Department of Energy
Consistent Application of Requirements Needed to Improve Project Management Gao ID: GAO-07-518 May 11, 2007Since 1990, Department of Energy (DOE) contract management (which includes project management) has been designated as a high-risk area for fraud, waste, abuse, and mismanagement. For years, GAO has reported on DOE's inadequate management and oversight of its contracts and projects. GAO has made dozens of recommendations on steps that DOE could take to improve project management. Furthermore, in 1999 The National Academies' National Research Council developed a series of recommendations to address weaknesses in DOE's project management. This GAO report discusses (1) DOE's main efforts since 1999 to address project management weaknesses, (2) the extent to which DOE's project performance has improved, and (3) the extent to which DOE's project management guidelines have been consistently followed.
Since 1999, DOE has improved itsapproach to project management by addressing weaknesses in three key areas, as recommended by the National Research Council--strengthening project management policies and guidance, developing consistent and objective performance information on ongoing projects, and improving the quality of federal oversight of contractors and projects. DOE revised its policies and guidance to, among other things, require senior management approval at critical decision points. To develop consistent, objective performance information for ongoing projects, DOE required its contractors to implement an "earned value" management system, commonly used in private industry. DOE also developed a project tracking and reporting system to routinely make the earned value performance information available to managers. To help ensurethe consistency and reliability of performance data, DOE is reviewing and certifying the contractors' earned value management systems. To improve the quality of federal oversight, DOE developed a training and certification program for federal project directors and required independent reviews of projects at critical decision points. Nevertheless, performance on DOE's projects has not substantially improved. DOE set a performance goal of having 90 percent of its ongoing projects being managed within a 10 percent variance of cost and schedule baseline targets. Since October 2002, when DOE began reporting monthly project performance data, DOE has achieved its 90 percent performance goal only about one third of the time. The percentage of projects meeting the performance goal has been relatively steady, seldom falling below 80 percent or exceeding 90 percent. DOE officials said that, although performance goals are not consistently being met, improvements in project planning, independent project reviews at critical decision points, and stronger federal oversight should result in improved project performance in the future. DOE has not ensured that its project management requirements are consistently followed. For example, on a project started in June 2004 to demonstrate an alternative waste treatment technology at DOE's Hanford site, DOE officials decided to accelerate the project's schedule. As a result, the project was initiated without using key project management tools, such as an independent review of the cost and schedule baseline. After the project experienced significant schedule and technical problems and the estimated cost more than tripled to about $230 million, DOE began requiring that the project be managed consistent with its project management requirements. Furthermore, on four additional projects, estimated to cost over $100 million each, cost and schedule information was not being reported into DOE's project tracking system, resulting in less senior management oversight.
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-07-518, Department of Energy: Consistent Application of Requirements Needed to Improve Project Management
This is the accessible text file for GAO report number GAO-07-518
entitled 'Department of Energy: Consistent Application of Requirements
Needed to Improve Project Management' which was released on May 11,
2007.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to the Subcommittee on Energy and Water Development, Committee
on Appropriations, House of Representatives:
United States Government Accountability Office:
GAO:
May 2007:
Department of Energy:
Consistent Application of Requirements Needed to Improve Project
Management:
GAO-07-518:
GAO Highlights:
Highlights of GAO-07-518, a report to the Subcommittee on Energy and
Water Development, Committee on Appropriations, House of
Representatives
Why GAO Did This Study:
Since 1990, Department of Energy (DOE) contract management (which
includes project management) has been designated as a high-risk area
for fraud, waste, abuse, and mismanagement. For years, GAO has reported
on DOE‘s inadequate management and oversight of its contracts and
projects. GAO has made dozens of recommendations on steps that DOE
could take to improve project management. Furthermore, in 1999 The
National Academies‘ National Research Council developed a series of
recommendations to address weaknesses in DOE‘s project management. This
GAO report discusses (1) DOE‘s main efforts since 1999 to address
project management weaknesses, (2) the extent to which DOE‘s project
performance has improved, and (3) the extent to which DOE‘s project
management guidelines have been consistently followed.
What GAO Found:
Since 1999, DOE has improved its approach to project management by
addressing weaknesses in three key areas, as recommended by the
National Research Council”strengthening project management policies and
guidance, developing consistent and objective performance information
on ongoing projects, and improving the quality of federal oversight of
contractors and projects. DOE revised its policies and guidance to,
among other things, require senior management approval at critical
decision points. To develop consistent, objective performance
information for ongoing projects, DOE required its contractors to
implement an ’earned value“ management system, commonly used in private
industry. DOE also developed a project tracking and reporting system to
routinely make the earned value performance information available to
managers. To help ensure the consistency and reliability of performance
data, DOE is reviewing and certifying the contractors‘ earned value
management systems. To improve the quality of federal oversight, DOE
developed a training and certification program for federal project
directors and required independent reviews of projects at critical
decision points.
Nevertheless, performance on DOE‘s projects has not substantially
improved. DOE set a performance goal of having 90 percent of its
ongoing projects being managed within a 10 percent variance of cost and
schedule baseline targets. Since October 2002, when DOE began reporting
monthly project performance data, DOE has achieved its 90 percent
performance goal only about one third of the time. The percentage of
projects meeting the performance goal has been relatively steady,
seldom falling below 80 percent or exceeding 90 percent. DOE officials
said that, although performance goals are not consistently being met,
improvements in project planning, independent project reviews at
critical decision points, and stronger federal oversight should result
in improved project performance in the future.
DOE has not ensured that its project management requirements are
consistently followed. For example, on a project started in June 2004
to demonstrate an alternative waste treatment technology at DOE‘s
Hanford site, DOE officials decided to accelerate the project‘s
schedule. As a result, the project was initiated without using key
project management tools, such as an independent review of the cost and
schedule baseline. After the project experienced significant schedule
and technical problems and the estimated cost more than tripled to
about $230 million, DOE began requiring that the project be managed
consistent with its project management requirements. Furthermore, on
four additional projects, estimated to cost over $100 million each,
cost and schedule information was not being reported into DOE‘s project
tracking system, resulting in less senior management oversight.
