Department of Energy
External Regulation Savings in Safety and Health Activities at DOE Science Laboratories Gao ID: GAO-03-633R May 14, 2003The Department of Energy (DOE) is unusual among federal agencies in that it regulates and inspects its own facilities to protect the safety and health of its workers and of the communities surrounding its vast complex of research laboratories. With few exceptions, all other federal facilities must comply with national standards set by the Nuclear Regulatory Commission (NRC) for nuclear safety and by the Occupational Safety and Health Administration (OSHA) for worker safety and health. DOE asserts that, for the most part, its safety and health standards meet or exceed those promulgated for facilities regulated by NRC and OSHA. At DOE's 10 science laboratories, which are run by management and operating (M&O) contractors, the department and its contractors use a contract administration process to select standards appropriate to current worker hazards and public safety issues. Both DOE and the M&O contractors are involved in safety and health activities. DOE's field offices, most of which are located at the laboratories, provide continuous safety and health oversight of the M&O contractors. DOE headquarters offices provide policy guidance to the field offices and also conduct some oversight of the laboratories. Safety and health personnel working for the M&O contractors take actions to comply with the safety and health standards and conduct their own self-assessment activities. DOE's field offices track contract compliance through direct observations and through the review of safety and health reports and other related information provided by the M&O contractors. Over a decade ago, DOE began considering whether to end self-regulation of its facilities to improve safety and public trust in the department, among other reasons. However, after much study, the department concluded that the costs of shifting to external regulation would exceed the potential benefits of doing so. We have taken a position different from DOE. For example, in a 2002 report, we observed that external regulatory agencies' "greater independence, coupled with use of national nuclear and worker safety standards and enforcement powers, would make them more cost-effective regulators (than DOE)." In addition, any resource savings to the department in shifting to external regulation could potentially be redirected to other mission priorities. The conference report accompanying the Energy and Water Development Appropriations Act for fiscal year 2002 directed DOE to prepare an implementation plan for shifting the department's science laboratories to external regulation. In July 2002, DOE presented a plan that was one month late and lacked important information. A subsequent committee report accompanying the 2003 appropriations bill criticized DOE for providing the "grossly inadequate" plan. This report concluded that DOE "cannot be relied upon to provide accurate and objective information in response to Committee requests for information on this issue." Congress therefore requested us to determine (1) how much DOE spends on safety and health activities at its science laboratories and (2) how much DOE might save after shifting to external regulation of these facilities.
In FY 2002, DOE spent about $145 million on safety and health activities at its 10 science laboratories, and we believe that this spending level has not varied much during the last 4 years. This expenditure represented about 16 percent of all safety and health costs department wide. Virtually the entire expenditure went to cover the more than 1,400 federal and M&O contractor personnel involved in safety and health activities--about 95 percent of whom worked for the M&O contractors. The reported safety and health costs do not include any maintenance costs, which are accounted for separately. A shift to external regulation of the science laboratories could decrease DOE's annual safety and health costs by up to about $41 million, or increase these costs up to about $5 million depending on the level of continued department oversight of these activities. Any potential savings in DOE safety and health costs, however, would likely be applied to reduce other costs associated with external regulation and would, therefore, not produce immediate overall budgetary savings. Costs would be incurred to bring the laboratories into compliance with national safety and health standards and to supplement the staffs of the external agencies to take on regulatory and inspection responsibilities for the numerous facilities at each science laboratory. In addition, both DOE and the M&O contractors might transfer safety and health personnel to other functional areas in their respective organizations rather than eliminate these positions to reduce overall operating costs. Further reductions in safety and health costs might be possible through staff reductions at DOE headquarters offices. However, these offices contend that personnel reductions are unlikely because staff will still be needed to self-regulate other facilities, such as the defense laboratories, and to interact with the external regulators. Any reduction in DOE safety and health costs after shifting to external regulation would stem from DOE altering its approach to overseeing safety and health activities. If DOE continues with its current oversight approach after regulatory authority shifts to NRC and OSHA, safety and health costs could actually increase up to about $5 million annually. These additional costs would result from DOE increasing its current safety and health staffing levels to interact with the external regulatory agencies, and the M&O contractors increasing their safety and health staffing levels to respond to reporting requirements and information requests from both the external regulators and DOE. We found that the DOE safety and health oversight approach, which drives staffing levels, is substantially reflected in the number of contractually required safety and health reports and frequent ad hoc information requests of the M&O contractors. Eliminating redundant information requests and oversight after shifting to external regulation could justify a reduction in or redirection of safety and health personnel that would lower safety and health costs.
GAO-03-633R, Department of Energy: External Regulation Savings in Safety and Health Activities at DOE Science Laboratories
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United States General Accounting Office:
Washington, DC 20548:
May 14, 2003:
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:
Subject: Department of Energy: External Regulation Savings in
Safety and Health Activities at DOE Science Laboratories:
The Department of Energy (DOE) is unusual among federal agencies in
that it regulates and inspects its own facilities to protect the safety
and health of its workers and of the communities surrounding its vast
complex of research laboratories. With few exceptions, all other
federal facilities must comply with national standards set by the
Nuclear Regulatory Commission (NRC) for nuclear safety and by the
Occupational Safety and Health Administration (OSHA) for worker safety
and health.
