets are documented. According to an EM official, operation activity
projects are to be assessed against key performance parameters as
documented in the IPABS database. EM’s 2011 guidance on preparing
closure documents for Recovery Act projects, on the other hand, directs
sites to measure success against key performance parameters in project
plans. Moreover, we found cases in which a project’s scope targets as
documented in the project plan differed from the scope targets
documented in IPABS. Examples we found include the following:

•   The scope set forth in IPABS for a project to clean up a nuclear facility
    at Argonne National Laboratory in Illinois included shipping up to 15
    casks of material for disposal. At the end of the project, however,
    EM’s closure document labeled the project a success because it met
    the key performance parameter found in the project plan, which was




Page 20                              GAO-13-23 DOE Recovery Act Cleanup Projects
    stated in terms of linear inches of nuclear fuel packaged into shipping
    tubes.

•   An EM official told us that another project, at Brookhaven National
    Laboratory, had failed because it did not complete a key scope
    requirement—the removal of an exhaust stack for air cooling in a
    facility—as recorded in IPABS. The official stated the site’s closure
    document inappropriately indicated that all key performance
    parameters were completed on the basis of a more limited scope
    described in the project plan.

Such uses of two different scope targets may thus lead to differing or
inaccurate assessments of performance.

In addition to inconsistencies in how and where EM set and documented
scope targets, we found flaws in EM’s evaluation of project
performance—in particular, claims of project success even if key
performance parameters were not achieved. According to EM officials,
EM is committed to implementing Order 413.3B principles as applicable
to all EM activities, including operation activity projects. In discussions
with us, EM officials offered a number of explanations for determining that
certain key project parameters of operation activity projects were
successfully completed, even though these explanations ran counter to
specific provisions in Order 413.3B, and an official from the Office of
Project Management questioned the validity of these explanations.
Following are some examples:

•   According to EM officials, an operation activity project at the Energy
    Technology Engineering Center in California—a project including site
    characterization and analyses to support site cleanup—was deemed
    successful even though not all key performance parameters were
    completed. EM officials stated that these parameters were not
    completed for reasons outside of the office’s control because
    Recovery Act funding arrived later than expected and because state
    regulators changed regulatory requirements. However, an Office of
    Project Management official told us that if the provisions in Order
    413.3B applied, the unavailability of funds when expected appears to
    result from EM’s inadequate up-front planning rather than a matter
    outside of its control. Moreover, the official observed, under Order
    413.3B, EM would have had to demonstrate that the state had
    changed its regulatory requirements or its agreement with DOE before
    EM could argue that a change in project scope was justified.




Page 21                              GAO-13-23 DOE Recovery Act Cleanup Projects
                               •   A project to demolish contaminated buildings at the Portsmouth Site in
                                   Ohio did not fulfill a key performance parameter—the removal of two
                                   buildings’ concrete slab foundations—because after officials had set
                                   the parameters, they determined that these slabs could be used as a
                                   staging area for future cleanup work, and it was, therefore, in the
                                   government’s interest to retain them. Nevertheless, an Office of
                                   Project Management official told us that not meeting a key
                                   performance parameter would have been considered a failure under
                                   Order 413.3B. He stated that regardless of a later determination of
                                   what is in the government’s interest, setting the removal of the
                                   buildings’ foundations as a key performance parameter appears to be
                                   a failure of front-end project planning.

Cost Targets Were Not          Planned costs for operation activity projects—unlike those of capital asset
Consistently Documented for    projects, for which Order 413.3B establishes specific requirements—were
Operation Activity Projects    more flexibly set. Specifically, operation activity projects had no single
                               original cost targets they were to adhere to, and EM sometimes altered
                               cost targets, in response to changes in funding or planning
                               circumstances, to final cost targets while the projects were under way.
                               Without a fixed cost target against which to measure a project’s success,
                               it is possible that EM could claim that a project was on budget by
                               successively altering the cost targets.

                               For example, EM asserted that a project to ship and dispose of
                               contaminated waste from the Hanford Site was successfully completed at
                               a cost of $47.5 million—slightly below its final cost target of $47.9
                               million—even though IPABS information indicated that the project’s cost
                               target was originally approximately $43 million. Thus, rather than coming
                               in under budget, this project exceeded its original cost target by more
                               than 10 percent. According to EM officials, resetting to a higher original
                               cost target was appropriate because the commercial costs of waste
                               treatment and disposal had gone up since the original performance
                               baseline was established. An EM official told us that this decision was
                               consistent with changing cost targets under Order 413.3B. An Office of
                               Project Management official, however, noted that the possibility of
                               changing commercial costs should have been taken into consideration
                               during project planning stages and, therefore, did not constitute a basis
                               for changing this project’s cost target under Order 413.3B.

Schedule Targets Usually Did   EM’s data do not generally support a meaningful assessment of whether
Not Reflect Expected Project   Recovery Act projects were completed within schedule targets. According
Completion Dates               to EM officials, the target completion dates for Recovery Act projects
                               were generally set to be the end of a fiscal year and not at the point when



                               Page 22                             GAO-13-23 DOE Recovery Act Cleanup Projects
                               projects were actually expected to be completed. For 72 of the 78
                               completed projects, EM data showed a target completion date either at
                               the end of EM’s Recovery Act program (initially slated for the end of fiscal
                               year 2011) or the end of EM’s budget period at the end of fiscal year
                               2012.

                               Using the end-of-program or budget periods as the target date for project
                               completion raises concerns about the accuracy of resulting assessments
                               of individual project’s schedule performance. Our analysis of EM
                               headquarters’ data shows that some projects appeared to be completed
                               as much as 50 to 80 percent earlier than planned. However, the closure
                               documentation for these projects sometimes presented a very different
                               picture about the scheduled completion of work at the site. For example,
                               EM’s headquarters data show that the project to prepare the K-27
                               building for demolition at Oak Ridge had a target date for completion at
                               the end of fiscal year 2012, but all elements of the project’s scope were
                               actually completed on December 30, 2010, over 21 months earlier. A
                               review of project-specific documentation, however, revealed that the work
                               was completed only a few weeks early compared with target dates in that
                               documentation. According to an EM official, schedule completion dates
                               for Recovery Act projects were left at the end of the fiscal year to provide
                               additional flexibility in completing the projects on time. After final contracts
                               were agreed upon, he told us, EM did not change schedule dates to the
                               target completion date in the contract because the office believed that the
                               contractor schedule estimates were generally too optimistic and might not
                               fully reflect risks that could delay the projects.

