Department of Energy
Improved Guidance, Oversight, and Planning Are Needed to Better Identify Cost-Saving Alternatives for Managing Low-Level Radioactive Waste Gao ID: GAO-06-94 October 31, 2005In 2004, the Department of Energy (DOE) disposed of more than 378,000 cubic meters of low-level radioactive waste (LLRW)--contaminated building rubble, soil, and debris. In 2002, DOE directed its sites to use life-cycle cost analysis to manage LLRW. Life-cycle cost analysis examines the total cost of various options to manage LLRW over its life, including its packaging, treatment, transport, and disposal, to identify the lowest-cost alternative. GAO determined whether (1) DOE sites use life-cycle cost analysis to evaluate LLRW management alternatives and (2) DOE has a strategy for cost-effectively managing LLRW departmentwide, including state actions that may affect this strategy.
The six DOE sites we visited, representing more than 70 percent of the LLRW disposed of by DOE during 2003 and 2004, did not consistently use life-cycle cost analysis because of weak DOE guidance and a lack of oversight of contractors' implementation of this guidance. As a result, DOE cannot ensure that lowest-cost LLRW management alternatives are identified, so that managers make decisions that fully weigh costs against noncost factors, such as safety and schedule. For example, DOE contractors at two sites did not consistently consider alternative transportation modes or postclosure maintenance and surveillance costs of disposal sites in their analyses for fiscal year 2004 disposal decisions. GAO also could not always determine how contractors used cost analyses in disposal decisions because of incomplete documentation. While DOE's guidance requires each site to develop the mechanisms necessary to ensure use of life-cycle cost analysis, it does not specify, for example, (1) a systematic, consistent method of analyzing all cost elements to determine the lowest cost, or (2) when analyses should be performed. Also, no such guidance was incorporated into site contracts, and DOE site offices had not evaluated contractors' use of life-cycle cost analysis. DOE has recognized that its current approach--having each site responsible for developing mechanisms necessary to control costs--may result in cost inefficiencies and may limit its ability to meet departmentwide strategic objectives. As a result, DOE plans to begin implementing a national LLRW disposition strategy by March 2006 to better coordinate disposal efforts--specific schedules have not yet been established for when the strategy will be fully in place. However, DOE faces challenges in developing and implementing this strategy. First, it needs to gather complete data on the amount of LLRW needing disposal. Second, the fact that DOE's multiple program and site offices have differing missions and oversee many contractors presents coordination challenges. For example, one program office dismantled and disposed of a supercompactor used to reduce the volume of large LLRW items without a DOE-wide assessment of LLRW compacting needs and without considering other potential cost-effective uses for the supercompactor that might benefit other DOE sites. Third, DOE faces state actions that have restricted access to disposal facilities, making it more difficult to coordinate and integrate disposal departmentwide.
RecommendationsOur 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.
Director: Team: Phone:GAO-06-94, Department of Energy: Improved Guidance, Oversight, and Planning Are Needed to Better Identify Cost-Saving Alternatives for Managing Low-Level Radioactive Waste
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Managing Low-Level Radioactive Waste' which was released on October 31,
2005.
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Report to the Subcommittee on Energy and Water Development, Committee
on Appropriations, House of Representatives:
October 2005:
Department of Energy:
Improved Guidance, Oversight, and Planning Are Needed to Better
Identify Cost-Saving Alternatives for Managing Low-Level Radioactive
Waste:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-94]
GAO Highlights:
Highlights of GAO-06-94, a report to the Subcommittee on Energy and
Water Development, Committee on Appropriations, House of
Representatives:
Why GAO Did This Study:
In 2004, the Department of Energy (DOE) disposed of more than 378,000
cubic meters of low-level radioactive waste (LLRW)”contaminated
building rubble, soil, and debris. In 2002, DOE directed its sites to
use life-cycle cost analysis to manage LLRW. Life-cycle cost analysis
examines the total cost of various options to manage LLRW over its
life, including its packaging, treatment, transport, and disposal, to
identify the lowest-cost alternative. GAO determined whether (1) DOE
sites use life-cycle cost analysis to evaluate LLRW management
alternatives and (2) DOE has a strategy for cost-effectively managing
LLRW departmentwide, including state actions that may affect this
strategy.
What GAO Found:
The six DOE sites we visited, representing more than 70 percent of the
LLRW disposed of by DOE during 2003 and 2004, did not consistently use
life-cycle cost analysis because of weak DOE guidance and a lack of
oversight of contractors‘ implementation of this guidance. As a result,
DOE cannot ensure that lowest-cost LLRW management alternatives are
identified, so that managers make decisions that fully weigh costs
against noncost factors, such as safety and schedule. For example, DOE
contractors at two sites did not consistently consider alternative
transportation modes or postclosure maintenance and surveillance costs
of disposal sites in their analyses for fiscal year 2004 disposal
decisions. GAO also could not always determine how contractors used
cost analyses in disposal decisions because of incomplete
documentation. While DOE‘s guidance requires each site to develop the
mechanisms necessary to ensure use of life-cycle cost analysis, it does
not specify, for example, (1) a systematic, consistent method of
analyzing all cost elements to determine the lowest cost, or (2) when
analyses should be performed. Also, no such guidance was incorporated
into site contracts, and DOE site offices had not evaluated
contractors‘ use of life-cycle cost analysis.
DOE has recognized that its current approach---having each site
responsible for developing mechanisms necessary to control costs”may
result in cost inefficiencies and may limit its ability to meet
departmentwide strategic objectives. As a result, DOE plans to begin
implementing a national LLRW disposition strategy by March 2006 to
better coordinate disposal efforts”specific schedules have not yet been
established for when the strategy will be fully in place. However, DOE
faces challenges in developing and implementing this strategy. First,
it needs to gather complete data on the amount of LLRW needing
disposal. Second, the fact that DOE‘s multiple program and site offices
have differing missions and oversee many contractors presents
coordination challenges. For example, one program office dismantled and
disposed of a supercompactor used to reduce the volume of large LLRW
items without a DOE-wide assessment of LLRW compacting needs and
without considering other potential cost-effective uses for the
supercompactor that might benefit other DOE sites. Third, DOE faces
state actions that have restricted access to disposal facilities,
making it more difficult to coordinate and integrate disposal
departmentwide.
Cost Elements of LLRW Management:
[See PDF for image]
[End of figure]
What GAO Recommends:
GAO is making recommendations to better ensure that DOE sites properly
use life-cycle cost analysis to evaluate LLRW management options and
that DOE successfully develop and implement a DOE-wide LLRW strategic
plan. In commenting on the draft report, DOE generally agreed with our
conclusions and thanked us for the recommendations, but disagreed with
or wanted to clarify certain statements in the draft report and
provided technical comments which we incorporated as appropriate.
www.gao.gov/cgi-bin/getrpt?GAO-06-94.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gene Aloise at (202) 512-
3841 or aloisee@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
DOE Sites Do Not Consistently Use Life-Cycle Cost Analysis in Managing
LLRW:
DOE Faces Challenges in Developing a National LLRW Disposition
Strategy:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Disposed Waste Volume by Major DOE Generator Sites, Fiscal
Year 2004 through Second Quarter, Fiscal Year 2005:
Appendix II: Comments from the Department of Energy:
Appendix III: GAO Contact and Staff Acknowledgments:
Table:
Table 1: Cost Elements in Life-Cycle Cost Analysis and Associated
Activities:
DOE: Department of Energy:
EM: Office of Environmental Management:
LLRW: low-level radioactive waste:
NNSA: National Nuclear Security Administration:
Letter October 31, 2005:
The Honorable David L. Hobson:
Chairman:
The Honorable Peter J. Visclosky:
Ranking Minority Member:
Subcommittee on Energy and Water Development:
Committee on Appropriations:
House of Representatives:
In fiscal year 2004, the Department of Energy (DOE) disposed of more
than 378,000 cubic meters of low-level radioactive waste (LLRW)--enough
to fill a football field to the depth of a 19-story building.[Footnote
1] This waste included radioactively contaminated building rubble,
soil, and debris, as well as a small volume of mixed waste, which is
LLRW that is further contaminated with chemicals and other hazardous
waste.[Footnote 2] DOE disposes of such waste at two federal
facilities--the Hanford Site in Washington State and the Nevada Test
Site--and one commercial facility in Utah. Disposal actions at these
facilities are in some cases subject to regulation and licensing
decisions by the states in which they are located. DOE's Office of
Environmental Management (EM) manages the majority of LLRW at multiple
sites where the department is cleaning up facilities that were
contaminated with radioactivity as a result of, for example, nuclear
weapons-related activities. Many factors must be taken into account in
managing this waste, including health and safety and the target dates
for cleaning up the sites. Cost is also an important factor. In 2000,
we reported that DOE spent more than $700 million to manage LLRW from
1997 through 1999.[Footnote 3]
One tool for evaluating LLRW management costs is life-cycle cost
analysis. Such analysis calculates the total cost to manage waste over
its life, including cost elements like waste packaging, treatment,
transportation, disposal, and monitoring of the disposal site after
closure. The analysis is valuable for comparing the total costs of
various waste management options leading up to and including disposal
to identify the most cost-effective alternative. The results of such
analyses can be used in making LLRW management decisions that weigh
cost against noncost factors such as safety, health, and schedule.
