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entitled 'Nuclear Nonproliferation: DOE Needs to Address Uncertainties 
with and Strengthen Independent Safety Oversight of Its Plutonium 
Disposition Program' which was released on March 26, 2010. 

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United States Government Accountability Office: 
GAO: 

Report to the Subcommittee on Energy and Water Development, Committee 
on Appropriations, House of Representatives: 

March 2010: 

Nuclear Nonproliferation: 

DOE Needs to Address Uncertainties with and Strengthen Independent 
Safety Oversight of Its Plutonium Disposition Program: 

GAO-10-378: 

GAO Highlights: 

Highlights of GA0-10-378, a report to the Subcommittee on Energy and 
Water Development, Committee on Appropriations, House of 
Representatives. 

Why GAO Did This Study: 

The end of the Cold War left the United States with a surplus of 
weapons-grade plutonium, which poses proliferation and safety risks. 
Much of this material is found in a key nuclear weapon component known 
as a pit. The Department of Energy (DOE) plans to dispose of at least 
34 metric tons of plutonium by fabricating it into mixed oxide (MOX) 
fuel for domestic nuclear reactors. To do so, DOE's National Nuclear 
Security Administration (NNSA) is constructing two facilities—a MOX 
Fuel Fabrication Facility (MF1410 and a Waste Solidification Building 
(WSB)—at the Savannah River Site in South Carolina. GAO was asked to 
assess the (1) cost and schedule status of the MFFF and WSB 
construction projects, (2) status of NNSA's plans for pit disassembly 
and conversion, (3) status of NNSA's plans to obtain customers for MOX 
fuel from the MFFF, and (4) actions that the Nuclear Regulatory 
Commission (NRC) and DOE have taken to provide independent nuclear 
safety oversight. GAO reviewed NNSA documents and project data, toured 
DOE facilities, and interviewed officials from DOE, NRC, and nuclear 
utilities. 

What GAO Found: 

The MFFF and WSB projects both appear to be meeting their cost targets 
for construction, but the MFFF project has experienced schedule 
delays. Specifically, the MFFF and WSB projects are on track to meet 
their respective construction cost estimates of $4.9 billion and $344 
million. However, the MFFF project has experienced some delays over 
the past 2 years, due in part to the delivery of reinforcing bars that 
did not meet nuclear quality standards. Project officials said that 
they expect to recover from these delays by the end of 2010 and plan 
for the start of MFFF operations on schedule in 2016. The WSB project 
appears to be on schedule. 

NNSA is reconsidering its alternatives for establishing a pit 
disassembly and conversion capability. However, it seems unlikely that 
NNSA will be able to establish this capability in time to produce the 
plutonium feedstock needed to operate the MFFF, due to the amount of 
time and effort needed to reconsider alternatives and construct a 
facility as well as the amount of uncertainty associated with NNSA's 
current plans. NNSA had previously planned to build a stand-alone 
facility near the MFFF construction site to disassemble pits and 
convert the plutonium into a form suitable for use by the MFFF. 
However, NNSA is now considering a plan to combine this capability 
with another project at an existing facility at the Savannah River 
Site. NNSA officials could not estimate when the agency will reach a 
final decision or establish more definitive cost and schedule 
estimates for the project. However, NNSA's new alternative depends on 
an aggressive, potentially unrealistic schedule. In addition, NNSA has 
not sufficiently planned for the maturation of critical technologies 
to be used in pit disassembly and conversion operations, some of which 
are being tested at the Los Alamos National Laboratory in New Mexico. 

NNSA has one potential customer for most of its MOX fuel, but outreach 
to other utilities may be insufficient. NNSA is in discussions with 
the Tennessee Valley Authority to provide MOX fuel for five reactors. 
NNSA plans to offer several incentives to potential customers, 
including offering to sell MOX fuel at a discount relative to the 
price of uranium fuel. In interviews with the nation's nuclear 
utilities, GAO found that while many of the utilities expressed 
interest in NNSA's proposed incentives, the majority of utilities also 
expressed little interest in becoming MOX fuel customers. This 
suggests that NNSA's outreach to utilities may not be sufficient. 

NRC is currently reviewing the MFFF's license application and has 
identified several issues related to construction. However, oversight 
of the MFFF and the WSB by DOE's independent nuclear safety entities 
has been limited. For example, DOE's Office of Health, Safety, and 
Security has not conducted any oversight activities or participated in 
any project reviews of the WSB, despite the WSB's status as a high-
hazard nuclear facility. In addition, NNSA's Chief of Defense Nuclear 
Safety has not conducted any nuclear safety oversight activities for 
the MFFF project and has not conducted all oversight activities for 
the WSB project that are required by DOE order. 

What GAO Recommends: 

GAO recommends, among other things, that NNSA improve its plans for 
the maturation of critical technologies related to pit disassembly and 
conduct additional outreach to potential MOX fuel customers. hi 
commenting on a draft of this report, DOE agreed with GAO's 
recommendations. 

View [hyperlink, http://www.gao.gov/products/GA0-10-378] or key 
components. For more information, contact Gene Aloise at (202) 512-
3841 or aloisee@ gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Construction Projects Appear to Be Meeting Cost Targets, but the MFFF 
Has Had Schedule Delays: 

NNSA Is Reconsidering Alternatives for Its Pit Disassembly Mission 
That Could Delay Production of Material Needed for the MFFF: 

NNSA Has One Potential Customer for Most of Its MOX Fuel, but Outreach 
to Others May Be Insufficient: 

NRC Has Been Providing Oversight for the MFFF, but DOE's Independent 
Oversight of the MFFF and the WSB Has Been Limited: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Extent to Which the MFFF Project's Schedule Used Key 
Practices: 

Appendix III: Extent to Which the WSB Project's Schedule Used Key 
Practices: 

Appendix IV: Summary Results of Interviews with 22 Utilities: 

Appendix V: Nuclear Regulatory Commission's Notices of Violation for 
the MFFF: 

Appendix VI: Comments from the Department of Energy: 

Appendix VII: Comments from the Nuclear Regulatory Commission: 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Technology Assessments of Critical Pit Disassembly and 
Conversion Technologies Conducted in 2008 and 2009: 

Table 2: Factors Affecting a Utility's Interest in the MOX Fuel 
Program: 

Table 3: Number of Utilities Indicating Increased Interest in the MOX 
Fuel Program Due to Possible Incentives: 

Table 4: Status of NRC's Review of the MFFF's Operating License as of 
January 2010: 

Figures: 

Figure 1: Cumulative Cost and Schedule Variances for MFFF over a 2-
Year Period (2007-2009): 

Figure 2: Cumulative Cost and Schedule Variances for the WSB, January 
through November, 2009: 

Figure 3: The MFFF Planned Production Schedule for MOX Fuel Assemblies: 

Abbreviations: 

ARIES: Advanced Recovery and Integrated Extraction System: 

CDNS: Chief of Defense Nuclear Safety: 

DOE: Department of Energy: 

EVM: earned value management: 

HSS: Office of Health, Safety, and Security: 

LANL: Los Alamos National Laboratory: 

MFFF: Mixed Oxide Fuel Fabrication Facility: 

MOX: mixed oxide: 

NNSA: National Nuclear Security Administration: 

OECM: Office of Engineering and Construction Management: 

NRC: Nuclear Regulatory Commission: 

PDCF: Pit Disassembly and Conversion Facility: 

SRS: Savannah River Site: 

TRL: technology readiness level: 

TVA: Tennessee Valley Authority: 

WSB: Waste Solidification Building: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

March 26, 2010: 

The Honorable Peter J. Visclosky: 
Chairman: 
The Honorable Rodney P. Frelinghuysen: 
Ranking Member: 
Subcommittee on Energy and Water Development: 
Committee on Appropriations: 
House of Representatives: 

The end of the Cold War left a legacy of fissile material that the 
United States no longer required for national security. This fissile 
material includes large quantities of weapons-grade plutonium, such as 
the plutonium used in the pit of a nuclear warhead.[Footnote 1] 
Plutonium is a man-made, radioactive element that poses a danger of 
nuclear weapons proliferation and a risk of environmental, safety, and 
health consequences. For example, internal exposure in humans to 
plutonium through inhalation or consumption poses an extremely serious 
health hazard by exposing organs and tissues to ionizing radiation and 
increasing the risk of cancer. 

In 1997, the Department of Energy (DOE) established a program to 
provide for the disposition of surplus, weapons-grade plutonium. 
[Footnote 2] The National Nuclear Security Administration (NNSA), a 
separately organized agency within DOE, manages this program, now 
called the U.S. Plutonium Disposition program. NNSA's goal is to 
dispose of at least 34 metric tons of surplus, weapons-grade plutonium 
by (1) combining it with uranium to produce mixed oxide (MOX) fuel and 
(2) selling the MOX fuel to domestic utilities that own nuclear 
reactors. Once the MOX fuel is irradiated in a nuclear reactor, it 
would be rendered useless to potential proliferators. According to 
NNSA officials, the sale of MOX fuel over a 15-year period could 
return over $1 billion to the U.S. Treasury. To achieve this goal, 
NNSA is currently constructing the following two facilities at the 
Savannah River Site (SRS) in South Carolina: 

* MOX Fuel Fabrication Facility (MFFF)—The MFFF is projected to use up 
to 3.5 metric tons of plutonium a year to fabricate about 1,700 MOX 
fuel assemblies over a 15-year period. NNSA began construction on the 
MFFF in August 2007. As we reported in March 2007, NNSA initially 
estimated that the MFFF would cost about $1.4 billion and be completed 
by September 2004.[Footnote 3] NNSA currently projects that the MFFF 
will cost about $4.9 billion, be ready for operations by October 2016, 
and begin producing MOX fuel assemblies in 2018. 

* A Waste Solidification Building (WSB) will process radioactive waste 
from the MFFF and related facilities. NNSA began construction on the 
WSB in December 2008, and it is projected to cost $344 million and to 
be ready for operations by September 2013. 

In addition, because NNSA expects to obtain the majority of the 
plutonium from nuclear pits, it also plans to build a facility at SRS 
to disassemble pits and convert the plutonium into a plutonium oxide 
form suitable for use in MOX fuel. 

Several entities oversee nuclear safety for the Plutonium Disposition 
program. The National Defense Authorization Act of 1999 amended the 
Energy Reorganization Act of 1974 to require the Nuclear Regulatory 
Commission (NRC), an independent oversight agency, to regulate and 
license the operation of the MFFF. DOE is responsible for regulating 
the nuclear safety of the WSB and the planned Pit Disassembly and 
Conversion Facility (PDCF), with NNSA taking the primary role. Several 
other DOE offices and entities provide independent nuclear safety 
oversight for all three facilities, including the DOE Office of 
Health, Safety, and Security (HSS); the NNSA Central Technical 
Authority; and the NNSA Chief of Defense Nuclear Safety (CDNS). 

This report assesses (1) the performance status of the MFFF and WSB 
construction projects with respect to cost and schedule, (2) the 
status of NNSA's plans to establish a pit disassembly and conversion 
capability to supply plutonium to the MFFF, (3) the status of NNSA's 
plans to obtain customers for MOX fuel from the MFFF, and (4) the 
actions that NRC and DOE have taken to provide independent nuclear 
safety oversight of the MFFF and WSB construction projects. 

To assess the performance status of the MFFF and WSB construction 
projects with respect to cost and schedule, we reviewed earned value 
management (EVM) data and assessed the reliability of EVM data by 
evaluating each project's schedule against GAO's scheduling best 
practices.[Footnote 4] We also interviewed key NNSA and contractor 
officials and reviewed data and key processes used to conduct a risk 
analysis of the MFFF project's schedule. To assess the status of 
NNSA's plans to establish a pit disassembly and conversion capability 
to supply plutonium to the MFFF, we reviewed documentation provided by 
NNSA and its contractors for the MFFF, WSB, and PDCF projects, 
including project execution plans, project status reports, EVM data, 
and independent project reviews. We also reviewed project plans and 
research and development data related to the Advanced Recovery and 
Integrated Extraction System (ARIES) project at DOE's Los Alamos 
National Laboratory (LANL) in New Mexico; toured site facilities at 
SRS and LANL; and interviewed DOE, NNSA, and contractor officials. To 
assess the status of NNSA's plans to obtain customers for MOX fuel 
from the MFFF, we reviewed documentation provided by NNSA and its 
contractors, including project plans, studies, and MOX fuel production 
schedules. We also interviewed NNSA and contractor officials. In 
addition, we analyzed responses to structured interviews we 
administered to U.S. utilities that own nuclear reactors. We received 
data from utility officials representing 22 of the 26 utilities, for a 
response rate of 85 percent. Finally, to assess the actions that NRC 
and DOE have taken to provide independent nuclear safety oversight of 
the MFFF and WSB construction projects, we reviewed NRC and DOE 
regulations related to nuclear safety, NRC inspection reports, and DOE 
independent review reports. We also spoke with officials in NRC's 
Office of Nuclear Materials Safety and Safeguards and the Division of 
Construction Projects; NNSA's program offices responsible for the MFFF 
and WSB projects; the CDNS; DOE's HSS; and the Defense Nuclear 
Facilities Safety Board to discuss their oversight roles and 
activities in relation to the MFFF and the WSB. Appendix I contains 
additional information on our scope and methodology. 

We conducted this performance audit from March 2009 to March 2010, 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: 

A number of events are important in the history of DOE's U.S. 
Plutonium Disposition program. 

* In 1994, the United States declared 38.2 metric tons of weapons-
grade plutonium as surplus to national security needs. 

* In 1997, DOE announced a plan to dispose of surplus, weapons-grade 
plutonium through the following dual approach: (1) conversion into MOX 
fuel and (2) immobilization in glass or ceramic material. According to 
DOE, its approach would require the construction of three facilities—a 
pit disassembly and conversion facility, a MOX fuel fabrication 
facility, and an immobilization facility. 

* In 2000, the United States and Russia entered into a Plutonium 
Management and Disposition Agreement, in which each country pledged to 
dispose of at least 34 metric tons of surplus, weapons-grade 
plutonium, including the disposition of no less than 2 metric tons of 
plutonium per year. 

* In 2000, DOE announced in a record of decision that it would 
construct a pit disassembly and conversion facility, a MOX fuel 
fabrication facility, and an immobilization facility at SRS. 

* In 2002, NNSA canceled the immobilization portion of its surplus 
plutonium disposition strategy due to budgetary constraints. In 
addition, according to NNSA officials, NNSA canceled the 
immobilization portion because (1) Russia would not dispose of its 
plutonium if the United States adopted an immobilization-only approach 
and (2) the technology for MOX fuel fabrication had been in use in 
Europe for three decades, whereas immobilization of weapons-grade 
plutonium in glass or ceramic had never before been demonstrated. 

* In 2003, NNSA announced that it was pursuing a MOX-only plutonium 
disposition program to dispose of 34 metric tons of surplus, weapons-
grade plutonium. 

The majority of the 34 metric tons of surplus, weapons-grade plutonium 
is in the form of pits, clean metal, and oxides.[Footnote 5] The 
remainder is in nonpit forms, such as contaminated metal, oxides, and 
residues from the nuclear weapons production process. While NNSA plans 
to build a pit disassembly and conversion facility to obtain plutonium 
from pits, it also plans to use the ARIES project—a technology 
development and demonstration project for pit disassembly and 
conversion located at LANL—to obtain a small amount of plutonium from 
pits. In addition, according to NNSA documents, NNSA plans to obtain 
plutonium from nonpit forms in two ways. First, the K-Area Facility at 
SRS is storing 4.1 metric tons of plutonium in nonpit form that is 
already suitable for use by the MFFF.[Footnote 6] Second, NNSA plans 
to prepare and process additional quantities of plutonium (3.7 metric 
tons) already at the K-Area Facility or planned for storage at the 
facility. 

Prior work by GAO has identified persistent problems with cost 
overruns and schedule delays on the PDCF project. For example, in our 
March 2007 report on major DOE construction projects, we found that 
ineffective DOE project oversight, poor contractor management, and 
external factors were among the primary reasons for the cost increases 
and schedule delays associated with the PDCF project.[Footnote 7] In 
addition, according to a May 2005 DOE Inspector General report, NNSA 
officials attributed schedule delays for the PDCF to the disagreement 
between the United States and Russia about liability for work 
performed by U.S. contractor personnel working in Russia and a change 
in funding priorities.[Footnote 8] 

NNSA project directors are responsible for managing the MFFF, WSB, and 
PDCF projects and overseeing the contractors that design and construct 
these facilities. In doing so, project directors follow specific DOE 
directives, policies, and guidance for project management. Among these 
is DOE Order 413.3A, which establishes protocols for planning and 
executing a project. The protocols require DOE projects to go through 
a series of five critical decisions as they enter each new phase of 
work. These decisions are as follows: 

* Critical decision 0, which approves a mission-related need. 

* Critical decision 1, which approves the selection of a preferred 
solution to meet a mission need and a preliminary estimate of project 
costs—an approval that is based on a review of a project's conceptual 
design. 

* Critical decision 2, which approves that a project's cost and 
schedule estimates are accurate and complete—an approval that is based 
on a review of the project's completed preliminary design. 