Guidance for Both Capital      Guidance is available for both capital asset and operation activity
Asset and Operation Activity   projects, but the guidance for capital asset projects—DOE Order
Projects Has Gaps              413.3B—is more comprehensive than the protocols for operation activity
                               projects. Nevertheless, according to Office of Project Management
                               officials, Order 413.3B does not address how to develop key performance
                               parameters for capital asset cleanup projects or provide examples.
                               Rather, it is up to individual sites to develop such parameters on a case-
                               by-case basis. This shortage of specific guidance, including examples, for
                               how to develop key performance parameters may contribute to the
                               inconsistencies we describe in this report.

                               EM’s 2012 operations protocol, the available guidance for operation
                               activity projects, omits a number of key elements related to setting scope,
                               cost, and schedule targets in performance baselines. For example, key
                               performance parameter is mentioned only in the glossary. Moreover,
                               unlike Order 413.3B, which defines permissible changes to projects’


                               Page 23                                GAO-13-23 DOE Recovery Act Cleanup Projects
                              performance baselines, the protocol for operation activity projects
                              provides only a partial list of such changes. Moreover, the protocol does
                              not define when and how projects’ performance baselines are to be
                              documented—documentation critical for accurately assessing a project’s
                              success or failure.


                              Some of EM’s long-standing project management problems occurred
Project Management            during its implementation of Recovery Act projects, primarily insufficient
Problems Occurred             early planning before setting a performance baseline; new problems also
                              occurred, particularly about how projects were classified as capital asset
on EM Recovery Act            or operation activity projects. EM has been gathering information on
Projects, and EM Is           lessons learned from Recovery Act projects, some of which could apply to
Taking Steps to               other EM cleanup work, but some lessons may have limited applicability
                              for future work, and the lessons to date do not provide a basis for EM to
Identify Lessons              assess the effectiveness of its initiative. 21
Learned
Some Recovery Act             DOE noted in its 2008 root cause analysis of project management issues
Projects Demonstrated         that a key issue affecting project performance was insufficient front-end
Insufficient Early Planning   planning before setting project baselines. 22 According to Order 413.3B for
                              capital asset projects, project planning, including site characterization,
before EM Set Project
                              should be conducted prior to establishing a project’s performance
Performance Baselines         baseline to help ensure the project can be completed within that baseline.
                              Similarly for operation activity projects, EM’s initiative stated that EM
                              would monitor the projects using credible performance baselines with
                              well-defined scope. Nevertheless, according to our analysis of EM
                              documents, several Recovery Act capital asset and operation activity
                              projects did not seem to benefit from sufficient early project planning.
                              Consequently, the projects’ final scope, cost, or schedule did not conform
                              to their performance baselines. Some examples are as follows:




                              21
                                In June 2011, a House committee report directed EM to develop lessons learned,
                              including problems encountered and best practices identified in its Recovery Act projects.
                              EM’s resulting report is expected to provide the committee with specific recommendations
                              on how those lessons learned can and will be applied to managing ongoing and future
                              projects. ( H.R. Rep. No. 112-118 (2011).
                              22
                                Department of Energy, Root Cause Analysis: Contract and Project Management
                              (Washington, D.C.: April 2008).




                              Page 24                                     GAO-13-23 DOE Recovery Act Cleanup Projects
•    Unexpected volumes of wastes changed project scope. The scope of
     a Recovery Act capital asset project at the Los Alamos National
     Laboratory in New Mexico to remove hazardous and radioactive
     wastes from a landfill dating to the 1940s increased significantly when
     it was determined that the site would need to be excavated to a depth
     of 30 feet rather than the planned for 12 to 18 feet. EM site officials
     reported that more site characterization would have helped identify
     the extent of contamination, but more characterization was not done
     because of schedule and budget constraints. The cost of the project
     increased from $111 million to $130 million when the amount of waste
     needing excavation exceeded the original target. At the Mound Site in
     Ohio, a Recovery Act capital asset project was to remove and dispose
     of three types of waste to certain maximums: 406,000 cubic feet of
     low-level waste, 27,000 cubic feet of mixed low-level waste, and
     15,000 cubic feet of hazardous waste. 23 According to EM documents,
     the project was completed under planned cost but with an actual
     scope almost unrelated to that in its performance baseline. The
     project disposed of all the waste at the site, but the mixture of wastes
     disposed of was completely different than expected: 73 percent more
     low-level waste was disposed of than planned, 1 percent of the
     planned mixed low-level waste was disposed of, and no hazardous
     waste was found.

•    Unexpected challenges affected project cost or schedule. At Idaho
     National Laboratory, during the decommissioning and demolition of a
     former nuclear reactor, the contractor discovered asbestos
     contamination that had not been identified before the project’s scope
     and cost targets had been established, which slowed work while the
     contractor planned how to address this unexpected contamination;
     this delay contributed to the operation activity project’s missing its
     completion date of the end of fiscal year 2011. Similarly, at the
     Brookhaven National Laboratory, the contractor demolishing a
     radioactively contaminated concrete shield around a former reactor
     found that the shield was much denser than expected, which delayed
     the completion of the capital asset project and raised costs; the
     additional funds EM provided were also exhausted before the


23
  The Environmental Protection Agency defines hazardous waste as waste that is
dangerous or potentially harmful to health or the environment. Low-level waste includes
radioactively contaminated debris, rubble, and soils from the decommissioning and
cleanup of nuclear facilities. Mixed low-level waste contains both radioactive and
chemically hazardous waste.




Page 25                                     GAO-13-23 DOE Recovery Act Cleanup Projects
     contractor completed the project, and the remaining demolition was
     transferred to a project funded with annual appropriations.
     Furthermore, as part of a Recovery Act capital asset project at the
     Separations Process Research Unit site in New York state, EM was
     demolishing a building that had been contaminated from nuclear
     research dating to the 1950s. In September 2010, a wrecking crew’s
     work resulted in the accidental spread of radioactive contamination.
     The building’s footprint was posted as a contamination area, and
     demolition work was suspended while the contractor prepared a
     corrective action plan to ensure no further accidents occurred.
     Moreover, in part because the cost to remediate the accident was
     expected to exceed $1 million, EM conducted an accident
     investigation, which concluded that the contractor’s failure to fully
     characterize the building before demolition contributed to the accident.