DOE's use of complete, current, and well-documented life-cycle cost
analyses in making LLRW management decisions, if properly conducted, is
consistent with the intent of DOE Order 430.1B on real property asset
management. This order identifies requirements for life-cycle
management of real property assets, including DOE land, improvements,
facilities, and structures, from planning and acquisition through
disposal. The order is relevant to LLRW management because many DOE
facilities and structures that are considered real property assets
eventually become LLRW through EM cleanup efforts. The proper use of
life-cycle cost analysis is also consistent with Office of Management
and Budget Circular A-94, which provides guidance on conducting cost-
effective analyses of federal programs and projects. Among other
things, the circular states that a program is cost-effective if, on the
basis of life-cycle cost analysis of competing alternatives, it is
determined to have the lowest costs for a given amount of benefits.
Concerned that DOE may be relying too heavily on the Nevada Test Site
and Hanford facilities instead of considering other alternatives, such
as commercial disposal facilities, the House Committee on
Appropriations directed DOE to prepare a cost study analyzing the life-
cycle costs of LLRW management alternatives.[Footnote 4] DOE's life-
cycle cost study, sent to Congress in July 2002, specified cost
elements to include in life-cycle cost analysis, defined some LLRW
management alternatives, and highlighted the potential for finding
various cost differences among alternatives, among other
things.[Footnote 5] The study stressed that a thorough evaluation of
all life-cycle costs is crucial to identifying the lowest-cost
alternative for LLRW management. Although the study recommended that
DOE sites consider all life-cycle costs in evaluating alternatives for
LLRW management, it cautioned that DOE's data collection and reporting
processes needed to be improved to make any departmentwide cost
analyses useful.
In this context, you asked us to determine whether (1) DOE sites use
life-cycle cost analysis to evaluate management alternatives for LLRW
and (2) DOE has a strategy for cost-effectively managing LLRW disposal
departmentwide, including state actions that may affect this strategy.
To determine whether DOE sites use life-cycle cost analysis to evaluate
management alternatives for LLRW, we obtained information from DOE and
contractor officials using structured interview guides, reviewed agency
documents on life-cycle cost analysis requirements and practices, and
reviewed analyses prepared at a nonprobability sample of six DOE sites
that generate LLRW.[Footnote 6] In selecting these waste generators for
site visits, we used LLRW disposal volumes reported by two disposal
facilities--DOE's Nevada Test Site and a commercial disposal facility
in Utah--to select three waste generator sites under EM's control: two
EM sites that disposed of the largest volume of LLRW in fiscal year
2004--Fernald, Ohio, and Rocky Flats, Colorado--and one EM site with
the largest projected volume for fiscal year 2005--Paducah,
Kentucky.[Footnote 7] To provide a DOE-wide perspective, our
nonprobability sample also included three waste generator sites under
non-EM program offices. Because multiple DOE program activities can
exist at a single non-EM site, and comprehensive, departmentwide data
on LLRW volumes needing disposal do not exist, we selected our non-EM
sites based on (1) the overall disposal volume of LLRW sent to the
Nevada Test Site and Envirocare of Utah in fiscal year 2004 and (2)
judgments made by DOE officials regarding the amount of newly generated
LLRW volumes for which DOE's National Nuclear Security Administration
(NNSA) is responsible. These three waste generator sites we visited
were the Office of Science's Oak Ridge Reservation and East Tennessee
Technology Park, and NNSA's Y-12 Plant--all in Oak Ridge, Tennessee. We
assessed the general reliability of the information on LLRW disposal
volumes by comparing data provided by waste generators with data from
disposal facilities, and determined that this information was reliable
enough for selecting sites. In total, the six sites we visited
constituted about 70 percent of DOE's LLRW disposal volume for an 18-
month period--October 1, 2003, through March 31, 2005.
To examine whether DOE has a strategy for integrating DOE-wide disposal
operations to ensure cost-effective disposal, we reviewed DOE's draft
plan for a national LLRW disposition strategy and used structured
interview guides to obtain information from DOE and contractor
officials at DOE waste generator sites and disposal facilities. In
addition, we spoke with DOE officials from DOE program offices in
Washington, D.C, including EM, NNSA, the Office of Science, and the
Office of Nuclear Energy, Science and Technology. We also spoke with
appropriate DOE and state officials to identify state actions, such as
regulatory and court actions, that have affected DOE LLRW disposal
options and to determine DOE's response to these actions. We performed
our work between June 2004 and August 2005, in accordance with
generally accepted government auditing standards.
Results in Brief:
The six DOE sites we visited, representing more than 70 percent of the
LLRW disposed of by DOE during 2003 and 2004, did not consistently use
life-cycle cost analysis to ensure that the lowest-cost LLRW management
alternatives are identified because of weaknesses in DOE's guidance for
life-cycle cost analysis and a lack of oversight of contractors'
implementation of this guidance. Specifically:
* Cost analyses are not complete, current, or well documented. The six
DOE sites prepared various types of cost analyses in making LLRW
management decisions, but these analyses did not always include all
life-cycle cost elements or examine alternative courses of action, and
were not always current or formally documented. For example, DOE
contractors at two sites--Rocky Flats, Colorado, and Paducah, Kentucky-
-did not consistently consider alternative transportation modes for
shipping waste or postclosure maintenance and surveillance costs of
disposal sites in their analyses supporting their fiscal year 2004 LLRW
disposal decisions. In contrast, the contractor at Fernald, Ohio,
prepared cost analyses that included all life-cycle cost elements and
examined alternative options. However, Fernald's life-cycle cost
analysis, used to justify its 2004 LLRW disposal decisions, was not
current--it was over 10 years old and had not been updated to reflect
any changes that might have occurred in the costs for packaging,
treatment, transportation, or disposal. In other cases, such as at
DOE's Rocky Flats site, we could not determine how contractors
incorporated cost analyses into their disposal decisions because their
documentation was incomplete. Rocky Flats officials told us that
disposal decisions were at times based on noncost factors, such as
schedule or safety, but agreed that decisions were not consistently
documented to show the rationale for how cost was balanced against
other factors.
* DOE's guidance and contractor oversight are weak. The cost analysis
inconsistencies have occurred, in part, because DOE's guidance on life-
cycle cost analysis is incomplete. For example, EM headquarters' July
2002 guidance to site offices on life-cycle cost analysis directed
sites to develop mechanisms necessary to establish that its LLRW
disposal decisions include the best estimate of full "cradle to grave"
costs and analysis of alternatives, but it did not specify (1) a
systematic, consistent method of analyzing all cost elements to
determine the lowest cost; (2) when or under what circumstances the
analysis should be performed; (3) relevant DOE orders, manuals, or
other reference materials that could provide consistent direction on
life-cycle cost analysis; or (4) how final LLRW management decisions
should be documented. Furthermore, DOE site offices were ineffective in
overseeing contractors' use of life-cycle cost analysis, which also
contributed to ineffective implementation of the guidance. At the sites
we visited, neither DOE nor contractors had taken identifiable steps to
implement the guidance on life-cycle cost analysis. For example, DOE
has not incorporated life-cycle cost analysis guidance into site
contracts. When we brought these issues to DOE's attention, EM
officials responded that they have relied on the use of incentive-based
contracts to ensure contractors are making cost-effective decisions.
Incentive-based contracts provide specific incentives for specified
performance outcomes, often driven by site-specific goals and
objectives in areas such as health, schedule, cost, or other areas, as
negotiated between DOE and the contractor. For example, incentive-based
contracts might help DOE meet goals such as accelerated cleanup, which
may in some cases reduce overall site costs. However, the use of these
contracts does not necessarily ensure that contractors identify the
lowest-cost waste management alternatives, unless the contract provides
this specific focus.
