oversight

Hanford Waste Treatment Plant: DOE Needs to Take Action to Resolve Technical and Management Challenges

Published by the Government Accountability Office on 2012-12-19.

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

                United States Government Accountability Office

GAO             Report to Congressional Requesters




                HANFORD WASTE
December 2012



                TREATMENT PLANT

                DOE Needs to Take
                Action to Resolve
                Technical and
                Management
                Challenges




GAO-13-38
                                                December 2012

                                                HANFORD WASTE TREATMENT PLANT
                                                DOE Needs to Take Action to Resolve Technical and
                                                Management Challenges
Highlights of GAO-13-38, a report to
congressional requesters




Why GAO Did This Study                          What GAO Found
In December 2000, DOE awarded                   The Department of Energy (DOE) faces significant technical challenges in
Bechtel a contract to design and                successfully constructing and operating the Waste Treatment and Immobilization
construct the WTP project at DOE’s              Plant (WTP) project that is to treat millions of gallons of highly radioactive liquid
Hanford Site in Washington State. This          waste resulting from the production of nuclear weapons. DOE and Bechtel
project—one of the largest nuclear              National, Inc. identified hundreds of technical challenges that vary in significance
waste cleanup facilities in the world—          and potential negative impact and have resolved many of them. Remaining
was originally scheduled for completion         challenges include (1) developing a viable technology to keep the waste mixed
in 2011 at an estimated cost of $4.3            uniformly in WTP mix tanks to both avoid explosions and so that it can be
billion. Technical challenges and other
                                                properly prepared for further processing; (2) ensuring that the erosion and
issues, however, have contributed to
                                                corrosion of components, such as tanks and piping systems, is effectively
cost increases and schedule delays.
GAO was asked to examine (1)
                                                mitigated; (3) preventing the buildup of flammable hydrogen gas in tanks,
remaining technical challenges, if any,         vessels, and piping systems; and (4) understanding better the waste that will be
the WTP faces; (2) the cost and                 processed at the WTP. Until these and other technical challenges are resolved,
schedule estimates for the WTP; and             DOE will continue to be uncertain whether the WTP can be completed on
(3) steps DOE is taking, if any, to             schedule and whether it will operate safely and effectively.
improve the management and                      Since its inception in 2000, DOE’s estimated cost to construct the WTP has
oversight of the WTP project. GAO               tripled and the scheduled completion date has slipped by nearly a decade to
reviewed DOE and contractor data and
                                                2019. GAO’s analysis shows that, as of May 2012, the project’s total estimated
documents, external review reports,
                                                cost had increased to $13.4 billion, and significant additional cost increases and
and spoke with officials from DOE and
the Defense Nuclear Facilities Safety           schedule delays are likely to occur because DOE has not fully resolved the
Board and with contractors at the WTP           technical challenges faced by the project. DOE has directed Bechtel to develop a
site and test facilities.                       new cost and schedule baseline for the project and to begin a study of
                                                alternatives that include potential changes to the WTP’s design and operational
                                                plans. These alternatives could add billions of dollars to the cost of treating the
What GAO Recommends                             waste and prolong the overall waste treatment mission.
GAO recommends that DOE (1) not
                                                DOE is taking steps to improve its management and oversight of Bechtel’s
resume construction on WTP’s
pretreatment and high-level waste               activities but continues to face challenges to completing the WTP project within
facilities until, among other things, the       budget and on schedule. DOE’s Office of Health, Safety, and Security has
facilities’ design has been completed to        conducted investigations of Bechtel’s activities that have resulted in penalties for
the level established by nuclear                design deficiencies and for multiple violations of DOE safety requirements. In
industry guidelines; (2) ensure the             January 2012, the office reported that some aspects of the WTP design may not
department’s contractor performance             comply with DOE safety standards. As a result, DOE ordered Bechtel to suspend
evaluation process does not                     work on several major WTP systems, including the pretreatment facility and parts
prematurely reward contractors for              of the high-level waste facility, until Bechtel can demonstrate that activities align
resolving technical issues later found          with DOE nuclear safety requirements. While DOE has taken actions to improve
to be unresolved; and (3) take                  performance, the ongoing use of an accelerated approach to design and
appropriate steps to determine whether          construction—an approach best suited for well-defined and less-complex
any incentive payments were made                projects—continues to result in cost and schedule problems, allowing
erroneously and, if so, take actions to         construction and fabrication of components that may not work and may not meet
recover them. DOE generally agreed              nuclear safety standards. While guidelines used in the civilian nuclear industry
with the report and its                         call for designs to be at least 90 percent complete before construction of nuclear
recommendations.                                facilities, DOE estimates that WTP is more than 55 percent complete though the
                                                design is only 80 percent complete. In addition, DOE has experienced continuing
                                                problems overseeing its contractor’s activities. For example, DOE’s incentives
View GAO-13-38. For more information,
contact David C. Trimble at (202) 512-3841 or   and management controls are inadequate for ensuring effective project
trimbled@gao.gov.                               management, and GAO found instances where DOE prematurely rewarded the
                                                contractor for resolving technical issues and completing work.
                                                                                         United States Government Accountability Office
Contents


Letter                                                                                                   1
              Background                                                                                 6
              Significant Technical Challenges Remain Unresolved                                        11
              Substantial Additional Cost Increases and Schedule Delays
                Are Likely                                                                              14
              DOE Is Taking Steps to Address Some Management and Oversight
                 Problems but Continues to Face Challenges to Completing the
                 WTP                                                                                    17
              Conclusions                                                                               23
              Recommendations for Executive Action                                                      25
              Agency Comments and Our Evaluation                                                        25

Appendix I    Comments from the Department of Energy                                                    27



Appendix II   GAO Contact and Staff Acknowledgments                                                     31



Figures
              Figure 1: WTP Waste Treatment Process                                                      3
              Figure 2: WTP Construction Site as of March 2012                                          10




              Abbreviations
              DOE         Department of Energy
              EPA         Environmental Protection Agency
              ORP         DOE’s Office of River Protection
              PNNL        Pacific Northwest National Laboratory
              WTP         Waste Treatment and Immobilization Plant


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              Page i                                             GAO-13-38 DOE’s Waste Treatment Plant
United States Government Accountability Office
Washington, DC 20548




                                   December 19, 2012

                                   The Honorable Fred Upton
                                   Chairman
                                   The Honorable Henry A. Waxman
                                   Ranking Member
                                   Committee on Energy and Commerce
                                   House of Representatives

                                   The Honorable Cliff Stearns
                                   Chairman
                                   The Honorable Diana DeGette
                                   Ranking Member
                                   Subcommittee on Oversight and Investigations
                                   Committee on Energy and Commerce
                                   House of Representatives

                                   The Honorable Edward J. Markey
                                   House of Representatives

                                   The Department of Energy (DOE) is responsible for one of the world’s
                                   largest environmental cleanup projects: the treatment and disposal of
                                   millions of gallons of radioactive and hazardous waste at its 586-square-
                                   mile Hanford Site in southeastern Washington State. A total of nine
                                   nuclear reactors––including the world’s first operating large-scale reactor,
                                   developed as part of the Manhattan Project during World War II––were
                                   built at Hanford and operated until the late 1980s. The primary mission of
                                   these reactors was to produce plutonium and other special nuclear
                                   materials for DOE’s nuclear weapons program. Some of the large
                                   volumes of hazardous and radioactive waste that resulted from nuclear
                                   materials production was deposited directly into the ground in trenches,
                                   injection wells, or other facilities designed to allow the waste to disperse
                                   into the soil, and some was packaged into drums and other containers
                                   and buried. The most dangerous waste was stored in 177 large
                                   underground storage tanks. The underground tanks currently hold more
                                   than 56 million gallons of this waste—enough to fill an area the size of a
                                   football field to a depth of over 150 feet.

