I for a list of DOE  sites that disposed of the majority of LLRW in fiscal years 2004 and 2005.) DOE Sites Do Not Consistently Use Life- Cycle Cost Analysis in Managing LLRW

DOE sites prepare various types of cost analyses in making LLRW  management decisions, but these analyses do not consistently use  complete, current, or well-documented life-cycle cost analysis to ensure  that the lowest-cost LLRW management alternatives are identified. These inconsistencies have occurred, in large  part, because DOE’s guidance lacks necessary detail and its oversight of  contractor practices is weak. DOE LLRW generator sites we visited did not always include all life-cycle  costs—including the postclosure costs of long-term maintenance and  surveillance of the disposal site—and did not always consider alternative  actions when deciding on how to manage and dispose of LLRW. For  example, despite DOE’s guidance to include all disposal costs in its life- cycle cost analyses, DOE contractors at two sites—Rocky Flats, Colorado,  and Paducah, Kentucky—did not consistently consider postclosure costs in  the analyses supporting their LLRW disposal decisions for fiscal year 2004. In some  cases, we could not determine how contractors incorporated cost analyses  into their disposal decisions because documentation was incomplete. DOE Has Not Taken Steps to Oversee Contractors’ Use of Life-Cycle Cost Analysis, Relying Instead on Incentive-Based Contracts to Ensure Cost-Effective LLRW Decisions

DOE site offices were ineffective in overseeing contractors’ use of life- cycle cost analysis, which also contributed to ineffective implementation of  the guidance. DOE Faces Challenges in Developing a National LLRW Disposition Strategy

To better coordinate disposal efforts among sites and program offices,  increase efficiencies, and minimize life-cycle costs, DOE has begun  developing a national LLRW disposition strategy. Although DOE expects to  begin implementing this strategy by March 2006, specific schedules have  not yet been established for when the strategy will be fully in place, and it  faces several significant challenges. DOE Expects to Begin Implementing a Departmentwide Strategic Plan for Disposing of LLRW in 2006

DOE has recognized that its current approach---having each site  responsible for developing mechanisms necessary to control costs—may  result in cost inefficiencies and could limit its ability to meet  departmentwide strategic objectives, such as accelerated waste cleanup  and site closure. EM  plans to use the strategy to evaluate predisposal, storage, treatment, and  disposal options across the department. To dispose of  this waste, BNFL had constructed a supercompactor, the largest of its type  in the nuclear industry. Consequently, DOE may have missed a potential  cost-saving opportunity. Recommendations for Executive Action

To promote cost-effective LLRW management, we are recommending that  the Secretary of Energy take the following four actions:  Prepare comprehensive guidance on life-cycle cost analysis that, at a  minimum, specifies (1) a systematic, consistent method of analyzing all  cost elements or of comparing key alternatives within these cost  elements to determine the lowest cost; (2) when and under what  circumstances sites should prepare cost analyses; (3) relevant DOE  orders, manuals, or other reference materials that should be consulted  to provide consistent direction on how and when to perform the  analysis; and (4) how final LLRW management decisions should be  documented to demonstrate that life-cycle cost factors were adequately  weighed against noncost factors, such as safety, health, or schedule.
Why GAO Did This Study

In 2004, the Department of Energy (DOE) disposed of more than 378,000 cubic meters of low-level radioactive waste (LLRW)--contaminated building rubble, soil, and debris. In 2002, DOE directed its sites to use life-cycle cost analysis to manage LLRW. Life-cycle cost analysis examines the total cost of various options to manage LLRW over its life, including its packaging, treatment, transport, and disposal, to identify the lowest-cost alternative. GAO determined whether (1) DOE sites use life-cycle cost analysis to evaluate LLRW management alternatives and (2) DOE has a strategy for cost-effectively managing LLRW departmentwide, including state actions that may affect this strategy.

What GAO Found

The six DOE sites we visited, representing more than 70 percent of the LLRW disposed of by DOE during 2003 and 2004, did not consistently use life-cycle cost analysis because of weak DOE guidance and a lack of oversight of contractors' implementation of this guidance. As a result, DOE cannot ensure that lowest-cost LLRW management alternatives are identified, so that managers make decisions that fully weigh costs against noncost factors, such as safety and schedule. For example, DOE contractors at two sites did not consistently consider alternative transportation modes or postclosure maintenance and surveillance costs of disposal sites in their analyses for fiscal year 2004 disposal decisions. GAO also could not always determine how contractors used cost analyses in disposal decisions because of incomplete documentation. While DOE's guidance requires each site to develop the mechanisms necessary to ensure use of life-cycle cost analysis, it does not specify, for example, (1) a systematic, consistent method of analyzing all cost elements to determine the lowest cost, or (2) when analyses should be performed. Also, no such guidance was incorporated into site contracts, and DOE site offices had not evaluated contractors' use of life-cycle cost analysis. DOE has recognized that its current approach--having each site responsible for developing mechanisms necessary to control costs--may result in cost inefficiencies and may limit its ability to meet departmentwide strategic objectives. As a result, DOE plans to begin implementing a national LLRW disposition strategy by March 2006 to better coordinate disposal efforts--specific schedules have not yet been established for when the strategy will be fully in place. However, DOE faces challenges in developing and implementing this strategy. First, it needs to gather complete data on the amount of LLRW needing disposal. Second, the fact that DOE's multiple program and site offices have differing missions and oversee many contractors presents coordination challenges. For example, one program office dismantled and disposed of a supercompactor used to reduce the volume of large LLRW items without a DOE-wide assessment of LLRW compacting needs and without considering other potential cost-effective uses for the supercompactor that might benefit other DOE sites. Third, DOE faces state actions that have restricted access to disposal facilities, making it more difficult to coordinate and integrate disposal departmentwide.