Department of Energy's Contract and Project Management for the National Nuclear Security Administration and Office of Environmental Management
What We Found
The National Nuclear Security Administration and the Office of Environmental Management need to improve oversight of contractors and incorporate program and project management best practices.

This year we are rating the National Nuclear Security Administration (NNSA) and the Office of Environmental Management (EM) separately to recognize the differences in the actions the offices have taken to address the high-risk area.
We have now revised the overall rating for the leadership commitment criterion from met in 2019 to partially met to reflect the differences between NNSA’s and EM’s performance against this criterion described when rating the offices separately for the first time. Since 2019, the rating for the capacity criterion progressed from not met to partially met because both NNSA and EM have taken actions to improve their capacities for managing their contracts and projects. The three other criteria remain unchanged.
Contract and Project Management for the National Nuclear Security Administration

Since 2019, NNSA has improved its capacity to manage contracts and projects.
Leadership commitment: met. NNSA has continued to show leadership commitment to improving contract and project management. For example, in 2019, NNSA moved oversight of capital asset construction projects into the Office of Acquisition and Project Management earlier in the project life cycle, reflecting a focus on project management in early-stage planning.
NNSA also established program manager or coordinator positions for certain activities and projects, as we found in our June 2019 report on high explosives activities and our October 2020 report on depleted uranium activities. However, in June 2020, we recommended incorporating additional management controls for microelectronics activities, such as investing the coordinator with increased responsibility and authority. NNSA planned to complete a strategic management plan to more clearly articulate the integration of management controls for the various components of its microelectronics activities in fiscal year 2021.
Capacity: partially met. NNSA has taken some steps to improve its capacity to oversee and manage its contracts, projects, and programs and has progressed from not met to partially met. In September 2019, we found that NNSA relied on support service contractors to perform many administrative and technical support functions even where there is risk of contractors performing inherently governmental functions. In 2019, NNSA requested and received an increase to the statutory cap on its number of federal positions to address critical unmet staffing needs. As of December 2020, NNSA had not yet filled the 200 new positions.
Additionally, NNSA determines the number of staff needed to oversee capital asset construction projects. However, NNSA does not have a process to determine the number of acquisition professionals it needs to award and oversee contracts. An April 2020 NNSA internal review found that NNSA had inadequately resourced program offices to oversee two activities and recommended that NNSA strengthen its oversight of the work by management and operating (M&O) contractors.
Action plan: partially met. NNSA has taken some actions to develop an action plan to address contract, project, and program management issues. For example, the committee reports accompanying the House Energy and Water Development appropriations bills for fiscal years 2019 and 2021 directed DOE to report on actions it planned to take to improve contract and project management. DOE issued a report in July 2020. However, the report focused on completed—not planned—actions. Further, the report includes limited information about program management or contract management for activities other than capital asset construction projects.
Monitoring: partially met. Since 2019, NNSA has continued to address contract performance that does not meet expectations. For example, in June 2020, NNSA did not exercise an option on an M&O contract due to concerns about the contractor’s performance. Additionally, as we found in April 2019, NNSA included clauses in an M&O contract with more specific requirements to support NNSA’s oversight of the contractor’s performance.
NNSA monitors contractor performance against cost and schedule baselines monthly for its capital asset construction projects and quarterly for certain programs. However, NNSA has not yet developed a full set of program management tools, as required by its program execution guidance, to monitor schedule performance for some program activities, as we found in our October 2020 review of depleted uranium activities.
Similarly, in September 2020 we reported that NNSA had not yet completed a program management tool to manage and monitor an integrated schedule for multiple plutonium projects and their supporting program.
Demonstrated progress: partially met. NNSA improved its collection of financial information across programs, projects, and contractors. In response to our January 2019 recommendation, NNSA implemented a common data collection format that should result in reliable, enterprise-wide financial data that enable NNSA to report total program costs.
NNSA has improved its cost estimates for projects and programs but continues to face challenges with its schedule estimates and analyses of alternatives. For example, in March 2020, we found that NNSA’s new Uranium Processing Facility project was on schedule and within budget.
