[DNFSB LETTERHEAD]

March 29, 2002

The Honorable Spencer Abraham
Secretary of Energy
1000 Independence Avenue, SW
Washington, DC 20585-1000

Dear Secretary Abraham:

The Defense Nuclear Facilities Safety Board (Board) is aware of the Department of Energy's (DOE) strong interest in performing its mission more cost-effectively. In the mid-1990s, DOE and its contractors undertook a major effort to change the fundamental structure of DOE's Safety Directives System to reduce the system's burden and cost. Prior to this initiative, DOE's safety directives were extensive, attempted to cover all potential applications, and were often captured wholesale in a contract. The intent was for the requirements to be tailored to specific work through use of the exemption process to screen out inapplicable requirements. This approach led to large DOE Orders with hundreds of requirements that were difficult to manage. In addition, as a result of real or perceived impediments to obtaining exemptions, DOE's contractors had difficulty tailoring the requirements to specific scopes of work and particular hazards. The result was a safety requirements scheme that was considered burdensome and wasteful.

As Integrated Safety Management (ISM) was developed and implemented beginning in 1995, DOE replaced its old system with a new one that could be considered based on a "bottom-up" approach. Directives were revised so that only a relatively small set of high-level safety expectations--ones generally applicable to most work--remained in the Orders and Manuals. Other safety requirements and guidance from the previous Orders were transferred to Guides and Standards. As before, none of the direction from DOE (other than requirements in Regulations) is binding on contractors unless it is included in their contract. However, the intent under the new system was for DOE's contractors and the Contracting Officers to use the Work Smart Standards program or the Standards/Requirements Identification Document (S/RID) process to select a set of safety requirements that would be well suited to the work at hand. Those safety expectations, regardless of their original source, would then become contractually binding safety requirements. This list is referred to as "List B" in Section 970.5204-2 of the Department of Energy Acquisition Regulations (DEAR). List B is used in conjunction with 10 Code of Federal Regulations (CFR) 830, Nuclear Safety Management, to form the nuclear safety requirements for the contractor.

The bottom-up approach for determining contract requirements relies much more heavily on the technical abilities of the DOE personnel involved than was the case with the previous system because the new approach starts with a minimum set of requirements that usually is inadequate, and relies on DOE managers and contractors to add others to produce an appropriate set of safety requirements. Perhaps for this reason, many of the current DOE Orders include extensive and sometimes overlapping responsibilities for DOE managers, along with numerous requirements for internal and external oversight. Recently, senior DOE leaders have concluded that this approach has not been as successful as desired in reducing burdens and excess costs.

The Board is aware of two related but separate assessments of existing requirements: one led by Dr. Robert Kuckuck, focusing on contractors that report through the Under Secretary for Nuclear Security and the Administrator of the National Nuclear Security Administration; and one led by Mr. Richard Hopf, focusing on contractors that report through the Under Secretary for Energy, Science and Environment. In keeping with its statutory requirement to review the adequacy of DOE's safety standards, the Board has been reviewing proposed changes in safety-related Orders being considered by the team led by Mr. Hopf. To date, the Board has reviewed proposed changes under consideration for 19 directives of interest to the Board. Our detailed comments relative to these proposals are enclosed. Relative to this initiative as a whole, the Board has the following comments:

• The Board understands the motivation for this initiative. However, the Board cautions against actions that would cause DOE's safety assurance program to be diminished or lead the public to perceive a decreased emphasis on safety in DOE operations.



• DOE made a major change in its safety regulation scheme approximately 5 years ago. On the basis of extensive and detailed reviews by technical experts from both the Board and DOE, Orders and Manuals were reduced to contain only high-level safety expectations, which are generally applicable to most of DOE's defense nuclear work. More explicit "how-to" or process-related direction was extracted and placed in Guides and Standards. The structure of DOE's Directives System implies that many or most of the safety expectations set forth in Orders and Manuals should be included as safety requirements in contracts. These requirements complement those established in the Nuclear Safety Management Rule. As DOE stated in the Federal Register notice for the Interim Final Rule (Part 830): "DOE Orders for other nuclear safety management topics such as maintenance, training, conduct of operations, defect identification, and occurrence reporting, will be retained so that the applicable and appropriate requirements of the orders can continue to be referenced in contracts" (65 FR 60292, 60302-60303, October 10, 2000). DOE directives issued as Guides or Standards were presumably intended to be optional or replaceable by equivalent industry standards. The core safety practices retained in Rules, Orders, and Manuals, which have evolved throughout the years in response to lessons learned, should remain relatively constant and changed only for cause.



