For Recovery Act Funding, DOE Generally Selected “Shovel-Ready” Projects Whose Cost and Schedule Targets Had Been Developed and Needed Minimal Work to Finalize

DOE generally chose to use Recovery Act funds for cleanup projects that  could be quickly started and finished. The majority of the projects selected  also had existing contracts, which allowed the department to update and  validate new cost and schedule targets within a short time frame. In all, DOE selected 84 projects at 17 DOE sites in 12 states for Recovery  Act funding (see fig.1) with the majority of the money going to four sites— Hanford, Idaho National Laboratory, the Oak Ridge Reservation, and  Savannah River (see app. Removing contamination from soil and groundwater: for example,  removing and disposing of radioactive and hazardous contaminants from  soil and groundwater at the Mound Site, a former production site for  explosives and other weapons’ components. 3.) DOE Has Begun Work on All Projects, Most Appear to Be Meeting Cost and Schedule Targets, and Spending Overall Has Been Slower Than Planned

DOE has begun work on all of its Recovery Act projects, spent over  $1.9 billion of its $6 billion in Recovery Act funding, and created more than  5,600 jobs at the 17 cleanup sites selected for funding. DOE reported that  the majority of Recovery Act projects were achieving cost and schedule  targets, although about one-third were not. The number of full-time jobs created varied from site to site. As of May 2010, a little over a year into the  program, DOE had obligated about $5.5 billion (92 percent) of the  $6 billion in Recovery Act cleanup funding and had spent about $1.9 billion  of those funds—slightly less than the $2.3 billion DOE had expected to  spend through May 2010. 4). In addition, it is unclear how  Recovery Act funding has affected job creation and the department’s  environmental cleanup goals or, in particular, to what degree this  additional funding will reduce DOE’s footprint, related environmental  risks, and future cleanup costs. DOE Has Taken Steps to Help Projects Achieve Cost and Schedule Targets, Although Some Project Management Issues Remain

To help Recovery Act projects achieve their cost and schedule targets,  DOE has taken steps to strengthen project management and oversight,  such as adding federal oversight staff, increasing project reporting  requirements, and placing tighter controls on when and how funds are  disbursed to cleanup sites. Officials attributed these difficulties to technical, regulatory, safety, and  contracting problems—some of the same issues that have challenged  DOE’s project management in the past. Determining Impact of Recovery Act Spending on Job Creation Is Problematic Because DOE Calculates Jobs Created Using Three Different Methodologies

DOE has wrestled with calculating and reporting jobs created—a  requirement of the Recovery Act—publicly reporting three vastly different  figures. The Impact of Recovery Act Spending on Cleanup and Other Goals Remains Unclear

In addition to inconsistencies in how the department measures job  creation, DOE has no clear means of determining how cleanup work  funded by the act will reduce environmental risk, if at all. Without a  clearly defined and consistent measure of its footprint, it will be difficult  for DOE to report whether or how Recovery Act funding has affected  progress toward this key DOE cleanup goal. GAO has previously taken issue with  DOE’s method of calculating savings in life-cycle costs. Recommendations for Executive Action

To help ensure successful completion of Recovery Act projects and apply  lessons learned to DOE’s larger cleanup effort, we recommend that the  Secretary of Energy direct the Assistant Secretary of Environmental  Management to take the following four actions:    Determine whether additional project management and oversight steps  adopted for Recovery Act projects, such as more frequent reporting, have  proven beneficial and whether these steps would be effective and  appropriate for DOE’s cleanup projects funded under annual  appropriations. Develop clear, quantifiable, and consistent measures for determining the  impact of Recovery Act funding on environmental risk. Ensure that savings estimates over the life of the cleanup projects are  calculated according to OMB and DOE guidance, so that these estimates  accurately represent potential savings and reflect costs adjusted for both  inflation and the time value of money. Appendix I: Scope and Methodology