                                   The oldest 149 tanks, some of which date back to the 1940s, have single-
                                   layer walls, or shells; were built with a 20-year design life; and will be
                                   almost 100 years old by the estimated end of waste treatment. DOE has
                                   reported that 67 of these tanks are assumed or are known to have leaked


                                   Page 1                                    GAO-13-38 DOE’s Waste Treatment Plant
waste into the soil. Because some of this contamination has reached the
groundwater under the tanks, DOE officials are concerned that the
contamination is now making its way to the Columbia River, which
borders the Hanford Site for almost 50 miles. The Columbia River is the
second largest river in the United States and a source for hydropower
production, agricultural irrigation, drinking water, and salmon
reproduction. The site is also near the cities of Richland, Pasco, and
Kennewick, with a combined regional population of over 200,000. DOE,
the Environmental Protection Agency (EPA), and the Washington State
Department of Ecology have determined that containing, stabilizing, and
preparing this highly radioactive liquid waste for final disposal is one of
the highest priority cleanup activities at the Hanford site. It is also one of
the most complex cleanup activities and, as of August 2012, none of the
waste in the tanks had been treated for disposal because no treatment
facility was yet available.

In 2000, DOE awarded a contract to Bechtel National, Inc. to design,
construct, and commission a Waste Treatment and Immobilization Plant
(WTP) to stabilize large quantities of this waste and prepare it for disposal
at a permanent national geologic repository that is yet to be identified.
The WTP is to consist of a pretreatment facility that separates waste into
high-level and low-activity radioactivity waste streams; two facilities to
treat these separated streams using a process called vitrification, where
waste is mixed with melted glass and poured into steel canisters where it
cools and hardens, to prepare it for final disposal; an analytical laboratory;
and a variety of supporting facilities. 1 See figure 1 for a description of the
process that is to be used to treat and stabilize waste at the WTP and
prepare it for disposal.




1
 As designed, the WTP Low Activity Waste Facility will only be capable of treating less
than half of the expected quantity of Hanford’s low-activity waste. DOE has indicated that
a second plant or alternative approach that is not part of the current project will be
necessary to treat the rest of the low-activity waste and is still exploring a supplemental
technology outside the scope of the WTP to treat this waste. See GAO, Nuclear Waste:
DOE Should Reassess Whether the Bulk Vitrification Demonstration Project at Its Hanford
Site Is Still Needed to Treat Radioactive Waste, GAO-07-762 (Washington, D.C.:
June 12, 2007).




Page 2                                             GAO-13-38 DOE’s Waste Treatment Plant
Figure 1: WTP Waste Treatment Process




                                        To construct the facility, DOE and Bechtel adopted a fast-track, design-
                                        build approach. Using the unconventional design-build approach,
                                        technology development activities, plant design, and construction occur
                                        simultaneously. In a conventional construction approach, these activities
                                        occur sequentially. As required by DOE’s project management directives,
                                        approval to begin construction is granted when technology development
                                        and design of the facility is essentially complete and after the
                                        establishment and approval of a project’s performance baseline, which
                                        represents DOE’s commitment to complete a project with a specific scope
                                        at a certain cost and by a specific date. We and others have raised
                                        concerns about DOE’s use of the design-build approach for the WTP
                                        because some sections of this facility are constructed before designs are
                                        complete and before technology issues are fully resolved, which has




                                        Page 3                                   GAO-13-38 DOE’s Waste Treatment Plant
led to significant cost increases and schedule delays. 2 Specifically, when
the contract was awarded in 2000 for the WTP, the contract for
constructing the WTP specified that the project would cost $4.3 billion and
would be completed in 2011. As a result of numerous problems with the
design and construction of WTP facilities, in 2006, DOE significantly
modified the project’s baseline. Despite the problems throughout the
construction process, however, DOE has continued with the design-build
approach. In the last 2 years, several WTP project engineers and
managers and the Defense Nuclear Facility Safety Board (Safety
Board)—an independent oversight agency created by Congress to
assess safety conditions and operations at defense nuclear facilities at
DOE’s sites—publicly criticized DOE and Bechtel for ignoring technical
and safety concerns that threaten the plant’s ability to operate safely once
constructed. In 2011, DOE reported that unresolved technical risks would
cause the cost and schedule estimates to slip further unless additional
funding was provided.

In this context, you asked us to evaluate DOE’s management of the WTP
project. Our objectives were to examine: (1) remaining technical
challenges, if any, the WTP faces; (2) cost and schedule estimates for the
WTP; and (3) steps DOE is taking, if any, to improve the management
and oversight of the WTP project.

To accomplish our objectives, we conducted our work at the Hanford Site,
including the WTP construction site; DOE’s Office of River Protection
(ORP)—which is responsible for DOE management of the construction of
the WTP; Bechtel’s WTP project office in Richland, Washington; and test
facilities at Mid Columbia Engineering. We interviewed, among others,
current and past DOE WTP project directors and officials from WTP
project support divisions, including the WTP Engineering Division, ORP
Engineering and Nuclear Safety Division, and ORP Environmental Safety
and Quality Division.




2
 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); 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-07-762.




Page 4                                         GAO-13-38 DOE’s Waste Treatment Plant
To identify any remaining technical challenges that the WTP is facing, we
reviewed DOE and Bechtel documents that provide a summary and
current status of technical issues, including criteria for addressing these
issues and a timeline for their resolution. We also examined independent
reviews on technical and safety issues and interviewed officials from
DOE’s Office of Engineering and Construction Management and Office of
Health, Safety, and Security; the Pacific Northwest National Laboratory
(PNNL); the Safety Board; and the Consortium for Risk Evaluation with
Stakeholder Participation—a group of engineering, scientific, and policy
experts from seven universities that advises DOE in its environmental
management activities. 3 We also interviewed officials from the
Washington State Department of Ecology and EPA.

To examine the current cost and schedule estimates for the WTP, we
reviewed the most current estimates for the project that DOE prepared in
2006, DOE and Bechtel progress reports on the project’s adherence to
these cost and schedule estimates, and project risk management plans.
We also interviewed DOE officials to obtain information on recent efforts
to revise the project’s cost and schedule estimates.

To determine any steps DOE is taking to improve the management and
oversight of the WTP project, we reviewed DOE policies on project
management, examined regulatory requirements, and reviewed
agreements between DOE, EPA, and the state of Washington. We also
reviewed DOE WTP management documents, risk analysis reports, and
contractor project plans.

We conducted this performance audit from September 2011 to December
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.




3
 DOE’s Office of Engineering and Construction Management is now called the Office of
Project Management and is within DOE’s Office of Acquisition and Project Management.