DOE asserts that, for the most part, its safety and health standards
meet or exceed those promulgated for facilities regulated by NRC and
OSHA. At DOE's 10 science laboratories, which are run by management and
operating (M&O) contractors, the department and its contractors use a
contract administration process to select standards appropriate to
current worker hazards and public safety issues.[Footnote 1]
Both DOE and the M&O contractors are involved in safety and health
activities.[Footnote 2] DOE's field offices, most of which are located
at the laboratories, provide continuous safety and health oversight of
the M&O contractors. DOE headquarters offices provide policy guidance
to the field offices and also conduct some oversight of the
laboratories. Safety and health personnel working for the M&O
contractors take actions to comply with the safety and health standards
and conduct their own self-assessment activities. DOE's field offices
track contract compliance through direct observations and through the
review of safety and health reports and other related information
provided by the M&O contractors.
Over a decade ago, DOE began considering whether to end self-regulation
of its facilities to improve safety and public trust in the department,
among other reasons. However, after much study, the department
concluded that the costs of shifting to external regulation would
exceed the potential benefits of doing so. We have taken a position
different from DOE. For example, in a 2002 report, we observed that
external regulatory agencies' "greater independence, coupled with use
of national nuclear and worker safety standards and enforcement powers,
would make them more cost-effective regulators [than DOE]."[Footnote 3]
In addition, any resource savings to the department in shifting to
external regulation could potentially be redirected to other mission
priorities.
The conference report accompanying the Energy and Water Development
Appropriations Act for fiscal year 2002 directed DOE to prepare an
implementation plan for shifting the department's science laboratories
to external regulation.[Footnote 4] In July 2002, DOE presented a plan
that was 1 month late and lacked important information. A subsequent
committee report accompanying the 2003 appropriations bill criticized
DOE for providing the "grossly inadequate" plan.[Footnote 5] This
report concluded that DOE "cannot be relied upon to provide accurate
and objective information in response to Committee requests for
information on this issue." You therefore requested us to determine (1)
how much DOE spends on safety and health activities at its science
laboratories and (2) how much DOE might save after shifting to external
regulation of these facilities. To address these objectives, we
substantially relied on data collection instruments that we sent to DOE
and M&O contractor officials associated with the 10 science
laboratories. We briefed your offices on the results of our review on
March 28, 2003, using the enclosed slides. This is report summarizes
the results of that briefing.
Summary:
In FY 2002, DOE spent about $145 million on safety and health
activities at its 10 science laboratories, and we believe that this
spending level has not varied much during the last 4 years. This
expenditure represented about 16 percent of all safety and health costs
department wide. Virtually the entire expenditure went to cover the
more than 1,400 federal and M&O contractor personnel involved in safety
and health activities--about 95 percent of whom worked for the M&O
contractors. The reported safety and health costs do not include any
maintenance costs, which are accounted for separately.
A shift to external regulation of the science laboratories could
decrease DOE's annual safety and health costs by up to about $41
million, or increase these costs up to about $5 million depending on
the level of continued department oversight of these activities. Any
potential savings in DOE safety and health costs, however, would likely
be applied to reduce other costs associated with external regulation
and would, therefore, not produce immediate overall budgetary savings.
Costs would be incurred to bring the laboratories into compliance with
national safety and health standards and to supplement the staffs of
the external agencies to take on regulatory and inspection
responsibilities for the numerous facilities at each science
laboratory. In addition, both DOE and the M&O contractors might
transfer safety and health personnel to other functional areas in their
respective organizations rather than eliminate these positions to
reduce overall operating costs. Further reductions in safety and health
costs might be possible through staff reductions at DOE headquarters
offices. However, these offices contend that personnel reductions are
unlikely because staff will still be needed to self-regulate other
facilities, such as the defense laboratories, and to interact with the
external regulators.
Any reduction in DOE safety and health costs after shifting to external
regulation would stem from DOE altering its approach to overseeing
safety and health activities. If DOE continues with its current
oversight approach after regulatory authority shifts to NRC and OSHA,
safety and health costs could actually increase up to about $5 million
annually. These additional costs would result from DOE increasing its
current safety and health staffing levels to interact with the external
regulatory agencies, and the M&O contractors increasing their safety
and health staffing levels to respond to reporting requirements and
information requests from both the external regulators and DOE. We
found that the DOE safety and health oversight approach, which drives
staffing levels, is substantially reflected in the number of
contractually required safety and health reports and frequent ad hoc
information requests of the M&O contractors. Eliminating redundant
information requests and oversight after shifting to external
regulation could justify a reduction in or redirection of safety and
health personnel that would lower safety and health costs.
Background:
External regulation of the science laboratories would provide a number
of benefits. In a 2001 report, we found that eliminating DOE self-
regulation of safety and health activities and taking other actions
would improve the accountability of the department.[Footnote 6] For a
2002 report, our examination of federal and foreign laboratories
comparable to DOE's science laboratories suggested that "external
regulators can potentially oversee [the laboratories] more efficiently
and at less cost than DOE's internal staff."[Footnote 7] In a
subsequent testimony, we concluded "the issue is not should DOE shift
to external regulation of its science laboratories, but how."[Footnote
8]
Shifting to external regulation of the science laboratories will entail
federal government costs to bring the laboratories into compliance with
national standards and annual cost increases for the regulatory
agencies. Any potential reduction in safety and health costs within DOE
and its M&O contractors is expected to help offset these other costs.
To ascertain the greatest of these anticipated costs, the conference
report on continuing appropriations for FY 2003 directed NRC and OSHA
to conduct compliance audits of the 10 science laboratories, with
funding support from DOE, and to cooperate with the department in
preparing cost estimates to bring the laboratories into compliance with
external regulations.[Footnote 9] The final DOE report is due no later
than April 30, 2004.
