GOVERNMENT
Environmental Cleanup Contract No Panacea for Energy Department Woes • Study reinforces Congress9 criticism that DOE pays too much to, and doesn't control, independent contractors
T
he Department of Energy has begun the enormous task of cleaning up environmental contamination at its facilities around the nation that were used to manufacture nuclear weapons. The government estimates this job will cost more than $300 billion over the next several decades, if all goes well with the process. But all is not going well. DOE has been severely criticized in numerous Congressional hearings and elsewhere for its handling of these cleanup projects. The most recent hearing, held early this month by the House Energy & Commerce Subcommittee on Oversight & Investigations, centered on problems at DOE's Fernald, Ohio, facility, which was supposed to be the showpiece for a new contract plan designed to substantially improve cleanup operations. The Fernald facility was used to process uranyl nitrate dissolved in concentrated nitric acid in order to recover slightly enriched (0.95 to 1.29%) radioactive uranium. Congressional criticism has been reinforced with release of a study, undertaken at DOE's own request, that shows the department pays too much money to, and does not properly control, its independent contractors. DOE's average cost for environmental restoration runs 32% more than private-sector cleanup projects, and 15% more than projects at other agencies. Completion times show similar discrepancies. It takes DOE 18% longer to complete projects than other federal agencies, and a huge 50% longer than for compa-
of the problems at cleanup sites, particularly Fernald. Victor S. Rezendes, director of energy and science issues at GAO, says recommendations from a year ago to set important goals for DOE's cleanups, and to prepare and execute a plan to evaluate pilot tests, have not been carried out. So a year after it has put its new contracting process in operation, DOE still has not developed a plan to evaluate the process, Rezendes says. And the Fernald project has a lot of problems. A consortium called the Fernald Environmental Restoration & Management Co. (FERMCO), led by Fluor Daniel Inc. of Irvine, Calif., was set up Dingell: contracting process a nightmare specifically to do the cleanup. rable private projects. Since the clean- From the start, the project was beset by ups are a $6 billion-a-year operation, labor and management conflicts, local the potential savings from improved citizens groups and contractor conflicts, a spill of uranyl nitrate, lack of continumanagement are immense. Rep. John D. Dingell (D.-Mich.), ity in DOE management at the site, and chairman of the subcommittee that is charges of insufficient planning. The department's Defense Nuclear studying the cleanup situation, noted at the hearing that the good news is Facilities Safety Board is supposed to that the public is aware of the enor- review and evaluate the implementamous cleanup problems facing the de- tion of DOE safety standards at nuclear partment. "The bad news is that there sites. The chairman of that board, John has been no department of the U.S. T. Conway, told the subcommittee that government less capable of carrying the problems at Fernald have earned out that responsibility than the DOE," that site special attention. The board, he says, "has identified two fundamenhe says. According to Dingell, DOE's con- tal weaknesses at Fernald which . . . tracting process is a nightmare "with have led to these operational and techthe contractors essentially in charge." nical management problems." First is At the Fernald facility, DOE intended the lack of "disciplined operations" by to fix these problems with its new En- the contractor. This includes everyvironmental Restoration Management thing from quality assurance to worker Contract process. But in its first year of training. Second are DOE's inadequate operation, that process has had numer- plans and preparations to supervise the ous problems, and there has been plen- contractor's activities. Conway says the ty of finger pointing by all parties as to department does not have an adequate technical staff, nor does it monitor the where the responsibility lies. Studies on DOE cleanup activities by work on a day-to-day basis. Thomas P. Grumbly, the new DOE the General Accounting Office (GAO) and an independent consultant agree assistant secretary for environmental that a serious lack of proper planning restoration and waste management, and goal setting is at the heart of many tries to put a good spin on the situation DECEMBER 20,1993 C&EN 15
GOVERNMENT by pointing out that FERMCO has made some solid progress. The company has accelerated the pace of remedial cleanup, has received the necessary clearances from, and improved its working relationship with, the Environmental Protection Agency, and has identified several areas for significant cost savings. But Grumbly admits planning is a problem. One of the primary things the contractor needs to do, he points out, is prepare a project baseline to improve its program management. The lack of this baseline, a foundation on which to judge the progress of all facility activities, "is a major deficiency of the current management," he says. He also says that improving communications between the Fernald operations and DOE headquarters will help avoid unnecessary delays. The president of FERMCO, Nicholas C. Kaufman, concedes some of the problems at the site, but sees the situation as primarily caused by DOE and by conditions FERMCO inherited in
1992. Among these is a labor conflict between the Atomic Trades Labor Council union at the facility and the local building and construction unions hired to work on the cleanup. Kaufman also notes that in the past year, there have been five different DOE managers at the Fernald site. He adds that the proposed budget from DOE for Fernald activity has been reduced about 30%, which has required a complete replanning of the activities to keep within federal compliance dates. Grumbly is aware that DOE is part of the problem and told Dingell the department is making improvements. Through what has been learned at Fernald, DOE is going to reform its management approach by setting quantitative goals and improving contractor oversight. Grumbly also pledges to modify the pay structure for contractors toward a more objective award fee plan. He says the department will also provide more federal employees to manage the environmental cleanups. This get-tough approach with con-
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tractors has already started. DOE has refused to give a performance bonus award to Westinghouse this year for its management of DOE's Hanford facility in Washington State. This is the first time this bonus has been denied. All of the planned changes are needed, according to the study released at the time of the hearing. The Project Performance Study was prepared by Independent Project Analysis Inc. of Reston, Va., at DOE's request. The study looked at 65 DOE environmental projects and says the department's cleanup projects cost much more and take more time to complete than comparable projects undertaken by private industry or for other federal departments. The consultant report says this is a result of high DOE management costs and poor project definition. In other words, the agency needs to do better planning. The report puts most of the blame for these problems on DOE. All of the report's recommendations involve improved management procedures. These include setting up a project measurement program to track the quality of project performance, working more closely with the various field offices to monitor that performance, and taking back control of project functions from contractors. One action Grumbly has taken is to convene a conference in January of federal employees and key environmental contractors to assess the progress of the department's restoration programs. Goal of the meeting will be to develop local action plans for making needed improvements at each facility. The conference, dubbed "Improving Project Performance: A Federal Hands-On Initiative," will include participants from federal procurement programs as well as finance officers, and security and safeguard personnel. Grumbly's response to the report was evident in the changes his testimony outlined at the subcommittee hearing. "The study puts some hard numbers around the gravity of our situation," Grumbly says. "We need to draw a clear line between the past and the future and commit to improving our cost and schedule performance by 20% over the next two years." With chairman Dingell's tenacity on this issue, Grumbly can be sure he will be held to that commitment. David Hanson