DOE has recognized that its current approach---having each site
responsible for developing mechanisms necessary to control costs--may
result in cost inefficiencies and could limit its ability to meet
departmentwide strategic objectives, such as accelerated waste cleanup
and site closure. To overcome these problems, DOE has begun planning a
national LLRW disposition strategy to minimize life-cycle costs, among
other things. DOE plans to begin implementing this strategy in March
2006, but specific schedules have not yet been established for when the
strategy will be fully in place. The department faces the following
challenges in achieving an integrated departmentwide strategy:
* Collecting basic data on the amounts of LLRW needing disposal by
program offices departmentwide. Although DOE continues to report
progress in disposing of LLRW, the LLRW volumes it reports as needing
disposal are not complete. DOE officials acknowledge that its databases
are outdated and incomplete and do not include all LLRW expected to be
generated in the future as part of ongoing environmental cleanup or
produced by non-EM generators. Complete information is crucial for
developing a national strategy and for holding organizations and
individuals responsible and accountable for cost-effectively managing
LLRW. EM plans to gather complete information as part of its national
disposition strategy.
* Overseeing LLRW management in a department with a complex
organization and multiple missions. Specifically, DOE's multiple
program offices and related site offices have differing missions and
oversee a variety of site operating contractors, who manage wastes with
many different characteristics. DOE's Oak Ridge site illustrates how
this complexity can pose additional challenges for LLRW management. At
the Oak Ridge site, DOE has three different program offices, each with
its own contractor with differing levels of responsibility for managing
or disposing of portions of LLRW. This condition has complicated
efforts to dispose of LLRW cost-effectively. For example, in 2004, DOE
allowed a contractor to dispose of a supercompactor used to reduce the
volume of large pieces of LLRW debris from its gaseous diffusion plant.
The decision to dismantle and dispose of this compactor was made
without a departmentwide assessment of LLRW volume reduction needs and
capabilities, and without fully considering the supercompactor's
potential for reducing LLRW volumes and lowering costs for other
program offices at Oak Ridge and other sites. Consequently, DOE may
have missed a potential cost-saving opportunity because other waste
generator sites might have benefited from the use of the
supercompactor, such as Paducah, Kentucky, which has 37,000 tons of
scrap metal that its current on-site compactor is incapable of
crushing, according to the site's senior contractor official
responsible for LLRW management.
* Addressing the impacts of recent state actions. Over the past 2
years, states' regulatory and legal actions have restricted DOE's
access to disposal facilities, which compounds the challenges of
coordinating and integrating disposal efforts departmentwide. For
example, the state of Washington has sued to prevent LLRW from other
DOE sites from being disposed of at the Hanford facility. Consequently,
DOE is incurring increased costs for storage and treatment.
To ensure the cost-effective management and disposal of LLRW, we are
recommending that the Secretary of Energy take specific actions to
ensure that DOE sites use complete, current, and well-documented life-
cycle cost analyses in making LLRW management decisions, and develop
and implement a strategy for managing LLRW disposal departmentwide.
Overall, DOE generally agreed with our conclusions and thanked us for
the recommendations. Specifically, DOE agreed that its sites are not
consistently using life-cycle cost analysis in making LLRW management
decisions. It also agreed that its current guidance and oversight in
the area of life-cycle cost analysis for LLRW management decisions
should be strengthened and expressed appreciation for our support of an
effective National Disposition Strategy for LLRW management. DOE also
provided technical comments on certain statements in the draft report
with which it disagreed or wanted to clarify, which we incorporated as
appropriate.
Background:
Under the LLRW Policy Act of 1980, as amended, the federal government
is responsible for the disposal of LLRW owned or generated by
DOE.[Footnote 8] DOE defines LLRW as all radioactive waste that does
not fall within other classifications, such as spent (used) nuclear
fuel and other high-level waste. Mixed waste is LLRW with hazardous
components, such as lead and mercury. LLRW can include material of
varying levels of radioactivity, from barely contaminated soil and
debris to LLRW with enough radioactivity to require remote handling.
LLRW can include items such as contaminated equipment, protective
clothing, rags, and packing materials and is managed at multiple sites
under a variety of contractors. (See app. I for a list of DOE sites
that disposed of the majority of LLRW in fiscal years 2004 and 2005.)
DOE sites typically dispose of LLRW at (1) on-site facilities, if
suitable capacity is available,[Footnote 9] (2) DOE's regional disposal
facilities at the Hanford Site or the Nevada Test Site, or (3) a
commercial facility.[Footnote 10] The selection of the disposal
facility is based partly on the facility's waste acceptance criteria.
These criteria specify the allowable types and amounts of radioactive
materials, and types of containers acceptable at the disposal facility.
In 2000, we reported that DOE had not developed full life-cycle costs
for its disposal facilities or established guidance to ensure that its
contractors base their disposal decisions on departmentwide
considerations of cost-effectiveness, among other things.[Footnote 11]
We also reported in 2001 that cost analyses concerning the use of DOE's
on-site disposal facilities should be periodically updated to take into
account changing economic conditions.[Footnote 12] Subsequently, the
House Committee on Appropriations directed DOE to prepare an objective
analysis of the life-cycle costs of LLRW disposal for various federal
and commercial disposal options.[Footnote 13] The committee was
concerned that DOE needed to include in its life-cycle cost analysis
certain cost elements, such as packaging, transportation, disposal, and
postclosure maintenance and surveillance.
In response, in its 2002 report to Congress on life-cycle cost analysis
of LLRW disposal, DOE listed among its next steps for EM sites to
consider the cradle-to-grave costs as they make LLRW management
decisions. On July 18, 2002, EM issued guidance directing each site
office to develop the mechanisms necessary to ensure that contractors'
LLRW disposal decisions include the best estimate of full cradle-to-
grave costs and analysis of alternatives. Several other documents on
life-cycle cost analyses are also available. For example, DOE has a
cost-estimating guide, developed in the mid-1990s, that provides a
chapter dedicated to life-cycle cost analysis, including definitions,
processes, limitations, common errors made in life-cycle cost analysis,
methods, examples, and diagrams.[Footnote 14] In addition, although not
directly applicable to LLRW management, guidance and manuals prepared
by other federal agencies for other DOE programs may be useful to the
sites in explaining life-cycle cost analysis methods. For example, the
National Institute of Standards and Technology has published two
documents on life-cycle cost analysis that are applicable to DOE's
Federal Energy Management Program.[Footnote 15]
DOE Sites Do Not Consistently Use Life-Cycle Cost Analysis in Managing
LLRW:
DOE sites prepare various types of cost analyses in making LLRW
management decisions, but these analyses do not consistently use
complete, current, or well-documented life-cycle cost analysis to
ensure that the lowest-cost LLRW management alternatives are
identified. As a result, the decisions the sites make may not take into
account the most cost-effective alternative. These inconsistencies have
occurred, in large part, because DOE's guidance lacks necessary detail
and its oversight of contractor practices is weak.
Site Cost Analyses Are Not Always Complete, Current, or Well
Documented:
Complete life-cycle cost analysis is cradle to grave and includes all
costs associated with the management and disposal of LLRW. As DOE's
2002 report to Congress explained, the costs preceding disposal vary
greatly and can be significantly greater than the actual cost of
disposal. As a result, DOE concluded it is essential to consider pre-
disposal costs as well as disposal costs. Table 1 shows the cost
elements of a complete life-cycle cost analysis, according to DOE's
2002 report.
Table 1: Cost Elements in Life-Cycle Cost Analysis and Associated
Activities:
Cost element: Preparation;
Activities: The waste generator samples and analyzes the waste to
ensure that it will be certified as acceptable to the disposal site--
actions also known as waste characterization. The generator is also
responsible for treating the waste so that it is in a proper chemical
and physical form to meet the disposal facility's acceptance criteria.
Treatment can include drying or compaction.
Cost element: Packaging;
Activities: The generator is responsible for placing the waste--usually
in the form of soil or debris--in containers or in bulk, such as in a
railcar. The container type and cost vary with the characteristics of
the waste.
Cost element: Transportation;
Activities: The generator sends LLRW off-site, usually by truck or
rail. According to DOE, truck shipments can cost up to 1.9 times the
cost of rail shipments, depending on the packaging method, waste
density, and routing.
