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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

June 2014: 

Fusion Energy: 

Actions Needed to Finalize Cost and Schedule Estimates for U.S. 
Contributions to an International Experimental Reactor: 

GAO-14-499: 

GAO Highlights: 

Highlights of GAO-14-499, a report to congressional requesters. 

Why GAO Did This Study: 

ITER is an international research facility being built in France to
demonstrate the feasibility of fusion energy. Fusion occurs when the 
nuclei of two light atoms collide and fuse together at high 
temperatures, which results in the release of large amounts of energy. 
The United States has committed to providing about 9 percent of ITER's 
construction costs through contributions of hardware, personnel, and 
cash, and DOE is responsible for managing those contributions, as well
as the overall U.S. fusion program. In fiscal year 2014, the U.S. ITER 
Project received $199.5 million, or about 40 percent of the overall 
U.S. fusion program budget. 

GAO was asked to review DOE's cost and schedule estimates for the U.S.
ITER Project. This report examines (1) how and why the estimated costs 
and schedule of the U.S. ITER Project have changed since 2006, (2) the 
reliability of DOE's current cost and schedule estimates, and (3) 
actions DOE has taken to reduce U.S. ITER Project costs and plan for 
their impact on the overall U.S. fusion program. GAO reviewed 
documents; assessed DOE's current estimates against best practices; 
and obtained the perspectives of 10 experts in fusion energy and 
project management. 

What GAO Found: 

Since the International Thermonuclear Experimental Reactor (ITER) 
Agreement was signed in 2006, the Department of Energy's (DOE) 
estimated cost for the U.S. portion of ITER has grown by almost $3 
billion, and its estimated completion date has slipped by 20 years 
(see figure). DOE has identified several reasons for the changes, such 
as increases in hardware cost estimates as designs and requirements 
have been more fully developed over time. 

DOE's current cost and schedule estimates for the U.S. ITER Project 
reflect most characteristics of reliable estimates, but the estimates 
cannot be used to set a performance baseline because they are linked 
to factors that DOE can only partially influence. A performance 
baseline would commit DOE to delivering the U.S. ITER Project at a 
specific cost and date and provide a way to measure the project's 
progress. According to DOE documents and officials, the agency has
been unable to finalize its cost and schedule estimates in part 
because the international project schedule the estimates are linked to 
is not reliable. DOE has taken some steps to help push for a more 
reliable international project schedule, such as providing position 
papers and suggested actions to the ITER Organization. However, DOE 
has not taken additional actions such as preparing formal proposals 
that could help resolve these issues. Unless such formal actions are 
taken to resolve the reliability concerns of the international project
schedule, DOE will remain hampered in its efforts to create and set a
performance baseline for the U.S. ITER Project. 

DOE has taken several actions that have reduced U.S. ITER Project 
costs by about $388 million as of February 2014, but DOE has not 
adequately planned for the potential impact of those costs on the 
overall U.S. fusion program. The House and Senate Appropriations 
Committees have directed DOE to complete a strategic plan for the U.S. 
fusion program. GAO has previously reported that strategic planning is 
a leading practice that can help clarify priorities, and DOE has begun 
work on such a plan but has not committed to a specific completion
date. Without a strategic plan for the U.S. fusion program, DOE does 
not have information to create an understanding among stakeholders 
about its plans for balancing the competing demands the program faces 
with the limited available resources or to help improve Congress' 
ability to weigh the trade-offs of different funding decisions for the 
U.S. ITER Project and overall U.S. fusion program. 

Figure: Total Estimated Cost and Completion Date for the U.S. ITER 
Project: 

[Refer to PDF for image: horizontal bar graph] 

2013 estimate: $3.915 billion; 
Completion date: 2023. 

2008 estimate: $1.45 billion to $2.2 billion; 
Completion date: 2017. 

2005 estimate: $1.122 billion; 
Completion date: 2013. 

Source: GAO analysis of DOE data. 

[End of figure] 

What GAO Recommends: 

GAO recommends, among other things, that DOE formally propose the
actions needed to set a reliable international project schedule and 
set a date to complete the U.S. fusion program's strategic plan. DOE 
agreed with GAO's recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-14-499]. For more 
information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

The Estimated Cost and Schedule of the U.S. ITER Project Has Grown 
Substantially Since 2006: 

Despite Reflecting Most Characteristics of Reliable Cost and Schedule 
Estimates, DOE's Estimates Cannot Be Used to Set a Baseline in Part 
Because They Are Linked to an Unreliable International Schedule: 

DOE Has Taken Actions to Reduce U.S. ITER Project Costs but Has Not 
Adequately Planned for Their Impact on the U.S. Fusion Program: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: List of Experts: 

Appendix III: Status of U.S. Hardware Components for the International 
Thermonuclear Experimental Reactor (ITER) as of August 2013: 

Appendix IV: GAO Assessment of DOE's Current (August 2013) Cost 
Estimate for the U.S. International Thermonuclear Experimental Reactor 
(ITER) Project Compared with Best Practices: 

Appendix V: GAO Assessment of DOE's Current (August 2013) Schedule 
Estimates for the Two Largest Hardware Items of the U.S. International 
Thermonuclear Experimental Reactor (ITER) Project Compared with Best 
Practices: 

Appendix VI: Comments from the Department of Energy: 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: U.S. Hardware Components to Be Delivered to the ITER 
Organization: 

Table 2: Four Characteristics of High-Quality, Reliable Cost and 
Schedule Estimates: 

Figures: 

Figure 1: The Fusion Reaction: 

Figure 2: Aerial View of Construction Progress at the ITER Site as of 
June 2013: 

Figure 3: Countries Participating in ITER and ITER Site Location: 

Figure 4: U.S. ITER Project Share of the U.S. Fusion Program Budget, 
Fiscal Years 2006-2015: 

Figure 5: Total Estimated Cost and Completion Date for the U.S. ITER 
Project: 

Abbreviations: 

DOE: Department of Energy: 

ITER: International Thermonuclear Experimental Reactor: 

OMB: Office of Management and Budget: 

OSTP: Office of Science and Technology Policy: 

State: Department of State: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

June 5, 2014: 

The Honorable Mary Landrieu: 
Chair: 
The Honorable Lisa Murkowski: 
Ranking Member: 
Committee on Energy and Natural Resources: 
United States Senate: 

The Honorable Dianne Feinstein: 
Chairwoman: 
The Honorable Lamar Alexander: 
Ranking Member: 
Subcommittee on Energy and Water Development: 
Committee on Appropriations: 
United States Senate: 

The Honorable Ron Wyden: 
United States Senate: 

In 2006, the United States signed an agreement with the European Union 
and five other countries[Footnote 1] to help build and operate the 
International Thermonuclear Experimental Reactor (ITER),[Footnote 2] a 
first-of-its-kind research facility currently being built in 
Cadarache, France, to demonstrate the feasibility of fusion energy. 
Fusion occurs when the nuclei of two light atoms--typically hydrogen 
isotopes--collide and fuse together when heated at high temperatures 
and placed under tremendous pressure. The result is the release of a 
large amount of energy that, it is hoped, someday may be captured to 
produce electricity. Fusion has the potential to be an abundant source 
of energy to help meet future energy needs, and it also offers many 
other benefits. Among those benefits would be no emissions of 
greenhouse gases, no risk of the type of severe accidents that could 
occur at existing nuclear power plants, and no long-lived radioactive 
waste. Over the last 50 years, scientists around the world have made 
progress in understanding how to create the conditions for fusion, but 
many outstanding scientific and technical questions must still be 
addressed before fusion can be used as an energy source. As a result, 
the United States and the six other parties to the ITER Agreement 
identified ITER as a critical experiment that, if successful, could 
finally produce more power from fusion reactions than is needed to 
start the fusion reaction--the first step toward producing electricity 
from fusion energy and developing the first demonstration fusion power 
plant. By participating in ITER, the United States will share the cost 
of building this complex and expensive fusion device, benefit from the 
scientific and technological expertise of the six other ITER members, 
and have full access to ITER research results. However, since the ITER 
Agreement was signed in 2006, the expected total cost of building ITER 
has grown by billions of dollars from its original estimate of about 
$5 billion,[Footnote 3] and its construction schedule has slipped by 
years, as have the cost and schedule estimates for the U.S. portion of 
the construction project. 

The ITER Agreement established the management framework for ITER. 
Under the agreement, the international ITER Organization is 
responsible for managing the overall project, including specifying 
final hardware designs and performance parameters; managing the 
international project schedule; and assembling, installing, and 
commissioning the ITER facilities.[Footnote 4] The ITER Organization 
is led by a Director-General, who serves as its Chief Executive 
Officer and is responsible for the execution of the organization's 
activities. The ITER Organization is governed by the ITER Council, 
which is composed of high-level government officials from each of the 
seven ITER members.[Footnote 5] During ITER's construction phase, each 
of the seven ITER members is responsible for procuring and delivering 
an assigned set of hardware components and making cash and personnel 
contributions to the ITER Organization. Each member also is 
responsible for managing the cost and schedule of its assigned 
contributions within the milestones set by the international project 
schedule. The United States has committed to providing about 9 percent 
of the cost of building ITER,[Footnote 6] and those construction 
contributions are managed by the Department of Energy (DOE) through 
the U.S. ITER Project Office at Oak Ridge National Laboratory in Oak 
Ridge, Tennessee, in partnership with Princeton Plasma Physics 
Laboratory and Savannah River National Laboratory.[Footnote 7] DOE's 
Office of Fusion Energy Sciences, which is responsible for managing 
the overall U.S. fusion program within the Office of Science, provides 
program-level oversight of the U.S. ITER Project. Through March 2014, 
DOE had spent about $692 million on the project. In fiscal year 2014, 
the U.S. ITER Project received $199.5 million, which represented about 
40 percent of that year's overall U.S. fusion program budget and 
continued a pattern of substantial funding increases for the project 
that began in fiscal year 2011 after several years of fluctuating 
funding levels. 

In 2007, when the U.S. ITER Project was just beginning, we reported on 
the importance of DOE assessing the full costs of U.S. participation 
in ITER and setting a definitive cost estimate for the project. 
[Footnote 8] We noted at the time that DOE had made a commitment to 
provide hardware components to ITER without a definitive cost and 
schedule estimate and a complete project design and, as a result, 
DOE's preliminary cost estimate of $1.122 billion for U.S. 
contributions to ITER's construction might be subject to significant 
change. We also noted the risk that management challenges facing the 
ITER Organization could result in ITER construction delays and further 
increase costs for the United States. Today, significant questions 
remain about how much the U.S. ITER Project will cost, when it will be 
completed, and how DOE plans to manage the impact of U.S. ITER Project 
costs on the overall U.S. fusion program in a constrained federal 
budget environment. The House and Senate Appropriations Committees, in 
particular, have expressed concern that DOE will fund the U.S. ITER 
Project at the expense of the rest of the U.S. fusion program, and 
they have directed DOE to provide detailed cost and schedule estimates 
for the project. 

In this context, you asked us to review DOE's cost and schedule 
estimates for U.S. contributions to ITER's construction. This report 
examines (1) how and why the estimated cost and schedule for the U.S. 
ITER Project have changed since 2006; (2) the reliability of DOE's 
current cost and schedule estimates for the U.S. ITER Project and the 
factors, if any, that have affected their reliability; and (3) the 
actions DOE has taken, if any, to reduce U.S. ITER Project costs and 
plan for their potential impact on the overall U.S. fusion program. 

To conduct this work, we reviewed the ITER Agreement, relevant laws, 
and DOE guidance. To determine how and why the estimated costs and 
schedule for the U.S. ITER Project have changed since 2006, we 
reviewed DOE and U.S. ITER Project Office documents. We assessed the 
reliability of the data on the changes in the cost estimates by 
interviewing DOE officials and U.S. ITER Project Office 
representatives who had knowledge of the data and by other means, and 
we determined that the data were sufficiently reliable for reporting 
on the reasons for the changes in the cost estimates. To evaluate the 
reliability of DOE's current cost and schedule estimates and the 
factors, if any, that have affected their reliability, we reviewed 
DOE's most recent cost and schedule estimates for the U.S. ITER 
Project--as developed by the U.S. ITER Project Office in August 2013--
and DOE's internal peer review of those estimates. We also reviewed 
DOE's project management order and related guidance, as well as an 
October 2013 report to the ITER Council on the results of a management 
assessment of the ITER Organization. We assessed the reliability of 
DOE's current cost and schedule estimates by analyzing those estimates 
against best practices identified in GAO's Cost Estimating and 
Assessment Guide and Schedule Assessment Guide.[Footnote 9] 
Specifically, we reviewed documentation, interviewed the U.S. ITER 
Project Office representatives who prepared the estimates, reviewed 
relevant sources, and compared the information collected with the best 
practices. For DOE's current schedule estimate, we assessed the 
characteristics of two selected subordinate schedules-
-the central solenoid modules schedule and the tokamak cooling water 
system schedule--that are used as inputs to the integrated U.S. ITER 
Project master schedule.[Footnote 10] We were able to use the results 
of the two subordinate schedules to provide insight into the 
integrated master schedule since the same strengths and weaknesses of 
the subordinate schedules would transfer to the master schedule. We 
determined that the schedules were sufficiently reliable for our 
reporting purposes, and our report notes the instances where 
reliability concerns affect the quality of the schedules. To examine 
the actions DOE has taken, if any, to reduce U.S. ITER Project costs 
and plan for their potential impact on the overall U.S. fusion 
program, we reviewed DOE and U.S. ITER Project Office documents on 
actions taken to reduce and plan for U.S. ITER Project costs and 
reviewed our prior work on leading practices in federal strategic 
planning for agency divisions, programs, or initiatives.[Footnote 11] 
We also interviewed 10 experts in fusion energy and the management of 
large scientific research projects. We selected these experts through 
a multistep process to ensure coverage and a range of perspectives 
from industry, DOE's national laboratories, and universities. We 
analyzed the experts' responses across a standard set of questions and 
summarized the results. Appendix I presents a more detailed 
description of our objectives, scope, and methodology, and appendix II 
lists the names and affiliations of the 10 experts we interviewed. 