According to DOE, the transition costs to external regulation could be
high, depending on the flexibility of the regulators in applying their
standards to the department's unique facilities without compromising
safety. We have previously reported, however, that DOE would likely
incur many of these costs anyway if the department were to bring the
laboratories into compliance with DOE's own safety and health
standards. The annual costs after transition are primarily associated
with increasing NRC and OSHA staffs to assume regulatory
responsibilities for the science laboratories. In a DOE implementation
plan for external regulation submitted to the Congress in July
2002,[Footnote 10] these agencies anticipated they would need an
additional $6.9 million annually for this purpose.[Footnote 11]
DOE Spends About $145 Million Annually on Safety and Health Activities:
In FY 2002, DOE spent $145.3 million on safety and health activities
associated with its 10 science laboratories. DOE data indicate that
this level of spending has not changed much in the previous 4
years.[Footnote 12] This expenditure represented about 16 percent of
total department spending on safety and health activities in FY 2002,
compared to the 35 percent spent at National Nuclear Security
Administration sites and the 45 percent spent at DOE environmental
management sites.[Footnote 13] The reported expenditure does not
include corrective maintenance for the repair of failed or
malfunctioning equipment.
Of the safety and health costs for the science laboratories, the
portion spent on DOE oversight was about $8.6 million. This $8.6
million covered primarily the cost of the approximately 74 full-time
equivalent (FTE) employees involved in safety and health policy
development and oversight of the laboratories, most of whom
(approximately 89 percent) were located in field offices.
The M&O contractors, however, incurred the vast majority of the
$145.3 million in safety and health costs. The cost of their safety and
health activities in FY 2002 was $136.7 million. For the most part,
this expenditure supported the nearly 1,334 FTEs involved in these
activities, comprising 3 to 9 percent of the laboratories' workforces.
As reported to us, expenditures on safety and health activities by the
M&O contractors represented about 3 percent of their total budgets.
Table 1 summarizes the safety and health FTE levels and costs for DOE
and the M&O contractors and compares these costs with overall budgets.
Table 1: Safety and Health FTEs and Costs in Fiscal Year 2002:
Dollars in millions.
DOE field offices: Safety and health FTEs: 65.3;
Safety and health costs: $7.5; Overall
budget: $137.5; Percent of budget: 5.4.
DOE headquarters: Safety and health FTEs: 8.5;
Safety and health costs: 1.1; Overall
budget: 98.3; Percent of budget: 1.1.
M&O contractors: Safety and health FTEs: 1,333.8;
Safety and health costs: 136.7; Overall
budget: 4,201.3; Percent of budget: 3.3.
Total: Safety and health FTEs: 1,407.6; Safety and
health costs: $145.3; Overall
budget: $4,437.2[A]; Percent of budget: 3.3.
Source: Figures for safety and health FTEs and costs were derived from
responses to data collection instruments sent to cognizant managers in
these organizations. The overall budget figure for the DOE headquarters
offices is based on their program direction funding in fiscal year
2002. The budget figures for the DOE field offices affiliated with the
10 science laboratories and their M&O contractors came from responses
to our survey.
[A] Total does not add up because of rounding.
[End of table]
Annual Safety and Health Savings of Up to $41 Million Possible,
Depending on Level of DOE Oversight:
Up to about $41 million annually in DOE's safety and health cost
savings might accrue after the department shifts to external
regulation, depending on the level of continued departmental oversight
of safety and health activities. However, if DOE does not alter its
oversight approach, especially through a reduction of contractual
reporting requirements and ad hoc information requests of the M&O
contractors, shifting to external regulation might require additional
safety and health personnel, potentially increasing annual DOE safety
and health costs by up to about $5 million.
Our data collection instruments included three scenarios that asked DOE
and M&O contractor safety and health managers how staffing levels might
change under various levels of DOE oversight after NRC and OSHA begin
regulating and inspecting the science laboratories. We developed a
fourth scenario to provide an independent assessment of potential
safety and health staff reductions for both DOE and its M&O contractors
based on the experiences of another federal agency and its science
laboratory which is already externally regulated. We selected the Jet
Propulsion Laboratory, owned by the National Aeronautics and Space
Administration (NASA), as a performance benchmark because DOE had
already identified it as a federally funded research and development
center comparable to its science laboratories. DOE has used the NASA
interaction with the Jet Propulsion Laboratory contractor to identify
best management practices for improving the overall efficiency and
cost-effectiveness of its laboratories.[Footnote 14] The Jet Propulsion
Laboratory concentrates its research on unmanned space operations,
including solar system exploration, space and earth observing systems,
robotic technology for space exploration, computational sciences for
assimilation of large databases, and advanced instrumentation. The
laboratory contractor holds all safety and health licenses with
external regulators, and DOE considers this laboratory's safety levels
to be similar to that of its Lawrence Berkeley National Laboratory. In
comparison to the Berkeley Lab and some other DOE science laboratories,
however, the Jet Propulsion Laboratory has a small radioactive
materials program, and it has no accelerator. On the other hand, the
laboratory has about 30 percent more employees (about 5,200 employees
mostly at three sites in southern California) and over twice the
operating budget (about $1.4 billion in fiscal year 2002) compared to
the largest DOE science laboratory.
The four scenarios of DOE oversight are:
* Scenario 1: DOE holds all applicable licenses and permits with
external regulators, eliminates the M&O contract requirements that
duplicate those of the external regulatory agencies, but retains its
current approach to contract performance oversight.
* Scenario 2: The same as the first scenario, but the M&O contractor,
instead of DOE, holds any licenses and permits issued by external
regulatory agencies.
* Scenario 3: The same as the second scenario, but DOE changes its
approach to contract performance oversight, relying instead on best
industry practices and norms for safety and health risk management.
* Scenario 4: DOE adopts the safety and health management approach used
by NASA at its Jet Propulsion Laboratory. This approach is essentially
NASA's application of scenario 3.