* Critical decision 3, which reaches agreement that a project's final 
design is sufficiently complete and that resources can be committed 
toward procurement and construction. 

* Critical decision 4, which approves that a project has met its 
performance criteria for completion or that the facility is ready to 
start operations. 

To oversee projects and approve these critical decisions, DOE conducts 
its own reviews, often with the help of independent technical experts. 
For example, for large projects (with a total project cost of greater 
than $100 million), DOE's Office of Engineering and Construction 
Management (OECM) validates the accuracy and completeness of the 
project's performance baseline as part of the critical decision 2 
process. 

DOE Order 413.3A also requires projects to use EVM to measure and 
report the progress of construction projects (with a total project 
cost of greater than or equal to $20 million). EVM measures the value 
of work accomplished in a given period and compares it with the 
planned value of work scheduled for that period and with the actual 
cost of work accomplished. Differences in these values are measured in 
both cost and schedule variances. EVM provides information that is 
necessary for understanding the health of a program and provides an 
objective view of program status. As a result, EVM can alert program 
managers to potential problems sooner than expenditures alone can, 
thereby reducing the chance and magnitude of cost overruns and 
schedule delays. 

The following DOE offices and entities provide independent nuclear 
safety oversight: 

* HSS is responsible for policy development, independent oversight, 
enforcement, and assistance in the areas of health, safety, the 
environment, and security across DOE. Among its functions are periodic 
appraisals of the environmental, safety, and health programs at DOE 
sites, including evaluation of a sample of high-hazard nuclear 
facility at these sites to determine whether the program offices and 
their contractors are complying with DOE policies.[Footnote 9] 

* The NNSA Central Technical Authority is responsible for maintaining 
operational awareness of nuclear safety on NNSA projects, especially 
with respect to complex, high-hazard nuclear operations, and ensuring 
that DOE's nuclear safety policies and requirements are implemented 
adequately and properly. 

* The CDNS is responsible for evaluating nuclear safety issues and 
providing expert advice to the Central Technical Authority and other 
senior NNSA officials. In particular, the CDNS is responsible for (1) 
validating that efforts to integrate safety into a project's design 
include the use of a system engineering approach, (2) determining that 
nuclear facilities have incorporated the concept of defense-in-depth 
into the facility design process, and (3) validating that federal 
personnel assigned to an integrated project team as nuclear safety 
experts are appropriately qualified. 

Finally, DOE considers assessments and recommendations from external 
organizations, most prominently the Defense Nuclear Facilities Safety 
Board—an independent, external organization that reviews nuclear 
safety issues at DOE defense facilities and makes nonbinding 
recommendations to DOE. 

Construction Projects Appear to Be Meeting Cost Targets, but the MFFF 
Has Had Schedule Delays: 

The MFFF and WSB construction projects both appear to be meeting their 
cost targets, but the MFFF project has experienced some delays over 
the past 2 years. In accordance with DOE project management 
requirements, both projects are using EVM to measure and report 
progress against their established cost and schedule estimates (also 
known as performance baselines) for construction. EVM provides a 
proven means for measuring such progress and thereby identifying 
potential cost overruns and schedule delays early, when their impact 
can be minimized. Differences from the performance baseline are 
measured in both cost and schedule variances.[Footnote 10] Positive 
variances indicate that activities are costing less or are completed 
ahead of schedule. Negative variances indicate that activities are 
costing more or are falling behind schedule. These cost and schedule 
variances can then be used in estimating the cost and time needed to 
complete the project. 

Figure 1 presents information on both cumulative cost and schedule 
variances for the MFFF project over the 2-year period ending November 
2009. With respect to cost, the MFFF project has experienced 
fluctuating variances during this period. Overall, these cost 
variances are relatively small compared with the project's average 
monthly expenditures of over $20 million. In addition, it is normal 
for variances to fluctuate during the course of a project. 

Figure 1: Cumulative Cost and Schedule Variances for MFFF over a 2-
Year Period (2007-2009): 

[Refer to PDF for image: multiple line graph] 

Month: September 2007; 
Cost Variance: -$2.9 million; 
Schedule Variance: -$2.9 million. 

Month: October 2007; 
Cost Variance: -$2.3 million; 
Schedule Variance: $1.4 million. 

Month: November 2007; 
Cost Variance: -$4.1 million; 
Schedule Variance: -$2.6 million. 

Month: December 2007; 
Cost Variance: -$3.5 million; 
Schedule Variance: -$2.1 million. 

Month: January 2008; 
Cost Variance: -$3.6 million; 
Schedule Variance: -$4.7 million. 

Month: February 2008; 
Cost Variance: -$2.3 million; 
Schedule Variance: -$7.8 million. 

Month: March 2008; 
Cost Variance: -$3.9 million; 
Schedule Variance: -$13.4 million. 

Month: April 2008; 
Cost Variance: -$4.5 million; 
Schedule Variance: -$17.1 million. 

Month: May 2008; 
Cost Variance: -$6.1 million; 
Schedule Variance: -$25.3 million. 

Month: June 2008; 
Cost Variance: -$7.9 million; 
Schedule Variance: -$20.6 million. 

Month: July 2008; 
Cost Variance: -$4.4 million; 
Schedule Variance: -$19.3 million. 

Month: August 2008; 
Cost Variance: -$2.2 million; 
Schedule Variance: -$27.2 million. 

Month: September 2008; 
Cost Variance: -$5 million; 
Schedule Variance: -$30.8 million. 

Month: October 2008; 
Cost Variance: -$6 million; 
Schedule Variance: -$30.4 million. 

Month: November 2008; 
Cost Variance: -$7.3 million; 
Schedule Variance: -$34.1 million. 

Month: December 2008; 
Cost Variance: -$4 million; 
Schedule Variance: -$36.1v. 

Month: January 2009; 
Cost Variance: -$1.5 million; 
Schedule Variance: -$37.7 million. 

Month: February 2009; 
Cost Variance: -$0.9 million; 
Schedule Variance: -$38.2 million. 

Month: March 2009; 
Cost Variance: $1.6 million; 
Schedule Variance: -$35 million. 

Month: April 2009; 
Cost Variance: $2.1 million; 
Schedule Variance: -$33.5 million. 

Month: May 2009; 
Cost Variance: -$2.1 million; 
Schedule Variance: -$37.9 million. 

Month: June 2009; 
Cost Variance: -$0.3 million; 
Schedule Variance: -$39.5 million. 

Month: July 2009v
Cost Variance: -$0.5 million; 
Schedule Variance: -$32.8 million. 

Month: August 2009; 
Cost Variance: -$2.6 million; 
Schedule Variance: -$25.5 million. 

Month: September 2009; 
Cost Variance: -$4 million; 
Schedule Variance: -$24.9 million. 

Month: October 2009; 
Cost Variance: -$5.4 million; 
Schedule Variance: -$30.9 million. 

Month: November 2009; 
Cost Variance: -$10.6 million; 
Schedule Variance: -$27.6 million. 

Source: Shaw AREVA MOX Services, LLC. 

[End of figure] 

However, with respect to the project's schedule, the MFFF project has 
experienced consistently negative variances for most of the past 2 
years. Specifically, as shown in figure 1, these schedule variances 
were consistently negative for most of 2008, and, for much of 2009, 
the project had not completed almost $40 million in scheduled work. 
According to the data and project officials, delays during 2008 were 
due primarily to the delivery of reinforcing bars that did not meet 
nuclear quality standards. Specifically, in February 2008, NRC 
inspectors identified numerous pieces of reinforcing bars—steel rods 
that are used in reinforced concrete—that did not meet industry 
standards for nuclear facilities. At that point, NNSA's contractor, 
Shaw AREVA MOX Services, LLC (MOX Services), had accepted delivery of 
about 10,000 tons of reinforcing bars on-site and had installed almost 
4,000 tons. Although NRC and MOX Services officials determined that 
the error did not affect the safety of reinforcing bars already 
installed, this issue had a major effect on the overall schedule for 
pouring concrete and installing reinforcing bars in the structure 
during 2008. According to project officials, the project switched to a 
different supplier of reinforcing bars in September 2008 and by April 
2009 had a sufficient supply of material to support the construction 
schedule. 

Schedule delays in 2009 occurred primarily because project officials 
decided that they had not allocated sufficient time in the existing 
schedule to ensure the delivery of materials that would meet the 
stringent safety and design standards for nuclear facilities. For 
example, according to project officials, the project extended the 
amount of time needed to produce concrete for the MFFF to provide 
additional assurance that the concrete will meet nuclear quality 
standards. The rate of concrete production will be gradually increased 
beginning in early 2010, according to project officials. In addition, 
the project extended the amount of time needed to fabricate and 
deliver slab tanks, which are used to hold liquid fissile material, to 
provide additional assurance that these tanks meet stringent safety 
and design standards. 

In recent months, the MFFF project has improved its schedule 
performance, so that it faced roughly $25 million in uncompleted work 
by November 2009, compared with almost $40 million in uncompleted work 
earlier in the year. According to project officials, this amount of 
negative schedule variance is equivalent to about 2 to 3 week's worth 
of work on the project, and they expect to recover from this variance 
during 2010. In comparison, these officials stated that the project's 
schedule includes 16 month's worth of contingency to mitigate any 
risks from additional delays before the expected start of MFFF 
operations. 

Figure 2 presents information on both cumulative cost and schedule 
variances for the WSB project over a 11-month period ending in 
November 2009. With respect to cost, the WSB project has experienced 
consistently positive cost variances. However, schedule variances have 
been consistently negative over the same period. By November 2009, the 
project had not completed over $4 million worth of scheduled work, 
compared with average monthly expenditures of roughly $2 million 
during fiscal year 2009. According to the NNSA federal project 
director, the schedule variances are due to a variety of factors, 
including delays in the procurement of cementation equipment and in 
the installation of piping due to inclement weather. However, the 
official said that he expects the project to recover from these 
delays, and that none of these factors will affect the overall 
construction schedule for the project. 

Figure 2: Cumulative Cost and Schedule Variances for the WSB, January 
through November, 2009: 

[Refer to PDF for image: multiple line graph] 

Month: January 2009; 
Cost variance: $1.8 million; 
Schedule variance: -$0.1 million. 

Month: February 2009; 
Cost variance: $2.0 million; 
Schedule variance: -$0.4 million. 

Month: March 2009; 
Cost variance: $2.4 million; 
Schedule variance: -$1.5 million. 

Month: April 2009; 
Cost variance: $2.6 million; 
Schedule variance: -$2.7 million. 

Month: May 2009; 
Cost variance: $4.0 million; 
Schedule variance: -$2.7 million. 

Month: June 3009; 
Cost variance: $2.9 million; 
Schedule variance: -$2.6 million. 

Month: July 2009; 
Cost variance: $4.0 million; 
Schedule variance: -$3.2 million. 

Month: August 2009; 
Cost variance: $5.5 million; 
Schedule variance: -$3.0 million. 

Month: September 2009; 
Cost variance: $4.5 million; 
Schedule variance: -$4.8 million. 

Month: October 2009; 
Cost variance: $4.4 million; 
Schedule variance: -$5.9 million. 

Month: November 2009; 
Cost variance: $4.4 million; 
Schedule variance: -$4.6 million. 

Source: NNSA. 

[End of figure] 

The reliability of a project's EVM system depends in large part on the 
reliability of its underlying schedule. A reliable schedule specifies 
when the project's work activities will occur, how long they will 
take, and how they relate to one another. We have previously 
identified nine key practices necessary for developing a reliable 
schedule.[Footnote 11] In a March 2009 testimony before this 
subcommittee, we identified several instances in which the MFFF 
project's schedule did not adhere to these practices.[Footnote 12] In 
particular, we found that MFFF project staff had not conducted a risk 
analysis on their current schedule. 

However, since our March 2009 testimony, MFFF project officials have 
taken a number of steps to address our concerns. For example, project 
officials conducted a risk analysis of the MFFF project schedule in 
the summer of 2009 and used the results to update their risk 
management plan. In addition, project officials stated that they have 
significantly reduced the number of scheduled activities with long 
durations—that is, activities with start-to-finish durations of over 
200 days.[Footnote 13] On the basis of these actions, we reevaluated 
the MFFF project's schedule against the nine key scheduling practices. 
We also evaluated the WSB project's schedule against these same 
practices. We found that both projects met most of the key practices 
to a satisfactory degree. For example, one key practice is to plan the 
schedule so that it can meet critical project dates. To do so, project 
officials must logically sequence all planned activities in the order 
that they are to be carried out. In particular, project officials must 
identify both predecessor activities—which must finish prior to the 
start of another activity—as well as successor activities—which cannot 
begin until other activities are completed. We found that the MFFF 
project had logically sequenced all scheduled activities, while the 
WSB project had logically sequenced the vast majority of its scheduled 
activities. For the complete results of our analysis of the projects' 
schedules, see appendixes II and III. 

NNSA Is Reconsidering Alternatives for Its Pit Disassembly Mission 
That Could Delay Production of Material Needed for the MFFF: 

NNSA recently announced that it is considering a new alternative for 
its pit disassembly and conversion mission. However, due to the amount 
of time and effort needed to reconsider alternatives and construct a 
facility, as well as the amount of uncertainty associated with the 
agency's new alternative, it seems unlikely that NNSA will be able to 
establish this capability in time to produce the plutonium oxide 
feedstock needed to operate the MFFF. As result of the likely delay in 
establishing a pit disassembly and conversion capability, NNSA may 
need to expand the ARIES project at LANL to provide additional interim 
plutonium feedstock to the MFFF. However, NNSA has not sufficiently 
planned for such a contingency. In addition, NNSA has not sufficiently 
planned for the maturation of critical technologies to be used in pit 
disassembly and conversion operations. 

NNSA Recently Announced a New Alternative for Pit Disassembly, but the 
Alternative Depends on an Aggressive, Potentially Unrealistic Schedule: 

In 1997, DOE decided to establish a pit disassembly and conversion 
capability as part of its strategy for plutonium disposition. Because 
about two-thirds of the plutonium slated for disposition is contained 
in nuclear weapon pit form, the ability to disassemble pits is 
critical to the success of the program. In 2000, DOE decided to 
construct and operate a PDCF at SRS. Through 2009, NNSA's strategy has 
been to design and construct the PDCF as a new, stand-alone facility 
on a site adjacent to the current construction site of the MFFF. While 
NNSA has never established a definitive cost and schedule estimate for 
the PDCF project, a 2009 NNSA report estimated that the PDCF would 
cost $3.65 billion to construct and be operational by April 2021. 
[Footnote 14] 

However, DOE recently proposed a new alternative for establishing a 
pit disassembly and conversion capability at SRS. In September 2008, 
DOE authorized a study to review alternatives to the siting location 
of the PDCF capability within existing facilities at SRS and, as a 
result, to potentially improve its approach to disposition of surplus 
plutonium at SRS. Specifically, the study looked at the feasibility of 
combining the capabilities of the PDCF project with the Plutonium 
Preparation project, another project at SRS being managed by DOE's 
Office of Environmental Management. The purpose of the Plutonium 
Preparation project, as approved by DOE in June 2008, was to prepare 
for disposition of up to 13 metric tons of surplus, nonpit, plutonium-
bearing materials that are either at the SRS K-Area Facility or 
planned for storage at the facility. According to DOE's plans, the 
project would be installed in the K-Area Facility and would prepare 
the plutonium-bearing materials for disposition via two pathways: (1) 
converting some of the materials into plutonium oxide feedstock for 
the MFFF and (2) immobilizing the rest of the materials with high-
level waste in glass using the Defense Waste Processing Facility at 
SRS. According to DOE's 2008 preliminary estimate, this project would 
be operational in the 2013-2014 time frame at a cost of $340 million 
to $540 million. 

In November 2008,[Footnote 15] DOE issued a report stating that it 
would be feasible to combine the two projects at the K-Area Facility. 
According to NNSA's preliminary estimates, the combined project would 
cost about $3.65 billion and would be constructed in two phases. The 
first phase would include the design and installation of equipment in 
one area of the K-Area Facility to provide the capability (formerly 
associated with the Plutonium Preparation project) to process 3.7 
metric tons of surplus, nonpit plutonium, which would be used as an 
early source of plutonium oxide feedstock to the MFFF. The second 
phase would include the modification of a different area within the 
facility and the design and installation of equipment to provide the 
pit disassembly and conversion capability.[Footnote 16] In December 
2008, NNSA suspended many of the activities associated with the PDCF 
project while it performed additional analyses, and DOE suspended 
activities associated with the Plutonium Preparation project. Finally, 
in November 2009, DOE approved the "pursuing" of the combined project 
approach, noting several potential benefits, such as greater funding 
flexibility, greater flexibility regarding DOE's secure transportation 
system, the avoidance of expenditures associated with constructing a 
new facility, and the avoidance of costs associated with 
decontaminating and decommissioning two Category 1 nuclear facilities, 
among others. 