We conducted this performance audit from June 2013 to June 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Fusion is the energy source that powers the sun and stars. Fusion 
occurs when the nuclei of two light atoms collide with sufficient 
energy to overcome their natural repulsive forces and fuse together. 
Scientists are currently using deuterium and tritium--two hydrogen 
isotopes--for this reaction. When the nuclei of the two atoms collide, 
the collision produces helium and a large quantity of energy (see 
figure 1). For the fusion reaction to take place, the atoms must be 
heated to very high temperatures--about 100 million degrees 
centigrade, or 10 times the temperature of the surface of the sun--and 
placed under tremendous pressure. 

Figure 1: The Fusion Reaction: 

[Refer to PDF for image: illustration] 

Deuterium and Tritium collide; 
producing: 
Helium; 
Neutron; 
Energy. 

Source: Copyright © ITER Organization. 

All rights reserved. 

[End of figure] 

For more than 50 years, the United States has been trying to control 
fusion to produce electricity. The United States is pursuing two paths 
to achieve controlled fusion--magnetic and inertial. The goal for both 
approaches is to generate more energy than is needed to begin and 
sustain the fusion reaction. The world's first controlled release of 
fusion power was achieved in 1991, but no fusion device has succeeded 
in generating more power than it consumes. Magnetic fusion uses 
magnetic devices to confine a plasma, consisting of electrically 
charged atoms, and sustain a fusion reaction.[Footnote 12] ITER will 
be a magnetic fusion device known as a "tokamak."[Footnote 13] To 
reduce the risk of investing in only one device, DOE's Office of 
Fusion Energy Sciences also funds scientific research on alternative 
types of magnetic devices. Inertial fusion relies on intense lasers or 
particle beams to heat and compress a small, frozen pellet of 
deuterium and tritium--a few millimeters in size--that would yield a 
burst of energy. The lasers or particle beams would continuously heat 
and compress the pellets, which would simulate, on a very small scale, 
the actions of a hydrogen bomb. The National Nuclear Security 
Administration, a separately organized agency within DOE, is leading 
efforts in inertial fusion because it can be used for defense needs, 
such as validating the integrity and reliability of the U.S. nuclear 
weapons stockpile. 

ITER is considered to be the next step in magnetic fusion. It is an 
experiment to study fusion reactions in conditions similar to those 
expected in a future electricity-generating power plant. The goal is 
to be the first fusion device in the world to produce a substantial 
amount of net power--that is, produce more power than it consumes. 
Specifically, the objective is to produce 10 times more power than is 
needed to start the fusion reaction in pulses of 5 or more minutes. 
ITER also will test a number of key technologies, including the 
heating, control, and remote maintenance systems that will be needed 
for a fusion power station. ITER has been planned to consist of four 
phases: (1) construction, (2) operation, (3) deactivation, and (4) 
decommissioning. The construction phase, which is the sole focus of 
the U.S. ITER Project, began in 2007 (see figure 2 for an aerial view 
of construction progress at the ITER site as of June 2013). The 
international project schedule, as of April 2014, anticipates that the 
ITER fusion device will be built by 2019 and achieve its "first 
plasma" in 2020.[Footnote 14] After ITER has achieved its first 
plasma, the next several years are expected to be devoted to a 
preliminary period of operation in pure hydrogen during which physics 
testing will be done, followed by operation in deuterium with a small 
amount of tritium to test ITER's wall shielding. This will then be 
followed by the start of full ITER operations in an equal mixture of 
deuterium and tritium, at which point ITER will be used to try to 
produce 10 times more power than it consumes. As of April 2014, the 
international project schedule anticipates the start of deuterium-
tritium operations in 2027. ITER's operation phase is expected to last 
20 years followed by a 5-year deactivation phase and then a 
decommissioning phase. If ITER is successful, it will lead to power 
plant design and testing. 

Figure 2: Aerial View of Construction Progress at the ITER Site as of 
June 2013: 

[Refer to PDF for image: photograph] 

Source: Copyright © M. Postollec, O.Gillain – Engage. All rights 
reserved. 

Note: The ITER construction site sits on a total of 180 hectares (or 
about 450 acres) of land in southern France. 

[End of figure] 

ITER was first proposed at the Geneva Summit in November 1985, when 
President Reagan and Soviet Premier Gorbachev recognized that joint 
activities were needed to diffuse the tension of the arms race during 
the cold war and begin the then Soviet Union's economic integration 
into the world economy. The goal was to share scientific and technical 
information in a program where both sides had a comparable level of 
knowledge and could jointly realize commercial gains from the 
development of fusion technology. Following the Geneva Summit, the 
United States, the Soviet Union, Japan, and several European countries 
entered into an agreement to develop ITER's design. The United States 
stopped participating in the project in 1999 after Congress raised 
concerns that the technical basis for the proposed project was not 
sound, the cost was too high, and the facility was too large. In 
response to the U.S. withdrawal, the countries participating in ITER 
reduced the size of the facility and the estimated cost of building 
ITER to about $5 billion. Subsequently, a number of scientific 
advances increased U.S. confidence that the new ITER design would meet 
its scientific and technological goals and, in January 2003, President 
Bush announced that the United States would rejoin ITER. In 2003, the 
People's Republic of China and the Republic of Korea also joined the 
project; in December 2005, India became the seventh and most recent 
member to join. In November 2006, all six countries and the European 
Union signed the ITER Agreement. Figure 3 shows the countries 
participating in ITER and the location of the ITER site. 

Figure 3: Countries Participating in ITER and ITER Site Location: 

[Refer to PDF for image: illustrated world map] 

ITER members: 
European Union; 
Japan; 
India; 
People's Republic of China; 
Republic of Korea; 
Russian Federation; 
United States. 

Site Location: 
International Thermonuclear Experimental Reactor (ITER) site: 
Cadarache, France. 

Sources: GAO; Map Resources (map). 

[End of figure] 

Under the ITER Agreement, the United States is responsible for 9.09 
percent of ITER's total construction cost.[Footnote 15] DOE fulfills 
this obligation by supplying personnel to work for the ITER 
Organization; by making cash contributions to the ITER Organization to 
cover common expenses; and by procuring and delivering the 12 assigned 
U.S. hardware components to the ITER Organization (see table 1 for a 
list of the 12 U.S. hardware components).[Footnote 16] The ITER 
Agreement includes a provision that allows any ITER member except the 
European Union to withdraw from the project after the agreement has 
been in force for 10 years, which would be in October 2017.[Footnote 
17] However, withdrawing members still have responsibility for 
providing the entire cost of their assigned hardware components and 
cash contributions to the construction phase, and they could be 
responsible for other costs as well if they withdraw during ITER's 
operation phase. 

Table 1: U.S. Hardware Components to Be Delivered to the ITER 
Organization: 

U.S. hardware component: Central solenoid magnet system; 
Purpose: Confines, shapes, and controls the plasma inside ITER's 
vacuum vessel. 

U.S. hardware component: Diagnostics (15% of ITER diagnostics); 
Purpose: Provides the measurements necessary to control, evaluate, and 
optimize plasma performance and to further the understanding of plasma 
physics. 

U.S. hardware component: Disruption mitigation systems (up to a capped 
value); 
Purpose: Limits the impact of plasma current disruptions to the 
tokamak vacuum vessel and other components. 

U.S. hardware component: Electron cyclotron heating transmission lines; 
Purpose: Brings additional heat to the plasma and deposits heat in 
specific areas of the plasma to minimize instabilities. 

U.S. hardware component: Ion cyclotron heating transmission lines; 
Purpose: Brings additional heat to the plasma. 

U.S. hardware component: Pellet injection system; 
Purpose: Provides efficient fueling and delivers hydrogen, deuterium, 
or a deuterium/tritium mixture as required by plasma operations. 

U.S. hardware component: Roughing pump system; 
Purpose: Exhausts certain parts of the ITER machine. 

U.S. hardware component: Steady state electrical network (75% of total 
network); 
Purpose: Supplies the electricity needed to operate the entire ITER 
plant, including offices and the operational facilities. 

U.S. hardware component: Tokamak cooling water system; 
Purpose: Manages temperatures generated during the operation of the 
tokamak. 

U.S. hardware component: Tokamak exhaust processing system; 
Purpose: Separates tokamak exhaust gases into a stream containing only 
hydrogen isotopes and a stream containing only nonhydrogen gases. 

U.S. hardware component: Toroidal field conductor (8% of total 
conductor); 
Purpose: Part of the toroidal field magnet that confines, shapes, and 
controls the plasma inside the ITER vacuum vessel. 

U.S. hardware component: Vacuum auxiliary systems; 
Purpose: Creates low density in ITER's vacuum vessel and connected 
vacuum components. 

Source: GAO analysis of DOE documents. 

[End of table] 

The percentage of the overall U.S. fusion program budget going toward 
the U.S. ITER Project has grown since fiscal year 2011 after 
fluctuating in previous years (see figure 4). In fiscal year 2011, the 
U.S. ITER Project received $80 million, or about 22 percent, of the 
U.S. fusion program budget of roughly $367 million. In fiscal year 
2012, the U.S. ITER Project received $105 million, or about 27 
percent, of the U.S. fusion program budget of approximately $393 
million. In fiscal year 2013, the project received about $124 million, 
or roughly 33 percent, of the U.S. fusion program budget of 
approximately $378 million and, in fiscal year 2014, it received just 
under $200 million, or about 40 percent, of the U.S. fusion program 
budget of approximately $505 million. DOE has requested that $150 
million, or about 36 percent, of its fiscal year 2015 proposed budget 
for the U.S. fusion program ($416 million) go toward the U.S. ITER 
Project. 

Figure 4: U.S. ITER Project Share of the U.S. Fusion Program Budget, 
Fiscal Years 2006-2015: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2006; 
Fusion Energy Sciences Program budget (total): $281 million 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $19 million; 
Percentage of total: 7%. 

Fiscal year: 2007; 
Fusion Energy Sciences Program budget (total): $312 million 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $60 million; 
Percentage of total: 19%. 

Fiscal year: 2008; 
Fusion Energy Sciences Program budget (total): $295 million 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $26 million; 
Percentage of total: 9%. 

Fiscal year: 2009; 
Fusion Energy Sciences Program budget (total): $395 million 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $124 million; 
Percentage of total: 31%. 

Fiscal year: 2010; 
Fusion Energy Sciences Program budget (total): $418 million 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $135 million; 
Percentage of total: 32%. 

Fiscal year: 2011; 
Fusion Energy Sciences Program budget (total): $367 million 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $80 million; 
Percentage of total: 22%. 

Fiscal year: 2012; 
Fusion Energy Sciences Program budget (total): $393 million; 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $105 million; 
Percentage of total: 27%. 

Fiscal year: 2013; 
Fusion Energy Sciences Program budget (total): $378 million ; 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $124 million; 
Percentage of total: 33%. 

Fiscal year: 2014; 
Fusion Energy Sciences Program budget (total): $505 million ; 
U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $200 million; 
Percentage of total: 40%. 

Fiscal year: 2015; 
Fusion Energy Sciences Program budget (total): $416 million (DOE's 
request); 

U.S. International Thermonuclear Experimental Reactor (ITER) Project 
budget: $150 million; 
Percentage of total: 36%. 

Source: GAO analysis of DOE data. 

Note: This figure reports dollar values rounded to millions of dollars 
and percentages rounded to the nearest whole percentage point. 

[End of figure] 

DOE's project management order[Footnote 18] establishes, among other 
things, a process for planning and executing large construction 
projects.[Footnote 19] The order establishes several major milestones--
or "critical decision points"--that span the life of the project and 
includes DOE's review and approval of a project's cost and schedule 
estimates at the major milestones. The order emphasizes that cost 
estimates should be provided at each major milestone, but the degree 
of rigor and uncertainty of the estimates will depend on the stage of 
the project. Specifically, it provides that cost and schedule 
estimates are not considered to be final until DOE has approved a 
"performance baseline" for a project.[Footnote 20] A performance 
baseline captures a project's key performance, scope, cost, and 
schedule parameters, and it represents a commitment from DOE to 
Congress to deliver a project within those parameters. DOE's project 
management order explains that a performance baseline sets the bar 
against which a project's progress will be measured, and that cost and 
schedule estimates developed prior to DOE approval of a performance 
baseline are only preliminary estimates. According to DOE guidance, 
[Footnote 21] developing a performance baseline for a project: 

* fosters effective coordination and integration of planning and 
decision making among the different DOE parties involved in a project; 

* enables routine monitoring and reporting on all aspects of a 
project's performance; 

* helps define a project and ensure that project requirements are 
rigorously refined; and: 

* facilitates the delivery of first-of-a-kind projects that typically 
have a high degree of uncertainty, high cost, high impact on 
stakeholders, and high visibility. 

The Estimated Cost and Schedule of the U.S. ITER Project Has Grown 
Substantially Since 2006: 

The estimated cost and schedule of the U.S. ITER Project has grown 
substantially since the ITER Agreement was signed in 2006 (see figure 
5), and DOE has identified several reasons for these changes. At the 
time the ITER Agreement was signed, DOE planned on spending $1.122 
billion on the U.S. ITER Project and expected to complete the project 
in 2013[Footnote 22] based on preliminary estimates it approved in 
2005.[Footnote 23] In 2008, DOE formally increased its preliminary 
cost estimate to a cost range of from $1.45 billion to $2.2 billion. 
[Footnote 24] This was the most recent time DOE approved a cost 
estimate for the U.S. ITER Project.[Footnote 25] Also, in 2008, DOE 
said it expected ITER to achieve first plasma in 2016 and expected the 
U.S. ITER Project to be completed in 2017. DOE now estimates that the 
U.S. ITER Project will cost $3.915 billion, that ITER will achieve 
first plasma in 2023, and that the U.S. ITER Project will be completed 
in 2033. These estimates were developed based on a set of key 
assumptions that were not used by DOE in its 2008 estimates. The 
current estimates include an assumption of annual funding for the U.S. 
ITER Project of $225 million, starting in fiscal year 2015 and 
continuing until the project is completed, with no adjustment for 
inflation; limited U.S. cash contributions to the ITER Organization 
from 2014 to 2016; future U.S. contributions to the ITER Organization 
for ITER's operation, deactivation, and decommissioning phases coming 
out of the $225 million annual funding level; and a hardware delivery 
schedule not tied to the ITER Organization's schedule. DOE also 
instructed the U.S. ITER Project Office to use its estimate of ITER 
achieving first plasma in 2023 rather than the 2020 date in the ITER 
Organization's schedule, and to use its best estimate for ITER 
Organization construction costs rather than the budget most recently 
approved by the ITER Council.[Footnote 26] Nonetheless, these current 
estimates remain preliminary, according to DOE officials, because DOE 
has not approved a performance baseline for the U.S. ITER Project. A 
performance baseline captures a project's key performance, scope, 
cost, and schedule parameters, and represents a commitment from DOE to 
Congress to deliver a project within those parameters. 