Page 5                                          GAO-13-38 DOE’s Waste Treatment Plant
             Established in 1943, Hanford produced plutonium for the world’s first
Background   nuclear device. At the time, little attention was given to the resulting by-
             products—massive amounts of radioactive and chemically hazardous
             waste—or how these by-products were to be permanently disposed of.
             About 46 different radioactive elements represent the majority of the
             radioactivity currently residing in Hanford’s tanks. Once Hanford tank
             waste is separated by the WTP waste treatment process, the high-level
             waste stream will contain more than 95 percent of the radioactivity but
             constitute less than 10 percent of the volume to be treated. The low-
             activity waste stream will contain less than 5 percent of the radioactivity
             but constitute over 90 percent of the volume. The tanks also contain large
             volumes of hazardous chemical waste, including various metal
             hydroxides, oxides, and carbonates. These hazardous chemicals are
             dangerous to human health and can cause medical disorders including
             cancer, and they can remain dangerous for thousands of years. Over the
             years, the waste contained in these tanks has settled; today it exists in
             the following four main forms or layers:

             •   Vapor: Gases produced from chemical reactions and radioactive
                 decay occupies tank space above the waste.

             •   Liquid: Fluids (supernatant liquid) may float above a layer of settled
                 solids or under a floating layer of crust; fluids may also seep into pore
                 spaces or cavities of settled solids, crust, or sludge.

             •   Saltcake: Water-soluble compounds, such as sodium salts, can
                 crystallize or solidify out of wastes to form a salt-like or crusty
                 material.

             •   Sludge: Denser water-insoluble or solid components generally settle
                 to the bottom of a tank to form a thick layer having the consistency
                 similar to peanut butter.

             DOE’s cleanup, treatment, and disposal of radioactive and hazardous
             wastes are governed by a number of federal and state laws and
             implemented under the leadership of DOE’s Assistant Secretary for
             Environmental Management. Key laws include the Comprehensive
             Environmental Response, Compensation, and Liability Act of 1980, as




             Page 6                                     GAO-13-38 DOE’s Waste Treatment Plant
amended, 4 and the Resource Conservation and Recovery Act of 1976, as
amended. 5 In addition, most of the cleanup activities at Hanford are
carried out under the Hanford Federal Facility Agreement and Consent
Order among DOE, the Washington State Department of Ecology, and
EPA. Commonly called the Tri-Party Agreement, this accord was signed
in May 1989 and has been amended a number of times since then to,
among other things, establish additional enforceable milestones for
certain WTP construction and tank waste retrieval activities. The
agreement lays out a series of legally enforceable milestones for
completing major activities in Hanford’s waste treatment and cleanup
process. A variety of local and regional stakeholders, including county
and local government agencies, citizen and advisory groups, and Native
American tribes, also have long-standing interests in Hanford cleanup
issues. These stakeholders make their views known through various
public involvement processes, including site-specific advisory boards.
DOE’s ORP administers Hanford’s radioactive liquid tank waste
stabilization and disposition project including the construction of the WTP.
The office has an annual budget of about $1 billion and a staff of 151
federal employees, of which 54 support the WTP project. Other cleanup
projects at Hanford are administered by DOE’s Richland Operations
Office.

DOE has attempted and abandoned several different strategies to treat
and dispose of Hanford’s tank wastes. In 1989, DOE’s initial strategy
called for treating only part of the waste. Part of this effort involved
renovating a World War II-era facility in which it planned to start waste
treatment. DOE spent about $23 million on this project but discontinued it
because of technical and environmental issues and stakeholder concerns
that not all the waste would be treated. In 1991, DOE decided to treat
waste from all 177 tanks. Under this strategy, DOE would have completed
the treatment facility before other aspects of the waste treatment program
were fully developed; however, the planned treatment facility would not
have had sufficient capacity to treat all the waste in a time frame
acceptable to EPA and the Washington State Department of Ecology.


4
 42 U.S.C. § 9601 et seq. The act, among other things, provided the federal government
with authority to respond to releases or threatened releases of hazardous substances.
5
 42 U.S.C. § 6901 et seq. Under the act, the owners or operators of facilities located on
sites where hazardous waste was or is treated, stored, or disposed of must, among other
things, clean up present and past contamination within the boundaries of their sites, as
well as contamination that may have spread beyond those boundaries.




Page 7                                            GAO-13-38 DOE’s Waste Treatment Plant
DOE spent about $418 million on this strategy. Beginning in 1995, DOE
attempted to privatize tank waste cleanup. Under its privatization strategy,
DOE planned to set a fixed price and pay the contractor for canisters and
containers of stabilized tank waste that complied with contract
specifications. If costs grew as a result of contractor performance
problems, the contractor, not DOE, was to bear these cost increases. Any
cost growth occurring as a result of changes directed by DOE was to
result in an adjustment to the contract price and was to be borne by DOE.
Under the privatization strategy, DOE’s contractor would build a
demonstration facility to treat 10 percent of the waste volume and 25
percent of the radioactivity by 2018 and complete cleanup in 2028.
However, because of dramatically escalating costs and concerns about
contractor performance, DOE terminated the contract after spending
about $300 million, mostly on plant design. Following our criticisms of
DOE’s earlier privatization approach, 6 DOE decided that a cost-
reimbursement contract with incentive fees would be more appropriate
than a fixed-price contract using a privatization approach for the Hanford
project and would better motivate the contractor to control costs through
incentive fees. In total, since 1989 when cleanup of the Hanford site
began, DOE has spent over $16 billion to manage the waste and explore
possible ways to treat and dispose of it.

DOE’s current strategy for dealing with tank waste consists of the
construction of a large plant—the WTP—to treat and prepare the waste
for permanent disposal. Begun in 2000, the WTP project is over half
completed and covers 65 acres and is described by DOE as the world’s
largest radioactive waste treatment plant. As designed, the WTP project
is to consist of three waste processing facilities, an analytical laboratory,
and over 20 smaller supporting facilities to treat the waste and prepare it
for permanent disposal. The three waste processing facilities are as
follows (see fig. 2):

•   Pretreatment Facility – This facility is to receive the waste from the
    tanks and separate it into high-level and low-activity components. This
    is the largest of the WTP facilities––expected to be 12-stories tall with
    a foundation the size of four football fields.




6
 See GAO, Nuclear Waste: Observations on DOE’s Privatization Initiative for Complex
Cleanup Projects, GAO/T-RCED-00-215 (Washington, D.C.: June 22, 2000).




Page 8                                          GAO-13-38 DOE’s Waste Treatment Plant
•   High-Level Waste Facility – This facility is to receive the high-level
    waste from the pretreatment facility and immobilize it by mixing it with
    a glass-forming material, melting the mixture into glass, and pouring
    the vitrified waste into stainless-steel canisters to cool and harden.
    The canisters filled with high-level waste were initially intended to be
    permanently disposed of at a geological repository that was to be
    constructed at Yucca Mountain in Nevada. However, in 2010, DOE
    began taking steps to terminate the Yucca Mountain project and is
    now considering other final disposal options. 7 In the meantime, high-
    level waste canisters will be stored at Hanford.

•   Low-Activity Waste Facility – This facility is to receive the low-activity
    waste from the pretreatment facility and vitrify it. The containers of
    vitrified waste will then be permanently disposed of at another facility
    at Hanford known as the Integrated Disposal Facility.




7
 GAO, Commercial Nuclear Waste: Effects of a Termination of the Yucca Mountain
Repository Program and Lessons Learned, GAO-11-229 (Washington, D.C.:
May 10, 2011).




Page 9                                         GAO-13-38 DOE’s Waste Treatment Plant
Figure 2: WTP Construction Site as of March 2012




                                        Constructing the WTP is a massive, highly complex, and technically
                                        challenging project. For example, according to Bechtel documents, the
                                        completed project will contain almost 270,000 cubic yards of concrete and
                                        nearly a million linear feet of piping. The project also involves developing
                                        first-of-a-kind nuclear waste mixing technologies that will need to operate
                                        for decades with perfect reliability because, as currently designed, once
                                        WTP begins operating, it will not be possible to access parts of the plant
                                        to conduct maintenance and repair of these technologies due to high
                                        radiation levels.