According to DOE’s 2008 corrective action plan, one obstacle to sufficient
planning is managers’ strong desire to begin executing their projects. 24
According to a senior EM official, when deciding how much site
characterization to conduct in determining scope, EM faces a trade-off:
(1) spend little time and money on site characterization and then face the
risk of finding more or different contamination than expected when the
cleanup project begins or (2) spend significant time and money on site
characterization, although additional contamination may still be found
when cleanup project begins.

EM’s plan to complete Recovery Act work by the end of fiscal year 2011
added to existing pressures to complete planning quickly and start
executing projects. According to an official at EM’s Consolidated
Business Center, most hiring would occur to execute jobs, not plan the
projects. Even though EM sought to begin Recovery Act projects quickly,
Office of Project Management officials told us that, for the sake of
establishing better cost targets, EM should resist external pressures to
start projects without sufficient site characterization; otherwise, EM’s
performance baselines will need large contingencies to cover the risks of
finding more contamination than expected.

According to an EM document, these types of scoping problems would be
partially addressed by its initiative, which was intended to break very


24
 Department of Energy, Root Cause Analysis: Contract and Project Management
Corrective Action Plan (Washington, D.C.: July 2008).




Page 26                                 GAO-13-23 DOE Recovery Act Cleanup Projects
large projects—composed of a mix of projects at different stages of being
defined or executed—into smaller, discrete, projects that could be better
defined. Discrete projects were also a key element of DOE’s corrective
action plan to address the department’s long-standing project
management issue of ensuring that performance baselines are sufficiently
planned. According to EM documents, this approach, in combination with
better planning, including site characterization, would allow EM to have
better performing projects, as well as better estimated final costs.

However, some of the Recovery Act cleanup projects were actually work
segments of larger projects rather than discrete projects. The lines
between the Recovery Act projects and large projects funded with annual
appropriations sometimes became blurred, making it difficult to determine
the scope, cost, and schedule targets for the Recovery Act-funded work.
Following are some examples:

•   The scope of a Recovery Act capital asset project included
    constructing three of several tent-like structures over excavation sites,
    according to the project’s closure document. This project was part of a
    larger overall project to retrieve buried waste contaminated with
    solvents, transuranic waste, and uranium at the Idaho National
    Laboratory. However, an EM official told us that one of these tents
    was mistakenly included in the project’s approved performance
    baseline, and it was instead constructed by an annual appropriations-
    funded project. The Recovery Act project also removed contaminated
    waste—part of an effort supported by other Recovery Act and annual
    appropriations-funded projects.

•   Since the Recovery Act funding for a capital asset project to expand a
    waste disposal facility at the Oak Ridge site was unavailable when the
    site wanted to take advantage of the full construction season,
    according to the project’s closure documents, the project’s initial
    steps, including site preparation, were funded with annual
    appropriations. When the site later realized that an additional
    expansion would be built for the waste disposal facility, certain final
    construction activities for the Recovery Act project were moved to the
    new construction project.

•   The scope for a Recovery Act project at the Energy Technology
    Engineering Center included submitting to state regulators a work
    plan for the study of feasible technologies to support site cleanup and
    closure, but that work was completed using annual appropriations
    prior to the start of the Recovery Act project. As a result, EM used the



Page 27                              GAO-13-23 DOE Recovery Act Cleanup Projects
                           freed-up Recovery Act funds for other work at the center, including
                           completing the model to predict the flow of contaminated groundwater
                           at the site, an analysis that had been started with annual
                           appropriations.

EM’s Initiative to    Project classification dictates whether EM must follow Order 413.3B in
Reclassify Projects   implementing a project. Capital asset projects have to be managed
                      according to the order, which established a management process with
                      five major milestones—called critical decision points—involving multiple
                      reviews and approvals. EM’s initiative allowed EM considerable flexibility
                      in determining whether it classified some Recovery Act projects as capital
                      asset or operation activity projects. EM does not have a clear policy that
                      sets out under what conditions and how EM should break a capital asset
                      project into smaller, discrete projects. According to EM’s initiative, the
                      classification of capital asset and operation activity projects depends, in
                      part, on project costs, with a total project cost of $10 million or more being
                      classified as a capital asset project; below this threshold, the project is
                      classified as an operation activity project. 25 In effect, this classification
                      could allow EM to determine which projects would, or would not, be
                      passing through critical decision points by breaking larger projects into
                      smaller projects. According to EM’s initiative, EM would manage
                      operation activity projects much as it does capital asset projects but
                      would not use critical decision points.

                      EM’s 2012 operations protocol provides considerable flexibility about
                      what project management principles from Order 413.3B the office applies
                      to operation activity projects. The protocol clarifies that critical decisions
                      and another control mechanism required under Order 413.3B will not be




                      25
                        Cleanup work, the cost of which could determine its project type, includes construction
                      projects and the construction phase of environmental remediation; the decommissioning
                      of nuclear facilities, radiological facilities, and contaminated facilities; and, the demolition
                      of nonnuclear facilities and noncontaminated facilities. Other cleanup work, such as
                      operating a waste processing plant, is classified by its nature—regardless of its cost—as
                      an operation activity project and not a capital asset project.




                      Page 28                                         GAO-13-23 DOE Recovery Act Cleanup Projects
applied to operation activity projects. 26 Beyond addressing these specific
exclusions from Order 413.3B, EM’s protocol states only that project
management principles will be applied as appropriate and that some
operations are project-like and others are routine or recurring
operations. 27 This distinction would seem to imply that at least routine and
recurring operations may not appropriately be managed as projects with
predetermined scope targets. According to an EM official, one advantage
of separating operation activity projects from larger capital asset projects
and the requirements of Order 413.3B is the greater flexibility to adjust
the scope of operations—by slowing down or stopping work—to manage
realized risks rather than having to apply contingency funds that have
been set aside. 28 This de-emphasis on managing to a scope target for
operation activity projects is illustrated in a Recovery Act closure
document for an Oak Ridge project. According to this document, key
performance parameters are not applicable for this operation activity
project, which had successfully met its objective of operating the waste
treatment facilities at Oak Ridge National Laboratory at exactly the
planned cost over the contract period. That is, this project’s success was
defined in terms of operating within a cost and schedule—without
reference to completing a defined scope.

