Oversight of contractors and environmental remediation remains at the forefront of the U.S. Department of Energy’s management challenges for fiscal 2020, according to a Nov. 15 special report from DOE’s Office of Inspector General.
Other major concerns include nuclear waste management, cybersecurity, safeguards and security of DOE installations, civilian stewardship of the U.S. nuclear arsenal, and modernization of infrastructure, the IG said in the 25-page document for the budget year that began Oct. 1.
The Energy Department is the No. 1 user of contractors in the federal government, with more than 14,000 awards worth over $25 billion as of September.
Various studies since 1990, by both the IG and the Government Accountability Office, have raised concerns about poor contract oversight and project management. “We continue to believe the area of Contract Oversight,” including subcontractors, remains a challenge for DOE, the IG said.
Among the issues is DOE prime contractors failing to properly audit subcontractors to help prevent potential waste or fraud. Such examples of inadequate agency oversight of vendors can leave the government paying for unneeded costs, Inspector General Teri Donaldson said in the report.
The report specifically cites the Idaho National Laboratory manager Battelle Energy Alliance, for its own laboratory audits, which were below federal cost accounting standards. The inspector general’s review of fiscal 2016 audits for example questioned $17.6 million in “over-recorded” funds and $8.4 million in “under-recorded” money.
Likewise, the IG cites Bechtel for failing to fully audit its flexible-pricing subcontractors for the $17 billion Waste Treatment Plant it is building at the Hanford Site in Washington state. Only about 20% of the subcontracts without fixed prices has been audited, based on the office’s review. In addition, some flexibly-price subcontracts were mistakenly listed as fixed price.
The audit shortcomings – which Bechtel says it has nearly fixed – make it tough to ensure federal money isn’t wasted.
Spending by DOE’s Office of Environmental Management to remediate the nation’s Manhattan Project and Cold War nuclear legacy also remains a concern, the IG said. Despite spending $48 billion over the last eight years, the Energy Department’s environmental liability rose to $494 billion in fiscal 2018, an increase of $110 billion just from fiscal 2017, mostly because of higher cost estimates for Hanford.
The Office of Environmental Management in October 2018 increased the lifetime cleanup estimate for the former plutonium production complex by $82 billion, to $242 billion, the inspector general noted. Half of the department’s environmental liability is traced to either Hanford or the Savannah River Site in South Carolina.
Many reasons contribute to rising liability estimates, DOE says. They include inflation, changing expectations from regulators, accidents, technology problems, and continued cost of keeping radioactive waste and contaminated buildings safe while they await long-term disposition.
Radioactive and hazardous waste left over from decades of federal nuclear weapons development poses a major expense. The Energy Department is responsible for roughly 90 million gallons of liquid waste in underground tanks and 4,000 cubic meters of solid waste derived from liquids held in bins, the IG said.
The radioactive waste located at INL, Hanford, and Savannah River must be treated and immobilized before it is shipped to a disposal site. The agency estimates the tab for treating and disposing of this waste is around $50 billion, according to the report.
Cost overruns and schedule delays on major projects continues to dog the Energy Department, the IG added. After much uncertainty with the construction of the Mixed Oxide Fuel Fabrication Facility (MFFF) at Savannah River, the federal agency terminated the project in October 2018.
The facility was intended to convert 34 metric tons of surplus plutonium into fuel for commercial nuclear power plants, under a U.S.-Russian nonproliferation agreement. The Energy Department spent over $5 billion on the project before its cancellation, but its life-cycle cost estimate grew to about $50 billion.
The cleanup office has traditionally done a poor job of providing Congress with sufficient and realistic data on future liability, according to the IG’s report. For example, the inspector general said the Environmental Management office liability estimate does not account for potential $2.3 billion in costs for remediation of contaminated facilities that could be transferred to its care from other DOE programs such as the National Nuclear Security Administration.
The NNSA is in charge of safety, security, and effectiveness of the U.S. nuclear arsenal. But more than half of its facilities are over 40 years old.
Aging infrastructure is also a DOE-wide problem. “For instance, poor conditions in laboratory facilities and infrastructure can lead to inadequate functionality in mission performance; negative effects on the environment, safety, and health of the site,” the inspector general said.
The old facilities can also result in higher maintenance costs, and make it tougher to recruit and keep top professionals, the IG said.
At the Los Alamos National Laboratory in New Mexico, the NNSA committed to building new facilities – one for processing low-level waste and a second for processing transuranic liquid waste, the inspector general noted in a report earlier this year. The IG found former prime contractor Los Alamos National Security had problems with design, construction quality, and subcontractor management at the low-level waste project. There were also design phase problems with the TRU waste project, the IG said.
Another significant problem is the NNSA’s “dwindling supply of explosive material,” the IG study said. Roughly 100 nuclear weapons components require explosive materials.
While a Government Accountability Office report in June said the NNSA has developed a strategy to shore up its explosive materials supply, some problems remain. The plan lacks a well-developed mission statement and some of its goals are not quantifiable, the GAO found.
Officials at the NNSA say they are award of the plan’s shortcomings, but released the document quickly to get it into the hands of the industry community. The National Nuclear Security Administration plans to update the strategy in the next year or so.
