Audit Report: DOE-OIG-17-05

April 26, 2017

Department of Energy’s West Valley Demonstration Project

From 1966 to 1972, Nuclear Fuel Services Inc. operated a commercial nuclear fuel reprocessing plant at the Western New York Nuclear Services Center near West Valley, New York. The plant was the first and only U.S. plant in history to commercially reprocess uranium and plutonium from spent nuclear fuel. Operations at the plant generated more than 600,000 gallons of liquid high-level waste, which was stored on-site in underground tanks. In 1980, Congress passed the West Valley Demonstration Project Act, which required the Department of Energy, in cooperation with the State of New York, to solidify high-level waste, develop containers suitable for permanent disposal of the high-level waste, transport the waste to a permanent Federal repository, dispose of low-level and transuranic waste, and decontaminate and decommission the associated facilities and tanks.

The Department reported that it had developed suitable containers and solidified the high-level waste via vitrification by 2002, fulfilling its first two responsibilities under the West Valley Demonstration Project Act. The Department then commenced interim activities for decontaminating and decommissioning the facilities and managing wastes until it issued its Record of Decision in 2010.  We initiated this audit to determine whether the Department was effectively managing the West Valley Demonstration Project (West Valley) cleanup efforts.

We identified several significant issues with the management of the West Valley cleanup effort. In particular, we found substantial weaknesses related to the Department’s project and contract management that contributed to the inability to meet the major milestones established in the Phase I – Facility Disposition contract.  Specifically, we found the following:

• Although the West Valley Phase I activities had been underway since 2011 and had incurred costs of $264 million by October 2015, the project was not administered using basic project management principles.
• The Department had omitted or had not explicitly described critical activities from the Phase I contract’s original scope. As of November 2015, the contract value had increased by $196 million as a result of differing site conditions and inaccurate scope.

These conditions occurred, in part, because the Department had not ensured that project management policies and procedures were followed. Despite the requirements established in the Office of Management and Budget’s Capital Programming Guide, Department Order 413.3B, Program and Project Management for the Acquisition of Capital Assets, and Environmental Management’s Portfolio Management Framework, the site did not manage the West Valley decontamination and decommissioning work as a capital project.

To minimize future cost overruns and schedule delays, we made a series of recommendations designed to assist management and improve oversight of the West Valley project.  Management concurred with our recommendations and identified a series of actions that were either underway or were planned to address our recommendations.  Management’s actions are responsive to our recommendations.

Topic: Environmental Cleanup