DOE Has Overall Program Plan in Place, but the Large Number of Organizations Involved in the Program Could Delay Progress

Since the program was transferred from DOD to DOE in December 2002,  DOE (1) has developed an overall program plan to manage the construction  of the fossil fuel plants, (2) has selected two U.S. contractors to oversee  work on the replacement fossil fuel plants, and (3) is working with its U.S.  contractors to review design and construction plans for the plants. However, U.S. and  Russian officials expressed concern that the large number of U.S. and  Russian organizations, 17, involved in the overall management of the  program makes coordination difficult and has led to delays. DOE Faces Challenges in Its Efforts to Shut Down the Reactors, Including Obtaining Russia’s Support to Implement Key Nonproliferation and Safety Initiatives

Final shutdown of Russia’s three plutonium production reactors is  uncertain because DOE faces challenges in implementing its program. Russia’s recent rejection of  DOE’s initiatives to reduce the amount of plutonium being produced by the  reactors and to improve the safety of the reactors prior to their shutdown  raises serious questions about Russia’s commitment to the fundamental  nonproliferation and safety goals of the program. Furthermore, the agreement contains shutdown dates  that are not realistic. Finally, thousands of Russian nuclear workers who  are currently employed at the reactors and related facilities will be  displaced when the reactors are closed. Although DOE officials told us that  a failure to find jobs for these workers could threaten the success of the  program, DOE has not developed a plan to coordinate the shutdown of the  reactors with other DOE and Department of State efforts designed to find  employment for Russian nuclear workers. DOE Has Spent Only a Small Portion of Available Program Funds, and Total Program Costs Are Likely to Be Significantly Higher Than DOE’s Original Estimates

As of December 31, 2003, DOE had spent $7.8 million, about 4 percent of  the funds available, to begin work on planning and developing the program. To increase the chances for program success by clarifying the existing  reactor shutdown agreement, we recommend that the Secretary of Energy,  working with the Administrator of the National Nuclear Security  Administration and Secretary of State, do the following:  reach agreement with Russia on the steps that must be taken to  permanently shut down the reactors and the specific requirements that  must be met to complete the replacement fossil fuel plants;  identify any additional costs that may surface as a result of refining the  scope of work associated with shutting down the reactors and  completing the replacement fossil fuel plants and revise cost and  schedule estimates for the program accordingly; and   amend the March 2003 reactor shutdown agreement as soon as  practicable to accurately reflect DOE’s more realistic shutdown dates  for Russia’s three plutonium production reactors. We  interviewed officials from DOE’s Office of Engineering and Construction  Management and from the Elimination of Weapons-Grade Plutonium  Production program.
Why GAO Did This Study

Russia's continued operation of three plutonium production reactors poses a serious proliferation threat. The Department of Energy's (DOE) Elimination of Weapons-Grade Plutonium Production program seeks to facilitate the reactors' closure by building or refurbishing replacement fossil fuel plants. This report (1) describes DOE's efforts to manage and implement the program, (2) assesses the challenges DOE faces in achieving its goal of shutting down the reactors, and (3) identifies DOE's current expenditures and projected program costs.

What GAO Found

DOE is financing and managing the construction of two fossil fuel plants in Russia that will replace the heat and electricity that will be lost with the shutdown of Russia's three plutonium production reactors. DOE (1) has developed an overall plan to manage its program, (2) has selected two U.S. contractors to oversee the construction of replacement fossil fuel plants, and (3) is working with its U.S. contractors to review specific design and construction plans for the plants. DOE officials expressed concern that the number of organizations, 17, involved in the program makes coordination difficult and has led to delays. Additionally, DOE and U.S. contractor officials said that the primary Russian contractor may not have adequate experience and currently lacks enough staff to implement its part of the program. Final shutdown of the reactors is uncertain because DOE faces a number of challenges in implementing its program, including (1) ensuring Russia's commitment to the nonproliferation and safety goals of the program, (2) clarifying the existing reactor shutdown agreement, and (3) working with Russia to find employment for thousands of Russian nuclear workers who will lose their jobs when the reactors are closed. Russia's rejection of DOE's proposals to reduce the amount of plutonium produced by the reactors and to improve the safety of the reactors before they are shut down raises serious questions about Russia's commitment to key program goals. Furthermore, the existing reactor shutdown agreement contains shutdown dates that do not reflect DOE's planned program schedule. Finally, the challenge of finding employment for Russian nuclear workers could undermine the program by creating the potential for Russia to continue operating the reactors longer than necessary to ensure jobs for the workers. DOE has not developed a plan to address this issue. As of December 31, 2003, DOE had spent $7.8 million--about 4 percent of available funds on planning and developing the program, including travel, overhead, project administration, and document translation costs. Regarding future program costs, DOE officials told us that they expect the projected costs to build the replacement fossil fuel plants to be significantly higher than their original estimate of $466 million, possibly as much as $1 billion.