However, it appears unlikely that NNSA will be able to establish a pit 
disassembly and conversion capability in time to produce the plutonium 
feedstock needed to operate the MFFF beginning in 2021, due to the 
amount of time and effort needed to reconsider alternatives and 
construct a facility as well as the amount of uncertainty associated 
with the agency's new proposal. First, according to NNSA officials, 
they do not expect to make a decision in the near future on which 
approach—either the PDCF as a stand-alone facility or the K-Area 
Facility combination project—they will ultimately approve. 
Specifically, officials told us that prior to making any decision, 
NNSA must first select its preferred alternative as part of the DOE 
critical decision 1 process. To prepare for critical decision 1, NNSA 
will need to develop and manage numerous details, including (1) the 
appropriate review and documentation pursuant to the National 
Environmental Policy Act; (2) a transfer by the Secretary of Energy 
from the Office of Environmental Management to NNSA of the necessary 
materials, functions, and facilities to carry out the preferred 
alternative; and (3) issues related to federal and contractor program 
management, contract management, project management, and 
budget/financial management. As a result, NNSA officials said that 
they are still developing plans and schedules for the combination 
project and cannot provide any specific project schedule dates at this 
time. In addition, they stated that once NNSA makes a final decision 
on its strategy for pit disassembly and conversion as part of the 
critical decision 1 process, it will take several additional years to 
develop definitive cost and schedule estimates for its final approach 
as part of the critical decision 2 process. 

Second, a number of issues with NNSA's new proposal raise doubts 
regarding whether the agency will be able to construct a facility in 
time to provide the plutonium feedstock necessary to operate the MFFF. 
For example: 

* According to NNSA documents, the K-Area Facility combined project 
will require an aggressive, near-term acquisition strategy and project 
development effort to design, construct, and start a pit disassembly 
and conversion capability under the current time constraints. Phase 1 
of the project is scheduled to be operational by 2014 to provide an 
early source of feedstock (from nonpit plutonium sources) to the MFFF, 
and phase 2 must be operational by 2021 to provide the bulk of the 
plutonium oxide feedstock that the MFFF will require to meet its 
planned production schedule. 

* According to NNSA documents, the existing schedule for the K-Area 
Facility combined project is at an early stage of development and 
lacks any quantified schedule contingency. 

* The project will require construction within an existing, secure, 
operating facility. Specifically, the project will need to excavate 
material from existing walls and floors in numerous locations to 
install piping and utilities, among other things. According to NNSA, 
during these excavations, the project may encounter conditions that 
have not been documented in existing design drawings for the K-Area 
Facility. Construction of a new facility, the original plan for the 
PDCF project, carries fewer risks of encountering unknown conditions—
such as undocumented electrical wiring or other physical interfaces. 

* The project will require substantial coordination between NNSA and 
the Office of Environmental Management, as well as various contractor 
organizations, to address competing missions and out-year issues. As a 
result, according to NNSA, DOE may require additional federal 
resources and interface agreements between its various offices to 
ensure the proper integration and execution of the project. 

NNSA Has Not Sufficiently Planned for an Expansion of the ARIES 
Project If Pit Disassembly Operations Are Delayed: 

NNSA's new alternative assumes that the K-Area Facility combined 
project will become operational by the 6th year of MFFF operations 
(2021). However, if the design and construction of the project are 
delayed, NNSA may have to rely on the ARIES project at LANL to provide 
additional plutonium oxide feedstock for the MFFF. The ARIES project 
includes (1) laboratory facility preparation activities, (2) the 
acquisition of gloveboxes,[Footnote 17] (3) the design and assembly of 
a control system to operate the demonstration modules, (4) the 
preparation of all system documentation requirements, (5) the 
demonstration of the disassembly and conversion of all types of 
surplus nuclear weapon pits, (6) material control and accountability, 
and (7) measurements of personnel radiation exposure from all surplus 
pit types. LANL conducts activities associated with the ARIES project 
at its Plutonium Facility 4 building, which was constructed in 1978 as 
a multiuse plutonium research and development facility. NNSA's current 
production mission for the ARIES project is to produce about 2 metric 
tons of plutonium oxide feedstock. Specifically, LANL is to produce 50 
kilograms of plutonium oxide by the end of fiscal year 2010, ramp up 
to a target rate of 300 kilograms per year in fiscal year 2012, and 
sustain this rate through fiscal year 2017. However, this material—
along with additional quantities of plutonium in nonpit form currently 
stored at the K-Area Facility—will only be enough for the first 5 
years of the MFFF production schedule. 

NNSA has examined the possibility of expanding the ARIES project at 
LANL to provide additional plutonium oxide feedstock to the MFFF. 
Specifically, in May 2008, NNSA published a report that estimated NNSA 
might need as much as 12 metric tons of plutonium oxide feedstock to 
bridge a time gap between the startup of operations at the MFFF and 
the PDCF.[Footnote 18] The report's authors evaluated several 
potential scenarios for increasing the amount of equipment and the 
number of work shifts at LANL and estimated that ARIES could produce 
up to 16.7 metric tons of plutonium oxide at a cost of over $700 
million. In conducting its analysis, the report's authors made a 
number of assumptions, including that space would be available within 
the Plutonium Facility 4 building to accommodate an expanded ARIES 
mission, and that LANL would be able to provide the necessary vault 
space to accommodate an expanded ARIES mission. However, recent GAO 
work raises questions about the validity of these assumptions. 
Specifically, in May 2008,[Footnote 19] we assessed NNSA's plans to 
expand pit manufacturing operations within the Plutonium Facility 4 
building. We found that NNSA would not be able to substantially 
increase its pit manufacturing capacity in the building for the 
foreseeable future because of several major constraints, including (1) 
limited vault space in the Plutonium Facility 4 building for storing 
pits and associated wastes and (2) competition for available floor 
space in the building due to the presence of other NNSA and DOE 
programs. For example, we found that vault space was one of the major 
limiting factors for pit production in fiscal year 2007, and that the 
vault was operating at 120 percent of its originally designed capacity. 

In a more recent study, NNSA concluded that LANL would not be a viable 
option to perform the entire pit disassembly and conversion mission. 
Specifically, in a November 2009 report,[Footnote 20] NNSA stated that 
the ARIES project would be unable to sustain the annual output of 
plutonium oxide feedstock necessary to support MFFF operations for a 
number of reasons. For example, the report stated that because the 
Plutonium Facility 4 building is a one-of-a-kind, mission-critical 
facility for national defense, national defense missions in the 
facility will continue to take precedence over other programs—
including the pit disassembly and conversion mission—for the 
foreseeable future. In addition, the report pointed out several of the 
same constraints to expanding operations in the Plutonium Facility 4 
building that we described in our prior report on pit manufacturing. 

NNSA's November 2009 report also concluded that LANL continues to be a 
viable option to produce some additional plutonium oxide material to 
fill a potential gap if the PDCF project is delayed further. However, 
the report did not update the prior 2008 report to determine what 
additional amount of material it would be feasible for the ARIES 
project to produce. The report also did not provide estimates for how 
much an expanded ARIES mission would cost or when LANL would be able 
to produce additional plutonium oxide material. Instead, the report 
noted that NNSA would need to prepare and validate a detailed, 
resource-loaded, integrated schedule for an expanded ARIES mission. As 
a result, it remains uncertain whether ARIES could fill a potential 
gap if NNSA's main pit disassembly and conversion operations are 
delayed. 

In March 2010, DOE stated that NNSA does not plan on expanding the 
current mission of the ARIES project until LANL demonstrates that it 
can sustain a production rate of 300 kilograms of plutonium oxide a 
year over an extended period of time. In addition, DOE stated that 
NNSA is evaluating other options to provide plutonium oxide feedstock 
to the MFFF prior to the start of pit disassembly and conversion 
operations. These options included (1) the use of 1.4 metric tons of 
fuel-grade plutonium already in storage at the K-Area Facility and (2) 
starting up "limited but sufficient" pit disassembly processes.[Footnote 21] 

NNSA Has Not Sufficiently Planned for the Maturation of Critical 
Technologies: 

NNSA's current strategy relies on a number of technologies that are 
critical to establishing a pit disassembly and conversion capability. 
These technologies include the following systems and components: 

* Pit disassembly—-includes a lathe, manipulators, and grippers to cut 
pits, extract the plutonium, and prepare it for oxidation. 

* Hydride dehydride—-includes two furnaces to separate plutonium from 
other pieces of material. 

* Direct metal oxidation-—includes a furnace to convert plutonium and 
uranium metal into plutonium and uranium oxide. 

* Oxide product handling—-includes mill rollers and a blender to size 
and blend the plutonium oxide product. 

* Product canning-includes an automated bagless transfer system to 
package the final product. 

* Sanitization—-includes a microwave furnace to melt components that 
do not contain plutonium or uranium. 

To demonstrate the viability of these technological components, DOE 
started the ARIES project at LANL in 1998. In addition, four other 
organizations are conducting testing and development activities in 
support of some of the critical technologies for pit disassembly and 
conversion: DOE's Savannah River National Laboratory, DOE's Pacific 
Northwest National Laboratory, the Clemson Engineering Technologies 
Laboratory, and a commercial vendor.[Footnote 22] 

Assessing technology readiness is crucial at certain points in the 
life of a project. Within DOE's critical decision framework, such 
assessments are crucial at critical decision 2—acceptance of the 
preliminary design and approval of the project's cost and schedule 
estimates as accurate and complete—and at critical decision 3—
acceptance of the final design as sufficiently complete so that 
resources can be committed toward procurement and construction. 
Proceeding through these critical decision points without a credible 
and complete technology readiness assessment can lead to problems 
later in the project. Specifically, if DOE proceeds with a project 
when technologies are not yet ready, there is less certainty that the 
technologies specified in the preliminary or final designs will work 
as intended. Project managers may then need to modify or replace these 
technologies to make them work properly, which can result in costly 
and time-consuming redesign work. 

DOE has endorsed the use of the technology readiness level (TRL) 
process for measuring and communicating technology readiness in cases 
where technology elements or their applications are new or novel. In 
March 2008, DOE's Office of Environmental Management published 
guidance on conducting technology readiness assessments and developing 
technology maturation plans. According to the guidance, staff should 
conduct technology readiness assessments using the TRL framework. 
Specifically, staff are to use a nine-point scale to measure TRLs. 
This scale ranges from a low of TRL 1 (basic principles observed) to a 
midlevel of TRL 6 (system/subsystem model or prototype demonstration 
in relevant environment) to a high of TRL 9 (total system used 
successfully in project operations). According to the guidance, for 
any critical technologies that did not receive a TRL of 6 or higher 
during such an assessment, staff should develop a technology 
maturation plan, which is supposed to describe planned technology 
development and engineering activities required to bring immature 
technologies up to the desired TRL of 6 or higher. This plan should 
include preliminary schedule and cost estimates to allow decision 
makers to determine the future course of technology development. In 
addition, the guidance stated that once a project reached the critical 
decision 2 stage, all critical technologies should have reached a TRL 
of 6. 

NNSA has undertaken a number of assessments of technological maturity 
and readiness for pit disassembly and conversion over the past decade 
as part of the ARIES project. For example, the PDCF project team 
carried out an evaluation of the maturity of ARIES equipment in 2003. 
According to project officials, the TRL framework was first used to 
assess the maturity of pit disassembly and conversion technologies in 
November 2008, in accordance with the Office of Environmental 
Management's 2008 guidance.[Footnote 23] In addition, as part of an 
independent review of the PDCF project, NNSA issued a report in 
January 2009 that included a technology readiness assessment of the 
ARIES equipment and other critical technologies.[Footnote 24] The 
results of this assessment, as well as the earlier assessment 
conducted in 2008, are shown in table 1. 

Table 1: Technology Assessments of Critical Pit Disassembly and 
Conversion Technologies Conducted in 2008 and 2009: 

Technology system/component: Pit disassembly; 
TRL: As assessed by the PDCF project in 2008: 6-7; 
As assessed by NNSA's independent review in 2009: 5. 

Technology system/component: Hydride dehydride; 
TRL: As assessed by the PDCF project in 2008: 3-4; 
As assessed by NNSA's independent review in 2009: 4. 

Technology system/component: Direct metal oxidation; 
TRL: As assessed by the PDCF project in 2008: 7-8; 
As assessed by NNSA's independent review in 2009: 5. 

Technology system/component: Oxide product handling; 
TRL: As assessed by the PDCF project in 2008: 4-5; 
As assessed by NNSA's independent review in 2009: 4. 

Technology system/component: Product canning; 
TRL: As assessed by the PDCF project in 2008: 7-8; 
As assessed by NNSA's independent review in 2009: 6. 

Technology system/component: Sanitization; 
TRL: As assessed by the PDCF project in 2008: 4-6; 
As assessed by NNSA's independent review in 2009: 4-6. 

Sources: Washington Group International, Inc.; NNSA. 

[End of table] 

As table 1 shows, there are a number of key technologies for pit 
disassembly and conversion that had not attained a TRL of 6. In 
accordance with the guidance on TRLs, NNSA should have a technology 
maturation plan in place to describe the planned technology 
development and engineering activities required to bring immature 
technologies up to the desired TRL of 6 or higher. According to NNSA 
officials, LANL had developed such a plan.[Footnote 25] However, we 
found that LANL's plan lacked several key attributes of a technology 
maturation plan as described by DOE's guidance. Specifically, we found 
the following problems with LANL's plan: 

* A technology maturation plan is supposed to be developed to bring 
all immature critical technologies up to an appropriate TRL. However, 
LANL's plan only addressed the technologies under development at LANL 
as part of the ARIES project. The plan did not address technologies, 
such as the oxide product handling equipment, being tested by the four 
other organizations. 

* For each technology assessed at less than TRL 6, a technology 
maturation plan should include preliminary schedule and cost estimates 
to allow decision makers to determine the future course of technology 
development. However, LANL's plan did not include preliminary 
estimates of cost and schedule. 

* LANL's plan is dated November 2007. However, NNSA has conducted or 
sponsored two technology readiness assessments of the PDCF critical 
technologies since that date. As a result, LANL's plan is out of date 
and does not take into account the current state of maturity of its 
critical technologies. 

NNSA officials told us that while they recognize some of the problems 
with the project's existing technology maturation plan, they have 
already prepared budget and schedule estimates for technology 
development activities in a number of separate documents (including 
the overall PDCF project schedule). However, they still have not 
updated the current technology maturation plan in accordance with DOE 
guidance. Until such an update is completed, it is uncertain whether 
these technologies will be sufficiently mature in time to meet the 
current, aggressive schedule for establishing a PDCF capability. 

NNSA Has One Potential Customer for Most of Its MOX Fuel, but Outreach 
to Others May Be Insufficient: 

NNSA has offered several incentives to attract customers for its MOX 
fuel and is working toward a formal agreement for the Tennessee Valley 
Authority (TVA) to purchase the majority of this fuel. However, NNSA's 
outreach to other utilities may not yet be sufficient to inform 
potential customers of incentives to use MOX fuel. 

NNSA Has Taken Steps to Attract Customers and Is in Negotiations with 
TVA: 

NNSA and its contractor for the MFFF project, MOX Services, have 
established a production schedule for the fabrication of MOX fuel 
assemblies from surplus, weapons-grade plutonium. According to the 
current production schedule, the MFFF is to produce 8 MOX fuel 
assemblies in 2018, the initial year of production. The MFFF's 
production rate is then to increase over the next 5 years up to a 
maximum rate of 151 fuel assemblies per year (see figure 3). The MFFF 
is expected to produce 1,700 fuel assemblies during its production 
run. In addition, according to NNSA's plans, these fuel assemblies 
will be designed for use in pressurized water nuclear reactors, which 
are the most common type of nuclear reactor in use in the United 
States.[Footnote 26] 

Figure 3: The MFFF Planned Production Schedule for MOX Fuel Assemblies: 

[Refer to PDF for image: line graph] 

Year: 2018; 
Number of MOX fuel assemblies: 8. 

Year: 2019; 
Number of MOX fuel assemblies: 20. 

Year: 2020; 
Number of MOX fuel assemblies: 75. 

Year: 2021; 
Number of MOX fuel assemblies: 100. 

Year: 2022; 
Number of MOX fuel assemblies: 100. 

Year: 2023; 
Number of MOX fuel assemblies: 151. 

Year: 2024; 
Number of MOX fuel assemblies: 151. 

Year: 2025; 
Number of MOX fuel assemblies: 151. 

Year: 2026; 
Number of MOX fuel assemblies: 151. 

Year: 2027; 
Number of MOX fuel assemblies: 151. 

Year: 2028; 
Number of MOX fuel assemblies: 151. 

Year: 2029; 
Number of MOX fuel assemblies: 151. 

Year: 2030; 
Number of MOX fuel assemblies: 151. 

Year: 2031; 
Number of MOX fuel assemblies: 151. 

Year: 2032; 
Number of MOX fuel assemblies: 38. 

Source: Shaw AREVA MOX Services, LLC. 

[End of figure] 

In June 2000, Duke Power (now Duke Energy Carolinas, LLC, or Duke), a 
power utility that operates seven pressurized water reactors in North 
Carolina and South Carolina, signed a subcontract with NNSA's 
contractor for the MFFF project, MOX Services. According to NNSA 
officials, this subcontract gave the utility the option to purchase up 
to three-fourths of the MOX fuel produced by the MFFF at a discount 
relative to the price of normal reactor fuel, which uses low enriched 
uranium. According to the officials, the subcontract also obligated 
MOX Services to compensate Duke if the MOX fuel was not delivered by 
December 2007. However, as project delays continued to push back the 
start of construction, Duke, MOX Services, and NNSA began discussions 
in 2005 to renegotiate the subcontract. After nearly 3 years of 
discussions, Duke and MOX Services were unable to reach agreement by 
the negotiation deadline, and the subcontract automatically terminated 
on December 1, 2008. 