Office of Project Management officials supported the concept behind the
project management initiative, noting that it could be useful to break out
projects into smaller, discrete capital asset projects. However, they


26
  In addition to the management process in Order 413.3B, it contains another control
mechanism, known as earned value management system, which provides a measure for
gauging progress against a cost and schedule baseline. Earned value data in this system
make it possible for managers and others to determine how a project has been performing
and to predict future performance trends. DOE Order 413.3B (and its version applicable
when the Recovery Act began in 2009) requires this system’s use for capital asset
projects costing $20 million or more, and EM’s 2009 initiative also requires it for operation
activity projects.
27
  EM’s first version of its operations protocol (April 2010) also established flexibility; that
is, EM headquarters and the sites could reach an agreement on which project
management principles from DOE’s order for capital asset projects would apply to
operation activity projects. It further indicated that EM should apply more of the project
management principles to project-like activities than to routine or recurring operations.
28
  EM’s 2010 version of its operations protocol, but not its 2012 revision, explicitly
describes managing scope as a contingency: “If a program risk is realized and
contingency is required, a baseline change proposal shall be processed to move scope to
future years, or delete scope, if appropriate, from the baseline to remain within the funding
target for the execution year or request additional funding.”




Page 29                                        GAO-13-23 DOE Recovery Act Cleanup Projects
expressed concern that an integrated capital asset project could be
inappropriately divided into smaller project fragments that would be
classified as operation activity projects costing less than $10 million. As a
result of such classification, they were concerned that these smaller
projects would be subject to less stringent controls than required by Order
413.3B.

Office of Project Management officials told us this classification issue
arose on several occasions. At the Hanford and Savannah River Sites,
Office of Project Management officials noticed scope within Recovery Act-
funded operation activity projects that the office saw as integral to larger
capital asset projects funded by annual appropriations. For example, at
Hanford, EM had designated a project to remediate soil and groundwater
contamination as an operation activity project, but EM officials told us that
they determined, in consultation with the Office of Project Management,
that about half of this $90 million project was, in fact, part of a capital
asset project. 29 According to Office of Project Management officials, EM
was constructing wells and a groundwater pump and treatment facility
that should be considered part of an existing capital asset project funded
by annual appropriations, and only EM’s pumping and treating of
contaminated water should be considered an operation activity project. In
addition, closure documents indicated that the operation activity project
had also included the construction of a maintenance facility complex that
included utility upgrades, 27 mobile office and restroom facilities, and four
shop and warehouse buildings of approximately 15,450 square feet each.
In another project—to clean up contaminated soil and buildings at the
SLAC National Accelerator Laboratory in California—Office of Project
Management officials told us that they and EM officials originally agreed
that the project was a capital asset project. The project was to cost
approximately $30 million using both Recovery Act and annual
appropriations. However, EM subsequently divided the project’s scope
into 18 separate operation activity projects, each costing under $10
million. Furthermore, according to our analysis of EM documents on the
Recovery Act-funded portion of the overall project, EM took advantage of
the flexibility under the initiative to create a Recovery Act project costing
$8 million and designated it as an operation activity project. However, EM
later added to the scope and increased the Recovery Act funding to this


29
  As noted earlier, some cleanup work, such as operating a waste processing plant, is
classified by its nature—regardless of its cost—as an operation activity project and not a
capital asset project.




Page 30                                      GAO-13-23 DOE Recovery Act Cleanup Projects
project, increasing its cost at completion to almost $16 million, but the
office never reclassified the project as a capital asset project.

Office of Project Management officials did not know how many Recovery
Act operation activity projects might actually be part of a capital asset
project because projects that EM starts as operation activity projects are
not likely to be reviewed by the Office of Project Management, which
does not participate in the classification of operation activity projects.
Moreover, these officials expressed concerns that EM may be
misclassifying capital asset projects as operation activity projects, with the
result that projects are implemented without the appropriate project
controls required by Order 413.3B. They said the disagreement over
project classifications applies to work funded by both EM’s Recovery Act
and annual appropriations. In a report about its partnership with EM to
help improve project management on some projects funded by annual
appropriations, the Army Corps of Engineers made similar observations,
stating that the Corps had observed EM efforts to disaggregate projects
by size and type to avoid the application of Order 413.3B for project
management. According to the report, these practices of overly
subdividing projects are inconsistent with good project management
practice and can result in a fragmented view of overall project health. 30

In contrast, EM officials stated that EM appropriately avoids critical
decision points for an aptly classified operation activity project, and the
more streamlined decision making does not preclude managing the
project in accordance with best project management principles.
Particularly given the pressure to quickly execute Recovery Act projects,
according to another EM official, being freed from formal critical decision
steps required by the order allowed EM to more quickly start operation
activity projects. However, without a clear principle for establishing the
boundaries of project scope, the expediency of avoiding the requirements
of Order 413.3B could become the decisive factor in classifying work as
not a capital asset project. For instance, a project review team at the
Idaho National Laboratory suggested that the site consider subdividing
the financial accounts of a Recovery Act-funded capital asset project with
an aggregate cost of over $10 million—separating the demolishment of
shielded rooms for working with radioactive materials (hot cells) from the


30
 U.S. Army Corps of Engineers, Report to the Department of Energy, Office of
Environmental Management: Analysis of USACE-DOE Project Management Partnership
Potential (Washington, DC: June 3, 2011).




Page 31                                GAO-13-23 DOE Recovery Act Cleanup Projects
                         demolishment of the surrounding building—because as a capital asset
                         project, the work must follow the Order 413.3B requirement for a critical
                         decision point approval, potentially delaying the project’s execution by
                         several months.


Some of EM’s Lessons     EM has been analyzing which lessons learned from its Recovery Act
Learned May Be           program are applicable to other cleanup efforts. EM has gathered lessons
Applicable to Other EM   learned from the 17 sites on Recovery Act projects and plans to report on
                         lessons learned in August 2012, according to the Director of EM’s
Projects                 Recovery Act Program Office.

                         EM may be able to use some of the materials that the sites submitted to
                         identify lessons learned to improve project management, particularly in
                         areas that have been problems in the past, such as early planning and
                         contracting, which DOE determined it had addressed as part of DOE’s
                         corrective action plan. Some examples are as follows:

                         •   Early planning. Some of the lessons learned reported as of June 2012
                             discussed how early planning can affect a project’s success. For
                             example, before demolishing an obsolete nuclear research building at
                             Los Alamos National Laboratory, managers for the Recovery Act
                             project coordinated with managers for a project funded by annual
                             appropriations responsible for remediating under-building soil and
                             developed a characterization plan for the potentially contaminated soil
                             under the building’s basement concrete floor. Early work showed that
                             no contaminants needed to be removed, enabling the site to place
                             uncontaminated fill into this basement rather than undertaking a more
                             costly removal of the basement’s walls and floor that would have
                             involved greater safety risks for workers. Conversely, at the SLAC
                             National Accelerator Laboratory, sufficient early site characterization
                             of contaminated soil had not been performed before starting
                             excavation. Without this characterization, the project experienced
                             costly downtime for work crews when more contamination was found
                             at the edges of the initial excavation and further characterization had
                             to be done.