Figure 5: Total Estimated Cost and Completion Date for the U.S. ITER 
Project: 

[Refer to PDF for image: horizontal bar graph] 

2013 estimate: $3.915 billion; 
Completion date: 2023. 

2008 estimate: $1.45 billion to $2.2 billion; 
Completion date: 2017. 

2005 estimate: $1.122 billion; 
Completion date: 2013. 

Source: GAO analysis of DOE data. 

[End of figure] 

According to DOE documents, the current $3.915 billion cost estimate 
for the U.S. ITER Project includes the following: 

* $1.469 billion (38 percent)[Footnote 27] to complete the remaining 
work to procure and deliver U.S. hardware components for ITER; 

* $928 million (24 percent) in contingency to address potential 
schedule delays or increases in costs for manufacturing components, 
including $852 million in contingency for the remaining work to 
procure and deliver U.S. hardware components, and $76 million in 
contingency for U.S. cash contributions to the ITER Organization; 
[Footnote 28] 

* $541 million (14 percent) to account for project costs through June 
2013; 

* $519 million (13 percent) for remaining cash contributions to the 
ITER Organization to pay for scientists, engineers, and support 
personnel working at the ITER Organization; the assembly and 
installation of the components in France to build the reactor; quality 
assurance testing of all ITER member-supplied components; and 
contingencies; and: 

* $458 million (12 percent) for escalation costs, such as changes in 
currency exchange rates and commodity prices, which are driven by the 
extended length of the project due to the funding assumptions used to 
develop the cost estimate. 

DOE documents and officials identified several key reasons for the 
growth of the cost and schedule estimates for the U.S. ITER Project. 
DOE officials identified a number of reasons that led to the change in 
the project's initial 2005 cost estimate of $1.122 billion to its 2008 
cost range of from $1.45 billion to $2.2 billion. These included (1) 
higher estimates for the cost of U.S. hardware components as their 
designs and requirements were more fully developed; (2) updated 
estimates for external factors such as currency exchange rates and 
commodity prices; (3) changes to U.S. hardware component requirements 
and the international project schedule due to a 2007 design review of 
the overall ITER project; and (4) additions for contingency and 
recognized risks. According to DOE documents and officials, the 
primary reasons the U.S. ITER Project's cost estimate grew from the 
upper range of $2.2 billion in 2008 to the current $3.915 billion 
estimate included the following: [Footnote 29] 

* Higher estimates for U.S. hardware components as designs and 
requirements have been more fully developed over time: The design and 
requirements for U.S. hardware components have evolved over time, and 
the cost estimates for these components have changed as a result, 
according to DOE documents and officials. Specifically, the current 
U.S. ITER Project cost estimate includes about $770 million more than 
the 2008 figures due to greater understanding of what U.S. hardware 
components are likely to cost. According to DOE officials, expected 
hardware costs now reflect more fully developed designs, better 
industry estimates of the cost of producing those designs, and greater 
understanding of project risks, among other things. DOE documents 
noted that, as of February 2014, about two-thirds of U.S. hardware 
components by value were in final design or beyond, although there 
were some smaller components that were still in earlier stages of 
design.[Footnote 30] According to DOE officials, because of the 
progress in developing hardware component designs, the project team 
has a greater understanding of what those components are likely to 
cost and has reflected that understanding in the current $3.915 
billion cost estimate. 

* Higher contingency amounts added to address risks: The U.S. ITER 
Project Office has increased the amount of contingency in the current 
cost estimate to address the risks from the project's significantly 
longer schedule and to increase confidence in the estimate, according 
to DOE documents and officials. Specifically, the current estimate 
includes about $681 million more in contingency than was in the U.S. 
ITER Project cost estimate in 2008. According to DOE officials, the 
amount of contingency is based on detailed risk analyses as well as a 
management assessment of key assumptions. DOE officials told us that, 
to develop contingency amounts for the current estimate, the U.S. ITER 
Project Office identified and evaluated program-level risks, such as 
changes in currency exchange rates and growth in ITER Organization 
cash contribution requirements. They also considered project-level 
risks, such as the U.S. ITER Project's dependence on other ITER 
members or the ITER Organization for inputs needed to complete U.S. 
hardware components and potential procurement and manufacturing 
difficulties. Further, they added contingency amounts if U.S. ITER 
Project Office management representatives thought initial contingency 
amounts were too low for the risks associated with the project's 
longer schedule or based on their past experience with large science 
projects. 

* Schedule delays: U.S. schedule delays due to international project 
schedule delays and U.S. funding constraints accounted for about $544 
million of the increase in the U.S. ITER Project's cost estimate since 
DOE last approved the estimate in 2008, according to DOE documents and 
officials. First, international project schedule delays have 
lengthened the U.S. ITER Project schedule and have also led to 
increases in the cost estimate. For example, in 2007, an international 
review identified extensive changes that were needed in ITER's design, 
and that significantly delayed the ITER Organization from defining 
requirements for U.S. hardware components.[Footnote 31] This in turn 
created delays in the U.S. ITER Project schedule for procuring and 
delivering those components, which led to higher cost estimates for 
those components. Second, U.S. funding constraints resulting from the 
project's most recent $225 million per year funding plan and lower-
than-requested funding levels in some years have lengthened the U.S. 
ITER Project schedule, according to DOE documents and officials. This 
in turn has made it necessary for the U.S. ITER Project Office to 
build additional amounts into the project's cost estimate to account 
for higher escalation costs and the longer period of time the U.S. 
ITER Project workforce will be needed. For example, DOE officials told 
us that the project's most recent $225 million per year funding plan 
reflected discussions between DOE, the Department of State (State), 
the Office of Management and Budget (OMB), and the Office of Science 
and Technology Policy (OSTP) to provide enough funding to meet U.S. 
obligations to ITER and reduce the amount of the U.S. fusion program 
budget and the overall DOE budget that had to be devoted to the U.S. 
ITER Project on an annual basis.[Footnote 32] However, this lengthened 
the U.S. ITER Project's schedule and created procurement 
inefficiencies, resulting in increases in the project's overall cost 
estimate. 

* Higher cash contributions to the ITER Organization due to growth in 
ITER construction costs: The U.S. ITER Project Office built an 
additional $348 million into the current cost estimate to reflect the 
increase in U.S. cash contributions it expects to have to make to the 
ITER Organization, according to DOE documents and officials. DOE 
officials explained this increase includes $169 million for the U.S. 
share of a previously approved increase in the ITER Organization's 
construction budget, as well as $179 million for the U.S. share of a 
potential future billion euro increase in the ITER Organization 
construction budget and the anticipated cost increases for the ITER 
Organization staff based on a 2023 first plasma date. 

* The United States has taken on additional hardware responsibilities: 
DOE agreed to take on additional hardware responsibilities, accounting 
for $39 million of the increase in the U.S. ITER Project cost 
estimates since 2008, according to DOE documents and officials. 
[Footnote 33] DOE officials told us that there is a cost cap for each 
of these additional hardware responsibilities, and that the ITER 
Organization will be responsible for paying any amounts that exceed 
the caps. As a result, they view taking on these additional hardware 
responsibilities as a way to reduce uncertainty about future U.S. ITER 
Project costs because DOE will not have to spend more than the amounts 
specified in the cost caps for each item. 

Despite Reflecting Most Characteristics of Reliable Cost and Schedule 
Estimates, DOE's Estimates Cannot Be Used to Set a Baseline in Part 
Because They Are Linked to an Unreliable International Schedule: 

DOE's current cost estimate for the U.S. ITER Project reflects most of 
the characteristics of a reliable cost estimate, and its schedule 
estimates reflect all characteristics of a reliable schedule.[Footnote 
34] However, DOE's estimates cannot be used to set a performance 
baseline that would commit DOE to delivering the project at a specific 
cost and date primarily because of some factors that DOE can only 
partially influence. The factors DOE can only partially influence 
include an unreliable international project schedule to which the U.S. 
schedule is linked and an uncertain U.S. funding plan. DOE has taken 
some action to address the factors that have prevented it from setting 
a performance baseline and finalizing its estimates, but significant 
challenges remain. 

DOE's Current Cost Estimate for the U.S. ITER Project Reflects Most 
Characteristics of a Reliable Estimate, and Its Schedule Estimates 
Reflect All These Characteristics: 

DOE's current cost estimate for the U.S. ITER Project reflects most of 
the characteristics of high-quality, reliable cost estimates as 
established by best practices documented in the GAO Cost Estimating 
and Assessment Guide.[Footnote 35] In addition, DOE's current schedule 
estimates fully reflect the characteristics of high-quality, reliable 
schedule estimates as established by best practices documented in the 
GAO Schedule Assessment Guide.[Footnote 36] According to the guides, 
four characteristics make up reliable cost estimates--they are 
comprehensive, well-documented, accurate, and credible (see table 2). 
Similarly, four characteristics make up reliable schedule estimates--
they are comprehensive, well-constructed, credible, and controlled. 
Cost and schedule estimates are considered reliable if each of the 
four characteristics is substantially or fully met. If any of the 
characteristics is not met, minimally met, or partially met, then the 
estimates do not fully reflect the characteristics of a high-quality 
estimate and cannot be considered reliable. 

Table 2: Four Characteristics of High-Quality, Reliable Cost and 
Schedule Estimates: 

Characteristics of reliable cost estimates: Comprehensive; 
A comprehensive cost estimate has enough detail to ensure that cost 
elements are neither omitted nor double counted. 

Characteristics of reliable cost estimates: Well-documented; 
A well-documented cost estimate allows for data it contains to be 
traced to source documents. 

Characteristics of reliable cost estimates: Accurate; 
An accurate cost estimate is based on an assessment of most likely 
costs and has been adjusted properly for inflation. 

Characteristics of reliable cost estimates: Credible; 
A credible cost estimate discusses any limitations because of 
uncertainty or bias surrounding data or assumptions. 

Characteristics of reliable schedule estimates: Comprehensive; 
A comprehensive schedule includes all government and contractor 
activities necessary to accomplish a project's objectives. 

Characteristics of reliable schedule estimates: Well-constructed; 
A well-constructed schedule sequences all activities using the most 
straightforward logic possible. 

Characteristics of reliable schedule estimates: Credible; 
A credible schedule uses data about risks and opportunities to predict 
a level of confidence in meeting the completion date. 

Characteristics of reliable schedule estimates: Controlled; 
A controlled schedule is updated periodically to realistically 
forecast dates for activities. 

Source: GAO. 

[End of table] 

DOE's current cost estimate for the U.S. ITER Project--as developed by 
the U.S. ITER Project Office in August 2013--substantially met best 
practices for comprehensive, well-documented, and accurate estimates, 
but only partially met best practices for credible estimates. For 
example, DOE's cost estimate substantially met best practices for 
documenting all assumptions that will influence costs (comprehensive), 
describing step by step how the estimate was developed (well-
documented), and adjusting properly for inflation (accurate). However, 
the U.S. ITER Project Office did not conduct a complete sensitivity 
analysis on the cost estimate, and an independent cost estimate has 
not been conducted (credible).[Footnote 37] The U.S. ITER Project 
Office did identify four key assumptions from the estimate for 
sensitivity testing. However, the analysis did not include some cost 
elements that represent high percentages of the overall estimate, 
including some of the most expensive hardware components being built 
by the United States. For example, the sensitivity analysis did not 
include the tokamak cooling water system, which is the most expensive 
U.S. hardware component. Without a comprehensive sensitivity analysis 
that identifies how the cost estimate is affected by changes to its 
assumptions, DOE will not fully understand how certain risks can 
affect the cost estimate and potentially result in decisions based on 
incomplete information. In addition, DOE did not conduct an 
independent cost estimate to determine whether other estimating 
methods produce similar results. DOE policy does not require an 
independent cost estimate until it approves a performance baseline, 
which the agency does not expect to occur until late 2015. However, 
including an independent estimate is a best practice associated with 
credible cost estimates. Independent cost estimates are less likely to 
reflect organizational bias. They also incorporate adequate risk, 
which generally results in more conservative estimates due to higher 
estimated costs. Without such an independent cost estimate, DOE faces 
a greater risk of underfunding the project, which can lead to overall 
cost growth and schedule slippage. (See appendix IV for the individual 
ratings of each cost estimating practice.) 

DOE's current schedule estimates for the two most expensive U.S. 
hardware items[Footnote 38]--the central solenoid modules and the 
tokamak cooling water system--fully met best practices for 
comprehensive schedules and substantially met best practices for well-
constructed, credible, and controlled schedules. For example, DOE's 
schedule estimate fully met best practices for capturing and 
establishing the duration of all activities (comprehensive), and 
substantially met best practices for sequencing all activities (well-
constructed), conducting a schedule risk analysis (credible), and 
updating the schedule with actual progress (controlled). However, the 
schedule estimate partially met best practices for horizontal and 
vertical traceability,[Footnote 39] maintaining a baseline schedule, 
and ensuring reasonable total float, which is the amount of time an 
activity can be delayed before the dates of the program's completion 
milestones are affected. U.S. ITER Project Office representatives 
acknowledged these issues with the schedule and attributed them to 
problems with the international project schedule. For example, 
according to project representatives, DOE's schedule does not align 
with the international project schedule (i.e.: is not vertically 
traceable) because the international project schedule does not account 
for delays in ITER Organization delivery milestones, including a 30-
month delay in ITER construction site preparations. Without up-to-date 
reliable international milestones, DOE cannot develop realistic U.S. 
milestones that align with the international project schedule and set 
a baseline that can provide a reliable, specific cost and completion 
date for the project. (See appendix V for the individual ratings of 
each scheduling best practice). 