Cost element: Disposal;
Activities: The disposal facility operator receives and disposes of
LLRW. Disposal facilities generally incur construction, operation,
maintenance, and postclosure costs that they may pass on to waste
generators through disposal fees. Postclosure activities are required
to protect human health and the environment from hazards remaining
after closure, and can include maintaining and repairing closure caps,
monitoring environmental contamination, and erecting and maintaining
barriers.[A].
Source: DOE.
[A] Typically, DOE disposal facilities do not include past construction
or future postclosure costs in their disposal fees because they operate
on an annual appropriations basis. In contrast, Envirocare of Utah, a
commercial operator, charges disposal fees that recoup such costs.
[End of table]
DOE LLRW generator sites we visited did not always include all life-
cycle costs--including the postclosure costs of long-term maintenance
and surveillance of the disposal site--and did not always consider
alternative actions when deciding on how to manage and dispose of LLRW.
For example, despite DOE's guidance to include all disposal costs in
its life-cycle cost analyses, DOE contractors at two sites--Rocky
Flats, Colorado, and Paducah, Kentucky--did not consistently consider
postclosure costs in the analyses supporting their LLRW disposal
decisions for fiscal year 2004. In contrast, the contractor at Fernald,
Ohio, prepared a life-cycle cost analysis that included estimated
postclosure costs for both the Nevada Test Site and for Envirocare of
Utah, a commercial disposal facility. Nevada Test Site officials told
us they do not include these future costs in their disposal fees
because they operate on an annual appropriated funds basis. Nevada Test
Site officials estimated that if they were to include postclosure costs
in their fee, these costs would add an additional $2.38 per cubic foot
of waste to the fee. Envirocare of Utah, on the other hand, includes
the estimated postclosure costs in its disposal fees, as required by
the state of Utah.
Costs for certain LLRW activities vary widely among disposal sites and
should be considered in preparing life-cycle cost analysis. For
example, EM's 2002 report to Congress found that costs for one
predisposal cost element--waste characterization--can be higher for
wastes shipped to the Nevada Test Site and the Hanford Site for
disposal than for wastes sent to Envirocare of Utah. Waste
characterization costs for the two DOE sites ranged from $130 to $2,400
per cubic meter, while these same costs ranged from $30 to $880 per
cubic meter at Envirocare of Utah. The major factors contributing to
this cost differential are (1) required procedures for accepting,
handling, and disposing of LLRW with higher levels of radioactivity at
the Nevada Test Site and Hanford and (2) the higher cost to the
generator of characterizing wastes that are shipped in containers to
the Nevada Test Site and Hanford Site for disposal. Although waste
characterization is an important element in life-cycle cost analysis,
the Rocky Flats contractor did not include the costs of these
activities in its cost analysis.
In addition, waste generators do not always include potential lower-
cost alternatives when making LLRW decisions. For example, in fiscal
year 2004, the Paducah contractor shipped 600 cubic meters of LLRW in
trucks to Envirocare of Utah. Although in its preliminary analysis, the
site contractor believed that using rail could save 25 percent in
transportation costs, contractor officials indicated they did not
validate these preliminary assumptions or complete a formal cost
analysis of the rail option.
DOE contractors' cost analyses are not always current. Despite DOE's
2002 recommendation that cost estimates should be revisited
periodically, one DOE waste generator disposed of large volumes of LLRW
in fiscal year 2004 on the basis of cost studies completed several
years earlier. Specifically, the contractor at Fernald acknowledged
shipping over 100,000 cubic meters of LLRW to Envirocare of Utah in
fiscal year 2004, using a cost analysis completed in 1994. This
analysis, while considering all life-cycle cost elements, had not been
updated during this 10-year period to account for any changes that
might have occurred in cost elements, such as changes in disposal
rates, costs for packaging, treatment, or transportation. For example,
disposal rates charged by Envirocare of Utah can change from year to
year, based on price discounts offered for larger LLRW disposal
volumes.
We also found that three of the five DOE sites that had expanded on-
site facilities since 2002 did not complete an analysis comparing the
life-cycle costs of on-site and off-site disposal alternatives. A 2001
congressional conference report requires DOE to perform such an
analysis "before proceeding with any new on-site disposal
cell."[Footnote 16] DOE asserts that the report language does not apply
to ongoing facility development or expansion. Officials at two sites
indicated they did not believe they needed to complete such a life-
cycle cost analysis because the expansion of their on-site disposal
facility was already accounted for in the initial facility design,
completed before 2002. The third site completed a life-cycle cost
analysis of LLRW waste streams for its on-site facility. However, site
officials did not complete a life-cycle cost analysis of off-site
disposal because they assumed that the costs of off-site transportation
and disposal would be significant enough to preclude the off-site
option. Although the remaining two sites completed life-cycle cost
studies comparing on-site and off-site disposal costs, these studies
were not submitted to the congressional appropriations committees.
DOE contractors' cost analyses are not always well documented. In some
cases, we could not determine how contractors incorporated cost
analyses into their disposal decisions because documentation was
incomplete. According to DOE and contractor site officials at Rocky
Flats, disposal decisions were at times based on noncost factors, such
as schedule or safety. For example, a 2003 cost study determined that
using trucks to transport building debris to a nearby rail loading area
less than 1 mile away would be more cost-effective than extending a
rail line to the building. However, contractor officials told us they
decided to build a rail extension to the building being demolished
because the extra traffic at the site caused by trucks hauling the LLRW
to the rail line could endanger the health and safety of the workers.
This decision, however, was not documented. Contractor officials at
Rocky Flats agreed that such LLRW management decisions were not
consistently documented to show the rationale for how cost was balanced
against other factors.
At other sites, cost analyses were informal and not documented. For
example, contractor officials responsible for LLRW disposal at Paducah
told us that they made some disposal decisions informally because they
believed their knowledge of the factors involved made it unnecessary to
complete a formal analysis. In addition, Oak Ridge contractor officials
coordinating the removal of LLRW from the site told us they did not
complete a formal analysis of disposal options for each waste stream
because their contract did not require such an analysis.
DOE's 2002 Guidance Lacks Necessary Detail:
DOE sites have not consistently used life-cycle cost analysis, in part
because EM's 2002 guidance memo on life-cycle cost analysis lacks the
necessary detail for how and when to use it. Consequently, each site
was responsible for deciding how to incorporate cost into its LLRW
management decisions. For example, although EM's guidance directed
sites "to develop mechanisms necessary to establish that its LLRW
disposal decisions include the best estimate of full 'cradle to grave'
costs and analysis of alternatives," the guidance did not do the
following things:
* Lay out a systematic, consistent method for (1) analyzing all cost
elements or (2) comparing key alternatives within these cost elements
to determine the lowest cost. Consequently, as we found, analyses often
did not include cost elements that might have altered a disposal
decision.
* Specify when or under what circumstances sites should prepare cost
analyses. As we found, some sites did not update their analyses to show
that their original LLRW management decisions were still supported by
current economic conditions;
* Refer sites to relevant DOE orders, manuals, or other reference
materials that could provide consistent direction on life-cycle cost
analysis. Such references could include, for example, the DOE order for
real property asset management, the DOE manual on preparing life-cycle
cost estimates, Office of Management and Budget guidance for completing
a cost-effective analysis, and the National Institute of Standards and
Technology guidance for completing life-cycle cost analysis, or
portions of these documents.
* Lay out how final LLRW management decisions should be documented. For
example, the guidance does not explain how sites should weigh disposal
costs against noncost factors such as safety and health. As we found,
without adequate documentation at some of the sites we visited, it was
difficult for site contractors to justify the decisions they had made.
DOE Has Not Taken Steps to Oversee Contractors' Use of Life-Cycle Cost
Analysis, Relying Instead on Incentive-Based Contracts to Ensure Cost-
Effective LLRW Decisions:
DOE site offices were ineffective in overseeing contractors' use of
life-cycle cost analysis, which also contributed to ineffective
implementation of the guidance. At the sites we visited, neither DOE
nor the contractors had taken identifiable steps to implement the
guidance on life-cycle cost analysis.