Additionally, in July 2020, we found that NNSA’s preliminary cost estimate for one of its nuclear weapon modernization programs, the W80-4 Life Extension Program, substantially met the criteria for a high-quality, reliable cost estimate. However, NNSA did not take into account the program’s schedule risk analysis, and established a key date that may unrealistically constrain the program’s schedule and introduce unnecessary risks. We recommended that NNSA address this issue.
In October 2017, DOE changed its order for project management of capital asset construction projects to apply to projects with total costs of more than $50 million. The order had previously applied to projects of more than $20 million. In June 2019, NNSA initiated a pilot project designed to streamline the construction of certain capital asset construction projects expected to cost less than $50 million. Projects constructed through the pilot are expected to use commercial construction practices and are exempt from NNSA’s project management order. We have not reviewed these projects to determine whether there are differences in meeting cost and schedule targets and recommend the pilot be completed to determine if this new process is more effective.
Contract and Project Management for the Office of Environmental Management

Since 2019, EM has taken steps to improve capacity but needs to follow through on its actions related to leadership commitment.
Leadership commitment: partially met. In 2019, we rated DOE as met overall for leadership commitment. However, this year our rating reflects a separate assessment of NNSA’s and EM’s performance. EM’s leadership has taken notable actions to demonstrate commitment to improving its contract and project management.
For example, in 2020, EM completed demolition activities at the East Tennessee Technology Park and continues implementation of a new contracting initiative called End State Contracting. In addition, EM recently developed and issued program-wide initiatives intended to improve contract and project management, such as a project management protocol for demolition projects in July 2020 and a general cleanup protocol in November 2020.
However, because these actions were taken over the last few months and are still being implemented, it is too early to evaluate the extent to which these actions address long-standing contract and project management challenges. In addition, the total costs of current and future cleanup activities have increased in recent years at a level far greater than the annual funding available to address them. These future costs now total $406 billion, as of fiscal year 2020, and result in part from persistent project and contract management challenges.
Moreover, EM has lacked continuity in prior initiatives designed to address project and contract management challenges that were ultimately short lived and replaced by different leadership priorities. For example, in June 2017, EM initiated a 45-day review to identify decision-making priorities at each site, but this study was never finalized.
In recent years, we have continued to highlight these significant problems and growing costs and have made several recommendations to DOE to help ensure that (1) EM projects adhere to best practices, and (2) EM applies additional contract management controls. Nonetheless, several key recommendations remain unimplemented.
In addition, frequent turnover in EM leadership over the last decade has hampered EM’s ability to sustain focus on addressing the root causes of these challenges. EM has had six different leaders in the last 5 years—each with different priorities. By applying consistent leadership commitment to recently established contract and project management frameworks, EM will be in a better position to address long-standing contract and project management challenges. Making progress in addressing the root causes of EM’s unsustainable growth in cleanup costs will require enhanced and sustained leadership commitment not only in EM but in the highest levels of the department.
Capacity: partially met. EM has taken some steps to address gaps in its ability to effectively manage contracts and projects and has progressed from not met to partially met on this criterion. For example, EM launched its Acquisition Corps initiative in July 2020 to hire and train additional staff to evaluate bids for EM contract awards. However, as we found in November 2020, EM has significant staffing shortages at its site office responsible for the Waste Isolation Pilot Plant in New Mexico. The shortages may impede EM’s ability to manage contractors executing two capital asset projects needed for the plant to reach full operational status and remain on schedule for constructing additional disposal space.
Action plan: partially met. In 2018, EM initiated a new contracting model—called end-state contracting—that DOE expects will help increase accountability for contractors to improve cost and schedule performance. Also, in fall of 2019, EM contracted with the National Academies of Sciences to evaluate EM’s project management efforts and plans to release a final report in mid-2021. It is too early for us to evaluate the effectiveness of actions, such as implementing the new contracting model, as it has been in place for a short time and has only been applied to a small number of contracts. Further, as discussed above, DOE’s report on improving contract and project management focuses on completed, rather than future, actions.