                                        Page 10                                   GAO-13-38 DOE’s Waste Treatment Plant
                        Since the start of the project, DOE and Bechtel have identified hundreds
Significant Technical   of technical challenges that vary in their significance and potential
Challenges Remain       negative impact, and significant technical challenges remain. Technical
                        challenges are to be expected on a one-of-a-kind project of this size, and
Unresolved              DOE and Bechtel have resolved many of them. However, because such
                        challenges remain, DOE cannot be certain whether the WTP can be
                        completed on schedule and, once completed, whether it will successfully
                        operate as intended.

                        Among others, the significant technical challenges DOE and Bechtel are
                        trying to resolve include the following:

                        •   Waste mixing—One function of the WTP will be to keep the waste
                            uniformly mixed in tanks so it can be transported through the plant
                            and to prevent the buildup of flammable hydrogen and fissile material
                            that could inadvertently result in a nuclear criticality accident. The
                            WTP project has been developing a technology known as “pulse jet
                            mixers” that uses compressed air to mix the waste. Such devices
                            have previously been used successfully in other materials mixing
                            applications but have never been used for mixing wastes with high
                            solid content like those to be treated at the WTP. In 2004 and again in
                            2006, we reported that Bechtel’s inability to successfully demonstrate
                            waste mixing technologies was already leading to cost and schedule
                            delays. 8 Our 2004 report recommended that DOE and Bechtel resolve
                            this issue before continuing with construction. DOE agreed with our
                            recommendation, slowed construction on the pretreatment and high-
                            level waste facilities and established a path forward that included
                            larger-scale testing to address the mixing issue. In 2010, following
                            further testing by Bechtel, DOE announced that mixing issues had
                            been resolved and moved forward with construction. However,
                            concerns about the pulse jet mixers’ ability to successfully ensure
                            uniform mixing continued to be raised by the Safety Board, PNNL,
                            and DOE engineering officials on site. As a result, in late 2011, DOE
                            directed Bechtel to demonstrate that the mixers will work properly and
                            meet the safety standards for the facility. According to DOE officials,
                            no timeline for the completion of this testing has been set.




                        8
                         GAO, Nuclear Waste: Absence of Key Management Reforms on Hanford’s Cleanup
                        Project Adds to Challenges of Achieving Cost and Schedule Goals, GAO-04-611
                        (Washington, D.C.: June 9, 2004) and GAO-06-602T.




                        Page 11                                     GAO-13-38 DOE’s Waste Treatment Plant
•   Preventing erosion and corrosion of WTP components—Excessive
    erosion or corrosion of components such as mixing tanks and piping
    systems in the WTP is possible. Such excessive erosion and
    corrosion could be caused by potentially corrosive chemicals and
    large dense particles present in the waste that is to be treated. This
    excessive erosion and corrosion could result in the components’
    failure and lead to disruptions of waste processing. Bechtel officials
    first raised concerns about erosion and corrosion of WTP components
    in 2001, and these concerns were echoed in 2006 by an independent
    expert review of the project. Following further testing, DOE project
    officials declared the issue closed in 2008. However, DOE and
    Bechtel engineers recently voiced concerns that erosion and
    corrosion of components is still a significant risk that has not been
    sufficiently addressed. Furthermore, in January 2012, the Safety
    Board reported that concerns about erosion in the facility had still not
    been addressed, and that further testing is required to resolve
    remaining uncertainties. Bechtel has agreed to do further work to
    resolve technical challenges surrounding erosion and corrosion of the
    facilities internal components; however, DOE and Bechtel have not
    yet agreed upon an overall plan and schedule to resolve this
    challenge.

•   Preventing buildup of flammable hydrogen gas—Waste treatment
    activities in the WTP’s pretreatment and high-level waste facilities can
    result in the generation of hydrogen gas in the plant’s tanks and piping
    systems. The buildup of flammable gas in excess of safety limits could
    cause significant safety and operational problems. DOE and Bechtel
    have been aware of this challenge since 2002, and Bechtel formed an
    independent review team consisting of engineers and other experts in
    April 2010 to track and resolve the challenge. This team identified 35
    technical issues that must be addressed before the hydrogen buildup
    challenge can be resolved. Bechtel has been working to address
    these issues. However, a 2011 DOE construction project review noted
    that, while Bechtel continues to make progress resolving these issues,
    the estimated schedule to resolve this challenge has slipped. 9
    According to DOE and Bechtel officials, Bechtel is still conducting
    analysis and is planning to complete the work to resolve this
    challenge by 2013.


9
 DOE, Department of Energy Review Committee Report on the Construction Project
Review of the Waste Treatment and Immobilization Plant Project at the Office of River
Protection at Hanford (Washington, D.C.: August 2011).




Page 12                                           GAO-13-38 DOE’s Waste Treatment Plant
•   Incomplete understanding of waste—DOE does not have
    comprehensive data on the specific physical, radiological, and
    chemical properties of the waste in each underground waste tank at
    Hanford. In the absence of such data, DOE has established some
    parameters for the waste that are meant to estimate the range of
    waste that may go through the WTP in an effort to help the contractor
    design a facility that will be able to treat whatever waste––or
    combination of wastes—is ultimately brought into the WTP. In 2006,
    an independent review team stated that properly understanding the
    waste would be an essential key factor in designing an effective
    facility. In 2010, the Consortium for Risk Evaluation with Stakeholder
    Participation, PNNL, and the Safety Board reviewed the status of
    DOE’s plans to obtain comprehensive data on the characteristics of
    the waste, and each concluded that DOE and Bechtel did not have
    enough information about the waste and would therefore need to
    increase the range of possible wastes that the WTP is designed to
    treat in order to account for the uncertainty. Officials at PNNL reported
    that not having a large enough range is “a vulnerability that could lead
    to inadequate mixing and line plugging.” The Safety Board reported
    that obtaining representative samples of the waste is necessary to
    demonstrate that the WTP can be operated safely, but that DOE and
    its contractors have not been able to explain how those samples will
    be obtained. In its 2011 review of the WTP project, a DOE
    headquarters construction project review report notes that progress
    has been made on including additional information and uncertainties
    in the efforts to estimate and model the waste that will be fed to the
    WTP. However, DOE officials stated that more sampling of the waste
    is needed. An expert study is under way that will analyze the gap
    between what is known and what is needed to be known to design an
    effective facility. This study is expected to be completed in August
    2014.