As negotiations with Duke came to an end, MOX Services, at NNSA's 
direction, issued a request to nuclear utilities in October 2008 to 
express their interest in the MOX fuel program. The request outlined a 
number of possible incentives to mitigate the risks to utilities in 
using MOX fuel—risks that include the need to modify reactors and 
obtain an operating license amendment from NRC to use MOX fuel. For 
example, the request discussed the possibility of (1) selling MOX fuel 
at a discount relative to the price of uranium fuel[Footnote 27] and 
(2) paying for costs associated with modifying a reactor and obtaining 
an operating license amendment from NRC. Furthermore, in January 2009, 
DOE reserved 12.1 metric tons of highly enriched uranium from its 
stockpile and hired a contractor to downblend this amount into 155 to 
170 metric tons of low enriched uranium to serve as a backup supply of 
fuel if MOX fuel deliveries to customers are delayed.[Footnote 28] As 
of December 2009, NNSA and MOX Services were still working on an 
agreement on liability if fuel is not delivered on time. 

According to NNSA officials, three utilities have responded to MOX 
Services' request and have expressed interest in the MOX fuel program. 
Notably, in February 2010, NNSA and TVA signed an interagency 
agreement to fund TVA studies on the use of MOX fuel in five of TVA's 
reactors. Under the agreement, TVA will perform work on core design, 
licensing, modifications, and other related activities to evaluate the 
use of MOX fuel in its reactors. According to an NNSA official, using 
MOX fuel in five of TVA's reactors could account for up to 85 percent 
of the MFFF's output. The official also stated that an agreement with 
TVA to become a customer could be signed by the fall of 2010. TVA 
officials stated that they believed that familiarity gained by working 
with DOE during the Blended Low Enriched Uranium would help them work 
with DOE during the MOX program and cited this factor in their 
decision to begin discussions about becoming a customer for MOX fuel. 
Aside from TVA, NNSA officials characterized their contact with two 
other utilities as in the preliminary stages, and they could not 
estimate when or if they would secure them as customers for MOX fuel. 

Because utilities typically contract with fuel suppliers at least 5 
years in advance, NNSA and MOX Services will need to secure customers 
several years before they deliver MOX fuel to them. NNSA officials 
said that their goal is to obtain at least one customer by the end of 
fiscal year 2010, in part because the 5-year period during which the 
MFFF will increase its production capacity will allow them additional 
time to secure more customers. Furthermore, if TVA agrees to be a 
customer and uses MOX fuel in five of its reactors, these officials 
said that NNSA may only need one additional utility to account for the 
remainder of the MFFF's planned production of MOX fuel assemblies. 

However, NNSA faces two main obstacles in obtaining TVA as its primary 
customer. First, some of TVA's reactors that would be candidates for 
using MOX fuel may not be permitted to use the fuel due to their 
status as backup reactors in DOE's tritium production program. 
According to NNSA officials, the 2000 U.S.-Russian plutonium 
disposition agreement could be interpreted as precluding reactors 
involved in weapons production from being used to dispose of MOX fuel. 
TVA officials told us that they are working with DOE to transfer 
tritium production responsibilities to another TVA reactor that is not 
presently a candidate for the MOX program. Second, although NNSA 
currently plans to produce MOX fuel assemblies for use in pressurized 
water reactors, three of TVA's reactors that are candidates for 
burning MOX fuel are boiling water reactors.[Footnote 29] NNSA 
officials told us that they are studying how the MFFF can be 
reconfigured to produce fuel assemblies for boiling water reactors. In 
particular, they stated that the MFFF's design is based on a French 
MOX Facility, which can switch production between fuel assemblies for 
pressurized water reactors and for boiling water reactors in about 10 
to 20 days. However, the officials also stated that they might need to 
conduct additional tests on using MOX fuel assemblies in boiling water 
reactors before producing the fuel assemblies in large quantities, and 
that it was unclear whether such tests would delay the MOX production 
schedule. 

In March 2010, DOE stated that NNSA is evaluating several options for 
providing alternative sources of plutonium oxide material to the MFFF 
prior to the start of pit disassembly and conversion operations. One 
option under consideration is to adjust the "quantity and timing in 
providing initial fuel deliveries" to potential customers. 

NNSA's Proposed Incentives Might Attract Customers, but Current 
Outreach May Be Insufficient: 

We interviewed fuel procurement officials at 22 of the nation's 26 
nuclear utilities to determine the extent to which nuclear utilities 
are interested in participating in DOE's MOX fuel program and to 
evaluate what factors may influence their interest.[Footnote 30] The 
factors we asked about were based on input we received from industry 
experts, DOE officials, and former utility officials. (For a list of 
the structured interview questions that we asked utilities, see app. 
IV.) As shown in table 2, utility officials most often identified the 
following factors as very or extremely important when assessing their 
level of interest in participating in the MOX fuel program: 

* consistent congressional funding of the program, 

* DOE's ability to ensure timely delivery of MOX fuel, 

* DOE's ability to ensure the timely delivery of a backup supply of 
uranium fuel, 

* the cost of MOX fuel relative to the cost of reactor fuel, and, 

* the opportunity to test MOX fuel in their reactors prior to full-
scale use. 

Table 2: Factors Affecting a Utility's Interest in the MOX Fuel 
Program: 

Factor: Congressional funding of the program throughout its expected 
duration; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 20. 

Factor: DOE's ability to ensure timely delivery of MOX fuel; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 20. 

Factor: DOE's ability to ensure timely delivery of backup uranium fuel; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 19. 

Factor: Cost of MOX fuel relative to reactor fuel; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 19. 

Factor: Opportunity to test MOX fuel prior to full-scale use; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 19. 

Factor: Cost of modifying the reactor for MOX fuel use; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 17. 

Factor: Costs associated with obtaining NRC licensing to use MOX fuel; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 15. 

Factor: Public opinion regarding MOX fuel use; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 14. 

Factor: Storage of MOX fuel on site prior to use; 
Number of utilities characterizing factor as "very important" or 
"extremely important": 7. 

Source: GAO analysis of structured interviews of 22 utilities. 

[End of table] 

We then asked utilities about possible incentives—some of which have 
already been proposed by NNSA and DOE—that may affect their interest 
in becoming program participants.[Footnote 31] We also asked about 
scenarios in which DOE offered a discount of 15 percent and 25 percent 
for MOX fuel relative to the price of regular reactor fuel. As shown 
in table 3, DOE's payment for costs associated with reactor 
modifications and NRC licensing to use MOX fuel—two incentives DOE has 
actually proposed to utilities—resulted in the largest number of 
utilities expressing increased interest in participating in the MOX 
fuel program. 

Table 3: Number of Utilities Indicating Increased Interest in the MOX 
Fuel Program Due to Possible Incentives: 

Incentive: DOE payment for reactor modifications for MOX fuel use[A]; 
Number of utilities expressing increased interest: 15. 

Incentive: DOE payment of costs associated with obtaining NRC 
licensing to use MOX fuels; 
Number of utilities expressing increased interest: 14. 

Incentive: DOE offering a 25 percent discount for MOX fuel in relation 
to regular reactor fuel; 
Number of utilities expressing increased interest: 13. 

Incentive: DOE funding for MOX fuel testing prior to full-scale use; 
Number of utilities expressing increased interest: 12. 

Incentive: DOE offering a 15 percent discount for MOX fuel in relation 
to regular reactor fuel; 
Number of utilities expressing increased interest: 8. 

Source: GAO structured interview of 22 utilities. 

[A] Indicates proposed DOE incentive. 

[End of table] 

However, despite the incentives offered, as of October 2009 the 
majority of the utilities that we interviewed expressed little or no 
interest in becoming MOX fuel customers. Specifically, 12 utilities 
reported they were either not interested or not very interested in 
becoming MOX fuel customers, 8 utilities were somewhat interested, and 
only 2 utilities indicated that they were currently very interested or 
extremely interested in the program. Three utilities indicated that 
they were currently interested enough to consider contacting DOE about 
becoming MOX fuel customers. When asked to consider the proposed 
incentives, however, 8 utilities expressed such interest.[Footnote 32] 
NNSA officials stated that they have communicated their willingness to 
provide incentives to potential customers. However, neither NNSA nor 
MOX Services has provided additional outreach or information to 
utilities in general since the October 2008 request for expression of 
interest.[Footnote 33] Furthermore, 11 utilities responded in our 
interviews that they had heard or read very little about the MOX fuel 
program, while 5 responded that they had received no information. In 
our view, the fact that so few utilities expressed sufficient interest 
in even contacting NNSA and MOX Services suggests that NNSA's outreach 
may not be sufficient. 

NRC Has Been Providing Oversight for the MFFF, but DOE's Independent 
Oversight of the MFFF and the WSB Has Been Limited: 

NRC has been providing nuclear safety oversight of the MFFF, which so 
far has included authorizing construction, identifying safety-related 
issues with construction, and reviewing the license application for 
the operation of the facility. DOE has looked at some aspects of 
nuclear safety for both the MFFF and the WSB as part of its management 
reviews, but oversight by DOE's independent nuclear safety entities 
has been limited. 

NRC Has Been Reviewing the MFFF's License Application and Has 
Identified Issues with Construction Practices: 

NRC is responsible for licensing the MFFF to produce fuel for 
commercial nuclear reactors. To do so, NRC is using a two-stage review 
and approval process: the first stage is construction authorization, 
and the second stage is license application approval. The construction 
authorization stage began in February 2001, when the MFFF contractor 
submitted an application to begin construction. As part of the 
construction authorization review, NRC reviewed key documents, 
including the project's preliminary safety designs, environmental 
impact statement, and quality assurance plan. NRC approved the 
facility's construction authorization request in March 2005. 

NRC began its review of the MFFF project's application for a license 
to possess and use radioactive materials in December 2006. NRC has 
divided the license review into 16 areas, including 
criticality/safety, chemical processing, and fire protection. NRC has 
issued requests for additional information for each of the 16 review 
areas. According to NRC officials, once NRC staff obtain all of the 
necessary information in a given area, they prepare a draft section 
for that area to be included in the draft Safety Evaluation Report for 
the facility. As shown in table 4, NRC had drafted sections for 6 of 
the 16 review areas as of January 2010. Once all of the draft sections 
are complete, NRC staff will prepare a draft safety evaluation report 
and, after concurrence from NRC management, will submit them to NRC's 
Advisory Committee on Reactor Safeguards-—a committee of experts that 
is independent of the staff and that reports directly to NRC's 
commissioners-—for review and comment. NRC staff are then to 
incorporate, at their discretion, the committee's comments into the 
license approval document and issue a final safety evaluation report 
for the facility, which NRC expects to occur in December 2010. Once 
NRC completes a safety review and verifies that MOX Services has built 
the facility according to NRC's safety regulations, it may issue the 
license. NRC officials stated that they could issue the license by 
2014 or 2015, depending on the construction status of the facility. 

Table 4: Status of NRC's Review of the MFFF's Operating License as of 
January 2010: 

Review area: Chemical processing; 
Safety section drafted: No. 

Review area: Civil/Structural; 
Safety section drafted: Yes. 

Review area: Classified matter handling; 
Safety section drafted: Yes. 

Review area: Criticality safety; 
Safety section drafted: Yes. 

Review area: Confinement; 
Safety section drafted: No. 

Review area: Emergency planning; 
Safety section drafted: Yes. 

Review area: Environmental protection; 
Safety section drafted: Yes. 

Review area: Fire protection; 
Safety section drafted: No. 

Review area: Human factors; 
Safety section drafted: No. 

Review area: Instrumentation and control; 
Safety section drafted: No. 

Review area: Integrated safety analysis; 
Safety section drafted: No. 

Review area: Management measures; 
Safety section drafted: No. 

Review area: Material control and accounting; 
Safety section drafted: No. 

Review area: Physical protection; 
Safety section drafted: No. 

Review area: Plant systems; 
Safety section drafted: No. 

Review area: Radiation protection; 
Safety section drafted: Yes. 

Source: NRC. 

[End of table] 

One issue that NRC raised during its review of the MFFF project is the 
design of safety controls to prevent a chemical reaction known as a 
"red oil excursion."[Footnote 34] Specifically, in January 2004, 
during the construction authorization stage, a senior NRC chemical 
safety reviewer stated that the MFFF's planned safety controls to 
prevent a red oil excursion differed from those recommended by DOE and 
the Defense Nuclear Facilities Safety Board. In response, NRC convened 
a panel in March 2005 to evaluate the reviewer's concerns. The panel 
issued a report in February 2007 concluding that although NRC's 
construction authorization of the MFFF did not need to be revisited, 
there was wide agreement among NRC staff and the Advisory Committee on 
Reactor Safeguards that significant technical questions remained 
unanswered about the MFFF's planned safety controls. To address these 
technical questions, NRC has taken a number of actions, including the 
following: 

* NRC engaged the assistance of the Brookhaven National Laboratory to 
provide two independent assessments of the risk of a red oil excursion 
at the facility. Brookhaven National Laboratory issued an initial 
report in March 2007 and a follow-up report in August 2009 in which it 
examined updated safety information provided by MOX Services.[Footnote 
35] The second of the two reports concluded that the risk of a red oil 
excursion at the facility is highly unlikely. 

* During the current licensing application stage, NRC officials have 
requested and received additional information from MOX Services 
related to planned safety controls to prevent a red oil excursion. 
However, as of our review, NRC staff had not completed their draft 
safety evaluation report for this area. 

NRC's oversight responsibilities also include inspecting the 
construction of the MFFF as well as the project's own quality 
assurance plan. NRC's Division of Construction Projects, based in 
NRC's Region II headquarters in Atlanta, conducts periodic inspections 
of the MFFF that assess the design and installation of the facility's 
principal structures, systems, and components and verifies that the 
project's quality assurance program is adequately implemented. These 
inspections involve document reviews and site inspections over several 
weeks and can include specialty reviews in welding, concrete, and 
other construction subject areas. NRC evaluates the MFFF's 
construction against standards set by the American Concrete Institute 
and the American Society of Mechanical Engineers, among others. In 
addition to the Region II inspections, NRC maintains one resident 
inspector at the construction site who conducts day-to-day inspection 
activities, such as walk-throughs. NRC also plans to hire an 
additional full-time resident inspector for the MFFF in fiscal year 
2010. 

As part of its ongoing inspection of the construction of the MFFF, NRC 
has issued 16 notices of violation against MOX Services since the 
start of construction in August 2007 related to various subjects, 
including quality assurance and control over design changes. 

(See appendix V for a complete list and description of NRC notices of 
violation.) Although NRC has classified all of the violations to date 
as severity level IV, the lowest safety-significant designation in its 
four-category scale, the violations have had an effect on the 
project's schedule.[Footnote 36] 

In addition to its regular construction reviews, NRC issues periodic 
assessments of the contractor's performance. In its latest assessment, 
released in November 2009, NRC concluded that MOX Services had 
conducted its overall construction activities at the MFFF in an 
acceptable manner. However, NRC also determined that MOX Services must 
improve its control over changes to the MFFF's design and increase its 
attention to its quality assurance oversight of vendors. NRC 
identified several examples of deficiencies associated with 
performing, verifying, and documenting design changes and noted 
failures on the part of MOX Services to adequately translate 
requirements into design and construction documents. In addition, NRC 
concluded that its finding of a violation related to MOX Services' 
vendor oversight indicates "a challenge to [MOX Services'] quality 
assurance staff to provide effective oversight of vendors that perform 
work on, fabricate, or supply components and equipment for use at the 
MFFF." In its assessment, NRC stated that it will conduct additional 
inspections to assess the effectiveness of MOX Services' corrective 
actions. In response to NRC's assessment, MOX Services stated that it 
is taking steps to strengthen its design control process, such as 
increasing training for quality control supervisors; introducing 
quality control checklists into its subcontractor and construction 
procedures; and conducting oversight visits to vendors. 

DOE Included Nuclear Safety in Management Reviews of the Projects, but 
Oversight by DOE's Independent Nuclear Safety Entities Has Been 
Limited: 

Although DOE has incorporated elements of nuclear safety in management 
reviews of the MFFF and the WSB projects that were conducted as part 
of its critical decision review process, the independent entities that 
were to conduct reviews of these projects were minimally involved. As 
part of the critical decisions 2 and 3 review process for the MFFF 
project, OECM conducted a review of the MFFF project during April and 
May, 2006, which included nuclear safety as one of several review 
areas. A review team comprising independent consultants and former DOE 
officials evaluated, among other things, the integration of nuclear 
safety into the project's environmental, safety, and health programs, 
as well the contractor's process for addressing issues found by NRC. 
The review identified one finding related to safety, noting that the 
ongoing revision of the project contract could introduce conflicts 
with NRC regulations. NNSA accepted the review's recommendation to 
develop a memorandum of understanding with NRC to resolve this issue. 