First, DOE has not incorporated life-cycle cost guidance into
contracts. Most of the incentive-based contracts at the sites we
visited require contractors to comply with DOE Order 430.1A on life-
cycle asset management, which requires the use of life-cycle cost
analysis. However, neither that order, nor its successor, DOE Order
430.1B, provide sufficient detail on life-cycle cost analysis
definitions, methods, examples, or diagrams that would be useful in
preparing such analyses. In contrast, DOE's cost-estimating guide
provides a chapter dedicated to life-cycle cost analysis.[Footnote 17]
This chapter includes definitions, processes, limitations, a list of
common errors made in life-cycle cost analysis, methods, examples, and
diagrams. However, the estimating guide is not explicitly cited in DOE
Order 430.1A or 430.1B, or in the site contracts. As a result, the
contractor official responsible for controlling LLRW costs at Rocky
Flats, for example, could not tell us whether the contractor used DOE's
cost-estimating guide, particularly the chapter on life-cycle cost
analysis in LLRW management decisions, because he was not familiar with
the guide.
Second, DOE field offices have not taken steps to implement guidance or
to evaluate contractors' use of life-cycle cost analysis. For example,
contractor officials at Paducah were not aware of EM's July 18, 2002,
guidance memo on life-cycle cost analysis until we showed a copy to
them at the time of our visit. In addition, in October 2002, DOE's
Rocky Flats Field Office sent a memo to its contractor, Kaiser-Hill
Company, concerning this EM guidance. According to the memo, the
department was already aware that the contractor used licensed
commercial disposal facilities and that disposal decisions considered
technical acceptability, schedule, and cost benefit; the field office
therefore concluded that the mechanisms to establish cost-effective
disposal decisions by Kaiser-Hill were already in place and thus
satisfied the intent of the EM guidance. However, we found no
indication at any of the sites we visited that DOE officials had
specifically assessed the contractor's use of life-cycle cost analysis
in making LLRW management decisions.
When we brought our concerns to EM officials on the inconsistent use of
life-cycle cost analysis at the sites, they responded that EM has
relied on the use of incentive-based contracts to ensure contractors
are making cost-effective LLRW management decisions, rather than
encouraging the use of life-cycle cost analysis. Incentive-based
contracts provide specific incentives for specified performance
outcomes, often driven by site-specific goals and objectives in areas
such as health, safety, schedule, cost, or other areas, as negotiated
between DOE and the contractor. We recognize that incentive-based
contracts might help DOE meet goals such as accelerated cleanup and
that these contracts may, in some cases, reduce overall site costs.
However, their use may not necessarily identify lowest-cost waste
management alternatives, unless the contract provides this specific
focus. Since the department relies on incentive-based contracts, it is
critical that the contract's total estimated cost be based on, among
other things, life-cycle cost analyses of LLRW management alternatives
and that the contract specify the proper use of life-cycle cost
analysis.
Without the proper use of life-cycle cost analysis in establishing and
overseeing incentive-based contracts, DOE cannot be assured that the
contractor has identified the lowest life-cycle cost alternatives for
LLRW management. For example, the Rocky Flats contractor, operating
under an incentive-based contract, prepared various analyses of
transportation alternatives from 2000 to 2003, but these analyses did
not comprehensively address sitewide LLRW disposal needs because they
were incomplete and not updated. Specifically, two DOE contractor draft
studies in 1999 and 2000 indicated that adding rail as an alternative
for shipping LLRW from Rocky Flats to off-site disposal facilities
could save millions of dollars in transportation costs. Despite this
cost-saving potential, the contractor decided in 2000 to rely
exclusively on trucks for all Rocky Flats LLRW shipments. Subsequently,
in 2002, the contractor analyzed transportation alternatives
specifically for shipping certain contaminated LLRW soil off-site.
Although the analysis concluded that using rail to transport this soil
alone could save up to $216,000, the contractor continued using trucks
exclusively in fiscal year 2003 and most of fiscal year 2004 to
transport this waste to Envirocare of Utah. In 2003 the contractor
determined that the total volume of this LLRW soil would be
significantly higher than previously estimated, further increasing the
cost-saving potential of using rail, but nevertheless did not update or
formalize the analysis. Instead, the contractor decided to send the
soil by rail only after determining that it would use rail for shipping
debris from an altogether separate LLRW project at Rocky Flats. In
September 2004, the site began to transport the LLRW soil by rail,
after it had already sent over 4,200 truck shipments of soil to Utah in
fiscal years 2003 and 2004. Use of rail instead of trucks to ship the
LLRW soil might have saved the site over $4 million during fiscal year
2004. Comprehensive, complete, and current analyses of transportation
alternatives for sitewide LLRW disposal needs might have better
identified the lowest-cost transportation alternative, therefore
providing an opportunity for reducing LLRW management costs for the
site.
In April 2005, as part of our ongoing engagement, we briefed the
Subcommittee on Energy and Water Development, House Committee on
Appropriations, on the preliminary results of our work. We stated that
DOE LLRW generators were not consistently using life-cycle cost
analyses in their disposal decisions because of poor guidance and weak
oversight. One month later, in its report to accompany the fiscal year
2006 energy and water appropriations bill, the full Appropriations
Committee emphasized its intention to have DOE use life-cycle cost
analysis in LLRW management decisions. Using our preliminary findings,
the committee noted its concern with the department's reliance on
incentive-based contracts as a mechanism for ensuring cost-effective
decision making rather than using life-cycle cost analyses, as
directed.[Footnote 18]
According to the committee, while contractors should pursue cost-
effective cleanup activities at their sites, it is up to the federal
management responsible for those contractors to provide guidance and
make decisions that benefit the whole DOE complex. As such, the
committee directed the Secretary of Energy to report to the committee
within 30 days of enactment of the 2006 Energy and Water Development
Appropriations Act, on the specific steps the department will take to
ensure that contractors use life-cycle cost analysis in considering
LLRW options, and that DOE maintains a viable oversight function to
oversee the implementation of such guidance. The committee further
recommended that a third of EM's budget for managing the cleanup
program, or $82,924,000, be withheld until after the Secretary of
Energy delivers a report to the committee.[Footnote 19]
DOE Faces Challenges in Developing a National LLRW Disposition
Strategy:
To better coordinate disposal efforts among sites and program offices,
increase efficiencies, and minimize life-cycle costs, DOE has begun
developing a national LLRW disposition strategy. Although DOE expects
to begin implementing this strategy by March 2006, specific schedules
have not yet been established for when the strategy will be fully in
place, and it faces several significant challenges. These include
developing a database that can be used to manage LLRW complexwide and
overcoming organizational obstacles created by the department's varied
missions.
DOE Expects to Begin Implementing a Departmentwide Strategic Plan for
Disposing of LLRW in 2006:
DOE has recognized that its current approach---having each site
responsible for developing mechanisms necessary to control costs--may
result in cost inefficiencies and could limit its ability to meet
departmentwide strategic objectives, such as accelerated waste cleanup
and site closure. To overcome these problems, EM has begun developing a
National Disposition Strategy, which it plans to implement in 2006. EM
plans to use the strategy to evaluate predisposal, storage, treatment,
and disposal options across the department. The focus of the strategy
will be on DOE LLRW that is shipped off-site for disposal and on waste
for which DOE currently has no treatment or disposal options. EM hopes
to make specific recommendations regarding waste without treatment or
disposal options, develop a LLRW database, and reduce predisposal
costs. To implement a successful strategy, EM expects to integrate
sites' waste disposition plans by (1) identifying and quantifying LLRW
by waste category and site, (2) developing potential treatment and
disposal options, and (3) identifying federal and commercial site
capabilities for disposal of LLRW. DOE has not yet established specific
schedules for when the strategy will be fully in place.
EM plans to develop this national disposition strategy in two phases.
In Phase I, EM will examine those DOE sites that now have significant
quantities of EM LLRW, including Oak Ridge, Savannah River, Idaho
National Laboratory, Hanford (including the Office of River
Protection),[Footnote 20] Fernald, Portsmouth (in Ohio), and Paducah
(in Kentucky). DOE will also take into account LLRW requiring disposal
from fiscal year 2005 to about fiscal year 2035. In Phase II, EM will
examine the LLRW managed by other DOE program offices, such as NNSA and
the Office of Science. Efforts in Phase II will require considerable
coordination among different DOE program offices.
DOE Lacks Departmentwide Data on Its LLRW Inventory:
To develop and implement its national strategy for LLRW disposition,
DOE needs basic data--both current and forecasted--from individual
sites on their disposition plans. However, EM does not have complete
data, either for its own sites or for non-EM sites with LLRW. Although
DOE continues to report progress in disposing of LLRW, the LLRW volumes
it reports as needing disposal are not complete. EM's databases do not
include all LLRW expected to be generated in the future as part of
ongoing environmental cleanup or waste produced by non-EM generators.