What GAO Recommends:
GAO recommends that DOE enhance accountability by ensuring that project
management requirements are consistently followed by all of the
department‘s component organizations and that any exceptions to
following the requirements are allowed only after senior management‘s
review and approval. In commenting on a draft of the report, DOE agreed
with the recommendation.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-518].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gene Aloise, 202-512-
3841, aloisee@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
DOE Has Improved Its Approach to Managing and Overseeing Projects:
DOE Has Not Demonstrated Improved Project Performance:
DOE Has Not Fully Implemented Its Project Management Improvement
Efforts or Ensured That Project Management Requirements Are
Consistently Followed:
Conclusions:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Energy:
Appendix III: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Figures:
Figure 1: Percentage of Ongoing Line Item Construction Projects within
10 Percent of Cost and Schedule Baseline, October 2002 through
September 2006:
Figure 2: Percentage of Ongoing Office of Environmental Management
Operating Projects within 10 Percent of Cost and Schedule Baseline,
February 2004 through September 2006:
Abbreviations:
DOE: Department of Energy:
NNSA: National Nuclear Security Administration:
United States Government Accountability Office:
Washington, DC 20548:
May 11, 2007:
The Honorable Peter J. Visclosky:
Chairman:
The Honorable David L. Hobson:
Ranking Member:
Subcommittee on Energy and Water Development:
Committee on Appropriations:
House of Representatives:
The Department of Energy (DOE), the largest civilian contracting agency
in the federal government, spends over 90 percent of its annual budget
on contracts to operate its laboratories, production facilities, and
environmental restoration sites. In fiscal year 2006, DOE spent about
$23 billion on contracts to maintain the nation's nuclear weapons
stockpile, clean up radioactive and hazardous wastes, and conduct
scientific research activities. DOE's contractors generally carry out
these missions by managing the department's projects, and DOE program
managers and federal project directors oversee the contractors'
efforts. As of September 2006, DOE was managing 206 ongoing projects,
costing $5 million or more, for a total estimated cost of $205.6
billion. These projects can be funded separately in the department's
annual budget as a construction line item or funded from annual
operating funds, such as environmental cleanup projects. The cost and
complexity of these projects can vary greatly, such as a $12-million
project to demolish a surplus building at the Lawrence Livermore
National Laboratory in California or a multi-billion dollar project at
the Hanford site in Washington state to design and construct one-of-a-
kind facilities to treat high-level radioactive and hazardous wastes.
For years, GAO has reported on DOE's inadequate management and
oversight of its contracts and projects and on its failure to hold
contractors accountable for results. The poor performance of DOE's
contractors has led to schedule delays and cost increases for many of
the department's major projects. Such problems led us to designate
DOE's contract management--defined broadly to include both contract
administration and project management--as a high-risk area for fraud,
waste, abuse, and mismanagement in 1990. Since that time, we have
issued numerous reports and made dozens of recommendations to DOE
identifying specific steps that would improve project management across
all parts of the department's organization. For example, in June 2004,
we found that DOE's failure to implement project management guidelines
at the initiation of a major cleanup project at its Hanford site led to
about a one-third increase in the project cost and added about 16
months to the estimated construction schedule.[Footnote 1] We
recommended, among other things, that DOE follow project management
guidelines more closely. In addition, in March 2005, we recommended
that the department take steps to strengthen contract management
throughout its organization to more effectively control cost increases
and schedule delays that were occurring on many of the department's
major projects.[Footnote 2] Several years later, we found that
organizational conflicts between the National Nuclear Security
Administration (NNSA) and DOE were inhibiting the effective management
of the nuclear weapons complex and recommended, among other things,
that NNSA take actions to strengthen management of its
projects.[Footnote 3] In April 2006, we testified before this
subcommittee on the technical and management problems with the Hanford
Waste Treatment Plant, a project to construct facilities to treat and
prepare for disposal of 55 million gallons of high-level radioactive
waste.[Footnote 4] The estimated costs of this project had increased
from about $4.3 billion to over $12 billion, with an 8-year delay in
completing the facilities. Many of the problems with the project
resulted from poor contractor performance and poor DOE oversight of the
contractor's activities. Ultimately, in January of this year, we
concluded that despite DOE's efforts to address contract and project
management weaknesses, performance problems continued to occur on DOE's
major projects, and DOE contract management remained at high-risk for
fraud, waste, abuse, and mismanagement.[Footnote 5]
In addition to GAO, others have reported problems with DOE's management
and oversight of its projects. Specifically, the conference report
accompanying DOE's fiscal year 1998 Energy and Water Development
Appropriations Act directed the department to obtain an independent
review of its project management capabilities. The National Academies'
National Research Council issued its first report from this review in
1999.[Footnote 6] The National Research Council reported that DOE's
construction and environmental cleanup projects took much longer and
cost about 50 percent more than comparable projects by other federal
agencies or projects in the private sector. The council concluded that
DOE's project management practices fell short of industry best
practices in three key areas--the adequacy of its project management
policies and guidance, consistent and objective performance information
on the cost and schedule of projects, and the quality and adequacy of
federal oversight. The National Research Council developed a series of
recommendations to improve DOE's framework for managing projects and
noted that improved performance on projects would require an
organizational and cultural change within the department. Both the
National Research Council and DOE acknowledged that implementing these
recommendations and changing the organization and culture within the
department would be a major initiative and that it could take years to
complete the implementation activities and to improve the cost and
schedule performance of DOE's projects.
Therefore, you asked us to evaluate DOE's efforts to improve management
of its projects since the 1999 National Research Council report and to
identify other steps DOE could take to strengthen its project
management practices. In response, we undertook two separate reviews.
One report issued in March 2007 discusses cost and schedule performance
on 12 of DOE's major construction projects, and the factors
contributing to any cost increases or schedule delays.[Footnote 7] This
is the second report that discusses (1) DOE's main efforts since 1999
to address weaknesses in the management of its projects, (2) the extent
to which DOE's project performance has improved, and (3) the extent to
which DOE has implemented its improvement efforts and consistently
followed its project management guidelines.
To determine DOE's main efforts since 1999 to address weaknesses in its
project management, we reviewed and analyzed DOE's policies and
guidance on managing projects, and DOE efforts to improve its
management processes. We also interviewed senior DOE headquarters
officials to identify improvement efforts that the department had taken
or had in process. We focused our review of actions taken by DOE's
program offices on the department's three largest elements by
percentage of the annual budget--NNSA and the Offices of Environmental
Management and Science. To determine the extent to which performance on
DOE's projects has improved since 1999, we reviewed and analyzed DOE's
monthly status reports on projects and related supporting
documentation. Since we have expressed concern about the reliability of
the data in DOE's project tracking and reporting system, we did not
develop our conclusions or findings based on information generated from
that system. However, we did determine that the data were sufficiently
reliable to present trends in DOE's ability to meet its performance
goals. To determine the extent to which DOE's improvement efforts have
been fully implemented and its project management guidelines
consistently followed since 1999, we reviewed and analyzed prior GAO
reports and reports from DOE's Office of Inspector General and The
National Academies' National Research Council. These reports discussed
weaknesses in DOE's project management, contractor performance, and
federal oversight of individual projects, as well as DOE's efforts to
improve management of contracts and associated performance measures. A
more detailed description of our scope and methodology is presented in
appendix I. On October 12, 2006, we briefed your staff on our results
to date, and this report documents information presented in that
briefing. We conducted our work from June 2006 to April 2007 in
accordance with generally accepted government auditing standards.
Results in Brief:
DOE has improved its approach to project management by addressing
weaknesses in three key areas, as recommended by the National Research
Council in 1999--strengthening project management policies and
guidance, developing consistent and objective performance information
on ongoing projects, and improving the quality of federal oversight of
contractors and projects.
* To strengthen project management policies and guidance, DOE began
revising its policies and guidance in 2000 to incorporate industry
practices and requirements and increase the focus on early planning.
Specifically, to improve contract planning, DOE issued new guidance on
factors to consider in selecting the appropriate contract type for a
project, given the work to be performed and the associated risks. DOE
also revised its policies and guidance to require the use of an
integrated project team for planning, to help ensure that the program
office considers legal, contracting, and safety issues in the early
phases of a project. In addition, the revised guidance required senior
management approval at critical decision points during a project, such
as when starting construction for a new facility.