Regarding the WSB project, OECM conducted a review during September 
2008—as part of the critical decision 2 process—that included nuclear 
safety as one of several review areas. The review team examined key 
WSB documents related to nuclear safety, including the facility's 
safety evaluation report, preliminary documented safety analysis, and 
the design hazard analysis report. The review team recommended that an 
additional hazard analysis for one system be performed but determined 
that overall, the hazard analyses and safety assessments for the WSB 
were comprehensive and complete. In addition, NNSA's Office of Project 
Management and Systems Support conducted another review of the WSB 
project during September 2008 as part of the critical decision 3 
process. Because it was almost simultaneous with OECM's review, NNSA's 
review was less comprehensive and focused specifically on the WSB's 
ability to protect against a red oil excursion. This review resulted 
in a single recommendation, that is, for additional justification for 
the inclusion of certain equipment in the facility's design. In 
response to the recommendation, the WSB project team submitted a 
revised safety evaluation report justifying the equipment. 

Oversight by HSS Has Been Limited: 

Involvement by 1155, the main independent oversight entity for safety 
within DOE, has been limited for both the MFFF and the WSB projects. 
1155 is responsible for policy development, enforcement, and 
independent oversight in the areas of health, safety, the environment, 
and security across DOE. To accomplish this responsibility, this office 
performs appraisals to verify, among other things, that the 
department's employees, contractors, the public, and the environment 
are protected from hazardous operations and materials. However, these 
appraisals are designed to complement, not duplicate, program office 
oversight and self-assessments. In particular, HSS conducts visits to 
DOE sites and reviews a sample of facilities at those sites, including 
construction activities for new facilities. In addition, according to 
HSS officials, the office assists DOE's program offices by conducting 
reviews of documents supporting the safety basis—which is a technical 
analysis that helps ensure the safe design and operation of DOE's 
nuclear facilities—of a sample of high hazard nuclear facilities at a 
DOE site. For example, in response to our October 2008 report, which 
found that HSS was not conducting reviews of the safety basis of new, 
high-hazard nuclear facilities, HSS issued a new appraisal process 
guide in July 2009 that emphasized increased focus on the safety basis 
at such facilities.[Footnote 37] Finally, HSS has other oversight and 
advisory responsibilities related to nuclear safety during critical 
decision reviews for major DOE facilities. These responsibilities are 
spelled out in DOE's Order 413.3A, which provides direction on program 
and project management for the acquisition of capital assets, and 
include the following actions: 

* participating on the Energy Systems Acquisition Advisory Board—a 
body comprising senior DOE officials who advise DOE's Secretarial 
Acquisition Executive in critical decisions regarding major projects 
and facilities; 

* advising the DOE Secretarial Acquisition Executive on environmental, 
safety, and security matters related to all critical decision 
approvals; 

* serving on independent project reviews as a team member at the 
request of the Secretarial Acquisition Executive or program officials; 
and; 

* participating on external independent reviews as an observer at 
OECM's request. 

Regarding the MFFF project, IBS has provided limited oversight. 
According to IBS officials, because the National Defense Authorization 
Act of 1999 gave NRC responsibility for regulating nuclear safety at 
the MFFF, HSS's oversight activities have been more limited at the 
MFFF than at other DOE facilities. For example, while HSS has 
conducted some inspection activities at the MFFF, including reviewing 
reinforced concrete and structural steel at the facility during site 
visits to SRS in August and September, 2009, HSS officials said that 
these activities did not include a review of documents supporting the 
MFFF's safety basis. In addition, while HSS officials stated that 
personnel from HSS's predecessor office participated in the critical 
decisions 2 and 3 reviews for the MFFF project during 2006, HSS was 
unable to provide any documentation to substantiate this statement. 
[Footnote 38] According to department officials, HSS had limited 
resources for conducting reviews and needed to focus its resources on 
facilities that were not subject to external regulation. 

Regarding nuclear safety oversight of the WSB project, which is solely 
regulated by DOE, we found that HSS had not conducted any oversight 
activities or participated in any critical decision reviews. 
Specifically, HSS officials told us that they have not reviewed any 
documents supporting the WSB's safety basis, nor have they conducted 
any inspection activities at the WSB construction site. Despite the 
issuance of HSS's new appraisal process guide, which contains 
inspection protocols for new and unfinished high-hazard nuclear 
facilities, an HSS official told us that the office has yet to 
determine when they will inspect the WSB. An HSS official told us that 
he was uncertain whether a WSB inspection would occur in 2010 because 
an ongoing internal DOE review has delayed the development of the 
office's 2010 inspection schedule. However, if HSS's initial visit 
occurs later than 2010, NNSA will have already completed at least half 
of the WSB's construction, according to the project's schedule. 

Additionally, 1155 did not participate in any of the critical decision 
reviews for the WSB project because of existing DOE guidelines. 
Specifically, although the WSB is considered a category 2 (high-
hazard) nuclear facility, it is categorized as a nonmajor project. 
[Footnote 39] According to DOE's order, 1155 is not required to 
participate on the review board for a nonmajor project. In addition, 
neither OECM nor NNSA requested HSS to participate on the project 
reviews conducted for critical decisions 2 and 3. 

Oversight by CDNS Has Been Limited: 

NNSA's Central Technical Authority and the CDNS, which provide 
independent nuclear safety oversight, have not conducted any nuclear 
safety oversight activities for the MFFF project, and the offices have 
not conducted all of the oversight activities called for by DOE 
guidance for the WSB. DOE's Order 413.3A calls for the Central 
Technical Authority to maintain operational awareness regarding 
complex, high-hazard nuclear operations, and to ensure that DOE's 
nuclear safety policies and requirements are implemented adequately 
and properly. The order directs the CDNS to support the Central 
Technical Authority in this effort by: 

* participating as part of the Energy Systems Acquisition Advisory 
Board for major facilities, or similar advisory boards for minor 
facilities; 

* providing support to both the Central Technical Authority and the 
Acquisition Executive regarding the effectiveness of efforts to 
integrate safety into design at each of the critical decisions, and as 
requested during other project reviews; 

* determining that nuclear facilities have incorporated the concept of 
defense-in-depth into the facility design process; 

* validating that the integration of design and safety basis 
activities includes the use of a system engineering approach tailored 
to the specific needs and requirements of the project; and; 

* validating that federal personnel assigned to projects as nuclear 
safety experts are appropriately qualified. 

The CDNS's manual for implementing DOE Order 413.3A provides 
additional guidance, such as establishing the responsibilities of CDNS 
staff for evaluating safety activities at nuclear facilities. The 
manual also directs the head of the CDNS to participate in relevant 
staff meetings for NNSA projects that are requesting a decision from 
the Energy Systems Acquisition Advisory Board, an activity that may 
not be delegated for major projects.[Footnote 40] 

However, according to the head of the CDNS, his office has not 
participated in any safety review activities at the MFFF because NRC 
is regulating nuclear safety at the facility. The head of the CDNS 
acknowledged that his office's approach to overseeing nuclear safety 
for the MFFF project does not follow the guidance set out in DOE 
orders and related manuals and has not been formally adopted by NNSA. 
He stated this approach is necessary to make more efficient use of 
CDNS resources by focusing oversight activities on facilities 
regulated entirely by DOE. 

The CDNS has provided some oversight of the WSB project, but according 
to the head of the CDNS, this oversight has been limited, due in part 
to difficulty in applying DOE's guidance to the WSB and staffing 
issues. The CDNS participated as an observer on the advisory board for 
the WSB project during the project's critical decisions 2 and 3 
processes. However, the head of the CDNS said that he had no record of 
whether his office participated in or evaluated the results of OECM's 
review during the critical decision 2 process, which included several 
lines of inquiry related to nuclear safety. During the critical 
decision 3 process for the WSB project, CDNS staff reviewed key 
project safety documents to determine how the facility would protect 
against a red oil excursion and determine the qualifications of the 
federal staff person assigned to the project as a nuclear safety 
expert. 

Despite these efforts, the head of the CDNS told us that during the 
critical decision 3 review, his office experienced some difficulty in 
implementing the guidance established in DOE orders for the WSB 
project. The office's current policy is to review a project's safety 
documentation early in the design process and determine whether it 
conforms to DOE's relevant safety standard for integrating safety into 
design and incorporating defense-in-depth.[Footnote 41] The WSB 
project had completed its design work before DOE issued its current 
standard, and before the CDNS implemented a systematic approach to 
fulfilling its functions. Consequently, the CDNS did not perform a 
systematic review of WSB safety documentation. The CDNS head 
characterized the WSB review as being an ad hoc, qualitative 
assessment of some of the project's safety documentation. 
Additionally, the CDNS has not evaluated the qualifications of the 
nuclear safety expert that replaced the one evaluated as part of the 
critical decision 3 review. However, according to the head of the 
CDNS, his office only plans to evaluate the qualifications of new 
staff during technical reviews of the project, not after every change 
to the project team's composition. 

The head of the CDNS told us that his office has begun developing a 
more systematic approach to evaluating the design safety of DOE 
facilities. In addition, he stated that he would like to conduct 
additional safety reviews of facilities currently in design and 
construction. However, he said that these efforts have been hampered, 
in part due to staffing shortages. For example, the CDNS had a staff 
of 13 people in 2007. As of December 2009, however, only 4 people 
remained on the CDNS staff due to attrition and NNSA's decision to 
transfer some of the personnel into other program offices. The head of 
the CDNS stated that current staffing levels have led the CDNS to 
focus its attention on projects that are still in the design phase. He 
said that it was doubtful that the CDNS would return to the WSB to 
ensure that safety basis controls are fully integrated during its 
construction. Concerns over CDNS staffing issues also were raised by 
the Defense Nuclear Facilities Safety Board. Specifically, in its 
March 2009 letter to the Secretary of Energy, the safety board noted 
that reduced staff levels and the transfer of CDNS personnel into 
NNSA's program offices have reduced the effectiveness of the office. 

Conclusions: 

NNSA is already over 2 years into its construction schedule for the 
MFFF and expects the facility to become operational by 2016. It has 
also established a production schedule for fabricating up to 151 MOX 
fuel assemblies per year at full production. However, the agency faces 
uncertainty as to (1) its ability to supply the MFFF with sufficient 
quantities of plutonium oxide feedstock to meet its planned production 
schedule of MOX fuel and (2) the demand for MOX fuel assemblies from 
potential customers. Regarding the supply of plutonium oxide 
feedstock, NNSA only has a limited quantity of feedstock on hand to 
supply the MFFF prior to the start of pit disassembly operations. 
However, NNSA has not established a definitive strategy for pit 
disassembly operations, nor does it expect to do so in the near 
future. As a result, it appears unrealistic that NNSA will be able to 
meet its current production schedule for MOX fuel without obtaining 
additional sources of plutonium oxide. NNSA has stated that while it 
does not plan on expanding the current mission of the ARIES project 
until LANL demonstrates a sustained production rate over an extended 
period of time, it is evaluating other options to address this 
potential shortfall of plutonium oxide. These options include (1) the 
use of 1.4 metric tons of fuel-grade plutonium already in storage at 
the K-Area Facility, (2) starting up "limited but sufficient" pit 
disassembly processes, and (3) adjusting the "quantity and timing" in 
delivering MOX fuel to potential customers. We have concerns with 
these options, including (1) NNSA's use of a "wait-and-see" approach 
to the ARIES project, and the implications this may have on the 
ability of the ARIES project to meet its current and future production 
goals; (2) the implications of the use of fuel-grade plutonium on the 
design and safety of the MFFF, and the extent to which DOE has 
adequately determined how much additional material throughout the DOE 
complex may be suitable and available for use by the MFFF; (3) how DOE 
plans to establish limited pit disassembly processes given the current 
lack of a definitive strategy for pit disassembly operations; and (4) 
how DOE plans to adjust the MOX fuel production schedule, and the 
implications this may have on the cost and schedule for operating the 
MFFF and DOE's ability to attract potential MOX fuel customers. In 
addition to these concerns, while NNSA's strategy relies on critical 
technologies currently under development at LANL and other sites for 
pit disassembly and conversion operations, its current technology 
maturation plan does not meet DOE's current guidance because the plan 
is outdated and incomplete. Without a plan that provides more details 
on the options DOE has mentioned to increase the supply of plutonium 
oxide, or a comprehensive technology maturation plan, it is uncertain 
whether NNSA will be able to meet the MFFF's planned production 
schedule. 

Regarding obtaining customers for MOX fuel assemblies, our survey of 
utilities indicated that some utilities might be interested in 
becoming customers but appear unaware of the incentives NNSA and DOE 
are offering. Without additional outreach, NNSA may not be able to 
obtain sufficient customers for the MOX fuel it plans to produce, 
which would leave the agency with nuclear material it cannot dispose 
of and the U.S. Treasury with a forgone opportunity for revenue. 

Although DOE incorporated some aspects of nuclear safety oversight in 
its management reviews of the MFFF and WSB projects, oversight by HSS 
and the CDNS has been limited. Specifically, HSS has conducted limited 
oversight activities at the MFFF but has played no role in the WSB 
project because of its designation as a nonmajor project. In contrast, 
the CDNS has played no role in the MFFF project and has provided some 
elements of nuclear safety oversight for the WSB project. However, it 
has not fully met the responsibilities laid out for it by DOE order, 
in part due to a lack of a formal, standardized approach for reviewing 
project safety documents. We believe that HSS's exclusion from these 
project reviews, as well as the limited involvement of the CDNS, 
creates a gap in oversight of the MFFF, WSB, and similar facilities. 

Recommendations for Executive Action: 

We are making the following five recommendations. 

To address uncertainties associated with NNSA's plans to establish a 
pit disassembly and conversion capability, we recommend that the 
Administrator of the National Nuclear Security Administration take the 
following three actions: 

* Develop a plan to mitigate the likely shortfall in plutonium oxide 
feedstock for the MFFF prior to the start of pit disassembly 
operations. This plan should include, at a minimum, the following five 
items: (1) the actions needed to ensure that the ARIES project will 
meet its existing production goals, and the cost and schedule 40
associated with any needed expansion of the project; (2) an assessment 
of how much additional plutonium material, including fuel-grade 
plutonium, is available within the DOE complex for use as feedstock 
for the MFFF; (3) an assessment of the effect on the design and safety 
of the MFFF from the use of fuel-grade plutonium as feedstock; (4) an 
assessment of potential changes to the MOX fuel production schedule 
and the effect of these changes on the cost and schedule for operating 
the MFFF; and (5) an assessment of the cost and schedule associated 
with obtaining a limited but sufficient pit disassembly process to 
produce feedstock for the MFFF. 

* Develop a technology maturation plan for the pit disassembly and 
conversion mission that (1) includes all critical technologies to be 
used in pit disassembly and conversion operations and (2) provides 
details (including preliminary cost and schedule estimates) on planned 
testing and development activities to bring each critical technology 
up to a sufficient level of maturity. 

* Conduct additional outreach activities to better inform utilities 
about the MOX fuel program and related incentives. 

To ensure that the MFFF, WSB, and similar projects receive consistent 
nuclear safety oversight that is independent from the DOE program 
offices, we make the following two recommendations: 

* The Secretary of Energy should revise DOE Order 413.3A to provide 
that HSS participate in key project reviews for the WSB and similar 
high-hazard facilities prior to the beginning of construction 
activities regardless of their status as nonmajor projects. 

* The Administrator of NNSA should ensure that the CDNS conducts 
oversight activities to the extent called for by DOE Order 413.3A and 
establishes a formal, standardized approach to reviewing safety 
documentation. 

Agency Comments and Our Evaluation: 

We provided the Department of Energy, the National Nuclear Security 
Administration, and the Nuclear Regulatory Commission with a draft of 
this report for their review and comment. In commenting on the draft 
report, the NNSA Associate Administrator for Management and 
Administration said that DOE agreed with the report and its 
recommendations. 

However, we have concerns about DOE's response to one of our 
recommendations. Specifically, NNSA agreed with our recommendation, in 
a draft report, to ensure that CDNS conducts oversight activities for 
the WSB and similar facilities. However, in its comments, NNSA stated 
that it is working with DOE to more clearly exclude CDNS from 
overseeing facilities regulated by NRC. We are concerned with the 
suggestion that CDNS should be excluded from overseeing facilities 
regulated by NRC. As our report explains, CDNS is responsible for 
supporting the NNSA Central Technical Authority in a variety of ways, 
including participating as part of the Energy Systems Acquisition 
Advisory Board for major facilities and providing support regarding 
the effectiveness of efforts to integrate safety into designs at each 
of a project's critical decisions. We do not see a rationale for 
excluding CDNS from providing technical advice to senior NNSA 
officials on matters related to nuclear safety, including for the MFFF 
or any other facility, merely because a facility is subject to 
regulation by NRC. As a result, we have revised our conclusions to 
more clearly express our concerns and expanded our original 
recommendation to address nuclear safety oversight for both the MFFF 
and the WSB. 