The risks posed by these technical challenges are exacerbated because
once the facility begins operating, certain areas within the WTP
(particularly in the pretreatment and high-level waste facilities) will be
permanently closed off to any human intervention in order to protect
workers and the public from radioactive contamination. To shield plant
workers from intense radiation that will occur during WTP operations,
some processing tanks will be located in sealed compartments called
“black cells.” These black cells are enclosed rooms where inspection,
maintenance, repair, or replacement of equipment or components is
extremely difficult because high radiation levels prevent access into them.
As a result, plant equipment in black cells must last for WTP’s 40-year



Page 13                                    GAO-13-38 DOE’s Waste Treatment Plant
                         expected design life without maintenance. According to a recent review
                         conducted by the DOE Inspector General, premature failure of these
                         components could result in radiation exposure to workers, contaminate
                         large portions of the WTP and/or interrupt waste processing for an
                         unknown period. 10 Significant failures of components installed in the WTP
                         once operations begin could render the WTP unusable and unrepairable,
                         wasting the billions of dollars invested in the WTP. In August 2012, DOE
                         announced that it was asking a team of experts to examine the WTP’s
                         capability to detect problems in the black cells and the plant’s ability to
                         repair equipment in the black cells, if necessary. According to DOE
                         officials, the team will, if needed, recommend design changes to improve
                         the operational reliability of the black cells and the WTP. In addition, the
                         Secretary of Energy has been actively engaged in the development of a
                         new approach to managing WTP technical challenges and has
                         assembled subject matter experts to assist in addressing the technical
                         challenges confronting the WTP.


                         The estimated cost to construct the WTP has almost tripled since the
Substantial Additional   project’s inception in 2000, its scheduled completion date has slipped by
Cost Increases and       nearly a decade, and additional significant cost increases and schedule
                         delays are likely to occur because DOE has not fully resolved the
Schedule Delays          technical challenges faced by the project. In addition, DOE recently
Are Likely               reported that Bechtel’s actions to take advantage of potential cost savings
                         opportunities are frequently delayed and, as a result, rising costs are
                         outpacing opportunities for savings.


DOE Has Not Yet Fully    DOE’s original contract price for constructing the WTP, approved in 2000,
Estimated the Cost and   stated that the project would cost $4.3 billion and be completed in 2011.
Schedule Impact of       In 2006, however, DOE revised the cost baseline to $12.3 billion, nearly
                         triple the initial estimate, with a completion date of 2019. As we reported
Resolving Technical      in 2006, contractor performance problems, weak DOE management, and
Challenges               technical challenges resulted in these cost increases and schedule
                         delays. 11 A 2011 DOE headquarters review report on the WTP projected



                         10
                            U.S.DOE Office of Inspector General, Audit Report: The Department of Energy’s $12.2
                         Billion Waste Treatment and Immobilization Plant—Quality Assurance Issues—Black Cell
                         Vessels, DOE/IG-0863 (Washington D.C.: April 2012).
                         11
                          GAO-06-602T.




                         Page 14                                         GAO-13-38 DOE’s Waste Treatment Plant
additional cost increases of $800 million to $900 million over the revised
2006 cost estimate of $12.3 billion and additional delays to the project
schedule. 12 Furthermore, in November 2011, the Department of Justice
notified the state of Washington that there is a serious risk that DOE may
be unable to meet the legally enforceable milestones required by legal
agreement, for completing certain activities in Hanford’s WTP
construction and startup activities, as well as tank waste retrieval
activities. 13 The Department of Justice did not identify the cause of the
delay or specify the milestones that could be affected. As of May 2012,
according to our analysis, the project’s total estimated cost had increased
to $13.4 billion, and additional cost increases and schedule delays are
likely, although a new performance baseline has not yet been developed
and approved.

DOE ORP officials warn that cost increases and schedule delays will
occur as a result of funding shortfalls and will prevent the department
from successfully resolving technical challenges the WTP project faces.
However, from fiscal years 2007 to 2010, the project was appropriated
the $690 million that DOE requested in its annual congressional budget
request. 14 In fiscal years 2011 and 2012, DOE received approximately
$740 million each year––a $50 million increase over fiscal year 2010
funding. DOE project management officials and Bechtel representatives
told us that $740 million for fiscal year 2012 was not enough to support
planned work and, as a result, project work would slow down and project
staffing levels would be reduced. However, according to senior DOE
officials, including the acting Chief Financial Officer, the primary cause of
the increasing costs and delayed completion has been the difficulty in
resolving complex technical challenges rather than funding issues.

DOE and Bechtel have not yet fully estimated the effect of resolving these
technical challenges on the project’s baseline. In February 2012, DOE
directed Bechtel to develop a new, proposed cost and schedule baseline



12
 DOE, Department of Energy Review Committee Report on the Construction Project
Review of the Waste Treatment and Immobilization Plant Project at the Office of River
Protection at Hanford (Washington, D.C.: August 2011).
13
 Consent Decree at 4 and Appx A in Washington v. DOE, Case No. 08-5085-FVS (E.D.
WA. October 25, 2010).
14
  DOE’s 2008 enacted appropriation of $690 million was later reduced by a rescission of
.91 percent to $683.721 million.




Page 15                                           GAO-13-38 DOE’s Waste Treatment Plant
                            for the project and, at the same time, to begin a study of alternatives that
                            includes potential changes to the WTP’s design and operational plans to
                            resolve technical challenges faced by the project. The study is to also
                            identify the cost and schedule impact of these alternatives on the project.
                            For example, according to a DOE official, one alternative Bechtel is
                            studying is to construct an additional facility that would process the tank
                            waste by removing the largest solid particles from the waste before it
                            enters WTP’s pretreatment facility. This advance processing would
                            reduce the risks posed by insufficient mixing of the waste in the
                            pretreatment facility by the pulse jet mixers. A DOE official told us that
                            this alternative could add $2 to $3 billion to the overall cost of the project
                            and further delay its completion by several years.

                            According to DOE officials, other alternatives being studied involve
                            reducing the total amount of waste the WTP treats or operating the WTP
                            at a slower pace for a longer period of time to accomplish its waste
                            processing mission. However, these alternatives could delay the total
                            time needed to process Hanford’s waste and add billions of dollars to the
                            total cost to treat all of Hanford’s tank waste. Further delays constructing
                            the WTP could also result in significant cost increases to treat all of
                            Hanford’s waste. For example, DOE has estimated that a 4-year delay in
                            the WTP start-up date could add an additional $6 to $8 billion to the total
                            cost of the Hanford Site tank waste treatment mission.

                            In June 2012, DOE announced that the new cost and schedule baseline
                            Bechtel is developing would not include the pretreatment and high-level
                            waste facilities. According to DOE officials, additional testing and analysis
                            is needed to resolve the facilities’ technical challenges before a
                            comprehensive new cost and schedule baseline can be completed. DOE
                            officials responsible for overseeing the WTP project are uncertain when
                            the new baseline for these facilities will be completed. As a result, our
                            May 2012 cost estimate of $13.4 is highly uncertain and could grow
                            substantially if the technical challenges that the project faces are not
                            easily and quickly resolved.


Project Cost and Schedule   DOE and Bechtel have identified some opportunities for cost savings, but
Increases Could Be          these opportunities are not always pursued in a timely fashion. For
Partially Offset by         example, Bechtel has identified an estimated $48 million in savings that
                            could be achieved over the life of the project by accelerating specific
Opportunities for Savings   areas of the project scope. Specifically, some of these savings could be
                            achieved by acquiring material and equipment in bulk to maintain the
                            pace of construction activities and avoid delays. In addition, another $24


                            Page 16                                     GAO-13-38 DOE’s Waste Treatment Plant
                           million in savings could be achieved by reducing the amount of steel,
                           pipe, wire, and other materials needed in remaining design work. DOE
                           reported in March 2012, however, that Bechtel’s actions to take
                           advantage of potential cost savings opportunities are frequently delayed
                           and, as a result, rising costs have outpaced opportunities for savings. For
                           example, DOE reported that Bechtel continues to perform poorly in
                           meeting planned dates for material delivery due to delayed identification
                           and resolution of internal issues impacting procurement of plant
                           equipment. Specifically, DOE noted that, of 95 needed project equipment
                           deliveries scheduled for July 2011 through October 2011, 42 were
                           delivered on time and that this poor performance trend is expected to
                           continue.


