DOE’s EM Program Manages Most of Its Multibillion-Dollar Cleanup Work as Operations Activities, Posing Cost and Schedule Risks

DOE’s EM program manages most of its cleanup work as operations  activities, posing cost and schedule risks. Site managers have the discretion to classify  cleanup work as operations activities, even if the work has characteristics  of capital asset projects, because DOE and EM have not established  requirements for classifying EM’s cleanup work. Figure 3 illustrates how EM  classified and funded its work during fiscal year 2019. Figure 4 below illustrates how  operations activities are managed under less stringent requirements  than capital asset projects. For example, under the appendix, the  cleanup of radioactive liquid waste tanks and solid waste exhumation  and disposition would have been designated as capital asset  projects. Officials from DOE’s Office of Project Management stated that EM did not  respond to their concerns that EM’s approach to classification of cleanup  work poses unwarranted cost and schedule risks. Until  EM works together with DOE’s Office of Project management to (1)  establish requirements for classifying cleanup work as capital asset  projects or operations activities and (2) assess EM’s ongoing operations  activities to determine if they should be reclassified as capital asset  projects based on the newly established requirements, the department  may incur more project management risk of cost increases and schedule  delays than it should for hundreds of billions of dollars of remaining work. EM’s Cleanup Policy Does Not Follow Most Selected Program and Project Management Leading Practices

EM’s 2017 cleanup policy, which governs the EM program and its  operations activities, does not follow most selected leading practices for  program and project management. More specifically, EM’s 2017  cleanup policy does not follow any of 9 selected program management  leading practices related to scope, cost, schedule performance, and  independent reviews. EM’s policy does not require EM to  conduct risk management throughout the life of the program. The selected leading practices help ensure that a program achieves its  goals and intended benefits and that it optimizes scope, cost, and  schedule performance, and independent review of performance. Until EM reviews and revises its policy to  include project management leading practices related to scope, cost, and  schedule performance, and independent reviews, EM’s operations  activities are at risk of scope creep or uncontrolled changes to scope,  exceeding their initial budget and schedule, and failing to meet their  goals. In EM’s  case, its objective, as stated in its mission, includes completing its  cleanup work in a way that reduces associated risks and costs. Given  (1) the high-risk posed by EM’s cleanup work and the high  environmental liability, which may continue to grow; (2) the difference  in the stringency of requirements between managing and overseeing  operations activities and capital asset projects; and (3) the concerns  raised by DOE top project management experts that some current  operations activities should be classified as capital asset projects, we  encourage the Secretary to direct EM not only to consult with DOE’s  Office of Project Management but to take advantage of the office’s  role and expertise and direct EM to work with this office to come to an  agreement about proper classification requirements and classification  of current and future cleanup work. To examine the extent to which EM’s cleanup policy follows selected  program and project management leading practices, we selected two sets  of criteria for program and project management leading practices using  leading practices from the Project Management Institute, which are  generally recognized as the top leading practices for program and project  management. We  reviewed relevant documentation, and interviewed agency officials  knowledgeable about those data, among other things.
Why GAO Did This Study

EM's mission is to complete the cleanup of nuclear waste at 16 DOE sites and to work to reduce risks and costs within its established regulatory framework. In December 2018, DOE reported that it faced an estimated $494 billion in future environmental cleanup costs—a liability that roughly tripled during the previous 20 years.
GAO was asked to examine EM's operations activities. This report examines, among other objectives, (1) how EM manages its cleanup work and (2) the extent to which EM's cleanup policy follows selected leading practices for program and project management.
To do this work, GAO reviewed agency documents and interviewed DOE project management experts and EM officials. GAO compared EM's policy with selected leading practices endorsed by the Project Management Institute for program and project management related to scope, cost, schedule, and independent review.

What GAO Found

The Department of Energy's (DOE) Office of Environmental Management (EM) manages most of its cleanup of nuclear waste (77 percent of its fiscal year 2019 budget) under a category that EM refers to as operations activities, using less stringent requirements than a category of work, known as capital asset projects. (See figure) Capital asset projects—which involve the acquisition of land and other assets, including through environmental remediation—must undergo a series of reviews by independent experts and DOE's senior leadership. In contrast, operations activities are not reviewed outside of EM. EM's policy defines operations activities as reoccurring facility or environmental operations, as well as activities that are project-like, with defined start and end dates. EM cleanup site managers have discretion on how to classify cleanup work because DOE and EM have not established classification requirements. Since 2015, experts in DOE's Office of Project Management have raised concerns that some operations activities should be classified as capital asset projects, and that managing them under less stringent requirements poses cost and schedule risks. For example, the experts stated the cleanup of tanks of radioactive liquid waste should be designated as capital asset projects. However, these experts also stated that EM did not respond to their concerns, even though the office has department-wide responsibilities for overseeing project management. Until EM works with DOE's Office of Project Management to establish requirements for classifying cleanup work, the department may incur more cost and schedule risks than it should.
EM's cleanup policy does not follow any of 9 selected program management leading practices or 9 of 12 selected project management leading practices. For example, EM's 2017 cleanup policy does not follow the program management leading practice of conducting risk management throughout the life of a program or the project management leading practice of requiring independent reviews of operations activities. These leading practices help ensure that a program optimizes scope, cost, and schedule performance and that it achieves its goals and intended benefits. Until EM revises its cleanup policy to follow leading practices, EM's operations activities are at risk of uncontrolled changes to scope, exceeding initial budget and schedule, and failing to meet their original goals.

What GAO Recommends

GAO is making seven recommendations, including that EM (1) establish cleanup work classification requirements and (2) revise its cleanup policy to follow program and project management leading practices. DOE generally agreed with GAO's recommendations.