Department of Energy

From 1980 through 1996, the Energy Department (DOE) conducted 80 projected that it characterized as "major system acquisitions." Thirty-one of the projects were terminated before completion after expenditures of more than $10 billion. Only 15 of the projects were completed, and most of them were finished behind schedule and over budget. Moreover, three of the 15 projects have yet to be used for their intended purpose. The remaining 34 projects are ongoing, many with substantial cost increases and schedule slippages. Four key factors underlie the cost overruns, schedules slippage, and terminations of DOE's most critical projects. These are unclear or changing missions; the incremental funding of projects; a flawed system of incentive both for DOE personnel and contractors; and a lack of enough DOE personnel with the skills to effectively oversee contractors' operations. On the positive side, DOE is launching several initiative that could help improve the Department's overall management as well as the management of individual major system acquisitions.

GAO noted that: (1) from 1980 through 1996, DOE conducted 80 projects that it designated as major system acquisitions; (2) 31 of those projects were terminated prior to completion, after expenditures of over $10 billion; (3) only 15 of the projects were completed, and most of them were finished behind schedule and with cost overruns; (4) further, 3 of the 15 projects have not yet been used for their intended purpose; (5) the remaining 34 projects are ongoing, many with substantial cost increases and schedule slippage; (6) GAO believes there are four key factors underlying the cost overruns, schedule slippage, and terminations of DOE's most critical projects: (a) unclear or changing missions; (b) the incremental funding of projects; (c) a flawed system of incentives both for DOE's employees and contractors; and (d) a lack of sufficient DOE personnel with the appropriate skills to effectively oversee contractors' operations; (7) on the positive side, DOE is implementing several initiatives that could help improve its overall management as well as the management of individual major system acquisitions; and (8) GAO believes that the implementation of these initiatives offers DOE an excellent opportunity to address the key factors.