This information may be time-consuming and costly to obtain from the
different program offices. For example, when we sought information on
current and forecasted LLRW volumes from the Office of Science, NNSA,
and the Office of Nuclear Energy, Science, and Technology (Nuclear
Energy), only the Office of Science provided the requested information.
NNSA and Nuclear Energy did not provide this information because,
according to officials from each of these program offices, the
information was not readily available.
Regarding cost information, EM's 2002 report to Congress recommended
that DOE sites consider all life-cycle costs in evaluating alternatives
for LLRW management, but it cautioned that DOE's data collection and
reporting processes needed to be improved to make any departmentwide
cost analyses useful. EM officials stated that they will consider LLRW
costs in their National Disposition Strategy. Currently, according to
EM, DOE does not have uniform requirements for defining, monitoring,
and reporting waste disposal costs, and sites may differ significantly
in their protocols for collecting cost information. However, EM agrees
that if DOE is to use life-cycle cost analysis to improve the bases for
sites' disposal decisions, standardized protocols for collecting and
reporting the data would have to be established.
DOE recognizes these problems and has begun to develop some information
it needs to support the evolving disposition strategy. Specifically,
DOE is determining (1) what data it needs; (2) whether it can use the
data in existing databases or has to develop a new database; and (3)
how these data should be organized in a database.
DOE's Organization and Multiple Missions Pose Challenges to Developing
a National Strategy:
EM's ability to develop an integrated strategy for managing LLRW is
further complicated by the fact that DOE has multiple program and site
offices with different missions, and these offices oversee a variety of
site contractors who manage waste with many different characteristics.
DOE's experience with the use of a supercompactor at its Oak Ridge site
illustrates the difficulty EM faces in developing a waste disposition
strategy that covers multiple program offices. At this site, EM and
NNSA program offices have their own contractors that are responsible
for various activities, including managing or disposing of LLRW. In
1997, DOE awarded BNFL a 6-year fixed-price contract to decontaminate
and decommission three buildings once used to enrich uranium at the Oak
Ridge gaseous diffusion plant.[Footnote 21] These buildings comprised
more than 4.8 million square feet and housed more than 328 million
pounds of material. To dispose of this waste, BNFL had constructed a
supercompactor, the largest of its type in the nuclear industry. Using
this supercompactor, the contractor was able to reduce the volume of
several thousand tons of LLRW by 75 percent and save an estimated $100
million in LLRW management and disposal costs. Despite the
supercompactor's potential for reducing LLRW volumes and lowering costs
for the other program offices at the Oak Ridge site, the contractor,
with the approval of the DOE site office, decided in 2004 to dismantle
the supercompactor and ship it as LLRW to Envirocare of Utah for
disposal.
According to NNSA officials at the Y-12 Plant, also located at the Oak
Ridge site, they have contaminated buildings that need to be dismantled
and disposed of, but neither DOE nor the contractor consulted with NNSA
officials about the potential use of the supercompactor for NNSA's
ongoing compacting needs. Similarly, contractor officials at EM's
Paducah Site in Kentucky, which is about 300 miles away, stated that
they might have benefited from the use of the supercompactor but were
not given the opportunity to consider alternatives to its disposal. For
example, Paducah had about 37,000 tons of remaining scrap metal, as of
June 26, 2005, that its current on-site compactor is incapable of
crushing, according to a contractor official at the Paducah site.
A DOE official at the Oak Ridge site stated that it would probably not
be cost-effective to ship debris to the supercompactor from other
sites, and the supercompactor could not cost-effectively be relocated.
However, neither DOE nor contractor officials provided any
documentation of cost analysis to support this statement. Although the
dismantling, shipping, and disposal of the supercompactor may have been
the correct decision, DOE did not conduct a departmentwide assessment
of volume reduction needs and capabilities, and the costs or potential
obstacles associated with maintaining or moving the supercompactor
under various LLRW management alternatives. Consequently, DOE may have
missed a potential cost-saving opportunity. Oak Ridge officials told us
that they are currently developing an integrated disposition plan to
better coordinate LLRW management activities specifically for the Oak
Ridge site. According to DOE, other integrated activities underway at
Oak Ridge include, among other things, a pilot program between EM and
the Office of Science to dispose of LLRW that needs no further storage
or processing.
Litigation and State Actions Can Affect DOE's Waste Management Options:
As a result of lawsuits and state regulatory and legislative actions in
two states--Washington and Nevada--DOE cannot currently rely on either
of its federal disposal facilities--Hanford or the Nevada Test Site--to
dispose of mixed LLRW. Consequently, DOE is incurring increased costs
for storage and treatment. Texas may provide DOE with new disposal
options, but not sooner than December 2007. Specifically:
* In July 2004, Washington state asked a U.S. district court to
prohibit DOE from sending LLRW from other DOE sites to Hanford for
disposal.[Footnote 22] DOE voluntarily suspended LLRW shipments pending
the court's decision. In May 2005, the court ruled in favor of the
state, issuing a preliminary injunction prohibiting DOE from sending
LLRW from other sites to Hanford for disposal.[Footnote 23] In
addition, in November 2004, Washington state voters passed an
initiative, now incorporated in Washington state law, that would
prohibit DOE from accepting out-of-state waste until existing waste at
Hanford is cleaned up.[Footnote 24] The scope and constitutionality of
the initiative are currently being litigated in federal district
court.[Footnote 25] DOE officials told us that its inability to ship
mixed LLRW to Hanford from other states is increasing costs and may
delay cleanup and closure plans at several sites. For example, at Rocky
Flats, approximately 1,000 cubic meters of mixed LLRW, intended for
disposal at Hanford, instead had to be shipped off-site for commercial
treatment, temporary storage, and eventual disposal at Envirocare of
Utah to avoid delaying site cleanup; the Rocky Flats contractor
estimates incremental storage, handling, treatment, and disposal costs
of this LLRW may exceed $8 million.
* In Nevada, as of August 2005, DOE was still awaiting approval from
state regulators for a permit to dispose of, at the Nevada Test Site,
mixed LLRW from other sites.[Footnote 26] After DOE filed its permit
application in December 2000, Nevada objected to DOE's planned method
of disposal. DOE is working with the state regulators to achieve a
mutually agreeable resolution, and state officials indicate this issue
could be resolved by the end of 2005. Until DOE receives this permit,
DOE cannot dispose of mixed LLRW generated at other sites at the Nevada
Test Site.
* In 2004, the Nevada Attorney General objected to DOE's plan to ship
certain LLRW from DOE's Fernald, Ohio, site for disposal at the Nevada
Test Site, asserting in a letter to DOE that the plan violated federal
law and regulations. Pending a resolution of these issues, DOE signed a
$7.5 million contract in April 2005 with a commercial facility in Texas
to temporarily store 6,800 cubic meters of this LLRW for up to 2 years.
* Texas may provide DOE with additional storage options. In February
2005, the state approved a license amendment for Waste Control
Specialists to enlarge its LLRW storage facility. In addition, the
state has begun a technical review of WCS's application for a LLRW
disposal facility license, which could be issued by December 2007.
Conclusions:
Given the large volumes of LLRW generated by DOE activities, it is
imperative that DOE recognize the importance of life-cycle cost
analysis in identifying the most cost-effective alternatives for
managing LLRW and then weighing the cost of these alternatives against
noncost factors, such as safety and schedule. However, EM's July 2002
guidance on life-cycle cost analysis did not include information on how
or when such an analysis should be completed. Moreover, the department
has not performed oversight to ensure that contractors are completing
life-cycle cost analyses. EM has elected not to encourage the use of
life-cycle cost analysis in making LLRW management decisions, relying
instead on incentive-based contracts to ensure contractors are making
cost-effective decisions. However, we believe that this contract
mechanism does not necessarily ensure that contractors identify the
lowest-cost LLRW management options. Without complete, well-documented
life-cycle cost analysis, EM may be overlooking cost-saving
opportunities that could have resulted from pursuing alternative
disposal options. Furthermore, this lack of transparency diminishes
confidence in DOE's ability to ensure that contractors have considered
life-cycle costs, regardless of whether the lowest-cost alternative is
selected.
Although DOE has been disposing of LLRW for decades, it still lacks an
integrated national strategy for doing so. Such a departmentwide
strategy is crucial for ensuring that LLRW management needs throughout
DOE are identified and addressed in a cost-effective manner that also
meets other departmental goals, such as timely site cleanup.