* To develop consistent, objective performance information on the
progress of its ongoing projects, DOE required its contractors to
implement an "earned value" management system. Earned value management,
commonly used in private industry, relates the actual cost and schedule
for accomplishing work on a project to the planned cost and schedule,
and provides an objective measure of performance. DOE also developed a
project tracking and reporting system to routinely gather and make
available to its managers the earned value performance information, and
began summarizing and reporting performance data from this system in
fiscal year 2003. To help ensure the consistency and reliability of the
data in its project tracking system, in 2005 DOE began reviewing and
certifying the earned value management systems used by its contractors.
The purpose of this review was to determine whether the systems used by
contractors to develop and report project cost and schedule information
complied with the industry standards for an earned value management
system, and could be relied upon to produce consistent and objective
performance information.
* To improve oversight of projects, DOE took two main actions--it
developed a training and certification program for its federal project
directors, and it required independent reviews of projects at key
decision points. Specifically, in 2003, DOE established a project
management career development program, which defined the training and
experience necessary for federal project directors. As of May 2006, all
DOE employees responsible for oversight of its projects had met the
training and experience requirements to become certified federal
project directors. In addition, to increase confidence in its ongoing
projects, DOE required independent reviews from outside the responsible
program office, at the initiation of a project to validate the mission
need and before the project baseline is approved to validate the cost
and schedule estimates.
Despite these considerable efforts, overall performance on DOE's
projects has not substantially improved to this point. DOE set a
performance goal of having 90 percent of its ongoing projects being
managed within a 10 percent variance of cost and schedule baseline
targets. However, since October 2002, when DOE began reporting monthly
project performance data, the department has achieved its performance
goals for line item construction projects (generally funded separately
in the government's annual budget) only about one third of the time.
Also, starting in February 2004, DOE began reporting performance
information separately for cleanup activities funded by the Office of
Environmental Management annual operating funds rather than as
individual line item construction projects. Prior to that time, these
"operating" projects were included with the line item construction
projects. Since February 2004, these "operating" projects met cost and
schedule performance goals only about 21 percent of the time. DOE
officials said that, although performance goals are not consistently
being met, improvements in project planning, independent project
reviews at critical decision points, and stronger federal oversight
should result in improved project performance in the future.
DOE has not fully implemented its project management improvement
efforts or ensured that project management requirements are
consistently followed. One of DOE's improvement efforts has been to
review and certify contractors' earned value management systems used to
develop and report information on the cost and schedule performance of
DOE's projects. DOE has completed the review and certification of eight
contractor earned value management systems used on 40 of 96 ongoing DOE
projects. DOE has established annual targets for the number of
contractor systems to be reviewed, but it could be several years before
DOE has certified substantially all of the contractors' earned value
management systems. Of greater concern is that DOE has not ensured that
its project management requirements are consistently followed. For
example, DOE officials initially did not require the contractor to
follow all project management requirements on a project to demonstrate
an alternative waste treatment technology at DOE's Hanford site.
Therefore, the project was initiated without using key project
management tools, such as an independent review of the cost and
schedule baseline. After the project experienced significant schedule
and technical problems and the estimated cost more than tripled to
about $230 million, DOE began requiring that the project be managed
consistent with its project management requirements. In addition, we
reported in January 2007 that cost and schedule status information on
four NNSA projects, estimated to cost over $100 million each, was not
being reported into DOE's project tracking system, and therefore, the
projects were not receiving senior management oversight.
To help strengthen management of DOE's projects and to better ensure
that projects are completed on time and within budget, we are
recommending that DOE take steps to ensure that project management
requirements are consistently followed and that any exceptions to
following the requirements are carefully reviewed and approved by
senior management.
In its comments on a draft version of the report, DOE agreed with our
recommendation and outlined steps that the department is taking or will
take to strengthen project management.
Background:
DOE relies on its contractors to operate its sites and carry out its
diverse missions, including developing, maintaining, and securing the
nation's nuclear weapons capability; cleaning up the nuclear and
hazardous wastes resulting from more than 50 years of weapons
production; and conducting basic energy and scientific research, such
as mapping the human genome. This mission work is carried out under the
direction of NNSA and DOE's program offices, including the Offices of
Environmental Management and Science. At the end of fiscal year 2006,
DOE had fewer than 11,000 employees to provide oversight for work
performed under contract by over 95,000 contractor employees.[Footnote
8]
DOE's contractors generally carry out the department's missions by
managing its projects. DOE defines a project as "a unique effort that
supports a program mission having defined points for starting and
ending, undertaken to create a product, facility, or system and
containing interdependent activities planned to meet a common objective
or mission." A project is individually planned, approved, and managed
in support of a program objective. Projects can include such diverse
efforts as construction of multi-billion dollar facilities to treat
radioactive and hazardous wastes, decontamination and demolition of
excess facilities, or technology development activities.
DOE's Office of Engineering and Construction Management establishes
policies and guidance for planning and managing projects. DOE's Office
of Procurement and Assistance Management and NNSA's Office of
Acquisition and Supply Management establish policies and guidance for
awarding and administering the contracts under which the department's
projects are carried out. Officials from DOE's programs, such as NNSA
and the Offices of Environmental Management and Science, provide
oversight to ensure that the contractors are managing projects to
support DOE's missions. In addition to the oversight of projects
provided by the Office of Engineering and Construction Management,
DOE's three largest program elements--NNSA and the Offices of
Environmental Management and Science--established project management
support offices within their organizations. These project management
support offices coordinate efforts within the program, provide
additional oversight of projects, and conduct more detailed reviews of
individual projects.
DOE Has Improved Its Approach to Managing and Overseeing Projects:
Since 1999, DOE has worked to improve its approach to managing projects
in three key areas of concern identified by the National Research
Council--strengthening project management policies and guidance,
developing consistent and objective performance information on ongoing
projects, and improving the quality of federal oversight.
Project Management Policies and Guidance Now Incorporate Industry
Practices:
The first key area that DOE focused on was strengthening its project
management policies and guidance to incorporate industry practices as
recommended by the National Research Council. In its 1999 report, the
council found that DOE lacked comprehensive project management policies
and guidance and that there was little emphasis on early planning for
projects.
To incorporate industry practices into its project planning and
management, DOE implemented a new project management order and
guidelines that established a systematic process commonly used in
private industry for managing and overseeing projects, from
identification of need through project completion. DOE issued its
project management order in October 2000[Footnote 9] and in March 2003,
issued a project management manual, containing supplemental information
and guidance on applying the order to individual projects. In July
2006, DOE revised the order to, among other things, reflect lessons
learned since October 2000, including how to improve the quality of the
documentation supporting project decisions.[Footnote 10] Furthermore,
the July 2006 order clarified how the project management guidelines
should be applied both to environmental management cleanup projects and
to information technology projects.
The project management order provided a much more specific framework
for planning, managing, and overseeing a project. For example, prior to
2000, DOE's previous order on the acquisition of capital assets had a
stated objective of managing physical assets in a safe and cost
effective manner to meet the DOE mission.[Footnote 11] In contrast to
that more general objective, the stated objective in the October 2000
project management order was to provide project management direction
with the goal of delivering projects on schedule, within budget, and
fully capable of meeting standards for mission performance, and
safeguards and security, as well as environmental, safety, and health
standards.