To determine how the Department of Energy (DOE) selected projects for  funding under the American Recovery and Reinvestment Act of 2009  (Recovery Act) and developed cost, schedule, and performance targets,  we reviewed key provisions of the Recovery Act and Office of  Management and Budget (OMB) guidance regarding the act.
Why GAO Did This Study

The American Reinvestment Act of 2009 aims to stimulate the economy, including funding for environmental cleanup projects. The Department of Energy (DOE) receives annual appropriations of $6 billion to support the cleanup of radioactive and hazardous wastes resulting from decades of nuclear weapons research and production. GAO was asked to examine (1) how DOE selected projects for funding and developed cost and schedule targets, (2) project status and extent to which projects are achieving these targets, and (3) key challenges faced and efforts to address them. GAO reviewed Recovery Act project documentation, including cost, schedule, and performance data for 84 projects at 17 sites; visited the 4 sites receiving most of the funding; and interviewed headquarters and site officials.

What GAO Found

DOE's Office of Environmental Management generally chose to use Recovery Act funds for cleanup projects that could be quickly started and finished. Most projects also had existing contracts, which allowed DOE to update and validate cost and schedule targets within a short time. DOE generally funded four types of projects: decontaminating or demolishing facilities, removing contamination from soil and groundwater, packaging and disposing of transuranic and other wastes, and supporting the maintenance and treatment of liquid tank wastes. In all, DOE selected 84 projects at 17 DOE sites in 12 states for Recovery Act funding, with 4 sites receiving most of the money. As of May 2010, DOE had begun work on all Recovery Act projects and reported creating about 5,600 full-time equivalent jobs at the 17 sites during the first quarter of 2010. Spending on Recovery Act projects has been slower than planned. DOE had obligated about $5.5 billion of the $6 billion in Recovery Act cleanup funding and spent about $1.9 billion of those funds. This sum is less than the $2.3 billion DOE had expected to spend by that time. DOE reported that most Recovery Act projects were achieving cost and schedule targets, although a third of projects were not. DOE has faced familiar challenges in both managing Recovery Act projects and measuring how Recovery Act funding has affected cleanup and other goals. According to DOE officials, a third of projects did not meet cost and schedule targets for some of the same reasons that have plagued DOE in the past: technical, regulatory, safety, and contracting issues. DOE has taken steps aimed at strengthening project management and oversight for Recovery Act projects, such as increasing project reporting requirements and placing tighter controls on when funds are disbursed to sites, but it is uncertain how these steps will ultimately affect Recovery Act project performance, or whether they hold the potential to be useful for cleanup work funded under annual appropriations. Measuring the impact of Recovery Act funding on job creation and DOE's cleanup goals has also been a challenge for DOE, in particular, providing an accurate assessment of the act's impact on jobs, environmental risk reduction, and the life-cycle costs of its cleanup program. DOE has used three different methodologies to assess and report jobs created, which provide very different and potentially misleading, pictures of jobs created. For example, the calculations ranged from about 5,700 jobs to 20,200, depending on the methodology used. Also, DOE has not developed a clear means of measuring how cleanup work funded by the act will affect environmental risk or reduce its footprint--the land and facilities requiring DOE cleanup. Further, it is unclear to what extent Recovery Act funding will reduce the costs of cleaning up the DOE complex over the long term. DOE's estimate of $4 billion in life cycle cost savings resulting from Recovery Act funding was not calculated in accordance with federal guidance. GAO's analysis indicates that those savings could be 80 percent less than DOE estimated. Without clear and consistent measures, it will be difficult to say whether or how Recovery Act funding has affected DOE's cleanup goals.

What GAO Recommends

GAO recommends four actions for DOE to improve project management and reporting: (1) determine whether project management and oversight steps adopted for Recovery Act projects would benefit other cleanup projects, (2) clarify the methodology used to calculate jobs created, (3) develop clear and quantifiable measures for determining the impact of Recovery Act funding, and (4) ensure that cost savings are calculated according to federal guidance. DOE agreed with the recommendations.