In addition, in commenting on our recommendation in a draft report 
that NNSA should develop a plan for expanding the ARIES project to 
produce additional quantities of plutonium oxide feedstock for the 
MFFF, DOE stated that NNSA is also evaluating other options for 
producing additional feedstock material for the MFFF, including (1) 
the use of 1.4 metric tons of fuel-grade plutonium already in storage 
at the K-Area Facility, (2) starting up "limited but sufficient" pit 
disassembly processes, and (3) adjusting the "quantity and timing" in 
delivering MOX fuel to potential customers. This information was not 
disclosed to us during our review, and we have a number of concerns 
about these options. For example, regarding the option to process fuel-
grade plutonium, the MFFF was designed to process weapons-grade 
plutonium, not fuel-grade plutonium. As a result, we are concerned 
about the implications of this option on the design and safety of the 
MFFF. We are also concerned about the extent to which DOE has 
adequately determined how much additional material might be available 
throughout the DOE complex for use as an alterative source of 
feedstock for the MFFF. To address these concerns, we revised our 
conclusions and expanded our original recommendation to ensure that 
NNSA establishes a plan to more clearly explain its strategy for 
mitigating the likely shortfall in plutonium oxide feedstock for the 
MFFF prior to the start of pit disassembly operations. 

DOE's written comments are reprinted in appendix VI, and NRC's written 
comments are reprinted in appendix VII. In addition, DOE and NRC 
provided detailed technical comments, which we incorporated as 
appropriate. 

We are sending copies of this report to the appropriate congressional 
committees, the Secretary of Energy, the Administrator of NNSA, and 
other interested parties. We will also make copies available at no 
charge on GAO's Web site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 5123841 or aloisee@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Key contributors to this report are 
listed in appendix VIII. 

Signed by: 

Gene Aloise: 
Director, Natural Resources and Environment: 

Appendix I: Scope and Methodology: 

To assess the performance status of the MOX Fuel Fabrication Facility 
(MFFF) ) and the Waste Solidification Building (WSB) construction 
projects regarding cost and schedule, we requested and analyzed earned 
value management (EVM) data contained in the projects' monthly reports 
and variance reports, as well as EVM data for the MFFF project 
contained in Excel spreadsheets. We assessed the adequacy of the MFFF 
project's use of EVM reporting by using a set of analysis tasks 
developed by GAO. In addition, we assessed the reliability of the EVM 
data by evaluating each project's schedule against GAO's scheduling 
best practices.[Footnote 42] We have previously identified nine key 
practices necessary for developing a reliable schedule. These 
practices are (1) capturing all activities, (2) sequencing activities, 
(3) establishing the duration of activities, (4) assigning resources 
to activities, (5) integrating activities horizontally and vertically, 
(6) establishing the critical path for activities, (7) identifying the 
float time between activities, (8) performing a schedule risk 
analysis, and (9) monitoring and updating the schedule. To assist us 
in these efforts, we contracted with Technomics, Inc., to perform an 
in-depth analysis of data used in the MFFF's integrated master 
schedule and the WSB's current schedule. For the MFFF project, we also 
conducted a review of the project's schedule risk analysis, which was 
performed during the summer of 2009. We also interviewed officials 
from the Department of Energy's (DOE) National Nuclear Security 
Administration (NNSA) and MOX Services regarding their use of EVM 
data, scheduling practices, and schedule risk analyses for the two 
projects. Finally, we conducted tours of the MFFF construction project 
at DOE's Savannah River Site (SRS), and met officials from the MFFF's 
contractor, MOX Services, Inc.; and DOE's NNSA and Office of 
Engineering and Construction Management (OECM). 

To assess the status of NNSA's plan to establish a pit disassembly and 
conversion capability to supply plutonium to the MFFF, we reviewed 
documentation provided by NNSA and its contractors for the Pit 
Disassembly and Conversion Facility (PDCF), Plutonium Preparation 
Project, K-Area Complex, and MFFF projects, including project 
execution plans, project status reports, EVM data, and independent 
project reviews. We also requested information from NNSA on risks 
associated with the development of technology used in pit disassembly 
and conversion. We analyzed these risks using DOE guidance on 
assessing technology readiness.[Footnote 43] We also reviewed project 
plans, testing and development data, and feasibility studies related 
to the Advanced Recovery and Integrated Extraction System (ARIES) 
project. We also toured the ARIES facility at DOE's Los Alamos 
National Laboratory (LANL) in New Mexico and interviewed officials 
involved in the project. 

To assess the status NNSA's plans to obtain customers for mixed-oxide 
(MOX) fuel from the MFFF, we reviewed project documents, including 
interest requests communicated to utilities, descriptions of possible 
incentives for participating in the MOX program, and analyses on the 
expected return to the government from the sale of MOX fuel. We also 
interviewed officials from NNSA and the Tennessee Valley Authority 
(TVA) on current efforts to secure TVA as a customer for MOX fuel, as 
well as officials from Duke Energy on factors that caused the utility 
to end its agreement with NNSA's contractor to purchase MOX fuel. To 
further identify factors impacting utilities' interest in the MOX fuel 
program, we conducted structured telephone interviews of U.S. nuclear 
utilities. We chose to interview fuel procurement officers because 
they would be the most knowledgeable respondents about factors 
impacting fuel purchasing decisions, including considerations for MOX 
fuel. We asked fuel procurement officers to provide information on 
their currents interest in MOX fuel, important factors in the 
consideration of using MOX fuel, and possible incentives for the 
adoption of MOX fuel. To develop the structured interview 
questionnaire, GAO social science survey specialists and GAO staff 
developed a draft of the questionnaire on the basis of survey design 
principles and information obtained in interviews with DOE and nuclear 
utility officials. The draft questionnaire underwent a blind review by 
an additional social science survey specialist and was edited to 
ensure consistency among questions and clearly defined terms. The 
revised draft questionnaire was then pretested on three respondents, 
all of whom were familiar with the nuclear fuel procurement process. 
During the pretests, respondents were asked about their understanding 
of the questions, how they would approach constructing their answers, 
and any editorial concerns. The draft questionnaire underwent a final 
revision before being used to conduct the structured telephone 
interviews. 

Structured interviews were completed by fuel procurement officials 
from 22 of the 26 nuclear utilities in the United States, for an 
overall response rate of 85 percent. All of the interviews were 
conducted during September and October, 2009. Respondents were 
contacted in advance to schedule a time to complete the interview. One 
of the 22 responding utilities elected not to answer two of the 
interview questions, but the other 21 completed the entire 
questionnaire. Data from the interviews were recorded and entered by 
the interviewer. A social science analyst performed a 100 percent 
check of that data entry by comparing them with their corresponding 
questionnaires, to ensure that there were no errors. Because 
respondents were not drawn from a sample, there are no sampling errors 
in our results. Additionally, the design process of the questionnaire, 
previously described, was carefully constructed to minimize 
nonsampling error. 

To examine the actions that NRC and DOE have taken to provide 
independent nuclear safety oversight of the MFFF and WSB construction 
projects, we reviewed oversight documentation and reports and 
interviewed oversight officials from both agencies. In relation to 
NRC's oversight activities, we examined documents related to NRC's 
approval of the MFFF's construction authorization request; information 
requests submitted by NRC to MOX Services in support of NRC's ongoing 
review of the facility's operating license application; and technical 
analyses conducted by Brookhaven National Laboratory on behalf of NRC 
examining the likelihood of a red oil excursion at the facility. We 
also reviewed documents related to NRC's construction inspection 
program, including inspection guidance and procedures, inspection 
reports, periodic assessments of MOX Services' performance, and MOX 
Services' responses to inspection findings. We also interviewed 
officials from the Nuclear Regulatory Commission's Office of Nuclear 
Materials Safety and Safeguards and the Region II Division of 
Construction Projects. In relation to DOE's inspection activities, we 
reviewed DOE project management and nuclear safety oversight guidance, 
protocols for conducing facility inspections, inspection reports, and 
records of decision related to reviews conducted by DOE's Office of 
Health, Safety, and Security (HSS) and the Chief of Defense Nuclear 
Safety. We also reviewed reports by the Defense Nuclear Facilities 
Safety Board on DOE oversight and interviewed Safety Board officials. 
We interviewed officials from NNSA's Office of Fissile Materials 
Disposition, HSS's Office of Independent Oversight, and the Chief of 
Defense Nuclear Safety. 

We conducted this performance audit from January 2009 to March 2010, 
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: Extent to Which the MFFF Project’s Schedule Used Key 
Practices: 

Practice: Capturing all activities; 
Explanation: The schedule should reflect all activities as defined in 
the program's work breakdown structure, including activities to be 
performed by both the government and its contractors; 
Rating: Fully; 
GAO analysis: The project has provided evidence that the schedule 
reflects both government and contractor activities, such as the 
building and testing of software components, as well as key milestones 
for measuring progress. 

Practice: Sequencing activities; 
Explanation: The schedule should be planned so that it can meet 
critical program dates. To meet this objective, activities need to be 
logically sequenced in the order that they are to be carried out. In 
particular, activities that must finish prior to the start of other 
activities (i.e., predecessor activities), as well as activities that 
cannot begin until other activities are completed (i.e., successor 
activities), should be identified. By doing so, interdependencies 
among activities that collectively lead to the accomplishment of 
events or milestones can be established and used as a basis for 
guiding work and measuring progress. The schedule should avoid logic 
overrides and artificial constraint dates that are chosen to create a 
certain result; 
Rating: Fully; 
GAO analysis: Of the approximately 22,000 normal activities, all are 
logically sequenced--that is, the schedule identifies 
interdependencies among work activities that form the basis for 
guiding work and measuring progress. 

Practice: Establishing the duration of activities; 
Explanation: The schedule should realistically reflect how long each 
activity will take to execute. In determining the duration of each 
activity, the same rationale, historical data, and assumptions used 
for cost estimating should be used. Durations should be as short as 
possible and have specific start and end dates. In particular, 
durations of longer than 200 days should be minimized; 
Rating: Mostly; 
GAO analysis: Of the 22,000 normal activities, only 569 have durations 
of over 200 days. In addition, the schedule includes 38 activities 
with a remaining duration over 500 days and 10 activities with 
remaining duration over 1,000 days (3.9 years). 

Practice: Assigning resources to activities; 
Explanation: The schedule should reflect what resources (e.g., labor, 
material, and overhead) are needed to do the work, whether all 
required resources will be available when needed, and whether any 
funding or time constraints exist; 
Rating: Mostly; 
GAO analysis: Of the 22,000 normal activities, resources are placed on 
3,124 of these, and 13,988 of these have no resources. However, the 
program does have all resources captured in an alternate software 
package. According to DOE, the current baseline reflects $2.2 billion. 

Practice: Integrating activities horizontally and vertically; 
Explanation: The schedule should be horizontally integrated, meaning 
that it should link the products and outcomes associated with other 
sequenced activities. These links are commonly referred to as 
"handoffs" and serve to verify that activities are arranged in the 
right order to achieve aggregated products or outcomes. The schedule 
should also be vertically integrated, meaning that traceability exists 
among varying levels of activities and supporting tasks and subtasks. 
Such mapping or alignment among levels enables different groups to work 
to the same master schedule; 
Rating: Mostly; 
GAO analysis: Due to concerns about total float values discussed below 
in "identifying float between activities," the schedule has not fully 
integrated key activities horizontally. The schedule has sufficiently 
integrated key activities vertically. 

Practice: Establishing the critical path for activities; 
Explanation: Using scheduling software, the critical path--the longest 
duration path through the sequenced list of key activities--should be 
identified. The establishment of a program's critical path is 
necessary for examining the effects of any activity slipping along 
this path. Potential problems that might occur along or near the 
critical path should also be identified and reflected in the 
scheduling of the time for high-risk activities; 
Rating: Fully; 
GAO analysis: The project has established a number of critical paths 
by using the scheduling software to identify activities with low or 
zero float, as well as by identifying high-risk activities. Project 
officials said that they conduct weekly meetings to keep track of 
critical path activities. 

Practice: Identifying the "float time" between activities; 
Explanation: The schedule should identify float time--the time that a 
predecessor activity can slip before the delay affects successor 
activities--so that schedule flexibility can be determined. As a 
general rule, activities along the critical path typically have the 
least amount of float time. Total float time is the amount of time 
flexibility an activity has that will not delay the project's 
completion (if everything else goes according to plan). Total float 
that exceeds a year is unrealistic and should be minimized; 
Rating: Partially; 
GAO analysis: The schedule contains 8,600 activities with total float 
exceeding 400 days (1.5 years) and 669 activities with total float 
exceeding 1,000 days (3.9 years). Many of the activities with large 
total float values are tied to completion milestones, rather than to an 
intermediate successor. 

Practice: Performing a schedule risk analysis; 
Explanation: A schedule risk analysis should be performed using 
statistical techniques to predict the level of confidence in meeting a 
program's completion date. This analysis focuses not only on critical 
path activities but also on activities near the critical path, since 
they can potentially affect program status; 
Rating: Fully; 
GAO analysis: Project officials conducted a schedule risk analysis 
during the summer of 2009. This analysis was performed using 
statistical techniques and focused on critical path and near-the-
critical-path activities. Officials said that this analysis has 
provided important overall project risk information to management. 

Practice: Monitoring and updating the schedule; 
Explanation: The schedule should be continually monitored to determine 
when forecasted completion dates differ from the planned dates, which 
can be used to determine whether schedule variances will affect 
downstream work. Individuals trained in critical path method 
scheduling should be responsible for ensuring that the schedule is 
properly updated. Maintaining the integrity of the schedule logic is 
not only necessary to reflect true status, but is also required before 
conducting a schedule risk analysis; 
Rating: Fully; 
GAO analysis: Project officials said that they update the schedule on 
a weekly basis. In particular, project controls staff are associated 
with each engineering group and provide a status update on a weekly 
basis. 

Sources: Shaw AREVA MOX Services, LLC (data); GAO (analysis). 

Note: The ratings we used in this analysis are as follows: Based on the 
documentation provided, "fully" means that the project fully satisfied 
the criterion; "mostly" means that the project satisfied the criterion 
to a large extent; "partially" means that the project satisfied the 
criterion in part; "minimally" means that the project satisfied the 
criterion to a minimal extent; and "not" means that the project did not 
satisfy the criterion. 

[End of table] 

[End of section] 

Appendix III: Extent to Which the WSB Project’s Schedule Used Key 
Practices: 

Practice: Capturing all activities; 
Explanation: The schedule should reflect all activities as defined in 
the program's work breakdown structure, including activities to be 
performed by both the government and its contractors; 
Rating: Fully; 
GAO analysis: The project's schedule reflects both government and 
contractor activities, such as the building and testing of cementation 
equipment, as well as key milestones for measuring progress. 

Practice: Sequencing activities; 
Explanation: The schedule should be planned so that it can meet 
critical program dates. To meet this objective, activities need to be 
logically sequenced in the order that they are to be carried out. In 
particular, activities that must finish prior to the start of other 
activities (i.e., predecessor activities), as well as activities that 
cannot begin until other activities are completed (i.e., successor 
activities), should be identified. By doing so, interdependencies 
among activities that collectively lead to the accomplishment of 
events or milestones can be established and used as a basis for 
guiding work and measuring progress. The schedule should avoid logic 
overrides and artificial constraint dates that are chosen to create a 
certain result; 
Rating: Mostly; 
GAO analysis: Of 2,066 activities that are currently in progress or 
have not yet started, 80 are not logically sequenced--that is, the 
schedule does not identify interdependencies among work activities 
that form the basis for guiding work and measuring progress. 

Practice: Establishing the duration of activities; 
Explanation: The schedule should realistically reflect how long each 
activity will take to execute. In determining the duration of each 
activity, the same rationale, historical data, and assumptions used 
for cost estimating should be used. Durations should be as short as 
possible and have specific start and end dates. In particular, 
durations of longer than 200 days should be minimized; 
Rating: Mostly; 
GAO analysis: Ninety-eight of the 2,066 activities that are currently 
in progress or have not yet started have durations of 100 days or 
more. While durations should be as short as possible and have specific 
start and end dates to objectively measure progress, project officials 
provided a valid rationale for the duration of these activities. 

Practice: Assigning resources to activities; 
Explanation: The schedule should reflect what resources (e.g., labor, 
material, and overhead) are needed to do the work, whether all 
required resources will be available when needed, and whether any 
funding or time constraints exist; 
Rating: Fully; 
GAO analysis: The schedule reflects $336 million in resource costs. 
The project's cost baseline is $344 million. According to project 
officials, they are aware of this discrepancy. They stated that while 
all of the project resources are reflected in the schedule, a software 
problem has caused some of these resources to not show up. Project 
officials are working to correct this software problem. 

Practice: Integrating activities horizontally and vertically; 
Explanation: The schedule should be horizontally integrated, meaning 
that it should link the products and outcomes associated with other 
sequenced activities. These links are commonly referred to as 
"handoffs" and serve to verify that activities are arranged in the 
right order to achieve aggregated products or outcomes. The schedule 
should also be vertically integrated, meaning that traceability exists 
among varying levels of activities and supporting tasks and subtasks. 
Such mapping or alignment among levels enables different groups to work 
to the same master schedule; 
Rating: Fully; 
GAO analysis: Project officials provided evidence that the schedule is 
sufficiently integrated. 

