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entitled 'Department of Energy: Consistent Application of Requirements 
Needed to Improve Project Management' which was released on May 11, 
2007. 

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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. 

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