                         •   Contracting. Some of the lessons learned discussed the importance of
                             using an appropriate type of contract for the work to be performed—




                         Page 32                             GAO-13-23 DOE Recovery Act Cleanup Projects
    specifically fixed-price contracts or cost reimbursement contracts. 31
    According to the lessons learned, DOE’s use of fixed-price contracting
    was appropriate when projects were, among other things, well-
    defined. When projects were not well-defined, however, cost overruns
    and schedule delays could occur under such a contract. For example,
    one lesson learned stated that a fixed-price contract worked well for
    the demolition of the Oak Ridge site’s K-33 building, a former uranium
    enrichment facility, because the project’s well-defined scope limited
    the possibility of unexpected conditions, changes to the contract, and
    cost adjustments. The Los Alamos National Laboratory, however,
    used a fixed-price contract for a landfill excavation project that did not
    have a well-defined scope, and significant cost adjustments resulted
    when the contractor found unexpected types and volumes of waste.

Other lessons may have limited applicability to non-Recovery Act work
because they address issues specific to EM’s Recovery Act program. For
example, some lessons learned address personnel issues, such as
methods to rapidly hire and train large numbers of new employees for a
window of a few years of Recovery Act funding. These lessons learned
may not be applicable unless EM receives another large-scale boost in
funding for environmental cleanup projects. Similarly, a few lessons
learned that addressed methods of coordinating the new Recovery Act
projects with projects funded by annual appropriations may have limited
use after Recovery Act funding is exhausted.

Furthermore, some lessons learned may have resulted from unique
circumstances that also may not be replicated in future EM projects. For
instance, one Savannah River Site official said that depressed market
conditions resulted in very strong competition among subcontractors for
work to decommission reactors; as a result, the site contracted for the
work at a price that was lower than expected. Another official at
Savannah River told us that the site was able to negotiate a unit cost for
waste treatment that was about 40 percent below the cost expected when
the Recovery Act project’s performance baseline was set. In this case,
the official said there is no lesson learned about cost savings for future


31
  Under a cost-reimbursement contract, the government pays a contractor’s allowable
incurred costs to the extent provided in the contract, regardless of whether the work is
completed. Under a fixed-price contract, a contractor accepts responsibility for completing
a defined amount of work for a fixed price, which places the risk of cost overruns on the
contractor rather than the government.




Page 33                                     GAO-13-23 DOE Recovery Act Cleanup Projects
              projects because the Recovery Act funding allowed the site to get the
              reduced rates by sending higher volumes of waste for treatment, but after
              the Recovery Act funds are expended and volumes of waste treated are
              reduced, the site will not be able to get the lower rates. In addition, EM
              selected shovel-ready projects that it expected could be completed
              quickly, and these lessons therefore may not be applicable to its more
              complex projects.

              The main features of EM’s initiative—such as breaking projects into
              smaller and shorter-term capital asset projects and operation activity
              projects and increasing project oversight—were not addressed in the
              lessons learned that had been developed through June 2012. EM did not
              specifically ask sites to comment on how the initiative affected their ability
              to manage Recovery Act projects, and the sites did not so comment.
              However, without lessons learned about the initiative, EM may not be
              able to determine whether this initiative will better support its cleanup
              efforts in the future. Furthermore, in response to our 2010
              recommendation for EM to assess project management and oversight
              steps adopted for Recovery Act projects, EM stated it would determine
              whether such steps, such as the initiative, have proven beneficial for
              Recovery Act projects and whether they would be effective and
              appropriate for cleanup projects funded by annual appropriations. 32 In
              May 2012, EM officials told us that a quantitative study has not yet been
              done to do such an assessment, but that it will be based on the lessons
              learned submitted by the sites. However, these lessons learned as of
              June 2012 have not focused on the effectiveness of the initiative.


              When EM received $6 billion in Recovery Act funds—an amount nearly
Conclusions   equal to its 2009 annual appropriation for its cleanup efforts—it faced a
              daunting task to quickly plan and begin this cleanup work. EM was
              generally successful in several areas—quickly selecting and starting
              dozens of cleanup projects, funding thousands of FTEs, accelerating
              cleanup work, and reducing the number of remaining facilities and the
              size of the areas needing to be cleaned up. Of the projects completed,
              most were completed at a lower-than-planned cost—some projects so
              much so that they raised questions about whether EM has effectively


              32
                GAO, Recovery Act: Most DOE Cleanup Projects Appear to Be Meeting Cost and
              Schedule Targets, but Assessing Impact of Spending Remains a Challenge GAO-10-784
              (Washington, D.C.: July 29, 2010).




              Page 34                                 GAO-13-23 DOE Recovery Act Cleanup Projects
                      addressed its long-standing challenge of developing realistic performance
                      baselines.

                      The Recovery Act-funded work is almost complete, but effective EM
                      project management remains a critical area because completing EM’s
                      cleanup work will take decades and cost billions of dollars. First used for
                      Recovery Act projects, the new initiative—which breaks large projects into
                      smaller projects to better manage them—holds potential as a way to help
                      improve DOE project management. The guidance describing how
                      projects can be broken out, however, does not clearly set out the
                      conditions under which and how EM should break a capital asset project
                      into smaller, discrete projects. Without a clear policy guiding how a
                      project should be broken out, the initiative could allow managers to avoid
                      DOE’s more stringent Order 413.3B project controls by classifying some
                      larger capital asset projects as smaller operation activity projects. Officials
                      in the Office of Project Management, who are responsible for project
                      management policy, told us that they did not know how many Recovery
                      Act operation activity projects might actually be part of capital asset
                      projects and have expressed concern that, under the initiative, some
                      capital asset projects had been broken into operation activity projects in a
                      way that bypasses project controls required by Order 413.3B. The project
                      controls, established to improve project management, are only required
                      for capital asset projects. Order 413.3B has been an important step in
                      DOE’s efforts to improve project management. Even this order and
                      associated guides, however, do not adequately address how to develop
                      key performance parameters for capital asset cleanup projects or provide
                      examples of such parameters in a way that would help ensure that scope
                      is always defined so that it would help officials and others accurately
                      assess project performance. EM’s 2012 operations protocol, the guidance
                      for operation activity projects, is less specific than Order 413.3B and
                      allows for wide variation in how and when performance baselines are
                      established and documented. Without sufficient project controls and
                      sufficient guidance to ensure that specific performance baselines are
                      established at a consistent point in a project’s development and clearly
                      documented, it may continue to be difficult for EM and others to assess
                      project performance, as we have previously reported.