In addition, the October 2000 order required a far more structured
process for carrying out a project. Specifically, the order established
major milestones--or critical decision points--that span the life of a
project. For example, critical decision points for a construction
project include (1) approving mission need, (2) approving the selection
of the alternative and cost range, (3) approving the performance
baseline (cost, schedule, and scope), (4) approving the start of
construction, and (5) approving the start of operations or project
completion. The order specifies the requirements that must be met, with
the documentation necessary to move past the decision point. In
addition, DOE senior management must review the supporting
documentation and approve the project at each critical decision
point.[Footnote 12]
Overall, the revised policies and guidance provide more structure,
discipline, and control over the management of DOE's projects, and more
information on projects is available for review and approval. For
example, for the decision point when an alternative is selected and the
cost range for the project is identified, the program office needs to
document why it selected the preferred approach from the various
alternatives considered, develop an acquisition strategy, and develop a
range of estimated costs to complete the project. Senior DOE management
must review and approve the planned approach before the project can
proceed. Under the previous order, there was more limited review in the
early phases of a project, and it was not until later in the project
that the program office documented the mission need and a range of
estimated costs. In addition, the previous order did not specifically
require senior management review in the early phases of a project.
Another way in which the order strengthens project planning and
management is by requiring and emphasizing the use of integrated
project teams. These teams, led by the federal project director, bring
together expertise from the program office, along with the knowledge,
skills, and abilities from other program and staff offices within the
department, such as the Office of General Counsel, to support the
federal project director in successfully executing a project. The
integrated project team generally includes members who can provide
legal and contracting expertise, in addition to helping the project
director comply with safety, security, and environmental requirements.
The previous order did not specifically require the use of an
integrated project team for planning and carrying out a project.
In 2004, DOE's Office of Procurement and Assistance Management
initiated a separate but related effort to strengthen DOE's contracting
practices by issuing new guidance intended to strengthen contract
planning and management.[Footnote 13] The guidance included information
on:
* how to select an appropriate contract type for a project and the
factors to consider for each type of contract, taking into account the
scope and complexity of the work to be performed, and the business,
technical, and regulatory risks;
* how to provide incentives for contractors to complete projects on
time and within budget;
* how to develop a contract management plan once the contract is
awarded, including describing how the contracting officer and program
managers will monitor contractor performance to ensure that the
requirements of the contract will be met and that the contractor will
be held accountable for results; and:
* how to develop effective, results-oriented performance measures and
incorporate incentives into contracts that will encourage meeting cost
and schedule goals on projects.
In the past, we have recommended other actions DOE could take to
strengthen contract management for its major projects. Specifically, in
March 2005, we recommended that DOE develop new guidance on structuring
and managing contracts.[Footnote 14] In June 2005, DOE issued this new
guidance, which covers such topics as how to incorporate project
management requirements into contracts and the importance of having
reliable project performance data to manage contracts.
DOE Has Developed a Project Tracking Information System and Is
Improving the Quality of Project Performance Data:
The second key area where DOE focused was developing more consistent,
objective performance information on its ongoing projects, as the
National Research Council recommended. Before 1999, DOE policies and
guidance did not require systematic reporting of cost and schedule
status on projects into a centralized project tracking system. In its
1999 report, the National Research Council found that DOE had no
consistent system for objectively tracking progress on its projects,
identifying the potential for cost and schedule overruns, or providing
status information to DOE senior management. As a result, the types of
information contractors developed and reported and the frequency of
those reports varied across DOE's program offices and field locations.
In response to these concerns about the reliability of project
performance information, DOE required its contractors to implement a
uniform way of tracking and reporting a project's status. This way of
measuring project cost and schedule performance--called an earned value
management system--is commonly used in private industry. At any point
in time during a project, an earned value system relates the actual
cost and actual schedule for accomplishing work to the planned cost and
schedule. Generally, for DOE projects with a total project cost of $20
million or more, the contractor must have an earned value management
system in place.[Footnote 15] To make the earned value performance data
reported by the contractors available to DOE senior management, in 2001
DOE established a project tracking and reporting system. Each month DOE
federal project directors report the status of their projects into the
system, including the contractors' earned value management system
performance data.[Footnote 16]
In March 2005, we questioned the accuracy and completeness of the
performance data in DOE's project tracking and reporting system and
recommended that the department assess the reliability of the
contractors' earned value management systems used to report project
cost and schedule information.[Footnote 17] In 2005 DOE began reviewing
the earned value management systems used by its contractors. The
purpose of these reviews is to determine if the contractor has an
earned value management system that complies with the standards
specified by the department. DOE uses a team approach to conduct the
reviews, with the team including representatives from DOE's Office of
Engineering and Construction Management and the program offices. During
the course of the review, the team may determine that the contractor's
system does not fully comply with DOE guidelines for earned value
management systems. In such cases, the team generates a corrective
action request, and the contractor must develop a corrective action
plan to address any deficiencies. Once the corrective actions have been
taken and verified, DOE certifies the contractor's system, which may
provide data on several ongoing projects. As of September 2006, DOE had
certified earned value management systems for eight of its contractors,
which manage a combined total of 40 of DOE's 96 ongoing projects.
DOE Is Strengthening Oversight by Providing Training to Enhance the
Skills of Federal Project Directors and Conducting More Frequent
Reviews of Ongoing Projects:
The third key area DOE focused on was strengthening federal oversight
of projects through improving the skills of federal project directors
and increasing the frequency of reviews of ongoing projects. In its
1999 report, the National Research Council cited DOE's failure to
develop the project management skills of its personnel as a fundamental
cause of poor performance on projects. The council also found that DOE
did not consistently review its ongoing projects to identify and
address problems before there was a significant impact on project
performance.
To enhance the skills of federal project directors, in 2003 DOE
established a project management career development program. This
program defined the necessary combination of training and experience to
obtain certification as a DOE federal project director. It also
established four levels of certification and required increasing
amounts of training and experience for each succeeding level.[Footnote
18] The training curriculum includes earned value management systems,
acquisition strategy and planning, and cost and schedule estimating. In
addition to the training courses and work experience requirements,
federal project directors seeking the top two levels of certification
must also successfully complete an interview with DOE's certification
review board.[Footnote 19] This board includes representatives from the
Office of Engineering and Construction Management, and DOE's three
largest component organizations (NNSA and the Offices of Environmental
Management and Science). Once federal project directors have obtained
certification from the review board, they must also meet continuing
education requirements to maintain their certification. As of May 2006,
DOE met its goal of having all 96 of its active federal project
directors at least at the first level of certification.
DOE has also taken steps to strengthen project oversight by requiring
independent reviews at critical decision points. The independent
reviews typically occur at the first three critical decision points on
a project and are performed either by a team of DOE officials from
outside the sponsoring program office, by DOE's Office of Engineering
and Construction Management, or by outside organizations. Specifically,
these reviews include:
* At the first critical decision point, approving mission need, DOE
requires an independent review of major projects (those with an
estimated total project cost over $750 million) to validate the mission
need and the cost range. For projects below the major project dollar
threshold, the approval authority reviews the mission need statement
and cost range as part of the supporting documentation at this critical
decision point.
