GAO CONTINUES CRITICISM OF DOE/NNSA COST ESTIMATING

Problems on major construction projects at the Department of Energy and the National Nuclear Security Administration are likely to continue until the agency strengthens its cost estimating practices, Government Accountability Office Natural Resources and Environment Director David Trimble told a Senate panel yesterday. Citing major cost and schedule delays on projects like the Uranium Processing Facility, Chemistry and Metallurgy Research Replacement-Nuclear Facility and the Waste Treatment Plant, Trimble suggested to the Senate Armed Services Strategic Forces Subcommittee that part of the problem stems from the lack of a DOE cost estimating policy for capital projects. He also said that DOE’s project management order doesn’t meet cost-estimating best practices, and NNSA and DOE cost estimating guidance falls short of the GAO’s best practices in that area.

Similar problems exist for NNSA programs as well, and Trimble noted that the Department and NNSA have no requirement outlining how life cycle cost estimates for programs should be produced or requirements that it be independently reviewed. That’s been a significant issue with the Mixed Oxide Fuel Fabrication Facility, which has a $24 billion life cycle price tag. “Without accurate cost and budget information, DOE is not in a position to effectively manage the critical projects and programs carried out by its contractors,” Trimble said. “With over $180 billion planned to be spent at NNSA alone over the next 18 years, Congress also needs accurate and reliable information on these costs as it confronts difficult budgetary decisions. Without improvements in this information, and DOE’s capabilities to use and effectively apply this information, DOE will continue to be surprised by cost and schedule problems and will continue to be forced to manage these problems through reactive and stopgap measures such as suspending programs, reducing the scope of critical projects, robbing Peter to pay Paul.”

For its part, the NNSA has worked in recent years to beef up its project management efforts, creating a new Office of Acquisition and Project Management. It has also partnered with the Department of Defense’s Cost Assessment and Program Evaluation group, utilizing its cost assessment skills on major capital projects and life extension programs and standing up its own program evaluation function. “I think the two together give us what we need,” acting NNSA Administrator Neile Miller said at yesterday’s hearing.