                           DOE is taking steps to improve its management and oversight of
DOE Is Taking Steps        Bechtel’s activities, including levying penalties on the contractor for
to Address Some            quality and safety problems but continues to face challenges to
                           completing the WTP project within budget and on schedule. For example,
Management and             DOE’s continued use of a fast-track, design-build management approach
Oversight Problems         where construction on the project has moved forward before design
                           activities are complete has resulted in costly reworking and schedule
but Continues to Face      delays.
Challenges to
Completing the WTP

DOE Is Taking Steps to     DOE is taking steps to improve its management and oversight of
Improve the Management     Bechtel’s activities. For example, in November 2011, DOE’s Office of
and Oversight of the WTP   Enforcement and Oversight started an investigation into Bechtel’s
                           potential noncompliance with DOE’s nuclear safety requirements.
Project                    Specifically, this DOE office is investigating Bechtel’s processes for
                           designing, procuring, and installing structures, systems, and components
                           and their potential noncompliance with DOE nuclear safety requirements.
                           If the contractor is found to not be complying with DOE requirements,
                           DOE’s Office of Enforcement and Oversight is authorized to take
                           appropriate action, including the issuance of notices of violations and
                           proposed civil penalties against Bechtel. Since 2006, DOE’s Office of
                           Enforcement and Oversight has conducted six investigations into
                           Bechtel’s activities at WTP that resulted in civil penalty against Bechtel.
                           Five of the six investigations involved issues related to the design and
                           safe operation of the WTP. For example, in 2008, DOE’s Office of
                           Enforcement and Oversight investigated Bechtel for circumstances



                           Page 17                                   GAO-13-38 DOE’s Waste Treatment Plant
associated with procurement and design deficiencies of equipment for the
WTP and identified multiple violations of DOE nuclear safety
requirements. This investigation resulted in Bechtel receiving a $385,000
fine.

In addition, in January 2012, DOE’s Office of Health, Safety, and Security
reported that some aspects of the WTP design may not comply with DOE
safety requirements. 15 Specifically, under DOE safety regulations, Bechtel
must complete a preliminary documented safety analysis—an analysis
that demonstrates the extent to which a nuclear facility can be operated
safely with respect to workers, the public, and the environment. However,
Bechtel’s preliminary documented safety analyses have not always kept
pace with the frequently changing designs and specifications for the
various WTP facilities and DOE oversight reviews have highlighted
significant deficiencies in the project’s safety analyses. In November
2011, according to DOE officials, DOE ordered Bechtel to suspend work
on design, procurement, and installation activities for several major WTP
systems including parts of the pretreatment facility and high-level waste
facility until the contractor demonstrates that these activities are aligned
with DOE nuclear safety requirements. This suspension remains in effect.

DOE has also taken steps to address concerns about the project’s safety
culture. According to DOE’s Integrated Safety Management System
Guide, safety culture is an organization’s values and behaviors modeled
by its leaders and internalized by its members, which serves to make safe
performance of work the overriding priority to protect workers, the public,
and the environment. In 2011, the Safety Board issued the results of an
investigation into health and safety concerns at WTP. The investigation’s
principal conclusion was that the prevailing safety culture of the WTP
project effectively defeats DOE’s policy to establish and maintain a strong
safety culture at its nuclear facilities. The Safety Board found that both the
DOE and Bechtel project management behaviors reinforce a subculture
at WTP that deters the timely reporting, acknowledgement, and ultimate
resolution of technical safety concerns. In addition, the Safety Board
found a flawed safety culture embedded in the project at the time had a
substantial probability of jeopardizing the WTP mission. As a result of


15
  DOE, Office of Health, Safety, and Security, Office of Enforcement and Oversight,
Independent Assessment of the Nuclear Safety Culture and Management of Nuclear
Safety Concerns at the Hanford Site Waste Treatment and Immobilization Plant
(Washington, D.C.: January 2012).




Page 18                                          GAO-13-38 DOE’s Waste Treatment Plant
                            these findings, the Safety Board made a series of recommendations to
                            DOE to address WTP project safety problems. DOE has developed
                            implementation plans to address the Safety Board’s recommendations. In
                            addition, DOE itself has raised significant concerns about WTP safety
                            culture. In 2011 DOE’s Office of Health, Safety, and Security conducted
                            an independent assessment of the nuclear safety culture and
                            management of nuclear safety concerns at the WTP. As a result of this
                            assessment, DOE determined that most DOE and Bechtel WTP staff at
                            the WTP believed that safety is a high priority. However, DOE also
                            determined that a significant number of DOE and Bechtel staff expressed
                            reluctance to raise concerns about safety or quality of WTP facilities
                            design because WTP project management does not create an
                            atmosphere conducive to hearing concerns or for fear of retaliation.
                            Employees’ willingness to raise safety concerns without fear of retaliation
                            is an essential element of a healthy safety culture and creating an
                            atmosphere where problems can be identified. DOE’s assessment also
                            determined that DOE has mechanisms in place to address safety culture
                            concerns. For example, according to a January 2012 issued DOE Office
                            of Health, Safety, and Security report on the safety culture and safety
                            management of the project, the project has an employee’s concerns
                            program and a differing professional opinion program that assist staff to
                            raise safety concerns. In addition, the January 2012 issued report stated
                            that several DOE reviews of the WTP project have been effective in
                            identifying deficiencies in WTP designs and vulnerabilities that could
                            impact the future operation of waste treatment facilities.


DOE’s Fast-Track, Design-   DOE has taken some steps to improve its management and oversight of
Build Management            Bechtel’s activities, but some problems remain. For example, DOE’s
Approach and Other          ongoing use of a fast-track, design-build approach continues to result in
                            cost and schedule problems. As we reported in 2006, DOE’s
Management and              management of the project has been flawed, as evidenced by DOE’s
Oversight Problems Have     decision to adopt a fast-track, design-build approach to design and
Led to Cost Increases and   construction activities, and its failure to exercise adequate and effective
Schedule Delays             oversight of contractor activities, both of which contributed to cost and
                            schedule delays. 16 According to DOE officials, DOE’s current project
                            management orders will not allow the use of the fast-track, design-build




                            16
                             GAO-06-602T.




                            Page 19                                    GAO-13-38 DOE’s Waste Treatment Plant
approach for first-of-its-kind complex facilities such as the WTP. 17
However, DOE was able to start the project using the fast-track, design-
build approach before this order was in place. In a February 2012 written
statement, DOE defended the fast-track, design-build management
approach for the WTP project by stating that: (1) it allows for a single
contract that gives the contractor responsibility for designing, building,
and commissioning the facility, thus helping ensure that the design works
as expected; (2) it allows the contractor to begin construction on parts of
the facility for which design was complete; and (3) doing so would
encourage construction to be completed faster.

According to DOE officials, construction of the WTP is currently more
than 55 percent complete, though the design is only about 80 percent
complete. Nuclear industry guidelines suggest that design should be
complete to at least 90 percent before starting construction of nuclear
facilities. Furthermore, according to current DOE orders, construction
should not begin until engineering and design work on critical
technologies is essentially complete, and these technologies have been
tested and proven to work. According to DOE’s analysis in 2007, several
years after the beginning of WTP construction, several critical
technologies designed for the WTP had not yet reached this level of
readiness. 18 In addition, current DOE guidance states that the design-
build approach can be used most successfully with projects that have
well-defined requirements, are not complex, and have limited risks.