                      To help ensure that EM more effectively manages all its projects, we
Recommendations for   recommend that the Secretary of Energy direct the Senior Advisor for
Executive Action      Environmental Management and the Director of the Office of
                      Management, as appropriate, to take the following four actions:



                      Page 35                               GAO-13-23 DOE Recovery Act Cleanup Projects
                     •   Develop and issue a policy that clearly sets out the criteria with more
                         specificity for reclassifying capital asset projects over $10 million into
                         smaller operation activity projects under $10 million in value.

                     •   Provide the Office of Acquisition and Project Management with
                         information on EM’s project classification decisions to ensure that all
                         capital asset projects have been appropriately classified and are
                         managed in accordance with DOE Order 413.3B.

                     •   Develop guidance to supplement DOE Order 413.3B to explain how
                         EM should develop scope targets—specifically key performance
                         parameters—for capital asset cleanup projects and include specific
                         examples for such parameters to help ensure that scope is always
                         defined in a way that it would help officials and others accurately
                         assess project performance, including cleanup projects.

                     •   Clarify guidance for operation activity projects to specify how and
                         when performance baselines (i.e., for scope, cost, and schedule
                         targets), which EM calls key performance metrics for operations
                         activity projects, are to be established and documented to help ensure
                         consistent assessment of performance.

                     We provided DOE with a draft of this report for review and comment. In
Agency Comments      written comments, which are reproduced in appendix III, DOE did not
and Our Evaluation   comment on the report findings but agreed with the recommendations in
                     our report, subject to some wording modifications. We incorporated most
                     of DOE’s suggested wording changes. However, DOE objected to our
                     referring to operation activity projects as “projects” because it wants to
                     avoid any confusion about the applicability of its project management
                     order that applies to only capital asset projects. We understand the
                     distinction DOE is making and explained that distinction in the report. For
                     purposes of this report, we refer to the operation activities as projects
                     because we are collectively referring to all Recovery-Act funded efforts as
                     projects. DOE also provided technical comments, which we incorporated
                     as appropriate.


                     We are sending copies of this report to the Secretary of Energy,
                     appropriate congressional committees, and other interested parties. In
                     addition, the report is available at no charge on the GAO website at
                     http://www.gao.gov




                     Page 36                               GAO-13-23 DOE Recovery Act Cleanup Projects
If you or your staff members have any questions about this report, please
contact me at (202) 512-3841 or gaffiganm@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major contributions to
this report are listed in appendix IV.




Mark Gaffigan
Managing Director, Natural Resources and Environment




Page 37                             GAO-13-23 DOE Recovery Act Cleanup Projects
List of Committees

The Honorable Carl Levin
Chairman
The Honorable John McCain
Ranking Member
Committee on Armed Services
United States Senate

The Honorable Joseph I. Lieberman
Chairman
The Honorable Susan M. Collins
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable Dianne Feinstein
Chairman
The Honorable Lamar Alexander
Ranking Member
Subcommittee on Energy and Water Development
Committee on Appropriations
United States Senate

The Honorable Howard P. McKeon
Chairman
The Honorable Adam Smith
Ranking Member
Committee on Armed Services
House of Representatives

The Honorable Darrel E. Issa
Chairman
The Honorable Elijah Cummings
Ranking Member
Committee on Oversight and Government Reform
House of Representatives




Page 38                          GAO-13-23 DOE Recovery Act Cleanup Projects
The Honorable Rodney P. Frelinghuysen
Chairman
The Honorable Peter Visclosky
Ranking Member
Subcommittee on Energy and Water Development
Committee on Appropriations
House of Representatives




Page 39                        GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix I: Objectives, Scope and
              Appendix I: Objectives, Scope and
              Methodology



Methodology

              To determine the number of full-time equivalent (FTE) jobs the
              Department of Energy’s (DOE) Office of Environmental Management
              (EM) funded with Recovery Act funds from October 2009 through March
              2012, we reviewed pertinent provisions of the American Recovery and
              Reinvestment Act of 2009 and Office of Management and Budget (OMB)
              guidance on reporting FTEs. We obtained data from EM on the number of
              FTEs that EM’s contractors reported to the government’s official
              Recovery Act website since October 2009. To assess the accuracy of the
              FTE data, we discussed DOE’s process for reviewing these data with
              officials from DOE’s Office of the Chief Financial Officer and EM’s
              Recovery Act Program Office. These officials told us that DOE does
              accuracy reviews, including EM’s comparison of the information
              contractors submitted to the website with the information that contractors
              provide directly to EM site officials. We also compared the quarterly FTE
              data that EM provided us from the government website with two other
              sources—from the Recovery.gov website, as downloaded by GAO, and
              from contractors, as directly collected by EM at sites. The FTE counts
              from the three sources generally do not vary more than a few percentage
              points. In accordance with Recovery Act reporting requirements, prime
              contractors reported only prime, and not subcontractor, FTEs for the first
              and second quarters of fiscal year 2010. 1 To provide a meaningful FTE
              trend, we used subcontractor FTEs reported by EM sites for those two
              quarters to reconstruct a combined total for prime and subcontractors. We
              believe the counts for subcontractors are sufficiently reliable for the
              purposes of this report because the site-reported counts for prime
              contractors’ FTEs for the same quarters are no more than 5 percent
              different than the numbers in the government’s website. Overall, on the
              basis of these steps, we concluded the FTE data included in our report
              are sufficiently reliable for our reporting purposes.

              To determine the status of EM’s Recovery Act-funded cleanup projects
              and the extent to which completed projects met performance baselines,
              we reviewed pertinent DOE and EM policies and guidance on project
              management, including for Recovery Act projects; analyzed project
              documents and data recorded in EM’s corporate database—called the
              Integrated Planning, Accountability, and Budgeting System (IPABS); and
              interviewed DOE, EM, EM’s Recovery Act Program Office, and Office of



              1
               Only starting in the third quarter of fiscal year 2010 were EM prime contractors at each
              site required to report FTEs for both prime and subcontractors combined.