* At the second critical decision point, approving the selection of the
alternative and the estimated cost range, DOE requires an independent
review of (1) the acquisition strategy, including the rationale for
selecting the preferred alternative; (2) design and construction plans
for high-risk, high-hazard nuclear facilities to ensure that safety and
security requirements are effectively integrated into the facility; and
(3) design specifications to ensure that the facility will meet
operational requirements.
* At the third critical decision point, approving the performance
baseline, DOE requires an independent review of the estimated costs and
schedule associated with the project, to provide reasonable assurance
that the project can be successfully carried out.
In addition to the independent reviews at critical decision points, DOE
also required quarterly progress reviews on all ongoing projects having
a total estimated cost of $5 million or more. These quarterly reviews
are conducted by senior program officials, representatives from the
Office of Engineering and Construction Management, and other
departmental organizations as appropriate. The purpose of these
progress reviews is to identify potential problems and concerns and
develop corrective action plans that will help ensure successful
project completion.
As a further step to improve the quality of federal oversight, in an
August 2005 memorandum to all DOE senior managers, the Secretary of
Energy stressed the importance of following project management policies
and guidance. The Secretary stated that all program managers, federal
project directors, and contracting officers should be held accountable
for meeting cost, schedule, and performance targets on their projects.
DOE Has Not Demonstrated Improved Project Performance:
Despite DOE efforts to improve project management and strengthen
oversight of its contractors, overall project performance has not
improved. Starting in fiscal year 2003, DOE set a performance goal of
having 85 percent of its ongoing projects within a 10 percent variance
of approved cost and schedule baseline targets, and starting in fiscal
year 2004, DOE increased the goal to 90 percent of projects.[Footnote
20] Although we have expressed concern about the reliability of the
data in DOE's project tracking system, the summary performance data
reported by the department are useable to show trends.[Footnote 21]
DOE began summarizing and reporting monthly project performance data in
October 2002.[Footnote 22] Since October 2002, DOE has achieved its
performance goals for line item construction projects (generally funded
separately in the government's annual budget) only about one third of
the time. As figure 1 below shows, the percentage of line item
construction projects meeting DOE's performance goal has been
relatively steady, seldom falling below 80 percent or exceeding 90
percent.
Figure 1: Percentage of Ongoing Line Item Construction Projects within
10 Percent of Cost and Schedule Baseline, October 2002 through
September 2006:
[See PDF for image]
Source: DOE.
Note: In October 2003, DOE changed the goal (percentage of ongoing
projects within 10 percent of cost and schedule baseline) from 85
percent to 90 percent.
[End of figure]
In part, because of concerns about the accuracy and timeliness of the
project data shown above, when assessing the overall status of an
ongoing project, DOE's Office of Engineering and Construction
Management uses the earned value management information (cost and
schedule performance indicators) in concert with other information.
Specifically, for each ongoing project, DOE also considers information
such as the results of project reviews carried out by the program
offices, information on emerging issues and concerns raised at
quarterly progress reviews, discussions with program managers and
federal project directors, the status of certification of the
contractor's earned value management system, and any safety concerns
raised by the Defense Nuclear Facilities Safety Board or other outside
organizations.
Taking these other sources of information into account can affect DOE's
determination of whether a project is likely to meet cost and schedule
performance targets. For example, the Office of Science is constructing
a facility at the Stanford Linear Accelerator Center in California that
will be used to produce a light source that is 10-billion times greater
than any existing man-made light source and will use the high-
brightness light in experiments in chemical, material, and biological
sciences. This project, with a total cost of $379 million, had earned
value management cost and schedule indicators in September 2006 that
were within the acceptable range for meeting cost and schedule
performance targets. However, the earned value indicators reflect only
the current status of the project and may not accurately depict future
events or predict future performance. On this project, when DOE's
Office of Engineering and Construction Management took into account
other sources of information, such as discussions with the federal
project director, DOE determined that some of the construction bids had
come in significantly higher than estimated. Therefore, until DOE could
determine the extent of the cost increases and the potential impact on
the total cost of the project, the monthly status report listed this
project as one at risk for breaching its cost and schedule performance
baseline.
In February 2004, DOE began reporting performance information
separately for cleanup projects funded by the Office of Environmental
Management using annual operating funds, rather than using line item
construction funding. Prior to February 2004, performance information
on these "operating projects" had been included with the line item
construction projects. Since February 2004, considering only these
"operating" projects, as shown in figure 2, DOE met the cost and
schedule performance targets only about 21 percent of the time.
Figure 2: Percentage of Ongoing Office of Environmental Management
Operating Projects within 10 Percent of Cost and Schedule Baseline,
February 2004 through September 2006:
[See PDF for image]
Source: DOE.
[End of figure]
However, the performance data shown in figure 2 does not represent all
of the Environmental Management operating projects. In November 2005,
DOE began reporting on the performance of operating projects only if
the cost and schedule baselines of the projects had been independently
validated. Therefore, in November 2005, although DOE's Office of
Environmental Management had a total of 77 operating projects, only 16
had validated baselines and were included in the performance reporting.
DOE determined that the remaining 61 operating projects--those with
baselines that had not been independently validated--had cost and
schedule targets that could be overly optimistic, and therefore
including those projects would distort the performance trends.
Anecdotal evidence also indicates that cost increases and schedule
delays continue to occur on individual DOE projects. In March 2007, we
reported that our review of 12 of the department's major projects
showed that 9 of the 12 exceeded their original cost or schedule
estimates, principally because of ineffective DOE project oversight and
poor contractor management.[Footnote 23] Specifically, 8 of the 12
projects experienced cost increases ranging from $79 million to $7.9
billion, and 9 of the 12 projects were behind schedule by 9 months to
more than 11 years.
Nevertheless, senior DOE officials in both the Office of Management and
program offices said they believe the department has made real progress
in putting improved project management tools in place and emphasizing
the importance of effective federal oversight of projects. They added
that the improvements made in project planning, independent reviews at
critical decision points, and a greater emphasis on federal oversight
should result in improved project performance in the future.
DOE Has Not Fully Implemented Its Project Management Improvement
Efforts or Ensured That Project Management Requirements Are
Consistently Followed:
DOE could further strengthen management of its projects by completing
implementation of its project management improvement efforts and
ensuring that all of the department's component organizations
consistently follow the project management requirements.
DOE Has Not Fully Implemented Project Management Improvement Efforts:
DOE has not fully implemented two of its improvement efforts--reviewing
and certifying contractors' earned value management systems and issuing
revised guidance to supplement the July 2006 project management order.
However, the department is making progress in these two areas and has a
plan for completing these efforts.
One improvement effort not fully implemented has been to review and
certify contractors' earned value management systems, which are used to
develop and report on the cost and schedule performance of DOE's
projects. DOE uses this information, along with other information
obtained from federal project directors and program managers, to
determine whether ongoing projects are on target to meet cost and
schedule performance goals. Furthermore, DOE also factors in this
information when calculating the amount of any incentive fees paid to
the contractors under performance-based contracts. Therefore, the
accuracy and reliability of the data produced by the earned value
management systems is crucial to DOE's oversight of both individual
projects and its contractors.
