Todd Jacobson
NS&D Monitor
12/12/2014
The Department of Energy and the National Nuclear Security Administration are not adequately employing best practices in the analysis of alternatives (AOA) for major capital projects and may continue to see cost and schedule increases on its major projects, the Government Accountability Office said in a report released this week. The GAO examined three NNSA projects, the High Explosive Science, Technology and Engineering Project planned for the Pantex Plant, the Radioactive Liquid Waste Treatment Facility planned for Los Alamos National Laboratory, and the Uranium Processing Facility at the Y-12 National Security Complex, and found that the NNSA was not employing most of the 24 best practices identified by the GAO, which include defining functional requirements based on mission need, conducting an analysis of alternatives without a preconceived solution, and conducting an independent review of the entire analysis of alternatives process. The AOAs for the three projects “did not conform to best practices overall and may therefore not be reliable,” the GAO said.
The GAO found that only one of the 24 best practices it identified for analysis of alternatives was outlined in DOE requirements for AOAs: defining functional requirements based on mission need. Other DOE guidance revealed that the Department adheres to nine of the 24 best practices. “Federal standards for internal control related to risk assessment call for agency management to decide on actions to mitigate identified risks,” the GAO said. “Without developing a reliable AOA process, DOE may not be successful in mitigating the risk it has identified related to this process.”
Questions Abound for Major Projects
DOE and NNSA have been on GAO’s High-Risk List for major capital projects for more than two decades, and the NNSA has struggled in recent years with its biggest projects, having to cancel or significantly alter the scope of projects because of cost and schedule increases. The agency deferred, and then cancelled, the Chemistry and Metallurgy Research Replacement-Nuclear Facility planned for Los Alamos National Laboratory in favor of a scaled back strategy that relies on existing facilities and smaller construction of modules. Several years ago, it cancelled the Pit Disassembly and Conversion Facility in favor of using existing facilities at Los Alamos and merging some of the work with the Mixed Oxide Fuel Fabrication Facility the PDCF was intended to serve.
More recently, the NNSA abandoned its “big box” strategy for the Uranium Processing Facility to pursue a scaled back approach that takes advantage of existing facilities and less new construction. “NNSA has spent billions of dollars designing and partially constructing projects with an estimated cost of $750 million or more, only to later reassess alternatives,” the GAO said. “Without a process to develop reliable AOAs, NNSA may continue on this path and continue to have limited assurance that it is selecting alternatives that best meet its mission needs and will not result in major cost increases and schedule delays in the future.”
DOE Planning Changes
In a response to the GAO report, DOE Office of Management Director Ingrid Kolb said the Department planned to integrate GAO’s recommendations in future DOE policy updates. She said DOE’s project management order will be assessed for revision in 2016, and guidance involving AOAs has been strengthened with the issuance of a Life Cycle Cost Handbook. She also said DOE’s Office of Acquisition and Project Management will develop an AOA Handbook to highlight best practices for AOAs. “The recommendation is consistent with our commitment to continuous improvement in project management and the process of analyzing the appropriate alternative for capital asset acquisition,” Kolb said in a letter to the GAO.