Specifically, an integrated approach could help consolidate similar
types of LLRW to obtain economies of scale and lower per-unit disposal
costs across the complex. DOE will need to develop basic information on
LLRW volumes departmentwide and by program office, and to overcome the
challenges posed by DOE's complex organization and multiple missions,
and recent state actions.
Recommendations for Executive Action:
To promote cost-effective LLRW management, we are recommending that the
Secretary of Energy take the following four actions:
* Prepare comprehensive guidance on life-cycle cost analysis that, at a
minimum, specifies (1) a systematic, consistent method of analyzing all
cost elements or of comparing key alternatives within these cost
elements to determine the lowest cost; (2) when and under what
circumstances sites should prepare cost analyses; (3) relevant DOE
orders, manuals, or other reference materials that should be consulted
to provide consistent direction on how and when to perform the
analysis; and (4) how final LLRW management decisions should be
documented to demonstrate that life-cycle cost factors were adequately
weighed against noncost factors, such as safety, health, or schedule.
* Incorporate the revised life-cycle cost guidance into new or existing
site contracts or into the departmental orders cited in those
contracts.
* Direct DOE to oversee contractors to ensure that site contractor
officials properly use life-cycle cost analyses in evaluating LLRW
management alternatives.
* Actively promote and monitor the development of a timely, national
LLRW management strategy that is based on departmentwide data on LLRW
needing disposal, and ensure that the implementation of the strategy is
fully carried out.
Agency Comments and Our Evaluation:
We provided DOE with a draft of this report for review and comment.
Overall, DOE generally agreed with our conclusions and thanked us for
the recommendations, but disagreed with or wanted to clarify certain
statements in the draft report and provided technical comments, which
we incorporated as appropriate. Specifically, DOE agreed that its sites
are not consistently using life-cycle cost analysis in making LLRW
management decisions. It also agreed that its current guidance and
oversight in the area of life-cycle cost analysis for LLRW management
decisions should be strengthened and noted that it is currently
reevaluating its guidance documents and their implementation. In
addition, DOE expressed appreciation for our support of an effective
National Disposition Strategy for LLRW management, and expects this
strategy to be available by March 2006.
DOE also provided comments on several specific statements in our
report. First, DOE disagreed with our statement on the lack of an
effective, integrated approach for LLRW management at Oak Ridge and
offered examples of integration, which we have incorporated into our
report. Nonetheless, we found that not all LLRW activities at Oak Ridge
were integrated into a sitewide LLRW management strategy. For example,
NNSA officials told us their future need to decontaminate and
decommission numerous buildings on the site had not yet been included
in any sitewide LLRW management strategy.
Second, in its technical comments, DOE stated that our discussion of
the supercompactor at Oak Ridge was misleading and did not agree that
cost savings would have been realized if the supercompactor had been
retained and redeployed to another site. We believe that our discussion
of the supercompactor is accurate. It was intended to illustrate the
difficulty EM faces in developing a waste disposition strategy that
covers multiple program offices. In its technical comments, DOE told us
that the contractor at Oak Ridge completed a cost analysis and decided
that the supercompactor should not be reused. Nevertheless, neither DOE
nor contractor officials provided us with any documentation of a cost
analysis to support the dismantling and disposition of the
supercompactor. DOE also told us that the contractor who owned the
supercompactor and Oak Ridge management "openly solicited" other
contractors in the complex about potentially reusing the supercompactor
but did not find any interest. However, NNSA officials at Oak Ridge
told us that neither DOE nor the contractor consulted with them about
the potential use of the supercompactor, and the contractor at Paducah
told us that it might have benefited from the supercompactor but was
not given the opportunity to consider alternatives to its disposal.
Finally, DOE also stated that the lack of consistency that we found in
implementing cost guidance and preparing formal documentation should
not be interpreted to mean that the department's waste disposal systems
are necessarily inefficient or overly expensive, and asserted that
flexibility is needed in the level of detailed cost analysis required.
However, we did not conclude that the lack of consistent implementation
and the lack of documentation was indicative of an inefficient or
overly costly LLRW management system. Rather, we stated that we could
not determine how contractors incorporated costs analyses into their
disposal decisions because documentation did not exist or was
incomplete. Conclusions cannot be drawn about the cost-effectiveness of
LLRW management decisions if contractors do not adequately document
their decisions for not using life-cycle cost analysis and DOE does not
require them to do so. While we would agree that flexibility may be
important in determining the level of cost analyses required, we
believe this flexibility should be accompanied by proper documentation
to support the level of analysis completed and the degree to which life-
cycle cost principles were followed.
DOE's comments on our draft report are presented in appendix II.
We are sending copies of the report to the Secretary of Energy, the
Director of the Office of Management and Budget, and appropriate
congressional committees. We will make copies available to others on
request. In addition, the report will also be available at no charge on
the GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please call
me at (202) 512-3841. Contact points for our Office of Congressional
Relations and Public Affairs may be found on the last page of this
report. Other staff contributing to this report are listed in Appendix
III.
Signed by:
Gene Aloise,
Director, Natural Resources and Environment:
[End of section]
Appendixes:
Appendix I: Disposed Waste Volume by Major DOE Generator Sites, Fiscal
Year 2004 through Second Quarter, Fiscal Year 2005:
Waste volume in cubic meters.
Generator site/contractor: Rocky Flats/Kaiser Hill;
Total waste disposed off-site, fiscal year 2004: 118,460;
Total waste disposed off-site, October 2004-March 2005: 63,940;
Total waste disposed for 18-month period: 182,400.
Generator site/contractor: Fernald/Fluor Fernald;
Total waste disposed off-site, fiscal year 2004: 102,343;
Total waste disposed off-site, October 2004-March 2005: 68,495;
Total waste disposed for 18-month period: 170,838.
Generator site/contractor: Mound/CH2M Hill, Mound;
Total waste disposed off-site, fiscal year 2004: 43,554;
Total waste disposed off-site, October 2004-March 2005: 55,534;
Total waste disposed for 18-month period: 99,088.
Generator site/contractor: Oak Ridge ETTP/BNFL;
Total waste disposed off-site, fiscal year 2004: 37,502;
Total waste disposed off-site, October 2004-March 2005: 9,278;
Total waste disposed for 18-month period: 46,780.
Generator site/contractor: Knolls Atomic Power Laboratory/Nuclear Fuel
Services;
Total waste disposed off-site, fiscal year 2004: 21,208;
Total waste disposed off-site, October 2004-March 2005: 3,432;
Total waste disposed for 18-month period: 24,640.
Generator site/contractor: Oak Ridge Reservation/Bechtel Jacobs;
Total waste disposed off-site, fiscal year 2004: 9,658;
Total waste disposed off-site, October 2004-March 2005: 7,686;
Total waste disposed for 18-month period: 17,344.
Generator site/contractor: Portsmouth/Bechtel Jacobs;
Total waste disposed off-site, fiscal year 2004: 11,038;
Total waste disposed off-site, October 2004-March 2005: 3,644;
Total waste disposed for 18-month period: 14,682.
Generator site/contractor: Brookhaven National Lab/Brookhaven Science
Associates;
Total waste disposed off-site, fiscal year 2004: 4,199;
Total waste disposed off-site, October 2004-March 2005: 8,436;
Total waste disposed for 18-month period: 12,635.
Generator site/contractor: Paducah/Bechtel Jacobs;
Total waste disposed off-site, fiscal year 2004: 9,690;
Total waste disposed off-site, October 2004-March 2005: 268;
Total waste disposed for 18-month period: 9,958.
Generator site/contractor: Oak Ridge National Laboratory/University of
Tennessee/Battelle;
Total waste disposed off-site, fiscal year 2004: 440;
Total waste disposed off-site, October 2004-March 2005: 4,984;
Total waste disposed for 18-month period: 5,424.
Generator site/contractor: Ashtabula/RMI Titanium;
Total waste disposed off-site, fiscal year 2004: 4,056;
Total waste disposed off-site, October 2004-March 2005: 0;
Total waste disposed for 18-month period: 4,056.
Generator site/contractor: West Valley/West Valley Nuclear Services;
Total waste disposed off-site, fiscal year 2004: 1,124;
Total waste disposed off-site, October 2004-March 2005: 2,042;
Total waste disposed for 18-month period: 3,166.
Generator site/contractor: Oak Ridge Y-12/BWXT;
Total waste disposed off-site, fiscal year 2004: 2,485;
Total waste disposed off-site, October 2004-March 2005: 400;
Total waste disposed for 18-month period: 2,885.