DOE began its efforts to review and certify the contractors' earned
value management systems in fiscal year 2005. As of September 2006, DOE
had reviewed and certified contractor earned value management systems
for 8 of 29 contractors. These 8 contractors manage 40 of DOE's 96
projects that require an earned value management system. In March 2005,
we had recommended that DOE develop a schedule for assessing the
reliability of its contractors' earned value management
systems.[Footnote 24] In response to that recommendation and as part of
DOE's action plan to address the high-risk area of contract and project
management, DOE established annual targets for the number of contractor
systems to be reviewed. For example, the target for fiscal year 2006
was to review and certify 10 contractor systems.
Another improvement effort not fully implemented is the development of
new project management guidance to provide supplemental information to
the July 2006 revised project management order. These implementation
guides are being developed by teams led by a program office and
assisted by the Office of Engineering and Construction Management,
other DOE program offices as appropriate, and representatives from a
DOE contractor working group. The implementation guides will cover such
topics as safeguards and security, risk management, and how to apply
the project management guidelines to Office of Environmental
Management's operating projects or information technology projects. One
of the implementation guides--further explaining how a tailoring
strategy should be developed for a project--has an estimated issue date
of May 2007. According to the charter for the team developing this
guide, tailoring the processes in the project management order may be
appropriate for smaller, less complex, lower risk projects, but
tailoring does not imply omitting any essential steps in the project
planning and execution processes. Completing development of these
implementation guides will clarify requirements and may help DOE's
program offices be more consistent in planning and executing projects.
According to the current schedule, the last of the implementation
guides is expected to be issued in September 2008. However, since the
guidance will be subject to DOE's internal review procedures and
concurrence by DOE's program offices, it may take longer.
DOE Has Not Consistently Followed Project Management Requirements:
DOE also has not ensured that its component organizations have
consistently followed project management requirements. Even though the
project management requirements have been in place since October 2000,
there are still instances where projects are initiated or carried out
without fully complying with the processes and controls contained in
DOE's policies and guidance. Examples include:
* In our April 2006 report on the Hanford Waste Treatment Plant, we
reported that the estimated costs of this project to construct
facilities to treat and prepare for disposal 55 million gallons of high-
level radioactive waste had increased significantly. [Footnote 25]
Since the contract was awarded in 2000, estimated costs have increased
from about $4.3 billion to over $12 billion and the completion date has
been extended from 2011 to 2019, 8 years later than the milestone
included in DOE's agreement with its regulators. We found that one of
the contributing factors to the cost increases and schedule delays was
DOE's lack of oversight and its failure to ensure adherence to normal
project reporting requirements. Specifically, the contractor had been
adjusting the project performance baseline to match actual results,
which masked the full extent of the problems with the project.
* In December 2005, DOE's Office of Inspector General reported on the
status of a project to construct a facility at the Savannah River site
in South Carolina to dispose of surplus plutonium by converting it into
fuel for commercial nuclear power plants.[Footnote 26] The report
stated that although construction of the facility had not started,
significant cost growth had already occurred, in part because of
weaknesses in project management. Specifically, the Office of Inspector
General found that DOE had not given adequate attention to establishing
a performance baseline or ensuring that reporting mechanisms to monitor
progress and track costs were effective. Furthermore, DOE officials had
not provided adequate oversight of the project to ensure that
contractor performance problems were identified in a timely manner.
* In January 2007, we reported that about 16 percent of NNSA's projects
were in jeopardy of breaching their cost baseline, schedule baseline,
or both, and recommended actions that NNSA could take to strengthen its
management of projects.[Footnote 27] In addition, we found that cost
and schedule status information on four of NNSA's projects, estimated
to cost over $100 million each, was not being reported into DOE's
project tracking and reporting system. As a result, these projects were
not receiving senior management oversight.
* DOE's project to demonstrate an alternative technology to treat low-
activity radioactive waste at DOE's Hanford site involved building a
pilot plant to demonstrate the technology and treat waste from one of
the underground waste storage tanks. The original estimated cost of the
project was about $62 million and was to be carried out over a 2-year
period. DOE officials initially did not require the contractor to
follow all project management requirements, and therefore, the project
was initiated without using key project management tools, such as an
acquisition strategy or independent reviews of the cost and schedule
baseline. According to DOE officials, even though the estimated cost of
the project met the criteria for following the project management
requirements (total project cost was in excess of $20 million), they
decided to accelerate the project's schedule and therefore decided that
the project did not need to follow the project management requirements.
Within the first 2 years, the project experienced significant schedule
and technical problems and the estimated cost more than tripled to
about $230 million. DOE then assigned a federal project director and
began requiring that the project be managed consistent with its project
management requirements.[Footnote 28]
Conclusions:
DOE relies primarily on contractors to carry out its environmental
cleanup, scientific research, nuclear weapons management, and other
missions vital to safety, security, and the nation's energy supply.
Because these contractors also frequently construct and operate
complex, one-of-a-kind facilities to carry out these missions, it is
crucial that the department manage and oversee these projects to
successful completion. Over the years, we have issued numerous reports
on the challenges that the department faces in overseeing such projects
and have made a series of recommendations on steps DOE could take to
strengthen management and oversight of its projects. Although DOE has
made progress in addressing its project management weaknesses, such as
by incorporating industry best practices into its policies and
guidance, to date overall performance in achieving cost and schedule
goals has not substantially improved. Furthermore, DOE has yet to fully
implement all of its project management improvement efforts, such as
reviewing and certifying contractors' earned value management systems
that provide critical cost and schedule performance information, and
continued attention is needed to better ensure that the improved
project management policies and guidance are consistently followed. As
DOE goes forward with efforts to strengthen management of its projects,
including implementing our previous recommendations, consistent
application of the project management requirements, accurate and
reliable project performance data, and strong oversight are key to
obtaining and demonstrating improved performance. Without addressing
these areas, cost overruns on projects could continue to drain the
department's resources, and excessive schedule delays could affect the
department's ability to effectively carry out its missions.
Recommendation for Executive Action:
To help strengthen management of DOE's projects and to enhance
accountability for completing projects on time and within budget in all
of DOE's component organizations, we recommend that the Secretary of
Energy ensure that project management requirements are consistently and
rigorously followed by all of the department's component organizations,
and that any exceptions to following the requirements are allowed only
after senior management has ensured that the exceptions are appropriate
and has approved them.
Agency Comments and Our Evaluation:
We provided a draft of this report to DOE for review and comment. In
written comments, the Director of the Office of Management agreed with
our findings and accepted our recommendation. DOE acknowledged that the
department can further strengthen project management and stated that it
recognizes that the results of implementing project management
improvements will have a gradual impact on project performance.
DOE recommended that we modify the draft report to clarify the
distinction between project management guidelines and requirements. We
agree and have revised the report accordingly. DOE's comments on our
draft report are included in appendix II.
We are sending copies of this report to the Secretary of Energy, the
Director of the Office of Management and Budget, and appropriate
congressional committees. We will also make copies available to others
on request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov.
If you or your staff have any questions on this report, please contact
me at (202) 512-3841 or aloisee@gao.gov. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this
report are listed in appendix III.
