Department of Energy

More than 50 articles alleging mismanagement and safety violations at the Energy Department's (DOE) Fernald site in Ohio appeared in the Cincinnati Enquirer last year. The Fernald Site, located about 18 miles from Cincinnati, is contaminated from years of uranium metal production. DOE has a five-year, $1.9 billion contract with Fluor Daniel Fernald to clean up the facility. The contract will be up for a one- to three-year renewal in November 1997. DOE estimates that it will take an additional 13 years and about $2.4 billion to complete the cleanup. The seriousness of the allegations prompted both DOE and Fluor Daniel Fernald to create two ad-hoc groups to investigate the situation. This report discusses (1) the extent to which DOE is effectively managing and overseeing two key cleanup projects at Fernald--the vitrification pilot plant project and the uranyl hexahydrate project--that were reported on in the Cincinnati Enquirer, (2) DOE's oversight of safety and health activities at the site, and (3) the contractors' compliance with performance and financial system procedures. GAO also discusses the major allegations and what is known about them, including the results of the two main investigations, and provides information on the facts surrounding Fluor Daniel Fernald's recent announcement that it may take 12 to 15 years to complete the cleanup, rather than the previously agreed-upon 10-year time frame.

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.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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