Table 2 provides estimated changes in annual safety and health costs
under the four scenarios for DOE oversight. The first scenario resulted
in a projected increase in safety and health costs, while the other
scenarios produced decreases in these costs through anticipated
reductions in safety and health FTEs. Any reduction in annual DOE
safety and health costs, however, might not produce overall budgetary
savings, in part because the external agencies would need to supplement
their staffs to regulate and inspect the science laboratories. In
addition, there might not be immediate savings to DOE, given the
transition costs to bring the laboratories into compliance with
national safety and health regulations, irrespective of their present
conditions relative to DOE's own standards. Further, both DOE and the
M&O contractors might transfer safety and health personnel to other
functional areas in their respective organizations rather than
eliminate these positions to reduce overall operating costs.
Nevertheless, any savings in DOE safety and health personnel costs
might be transferred to NRC and OSHA to help defray their increased
costs, and reducing the safety and health personnel now required to
meet the significant information needs of DOE might allow the M&O
contractors to shift some of these resources to more science mission
work or to needed maintenance and infrastructure upgrades.
Table 2: Estimated Savings in Annual Safety and Health Costs:
Dollars in millions.
DOE field offices; Scenario 1: ($1.1 to $1.2); Scenario 2: $0.2;
Scenario 3: $0.2 to $0.8; Scenario 4: $5.9.
M&O contractors; Scenario 1: (2.9 to 4.0); Scenario 2: 0.4 to 0.8;
Scenario 3: 7.4 to 8.7; Scenario 4: 35.2.
Total; Scenario 1: ($4.0 to $5.2); Scenario 2: $0.6 to $0.9[A];
Scenario 3: $7.6 to $9.5; Scenario 4: $41.2[A].
Source: Negative or positive savings estimates were derived from
responses to data collection instruments sent to cognizant managers in
these organizations. DOE headquarters offices indicated no staffing
changes for the first three scenarios and we did not estimate them in
the fourth scenario.
Note: Dollar values were derived by multiplying the number of FTEs
(either projected safety and health position increases in scenario 1,
or position decreases in the other scenarios) by the average cost of an
FTE as reported for each location.
[A] Totals do not add up because of rounding.
[End of table]
Projected changes in safety and health costs for the first three
scenarios were derived from responses to our survey of DOE field
offices and M&O contractors. Headquarters offices did not project any
staffing changes under the first three scenarios. For scenario 4, we
calculated changes in DOE's field staff by applying NASA's safety and
health staffing approach (i.e., reducing safety and health field FTEs
to one per laboratory). In calculating potential changes for M&O
contractor staff, we determined that the Jet Propulsion Laboratory's
safety and health staffing levels were about 28 percent less than at
DOE's Lawrence Berkeley National Laboratory, even after DOE had
adjusted staffing figures downward to account for differences in
personnel functions at the two laboratories.[Footnote 15] For example,
DOE excluded its own safety and health personnel involved in radiation
safety and environmental radiation monitoring, health services, and
fire protection because it was determined that these functions were not
performed by the safety and health personnel at the Jet Propulsion
Laboratory. We then applied the 28 percent reduction to each of the 10
DOE science laboratories to estimate potential savings, although the
potential for this reduction would vary among the laboratories,
depending on the circumstances presented. We did not calculate any
staff changes for DOE headquarters.
Implementing scenario 4 could potentially provide the greatest savings
to offset the transition costs and the annual cost increases
anticipated for additional NRC and OSHA personnel under external
regulation. Implementing this scenario, however, would also require the
most dramatic changes in DOE's oversight culture, particularly in
contract administration and the responsibilities placed on safety and
health personnel. Our analysis suggests that, to a large extent, the
safety and health staffing levels across DOE field offices and the M&O
contractors are driven by the need to monitor and respond to the
numerous safety and health contractual reporting requirements and ad
hoc information requests. Eliminating unnecessary information requests
after shifting to external regulation could justify a reduction or
redirection of safety and health personnel that would lower safety and
health costs.
DOE has recognized the need to fundamentally change its contract
administration process to improve contractor efficiency and
effectiveness and to enhance accountability. In April 2002, DOE
formulated principles to guide the development of pending contracts
with three science laboratories.[Footnote 16] The management practices
at NASA's Jet Propulsion Laboratory were used to support these
principles. One of the principles calls for reliance on national
standards to establish contractor requirements and performance
criteria, while minimizing the use of DOE orders and directives that
place administrative and operational requirements on the contractor.
Applying this principle alone, in conjunction with adopting external
regulation, would help to move DOE toward the potential safety and
health savings projected in scenario 4.
Agency Comments:
We provided a draft of this report to DOE for its review and comments.
Written comments are presented and evaluated below and are reprinted in
enclosure II. In commenting on our report, the Deputy Secretary of
Energy expressed several concerns about our analysis and the need to
shift to external regulation. For example, DOE commented that because
our cost estimates were not independently verified, they are not
"decision-quality information." Other comments pertained to our
estimates of department savings in safety and health costs after
shifting to external regulation of the science laboratories. For
example, DOE questioned our calculation of potential reductions in
safety and health costs and the level of information necessary to
monitor these activities. Finally, DOE raised some concerns about
transition costs and other potential costs associated with shifting to
external regulation. While we agree that our assessment of safety and
health costs for the department was hindered by limitations in the
availability of budget quality data, our method of estimating these
costs was reasonable. Further, given the uncertainties about future
roles, responsibilities and interactions among DOE and its M&O
contractor safety and health personnel after shifting to external
regulation, providing a range of savings estimates based on a
combination of survey responses from the individuals responsible for
these activities and our own calculations, make us confident that our
assessment is independent and credible. Finally, while we were not
asked to assess the transition costs and other potential costs and
benefits of shifting to external regulation in this report, we have
discussed these issues in previous reports. At this point, with the
analysis undertaken on this issue over the years, it seems to us that
philosophical opposition rather than data limitations is the main
stumbling block to the department's shift to external regulation. Our
specific comments to each of the concerns raised by DOE are in
enclosure III.