Signed by:
Gene Aloise:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Scope and Methodology:
To determine DOE's main efforts since 1999 to address weaknesses in its
project management, we reviewed and analyzed prior and current DOE
policies and guidance on managing projects and administering contracts.
We also reviewed and analyzed DOE efforts to improve its management
processes, including those in response to the President's Management
Agenda and those that were part of a plan DOE developed in response to
an Office of Management and Budget request that agencies with
activities on GAO's high-risk list develop an action plan for
improvement. In addition, we interviewed senior DOE headquarters
officials to identify improvement efforts that the department had taken
or had in process. We focused our review of actions taken by DOE's
program offices on the department's three largest elements by
percentage of the annual budget--NNSA and the Offices of Environmental
Management and Science. These three offices represent about 80 percent
of the department's annual budget.
To determine the extent to which performance on DOE's projects has
improved, we reviewed and analyzed DOE's monthly status reports on
projects and related supporting documentation. Since we have expressed
concerns about the reliability of the data in DOE's project tracking
and reporting system in a prior report, we did not develop our
conclusions or findings based on information generated from that
system.[Footnote 29] However, we did determine that the data were
sufficiently reliable to present trends in meeting DOE's performance
goals over time, and have described our concerns with the accuracy and
completeness of the performance data in this report. As DOE reviews and
certifies the remaining earned value management systems used by its
contractors, the accuracy and completeness of the data may improve.
However, there are still other limitations to the data in DOE's project
tracking and reporting system, such as that data on projects are
reported at an aggregate project level, rather than at a more detailed
level showing key milestones and critical activities. We also reviewed
and analyzed prior GAO reports and recommendations on DOE project
management to identify anecdotal information concerning performance of
individual DOE projects.
To determine the extent to which DOE's improvement efforts have been
fully implemented or consistently followed, we reviewed and analyzed
previous GAO reports and reports from DOE's Office of Inspector General
and the four reports on improving project management in the Department
of Energy from the National Research Council. These reports discussed
weaknesses in DOE project management, contractor performance and
federal oversight of individual projects, and DOE's efforts to improve
management of contracts and associated performance measures. In
addition, we reviewed the status of previous GAO recommendations to
determine if they had been implemented. We also reviewed and analyzed
reports from DOE's Office of Engineering and Construction Management on
the status of certifying contractors' earned value management systems
and the schedule for developing supplemental guidance to the July 2006
revised project management order.
On October 12, 2006, we briefed your staff on our results to date, and
this report documents information presented in that briefing.
We conducted our work from June 2006 to April 2007 in accordance with
generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
Apr 27 2007:
Mr. Gene Aloise:
Director, Natural Resources and Environment:
U.S. Government Accountability Office:
441 G Street NW:
Washington, DC 20548:
Dear Mr. Aloise:
The Department of Energy (DOE or Department) has reviewed the draft
Government Accountability Office (GAO) report entitled "Consistent
Application of Guidelines Needed to Improve Project Management" (GAO-
07-518).
The report acknowledges that the Department has improved its approach
to project management by addressing weaknesses in three key areas, as
recommended by the National Research Council - strengthening project
management policies and guidance, developing consistent and objective
performance information on ongoing projects, and improving the quality
of federal oversight of contractors and projects. The Department agrees
that work is still needed to ensure that the requirements defined in
DOE Order 413.3A are consistently implemented. The Department
recognizes results of implementing project management improvements will
have a gradual, but lasting impact on the Department's project
performance.
The foundations for change are in place - increased project and
contract management oversight and accountability; improved project and
program management policy and guidance; consistent and objective
performance information; projectizing Environmental Management cleanup
projects; implementation and certification of earned value management
systems; and training and certification of Federal Project Directors.
The Department acknowledges that it can further strengthen project and
program management and has several initiatives currently underway that
include:
(1) Development of 18 project management guides (e.g. Risk Management,
Cost Estimating, Earned Value Management, etc.), which will provide
"how to", best practices, and industry standards for our federal
project directors;
(2) Revision of the Environment Management Cleanup project management
policy and protocol;
(3) Implementation of recommendations from the 2007 National Research
Council review of the Office of Engineering and Construction
Management's External Independent Review process;;
(4) Replacement of the Project Assessment and Reporting Systems (PARS);
and:
(5) Establishment of a professional development curriculum for program
officials who oversee major projects.
The Department appreciates GAO's positive confirmation of project
management improvements in the Department. The Department does have one
concern with the report - specifically the distinction between DOE
project management "requirements" and DOE project management
"guidelines". In almost all instances the term "guidelines" should be
changed to "requirements." It is recommended that the section heading
on page 22 be re-titled "DOE Has Not Consistently Followed Project
Management Requirements." In addition, the GAO report title should he
changed to read "Consistent Application of Requirements Needed to
Improve Project Management."
The Department accepts GAO's recommendation and will prepare a
statement for component organizations that requires adherence to the
Department's project management policies and that any exception to the
DOE Order 413.3A requires appropriate senior management approval.
The Department requests that this response letter be included in GAO's
final report.
Sincerely,
Signed by:
Ingrid Kolb:
Director:
Office of Management:
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Gene Aloise (202-512-3841) or aloisee@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Bill Swick, Assistant
Director; Carole Blackwell, Ryan Coles, Heather Dowey, Doreen Feldman,
Amanda Miller, and Alison O'Neill made key contributions to this
report.
[End of section]
Related GAO Products:
Department of Energy: Major Construction Projects Need a Consistent
Approach for Assessing Technology Readiness to Help Avoid Cost
Increases and Delays. GAO-07-336. Washington, D.C.: March 27, 2007.
National Nuclear Security Administration: Additional Actions Needed to
Improve Management of the Nation's Nuclear Program. GAO-07-36.
Washington, D.C.: January 19, 2007.
Nuclear Cleanup of Rocky Flats: DOE Can Use Lessons Learned to Improve
Oversight of Other Sites' Cleanup Activities. GAO-06-352. Washington,
D.C.: July 10, 2006.
DOE Contracting: Better Performance Measures and Management Needed to
Address Delays in Awarding Contracts. GAO-06-722. Washington, D.C.:
June 30, 2006.
Hanford Waste Treatment Plant: Contractor and DOE Management Problems
Have Led to Higher Costs, Construction Delays, and Safety Concerns. GAO-
06-602T. Washington, D.C.: April 6, 2006.
Yucca Mountain: Quality Assurance at DOE's Planned Nuclear Waste
Repository Needs Increased Management Attention. GAO-06-313.
Washington, D.C.: March 17, 2006.
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. Washington, D.C.: October 31. 2005.
Department of Energy: Further Actions Are Needed to Strengthen Contract
Management for Major Projects. GAO-05-123. Washington, D.C.: March 18,
2005.
Nuclear Waste: Absence of Key Management Reforms on Hanford's Cleanup
Project Adds to Challenges of Achieving Cost and Schedule Goals. GAO-
04-611. Washington, D.C.: June 9, 2004.
Nuclear Waste Cleanup: DOE Has Made Some Progress in Cleaning Up the
Paducah Site, but Challenges Remain. GAO-04-457. Washington, D.C.:
April 1, 2004.