Using the fast-track, design-build approach, DOE has moved the project
forward constructing and fabricating WTP components that may not work
and may not meet nuclear safety standards. For example, as discussed
above, pulse jet mixer technology continues to be tested to evaluate its
effectiveness. Moreover, some already procured and installed equipment
may need to be removed, refabricated, and reinstalled. For example, to



17
  DOE, Program and Project Management for the Acquisition of Capital Assets, DOE
Order 413.3B (Washington, D.C.: Nov. 29, 2010). The order also states that “aggressive
risk mitigation strategies are required” for fast-tracked, design-build projects.
18
  DOE measures technology readiness using Technology Readiness Levels, which range
from 1 to 9; where 9 represents a fully tested and proven technology. DOE guidance
indicates that critical technologies should be at Technology Readiness Level 6 or higher
before construction begins. However, in 2007, the last time DOE assessed Technical
Readiness Levels for the entire project, DOE found that 14 out of 21 critical technologies
assessed were at a Technology Readiness Level lower than 6.




Page 20                                           GAO-13-38 DOE’s Waste Treatment Plant
keep pace with the construction schedule, Bechtel fabricated 38 vessels
containing pulse jet mixers and installed 27 of them into the WTP
pretreatment and high-level waste facilities. However, according to DOE
officials, Bechtel has been forced to halt construction on the pretreatment
facility and parts of the high-level waste facility because it was unable to
verify that several vessels would work as designed and meet safety
requirements. Bechtel is currently analyzing potential alternatives that
include, among other things, scrapping 5 to 10 already completed vessels
and replacing them with vessels with more easily verifiable designs,
according to DOE officials. The cost and schedule impact of these
alternatives has not yet been fully estimated.

DOE has also experienced continuing problems overseeing its contractor’s
activities. For example, DOE’s incentives and management controls are
inadequate for ensuring effective project management and oversight of the
WTP project to ensure that the WTP project is completed within budget and
on schedule. As we reported in 2006, DOE did not ensure adherence to
normal project reporting requirements and as a result, status reports
provided an overly optimistic assessment of progress on the project. 19 We
also questioned the adequacy of project incentives for ensuring effective
project management. Specifically, because of cost increases and schedule
delays, we noted that the incentive fees in the original contract—including
more than $300 million in potential fees for meeting cost and schedule
goals or construction milestones—were no longer meaningful. Since that
time, some problems have continued. For example, Bechtel’s current
contract, which was modified in 2009, allows the contractor to receive
substantial incentives, such as an award fee for achieving specified project
objectives, and DOE has paid this fee, although events subsequently
revealed that the project was likely to exceed future cost and schedule
estimates. Since 2009, DOE has paid Bechtel approximately $24.2 million
or 63 percent of its $38.6 million incentive fee based, in part, on Bechtel’s
adherence to cost and schedule targets and its resolution of technical
challenges associated with waste mixing. However, the WTP project is now
at serious risk of missing major future cost and schedule targets, and it was
subsequently determined by DOE that the waste mixing technical
challenges were not resolved after all. According to DOE officials,
substantial further effort is needed that will take at least an additional 3
years of testing and analysis until project scientists and engineers can fully



19
 GAO-06-602T.




Page 21                                    GAO-13-38 DOE’s Waste Treatment Plant
resolve this challenge. In the current contract, there is no contractual
mechanism for recovering an incentive fee that was paid to a contractor for
work that was subsequently determined to be insufficient, according to
DOE officials.

Furthermore, under its project management order, DOE is to incorporate
and manage an appropriate level of risk—including critical technical,
performance, schedule, and cost risks—to ensure the best value for the
government. 20 However, DOE has no assurance that the incentives
included in the WTP construction contract are assisting in the effective
management of these risks. The contract provides that “incentives are
structured to ensure a strong financial motivation for the Contractor to
achieve the Contract requirements.” 21 However, the contract
requirements have been, and continue to be, revised to provide for a
longer schedule and higher cost. For example, DOE has already
announced that the project will not be completed within the 2006
performance baseline and has directed the contractor to prepare a
revised performance baseline. Further, since 2009, DOE has awarded
$15.6 million in incentive fees to Bechtel for meeting periodic schedule
and cost goals, even though the WTP’s schedule has slipped, and
construction costs have continued to increase. 22 Bechtel has estimated,
as of May 2012, that costs to complete the project are currently more than
$280 million over the amount specified in the construction contract.

DOE’s Inspector General has also found that DOE may have awarded
Bechtel fees without the contractor adequately fulfilling work. A 2012 DOE
Office of Inspector General report notes that DOE may have overpaid $15
million of potentially $30 million in incentive fees for the delivery and
installation of vessels into the WTP facility. 23 When DOE learned that one


20
  DOE, Program and Project Management for the Acquisition of Capital Assets, DOE
Order 413.3B (Washington, D.C.: Nov. 29, 2010). The order also states that “aggressive
risk mitigation strategies are required” for fast-tracked, design-build projects.
21
 Contract No. DE-AC27-01RV14136, § B.4 (conformed through modification No. 287).
22
   The contract specifically links schedule incentives with overall progress under the
contract: “Each milestone represents and measures progress towards achieving the
Contract requirements and do not represent payment for the specific named milestone
itself.” Contract No. DE-AC27-01RV14136, § B.4(c) (conformed through modification No.
287).
23
  DOE Office of Inspector General, Audit Report: The Department of Energy’s $12.2
Billion Waste Treatment and Immobilization Plant —Quality Assurance Issues—Black Cell
Vessels, DOE/IG-0863 (Washington, D.C.: April 2012).




Page 22                                          GAO-13-38 DOE’s Waste Treatment Plant
              of the vessels did not have quality assurance records and therefore did
              not conform to contract requirements, it instructed Bechtel to return $15
              million of the performance fee. However, according to the DOE Office of
              Inspector General report, neither DOE nor Bechtel could provide
              evidence that the fee was returned to DOE.

              DOE’s oversight of Bechtel’s activities may also be hampered because
              project reviews, such as external independent reviews or independent
              project reviews—which are a key oversight mechanism—are only
              required by DOE’s project management order to occur at major decision
              points in a project. These reviews examine a project’s estimated cost,
              scope, and schedule and are intended to provide reasonable assurance
              that the project can be successfully executed on time and within budget.
              For example, these independent reviews are to occur when a cost and
              schedule baseline is completed for the project or when construction is
              authorized to begin. A 2006 review conducted by the U.S. Army Corps of
              Engineers, for example, identified serious problems with Bechtel’s
              progress on the WTP project and indicated that the project would
              significantly exceed both cost and schedule targets. 24 In 2009, the Office
              of Project Management also conducted an external independent review.
              Such reviews are an important mechanism for overseeing DOE contractor
              activities. In a large, complex, multiyear project such as WTP, however,
              many years can pass between these critical decision points and the
              associated independent reviews. DOE officials noted that other reviews,
              such as Construction Project Reviews, were also completed between
              2009 and 2011 for the WTP project. While officials stated that these
              reviews did examine the project’s cost and schedule, they noted that the
              reviews were not as extensive as the 2006 and 2009 reviews.