DOE's Cost and Schedule Estimates Cannot Be Used to Set a Baseline Due 
to Factors That DOE Can Only Partially Influence: 

DOE considers its current cost and schedule estimates for the U.S. 
ITER Project to be preliminary, and these estimates cannot be used to 
set a performance baseline that would represent a commitment from DOE 
to Congress to deliver the project at a specific cost and date. DOE 
policy says that cost and schedule estimates are considered final only 
after a performance baseline has been approved for a project, and DOE 
has not approved a performance baseline for the U.S. ITER Project. 
According to DOE's project management order, a performance baseline 
sets a bar against which a project's progress can be measured. DOE's 
target date for setting a performance baseline finalizing its cost and 
schedule estimates for the U.S. ITER Project has continually slipped 
from an original expected date of fiscal year 2007 to the current 
target of late in fiscal year 2015. That is when DOE expects the 
international project schedule to be updated, according to DOE 
documents and officials. 

According to DOE documents and officials, DOE's current estimates for 
the U.S. ITER Project cannot be used to set a performance baseline 
because of three factors, two of which DOE can only partially 
influence as follows: 

* First, the overall international project schedule that DOE uses as a 
basis for the U.S. schedule is not reliable. In July 2010, the ITER 
Council approved an official schedule for the overall ITER project. 
However, an October 2013 management assessment of the ITER 
Organization determined that the international project schedule 
established in 2010 was not reliable. The assessment attributed the 
unreliable schedule, in part, to management deficiencies within the 
ITER Organization. For example, the assessment found that the ITER 
Organization's senior management had insisted that the international 
project schedule not be changed even when staff had developed what 
they thought were more realistic schedules, and that staff had not 
been allowed to openly challenge the schedule. According to DOE 
officials, the ITER Organization plans to spend the next year 
reassessing the international project schedule and taking actions to 
address the identified management deficiencies, and it hopes to 
complete its schedule reassessment by June 2015.[Footnote 40] 

* Second, DOE has not proposed a final, stable funding plan for the 
U.S. ITER Project. DOE's most recent plan had been to provide a flat 
$225 million per year for the project, and that figure was the basis 
for its current cost and schedule estimates. However, DOE officials 
told us that this funding plan could potentially change depending on 
the outcome of the ITER Organization's reassessment of the 
international project schedule. In March 2014, DOE requested $150 
million for the U.S. ITER Project in fiscal year 2015, $75 million 
less than the $225 million per year funding plan. According to DOE 
documents, the $150 million request would allow the U.S. ITER Project 
to meet its fiscal year 2015 commitments to ITER but would not be 
enough for the project to meet the milestones set in the official 
international project schedule. Officials noted that if Congress 
provided less than DOE's requested funding, the U.S. ITER Project 
schedule will slip further. Six of the 10 fusion energy and project 
management experts we interviewed said that identifying sufficient 
funding to execute the U.S. ITER Project poses a significant 
management challenge for DOE. 

The third factor that has kept DOE from setting a performance baseline 
finalizing its estimates is within the agency's direct control. 
Specifically, an August 2013 internal peer review found that the 
methodologies used to develop DOE's current cost and schedule 
estimates were appropriate, but that the estimates do not sufficiently 
consider all project risks and uncertainties.[Footnote 41] For 
example, the review found that the U.S. ITER Project Office did not 
identify and quantify all risks, that its view of potential risk 
mitigation was too optimistic, and that the range of possible cost 
outcomes due to each individual risk factor was too narrow. Further, 
the review identified potential cost increases related to changing 
technical requirements, uncertainty about the ITER Organization's 
performance, and the dependence on other ITER members for production 
of items that are used in U.S. hardware components. To better account 
for these risks and uncertainties, the review added additional amounts 
to DOE's current cost estimate of $3.915 billion and found that the 
U.S. ITER Project was more likely to cost from $4 billion to $6.5 
billion.[Footnote 42] The reviewers recommended, among other things, 
that the U.S. ITER Project Office update its risk estimates to be more 
comprehensive and reevaluate its risk mitigation assessments before 
DOE approves a performance baseline for the U.S. ITER Project. 

In the absence of a performance baseline, DOE has developed a 2-year 
plan for the U.S. ITER Project that sets near-term cost and schedule 
targets to guide the project's performance in fiscal years 2013 and 
2014.[Footnote 43] However, this 2-year plan is an interim measure and 
does not represent DOE's commitment to a specific cost and schedule 
for the U.S. ITER Project as a performance baseline would. Most of the 
fusion energy and project management experts we interviewed emphasized 
the importance of DOE approving a performance baseline for the U.S. 
ITER Project, with some experts noting that a performance baseline 
would provide a goal for all project stakeholders to work toward and 
might ease concerns about the uncertainty of the funding levels needed 
to complete the project. Several experts also told us that, until DOE 
approves a performance baseline for the U.S. ITER Project, there will 
continue to be uncertainty about the project's direction. 

DOE Has Taken Some Actions to Address the Factors Preventing It from 
Setting a Baseline, but Challenges Remain: 

DOE has taken some actions to address the factors preventing it from 
setting a performance baseline that would allow the agency to finalize 
its cost and schedule estimates for the U.S. ITER Project. However, 
project management and schedule deficiencies in the ITER Organization 
and uncertainty in the U.S. ITER Project funding plan continue to pose 
management challenges for the agency and delay its efforts to set a 
performance baseline. 

According to DOE officials, DOE has taken several actions to try to 
get the ITER Organization to address international project management 
and scheduling deficiencies. For example, DOE officials told us that 
their aggressive participation in early ITER Agreement negotiations 
led to the adoption of a biannual management assessment requirement. 
This has focused attention on international management deficiencies, 
resulting in several recommendations for improving the project. 
Further, DOE officials told us they have used ITER Council Management 
Advisory Committee meetings to introduce, communicate, and advance 
project management principles, such as competitive procurement 
actions, in an effort to improve ITER Organization project management. 
[Footnote 44] Additionally, DOE has developed position papers 
describing the agency's concerns with ineffective ITER Organization 
scheduling and management and suggesting actions the ITER Organization 
could take to develop a reliable international project schedule and 
improve international management. For example, in a position paper on 
scheduling issues, DOE recommended the ITER Council direct the ITER 
Organization to focus on developing a short-term schedule, and defer 
long-term schedule development until lessons are learned from the 
short-term effort. DOE has provided the position papers to other ITER 
members and achieved some unofficial support, but the agency has not 
submitted a formal proposal on the suggested actions to the ITER 
Council, which could vote on and ultimately require the implementation 
of these actions. According to DOE officials, DOE has not submitted 
formal proposals because previous ITER Council Chairs delayed 
substantive discussions of issues such as schedule slippages and 
conducted meetings with a primary goal of obtaining consensus among 
ITER members. However, DOE officials said the ITER Council and other 
ITER members are aware of DOE's position, and they hope the new ITER 
Council Chair, who took over in January 2014,[Footnote 45] will change 
the way the ITER Council operates. DOE officials also said the ITER 
Council approved at the November 2013 ITER Council meeting the 
initiative for the ITER Organization to develop a short-term annual 
work plan for 2014, the results of which will inform long-term 
schedule development, and that all milestones had been met by all 
seven ITER members for the first three months. 

Even so, challenges remain that will continue to hamper DOE's ability 
to develop a baseline for the U.S. ITER Project. Eight out of the 10 
fusion energy and project management experts we interviewed said DOE 
does not have enough information from the ITER Organization and other 
ITER members to effectively plan the U.S. ITER Project, and 7 of the 
10 experts said the international structure and management issues 
contribute to DOE's management challenges. In this context, DOE's 
efforts may have helped improve ITER Organization project management 
and helped jump-start efforts to develop a reliable international 
project schedule, but a reliable international project schedule is not 
expected until June 2015, as previously noted. Further, the previous 
international project schedule developed by the ITER Organization and 
approved by the ITER Council in 2010 has not proved reliable, and 
management issues that were identified in previous years continue to 
pose challenges at the international level. For example, the October 
2013 management assessment of the ITER Organization found that the 
ITER Council had not acted on many recommendations for project 
management improvements from a previous management assessment in 2009 
and that the problems identified in that assessment continue. The most 
recent management assessment attributed the inaction to the ITER 
Council's reliance on consensus decision making, which caused it to 
avoid or delay difficult decisions. The 2013 assessment stated that 
the ITER members needed to openly discuss and then make decisions on 
difficult issues at ITER Council meetings, even if there is no 
consensus, and all members should be held accountable for results. The 
management assessment contained 11 recommendations that were designed 
to be taken together. The assessment further said that the 
international project would not achieve significant improvement if the 
ITER Council only adopted a few recommendations, as has been the case 
with recommendations in previous management assessments. DOE officials 
told us that the ITER Council had approved proposals to address the 
recommendations from the October 2013 management assessment and that 
the ITER Council Chair was actively monitoring the implementation of 
the recommendations. 

To address the uncertainty of the U.S. funding plan for the U.S. ITER 
Project, DOE has evaluated a range of funding scenarios for executing 
the project. As previously noted, DOE most recently developed a $225 
million per year flat funding plan with State, OMB, and OSTP, but DOE 
officials acknowledged that the plan constrained funding for the 
project to allow DOE to meet U.S. obligations to ITER and reduce the 
amount of the U.S. fusion program and overall DOE budgets devoted to 
the project annually. DOE officials told us the flat funding plan 
created a long and inefficient schedule and has created gaps between 
the design and fabrication stages of some systems, which has led to 
cost growth. DOE officials said that they will not be able to meet the 
most recent international project schedule under this funding plan, 
and delivery of some U.S. components will likely be late under the 
plan. DOE officials told us they plan to develop a final, stable 
funding plan for the U.S. ITER Project, but that plan can only be 
developed if the international project schedule is reliable. 

To ensure that all risks and uncertainties are sufficiently 
incorporated into its estimates, DOE officials told us the U.S. ITER 
Project Office held a series of risk workshops. According to DOE 
officials, as of March 2014, the U.S. ITER Project Office had held 
risk workshops on U.S. hardware components and associated risks, as 
well as a workshop on external risks. U.S. ITER Project Office 
representatives told us that they are currently analyzing the results 
of the workshops and that the workshops will ultimately lead to 
updated risk estimates and an update to the current cost estimate of 
$3.915 billion for the U.S. ITER Project. 

DOE Has Taken Actions to Reduce U.S. ITER Project Costs but Has Not 
Adequately Planned for Their Impact on the U.S. Fusion Program: 

DOE has taken several actions to reduce the cost of the U.S. ITER 
Project. Some fusion energy and project management experts we 
interviewed suggested additional strategies DOE could pursue that 
might further reduce U.S. ITER Project costs or improve project 
management. DOE has not adequately planned for the potential impact of 
U.S. ITER Project costs on the overall U.S. fusion program because it 
has not completed a strategic plan that would clarify the program's 
priorities given those costs. 

DOE Has Taken Several Actions to Reduce U.S. ITER Project Costs: 

According to DOE documents and officials, DOE has taken several 
actions to reduce the cost of the U.S. ITER Project by about $388 
million as of February 2014,[Footnote 46] including the following: 

* Value engineering: The U.S. ITER Project Office has identified ways 
to design U.S. hardware components that lower costs but maintain the 
component's essential functions. According to DOE officials, this 
strategy--known as "value engineering"--has been an integral part of 
the U.S. design effort.[Footnote 47] For example, the U.S. ITER 
Project Office has been able to reduce the cost of the central 
solenoid magnet system by more than $18 million by eliminating, 
simplifying, or reducing the number of some parts. It also has reduced 
the cost of the vacuum auxiliary systems by almost $34 million by, 
among other things, revising test equipment items and quantities and 
reducing the number of system connections and pumps. According to DOE 
officials, these and other value engineering efforts have resulted in 
about $225 million in savings as of February 2014. DOE documents 
indicated that about half of the savings come from value engineering 
the design of the tokamak cooling water system. 

* Centralized and consolidated procurement for certain items: The U.S. 
ITER Project Office has agreed to have the ITER Organization centrally 
procure piping for the tokamak cooling water and vacuum systems for 
which the United States is responsible. It has also reached agreement 
with other ITER members to consolidate procurement of certain common 
parts rather than having each ITER member procure those parts for 
their assigned hardware components. For example, the U.S. ITER Project 
Office has agreed to have the European Union procure all cable trays 
needed for U.S. hardware components. According to DOE officials, 
centralized and consolidated procurement for certain items has saved 
the U.S. ITER Project about $120 million as of February 2014. 

* Scope transfers and reallocations: The U.S. ITER Project Office has 
reached agreements to transfer some U.S. hardware responsibilities to 
the ITER Organization and to reallocate some hardware responsibilities 
among ITER members to improve procurement efficiency and reduce U.S. 
costs. For example, project officials told us that they reached an 
agreement to shift the U.S. responsibility for procurement of one 
system to other ITER members, with the United States taking on more 
engineering work for that system in return. DOE officials estimated 
that this resulted in $20 million in savings. According to DOE 
officials, scope transfers and reallocations have saved about $43 
million as of February 2014. 

* Other strategies: According to DOE documents and officials, the U.S. 
ITER Project Office has used several other strategies to reduce U.S. 
ITER Project costs. These strategies have included implementing 
lessons learned and leading practices from other large projects; 
working with the ITER Organization on cost reduction initiatives to 
improve ITER Organization processes and requirements; and minimizing 
costs associated with project execution by, for example, providing 
incentives in contract provisions. DOE officials said that it was too 
soon to quantify the cost savings resulting from these actions. 