Practice: Establishing the critical path for activities; 
Explanation: Using scheduling software, the critical path--the longest 
duration path through the sequenced list of key activities--should be 
identified. The establishment of a program's critical path is 
necessary for examining the effects of any activity slipping along 
this path. Potential problems that might occur along or near the 
critical path should also be identified and reflected in the 
scheduling of the time for high-risk activities; 
Rating: Fully; 
GAO analysis: A critical path has been established. The critical path 
dates are driven by the logic of the schedule. 

Practice: Identifying the "float time" between activities; 
Explanation: The schedule should identify float time--the time that a 
predecessor activity can slip before the delay affects successor 
activities--so that schedule flexibility can be determined. As a 
general rule, activities along the critical path typically have the 
least amount of float time. Total float time is the amount of time 
flexibility an activity has that will not delay the project's 
completion (if everything else goes according to plan). Total float 
that exceeds a year is unrealistic and should be minimized; 
Rating: Mostly; 
GAO analysis: The schedule contains 1,482 activities that have a float 
time of over 100 days. However, project officials provided a valid 
rationale for having activities with large float times. 

Practice: Performing a schedule risk analysis; 
Explanation: A schedule risk analysis should be performed using 
statistical techniques to predict the level of confidence in meeting a 
program's completion date. This analysis focuses not only on critical 
path activities but also on activities near the critical path, since 
they can potentially affect program status; 
Rating: Fully; 
GAO analysis: Project officials stated that they conducted a schedule 
risk analysis using statistical techniques in July 2008 on the 
baseline schedule. 

Practice: Monitoring and updating the schedule; 
Explanation: The schedule should be continually monitored to determine 
when forecasted completion dates differ from the planned dates, which 
can be used to determine whether schedule variances will affect 
downstream work. Individuals trained in critical path method 
scheduling should be responsible for ensuring that the schedule is 
properly updated. Maintaining the integrity of the schedule logic is 
not only necessary to reflect true status, but is also required before 
conducting a schedule risk analysis; 
Rating: Fully; 
GAO analysis: Project officials conduct weekly meetings to review and 
update the project schedule. 

Appendix IV: Summary Results of Interviews with 22 Utilities: 

1. How much information have you heard or read about DOE's MOX fuel 
program? 

Response: A great deal of information; 
Frequency: 1. 

Response: Some information; 
Frequency: 5. 

Response: Very little information; 
Frequency: 11. 

Response: No information; 
Frequency: 5. 

[End of table] 

2. Does your utility own any reactors that are compatible with AREVA 
fuel designs? 

Response: No; 
Frequency: 2. 

Response: Yes; 
Frequency: 19. 

Note: The numbers in the table do not total to 22 because one utility 
elected not to respond to this question. 

[End of table] 

3. Taking into account your current reactor fleet, what is your 
utility's current level of interest in participating in the MOX fuel 
program? (Choose One): 

Response: Not at all interested; 
Frequency: 2. 

Response: Not very Interested; 
Frequency: 10. 

Response: Somewhat interested; 
Frequency: 8. 

Response: Very interested; 
Frequency: 1. 

Response: Extremely interested; 
Frequency: 1. 

[End of table] 

4. What kinds of reactors owned by your utility do you think would be 
the most likely candidates for MOX fuel if your utility decided to 
participate in the MOX fuel program? Please choose only one answer. 

Response: BWR only; 
Frequency: 2. 

Response: PWR only; 
Frequency: 13. 

Response: Both; 
Frequency: 7. 

[End of table] 

5. How important is this factor in your assessment of your utility's 
current level of interest in participating in the MOX fuel program? 

Response: Somewhat important; 
Frequency: 3. 

Response: Very important; 
Frequency: 9. 

Response: Extremely important; 
Frequency: 10. 

[End of table] 

6. If DOE would sell MOX fuel to your utility at a 15% discounted price 
relative to the market price for uranium fuel, what do you think your 
utility's level of interest in participating in the MOX program would 
be? 

Response: Not at all interested; 
Frequency: 2. 

Response: Not very Interested; 
Frequency: 7. 

Response: Somewhat interested; 
Frequency: 8. 

Response: Very interested; 
Frequency: 5. 

[End of table] 

7. If DOE would sell MOX fuel to your utility at a 25% discounted price 
relative to the market price for uranium fuel, what do you think your 
utility's level of interest in participating in the MOX program would 
be? 

Response: Not at all interested; 
Frequency: 2. 

Response: Not very Interested; 
Frequency: 4. 

Response: Somewhat interested; 
Frequency: 8. 

Response: Very interested; 
Frequency: 4. 

Response: Extremely interested; 
Frequency: 4. 

[End of table] 

8. How important is this factor in your assessment of your utility's 
current level of interest in participating in the MOX fuel program? 

Response: Somewhat important; 
Frequency: 5. 

Response: Very important; 
Frequency: 5. 

Response: Extremely important; 
Frequency: 12. 

[End of table] 

9. If DOE would cover the costs associated with reactor modifications 
for compatibility with MOX fuel, what do you think your utility's level 
of interest in participating in the MOX program would be? 

Response: Not very interested; 
Frequency: 2. 

Response: Somewhat interested; 
Frequency: 11. 

Response: Very interested; 
Frequency: 6. 

Response: Extremely interested; 
Frequency: 3. 

[End of table] 

10. How important are the costs associated with NRC licensing 
requirements, in terms of monetary outlays and staff time, to your 
utility's current level of interest in participating in the MOX fuel 
program? 

Response: Not very important; 
Frequency: 2. 

Response: Somewhat important; 
Frequency: 5. 

Response: Very important; 
Frequency: 7. 

Response: Extremely important; 
Frequency: 8. 

[End of table] 

11. If DOE would cover the costs associated with obtaining NRC 
licenses, what do you think your utility's level of interest in 
participating in the MOX program would be? 

Response: Not at all interested; 
Frequency: 1. 

Response: Not very interested; 
Frequency: 2. 

Response: Somewhat interested; 
Frequency: 9. 

Response: Very interested; 
Frequency: 8. 

Response: Extremely interested; 
Frequency: 2. 

[End of table] 

12. Another factor that may affect your level of interest is the 
ability to test the quality and safety of MOX fuel at your reactor. How 
important is this factor in your assessment of your utility's current 
level of interest in participating in the MOX fuel program? 

Response: Not very important; 
Frequency: 1. 

Response: Somewhat important; 
Frequency: 2. 

Response: Very important; 
Frequency: 4. 

Response: Extremely important; 
Frequency: 15. 

[End of table] 

13. If DOE offered to fund a demonstration program of MOX fuel at your 
reactor, what do you think your utility's level of interest in 
participating in the MOX program would be? 

Response: Not at all interested; 
Frequency: 2. 

Response: Not very interested; 
Frequency: 5. 

Response: Somewhat interested; 
Frequency: 5. 

Response: Very interested; 
Frequency: 6. 

Response: Extremely interested; 
Frequency: 3. 

Note: The numbers in the table do not total to 22 because one utility 
elected not to respond to this question. 

[End of table] 

14. Another factor that may affect your level of interest is DOE's 
ability to ensure the timely delivery of MOX fuel (i.e. - Delivery 
occurs at an interval that meets a reactor's needed timeline to prepare 
prior to a refueling outage). How important is this factor in your 
assessment of your utility's current level of interest in participating 
in the MOX fuel program? 

Response: Not very important; 
Frequency: 1. 

Response: Somewhat important; 
Frequency: 1. 

Response: Very important; 
Frequency: 3. 

Response: Extremely important; 
Frequency: 17. 

[End of table] 

15. Another factor that may affect your level of interest is DOE's 
ability to provide a compatible backup supply of uranium fuel as 
assurance in case of delays in the delivery of MOX fuel. How important 
is this factor in your assessment of your utility's current level of 
interest in participating in the MOX fuel program? 

Response: Not very important; 
Frequency: 1. 

Response: Somewhat important; 
Frequency: 2. 

Response: Very important; 
Frequency: 8. 

Response: Extremely important; 
Frequency: 11. 

[End of table] 

16. Another factor that may affect your level of interest is the 
storage of MOX fuel at your reactor site for longer than the interval 
that meets a reactor's needed timeline prior to a refueling outage. How 
important is this factor in your assessment of your utility's current 
level of interest in participating in the MOX fuel program? 

Response: Not at all important; 
Frequency: 2. 

Response: Not very important; 
Frequency: 3. 

Response: Somewhat important; 
Frequency: 10. 

Response: Very important; 
Frequency: 4. 

Response: Extremely important; 
Frequency: 3. 

[End of table] 

17. Another factor that may affect your level of interest is public 
opinion regarding the use of MOX fuel. How important is this factor in 
your assessment of your utility's current level of interest in 
participating in the MOX fuel program? 

Response: Not at all important; 
Frequency: 1. 

Response: Not very important; 
Frequency: 1. 

Response: Somewhat important; 
Frequency: 6. 

Response: Very important; 
Frequency: 9. 

Response: Extremely important; 
Frequency: 5. 

[End of table] 

18. DOE's MOX fuel program relies on annual Congressional 
appropriations. Another factor that may affect your level of interest 
is the consistency of funding for the program through 2033. How 
important is this factor in your assessment of your utility's current 
level of interest in participating in the MOX fuel program? 

Response: Somewhat important; 
Frequency: 2. 

Response: Very important; 
Frequency: 8. 

Response: Extremely important; 
Frequency: 12. 

[End of table] 

19. In addition to the factors described above, are there any other 
factors or issues that we have not discussed that affected your 
assessment of your utility's current interest in participating in the 
MOX fuel program? 

Open ended responses are not presented in this appendix. 

20. How interested in participating do you think your utility would 
have to be to actually submit such an expression of interest? 

Response: Somewhat interested; 
Frequency: 5. 

Response: Very interested; 
Frequency: 10. 

Response: Extremely interested; 
Frequency: 6. 

Note: The numbers in the table do not total to 22 because one utility 
elected not to respond to this question. 

[End of table] 

21. The MOX Fuel Fabrication Facility is expected to begin delivery of 
MOX fuel in 2018 and continue supplying fuel through 2032. How 
confident are you in DOE's ability to deliver MOX fuel on time 
throughout this period? 

Response: Not at all confident; 
Frequency: 3. 

Response: Not very confident; 
Frequency: 11. 

Response: Somewhat confident; 
Frequency: 8. 

[End of table] 

22. How confident are you in DOE's ability to ensure that a compatible 
backup supply of uranium fuel is delivered on time in the case of MOX 
fuel delays? 

Response: Not very confident; 
Frequency: 4. 

Response: Somewhat confident; 
Frequency: 15. 

Response: Very confident; 
Frequency: 2. 

Response: Extremely confident; 
Frequency: 1. 

[End of table] 

23. How satisfied are you with the amount of outreach that MOX Services 
and DOE have used to obtain interest in the MOX fuel program? 

Response: Very dissatisfied; 
Frequency: 1. 

Response: Somewhat dissatisfied; 
Frequency: 3. 

Response: Neither satisfied nor dissatisfied; 
Frequency: 14. 

Response: Somewhat satisfied; 
Frequency: 3. 

Response: Very satisfied; 
Frequency: 1. 

[End of section] 

Appendix V: Nuclear Regulatory Commission's Notices of Violation for 
the MFFF: 

NRC report date: October 30, 2009; 
Description of violation: MOX 
Services failed to ensure that design considerations were considered 
during installation of structures; 
Outcome: To be determined. 

NRC report date: October 30, 2009; 
Description of violation: MOX 
Services' design control procedures did not require that the method of 
design verification, or the results, be adequately documented when 
design verifications were performed; 
Outcome: To be determined. 

NRC report date: October 30, 2009; 
Description of violation: MOX 
Services failed to provide a technical justification for an engineering 
change request; 
Outcome: To be determined. 

NRC report date: October 30, 2009; 
Description of violation: MOX 
Services failed to include a sequential description of work to be 
performed in implementing documents; 
Outcome: To be determined. 

NRC report date: September 11, 2009; 
Description of violation: MOX Services failed to promptly identify, 
evaluate, correct, and document conditions adverse to quality, 
including incorrect placement of a floor and failure to document a 
rebar deficiency in the corrective action program; 
Outcome: MOX Services conducted a root cause analysis for the 
conditions that led to each of the findings in NRC's September 11, 
2009, inspection report and instituted actions, including improving 
communications between engineering, construction, and quality control 
personnel; adopting checklists for changes; and adding additional 
training for engineering personnel. NRC stated that the actions 
appeared adequate, and that it will verify implementation during later 
inspections. 

NRC report date: September 11, 2009; 
Description of violation: MOX Services failed to perform quality-
affecting activities in accordance with approved drawings and 
specifications; 
Outcome: MOX Services conducted a root cause analysis for the 
conditions that led to each of the findings in NRC's September 11, 
2009, inspection report and instituted actions, including improving 
communications between engineering, construction, and quality control 
personnel; adopting checklists for changes; and adding additional 
training for engineering personnel. NRC stated that the actions 
appeared adequate, and that it will verify implementation during later 
inspections. 

NRC report date: September 11, 2009; 
Description of violation: MOX Services failed to provide and adequate 
documented justification for changes to final designs; 
Outcome: MOX Services conducted a root cause analysis for the 
conditions that led to each of the findings in NRC's September 11, 
2009, inspection report and instituted actions, including improving 
communications between engineering, construction, and quality control 
personnel; adopting checklists for changes; and adding additional 
training for engineering personnel. NRC stated that the actions 
appeared adequate, and that it will verify implementation during later 
inspections. 

NRC report date: July 30, 2009; 
Description of violation: MOX Services failed to correctly translate 
applicable requirements into design documents; 
Outcome: MOX Services initiated corrective actions to address these 
issues. 

NRC report date: May 11, 2009; 
Description of violation: Suppliers were found to fail to meet a basic 
NQA-1 requirement, indicating that MOX Services failed to ensure that 
services were controlled to ensure conformance with specified 
technical and QA requirements; 
Outcome: NRC determined that MOX Services' oversight of its 
contractors was acceptable, despite numerous examples of failures to 
meet the QA requirements. 

NRC report date: January 30, 2009; 
Description of violation: Testing documentation for two separate tests 
did not include the required information; 
Outcome: MOX Services revised documentation procedure to include the 
necessary information. 

NRC report date: January 30, 2009; 
Description of violation: On two separate occasions, the contractor 
failed to incorporate an approved design change in project documents, 
and later did not verify a field drawing, which resulted in failure to 
identify that the drawing did not implement design requirements; 
Outcome: MOX Services took steps to ensure that documentation was 
appropriately revised, and added the design change into the corrective 
action plan to initiate correction before concrete placement. 

NRC report date: October 30, 2008; 
Description of violation: NRC found that some design reviews did not 
ensure that design inputs were correctly incorporated into field 
drawings; 
Outcome: MOX Services revised the design drawings to match the as-
built drawings after completing an analysis of the structure. 

NRC report date: July 29, 2008; 
Description of violation: Contractor failed to identify certain 
conditions adverse to quality assurance plan requirements, including 
those related to incorrectly poured concrete; 
Outcome: MOX Services placed the matter into its corrective action 
program and took steps to ensure adequate pouring of concrete. 

NRC report date: April 30, 2008; 
Description of violation: Contractor failed to take corrective action 
for conditions adverse to quality, including providing adequate 
resolution to justify the use of reinforcing steel splices that did 
not meet industry standards; 
Outcome: NRC reviewers concluded that MOX Services implemented 
appropriate actions to control purchase of items from the reinforcing 
bar vendor. 

NRC report date: April 30, 2008; 
Description of violation: Contractor failed to ensure that numerous 
pieces of reinforcing bar met industry standards for bend radius; 
Outcome: NRC reviewers concluded that MOX Services implemented 
appropriate actions to control purchase of items from the reinforcing 
bar vendor. 

NRC report date: October 30, 2007; 
Description of violation: NRC found that MOX Services had not followed 
quality insurance procedures, including, for example, ensuring that a 
vendor provided clear instructions for operating a concrete batch 
plant, which resulted in improperly mixed concrete; 
Outcome: MOX Services took over concrete testing and took corrective 
actions, including revising procedures and bringing in independent 
experts to make recommendations for improvement. 

Source: NRC. 

[End of table] 

[End of section] 

Appendix VI: Comments from the Department of Energy: 

Department of Energy: 
National Nuclear Security Administration: 
Washington, DC 20585: 

March 19, 2010: 

Mr. Gene Aloise: 
Director, Natural Resources and Environment: 
U.S. Government Accountability Office: 
Washington, D.C. 20458: 

Dear Mr. Aloise: 

The Department of Energy (Department) appreciates the opportunity to 
review and provide comments to the Government Accountability Office's 
(GAO) report, Nuclear Nonproliferation: DOE Needs to Address 
Uncertainties with and Strengthen Independence Safety Oversight of Its 
Plutonium Disposition Program, GA0-10-378. In response to a 
Congressional Mandate, we understand that GAO performed this review to 
assess the (1) status of the MOX Fuel Fabrication Facility (MFFF) and 
Waste Solidification Building (WSB) construction projects with respect 
to cost and schedule, (2) status of NNSA's plans to establish a pit 
disassembly and conversion capability, (3) status of NNSA's plans to 
obtain customers for mixed oxide (MOX) fuel from the MFFF, and (4) 
actions that the Nuclear Regulatory Commission (NRC) and DOE have 
taken to provide independent nuclear safety oversight of the two 
projects. 