              DOE is responsible for one of the world’s largest environmental cleanup
Conclusions   projects in which it must stabilize large quantities of hazardous and
              radioactive waste and prepare it for disposal at a permanent national
              geologic repository that has yet to be identified. By just about any
              definition, DOE’s WTP project at Hanford has not been a well-planned,
              well-managed, or well-executed major capital construction project.
              Daunting technical challenges that will take significant effort and years to


              24
                U.S. Army Corps of Engineers, Independent Validation Review of the May 2006
              Estimate at Completion for the Hanford Waste Treatment and Immobilization Plant Project
              (U.S. Army Corps of Engineers Walla Walla District: Aug. 28, 2006).




              Page 23                                          GAO-13-38 DOE’s Waste Treatment Plant
resolve combined with a near tripling of project costs and a decade of
schedule delays raise troubling questions as to whether this project can
be constructed and operated successfully. Additional cost increases
amounting to billions of dollars and schedule delays of years are almost
certain to occur. DOE and Bechtel officials have stated that the most
recent cost increases and schedule delays are the result of, among other
things, Congress not providing the required funding to resolve technical
issues. In our view, however, the more credible explanation continues to
be DOE’s decision to build what the department itself describes as the
world’s largest and most complex nuclear waste treatment plant using a
fast-track, design-build strategy that is more appropriate for much simpler,
smaller scale construction projects. Where nuclear industry guidelines
suggest completing 90 percent of design prior to beginning construction,
DOE instead began construction when design of the facility was in the
early stages and insisted on developing new technologies and completing
design efforts while construction was ongoing. The result has been
significant design rework, and some already procured and installed
equipment to possibly be removed, refabricated, and reinstalled.

The technical challenges are especially acute in the WTP’s pretreatment
and high-level waste facilities. Technologies for these facilities require
perfect reliability over the plant’s 40-year lifetime because no maintenance
or repair will be possible once waste treatment begins. According to DOE’s
analysis, several critical technologies designed for the WTP have not been
tested and verified as effective. Additional expensive rework in the
pretreatment and high-level waste facilities, particularly in the area of waste
mixing, is likely to occur. Further, an additional facility to treat tank waste
before the waste arrives at the WTP’s pretreatment facility may be
required. This additional facility could add billions to the cost of treating
Hanford’s waste. All the while, DOE and outside experts continue to raise
safety concerns, and Bechtel continues to earn incentive fees for meeting
specific project objectives even as the project’s costs and timelines balloon
far beyond the initially planned goals. DOE’s recent actions to identify cost
savings opportunities and to hold Bechtel accountable for the significant
deficiencies in its preliminary documented safety analyses and requiring
the contractor to comply with DOE’s nuclear safety regulations are steps in
the right direction. However, we continue to have serious concerns not only
about the ultimate cost and final completion date for this complex project,
but whether this project can successfully accomplish its waste treatment
mission given that several critical technologies have not been tested and
verified.




Page 24                                     GAO-13-38 DOE’s Waste Treatment Plant
                      To improve DOE’s management and oversight of the WTP project, we
Recommendations for   recommend that the Secretary of Energy take the following three actions:
Executive Action
                      •   Do not resume construction on the WTP’s pretreatment and high-level
                          waste facilities until critical technologies are tested and verified as
                          effective, the facilities’ design has been completed to the level
                          established by nuclear industry guidelines, and Bechtel’s preliminary
                          documented safety analyses complies with DOE nuclear safety
                          regulations.

                      •   Ensure the department’s contractor performance evaluation process
                          does not prematurely reward contractors for resolving technical issues
                          later found to be unresolved. For example, DOE could seek to modify
                          its contracts to withhold payment of incentive fees until the technical
                          challenges are independently verified as resolved.

                      •   Take appropriate steps to determine whether any incentive payments
                          made to the contractor for meeting project milestones were made
                          erroneously and, if so, take appropriate actions to recover those
                          payments.


                      We provided DOE with a draft of this report for its review and comment.
Agency Comments       DOE generally agreed with the report and its recommendations. In its
and Our Evaluation    written comments, DOE described actions under way to address the first
                      recommendation, as well as additional steps it plans to take to address
                      each of the report’s recommendations.

                      DOE stated that it has recently taken action that is, in part, aligned with
                      the first recommendation. Specifically, it issued guidance to the
                      contractor, which directed the contractor to address remaining WTP
                      technical and management issues sufficient to produce a high confidence
                      design and baseline for the pretreatment and high-level waste facilities of
                      the WTP. DOE also established a limited construction activity list for the
                      high-level waste facility, as well as a much more limited set of
                      construction activities in the pretreatment facility, which DOE stated will
                      allow it to complete construction of some portions of the facilities while
                      taking into account the unresolved technical issues. DOE stated that it
                      believes this approach balances the intent of the recommendation and
                      the need to continue moving forward with the project and preparations to
                      remove waste from Hanford waste storage tanks. While this approach
                      appears reasonable, we would caution that DOE should sufficiently
                      monitor the construction activities to ensure that additional construction



                      Page 25                                   GAO-13-38 DOE’s Waste Treatment Plant
beyond the activities specifically named on the approved list not be
undertaken until the technical and management issues are satisfactorily
resolved. DOE also noted that the Secretary of Energy has been actively
engaged in the development of a new approach to managing the WTP
and, together with a group of independent subject matter experts, is
working to resolve long-standing technical issues. As requested by DOE,
we did incorporate information into the report to indicate the Secretary’s
personal involvement in addressing the WTP issues and the technical
teams assembled to help resolve these persistent technical issues. In
addition, DOE stated that the department and the contractor have
implemented a plan to assure that the WTP documented safety analysis
will meet the department’s nuclear safety requirements and DOE
established a Safety Basis Review Team that will provide a mechanism
for reviewing the documented safety analyses for each facility to ensure it
meets nuclear safety requirements. DOE’s planned actions to address the
recommendations in this report are discussed more fully in DOE’s letter,
which is reproduced in appendix I. DOE also provided technical
clarifications, which we incorporated into the report as appropriate.


As agreed with your offices, unless you publicly announce the contents of
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In addition, the report will be available at no charge on the GAO website
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If you or your staff members have any questions about this report, please
contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for
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on the last page of this report. GAO staff who made major contributions to
this report are listed in appendix II.




David C. Trimble
Director
Natural Resources and Environment




Page 26                                   GAO-13-38 DOE’s Waste Treatment Plant
Appendix I: Comments from the Department
             Appendix I: Comments from the Department of
             Energy



of Energy




             Page 27                                       GAO-13-38 DOE’s Waste Treatment Plant
Appendix I: Comments from the Department of
Energy




Page 28                                       GAO-13-38 DOE’s Waste Treatment Plant
Appendix I: Comments from the Department of
Energy




Page 29                                       GAO-13-38 DOE’s Waste Treatment Plant
Appendix I: Comments from the Department of
Energy




Page 30                                       GAO-13-38 DOE’s Waste Treatment Plant
Appendix II: GAO Contact and Staff
                  Appendix II: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  David C. Trimble, (202) 512-3841, or trimbled@gao.gov
GAO Contact
                  In addition to the individual named above, Ryan T. Coles and Janet
Staff             Frisch, Assistant Directors; Gene Aloise; Scott Fletcher; Mark Gaffigan;
Acknowledgments   Richard Johnson; Jeff Larson; Mehrzad Nadji; Alison O’Neill; Kathy
                  Pedalino; Tim Persons; Peter Ruedel; and Ron Schwenn made key
                  contributions to this report.




(361327)
                  Page 31                                  GAO-13-38 DOE’s Waste Treatment Plant
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