According to DOE documents and officials, these cost savings are 
reflected in the current $3.915 billion cost estimate for the U.S. 
ITER Project. DOE officials told us that cost containment will 
continue to be a high priority for the project. They told us that the 
most significant opportunity to further reduce U.S. ITER Project costs 
would be the adoption of an optimal funding plan for the project. 
Officials explained that $458 million of the current $3.915 billion 
cost estimate is included to cover escalation costs, and an optimal 
funding plan could potentially reduce those and other costs by 
allowing the U.S. ITER Project to be completed in a shorter period of 
time. 

Some Experts Suggested Strategies to Further Reduce U.S. ITER Project 
Costs or Improve Management: 

Some of the 10 fusion energy and project management experts that we 
interviewed identified strategies DOE could pursue to further reduce 
the cost of the U.S. ITER Project. The following two strategies were 
suggested by several of these experts: 

* Six experts suggested that DOE could reduce U.S. ITER Project costs 
by adopting an optimal funding plan for the project. The optimal 
funding plan being suggested would involve different dollar figures 
year to year rather than DOE's most recent strategy of funding the 
U.S. ITER Project at a flat $225 million per year starting in fiscal 
year 2015. Some experts noted that a funding plan that scaled up in 
the near-term and then scaled down in later years could potentially 
reduce overall U.S. ITER Project costs by hundreds of millions of 
dollars. Specifically, three experts said that an optimal funding plan 
could shorten the current U.S. ITER Project schedule, and that doing 
so would reduce overall project costs. Two experts noted that one 
issue with this strategy would be that the U.S. ITER Project would 
need to receive more funding in some years, and that could lead to 
funding cuts for other DOE projects and programs. To address that 
issue, one expert suggested DOE not propose an optimal funding plan 
for the U.S. ITER Project until the agency determines that there is a 
reliable international project schedule and that the ITER Organization 
has made significant progress improving its management of the overall 
ITER project. Another expert suggested that DOE first communicate its 
plans for managing the impact on the overall U.S. fusion program of 
higher U.S. ITER Project funding in certain years before proposing an 
optimal funding plan. When we discussed this strategy with DOE program 
officials, they agreed that an optimal funding plan for the project 
could shorten the U.S. ITER Project schedule and potentially reduce 
costs significantly. However, they emphasized that the most recent 
$225 million annual funding plan was an attempt to balance the funding 
needs of the U.S. ITER Project and the rest of the U.S. fusion program. 

* Three experts suggested that DOE could reduce U.S. ITER Project 
costs by working with its international partners to develop a reliable 
international project schedule and aligning U.S. ITER Project efforts 
with that schedule. One expert noted that this would help make DOE's 
cost estimate for the U.S. ITER Project more certain. Another expert 
told us that a reliable international project schedule was necessary 
for DOE to set an optimal funding plan, which in turn could help 
minimize U.S. ITER Project costs. The expert said that aligning the 
U.S. ITER Project with a reliable international project schedule was 
necessary to ensure that the United States was not producing its 
hardware components too early or too late, either of which could 
result in cost growth. When we discussed this strategy with DOE 
program officials, they said that the United States has actively 
presented its views to its international partners on what would be a 
realistic schedule for the overall ITER project. Further, the 
officials told us that they do try to align U.S. ITER Project efforts 
with the international project schedule in spite of imperfect 
knowledge due to the current international project schedule not being 
reliable. 

Some of the 10 experts we interviewed also suggested strategies that 
DOE could pursue to improve its management of the U.S. ITER Project. 
The following two strategies were mentioned by several experts: 

* Six experts suggested DOE establish a separate office that would 
report directly to top DOE management officials to provide oversight 
of the U.S. ITER Project. Two of these experts said that having a 
separate office would give the U.S. ITER Project greater visibility at 
the highest levels of DOE. Another expert said a benefit would be to 
enhance the project's interaction with stakeholders, including 
Congress and the U.S. fusion community. Further, two experts told us 
that a separate office for the U.S. ITER Project would enhance DOE's 
ability to oversee the project's complexity and complications given 
the international structure the project operates within. When we 
discussed this strategy with DOE program officials, they said that a 
separate DOE office to oversee the U.S. ITER Project would not provide 
many benefits and could have unintended consequences. Specifically, 
they said that the project already has high visibility with top DOE 
management officials and that creating a separate office could result 
in a greater degree of funding competition between the U.S. ITER 
Project and the rest of the U.S. fusion program. 

* Four of the 10 experts we interviewed said DOE should make more 
information on the U.S. ITER Project available to stakeholders in the 
U.S. fusion community. One expert said DOE should be more forthcoming 
about what the agency expects the U.S. ITER Project to cost and how 
they plan to pay for it. Two other experts suggested that DOE should 
disclose its internal peer reviews of the U.S. ITER Project. Several 
of the experts we interviewed also identified a number of negative 
effects of DOE not being sufficiently transparent about the U.S. ITER 
Project. These included the erosion of stakeholder commitment to the 
project and a diminished ability for stakeholders to effectively plan 
research efforts and make informed funding decisions related to the 
impact of project costs on the overall U.S. fusion program. When we 
discussed this strategy with DOE program officials, they said they 
have shared a substantial amount of information on the U.S. ITER 
Project with stakeholders and were trying to share more. For example, 
they noted that DOE included a detailed section on the U.S. ITER 
Project in its fiscal year 2015 budget request. In some cases, 
however, officials said they were limited in the information they 
could share with stakeholders by the international sensitivities of 
the overall ITER project, by procurement sensitivities, and by the 
nature of the budget process. 

DOE Has Not Adequately Planned for the Impacts of U.S. ITER Project 
Costs on the U.S. Fusion Program: 

DOE has not adequately planned for the potential impact of U.S. ITER 
Project costs on the overall U.S. fusion program, although it has 
taken some steps. For example, as previously mentioned, the project's 
most recent $225 million per year funding plan was an attempt by DOE 
and other parts of the administration to meet U.S. obligations to ITER 
and reduce the project's impact on the U.S. fusion program and DOE's 
overall budget. However, according to agency officials, DOE has not 
completed a strategic plan for the U.S. fusion program to clarify the 
program's goals and priorities and its proposed approach for meeting 
them in light of the potential impact of U.S. ITER Project costs. 
[Footnote 48] 

The House and Senate Appropriations Committees directed DOE to submit 
a 10-year strategic plan for the U.S. fusion program in the 
explanatory statements that accompanied both the fiscal year 2012 and 
fiscal year 2014 energy and water development appropriation acts. 
[Footnote 49] In addition, DOE's Fusion Energy Sciences Advisory 
Committee recommended in 2013 that DOE develop a strategic plan for 
the U.S. fusion program using the advisory committee process and with 
broad U.S. fusion community input.[Footnote 50] Further, 9 of the 10 
fusion energy and project management experts we interviewed agreed 
that it would be useful for DOE to develop such a plan. 

DOE officials told us they have not completed a strategic plan for the 
U.S. fusion program to date, for three reasons. First, they said an 
effort in 2012 to obtain the Fusion Energy Sciences Advisory 
Committee's input on U.S. fusion program priorities had been 
unsuccessful because the committee did not address program priorities 
under a constrained budget scenario due to conflict of interest 
issues. Second, DOE officials said there had been too much budget 
uncertainty in fiscal year 2013 regarding the U.S. ITER Project and 
the overall U.S. fusion program to complete a plan. They explained 
that the House and Senate Appropriations Committees proposed different 
direction and funding levels for the U.S. fusion program in fiscal 
year 2013, and these differences were not resolved until the passage 
of the fiscal year 2014 appropriations act in January 2014. Third, DOE 
officials said an effort in 2012 and 2013 to develop a high-level 
strategic document for the U.S. fusion program was unsuccessful 
because OMB did not concur with the document developed by DOE. DOE 
officials said they are in the early stages of developing a strategic 
plan in response to the House and Senate appropriations committees' 
direction in the explanatory statement that accompanied the fiscal 
year 2014 appropriations act. These officials said they would ask the 
Fusion Energy Sciences Advisory Committee in April 2014 to provide 
input on U.S. fusion program priorities by October 2014. According to 
the officials, DOE will consider the committee's input in developing a 
strategic plan for the U.S. fusion program, and it hopes to finalize a 
plan no later than the January 2015 deadline set by the House and 
Senate Appropriations Committees. However, DOE officials could not 
provide a specific date when they expect to complete the strategic 
plan. 

We have previously reported that strategic planning is a leading 
management practice organizations can employ to define their mission 
and goals; help clarify priorities; address management and other 
challenges that threaten an agency's ability to meet its long-term 
strategic goals; align activities, core processes, and resources to 
accomplish those goals; and foster informed communication between an 
agency and its stakeholders.[Footnote 51] Without a strategic plan for 
the overall U.S. fusion program that addresses DOE's plans for 
managing the impacts of U.S. ITER Project costs, the agency does not 
have information to: 

* involve and help create a basic understanding among stakeholders--
including Congress and the U.S. fusion community--about its plans for 
balancing the competing demands that confront the program with the 
limited resources available; 

* better ensure that the U.S. ITER Project and other U.S. fusion 
program activities are aligned to effectively and efficiently achieve 
the program's goals; and: 

* improve Congress's ability to weigh the potential trade-offs of 
different funding decisions for the U.S. ITER Project and the overall 
U.S. fusion program within a constrained budget environment. 

Conclusions: 

DOE has taken some actions to address the factors that affect the 
reliability of its cost and schedule estimates for the U.S. ITER 
Project. However, more than 7 years and nearly $700 million after the 
ITER Agreement was signed, significant uncertainty remains about how 
much the U.S. ITER Project will cost, when it will be completed, and 
how DOE plans to manage the impact of the project's costs on the 
overall U.S. fusion program. DOE's current preliminary cost and 
schedule estimates met most characteristics of high-quality, reliable 
cost and schedule estimates, but the cost estimate was not fully 
credible. Specifically, the U.S. ITER Project Office did not include 
the most expensive U.S. hardware component in its sensitivity analysis 
and an independent cost estimate has not been conducted, which could 
result in DOE making decisions based on incomplete information and 
increase the risk of more cost growth. 

It is important for DOE to set a performance baseline for the U.S. 
ITER Project in order to finalize its cost and schedule estimates, 
provide a bar against which the project's progress can be measured, 
and allow Congress to make well-informed funding decisions about the 
project within a constrained budget environment. However, DOE has not 
yet set a performance baseline for the U.S. ITER Project in part 
because the international project schedule is not reliable, a key 
factor that DOE can only partially influence. To its credit, DOE has 
taken several actions to push for a reliable international project 
schedule and improvements to ITER Organization project management. 
Nonetheless, the agency could do more to ensure the ITER Organization 
develops a reliable international project schedule and that ITER 
Organization project management deficiencies are addressed by making 
formal proposals to the ITER Council that address these issues and 
remaining vigilant about the timely implementation of the proposed 
improvements. Without a reliable international project schedule, DOE 
neither can propose a final, stable funding plan for the U.S. ITER 
Project, nor can it reasonably assure Congress that the project's cost 
will not continue to grow and the schedule will not continue to slip. 

DOE has taken some steps to reduce the cost of the U.S. ITER Project 
and plan for the impact of the project's cost on the overall U.S. 
fusion program. However, even though there has been repeated direction 
from the House and Senate Appropriations Committees going back more 
than 2 years and a recommendation from its own advisory committee to 
do so, DOE has not yet completed a strategic plan for the overall U.S. 
fusion program. Strategic planning is a leading practice that can help 
organizations clarify priorities and address challenges that threaten 
their ability to meet long-term strategic goals. Completing a 
strategic plan for the overall U.S. fusion program would reduce 
uncertainty by addressing DOE's priorities for the program in light of 
U.S. ITER Project costs. Moreover, involving stakeholders, such as the 
Fusion Energy Sciences Advisory Committee, in the plan's development 
would increase stakeholder understanding of DOE's plans for balancing 
the competing demands that face the U.S. fusion program with the 
limited resources available. DOE is beginning the initial work on such 
a plan, but a similar effort that was started in 2012 did not result 
in a completed strategic plan for the U.S. fusion program, and the 
agency has not provided a specific date when it will complete its 
current effort. Without committing to a specific date, DOE may not 
complete a strategic plan for the U.S. fusion program in a timely 
manner and, without a completed strategic plan, DOE may face 
challenges ensuring that it has effectively aligned U.S. fusion 
program activities to achieve program goals. Further, Congress and the 
U.S. fusion community are likely to remain uncertain about DOE's plans 
for balancing the competing funding demands of the U.S. ITER Project 
and the rest of the U.S. fusion program. 

Recommendations for Executive Action: 

To reduce uncertainty about the expected cost and schedule of the U.S. 
ITER Project and its potential impact on the U.S. fusion program, the 
Secretary of Energy should direct the Associate Director of the Office 
of Fusion Energy Sciences to take the following four actions: 

* Direct the U.S. ITER Project Office to revise and update the 
project's cost estimate to meet all characteristics of high-quality, 
reliable cost estimates. Specifically, the U.S. ITER Project Office 
should revise the project's cost estimate to ensure it is credible by 
including a comprehensive sensitivity analysis that includes all 
significant cost elements and conducting an independent cost estimate; 

* Develop and present at the next ITER Council meeting a formal 
proposal describing the actions DOE believes need to be taken to set a 
reliable international project schedule and improve ITER Organization 
project management. Continue to formally advocate for the timely 
implementation of those actions at each future ITER Council meeting 
until the ITER Council approves an updated international project 
schedule; 

* Once the ITER Organization completes its reassessment of the 
international project schedule, use that schedule, if reliable, to 
propose a final, stable funding plan for the U.S. ITER Project, 
approve a performance baseline with finalized cost and schedule 
estimates, and communicate this information to Congress; and: 

* Set a specific date for completing, in a timely manner, a strategic 
plan for the U.S. fusion program that addresses DOE's priorities for 
the overall U.S. fusion program in light of U.S. ITER Project costs, 
and involve the Fusion Energy Sciences Advisory Committee in the 
development of the plan. 