Generator site/contractor: Remaining generator sites (27);
Total waste disposed off-site, fiscal year 2004: 12,508;
Total waste disposed off-site, October 2004-March 2005: 5,461;
Total waste disposed for 18-month period: 17,969.
Total;
Total waste disposed off-site, fiscal year 2004: 378,265;
Total waste disposed off-site, October 2004-March 2005: 233,600;
Total waste disposed for 18-month period: 611,865.
Source: DOE waste generator sites and EM headquarters.
Note: We identified 40 Department of Energy (DOE) waste generators for
the period we examined. We list in this table the 13 generators with
the highest volume of waste disposed off-site during this period. These
13 generators accounted for over 97 percent of DOE's low-level
radioactive waste (LLRW) volume disposed of off-site for the 18-month
period.
[End of table]
[End of section]
Appendix II: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
October 14, 2005:
Mr. Gene Aloise:
Director:
Natural Resources and Environment Team:
U.S. Government Accountability Office:
Washington, D.C. 20548:
Dear Mr. Aloise:
The purpose of this letter is to inform you that my office has reviewed
the draft report entitled Department of Energy: Improved Guidance,
Oversight, and Planning Are Needed to Better Identify Cost-Saving
Alternatives for Managing Low-Level Radioactive Waste (GAO-06-94). This
letter provides the Department's consolidated comments on the report;
it has been coordinated with staff in the Office of Science; Office of
Nuclear Energy, Science, and Technology; and the National Nuclear
Security Administration.
The information in the report validates our current efforts to improve
the integration and management of low-level radioactive waste
activities within the Department complex. Thank you for the
recommendations provided in the report.
We generally agree with your conclusions that our sites are not
consistently using life-cycle cost analyses as they make waste disposal
decisions. As you are well aware, cost is an important factor, but not
the only factor considered in these decisions. We also acknowledge that
our existing guidance and oversight in the area of life-cycle cost
analysis for low-level radioactive waste disposal decisions should be
strengthened, and we are currently re-evaluating the current guidance
documents and their implementation. I especially appreciate your
endorsement of our ongoing project to develop a National Disposition
Strategy for low-level radioactive waste management. We plan to have
the first phase of this Strategy available to the public by the end of
March 2006.
The enclosure provides our general and specific comments on the draft
report. While we agree with the report's conclusions, we disagree with
or wish to clarify many of the specific statements in the draft report.
For example, we disagree with the draft report's statements regarding
the lack of an effective, integrated approach for low-level radioactive
waste management at Oak Ridge and the potential for reuse and
disposition of a supercompactor brought to that site under a fixed-
price contract. Furthermore, lack of consistency on implementation of
cost guidance between sites and formal documentation should not be
interpreted to mean the Department's waste disposal systems are
necessarily inefficient or overly expensive. We feel strongly that the
nature of the waste disposal options and details of a site's waste
management challenge must be considered when determining the level of
detailed cost analyses required and plan to revise our guidance to
provide such flexibility. I hope our clarification provides you with an
improved understanding of the factors we consider in developing and
implementing waste management strategies and our overall efforts to
address the environmental contamination resultant from the Department's
national security legacy.
If you have any questions, please contact Mr. Frank Marcinowski, Deputy
Assistant Secretary for Logistics and Waste Disposition Enhancements,
within the Office of Environmental Management. He can be reached at
(202) 586-0370.
Sincerely,
Signed for:
James A. Rispoli:
Assistant Secretary for Environmental Management:
Enclosure:
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Gene Aloise (202) 512-3841:
Staff Acknowledgments:
In addition to the individual named above, Daniel Feehan, Doreen
Feldman, Thomas Kingham, Mehrzad Nadji, Omari Norman, Christopher
Pacheco, Judy Pagano, Carol Herrnstadt Shulman, and Peter Zwanzig made
key contributions to this report.
(360488):
FOOTNOTES
[1] This volume is only for waste disposed of at off-site locations.
Additional LLRW is disposed of at the DOE sites where it is generated.
[2] Throughout this report, references to low-level radioactive waste
also include mixed waste, unless otherwise specified.
[3] GAO, Low-Level Radioactive Wastes: Department of Energy Has
Opportunities to Reduce Disposal Costs, GAO/RCED-00-64 (Washington,
D.C.: Apr. 12, 2000).
[4] H.R. Rep. No. 107-112, at 135 (2001). A congressional conference
committee later issued a similar directive. H.R. Rep. No. 107-258, at
133 (2001).
[5] Department of Energy, Report to Congress, The Cost of Waste
Disposal: Life-Cycle Cost Analysis of Disposal of Department of Energy
Low-Level Radioactive Waste at Federal and Commercial Facilities
(Washington, D.C.: July 2002).
[6] Results of nonprobability samples cannot be used to make inferences
about a population because in a nonprobability sample some elements of
the population being studied have no chance or an unknown chance of
being selected as part of the sample.
[7] We did not use information on LLRW volumes sent to DOE's Hanford
disposal site to select waste generators for site visits. Hanford's
disposal site accounted for less than 1 percent of DOE's off-site LLRW
disposal volume in fiscal year 2004.
[8] 42 U.S.C. § 2021c(b).
[9] Sites with on-site disposal facilities include the Fernald
Environmental Management Project (in Ohio), Hanford in Washington,
Idaho National Laboratory, Los Alamos National Laboratory in New
Mexico, Nevada Test Site, Savannah River Site in South Carolina, and
the Oak Ridge site in Tennessee.
[10] Currently, Envirocare of Utah is the primary commercial option
available for disposal of DOE's LLRW.
[11] GAO/RCED-00-64.
[12] GAO, Nuclear Cleanup: DOE Should Reevaluate Waste Disposal Options
Before Building New Facilities, GAO-01-441 (Washington, D.C.: May
2001).
[13] H.R. Rep. No. 107-112, at 135 (2001). A congressional conference
committee later issued a similar directive. H.R. Rep. No. 107-258, at
133 (2001).
[14] Department of Energy, Cost Estimating Guide, DOE G 430.1-1
(Washington, D.C.: Mar. 28, 1997).
[15] A handbook, most recently updated in 1996, helps explain the
methodologies used in conducting life-cycle cost analysis. (Department
of Commerce, Life-Cycle Costing Manual for the Federal Energy
Management Program, NIST Handbook 135, 1995 Edition, Washington, D.C.:
February 1996). In addition, guidance prepared in April 2005 clarifies
how DOE should determine life-cycle costs for energy programs, as
required by section 401 of Executive Order 13123. (National Institute
of Standards and Technology [Prepared for DOE], Guidance on Life-Cycle
Cost Analysis Required by Executive Order 13123, Gaithersburg,
Maryland: National Institute of Standards and Technology, April 2005).
[16] H.R. Rep. No. 107-258, at 133 (2001). The five sites expanding
their on-site disposal facilities since 2002 included the On-Site
Disposal Facility at Fernald (Ohio), the Idaho CERCLA Disposal Facility
at the Idaho National Laboratory, the TA-54 On-Site Disposal Facility
at the Los Alamos National Laboratory, the Environmental Management
Waste Management Facility at Oak Ridge, Tennessee, and the Engineered
Trenches at the Savannah River Site in South Carolina.
[17] DOE G 430.1-1.
[18] H. R. Rep. No. 109-86, at 147-148 (2005).
[19] H.R. Rep. No. 109-86, at 151 (2005).
[20] In accordance with 50 U.S.C. § 2622, the Office of River
Protection was established in 1998 to manage the Department of Energy's
largest, most complex environmental cleanup project: Hanford tank waste
retrieval, treatment, and disposal.
[21] In 2005, BNFL changed its name to British Nuclear Group of
America.
[22] Washington asserted, among other things, that DOE did not comply
with the National Environmental Policy Act of 1969 and implementing
regulations.
[23] Washington v. Bodman, 2005 WL 1130294 (E.D. Wash. May 13, 2005).
[24] Initiative 297, the Cleanup Priority Act, is now codified in
chapter 70.105E of the Revised Code of Washington.
[25] United States v. Hoffman, No. CV-04-5128-AAM (E.D. Wash. filed
Dec. 1, 2004). The U.S. district court certified questions of state law
to the Washington Supreme Court, which issued its ruling on July 28,
2005. United States v. Hoffman, 116 P.3d 999 (Wash. 2005).
[26] At the Nevada Test Site, the hazardous components of mixed wastes
are regulated by the State of Nevada under the Resource Conservation
and Recovery Act of 1976, as amended.
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