Scope and Methodology:
To obtain information on the cost of safety and health activities and
on the potential for reductions under different DOE oversight
scenarios, we relied for the most part on data collection instruments
that we sent to DOE and M&O contractor officials associated with the 10
science laboratories. We also visited NASA's Jet Propulsion Laboratory,
a federally funded research and development center that we selected
because it is comparable to DOE's science laboratories and because the
department has already used it as a performance benchmark. In addition,
we obtained safety and health cost data from centralized data systems
to compare with our survey data. We did not independently verify the
accuracy of the self-reported data, nor did we undertake an independent
study of the current and proposed safety and health staffing levels for
DOE and its contractors, or of the proposed additions to NRC and OSHA
staffs. We did, however, compare responses among the laboratories and
follow up with respondents when necessary. We also encouraged narrative
explanations of the responses. To obtain additional information, we
spoke with DOE headquarters and field office officials. We conducted
our work between August 2002 and March 2003 in accordance with
generally accepted government auditing standards.
As agreed with your offices, we will make copies of this report
available to others upon 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 about this report, please
contact me at (202) 512-3841 or Dan Feehan, Assistant Director, at
(303) 572-7352. Major contributors to this report include Joel
Grossman, Thomas Laetz, Mehrzad Nadji, Cynthia Norris and Michael
Sagalow.
Robin Nazzaro
Director, Natural Resources and Environment:
Signed by Robin Nazzaro:
Enclosure:
[End of section]
Enclosure I: Briefing Slides:
[See PDF for image]
[End of section]
Enclosure II: Comments from the Department of Energy:
Note: GAO comments appear at the end of this appendix.
The Deputy Secretary of Energy Washington, DC 20585:
APR 28 2003:
Ms. Robin M. Nazzaro:
Director, Natural Resources and Environment U.S. General Accounting
Office:
Room 2T23:
441 G Street, N.W. Washington, D.C. 20548:
Dear Ms. Nazzaro:
Thank you for the opportunity to comment on the draft General
Accounting Office (GAO) report "Department of Energy: External
Regulation Savings in Safety and Health Activities at DOE Science
Laboratories" (GAO-03-633R.):
GAO's report focused on two issues: 1) How much the Department of
Energy (DOE) spends on safety and health; and 2) How much DOE might
save after shifting to external regulation. Based on its analysis, GAO
estimated that DOE spent approximately $145 million in fiscal year 2002
on safety and health for the ten DOE Science laboratories. Furthermore,
GAO indicated that annual safety and health costs could decrease by $41
million or increase by as much as $5.2 million under a shift to
external regulation, depending on the safety and health oversight
scenario.
The Department has several concerns regarding the limitations of GAO's
analysis, which are described in the enclosure. If you have any
questions regarding the Department's comments, please contact Mr. James
T. Campbell, Acting Director, Office of Management, Budget and
Evaluation/Acting Chief Financial Officer, at (202) 586-4171.
Sincerely,
Kyle E. McSlarrow:
Signed by Kyle E. McSlarrow:
Enclosure:
Department of Energy Comments on Draft General Accounting Office Report
"Department of Energy: External Regulation Savings in Safety and Health
Activities at DOE Science Laboratories" (GAO-03-633R.):
1. The first three external regulation scenarios described by GAO
produced results ranging from a cost increase of between $4 million and
$5.2 million annually to a cost savings of between $7.6 million and
$9.5 million annually; however, GAO noted that these figures do not
include the cost of additional NRC and OSHA staff required to address
the expanded workload, estimated to be around $7 million annually.
Taken entirely at face value, these figures indicate that the first
three scenarios would result in little if any savings. Moreover, for
many of the reasons we indicate in our more detailed discussion of
scenario 4, we believe there are reasons to question the results under
the first three scenarios as well.
2. Under scenario 4, the GAO calculated potential savings of $41
million. The core of those savings comes from the following two
propositions
"that, to a large extent, the safety and health staffing levels across
DOE field offices and the M&O contractors are driven by the need to
monitor and respond to the numerous safety and health contractual
reporting requirements and ad hoc information requests[;]" and that
"[e]liminating unnecessary information requests after shifting to
external regulation could justify a reduction or redirection of safety
and health personnel that would lower safety and health costs."
(Emphasis added.):
3. It is axiomatic that eliminating "unnecessary" information requests
would lower costs without any negative effect on health and safety. But
the report does not provide any supporting analysis or examples of
"unnecessary" vs. necessary DOE reporting requirements or any
explanation for the implication that external regulation will
facilitate the elimination of "unnecessary" information requests while
preserving necessary ones.
4. We think it highly counterintuitive that this will in fact be the
result. It seems almost certain to us that under external regulation,
three different entities (DOE, NRC, and OSHA) will each be requesting
information for their own purposes. Even if DOE's requests for
information plummet significantly, DOE will continue to need
some health and safety information for contract administration
purposes. Meanwhile, we think it quite unlikely that NRC's and OSHA's
needs for information from our contractors will be less than DOE's
current requests. DOE has some experience with NRC-licensed facilities.
That experience suggests to us that if they are licensed by NRC,
contractors will, among other things, likely need outside legal
services to address licensing issues, which even without any other
increased costs are likely to increase contractor costs for generating
information needed to respond to regulators substantially over what
they are now.