              Page 40                                      GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix I: Objectives, Scope and
Methodology




Project Management officials. We reviewed data for both original
Recovery Act projects and additional projects, known as buy-back
projects, which were started later when some original projects finished
with unused funds. 2 We selected a nonprobability sample of two EM
cleanup sites to visit in order to better understand how sites manage their
Recovery Act projects. 3 These sites—the Hanford Site and the Oak Ridge
Reservation—together were allotted about $2.7 billion of the total $6
billion in Recovery Act funding for environmental cleanup. At each site
visited, we reviewed project documentation, interviewed officials, and
observed Recovery Act work under way.

To assess project performance, we evaluated Recovery Act funded-
projects that were complete. Specifically, we obtained EM’s performance
analysis and its approved project closure packages for projects that were
administratively complete by April 30, 2012—that is, projects complete
both in terms of cleanup work and closure paperwork. Using the
assessment procedures that EM’s Recovery Act Program Office stated it
would apply to Recovery Act projects, we compared the scope, cost, and
schedule targets in performance baselines with actual scope, cost, and
schedule when the project was complete. We used DOE criteria to
measure project performance. Specifically, projects should be completed
within the planned scope, and within 110 percent of the cost target at
project completion, unless otherwise impacted by a directed change. 4 We
discussed projects with EM Recovery Act officials when our assessment
of project performance differed from EM’s to identify the reasons for the
differences. Because we found that the schedule targets for Recovery Act
projects were generally not specific to the projects, which is necessary for
a meaningful assessment, we chose to discuss this issue in the report but
do not draw conclusions about the extent to which projects met schedule



2
 We did not count as projects any of three project codes that EM identified as payment
activities, such as for Recovery Act administrative purposes, or “embedded buyback
activities” that involved using a project’s excess funds to do additional scope managed
under its existing project code.
3
 Because this was a nonprobability sample, the information derived from our site visits is
not generalizeable to all EM cleanup sites but provides illustrative examples of how sites
manage their Recovery Act projects.
4
 According to DOE Order 413.3B, a directed change is a change caused by some DOE
policy directives (such as those that have force and effect of law and regulation),
regulatory, or statutory action and is initiated by entities external to the Department, to
include external funding reductions.




Page 41                                       GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix I: Objectives, Scope and
Methodology




targets. We also interviewed EM officials about the reliability of the IPABS
database because of its use to document performance baselines for
operation activity projects. We believe the data are insufficiently reliable
for the purposes of drawing conclusions about the extent to which
projects met schedule targets, but are otherwise sufficiently reliable for
assessing overall project performance in conjunction with other data we
obtained.

To identify management issues, if any, that arose during EM’s Recovery
Act projects and any lessons EM has learned that it could apply to other
cleanup efforts, we reviewed GAO reports, including our High-Risk
series, 5 which discuss EM project management issues; DOE reports and
other documents, including DOE’s root cause analysis and corrective
action plan; and other recent reports and documents addressing
previously identified EM project management issues. We also reviewed
EM Recovery Act Program Portfolio Management Framework (2009), its
2010 and 2012 operations protocols, and other documents to understand
the management issues that the initiative was intended to address. To
identify any management issues that arose during EM’s Recovery Act
program, we examined project closure documents and interviewed EM
and Office of Project Management officials. With regard to lessons
learned, because EM was still in the process of gathering and assessing
lessons learned for inclusion in a report to be issued in August 2012, we
were unable to determine what EM considered the lessons learned from
its Recovery Act program. To understand EM’s potential lessons learned,
we reviewed the materials that sites submitted about Recovery Act
projects. Specifically, we reviewed lessons learned captured in EM’s
lessons learned database. We also attended EM’s lessons learned
“information exchange” conference held on March 1, 2012, and reviewed
presentations given. All 17 sites receiving Recovery Act funding
submitted lessons to the database or at the conference. We analyzed the
lessons learned to see if each addressed one or more of areas of
possible improvement identified by EM or others. In addition, we reviewed
the lessons learned to evaluate the potential for applying them to other
EM cleanup projects and discussed this issue with EM officials. We also
determined if any of the lessons addressed the effectiveness or other
aspects of the initiative for EM’s Recovery Act projects, such as
implementing smaller, shorter-term projects, breaking larger EM projects



5
See GAO-11-278.




Page 42                              GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix I: Objectives, Scope and
Methodology




into capital asset and operation activity projects, increasing project
oversight and reporting, and for disbursing Recovery Act funding in
phases.

We conducted this performance audit from May 2011 to October 2012 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.




Page 43                              GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix II: Administratively Completed
              Appendix II: Administratively Completed
              Recovery Act Projects Available for GAO
              Analysis as of April 30, 2012


Recovery Act Projects Available for GAO
Analysis as of April 30, 2012

              Project number                            Project description
              Argonne National Laboratory (IL)
              1. CH-ANLE-0040.NEW.R1.1                  Building 310
              2. CH-ANLE-0040.NEW.R1.2                  Building 330
              3. CH-ANLE-0040.NEW.R1.3                  AGHCF waste & materials disposition
              4. CH-ANLE-0040.NEW.R1.4                  TRU Waste Disposition
              Brookhaven National Laboratory (NY)
              5. BRNL-0040.R1                           Graphite Research Reactor D&D
              6. BRNL-0041.R1                           High Flux Beam Reactor
              7. BRNL-0041.NEW.R1                       High Flux Beam Reactor
              Energy Technical Engineering Center (CA)
              8. CBC-ETEC-0040.R1.2                     Area IV Soil and Groundwater Remediation
              Hanford Site – Office of River Protection (WA)
              9. ORP-0014.R1.1                          Tank Farm Infrastructure Upgrades
              10. ORP-0014.R1.2                         Other Infrastructure Upgrades
              11. ORP-0014.R1.3                         Facility Upgrades
              12. ORP-0014.R1.4                         Waste Feed Infrastructure Upgrades
              13. ORP-0014.R1.5                         SY Transfer Line Upgrade
              Hanford Site – Richland Office (WA)
              14. RL-0013C.R1.1                         MLLW Treatment
              15. RL-0013C.R1.2                         TRU Waste
              16. RL-0030.R1.1                          Soil & Groundwater Treatment
                                 a
              17. RL-0030.R1.2                          Soil & Groundwater Operation Activities
              18. RL-0040.R1.2                          Outer Zone D&D
              19. RL-0041.R1.1                          100 K Area Remediation
              20. RL-0041.R1.2                          ERDF Cell Expansion
              21. RL-0041.R1.3                          Accelerated Remediation & Disposal
              22. RL-0041.R1.4                          Super Cell 10
              23. RL-0041.R2                            618-10 Trench Remediation
              Idaho National Laboratory (ID)
              24. ID-0013.R1                            TRU Waste
              25. ID-0030B.R1.1                         Buried Waste
              26. ID-0030B.R1.2                         In Situ Grouting
              27. ID-0030B.R1.3                         Soil & Groundwater Operations
              28. ID-0030B.R1.4                         Soil & Groundwater Buy-Back
              29. ID-0040B.R1.1                         D&D (NTB)