Furthermore, EM’s efforts to address the root causes of its long-standing contract and project management challenges contain gaps. For example, as we found in December 2020, EM does not have a long-term plan—a leading practice—for its efforts to retrieve nuclear waste from underground tanks at the Hanford Site. This may impede EM’s ability to prepare for technical challenges.
Monitoring: partially met. EM has instituted annual program reviews and begun examining the consistency of expectations in its contracts. However, EM continues to face challenges monitoring the effectiveness of its actions to address contract and project management challenges. For example, we found in February 2019 that DOE does not accurately track or report whether cleanup milestones are met, missed, or postponed, and sites continually renegotiate milestones they are at risk of missing.
DOE has also not ensured that contractors audit subcontractors’ costs, as required. Specifically, as we and the DOE Office of the Inspector General found in March and November 2019, respectively, DOE did not ensure the contractor for the Waste Treatment and Immobilization Plant at Hanford completed required audits, increasing the risk of the contractor passing unallowable costs to DOE that it may be unable to recover.
Demonstrated progress: partially met. EM has made progress at some sites and is at or near completion for several important projects. For example, in August 2020, EM completed construction of the Salt Waste Processing Facility at the Savannah River Site. In October 2020, DOE also completed demolition work at the East Tennessee Technology Park. Further, as we found in January 2021, DOE has made progress in its first phase of decommissioning cleanup at the West Valley Site in New York State.
However, DOE continues to face significant cost and schedule challenges. For example, EM has not consistently developed reliable cost and schedule estimates for its cleanup efforts, including at the Idaho Site, the three gaseous diffusion plants, and the Waste Isolation Pilot Plant in New Mexico. At West Valley, DOE is late in making a final decommissioning decision, and as a result, cannot estimate the scope and cost of the remaining cleanup work.
DOE also continues to face challenges constructing its Waste Treatment and Immobilization Plant at the Hanford Site. Specifically, EM and its contractor consider technical challenges associated with the pretreatment facility to be conceptually resolved; however, EM has not yet designed, engineered, or tested the solutions.
The Department of Energy (DOE) oversees a broad range of programs related to nuclear security and waste cleanup, among other areas. DOE is the largest civilian contracting agency in the federal government. DOE relies primarily on contractors to carry out its programs and projects, spending about 80 percent of its annual budget on contracts. In fiscal year 2020, DOE’s budget was about $38.5 billion.
In 1990, we designated DOE’s contract management—including contract administration and project and program management—as a high-risk area. We took this action because DOE’s record of inadequate management and oversight of contractors left the department vulnerable to fraud, waste, abuse, and mismanagement. This high-risk area includes programs (functions or activities that typically involve broad objectives) and projects (temporary efforts with defined scopes).
In January 2009, recognizing the progress DOE’s Office of Science made, we narrowed the focus of DOE’s high-risk designation to two DOE program elements—NNSA and EM. In February 2013, we further narrowed the focus to NNSA’s and EM’s contracts and major projects—those with an estimated cost of $750 million or greater—to acknowledge progress NNSA and EM have made in managing nonmajor projects.
Contract and Project Management for the National Nuclear Security Administration
As of December 2020, 57 recommendations related to this high-risk area remain open, 21 of which we made since our last high-risk report in March 2019. These recommendations include:
- ensuring that the integrated schedule in development for pit production meets NNSA standards, consistent with best practices for schedule development;
- improving schedule estimates and analyses of alternatives to better align with best practices; and
- improving management controls to improve the oversight and coordination of programs and activities.
Contract and Project Management for the Office of Environmental Management
As of December 2020, 45 of our recommendations related to this high-risk area remain open, 19 of which we made since our last high-risk report in March 2019. These recommendations include
- incorporating project management leading practices for operations activities;
- taking steps to ensure cost and schedule estimates meet best practices; and
- identifying and fully analyzing additional flexibilities that could be used to address the staffing vacancies at DOE’s site office responsible for the Waste Isolation Pilot Plant.