5. In addition, external regulation is far from the most plausible
mechanism through which "unnecessary" information requests may be
eliminated. The FY 2003 Defense Authorization bill directed DOE to
promulgate a worker safety rule by December 2, 2004. In the course of
promulgating that rule, DOE intends to examine carefully its current
practices for requesting information from its contractors relating to
health and safety and to address any legitimate concerns that its
current oversight approach results in unnecessary information requests.
That process should allow DOE to achieve the cost savings that the
Report assumes from external regulation if in fact they are genuinely
achievable because the requests for information are in fact
"unnecessary.":
6. The corollary is that the Report's attribution of these cost savings
to external regulation is not well founded. If they are genuine, they
can be achieved not by a shift to external regulation, but by an
improvement in DOE's oversight practices. In fact, a shift to external
regulation seems to us likely to make it harder rather than easier to
achieve these improvements.
7. The only basis for the Report's savings estimates under scenario 4
is that it applies a 28 percent reduction across all science
laboratories based on relative health and safety staffing levels of
NASA's JPL and DOE's Lawrence Berkeley National Laboratory. While the
Department acknowledges there may be similarities between these two
laboratories, we believe a detailed analysis of relative hazards and
operating characteristics (including types and inventories of nuclear
materials requiring active regulation under NRC standards) would be
necessary to determine how similar they are in relevant respects. We
also believe such a comparison would be necessary on a laboratory-by-
laboratory basis before concluding that JPL is similar to other DOE
science laboratories.
8. We would also note that the cost information included in GAO's
report is based primarily on responses to survey instruments that GAO
distributed to DOE and M&O contractor officials. Neither the GAO nor
the Department independently verified the accuracy of the reported
information. Therefore, the cost information does not represent
decision-quality information.
9. GAO acknowledged that the study did not consider transition costs to
bring facilities into compliance with current NRC and OSHA standards,
but repeats the unsupported assertion that "DOE would likely incur much
of these [transition to OSHA and NRC regulation] costs anyway if the
department were to bring the laboratories into compliance with its own
safety and health standards." DOE is aware of no basis for that
assumption and does not believe there is any way of verifying it. DOE
believes that its current health and safety orders as currently applied
achieve comparable levels of protection of health and safety to those
that would be achieved under NRC and OSHA regulation. But because there
are likely numerous ways of achieving the same levels of protection,
DOE knows of no basis for assuming that they would be achieved in the
same fashion and at the same cost under NRC and OSHA regulation.
10. In particular, the report did not take into account the Integrated
Safety Management Systems clause in the DOE procurement regulations,
which requires DOE contractors to establish an integrated safety
management system. Under this approach, a contractor must define work,
analyze hazards, set standards and controls, perform work safely and
provide feedback and improvement. The relevant standards and controls
are then included in the contract through standard clauses. This allows
DOE and the contractor to identify a set of standards, practices, and
controls for health and safety that make sense for and are tailored to
the specific work and associated hazards. If OSHA and NRC begin to
regulate DOE facilities, DOE and its contractors would likely no longer
have this flexibility.
This deficiency is especially important since the report repeats the
unsupported assertion that "DOE would likely incur much of these
[transition to OSHA and NRC regulation] costs anyway if the department
were to bring the laboratories into compliance with its own safety and
health standards." The report fails to acknowledge the flexibility of
the current DOE approach and the fact that this approach has achieved a
high level of worker protection. In fact, in the National Defense
Authorization Act for Fiscal Year 2003 (FY03 DOD Authorization),
Congress directed the Department to adopt regulations on worker
protection that maintain "the level of protection currently provided to
[its] workers" and to include flexibility in those regulations to
tailor implementation of such regulations to reflect activities and
hazards associated with a particular work environment.
11. Footnote 1 indicates the science laboratories are also known as
nonmilitary energy laboratories. We are not sure what is meant by a
"nonmilitary energy laboratory," which is not a common DOE usage. Some
legislation has distinguished between laboratories under the
supervision of the NNSA versus laboratories under the supervision of
other DOE entities. That may be the distinction that the Report aims to
capture. In fact, however, DOE has laboratories such as INEEL that are
neither supervised by NNSA nor by the Office of Science, that would
therefore be "nonmilitary" if that is the usage the Report has in mind,
but that we do not believe were examined during preparation of the
Report. In any event, characterizing a laboratory as a military or non-
military does not capture the reality of the scope of activities
undertaken by that laboratory as part of the Departmental complex and
as a national scientific resource. Much very important national
security work is accomplished at laboratories that are not part of the
National Nuclear Security Administration (NNSA). This defense work may
be funded by NNSA, by other elements of the U.S. Government, or by
private organizations or international organizations such as the
International Atomic Energy Agency (IAEA). Looking at only NNSA-funded
work --that is to say, excluding work for the Defense Department and
other non-DOE national security directed departments and agencies --in
FY 2002 the non-NNSA managed laboratories engaged in over $300 million
of NNSA-funded activity, including $28.9 million at Argonne, $51.5
million at Brookhaven, $62.1 million at INEEL, $130.2 million at Oak
Ridge, and $164.6 million at the Pacific Northwest National Laboratory
(PNNL). To give an example of just one project: PNNL, a "nonmilitary
laboratory" under this usage, was funded by NNSA to analyze the source
and effect of what is being called a "Radiation Dispersal Release," the
so called
"dirty bomb." PNNL was selected for this research because it has
equipment and scientists with expertise in the effects of radiation on
the environment, and recently had been involved in related research.
Several non-military laboratories also have been involved in training
IAEA inspectors. The Congress also sought when it enacted legislation
creating the Department of Homeland Security, the Homeland Security
Act, to ensure that the new Department would have access to all the DOE
laboratories on the same terms as DOE in order to assist it in the
performance of its mission, and both Departments have been working
diligently to accomplish this objective. In short, all the DOE
laboratories perform important national security work, regardless of
whether they are characterized as "military" or "nonmilitary"
laboratories.