The Department agrees with the report and the recommendations. One 
conclusion GAO reached as a result of its nuclear utility survey was 
that utility interest in MOX fuel is enhanced by the offering of 
certain incentives: DOE compensation for utility reactor 
modifications, license amendments and fuel testing, and price 
discounts for MOX fuel relative to low enriched uranium fuel. NNSA 
notes that all of these incentives have previously been offered to 
utilities in two separate MOX Services Requests for Expressions of 
Interest and discussed in numerous other interactions with nuclear 
utilities. 

Since the issuance of your report, NNSA and the Tennessee Valley 
Authority have signed an interagency agreement to evaluate the use of 
MOX fuel made from U.S. surplus weapons plutonium in TVA's Sequoyah 
and Browns Ferry nuclear power reactors, a total of five large units. 
Under the interagency agreement, TVA will perform work on nuclear core 
design, safety analyses, environmental and reactor modification 
assessments, and other related activities. NNSA is optimistic that 
these studies will yield favorable results, and that other 
institutional issues noted in GAO's report will be manageable. The 
five TVA reactors could potentially use between 85 and 100 percent of 
the output of the MFFF. The signing of the interagency agreement 
indicates the Department's commitment to and success in working with 
the utilities on the MOX projects. 

We also note that some aspects of the results section do not recognize 
actions that HSS has taken to strengthen its oversight of nuclear 
facilities undergoing construction, major modification, or major 
changes in mission and operations. We believe the GAO report should 
more clearly distinguish between the level of Office of the Health, 
Safety and Security (HSS) oversight and that of the Nuclear Regulatory 
Commission. 

Our responses to the recommendations below are: 

1. Develop a plan for expanding the ARIES project at Los Alamos 
National Laboratory (LANL).... 

Expanding ARIES production is one of several options NNSA is 
evaluating to provide feedstock to the MFFF prior to the start of pit 
disassembly and conversion operations. Other options include: (1) 
process additional material suitable for MFFF feedstock currently 
under the jurisdiction of the Office of Environmental Management (EM) 
at the Savannah River Site (SRS), (2) work with utilities
interested in irradiating MOX fuel as to the quantity and timing in 
providing initial fuel deliveries, and (3) start up limited but 
sufficient processes in the Pit Disassembly and Conversion project to 
produce feedstock for MFFF. 

NNSA's current production schedule calls for LANL to produce 50 
kilograms of certified oxide by end of fiscal year (FY) 2010. 
Subsequently, I,ANL must ramp up to a target rate of 300 kilograms per 
year in FY 2012 and sustain this rate through FY 2017 in order to meet 
the two metric ton mission. As a prudent measure, NNSA undertook a 
study in May 2008 of various options for expanding the production of 
plutonium oxide at the Los Alamos National Laboratory (ARIES). 
However, until LANL demonstrates that they can produce 300 kilograms 
per year and sustain this rate over an extended period of time, NNSA 
considers further expansion of this potential risk mitigation 
alternative to be premature. 

2. Develop a technology maturation plan for the pit disassembly and 
conversion mission.... 

NNSA agrees with the recommendation, but notes that in a previous 
report issued by GAO in March 2007, Major Construction Projects Need a 
Consistent Approach for Assessing Technology Readiness to Help Avoid 
Cost Increases and Delays, GAO stated that: 

"Specifically, the DOE project director for the Pit Disassembly and 
Conversion Facility systematically measured and assessed readiness 
levels for each component of the overall project." 

While we were encouraged by this finding, we realize the need to 
continue updating the technology maturation plan for the Pit 
Disassembly and Conversion project as the development and testing 
efforts progress. With this in mind, as the project prepares for 
Critical Decision 1, Approve Alternative Selection and Cost Range, a
technology readiness assessment will be conducted and a new integrated 
technology plan will be developed to assess all critical technologies 
to be used in pit disassembly and conversion operations. This work 
will be closely integrated with the project's cost and schedule 
performance baseline and the risk management plan. All technology 
development activities will be managed and controlled as part of the 
integrated project schedule. 

3. Conduct additional outreach activities.... 

NNSA agrees with this recommendation and is actively considering 
changes in the contracting approach for the marketing and sales of MOX 
fuel that would better align these efforts with customary nuclear fuel 
market practices. In particular, NNSA is exploring marketing and sales 
of MOX fuel to utilities through established nuclear fuel fabrication 
vendors with substantial sales organizations and established 
relationships with U.S. utilities. In addition, NNSA is creating a 
backup inventory of low-enriched uranium (derived from down-blended 
surplus highly enriched uranium) to serve as fuel supply assurance to 
participating utilities in the event of delays in production of MOX 
fuel. 

4. The Secretary of Energy revise DOE Order 413.3A.... 

HSS agrees with the recommendation. The current version of DOE Order 
413.3A provides for HSS participation, if so requested by the line 
organizations. However, HSS has considerable expertise and experience 
with best practices and common pitfalls in safety programs at the 
Department sites, including construction activities. As GAO 
recommends, it would be prudent for the Department to better use the HSS
expertise on project reviews and to modify DOE Order 413.3A to include 
more definitive language about HSS participation on project reviews 
for higher hazard nuclear facilities. 

5. The Administrator of NNSA ensure that CDNS conducts oversight 
activities.... 

NNSA agrees with this recommendation. Just recently, CDNS has been 
able to obtain the necessary staffing to provide oversight to the 
extent called for by the DOE order. However, there is no clear 
exclusion of CDNS in the DOE Order 413.3A from oversight of facilities 
regulated by the Nuclear Regulatory Commission (NRC). However, we are 
working with the Department to have that exception inserted into the 
Order during the upcoming revision of the Order. Historically there 
was never an intention that CDNS would have responsibilities for 
facilities for which the NRC is the regulator. That needs to be 
clarified in the Order. 

For your consideration, enclosed are other general/technical 
corrections and minor suggestions to the report. 

If you have any questions concerning this response, please contact 
JoAnne Parker, Acting Director, Policy and Internal Controls 
Management at 202-586-1913. 

Sincerely, 

Signed by: 

Gerald L. Talbot, Jr. 
Acting Associate Administrator for Management and Administration: 

cc: 
Deputy Administrator for Defense Nuclear Nonproliferation: 
Senior Procurement Executive: 
Acting Director, Office of Independent Oversight, IISS Office of 
Environmental Management: 

Enclosure: 

[End of section] 

Appendix VII: Comments from the Nuclear Regulatory Commission: 

United States: 
Nuclear Regulatory Commission: 
Washington, D.C. 20555-0001: 

March 18, 2010: 

Mr. Eugene E. Aloise, Director: 
Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Aloise: 

In response to your request on February 19, 2010, the U.S. Nuclear 
Regulatory Commission (NRC) staff has reviewed the draft report 
entitled "Nuclear Nonproliferation: DOE Needs to Address Uncertainties 
with and Strengthen Independent Safety Oversight of Its Plutonium 
Disposition Program" (GAO-10-378), and provides the enclosed comments. 
The NRC appreciates the opportunity to review and comment on the draft 
report and looks forward to discussing any of the comments at your 
request. Please feel free to contact our staff regarding the draft 
report. 

Sincerely, 

Signed by: 

R.W. Borchardt: 
Executive Director for Operations: 

Enclosure: As stated: 

[End of section] 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Gene Aloise, (202) 512-3841 or aloisee@gao.gov. 

Staff Acknowledgments: 

In addition to the individual named above, Daniel Feehan, Assistant 
Director; Steve Carter; Antoinette Capaccio; Tisha Derricotte; 
Jennifer Echard; Jason Holliday; and Ben Shouse made key contributions 
to this report. 

[End of section] 

Footnotes: 

[1] Weapons-grade plutonium is plutonium with an isotopic ratio of 
plutonium-240 to plutonium-239 of no more than 0.10. The pit is a key 
nuclear weapon component that begins the chain reaction leading to a 
nuclear explosion. 

[2] This program is linked to a larger, international effort with 
Russia. In 2000, the United States and Russia entered into a Plutonium 
Management and Disposition Agreement, in which each country pledged to 
dispose of at least 34 metric tons of surplus weapons-grade plutonium. 

[3] GAO, Department of Energy: Major Construction Projects Need a 
Consistent Approach for Assessing Technology Readiness to Help Avoid 
Cost Increases and Delays, [hyperlink, 
http://www.gao.gov/products/GAO-07-336] (Washington, D.C.: Mar. 27, 
2007). 

[4] These practices are found in 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.: March 2009). 

[5] In addition to the 34 metric tons of weapons-grade plutonium 
pledged for disposal in 2000, the Secretary of Energy declared 9 
metric tons of weapons-grade plutonium as surplus to defense needs in 
September 2007. According to NNSA documents, NNSA plans to convert 
this additional material into MOX fuel at the MFFF but has not made an 
official decision. 

[6] The K-Area Facility is SRS's only special nuclear material storage 
facility designated for storage of significant quantities of plutonium 
and highly enriched uranium materials. The facility's principal 
operations building housed K Reactor, which produced nuclear materials 
to support the United States for nearly four decades. The K Reactor 
was shut down in 1992. 

[7] [hyperlink, http://www.gao.gov/products/GA0-07-336]. 

[8] DOE, Office of Inspector General, National Nuclear Security 
Administration's Pit Disassembly and Conversion Facility, DOE/IG-0688 
(Washington, D.C.: May 3, 2005). 

[9] DOE regulations (10 CFR pt. 830, app. A to subpt. B § (C)(2)) 
define three categories of high-hazard nuclear facilities according to 
their potential to produce significant radiological consequences from 
an event that could either extend beyond the boundaries of a DOE site, 
remain within the boundaries of a site, or remain within the immediate 
vicinity of a nuclear facility. 

[10] Cost variances compare the earned value of the completed work 
with the actual cost of the work performed. For example, if a 
contractor completed $5 million worth of work (i.e., the earned value 
of the work) and the work actually cost $6.7 million, there would be a 
negative $1.7 million cost variance. Schedule variances are also 
measured in dollars, but they compare the earned value of the work 
completed with the value of work that was expected to be completed. 
For example, if a contractor completed $5 million worth of work at the 
end of the month but was budgeted to complete $10 million worth of 
work, there would be a negative $5 million schedule variance. 

[11] These practices are (1) capturing all activities, (2) sequencing 
activities, (3) establishing the duration of activities, (4) assigning 
resources to activities, (5) integrating activities horizontally and 
vertically, (6) establishing the critical path for activities, (7) 
identifying the float time between activities, (8) performing a 
schedule risk analysis, and (9) monitoring and updating the schedule. 

[12] GA0, Department of Energy: Contract and Project Management 
Concerns at the National Nuclear Security Administration and Office of 
Environmental Management, [hyperlink, 
http://www.gao.gov/products/GAO-09-406T] (Washington, D.C.: Mar. 4, 
2009). 

[13] When we conducted our analysis in February 2009, the MFFF project 
schedule contained 1,064 activities with durations of over 200 days. 
According to our more recent analysis and interviews with project 
officials, the MFFF project schedule now has about 30 activities with 
durations of over 200 days. 

[14] NNSA, Savannah River Site, Alternative Study: Pit Disassembly and 
Conversion at the Savannah River Site (June 2009), a predecisional 
draft for official use only. 

[15] DOE, Savannah River Site, Alternative Study: Combining the Pit 
Disassembly and Conversion Facility (PDCF) and Plutonium Preparation 
Project (PuP) within the K-Area Complex (KAC) (November 2008), a 
predecision draft, unclassified controlled nuclear information. 

[16] According to NNSA officials, the majority of pit disassembly and 
conversion processing lines will be installed on the ground level of 
the facility. However, the project may also install a mezzanine level 
in several areas to house support equipment and electrical cabinets. 

[17] A glovebox is a sealed, protectively lined compartment having 
holes to which are attached gloves for use in handling especially 
dangerous materials inside the compartment. 

[18] NNSA, Report on ARIES Throughput Options (May 2008), for official 
use only. 

[19] GA0, Nuclear Weapons: NNSA Needs to Establish a Cost and Schedule 
Baseline for Manufacturing a Critical Nuclear Weapon Component, 
[hyperlink, http://www.gao.gov/products/GAO-08-593] (Washington, D.C.: 
May 23, 2008). 

[20] NNSA, Plutonium Capacity Option Study (Nov. 19, 2009), 
unclassified controlled nuclear information. 

[21] Fuel-grade plutonium is plutonium with an isotopic ratio of 
plutonium-240 to plutonium-239 of greater than 0.10 and less than 0.19. 

[22] The Clemson Engineering Technologies Laboratory is a contract 
research laboratory operated by Clemson University. 

[23] Washington Group International, Inc., Unclassified Summary for 
Technical Readiness of PDCF Processes (U) (Denver, Co: Nov. 10, 2008). 

[24] NNSA, Final Report: Technical Independent Project Review for the 
Pit Disassembly and Conversion Facility (PDCF) at the Savannah River 
Site (Jan. 13, 2009), for official use only. 

[25] LANL, Pit Disassembly and Conversion Integrated Design Support 
and Test Plan (November 2007). 

[26] A pressurized water reactor uses pressurized water to transfer 
heat from the reactor core to the steam generator, which then produces 
steam to turn the turbine generator. 

[27] According to NNSA officials, the sale of MOX fuel over the course 
of the program would return approximately $1.1 billion to the U.S. 
Treasury, even with a discount relative to the price of uranium fuel. 
This figure assumes that the price of uranium fuel will remain at 
least at March 2009 levels; increases and decreases in uranium fuel 
price would affect the amount of revenue from MOX fuel sales. 

[28] NNSA officials told us that current plans are for the backup fuel 
to be stored at the contractor's facility in the form of canisters. If 
the backup fuel is needed, the canisters can be delivered to a 
utility's fuel fabricator to be converted into reactor fuel assemblies. 

[29] In a boiling water reactor, water moves through the reactor core 
and becomes a water-steam mixture, after which the water is removed 
and the steam is used to move the turbine generator. 

[30] To quantify utilities' responses, we administered a structured 
interview to utilities, in which we asked them identical questions and 
requested that they select their answers from a series of set 
responses. 

[31] During our interviews, we only identified DOE as the party 
offering potential incentives to simplify our questions. 

[32] Specifically, we asked utility officials to estimate what their 
interest in participating in the program would have to be to submit an 
expression of interest to DOE. 

[33] An NNSA official told us that, as of February 2010, MOX Services 
is in discussions with a nuclear services company to market and sell a 
portion of the MFFF's output. Under this agreement, the nuclear 
services company would purchase a portion of the output of the MFFF 
and then would be responsible for selling the fuel assemblies to 
nuclear utilities. The company also would be responsible for marketing 
MOX fuel to utilities. The NNSA official told us that he could not 
specify when a contract between MOX Services and the company will be 
presented to NNSA for approval, although it could occur at some point 
in 2010. MOX Services is also holding exploratory discussions about 
potential roles in marketing MOX fuel to U.S. utilities with the two 
other commercial nuclear fuel fabrication and services companies that 
operate in the United States. 

[34] A red oil excursion is an explosive, runaway reaction that can 
occur when organic solvents containing tributylphosphates come into 
contact with nitric acid. While this reaction could occur during the 
manufacture of MOX fuel, it is not specific to the MOX process. 

[35] Brookhaven National Laboratory, Risk Assessment of Red Oil 
Excursions in the MOX Facility (Upton, N.Y.: March 2007), for official 
use only; Brookhaven National Laboratory, Risk Assessment of Red Oil 
Excursions in the MOX Facility (Upton, N.Y.: August 2009), for 
official use only. 

[36] As we have previously described, one of these violations was 
NRC's February 2008 findings and notice of violation related to 
nonconforming reinforcing bars, which resulted in delays in the 
schedule for the pouring of concrete during 2008. 

[37] GAO, Nuclear Safety: Department of Energy Needs to Strengthen Its 
Independent Oversight of Nuclear Facilities and Operations, 
[hyperlink, http://www.gao.gov/products/GAO-09-61] (Washington, D.C.: 
Oct. 23, 2008); and DOE, Office of Health, Safety, and Security, 
Office of Environment, Safety, and Health Evaluations Appraisal 
Process Guide (Washington, D.C.: July 2009). 

[38] DOE established HSS in October 2006. 

[39] DOE Order 413.3A defines a nonmajor project (other than an 
environmental management project) as one with a total project cost of 
less than $750 million. 

[40] DOE, "Implementation of CDNS Responsibilities Regarding Safety in 
Design and Construction of Nuclear Facilities" (CDNS M 413.3A). 

[41] DOE, "DOE Standard: Integration of Safety into the Design 
Process," DOE-STD-1189-2008 (Washington, D.C.: March 2008). 

[42] 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.: March 2009). 

[43] DOE, Office of Environmental Management, Technology Readiness 
Assessment (TRA)/Technology Maturation Plan (TMP) Process Guide 
(Washington, D.C.:) March 2008. 

[End of section] 

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