Effectiveness and Efficiency of Defense Environmental Cleanup Activities of the Department of Energy's Office of Environmental Management Report 2 (2022) / Chapter Skim
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3 Project Management and Contracting
3 Project Management and Contracting
Pages 21-40
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FINDING A-1: The design of the DOE-EM End State Contracting Model (ESCM) , in the early stages of implementation, appears to lack features 21
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• The contract cost ceilings imply annual funding levels that are signifi cantly higher than historical experience, resulting in inefficiencies in contract execution if higher annual funding levels are not achieved. • Task order scopes of work are established after contract award, limiting incentives for technology and business model innovations in incumbent contractor proposals.
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was the initial vision for a performance-based contracting approach that incentivizes contractor execution and completion of work with clearly established performance expectations. This vision was substantially achieved in the completion contracts for cleanups of the Rocky Flats and Fernald sites, which began in the early 2000s.
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: $10 billion $1 billion Central Plateau Cleanup Companyc Savannah Savannah River Mission Completion $21 billion $2.1 billion River (IMCC) , LLCd Oak Ridge Oak Ridge Reservation Cleanup Contract $8.3 $830 million (awarded 10/26/21)
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defined as the specified situation, including accomplishment of completion criteria, for an environmental cleanup activity at the end of the task order period of performance (POP) ."b $500 million See previous No clear end state identified; any end state under the row Richland Operations Office Hanford Life-cycle Baseline through 2059 permitted.
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The model's use of IDIQ contracts does not support the degree of program management responsibility and risk transfer to the private sector that the committee judges is necessary to achieve success. DOE-EM's current implementation of the ESCM creates a low-risk, low-innovation environment for the prime contractor and limited incentives to achieve completion of well-defined intermediate end states linked to the overall site cleanup and closure.
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. • The 10-year contract lengths, with possible extensions, locks DOE EM into particular contractors and allows them to play a central role in defining task orders post-award, thereby limiting opportunities for competition, inclusion of new entrants into the DOE-EM contractor community, and injection of new ideas into the cleanup program.
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DOE-EM provided no documentation to the com mittee as to which of the six factors were used as the basis for the EM determination, nor was the committee able to obtain specific documenta tion from its virtual site visits on any individual end-state contract. • The contract cost ceilings are set at levels significantly higher than current annual funding levels, providing no effective cost control or accountability, and possibly leading to inefficiencies in contract execution if annual funding levels do not keep pace with future cost adjustments. The cost ceilings for IDIQ contracts awarded to date are approximately $98 billion, or $9.8 billion per year on average over their 10-year draw periods (see Table 3.1, columns 3 and 4)
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• The existence of multiple task orders poses increased demands on DOE contract managers to ensure program and project effectiveness. The committee observed varying degrees of certification and training of DOE-EM staff in project management and end state.
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Such a review is needed to inform improvements in the execution of the existing 10-year ESCM and the design of any additional decade-long IDIQ contracts for major cleanup projects at its sites. ORDER 413.3B RECOMMENDATION A-3: The Department of Energy (DOE)
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; environmental cleanup projects; and line-item construction projects. As of February 2020, there were 14 line item construction projects and with a total project cost (TPC)
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An important focus of the committee's virtual site visits and discussions with DOE-EM leadership was to understand how DOE-EM uses innovation and technology insertion in its cleanup program. DOE-EM recently issued guidance on the technology innovation process (see DOE [2021]
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to help inform and focus the scientific work and promote the transfer of results to site cleanup. DOE-EM's focus on and investments in science, technology, and innovation has declined since the early 2000s as office leadership changed across administrations and the focus of cleanup activities turned to site closure using existing technologies.
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39) Recommendation C: A portion of the technology development effort for the DOE-EM cleanup program should focus on breakthrough 11 National Defense Authorization Act for fiscal year (FY)
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2020. "Policy Directive: End State Contracting Model Program Plan." DOE EM DIR 2020 001.
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2021. Effectiveness and Efficiency of Defense Environmental Cleanup Activities of DOE's Office of Environmental Management: Report 1.
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This was the completion outcomes achieved at Rocky Flats and Fernald. EM's end-state contracting model is not a contract type but an approach.
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. Polaris pioneered several managerial techniques that included the following: • Outcomes focus (Navy ballistic missile capability)
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In the United States, several outcomes-based public–private partnerships, such as the I-495 Capital Beltway expansion, have delivered the capital project outcomes and financial benefits the Commonwealth of Virginia sought with a capital cost reduction of nearly $1 billion while significantly reducing the property takes initially envisioned by the state by nearly 300. Currently, at Sellafield in the United Kingdom, outcomes-based remediation contracts are being initially deployed.4 3 B
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sharing lessons learned, including failures, successes, and good practices, from its technology development and deployment efforts both within and outside of DOE-EM. Finding 4: DOE-EM has substantially reduced investments in S&T develop ment over the past 15 years and has focused instead on technology deploy ment in current cleanup projects.
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