12. That brings us to the last issue that external regulation
potentially presents, a form of cost not addressed in the Report. Any
kind of external regulation that requires receiving permission from an
outside entity in order to proceed with work by the Department of
Energy potentially subordinates important national security work done
at the regulated laboratories to the views of the external regulators,
whose charge does not require them to give the same kind of weight to
that work. We believe that explains in part the decision generally not
to require NRC licensing of ERDA's work when the NRC and ERDA were
separated by the Energy Reorganization Act of 1974. DOE inherited
ERDA's responsibility for this national security work in the Department
of Energy Organization Act as well as its responsibility for health and
safety regulation at its contractor-managed facilities. We think there
was wisdom in the Congress's consistent intuition that health and
safety regulation by other governmental entities was unnecessary and
might interfere with performance of DOE's national security
responsibilities. Absent evidence that DOE is not fulfilling its health
and safety responsibilities properly at its science laboratories, we
think it imprudent suddenly to depart from Congress's original judgment
and now assume that those responsibilities can be transferred with no
cost to the national security functions performed at these facilities.
At the least, we believe any effort to quantify costs and benefits
should seek to quantify these kinds of potential costs as well.
The following are GAO's comments on the Department of Energy's letter
dated April 28. 2003. The number associated with each of our comments
corresponds to the numbered DOE statement in enclosure II.
GAO Comments:
1. We agree that any reductions in safety and health costs under the
first three oversight scenarios would at best offset anticipated
increases in staffing at NRC and OSHA. However, we disagree that these
estimates are questionable. Our estimates were derived directly from
survey responses provided to us by DOE and M&O contactor safety and
health managers who are in the best position to provide these data. The
fourth scenario, which did not rely on survey responses conditioned by
DOE's oversight culture, yielded much higher potential reductions in
safety and health costs. These savings would go well beyond offsetting
increases in NRC and OSHA costs, but only if they are not shifted to
other functional areas of the department and its M&O contractors.
2. We agree with the two propositions extracted by DOE from our report
that are behind the potential savings of up to $41 million calculated
in scenario 4. We believe that these propositions are reinforced by
DOE's current policy guidance for developing new science laboratory
contracts. This guidance underscores the use of national standards to
establish contractor requirements and performance criteria, while
minimizing the use of DOE orders and directives as mechanisms for
placing administrative and operational requirements on the contractors.
3. We agree that our report did not include any specific examples of
"unnecessary" DOE reporting requirements. However, we disagree that
there was no analysis to support our claim that these requirements and
ad hoc information requests drive the apparent high levels of safety
and health staffing. We compared the number of information requests
from NASA to its Jet Propulsion Laboratory with those from DOE to its
10 science laboratories. The Jet Propulsion Laboratory had
significantly fewer information requests than the DOE laboratories
because NASA essentially relies on the information requested by
external regulators, and their oversight, as well as the Jet Propulsion
Laboratory's self-assessments for safety assurances. If this
laboratory's total information demand equaled the information requested
of DOE's M&O contractors, one would expect that the number of staff
necessary to respond to these requests would be similar. However, the
Jet Propulsion Laboratory and the NASA Management Office at this
laboratory have far fewer safety and health personnel as a proportion
of their workforces than at a comparable DOE science laboratory and its
associated field offices.
4. DOE's concern that three entities (DOE, NRC, and OSHA) will each
request information under external regulation gets at a root concern
expressed by most of the M&O contractors that the department will not
fundamentally alter its oversight approach even with the presence of
external regulators. Scenario 4 shows that the Jet Propulsion
Laboratory is able to respond to the information requests of its
external regulators and NASA overseers with 28 percent fewer safety and
health personnel than a comparable DOE science laboratory, even after
significantly reducing the number of pertinent DOE laboratory personnel
(i.e., from 150 to 41) to account for differences in the types of
hazards overseen in the respective laboratories. And, as reported by
DOE, the Jet Propulsion Laboratory does this while maintaining
comparable levels of safety to its Lawrence Berkeley National
Laboratory.
5. We agree that DOE can address to some extent the issue of
"unnecessary" information requests under existing self-regulation.
However, we disagree that shifting to external regulation is "far from
the most plausible mechanism through which unnecessary information
requests may be eliminated." (See response to comment 6.):
6. We disagree that shifting to external regulation will make it harder
rather than easier to eliminate unnecessary information requests.
Shifting to external regulation should help clarify what DOE reporting
requirements and other information requests are duplicative of the
information needs of external regulators. Applying a NASA-type
oversight approach will also help uncover those administrative
mechanisms to ensure a safe and healthy work environment that are
unnecessary given the presence of external regulators.
7. We pointed out in our report that the potential for a 28 percent
reduction in safety and health personnel would vary among the
laboratories, depending on the circumstances presented. That is, for
some laboratories a higher percent reduction in M&O contractor safety
and health personnel might be achieved, and for other laboratories a
lower percent reduction would be possible. Applying this percentage to
reduce safety and health costs across the 10 laboratories is actually
more conservative than the 30 percent reduction in costs estimated by
DOE's major M&O contractors in one of our previous reports. We were
told that this latter estimate is only achievable if DOE relinquishes
its oversight to external regulators. It also takes into consideration
the Oak Ridge National Laboratory, which would likely have the greatest
regulatory presence of NRC under external regulation.
8. We agree that safety and health cost information is based primarily
on responses to our data collection instruments. We relied on survey
data because DOE does not have budget quality information on safety and
health costs. We disagree with DOE that our cost information does not
represent decision-quality information; given the steps we took to
determine the reasonableness of the data, including making cost
adjustments where necessary based on follow-up conversations with
respondents.
9. We agree that it would be difficult to determine how much of the
transition costs to bring the laboratories into compliance with NRC and
OSHA standards could be attributable to upgrading these laboratories to
meet DOE's own standards. DOE stated that there was no basis for
assuming that much of the transition costs would be needed to meet the
department's own standards and that any such determination could not be
verified. DOE also contends that its safety and health standards meet
or exceed those of NRC and OSHA, but that it achieves acceptable levels
of safety by means other than those that would be imposed under
external regulation. We acknowledge that the full cost of transitioning
to external regulation cannot be ascertained until the completion of
comprehensive compliance audits involving DOE, NRC, and OSHA for the 10
science laboratories. However, based on previously reported
information, we believe that some of the transition costs will be
associated with complying with DOE's own regulations. DOE even stated
in its Implementation Plan for External Regulation of the Non-Defense
Science Laboratories that some of the transition costs would be
necessary to cover the backlog of preventive facility maintenance that
presumably are in noncompliance with its own standards.
10. A review of DOE's Integrated Safety Management System was beyond
the scope of our report. We note, however, that officials at the Jet
Propulsion Laboratory told us that they also have an established
integrated safety management system operating within the context of
external regulation. We believe that the reasonable application of
regulations to reflect activities and hazards associated with a
particular work environment is appropriate and not automatically
eliminated with external regulation, as seen at the Jet Propulsion
Laboratory. We have also reported that NRC claims it would be flexible
in applying its standards to DOE's unique facilities without
compromising safety, and OSHA has concluded that any deficiencies
identified at the laboratories would be similar to levels found in the
private sector and, therefore, manageable.
11. We agree that characterizing the laboratories under the stewardship
of DOE's Office of Science as military or nonmilitary does not fully
capture the scope of research taking place at them. However, we
provided the questioned footnote to clarify for some readers that the
science laboratories have been referred to in other ways. For example,
the current version of H.R. 6 - The Energy Policy Act of 2003, uses the
phrase "nonmilitary energy laboratories." However, because DOE has
itself referred to the science laboratories as "nondefense" science
laboratories in its implementation plan for external regulation, we
have further clarified the footnote by adding "nondefense science"
laboratories.
12. We did not perform a cost benefit analysis of shifting to external
regulation of the science laboratories in this report, and we still
question the need to do so. As we previously reported, in our view "DOE
has sufficient information and has had ample time to move forward on
external regulation." At this point, it appears to us that
philosophical opposition rather than data limitations is the principal
impediment to a shift to external regulation. Besides, while some costs
and potential beneficial savings are reasonably quantifiable, others
are not. For example, attempting to quantify the cost of any potential
decrease in our national security by shifting to external regulation
would be as difficult as trying to quantify the benefits of increased
public trust in DOE that might be gained by eliminating self-regulation
of safety and health functions. As to national security concerns, we
would add that we previously reported that officials at comparable
foreign defense and nondefense laboratories, all of which accept the
presence of external regulators, indicated that they do not share DOE's
concern that external regulation poses a threat to their national
security. In addition, our present report identifies at least one
oversight scenario that might yield significant savings in safety and
health costs that could potentially help support additional research to
enhance our national security.
FOOTNOTES
[1] These science laboratories are also known as nonmilitary energy
laboratories or non-defense science laboratories.
[2] DOE and contractor safety and health personnel are involved in
emergency preparedness, fire protection, industrial hygiene,
industrial safety, occupational medical services, nuclear safety,
radiation safety, transportation safety, and management of oversight
and reporting on these safety and health activities.
[3] U.S. General Accounting Office, Department of Energy: Observations
on Using External Agencies to Regulate Nuclear and Worker Safety in
DOE's Science Laboratories, GAO-02-868R (Washington, D.C.: June 26,
2002).
[4] H.R. Rep. No. 107-258, October 30, 2001, at 109-110.
[5] H.R. Rep. No. 107-681, September 24, 2002, at 133-134.
[6] U.S. General Accounting Office, Department of Energy: Fundamental
Reassessment Needed to Address Major Mission, Structure, and
Accountability Problems, GAO-02-51 (Washington, D.C.: December 21,
2001).
[7] GAO-02-868R.
[8] Department of Energy, Observations on Externally Regulating Nuclear
and Worker Safety in DOE's Science Laboratories, GAO-02-974T
(Washington, D.C.: July 25, 2002).
[9] H.R. Rep. No. 108-10, February 12, 2003, at 898-899.
[10] Department of Energy, Implementation Plan for External Regulation
of Non-Defense Science Laboratories. (Washington, DC: July 1, 2002).
[11] The regulatory agencies anticipate the need for an additional 24
full-time employees at NRC and an additional 19 at OSHA.
[12] Based on data obtained from DOE's Functional Cost Report of 30
Major DOE Contractor Sites, the variation in safety and health costs
since 1998 has been less than a 5 percent.
[13] The remaining small percentage of total safety and health costs
went to miscellaneous activities.
[14] Berkeley Lab. DOE Best Practices Pilot Study, LBNL/PUB-865
(Berkeley, CA: February 2002).
[15] In the DOE Best Practices Pilot Study report, DOE adjusted the
safety and health staffing figure downward from 150 to 41 at the
Berkeley Lab and from 50 to 40 at Jet Propulsion Laboratory.
[16] Memorandum for Heads of Departmental Elements, the Under Secretary
of Energy, Robert G. Card, Principles for Office of Science Laboratory
Contracts, Department of Energy: April 30, 2002.