Department of Energy: Mission Support Challenges Remain at Los Alamos
and Lawrence Livermore National Laboratories. GAO-04-370. Washington,
D.C.: February 27, 2004.
Nuclear Weapons: Opportunities Exist to Improve the Budgeting, Cost
Accounting, and Management Associated with the Stockpile Life Extension
Program. GAO-03-583. Washington, D.C.: July 28, 2003.
Contract Reform: DOE's Policies and Practices in Competing Research
Laboratory Contracts. GAO-03-932T. Washington, D.C.: July 10, 2003.
Nuclear Waste: Challenges to Achieving Potential Savings in DOE's High-
Level Waste Cleanup Program. GAO-03-593. Washington, D.C.: June 17,
2003.
Department of Energy: Status of Contract and Project Management
Reforms. GAO-03-570T. Washington, D.C.: March 20, 2003.
Contract Reform: DOE Has Made Progress, but Actions Needed to Ensure
Initiatives Have Improved Results. GAO-02-798. Washington, D.C.:
September 13, 2002.
Nuclear Waste: Technical, Schedule, and Cost Uncertainties of the Yucca
Mountain Repository Project. GAO-02-191. Washington, D.C.: December 21,
2001.
Department of Energy: Fundamental Reassessment Needed to Address Major
Mission, Structure, and Accountability Problems. GAO-02-51. Washington,
D.C.: December 21, 2001.
Department of Energy: Follow-Up Review of the National Ignition
Facility. GAO-01-677R. Washington, D.C.: June 1, 2001.
Nuclear Cleanup: Progress Made at Rocky Flats, but Closure by 2006 Is
Unlikely, and Costs May Increase. GAO-01-284. Washington, D.C.:
February 28, 2001.
National Ignition Facility: Management and Oversight Failures Caused
Major Cost Overruns and Schedule Delays. GAO/RCED-00-271. Washington,
D.C.: August 8, 2000.
Department of Energy: Uncertainties and Management Problems Have
Hindered Cleanup at Two Nuclear Waste Sites. GAO/T-RCED-00-248.
Washington, D.C.: July 12, 2000.
Nuclear Waste: Observations on DOE's Privatization Initiative for
Complex Cleanup Projects. GAO/T-RCED-00-215. Washington, D.C.: June 22,
2000.
Nuclear Waste: DOE's Advanced Mixed Waste Treatment Project:
Uncertainties May Affect Performance, Schedule, and Price. GAO/RCED-00-
106. Washington, D.C.: April 28, 2000.
Nuclear Waste Cleanup: DOE's Paducah Plan Faces Uncertainties and
Excludes Costly Cleanup Activities. GAO/RCED-00-96. Washington, D.C.:
April 28, 2000.
FOOTNOTES
[1] GAO, Nuclear Waste: Absence of Key Management Reforms on Hanford's
Cleanup Project Adds to Challenges of Achieving Cost and Schedule
Goals, GAO-04-611 (Washington, D.C.: June 9, 2004).
[2] GAO, Department of Energy: Further Actions Are Needed to Strengthen
Contract Management for Major Projects, GAO-05-123 (Washington, D.C.:
Mar. 18, 2005).
[3] GAO, National Nuclear Security Administration: Additional Actions
Needed to Improve Management of the Nation's Nuclear Programs, GAO-07-
36 (Washington, D.C.: Jan. 19, 2007).
[4] GAO, Hanford Waste Treatment Plant: Contractor and DOE Management
Problems Have Led to Higher Costs, Construction Delays, and Safety
Concerns, GAO-06-602T (Washington, D.C.: Apr. 6, 2006).
[5] GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.:
January 2007).
[6] National Research Council, Improving Project Management in the
Department of Energy (Washington, D.C.: June 1999).
[7] GAO, Department of Energy: Major Construction Projects Need a
Consistent Approach for Assessing Technology Readiness to Help Avoid
Cost Increases and Delays, GAO-07-336 (Washington, D.C.: Mar. 27,
2007).
[8] At the end of fiscal year 2006, DOE had a total of about 15,000
full-time equivalent employees. Since over 4,000 of those employees
worked for one of the department's four power marketing
administrations, they are not included in the number available to
provide oversight of contractors' efforts.
[9] DOE Order 413.3, issued October 13, 2000.
[10] DOE Order 413.3A, issued July 28, 2006.
[11] The order provided little additional information on how to do
this.
[12] DOE's project management order also establishes the level of
approval authority required for projects depending on the total project
cost. For example, in the July 2006 revision, generally the approval
authority is the Secretarial Acquisition Executive for major projects
with a total project cost over $750 million, an undersecretary for
projects with a total project cost between $100 million and $750
million, and a program secretarial officer for projects less than $100
million.
[13] U.S. Department of Energy, Office of Procurement and Assistance
Management, Acquisition Guide: A DOE Guide to the Award and
Administration of Contracts (Washington, D.C.: Revised August 2006).
[14] GAO-05-123.
[15] DOE requires that the contractor have the earned value management
system in place by the decision point that establishes the approved
performance baseline for the project.
[16] Although DOE established the project tracking and reporting system
in 2001, it took until October 2002 for the contractors and federal
project directors to provide information on all ongoing projects so
that DOE could begin to summarize and report performance data from the
system.
[17] GAO-05-123.
[18] For example, a federal project director with level-1 certification
can be responsible for a project with a total project cost up to $20
million, while a project with a total project cost over $400 million
requires a level-4 certification.
[19] The board's main purpose is to review the qualifications of
federal project directors applying for certification.
[20] Starting in November 2005, DOE included these project performance
goals in its action plan to improve results in contract and project
management, an area designated by GAO since 1990 as being at high-risk
for fraud, waste, abuse, and mismanagement. This plan was developed in
response to a request by the Office of Management and Budget for
federal agencies with areas on the GAO high-risk list to demonstrate
how the agencies would address program weaknesses and improve results.
Starting in fiscal year 2007, in response to comments from GAO and the
Office of Management and Budget on its action plan, DOE developed three
separate performance goals for its ongoing projects, depending on the
total project cost. The goal is 85 percent for projects with a total
project cost less than $750 million, and the goal is 50 percent for
projects with a total project cost more than $750 million.
[21] Although in a past report (GAO-05-123) we expressed concerns with
the accuracy and completeness of the data in DOE's project tracking
system, we have determined that the data are sufficiently reliable to
present trends in meeting DOE's performance goals. See appendix I.
[22] DOE collects and summarizes performance information only on those
projects that have passed the critical decision point for an approved
cost and schedule performance baseline. For example, as of September
2006, DOE had 206 ongoing projects, but over half of those were in the
early planning phases of the project.
[23] GAO-07-336.
[24] GAO-05-123.
[25] GAO-06-602T.
[26] U.S. Department of Energy, Office of Inspector General, Status of
the Mixed Oxide Fuel Fabrication Facility, DOE/IG-0713 (Washington,
D.C.: Dec. 21, 2005).
[27] GAO-07-36.
[28] A forthcoming GAO report will provide greater detail on the
management of this project.
[29] GAO-05-123.
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site (www.gao.gov). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site.
To have GAO e-mail you a list of newly posted products every afternoon,
go to www.gao.gov and select "Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125
Washington, D.C. 20548:
Public Affairs:
Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548:
