oversight

GAO's Views on DOE's 1991 Budget for Addressing Problems at the Nuclear Weapons Complex

Published by the Government Accountability Office on 1990-03-02.

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

                   United States General Accounting Office   / $ a 922

GAO                Testimony              I

                                                               #Illllllllllll
                                                                    140822

For Release        GAO's Views on DOE's 1991 Budget
on Delivery        for Addressing Problems at the
Expected at        Nuclear Weapons Complex
1:30 p.m. EDT
Friday
March 2, 1990




                   Statement    for the Record of
                      Keith 0. Fultz
                   Director   of Planning    and Reporting
                   Resources,    Community,   and Economic
                      Development   Division
                   Before the
                   Committee on Budget
                   House of Representatives




GAO/T-RCED-90-33
                                                                  GAO Form 160 (12/W
Mr. Chairman                 and Members of                   the Committee:


          We are            pleased        to   submit          a statement            for     the     record       on the
Department              of     Energy's         (DOE) 1991 budget                     request        as it      relates             to
cleaning             up and modernizing                       the nuclear           weapons       complex.            Last          year
before         this         Committee,          we discussed                the     serious       problems          of        the
complex          and the             staggering          cost        to address          them.         The situation
this      year         is    not      any better.               Several       key facilities                 are    shut        down;
waste         is continuing                to back up at various                       DOE sites,            and the           full
scope      of DOE's environmental                              problems       still          remains     unknown.
Addressing              these         problems          is     a formidable            task,     which        we have
estimated             could        cost     up to $155 billion.                        To DOE's credit,                  it     has
taken      action,            during        this        past     year,       to better          organize           itself           to
deal     with         its     problems.


          In previous                 congressional              testimony,            we have used the problems
in DOE'S nuclear                      weapons       complex              as an example          of     how the        nation
has not          invested             wisely        in key government                  operations.              In this
regard,          the        federal        government            has consistently                made short-term
decisions             which        now leave            the     nation       with      extremely         serious

problems             that     will        require        long-term           solutions          with     enormous              costs.
The problems                 include        serious            safety       issues      in operating               nuclear
facilities,                 widespread          environmental                contamination              and the overall
deteriorating                 condition            of    the     complex.             Addressing         these        problems
represents              one of         the major             areas       of explosive           unfunded           costs        that

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will      have to be dealt                 with      at          the     same       time      the country            addresses
the      budget     deficit.


          The DOE 1991 budget                     contains               over       $4.5      billion         to address
environmental              and modernization                           problems       of      the complex.                While
this      is an increase              of over          20 percent                   from      fiscal         year    1990,           it
still      only     represents             a small               downpayment               on what will             eventually
be      needed.        Key questions                regarding                 the extent            the      complex         is
modernized          and the          pace of cleanup                      remain           open.        Regardless              of        how
these      questions           are    answered              it         is certain           that       modernizing              and
cleaning          up the       complex        will          be a long-term,                    costly         undertaking.                      A
national          consensus          is    needed           to maintain               congressional                 and public
support       for      the enormous               funding               required.


          My testimony            today       provides                  our     perspective             on (1)       the
continuing          problems          of     the complex,                     (2)    DOE's progress                 in
addressing          these        problems,           and (3)              important            budget         issues.



THE NUCLEAR WEAPONS COMPLEX
AND ITS CONTINUING PROBLEMS


          Today,     our       nation's           ability               to make nuclear                 material          for
weapons       is virtually                non-existent                   with       the     shutdown          of    the      Savannah
River      reactors,           the Rocky Flats                     Plant,           and the Hanford                 Purex
reprocessing            plant.            The Waste               Isolation           Pilot         Plant,         a repository
for     dispofing        of      certain          types           of     radioactive               waste,      is    still           not

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open and waste                  is      continuing               to back up at various                       DOE sites.
Further,          DOE is          still       seeking             a location              for     disposing          of high-
level         radioactive               waste.        And,         finally,          the environmental                      problems
are     still          not     fully       characterized.


         GAO has been pointing                         out         problems          for         several         years.         For
example,          we have called                  attention               to


         --     serious           safety         questions               regarding              the operation             of    DOE
                reactors               and other        facilities;


         --     the deterioration                     of     DOE's facilities                      that      results           from
                aging        and inattention                      to capital              improvements;


         --     groundwater                and soil          contamination                  at many DOE
                installations                 around         the         country,          some      of which          is      at
                levels          hundreds          to thousands                 of    times         above standards;                   and


         --     the      need to dispose                    of     radioactive              waste         that     DOE has been
                temporarily                storing          for     decades          at     various          sites        around        the
                country.


         We have also                   pointed       out         that     the cost              to resolve          such
problems          is     staggering.                 Our analysis               of    DOE data             indicates            it    will
cost     anywhere            from         $115 billion               to $155 billion                  to address               the
problems         of      the     complex.             This         includes          $35 billion                 to $45 billion
                 ')

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to upgrade               and modernize            the complex,             $35 billion             to $65 billion
for    environmental                 restoration,             and over           $45 billion            to dispose        of
radioactive                waste    and decontaminate                   facilities.               We would        like    to
stress        that         these     estimates          are      not    budget         quality         and should        only
be    used to illustrate                     the magnitude              of effort             needed     to address         the
problem        areas.


          While          recognizing          the      uncertain          cost      associated           with
addressing               these     problems,           we believe          it     is    important          to note       that
the eventual                cost    could        be    higher.          For example,              the    full     scope     and
magnitude            of     the environmental                 problems           are    not      known at many DOE
facilities               since     DOE is        in the early             phases        of     characterizing            the
problems.             Our experience                  in evaluating              the    superfund         program
administered                by the      Environmental                Protection          Agency         indicates        that
the    less       known about              the extent            of contamination,                 the more likely
the   cost        will       increase         when remediation                   begins.          Further,        new
facilities            and processes               are planned             to modernize             the complex.
DOE's construction                    of     such projects              has,      in some cases,                been prone
to cost       overruns.


DOE'S PROGRESS IN
ADDRESSING ITS PROBLEMS


         Next,        I would         like     to briefly              discuss         DOE's efforts            during
the   past       year        to address           the problems             of     the complex.               In this
regard,       is      is     important         to understand               that        these     are     long-term

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problems           which        will     require        billions        of dollars               each year             for
decades.            As we have stated                    in previous            testimonies,                 to manage such
a massive           effort,            DOE may need to restructure                          itself,           change          its
attitude           toward         environmental               and safety         matters,             and acquire              the
necessary           technical            expertise             to effectively            manage the              rebuilding
and cleanup               of    the     complex.


         During           the past         year,       DOE has taken             actions          designed             to better
deal     with       its        problems.            These actions             include         a programmatic
                                                                                                        _,,_.                 i and
safety      restructuring                  within       DOE, issuance                of a five-year                plan        on
environmental                  restoration           and waste         management,               and efforts                 by DOE
to make its               contractors            more accountable.                    Also,       the        Defense
Nuclear         Facilities             Safety        Board       mandated        by the Congress                   became
operational.


         DOE's organizational                        restructuring             is     two-fold.               First,         DOE
has established                  an Office           of Environmental                 Restoration              and Waste
Management           to consolidate                  environmental             cleanup,           compliance              and
waste      management              activities.                DOE has also            restructured               its
budgeting           system         to reflect           the      funding      of various               programs          within
this     office.               Second,       DOE is       in     the process           of     restructuring                  its
internal         safety          oversight           responsibilities                 in order              to hold       line
managers         accountable               for      safety.          The concept            of    this
reorganization,                  in our view,            provides          a framework                for     establishing
the    clear        lines        of    responsibility                needed      to ensure             the     safe
operation        * of      DOE's nuclear              facilities.              Its     success,              however,          will

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likely          depend        on DOE's commitment                             to safety,         how well                that
commitment             is     implemented,                 the availability                    of      technically
qualified            staff,          and the            close       coordination               and interaction                      of
various          oversight            groups.


          DOE also            issued         an Environmental                      Restoration.and,JQsta
Management             Five-Year             Plan        which           lays     out      a $20 billion                  effort         over
the      next     5 years            (fiscal            years       1991 through               1995)          to    (1)         bring     its
facilities             into       compliance               with          environmental                laws,        (2)     clean         up
environmental                 contamination                     at DOE sites,               and (3)           manage the wide
variety         of     radioactive                 and hazardous                  waste       that      DOE generates.                        In
addition,            the      plan      begins           implementing                an applied               research             and
development             program             to help             resolve          DOE's environmental                       problems.
In our         view,        the      plan         is    an important               first       step       in beginning                   to
lay      out    an approach                 for        cleaning              up DOE facilities                 and bringing                   DOE
operations             into       compliance              with           environmental               laws.


          DOE has also                undertaken                 efforts          to make its            contractors                    more
accountable             for       environmental                   and safety               matters.            In October                1989,
we issued            reports          and testified                      that     DOE's ,award fee process                              needs
to be restructured                     so that             it     accurately               reflects           the contractor's
performance             in     regard             to environmental                   and safety               matters.              DOE has
restructured                the      process,            and,       if        properly        implemented,                 it      should
increase          the contractors'                       sensitivity               to and performance                           regarding
environmental                 compliance                and safety              matters.



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              Finally,        the     Defense          Nuclear            Facilities                Safety         Board was
    established.              Although         not         a DOE action,                    its     establishment,
    nevertheless,             is     an important              step           to help             ensure     the public             and
    the Congress             that     DOE facilities                     in     the complex                can operate             safely.
    For the       first       time     there          is    now outside                independent                 oversight           of
    DOE's facilities.                  W e have long                 supported               the need for                 such an
    organization,             and the Congress,                      in 1988,               mandated         the Board.              We
    met with        the      board     soon after              it        became operational                        to discuss            our
    concerns        and plan          to meet periodically                            to exchange                 views     on the
    problems        within          the complex.


           Although           these     actions,              in and of               themselves,                do not       remedy
    the problems             facing     the complex,                     they        are an important                     aspect       of
    creating        an organization                   and management system                              within       which        the
    capability            to effectively               plan,         implement,                   and oversee             corrective
    actions       are developed.                 Rebuilding                   and cleaning                 up the complex                is    a
    long-term,            costly      undertaking.                   There           are no quick                 fixes     on the
    horizon.         W ith     this     in m ind,            we believe                it         wise    that      DOE takes            the
    time   now to properly               organize              itself           to manage the                    actions       needed
    to address            the problems           it        faces.             This     managerial                restructuring
    will   likely          continue       this         year         as DOE attempts                      to change its
    "culture"        and acquire           the         necessary               expertise             to effectively                 deal
    with   the problems.




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DOE'S FISCAL YEAR 1991 BUDGET


             Finally,          I would            like        to briefly               discuss           DOE's fiscal             year
1991 budget               request         for           addressing            problems              of    the      nuclear        weapons
complex.               Currently,            of         the     $8.6       billion            requested            for      operating
the      complex,          we estimate                   that     about           $1.9        billion         is    for
modernization                  activities,                including               safety           upgrades.              In addition
to the          $8.6     billion,            DOE is             requesting               approximately                   $2.8    billion
for      environmental                 restoration                and waste                  management,            most of which
is     for      the     complex.


             DOE's budget              request            represents               a continued                increase           of
funding           to deal         with       its         problems.                In the modernization                          area,        the
$1.9         billion       represents               an increase                   of     15 percent              over       DOE's
fiscal          year     1990 budget.                     These        funds           will       allow       DOE to continue
design          work on new production                            reactors,                  renovate         key facilities,
and pursue              safety         upgrades.                 In the environmental                            restoration             area
DOE is          seeking         $849 million,                    which        represents                 an increase             of     nearly
30 percent              and will          allow           for     the continued                     characterization                    of    DOE
environmental                  problems            at     inactive           waste            sites       and design             and
construction               work        on some restoration                             activities.                 For waste
management,              DOE is          seeking              about        $1.5        billion           which      is      an increase
of    23 percent,               and,      finally,               to bring              its       facilities              into
compliance              with     environmental                    laws       DOE is            seeking           $152 million,
which         is an increase                 of     about         22 percent.



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          While              DOE is       requesting                increased            funding           for         addressing              its
problems,               it      is     important           to note             that      the     funding               has not      peaked.
In fact,               the     1991 budget               only        represents               a small            down payment                on
what will               be needed               to address             the problems                  of    the complex.                  This
is particularly                        true      in the environmental                          restoration                area      where
DOE is          requesting                $849 million                 for      a problem             that        may eventually
cost      from          $35 billion                to $65 billion                     to resolve.                 According             to
DOE's five-year                        plan,       funding           for       environmental                 restoration                will
continue              to increase                over      the       next       5 fiscal             years        and may reach                      a
total          of over           $1.5         billion          in    fiscal           year     1995.             Higher      funding
levels          will          likely          be needed             in subsequent                years.


          Because              of      the magnitude                 of       the problems                facing         DOE and the
limited          resources                available             in a deficit                  era,        the     budget         request
will      be closely                   scrutinized.                  In our           view,      there           are     two key
questions:


          --     Is DOE's funding                        for        modernization               appropriate?