• DOE is in the process of moving to delegate more responsibility for contract development and administration to its field managers. The Board does not believe the field offices as currently staffed have the internal expertise needed to negotiate a "necessary and sufficient" requirements set. Past experience, as noted in the Board's letters of June 3, 1998, and April 28, 1998, on the Work Smart Standards process, has demonstrated the need for DOE to augment field resources with subject matter experts to assist in this exercise. Achieving reasonable uniformity in DOE's contract terms and conditions may necessitate the deployment of a special DOE-Headquarters team, supplemented as needed by outside experts, to assist the field managers, as has been done for ISM Verification Reviews and Operational Readiness Reviews.



• Federal employees are bound by the requirements in the DOE Orders and Manuals. If in fact an Order requires inefficient processes or is overly prescriptive in describing actions and responsibilities of federal employees (e.g., requiring multiple layers of reviews with similar scope prior to a decision), that Order may impose indirect burdens and costs on DOE's contractors. Since all requirements for federal employees in DOE's Orders are mandatory and applicable to all federal positions and organizations specified in the Order, it may be more worthwhile for the current Order review to focus on DOE processes and the roles and responsibilities of DOE's employees rather than on requirements intended to be levied on the contractors.



• DOE is currently emphasizing the use of "performance-based" requirements that stress what is to be accomplished instead of prescribing how to accomplish a task. Contract requirements that clearly define mission expectations in the form of end products or results to be delivered have much merit and should be encouraged. However, DOE is cautioned to move slowly in replacing well-established safety practices developed by the national and international nuclear safety community with general, performance-based safety objectives in the name of eliminating "needlessly burdensome" requirements.

The enclosure to this letter provides the Board's more detailed comments on DOE's Order review. Please contact me if you have any questions on this matter.

Sincerely,

John T. Conway
Chairman

c: The Honorable Robert Gordon Card
General John A. Gordon
Mr. Mark B. Whitaker, Jr.

Enclosure

Enclosure
Comments of the Defense Nuclear Facilities Safety Board on the
Department of Energy's Order Review

General Observations

1. The requirements review of the Hopf team focused on the Contractor Requirements Document (CRD) portion of the Orders. This is a narrow focus that offered the least promise of identifying burdensome provisions, and that, in effect, was the outcome of the review. However, many Department of Energy (DOE) Orders are predominantly a statement of functions and responsibilities for the federal workforce. A systematic review of these Orders should have been performed to identify overlaps, needless administrative processes, or requirements that are being ignored. For example, DOE Order 414.1A, Quality Assurance, requires that each Program Secretarial Officer (PSO) establish a Quality Assurance Program (QAP) for work performed by his/her organization. The Defense Nuclear Facilities Safety Board (Board) notes that this Order has been in effect since September 1999, and its predecessor--DOE O 5700.6C, published in August 1991--contained a similar requirement. To the Defense Nuclear Facilities Safety Board's (Board) knowledge, however, no PSO QAP has ever been approved. A critical review of all health and safety Orders from this perspective might prove beneficial.



2. The review to date has been focused too narrowly on the reduction of requirements. More objectively, the review could have benefited from consideration of appropriate additions to the requirements set. For example, in 1999 the National Research Council (NRC) published Improving Project Management in the Department of Energy, which was updated in 2001. The NRC made a number of recommendations for strengthening DOE's polices and procedures for project management. The review of DOE Order 413.1, Program and Project Management for Acquisition of Capital Assets, could well have considered the need for changes to reflect the NRC's recommendations.



3. The Orders themselves represent but a small portion of DOE's Directives pertaining to safety and administrative practices. At the last count, there were more than 140 DOE Guides, Manuals, Handbooks, and Standards associated with safety-related Orders of interest to the Board alone. A difficulty faced by contractors and the federal contract managers is the need to screen these guidance documents for pertinence to their operations and either (1) select from them or (2) identify commercial equivalents. A useful exercise would have been to screen all DOE guidance associated with each Order under scrutiny for existing commercial equivalents.

Order-Specific Observations