Agency Comments and Our Evaluation: 

We provided a draft copy of this report to DOE for review and comment. 
DOE provided written comments on the draft report on May 27, 2014, 
which are reproduced in appendix VI, and also provided technical and 
clarifying comments, which we incorporated as appropriate. DOE agreed 
with each of the report's recommendations and said it has taken steps 
or plans to take additional steps to fully implement them. 

We are sending copies of this report to the Secretary of Energy, the 
appropriate congressional committees, and other interested parties. In 
addition, the report is available at no charge on the GAO website at 
[hyperlink, http://www.gao.gov]. 

If you or your staff members have any questions about this report, 
please contact me at (202) 512-3841 or ruscof@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. GAO staff who made key 
contributions to this report are listed in appendix VII. 

Signed by: 

Frank Rusco: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Our review assessed: (1) how and why the estimated cost and schedule 
for the U.S. International Thermonuclear Experimental Reactor (ITER) 
Project have changed since 2006; (2) the reliability of the Department 
of Energy's (DOE) current cost and schedule estimates for the U.S. 
ITER Project and the factors, if any, that have affected their 
reliability; and (3) the actions DOE has taken, if any, to reduce U.S. 
ITER Project costs and plan for their potential impact on the overall 
U.S. fusion program. To address these objectives and better understand 
the U.S. ITER Project, we reviewed the ITER Agreement, relevant laws, 
and DOE guidance and met with DOE and Department of State officials, 
representatives from the U.S. ITER Project Office, and fusion energy 
and project management experts from industry, DOE's national 
laboratories, and universities. 

To determine how and why the estimated cost and schedule for the U.S. 
ITER Project have changed since 2006, we reviewed DOE and U.S. ITER 
Project Office documents. We assessed the reliability of the data on 
changes in the cost estimates by checking for obvious errors in 
accuracy and completeness; comparing the data with other sources of 
information; and interviewing DOE officials and U.S. ITER Project 
Office representatives who had knowledge of the data. We determined 
that DOE and the U.S. ITER Project Office's data on changes in the 
cost estimates for the U.S. ITER Project were sufficiently reliable 
for reporting on the reasons for the changes in the estimates. We also 
contacted the national audit offices of each of the six other ITER 
members to identify any audit reports they had issued on ITER, and we 
reviewed each report that was identified. 

To evaluate the reliability of DOE's current cost and schedule 
estimates and the factors, if any, that have affected their 
reliability, we reviewed DOE's most recent cost and schedule estimates 
for the U.S. ITER Project--as developed by the U.S. ITER Project 
Office in August 2013--and DOE's internal peer review of those 
estimates. We also reviewed DOE's project management order and related 
guidance, as well as an October 2013 report to the ITER Council on the 
results of a management assessment of the ITER Organization. We 
assessed the reliability of DOE's current cost and schedule estimates 
by analyzing the August 2013 estimates against the best practices 
identified in GAO's Cost Estimating and Assessment Guide (Cost Guide) 
and Schedule Assessment Guide (Schedule Guide).[Footnote 52] 

Specifically, we determined the reliability of the cost estimate by 
reviewing documentation DOE submitted for the cost estimate, 
interviewing U.S. ITER Project Office representatives who prepared the 
estimate, reviewing relevant sources, and comparing the information 
collected with the best practices identified in the Cost Guide to 
determine whether the cost estimate was (1) comprehensive, (2) 
accurate, (3) well-documented, and (4) credible.[Footnote 53] After a 
review of all source data, we assessed the extent to which the cost 
estimate met these best practices by calculating the assessment rating 
of each criteria within the four characteristics on a five-point 
scale: not met = 1, minimally met = 2, partially met = 3, 
substantially met = 4, and fully met = 5.[Footnote 54] Then, we took 
the average of the individual assessment ratings for the criteria to 
determine the overall rating for each of the four characteristics. The 
resulting average became the overall assessment as follows: not met = 
0 to 1.4; minimally met = 1.5 to 2.4; partially met = 2.5 to 3.4; 
substantially met = 3.5 to 4.4; and fully met = 4.5 to 5.0. After 
conducting our initial analysis, we shared it with DOE officials and 
representatives from the U.S. ITER Project Office who developed the 
cost estimate to provide an opportunity for them to comment and 
identify reasons for observed shortfalls in cost estimating best 
practices. We took their comments and any additional information they 
provided and incorporated it into the assessments to finalize the 
scores for each characteristic and best practice. 

We determined the reliability of the current schedule estimate for the 
U.S. ITER Project by assessing the characteristics of two selected 
subordinate schedules--the central solenoid modules schedule and the 
tokamak cooling water system schedule--that are used as inputs to the 
integrated master schedule. We selected these two schedules because 
they are the largest two hardware items, in terms of value, that the 
United States is responsible for contributing to ITER. We determined 
whether the schedules were (1) comprehensive, (2) well-constructed, 
(3) credible, and (4) controlled by reviewing documentation DOE 
submitted for the U.S. ITER Project schedule estimate, interviewing 
U.S. ITER Project Office representatives who developed the estimate, 
reviewing relevant sources, and comparing the information collected 
against the criteria for each of these characteristics identified in 
the Schedule Guide.[Footnote 55] We also analyzed schedule metrics as 
a part of that analysis to highlight potential areas of strengths and 
weaknesses against each of our four characteristics of a reliable 
schedule. In order to assess each schedule against the four 
characteristics and their accompanying 10 best practices, we traced 
and verified underlying support and determined whether the U.S. ITER 
Project Office provided sufficient evidence to satisfy the criterion 
and assigned a score based on the same five-point scale we used in our 
analysis of the cost estimate. Then, we took the average of the 
individual assessment ratings to determine the overall rating for each 
of the characteristics, also using the same scale we used in our 
analysis of the cost estimate. After conducting our initial analysis, 
we shared it with DOE officials and representatives from the U.S. ITER 
Project Office who developed the schedule estimate to provide an 
opportunity for them to comment and identify reasons for observed 
shortfalls in schedule management best practices. We took their 
comments and any additional information they provided and incorporated 
it into the assessments to finalize the scores for each characteristic 
and best practice. By examining the two subordinate schedules against 
our guidance, we conducted a reliability assessment on each of the 
schedules and incorporated our findings on reliability limitations in 
the analysis of each subordinate schedule. We were also able to use 
the results of the two subordinate schedules to provide insight into 
the health of the integrated master schedule since the same strengths 
and weaknesses of the subordinate schedules would transfer to the 
master schedule. We determined that the schedules were sufficiently 
reliable for our reporting purposes, and our report notes the 
instances where reliability concerns affect the quality of the 
schedules. 

To examine the actions DOE has taken, if any, to reduce U.S. ITER 
Project costs and plan for their potential impact on the overall U.S. 
fusion program, we reviewed DOE and U.S. ITER Project Office documents 
on actions taken to reduce U.S. ITER Project costs, interviewed DOE 
program officials about the status of their efforts to complete a 
strategic plan for the U.S. fusion program, and reviewed meeting 
records of DOE's Fusion Energy Sciences Advisory Committee.[Footnote 
56] We also reviewed our prior work on leading practices in federal 
strategic planning for agency divisions, programs, or initiatives, 
[Footnote 57] as well as the House and Senate Appropriations 
Committees' direction to DOE in the explanatory statements for the 
fiscal year 2012 and fiscal year 2014 energy and water development 
appropriation acts to submit a 10-year strategic plan for the U.S. 
fusion program. Further, we summarized the results of semistructured 
interviews with 10 experts in fusion energy and the management of 
large scientific research projects. To select these experts, we first 
identified 105 experts by reviewing the results of a literature 
search; congressional hearings; National Academies of Science 
publications; membership lists for the Fusion Energy Sciences Advisory 
Committee, the ITER Council Management Advisory Committee, [Footnote 
58] the ITER Council Science and Technology Advisory Committee, 
[Footnote 59] and DOE's internal peer reviews of the U.S. ITER 
Project; and recommendations from other fusion energy experts we 
interviewed. From this list, we then used a multistep process to 
select 10 experts.[Footnote 60] To ensure coverage and a range of 
perspectives, we selected fusion energy and large scientific project 
management experts from industry, DOE's national laboratories, and 
universities. We conducted semistructured interviews with the 10 
selected experts using a standard set of questions and analyzed their 
responses, grouping them into overall themes. We summarized the 
results of our analysis and then asked DOE program officials for their 
views on actions suggested by multiple stakeholders to potentially 
reduce U.S. ITER Project costs or improve U.S. ITER Project 
management. Not all 10 of the experts answered all of our questions. 
The views expressed by experts do not represent the views of GAO. 
Appendix II lists the names and affiliations of the 10 experts we 
interviewed. 

We conducted this performance audit from June 2013 to June 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: List of Experts: 

* Dr. Riccardo Betti, University of Rochester: 

* Dr. Aesook Byon, Brookhaven National Laboratory (retired): 

* Dr. Richard W. Callis, General Atomics: 

* Dr. Adam Cohen, Princeton Plasma Physics Laboratory: 

* Dr. Ray Fonck, University of Wisconsin--Madison: 

* Dr. Charles M. Greenfield, General Atomics: 

* Dr. Martin Greenwald, Massachusetts Institute of Technology: 

* Dr. Richard Hawryluk, Princeton Plasma Physics Laboratory: 

* Dr. Robert Iotti, CH2M Hill (retired): 

* Dr. Dale Meade, Princeton Plasma Physics Laboratory (retired): 

[End of section] 

Appendix III: Status of U.S. Hardware Components for the International 
Thermonuclear Experimental Reactor (ITER) as of August 2013: 

U.S. hardware component: Central solenoid magnet system; 
Purpose: Confines, shapes, and controls the plasma inside ITER's 
vacuum vessel; 
Design status: Final design[C, F]; 
Estimate to complete[A]: $252.1 million; 
Estimated final delivery date: April 2019; 
Procurement arrangement[B] reached: Yes. 

U.S. hardware component: Diagnostics (15% of ITER diagnostics); 
Purpose: Provides the measurements necessary to control, evaluate, and 
optimize plasma performance and to further the understanding of plasma 
physics; 
Design status: Preliminary design[D]; 
Estimate to complete[A]: $112.2 million; 
Estimated final delivery date: September 2024; 
Procurement arrangement[B] reached: Yes. 

U.S. hardware component: Disruption mitigation systems (up to a capped 
value); 
Purpose: Limits the effect of plasma current disruptions to the 
tokamak vacuum vessel and other components; 
Design status: Preliminary design; 
Estimate to complete[A]: $19.4 million; 
Estimated final delivery date: June 2019; 
Procurement arrangement[B] reached: No. 

U.S. hardware component: Electron cyclotron heating transmission lines; 
Purpose: Brings additional heat to the plasma and deposits heat in 
specific areas of the plasma to minimize instabilities; 
Design status: Final design; 
Estimate to complete[A]: $90.4 million; 
Estimated final delivery date: November 2024; 
Procurement arrangement[B] reached: Yes. 

U.S. hardware component: Ion cyclotron heating transmission lines; 
Purpose: Brings additional heat to the plasma; 
Design status: Preliminary design; 
Estimate to complete[A]: $98.1 million; 
Estimated final delivery date: August 2026; 
Procurement arrangement[B] reached: Yes. 

U.S. hardware component: Pellet injection system; 
Purpose: Provides efficient fueling and delivers hydrogen, deuterium, 
or a deuterium/tritium mixture as required by plasma operations; 
Design status: Preliminary design; 
Estimate to complete[A]: $39.0 million; 
Estimated final delivery date: July 2026; 
Procurement arrangement[B] reached: No. 

U.S. hardware component: Roughing pump system; 
Purpose: Exhausts certain parts of the ITER machine; 
Design status: Conceptual design[E]; 
Estimate to complete[A]: $36.0 million; 
Estimated final delivery date: September 2021; 
Procurement arrangement[B] reached: No. 

U.S. hardware component: Steady state electrical network (75% of total 
network); 
Purpose: Supplies the electricity needed to operate the entire ITER 
plant, including offices and the operational facilities; 
Design status: Design complete[F]; 
Estimate to complete[A]: $39.2 million; 
Estimated final delivery date: March 2016; 
Procurement arrangement[B] reached: Yes. 

U.S. hardware component: Tokamak cooling water system; 
Purpose: Manages temperatures generated during the operation of the 
tokamak; 
Design status: Final design[F]; 
Estimate to complete[A]: $463.4 million; 
Estimated final delivery date: September 2029; 
Procurement arrangement[B] reached: Yes. 

U.S. hardware component: Tokamak exhaust processing system; 
Purpose: Separates tokamak exhaust gases into a stream containing only 
hydrogen isotopes and a stream containing only non-hydrogen gases; 
Design status: Preliminary design; 
Estimate to complete[A]: $107.0 million; 
Estimated final delivery date: April 2030; 
Procurement arrangement[B] reached: No. 

U.S. hardware component: Toroidal field conductor (8% of total 
conductor); 
Purpose: Part of toroidal field magnet that confines, shapes, and 
controls the plasma inside the ITER vacuum vessel; 
Design status: Design complete[F]; 
Estimate to complete[A]: $10.3 million; 
Estimated final delivery date: July 2015; 
Procurement arrangement[B] reached: Yes. 

U.S. hardware component: Vacuum auxiliary systems; 
Purpose: Creates low density in ITER's vacuum vessel and connected 
vacuum components; 
Design status: Preliminary design[F]; 
Estimate to complete[A]: $58.7 million; 
Estimated final delivery date: September 2023; 
Procurement arrangement[B] reached: Yes. 

Source: GAO analysis of DOE documents. 

[A] The "Estimate to complete" refers to the latest estimate of budget 
required to finish the work remaining. The estimates listed in this 
column are burdened, meaning they include direct and indirect costs, 
and unescalated, meaning they represent current year dollar values. 

[B] "Procurement arrangements" govern the procurement of plant 
systems, components, or site construction, detailing all the necessary 
technical specifications and management requirements. 

[C] "Final design" is the last stage of design development prior to 
implementation. At the final design stage, the project scope should be 
finalized and changes should be permitted only for compelling reasons. 

[D] The "Preliminary design" stage initiates the process of converting 
concepts to a more detailed design whereby more detailed and reliable 
cost and schedule estimates are developed. This stage of the design is 
complete when it provides sufficient information to support 
development of the performance baseline. 

