The vitrification and uranyl projects are of similar size and complexity as some of the projects that DOE will undertake in the future. For the uranyl project, many of the required project management documents were not prepared until late or not prepared at all, contributing to the cost growth and schedule delays. Furthermore, for its most important projects, DOE has increased the frequency with which it meets with the contractor to discuss the status of the projects. Cost overruns and schedule slippages similar to those of these two projects exist Departmentwide. For example, the Board found in 1992 and 1993 that the Area Office had inadequate plans to supervise the contractor’s activities, did not have the technical staff to ensure that safety requirements were adhered to, and did not stay on top of the daily activities of the contractor. Some Weaknesses Exist in Performance and Financial Systems

Fluor Daniel Fernald’s compliance with procedures that we reviewed in the performance and financial systems was mixed, but some weaknesses make it difficult for both DOE’s and the contractor’s managers to exercise effective control and oversight of the contractor’s costs and performance. DOE has directed the contractor to make numerous changes to address the weaknesses identified in recent reviews of the contractor’s financial and performance management, but it is too early to assess the impact. DOE Is Implementing Contract and Management Initiatives to Improve Oversight

DOE recognizes that its management and contracting problems are Departmentwide and is implementing major reform efforts to improve these areas. These practices make it difficult for DOE and the contractor’s managers to exercise effective control and oversight of the contractor’s costs and performance. Information on Allegations Concerning Management of Two Cleanup Projects at Fernald

The following discusses the purpose and status of the Department of Energy’s (DOE) vitrification pilot plant (VITPP) and uranyl nitrate hexahydrate (UNH) projects and information relevant to the allegations published by the Cincinnati Enquirer about these projects. DOE has established internal project milestones for the construction and testing of VITPP. This problem has been noted in two reports on Fernald. Subsequently, the contractor did not process a proposal to change the baseline. Safety and Health Oversight and Incidents

To determine how DOE’s management and oversight processes at Fernald ensure that Fluor Daniel Fernald is fulfilling DOE’s safety and health requirements, we obtained and reviewed (1) DOE’s safety and health procedures and guidelines applicable to the site, (2) the assessments of Fluor Daniel Fernald’s safety and health activities done by DOE’s Fernald Area Office, and (3) the assessments of the Fernald Area Office’s safety- and health-related programs done by the Defense Nuclear Facilities Safety Board and by DOE headquarters’ Office of Environment, Safety and Health and Office of Environmental Management.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on: (1) the extent to which the Department of Energy (DOE) is providing effective management and oversight of two key cleanup projects at its Fernald site--the vitrification pilot plant project and the uranyl nitrate hexahydrate project--that were reported on in the Cincinnati Enquirer; (2) DOE's oversight of safety and health activities at the site; (3) the contractor's compliance with certain performance and financial system procedures; and (4) DOE's overall contracting and management initiatives and how they may resolve any problems identified at Fernald.

What GAO Found

GAO noted that: (1) DOE has not exercised adequate management and oversight of the vitrification and uranyl projects or of the contractor's safety and health activities; (2) for example, DOE provided limited oversight during the early stages of the two projects and did not prepare many of the required project management documents for the uranyl project; (3) these and other DOE oversight weaknesses contributed to a total of $65 million in estimated cost overruns and almost 6 years of schedule slippages for the two projects; (4) in the safety and health area, from 1993 to 1995, serious concerns were raised about DOE's ability to ensure the contractor's compliance with safety and health requirements; (5) for example, DOE did not have adequate plans to supervise the contractor's activities and was not conducting the required safety and health assessments; (6) in the performance and financial management area, some of the contractor's practices for maintaining key systems make it difficult for DOE and the contractor to exercise effective control and oversight of the contractor's costs and activities; (7) DOE recognizes that contracting and management problems exist throughout the Department and is implementing major reforms to change the way it does business at Fernald and other sites; (8) at Fernald, DOE has made some improvements in the areas that GAO reviewed; (9) for example, in project management, DOE has increased the frequency with which it meets with the contractor to discuss the status of its most important projects; (10) in the safety and health area, DOE has increased the number of assessments and is making other changes that are not far enough along to evaluate; (11) DOE has directed the contractor to make changes to address weaknesses identified in recent reviews of the contractor's financial and performance management; (12) these actions address some of the weaknesses GAO identified; (13) however, it is too soon to assess the overall effectiveness of these improvements and reforms; and (14) their implementation at Fernald will be a real test of DOE's reforms.