          --     Is      DOE's funding                   for        environmental               cleanup            sufficient?


          In 1988,               DOE issued              a modernization                      plan        that     called         for        a
multi-billion                   dollar           restructuring                  of     the complex.                    New facilities
and reactors                   were      to be built,                 others           upgraded,             and other
facilities               phased          out.           DOE officials                  have informed                    us that         this
plan      is     bfing           revised          and that            important               changes            are     being      studied.

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The 1991          budget,            nevertheless,                includes             about            $1.9      billion            for
modernization,                    including         design          work on two new reactors,                                    restart
operations            on DOE's Savannah                      River           reactors,              and renovation                     of
plutonium          operations               at     the Rocky Flats                     Plant.             Thus,
modernization                is     continuing             without            benefit             of an overall                  approved
strategic          plan.            Questions             about        the     need for                 additional             plutonium
production            capabilities,                 two new production                            facilities,                and
upgrading          facilities               which         may be phased                 out,            carry      with        them
important          budgetary               implications.


          The next           key question                 that     will        be discussed                     during         the
budget        process         is     the      adequacy            of     funding            for         environmental
problems.             DOE's fiscal                 year      1991        request            for         environmental
restoration            and waste              management               is     approximately                     $2.8        billion.
The five-year                plan,        however,          called            for     $3.3         billion             in    fiscal          year
1991.         The difference                  is    because            (1)     DOE is not                 funding            some       of    the
lower      priority           items         designated              in       the     five-year                 plan,        and (2)          DOE
anticipates            some delays                 in obtaining                the necessary                     environmental
permits.           The low priority                       items        not     funded             in the          1991 budget
include        about         $200 million                 in disposal                fees         for     high-level
radioactive            waste         and some decontamination                                 projects.


          Along       with        considering              the     adequacy             of DOE's 1991 budget,                                the
Congress          should          give     careful          consideration                     to DOE's ability                         to
effectively            spend         the      funds.             In this            regard,             DOE's own internal
control        eWvaluation               report      to the            President             dated          December             28,        1989,

                                                                  10
identified                 several         material            weaknesses         that     could         impact      on DOE's
ability         to rebuild                 and clean            up the complex.               These weaknesses
include         deficiencies                     in DOE's contracting                    manaqement         system          and
staffing             inadequacies.                   Because        programs            growing         as fast      as DOE's
can be very                 vulnerable             to fraud,            waste,      and abuse,            we have
initiated                 a focused         effort         to review            DOE's oversight             of      its
contractors                 and contracting                    procedures.              In carrying         out      this      work
we plan         to examine                 the     adequacy         and technical             capability             of DOE's
staff,        the effectiveness                       of       DOE's management              structure,             and DOE's
budgeting             process.


SUMMARY


            In summary,              the     problems            facing         the complex          are    still
critical.                 The nation's               ability        to produce            weapons grade              nuclear
material             is virtually                nonexistent             because         a number of          key
facilities                are     shut      down.          Widespread            environmental             contamination
exists        at many DOE sites                       and the           full     extent     of     the environmental
problems             is     not    known.


            During          the past         year,         DOE has taken                a number of         steps         to
better        deal         with      these        problems.              Such actions             are     important            as DOE
develops             an organization                  and management               system         with     the      capability
to effectively                    plan,      implement,             and oversee            corrective             actions.        We
believe         it        is wise         that       DOE takes           the     time     now to properly                 organize
itself        to,manage              the     actions            needed         to address         the many problems                  it

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faces.       Moreover,             a clearly              defined         organizational             structure,
sufficient           technical            staff,          and cohesive              manaqement        systems       will
all   be needed             to ensure          funds        are effectively                 spent     to correct
problems      that          have been neqlected                     for     many years.


         The 1991 budqet                  includes          increases          over     last        year     and further
increases          in DOE's budget                  to deal         with      its     problems        will     likely
continue      over         the     next      several         years.           During        this     time,     key issues
such as how should                  the complex              be modernized              and can cleanup                 be
expedited          will     be continually                  raised.           Hopefully,            such discussions
on these      key         issues     will          also     provide         the opportunity                to develop        a
national      consensus             on how we deal                  with      the problems.                Such a
consensus          is necessary              to maintain              strong        congressional             and public
support      for      the     enormous             expenditures             that      are    needed.




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