[E] The "Conceptual design" process must ensure that a solution or 
alternatives are responsive to an approved need, and also technically 
achievable, affordable, and will provide the best value to the agency. 

[F] Certain parts of these components are already being fabricated or 
being prepared for fabrication. 

[End of table] 

[End of section] 

Appendix IV: GAO Assessment of DOE's Current (August 2013) Cost 
Estimate for the U.S. International Thermonuclear Experimental Reactor 
(ITER) Project Compared with Best Practices: 

Characteristic: Comprehensive; 
Overall assessment[A]: Substantially met; 

Best practice: The cost estimate includes all life-cycle costs; 
Individual assessment: Partially met. 

Best practice: The cost estimate completely defines the program, 
reflects the current schedule, and is technically reasonable; 
Individual assessment: Substantially met. 

Best practice: The cost estimate work breakdown structure is product-
oriented, traceable to the statement of work/objective, and at an 
appropriate level of detail to ensure that cost elements are neither 
omitted nor double-counted; 
Individual assessment: Substantially met. 

Best practice: The estimate documents all cost-influencing ground 
rules and assumptions; 
Individual assessment: Substantially met. 

Characteristic: Well-documented; 
Overall assessment[A]: Substantially met; 

Best practice: The documentation should capture the source data used, 
the reliability of the data, and how the data were normalized; 
Individual assessment: Substantially met. 

Best practice: The documentation describes in sufficient detail the 
calculations performed and the estimating methodology used to derive 
each element's cost; 
Individual assessment: Substantially met. 

Best practice: The documentation describes step by step how the 
estimate was developed so that a cost analyst unfamiliar with the 
program could understand what was done and replicate it; 
Individual assessment: Substantially met. 

Best practice: The documentation discusses the technical baseline 
description and the data in the baseline is consistent with the 
estimate; 
Individual assessment: Fully met. 

Best practice: The documentation provides evidence that the cost 
estimate was reviewed and accepted by management; 
Individual assessment: Substantially met. 

Characteristic: Accurate; 
Overall assessment[A]: Substantially met; 

Best practice: The cost estimate results are unbiased, not overly 
conservative or optimistic and based on an assessment of most likely 
costs; 
Individual assessment: Partially met. 

Best practice: The estimate has been adjusted properly for inflation; 
Individual assessment: Substantially met. 

Best practice: The estimate contains few, if any, minor mistakes; 
Individual assessment: Fully met. 

Best practice: The cost estimate is regularly updated to reflect 
significant changes in the program so that it is always reflecting 
current status; 
Individual assessment: Substantially met. 

Best practice: Variances between planned and actual costs are 
documented, explained, and reviewed; 
Individual assessment: Substantially met. 

Best practice: The estimate is based on a historical record of cost 
estimating and actual experiences from other comparable programs; 
Individual assessment: Substantially met. 

Best practice: The estimating technique for each cost element was used 
appropriately; 
Individual assessment: Partially met. 

Characteristic: Credible; 
Overall assessment[A]: Partially met; 

Best practice: The cost estimate includes a sensitivity analysis that 
identifies a range of possible costs based on varying major 
assumptions, parameters, and data inputs; 
Individual assessment: Partially met. 

Best practice: A risk and uncertainty analysis was conducted that 
quantified the imperfectly understood risks and identified the effects 
of changing key cost driver assumptions and factors; 
Individual assessment: Partially met. 

Best practice: Major cost elements were cross-checked to see whether 
results were similar; 
Individual assessment: Partially met. 

Best practice: An independent cost estimate was conducted by a group 
outside the acquiring organization to determine whether other 
estimating methods produce similar results; 
Individual assessment: Partially met. 

Source: GAO analysis of DOE data. 

[A] Not met-DOE provided no evidence that satisfies any of the 
criterion; minimally met-DOE provided evidence that satisfies a small 
portion of the criterion; partially met-DOE provided evidence that 
satisfies about half of the criterion; substantially met-DOE provided 
evidence that satisfies a large portion of the criterion; and fully 
met-DOE provided complete evidence that satisfies the entire criterion. 

[End of table] 

[End of section] 

Appendix V: GAO Assessment of DOE's Current (August 2013) Schedule 
Estimates for the Two Largest Hardware Items of the U.S. International 
Thermonuclear Experimental Reactor (ITER) Project Compared with Best 
Practices: 

Characteristic: Comprehensive; 
Overall assessment[A]: 
Central solenoid modules: Fully met; 
Tokamak cooling water system: Fully met; 

Best practice: Capturing all activities; 
Individual assessment: 
Central solenoid modules: Fully met; 
Tokamak cooling water system: Fully met. 

Best practice: Assigning resources to all activities; 
Individual assessment: 
Central solenoid modules: Substantially met; 
Tokamak cooling water system: Substantially met. 

Best practice: Establishing the durations of all activities; 
Individual assessment: 
Central solenoid modules: Fully met; 
Tokamak cooling water system: Fully met. 

Characteristic: Well-constructed; 
Overall assessment[A]: 
Central solenoid modules: Substantially met; 
Tokamak cooling water system: Substantially met; 

Best practice: Sequencing all activities; 
Individual assessment: 
Central solenoid modules: Substantially met; 
Tokamak cooling water system: Substantially met. 

Best practice: Confirming that the critical path is valid; 
Individual assessment: 
Central solenoid modules: Substantially met; 
Tokamak cooling water system: Substantially met. 

Best practice: Ensuring reasonable total float; 
Individual assessment: 
Central solenoid modules: Partially met; 
Tokamak cooling water system: Partially met. 

Characteristic: Credible; 
Overall assessment[A]: 
Central solenoid modules: Substantially met; 
Tokamak cooling water system: Substantially met; 
Best practice: Verifying that the schedule is traceable horizontally 
and vertically; 
Individual assessment: Partially met; 
Individual assessment: Partially met. 

Best practice: Conducting a schedule risk analysis; 
Individual assessment: 
Central solenoid modules: Substantially met; 
Tokamak cooling water system: Substantially met. 

Characteristic: Controlled; 
Overall assessment[A]: 
Central solenoid modules: Substantially met; 
Tokamak cooling water system: Substantially met; 

Best practice: Updating the schedule with actual progress and logic; 
Individual assessment: 
Central solenoid modules: Substantially met; 
Tokamak cooling water system: Fully met. 

Best practice:Maintaining a baseline schedule; 
Individual assessment: 
Central solenoid modules: Partially met; 
Tokamak cooling water system: Partially met. 

Source: GAO analysis of DOE data. 

[A] Not met--DOE provided no evidence that satisfies any of the 
criterion; minimally met-DOE provided evidence that satisfies a small 
portion of the criterion; partially met--DOE provided evidence that 
satisfies about half of the criterion; substantially met--DOE provided 
evidence that satisfies a large portion of the criterion; and fully 
met--DOE provided complete evidence that satisfies the entire 
criterion. 

[End of table] 

[End of section] 

Appendix VI: Comments from the Department of Energy: 

Department of Energy: 
Office of Science: 
Office of the Director: 
Washington, DC 20585: 

May 27, 2014: 

Mr. Frank Rusco: 
Director, Natural Resources and Environment: 
Government Accountability Office: 
441 G Street: 
Washington, DC 20548: 

Dear Mr. Rusco: 

Thank you for the opportunity to comment on the Government 
Accountability Office (GAO) draft report entitled, "Fusion Energy: 
Actions Needed to Finalize Cost and Schedule Estimates for U.S. 
Contributions to an International Experimental Reactor" (GAO-14-499). 

We found the report balanced in its discussions of the status of the 
U.S. and international parts of ITER, the efforts of the Office of 
Science (SC) and the U.S. ITER Project Office to manage the U.S 
Contributions to ITER Project, and the current managerial and technical
challenges. We appreciate GAO's thoroughness and effective 
coordination of its assessment. 

The Department agrees with the four recommendations for Executive 
Action that the GAO identified in its draft report and provides 
comments on each below. In addition, an Enclosure provides detailed 
comments on specific points throughout the report. 

Recommendation 1: "Direct the U.S. ITER Project Office to revise and 
update the project's cost estimate to meet all characteristics of high 
quality, reliable cost estimates. Specifically, the U.S. ITER Project 
Office should revise its cost estimate to ensure they are credible by 
including a comprehensive sensitivity analysis that includes all 
significant cost elements and conducting an independent cost estimate." 

We agree. Conducting a sensitivity analysis and an independent cost 
estimate/review is consistent with the requirements set forth in DOE 
Order 413.3B, "Program and Project Management for the Acquisition of 
Capital Assets," for the establishment of the scope, cost, and 
schedule performance baseline as part of Critical Decision 2 for the 
U.S. Contributions to ITER Project. 

Recommendation 2: "Develop and present at the next ITER Council 
Meeting a formal proposal describing the actions DOE believes need to 
be taken to set a reliable international project schedule and improve 
ITER Organization project management. Continue to formally advocate 
for the timely implementation of those actions at each future ITER
Council meeting until the ITER Council approves an updated 
international project schedule." 

We believe that this recommendation has essentially been accomplished. 
The U.S. has advocated using two ITER forums--the ITER Management 
Advisory Committee (MAC) and the ITER Council (IC}--for improving the 
ITER Organization's (10) project management capabilities. During two 
MAC meetings in 2013, the U.S. senior MAC member (now the ITER Council 
Chair) led discussions resulting in clear guidance to the IO that set 
in motion efforts to prepare a credible international project 
schedule. This action was recorded in the IC-13 Record of Decisions. 
The U.S. will continue to be an advocate of improving the IO's project
management capabilities and of working with the IO and the other ITER 
Members in the development of a project schedule that is credible. It 
is anticipated that the 10 will present its proposed schedule to the 
ITER Council in June 2015. 

Recommendation 3: "Once the ITER Organization completes its 
reassessment of the international project schedule, use that schedule, 
if reliable, to propose a final, stable funding plan for the U.S. ITER 
Project, approve a performance baseline with finalized cost and 
schedule estimates, and communicate this information to Congress."
We agree. We are awaiting the completion of the international project 
schedule. 

Recommendation 4: "Set a specific date for completing, in a timely 
manner, a strategic plan for the U.S. fusion program that addresses 
DOE's priorities for the overall U.S. fusion program in light of U.S. 
ITER Project costs, and involve the Fusion Energy Sciences Advisory 
Committee in the development of the plan." 

We agree. On April 8, 2014, the Acting Director of the Office of 
Science issued a charge to the Fusion Energy Sciences Advisory 
Committee to advise the Office of Science on a portfolio that will 
ensure that the U.S. is in a position to exert long-term leadership in 
fusion energy sciences research. This report, due October 1,2014, is 
responsive to congressional direction in the FY 2014 Omnibus 
Appropriations Act. 

Again, we very much appreciate the opportunity to provide comments on 
the draft report. If you have any questions, please contact Dr. Edmund 
Synakowski, Associate Director of the Office of Science for Fusion 
Energy Sciences, at (301) 903-4941. 

Sincerely, 

Signed by: 

Patricia M. Dehmer: 
Acting Director: 
Office of Science: 

Enclosure 

[End of section] 

Appendix VII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Frank Rusco, (202) 512-3841 or ruscof@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, other key contributors to 
this report were Dan Haas, Assistant Director; David Marroni; Andrew 
Moore; and Jacqueline Wade. Important contributions were also made by 
Cheryl Arvidson, Brian Bothwell, Nikki Clowers, Elizabeth Curda, R. 
Scott Fletcher, Cindy Gilbert, Jason Lee, Karen Richey, and Barbara 
Timmerman. 

[End of section] 

Footnotes: 

[1] The five countries are India, Japan, the People's Republic of 
China, the Republic of Korea, and the Russian Federation. 

[2] The term "International Thermonuclear Experimental Reactor" is no 
longer used for the project. Instead, the project is simply referred 
to as "ITER." 

[3] According to a Department of Energy (DOE) document, the original 
estimate of about $5 billion for ITER's construction was in 2002 
dollars and based on the 2001 ITER design. The estimate was developed 
for the purpose of establishing relative contributions of the ITER 
members toward ITER's construction and was not comparable to a DOE 
construction project cost estimate. 

[4] The ITER Organization will also be responsible for managing the 
operation and deactivation of the ITER facilities. 

[5] The ITER Council meets at least twice a year. ITER members have 
the ability to raise issues for consideration and decision by the 
council. 

[6] Of the seven ITER members, the United States and five other 
countries--the People's Republic of China, Japan, India, the Republic 
of Korea, and the Russian Federation--are each providing 9.09 percent 
of the total construction cost. The European Union is the largest 
contributor--45.46 percent--because ITER is being built on a European 
Union country's soil, and the European Union has agreed to pay for 
infrastructure costs. 

[7] The U.S. ITER Project covers only U.S. contributions to ITER's 
construction phase. U.S. contributions for ITER's operation, 
deactivation, and decommissioning phases are not part of the U.S. ITER 
Project. 

[8] GAO, Fusion Energy: Definitive Cost Estimates for U.S. 
Contributions to an International Experimental Reactor and Better 
Coordinated DOE Research Are Needed, [hyperlink, 
http://www.gao.gov/products/GAO-08-30] (Washington, D.C.: Oct. 26, 
2007). 

[9] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: Mar. 2, 
2009) and GAO Schedule Assessment Guide: Best Practices for Project 
Schedules--Exposure Draft, [hyperlink, 
http://www.gao.gov/products/GAO-12-120G] (Washington, D.C.: May 30, 
2012). 

[10] We selected these two subordinate schedules because they are the 
largest two hardware items, in terms of value, that the United States 
is responsible for contributing to ITER. By examining the two 
subordinate schedules against our guidance, we conducted a reliability 
assessment on each of the schedules and incorporated our findings on 
reliability limitations in the analysis of each subordinate schedule. 