              Page 44                                   GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix II: Administratively Completed
Recovery Act Projects Available for GAO
Analysis as of April 30, 2012




Project number                            Project description
Los Alamos National Laboratory (NM)
30. VL-LANL-0030.R1.2                     Monitory Well Installation Program
31. VL-LANL-0040-D.R1.1                   D&D - TA-21
32. VL-LANL-0040-N.R1.1                   D&D-TSTA
33. VL-LANL-0040-N.R1.2                   D&D-Non Def Buy-Back
Moab UMTRA Site (UT)
34. CBC-MOAB-0031.R1                      Moab Recovery Act Project
Mound Site (OH)
35. OH-MB-0031.NEW.R1                     Mound Operable Unit 1
Nevada National Security Site (NV)
36. VL-NV-0030.R1                         Soil and Water Remediation
37. VL-NV-0030.R2                         NNSS ARRA Buy-Back
Oak Ridge National Laboratory (TN)
38. OR-0040.R1.1                          K-27 Demolition Preparation
39. OR-0040.R1.2                          K-33 Demolition
40. OR-0041.NEW.R1.1                      Y-12 Excess Material Disposition
41. OR-0041.NEW.R1.2                      Y-12 Biology Complex
42. OR-0041.NEW.R1.3                      Y-12 9206 Filter House D&D
43. OR-0041.R1.1                          Y-12 Facility D&D
44. OR-0041.R1.3                          Disposal Facility Expansion - EMWMF
                                          Expansion
45. OR-0041.R1.4                          Disposal Facility Expansion-Sanitary Landfill
                                          Expansion
46. OR-0042.R1.2                          Facility Demolition - Building 3026/Wooden
                                          Facilities
47. OR-0042.R1.3                          Defense Remedial Actions
48. OR-0042.R1.5                          ORNL Bethel Valley Burial Grounds
49 OR-0042.R1.10                          ORNL Waste Operations
50. OR-0042.NEW.R2.2                      ORNL Non-Defense Misc. Facility Demolition
                                          – 2000 Complex
Paducah Site (KY)
51. PA-0040.R1.1                          C-410 D&D
52. PA-0040.R1.2                          C-340 D&D
53. PA-0040.R1.3                          C-746-A D&D
54. PA-0040.R1.4                          Paducah Buy-Back
Portsmouth Site (OH)
55. PO-0013.R1.1                          UMC Disposition
56. PO-0040.R1.1                          X-701B Plume Remediation




Page 45                                   GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix II: Administratively Completed
Recovery Act Projects Available for GAO
Analysis as of April 30, 2012




    Project number                             Project description
    57. PO-0040.R1.2                           X-533 D&D
    58. PO-0040.R1.3                           X-633 D&D
    59. PO-0040.R1.4                           X-760 D&D
    60. PO-0040.R1.5                           D&D Buy-Back
    61. PO-0040.R1.6                           Waste Disposal Buy-Back
    Savannah River Site (SC)
    62. SR-0013.R1.1                           Solid Waste Disposition
    63. SR-0014C.R1.1                          Liquid Waste Systems Recapitalization
    64. SR-0014C.R1.2                          Saltstone Disposal Unit #2
    65. SR-0030.R1.2                           P Reactor Decommissioning Project
    66. SR-0030.R1.3                           P Ash Basin Remediation Project
    67. SR-0030.R1.4                           R Reactor Decommissioning Project
    68. SR-0030.R1.5                           R Ash Basin Remedial Action Project
    69. SR-0030.R2.1                           M and D Area Completion GPP and
                                               Operations
    70. SR-0030.R3.1                           Site Wide Completion GPPs and Operations
    71. SR-0030.R3.2                           Heavy Water Components Test Reactor
                                               Decommissioning Project
    72. SR-0040.R1                             Inactive facility S&M
    SLAC National Accelerator Laboratory (CA)
    73. CBC-SLAC-0030.R1                       SLAC Recovery Act Project
    Separations Process Research Unit (NY)
    74. VL-SPRU-0040.R1.1                      Building G2 and H2 D&D
    75. VL-SPRU-0040.R1.2                      Contaminated Soil Removal - North Field
    West Valley Demonstration Project (NY)
    76. OH-WV-0013.R1                          TRU and Solid Waste
    77. OH-WV-0040.R1.1                        Main Plant D&D
    78. OH-WV-0040.R1.2                        Other D&D
Source: GAO analysis of DOE data.

a
 In a closure document, EM designated a portion of the scope of RL-0030.R1.2 as RL-0030.R1.3, We
are referring to both projects as the single project RL-0030.R1.2 because an EM official explained
that they were managed as a single project with a single baseline.




Page 46                                         GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix III: Comments from the
              Appendix III: Comments from the Department
              of Energy



Department of Energy




              Page 47                                      GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix III: Comments from the Department
of Energy




Page 48                                      GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix III: Comments from the Department
of Energy




Page 49                                      GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix III: Comments from the Department
of Energy




Page 50                                      GAO-13-23 DOE Recovery Act Cleanup Projects
Appendix IV: GAO Contact and Staff
                  Appendix IV: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Mark Gaffigan (202) 512-3841, or gaffiganm@gao.gov
GAO Contact
                  In addition to the individual named above, the following staff members
Staff             made key contributions to this report: Janet Frisch, Assistant Director;
Acknowledgments   Thomas Beall; Antoinette Capaccio; Ellen W. Chu; Eli DeVan; James
                  Espinoza; Terry Hanford; Yvonne Jones; Eli Lewine; Mehrzad Nadji;
                  Josie Ostrander; Carol Patey, Anne Rhodes-Kline; Beverly Ross; Carol
                  Herrnstadt Shulman; Jonathan Stehle; and Kiki Theodoropoulos.




(361286)
                  Page 51                              GAO-13-23 DOE Recovery Act Cleanup Projects
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