[11] For example, see GAO, Environmental Protection: EPA Should 
Develop a Strategic Plan for Its New Compliance Initiative, 
[hyperlink, http://www.gao.gov/products/GAO-13-115] (Washington, D.C.: 
Dec. 10, 2012) and Environmental Justice: EPA Needs to Take Additional 
Actions to Help Ensure Effective Implementation, [hyperlink, 
http://www.gao.gov/products/GAO-12-77] (Washington, D.C.: Oct. 6, 
2011). 

[12] Current magnetic devices have not been able to sustain this 
fusion reaction for more than a few seconds, not the long period of 
time that the reaction would need to be sustained to produce 
electricity. 

[13] The term "tokamak" comes from a Russian acronym for a fusion 
device that was developed in the former Soviet Union during the 1950s 
and 1960s. A tokamak has been the most successful magnetic fusion 
device, but there is still uncertainty that it will lead to a 
commercially viable fusion energy device. 

[14] "First plasma" refers to the first time the ITER device is able 
to successfully produce a plasma. Construction will continue after 
this to prepare ITER to use deuterium-tritium fuel. The introduction 
of deuterium-tritium fuel marks the start of full ITER operations. 

[15] The United States will also be responsible in the future for 13 
percent of the costs of operating, deactivating, and decommissioning 
ITER. These costs--which DOE estimated would be about $1.5 billion 
when the ITER Agreement was signed in 2006--are not included in U.S. 
ITER Project cost estimates because the U.S. ITER Project only covers 
U.S. contributions to ITER's construction phase. 

[16] See appendix III for additional information on the status of each 
U.S. hardware component as of August 2013. 

[17] The European Union, as the host of the ITER site, is not 
permitted to withdraw from the project under the ITER Agreement. 

[18] Department of Energy, Program and Project Management for the 
Acquisition of Capital Assets, DOE Order 413.3B (Washington, D.C.: 
Nov. 29, 2010). 

[19] In December 2012, the Deputy Secretary of Energy authorized the 
removal of the U.S. ITER Project's designation as a "capital asset 
project" as defined by DOE's project management order because he 
determined that the U.S. ITER Project did not fit the definition of 
such a project. However, the Deputy Secretary directed the Office of 
Science to continue to apply DOE's project management policies, 
principles, and processes to the extent practical. According to DOE 
documents, DOE is following the process described in DOE's project 
management order, including its major milestones. 

[20] For the purposes of this report, we refer to the definitive cost 
and schedule estimates that DOE sets when it approves a project's 
performance baseline as "final" estimates. The estimates set at the 
time DOE approves a performance baseline can change, but DOE's project 
management order states that such a change would represent an 
irregular event that should be avoided to the maximum extent possible. 

[21] Department of Energy, U.S. Department of Energy Performance 
Baseline Guide, DOE Guide 413.3-5A (Washington, D.C.: Sept. 23, 2011). 

[22] According to DOE documents, the U.S. ITER Project will be 
considered to be complete when DOE has made the last delivery of 
hardware components and the final cash contribution for the U.S. share 
of ITER's construction budget. DOE will still be responsible for 
making cash contributions to the ITER Organization for the operation, 
deactivation, and decommissioning phases of the ITER project. 

[23] Under DOE's program management order, projects are organized by 
phases and major milestones, starting with the initiation phase and 
approval of broadly-stated mission needs, known as "CD-0." In 2005, 
DOE estimated that the U.S. ITER Project would cost $1.122 billion as 
part of the project's CD-0 milestone. The $1.122 billion cost estimate 
was a rough-order-of-magnitude estimate, which means it was 
preliminary and based on high-level project objectives. It remained 
DOE's cost estimate for the U.S. ITER Project when the ITER Agreement 
was signed in 2006. 

[24] In 2008, DOE approved the start of the U.S. ITER Project's 
execution phase at the project's second major milestone, known as "CD-
1." This milestone included DOE's approval of a preliminary cost range 
for the U.S. ITER Project of from $1.45 billion to $2.2 billion. 

[25] According to DOE officials, the U.S. ITER Project estimate was 
capped at $2.2 billion until April 2011. They explained that, from 
January 2011 through August 2013, DOE directed the U.S. ITER Project 
Office to include various funding profiles in its detailed planning. 

[26] As of March 2014, the official ITER Organization schedule 
anticipates ITER achieving first plasma in 2020, but DOE officials 
told us this date is unrealistic. Instead, the U.S. ITER Project 
Office developed the August 2013 estimates based on its best estimate 
that ITER will achieve first plasma in 2023, with contingency for 
another year delay to 2024. DOE officials told us that the August 2013 
estimates also assumed an increase in the ITER Organization 
construction budget of 1 billion euros, and the U.S. share of this 
value was included in the estimates. 

[27] The percentages in this list do not sum to 100 percent because of 
rounding. 

[28] According to DOE, the current cost estimate includes 47 percent 
in contingency for the remaining work to procure and deliver U.S. 
hardware components, and 12 percent in contingency for U.S. cash 
contributions to the ITER Organization. 

[29] The current $3.915 billion estimate does not include $667 million 
that was included in the $2.2 billion upper range estimate in 2008 to 
cover potential future cost growth from risks that were not fully 
understood at that time or difficult to quantify, according to DOE 
documents and officials. 

[30] See appendix III for the status of U.S. hardware components as of 
August 2013. Overall, U.S. hardware component designs were about 52 
percent complete as of February 2014, with the level of completion 
varying by hardware component from as low as 40 percent complete to as 
high as 100 percent complete. At that time, DOE officials expected to 
finish delivering the first of the 12 U.S. hardware components in 2015 
and to finish delivering the last of the U.S. hardware components in 
2030. 

[31] DOE officials told us that ITER's design was less developed than 
the United States understood it to be when the ITER Agreement was 
signed in 2006. At that time, the United States understood that ITER's 
design was about 80 to 90 percent complete. However, DOE officials 
said it was later determined that ITER's design was only about 40 
percent complete and that extensive changes would be needed to the 
design. 

[32] State had a role in the negotiation of the ITER Agreement and has 
a continuing role interpreting U.S. obligations under the agreement. 
OMB, as the implementation and enforcement arm of presidential policy, 
is responsible for, among other things, the development and execution 
of the federal budget. Under the National Science and Technology 
Policy, Organization, and Priorities Act of 1976 (Pub. L. No. 94-282), 
the primary function of the OSTP Director is to provide, within the 
Executive Office of the President, advice on the scientific, 
engineering, and technological aspects of issues that require 
attention at the highest level of government. Further, the office 
serves as a source of scientific and technological analysis and 
judgment for the President with respect to major policies, plans, and 
programs of the federal government. 

[33] The additional hardware responsibilities DOE agreed to take on 
were the disruption mitigation systems and the design, fabrication, 
and testing of insert coils for the central solenoid magnet system and 
the toroidal field conductor. 

[34] [hyperlink, http://www.gao.gov/products/GAO-09-3SP] and 
[hyperlink, http://www.gao.gov/products/GAO-12-120G]. 

[35] [hyperlink, http://www.gao.gov/products/GAO-09-3SP]. 

[36] [hyperlink, http://www.gao.gov/products/GAO-12-120G]. 

[37] A sensitivity analysis describes how much costs can change by 
varying major assumptions, parameters, and data inputs. 

[38] We chose to analyze the schedule for the central solenoid 
modules, which are the largest part of the central solenoid magnet 
system that will help control the shape of the ITER plasma, and the 
tokamak cooling water system, which is designed to cool ITER's 
systems, because they are the largest two hardware items, in terms of 
value, that the United States is responsible for contributing to ITER. 
The U.S. ITER Project Office developed the current estimates for these 
schedules in August 2013. 

[39] Horizontal traceability verifies that activities are arranged in 
the right order for achieving aggregated products or outcomes. 
Vertical traceability means that varying levels of activities and 
supporting subactivities can be traced to each other enabling 
different groups to work to the same master schedule. 

[40] DOE officials told us the U.S. ITER Project Office used its best 
estimate of a realistic international project schedule to develop the 
August 2013 cost and schedule estimates for the U.S. ITER Project and 
included a contingency for 1 year of additional potential delay. 

[41] At the request of the Office of Fusion Energy Sciences, the 
Office of Project Assessment within DOE's Office of Science conducted 
an internal peer review of the U.S. ITER Project in August 2013. The 
review evaluated, among other things, the project's cost and schedule 
estimates and the supporting documentation. 

[42] DOE, in its fiscal year 2015 budget request, identified the 
internal peer review's suggested cost range of $4 billion to $6.5 
billion as the best estimate for the U.S. ITER Project's potential 
cost. According to DOE officials, the internal peer review's cost 
range was not a detailed cost estimate like the U.S. ITER Project 
Office's $3.915 billion estimate. Rather, the range reflected amounts 
added to the $3.915 billion estimate by peer review officials to 
address their assessment that the U.S. ITER Project Office estimate 
did not sufficiently consider all project risks and uncertainties. 
Four of the 10 fusion energy and project management experts we 
interviewed said they thought the internal peer review's cost range 
was overstated and unrealistic, with 2 of the experts stating that the 
review committee used a worst case scenario, which they do not view as 
likely, to develop the higher end of the cost range. 

[43] DOE officials told us that the interim 2-year plan also allows 
the agency to formally monitor project progress. 

[44] The ITER Council Management Advisory Committee, at the request of 
the ITER Council, reviews and evaluates matters of strategic 
management importance to the ITER project and makes recommendations to 
the ITER Council to facilitate the successful development of the ITER 
Organization and the successful execution of the ITER construction 
project. 

[45] Robert Iotti, a U.S. representative, became the ITER Council 
Chair in January 2014 and will serve a term of up to 4 years. 

[46] This includes amounts identified by DOE as "cost avoidance" or 
"cost savings." According to OMB, "cost avoidance" is an action taken 
in the immediate time frame that will decrease costs in the future, 
and "cost savings" are a reduction in actual expenditures below the 
projected level of costs to achieve a specific objective. For purposes 
of this report, we are using the term "cost savings" to encompass both 
types of actions. 

[47] According to DOE's project management order, value engineering is 
a structured technique commonly used in project management to optimize 
the overall value of the project. Often, creative strategies will be 
employed in an attempt to achieve the lowest life-cycle cost available 
for the project. Value engineering is a planned, detailed review and 
evaluation of a project to identify alternative approaches to 
providing the needed assets. 

[48] A DOE official told us that, in the absence of a completed 
strategic plan, the agency believes it has clearly stated the values 
that are driving U.S. fusion program priorities through DOE's annual 
budget requests and presentations to stakeholders. Those presentations 
have provided some information on the program's direction and the 
challenges it faces, but they are broad in nature and are not 
equivalent to a completed strategic plan. 

[49] See Explanatory Statement, 160 Cong. Rec. H 878 (daily ed., 
Jan.15, 2014), to the Energy and Water Development and Related 
Agencies Appropriations Act, 2014, contained in Division D of the 
Consolidated Appropriations Act, 2014, Pub. L. No. 113-76; and H.R. 
Rep. No. 112-331, at 855 (Dec.15, 2011) (Conf. Rep.). The fiscal year 
2014 explanatory statement further directed that the strategic plan 
DOE submitted should assume U.S. participation in ITER and assess its 
priorities for the domestic fusion program based on three funding 
scenarios. 

[50] The Fusion Energy Sciences Advisory Committee provides 
independent advice to the Director of DOE's Office of Science on 
complex scientific and technological issues that arise in the 
planning, implementation, and management of the fusion energy sciences 
program. Committee members are drawn from universities, national 
laboratories, and industrial companies. 

[51] For example, see [hyperlink, 
http://www.gao.gov/products/GAO-13-115] and [hyperlink, 
http://www.gao.gov/products/GAO-12-77]. 

[52] [hyperlink, http://www.gao.gov/products/GAO-09-3SP] and 
[hyperlink, http://www.gao.gov/products/GAO-12-120G]. 

[53] GAO designed the Cost Guide to be used by federal agencies to 
assist them in developing reliable cost estimates and also as an 
evaluation tool for existing cost estimates. To develop the Cost 
Guide, GAO cost experts assessed measures applied by cost-estimating 
organizations throughout the federal government and industry and 
considered best-practices for the development of reliable cost-
estimates. 

[54] Not met-DOE provided no evidence that satisfies any of the 
criterion; minimally met-DOE provided evidence that satisfies a small 
portion of the criterion; partially met-DOE provided evidence that 
satisfies about half of the criterion; substantially met-DOE provided 
evidence that satisfies a large portion of the criterion; and fully 
met-DOE provided complete evidence that satisfies the entire criterion. 

[55] The Schedule Guide is intended to expand on the scheduling 
concepts introduced in the Cost Guide by providing 10 best practices 
to help managers and auditors ensure that the program schedule is 
reliable. The reliability of the schedule determines the credibility 
of the program's forecasted dates for decision making. 

[56] The Fusion Energy Sciences Advisory Committee provides 
independent advice to the Director of DOE's Office of Science on 
complex scientific and technological issues that arise in the 
planning, implementation, and management of the fusion energy sciences 
program. Committee members are drawn from universities, national 
laboratories, and industrial companies. 

[57] For example, see [hyperlink, 
http://www.gao.gov/products/GAO-13-115] and [hyperlink, 
http://www.gao.gov/products/GAO-12-77]. 

[58] The ITER Council Management Advisory Committee, at the request of 
the ITER Council, reviews and evaluates matters of strategic 
management importance to the ITER project and makes recommendations to 
the ITER Council to facilitate the successful development of the ITER 
Organization and the successful execution of the ITER construction 
project. 

[59] The ITER Council Science and Technology Advisory Committee, at 
the request of the ITER Council, reviews and advises the ITER Council 
on science and technology issues concerning the implementation of the 
ITER project. 

[60] We initially selected 15 experts using this multistep process. We 
eliminated 3 of the initially selected experts because they were 
working directly on the U.S. ITER Project, either for DOE or the U.S. 
ITER Project Office. Another expert we initially selected told us she 
did not have sufficient knowledge of the U.S. ITER Project to 
participate in our review, and we were unable to get in contact with 
one other expert we initially selected, so we eliminated both experts 
and ended up with our final list of 10 experts. We determined that the 
remaining 10 experts still ensured sufficient coverage and a range of 
perspectives. 

[End of section] 

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