4
Project Management Policies, Processes, and Procedures
DESCRIPTION OF CURRENT EM PROGRAM AND PROJECT STRUCTURES AND TYPES
This chapter describes and assesses Order 413.3B of the U.S. Department of Energy (DOE), Program and Project Management for the Acquisition of Capital Assets (DOE, 2018a). The chapter assesses Order 413.3B by comparing it against recognized industry standards and looking at its current application within the Office of Environmental Management’s (EM’s) cleanup program. The committee deferred the review of program management to the second phase of work and has emphasized project management for this first phase. The two levels of management—program and project—are linked, with one enabling the success of the other. The chapter provides specific findings regarding Order 413.3B compared to “best practice” status for significant elements of Order 413.3B together with actionable recommendations.
In meetings with the committee, EM staff outlined an approach to end-state contracting, discussed in greater detail in Chapter 3. This approach will utilize indefinite delivery, indefinite quantity (IDIQ) contracts, with 5-year task orders issued over a 10-year draw period. Under this concept, EM plans to utilize such contracts but with a single award.1
In one sense, DOE-EM does not thoroughly define successful outcomes or end states. The use of IDIQ, typically employed when an agency has not defined the work except in broad terms, underscores this. Rather, an end-state contracting model (ESCM) is focused on delivery of a set of discrete outputs
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1 Rodney Lehman, EM-5.22, DOE, “Responses to NAS Questions,” sent to committee staff, June 30, 2020.
that are not clearly mapped by contract to achievement of either a clearly defined intermediate or final end state. This significant deficiency deprives EM and the IDIQ contractor of the benefits of having a completion-oriented contract fully integrated throughout the supply chain and the fostering of innovation at the scale the program requires. Finally, the ESCM approach, as defined, focuses on narrowly defined performance criteria and increases risks associated with incomplete statements of work. These concerns and deficiencies were largely successfully addressed in Rocky Flats and Fernald.
EM appears to be at an inflection point where outcomes-based contracting for an entire site is not feasible given the scale of the challenges at the individual site. However, the committee believes that subgroupings of cleanup activities exist which lend themselves to end-state approaches similar to what was achieved on a site-wide basis at Rocky Flats and Fernald. This chapter considers the lessons learned from these two sites and their impact on DOE’s path forward and choice of the IDIQ task order approach and the degree to which this approach can be linked with meaningful end states.
OMB Circular A-11 and PMIAA Applicability
This section discusses three areas where additional clarity and expansion would be beneficial, particularly in applying Order 413.3B to the EM cleanup program. (The section following this, Assessment of Order 413.3B compared to other project management standards, discusses Order 413.3B vis-à-vis best practices for project management.) These include the following:
- Applicability of Order 413.3B. There is an inconsistency between the statements by DOE and what is stated in Order 413.3B itself. The Office of Project Management states that Order 413.3B “Applies ONLY to construction projects, major items of equipment (MIE’s) and (currently) environmental cleanup projects—Over $50 (M) Million Dollars.”2 In EM currently, the active (i.e., Critical Decision 3 [CD-3]) construction projects include 14 projects with a combined $21.6B total project cost (TPC). The “recorded” cleanup projects include four projects with combined TPC of $717 million.3 DOE Order 413.3B itself, however, describes its purpose as being:
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2 Paul Bosco, Office of Project Management, DOE, “Project Management (PM) Governance, Systems and Training,” presentation to the committee, May 6, 2020, Washington, D.C.
3 Rodney Lehman, Director, EM Office of Project Management (EM-5.22), “Overview of DOE O[rder] 413.3B and EM Project Management Protocol for Demolition Projects,” presentation to the committee, February 24, 2020, Washington, D.C.
To provide the Department of Energy (DOE) Elements, including the National Nuclear Security Administration (NNSA), with program and project management direction for the acquisition of capital assets with the goal of delivering projects within the original performance baseline (PB), cost and schedule, and fully capable of meeting mission performance, safeguards and security, and environmental, safety, and health requirements unless impacted by a directed change.
To implement Office of Management and Budget (OMB) Circulars to include: A-11, and its supplement, Capital Programming Guide, which prescribes new requirements and leading practices for project and acquisition management . . . (DOE, 2018a, p. 1)
- To a literal reading of the above, Order 413.3B would apply to all projects meeting the definition in Appendix 1 of Capital Programming Guide V 3.0: Supplement to Office of Management and Budget Circular A-11, Preparation, Submission and Execution of the Budget concerning capital assets (OMB, 2016).
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Overly narrow interpretation of OMB Circular A-11, Appendix 1 - Capital Programming Guide. The Capital Programming Guide of A-11, Appendix 1 notes that “capital assets include the environmental remediation of land to make it useful…” It continues, “Examples of capital assets include the following, but are not limited to them…. Environmental restoration (decontamination and decommissioning efforts).” Further it states, “The cost of a capital asset is its full life-cycle costs, including all direct and indirect costs for planning, procurement (purchase price and all other costs incurred to bring it to a form and location suitable for its intended use), operations and maintenance (including service contracts), and disposal [italic added].”
Additional clarity in A-11 Appendix 1 Capital Programming Guide and DOE Order 413.3B, to clearly establish that all environmental restoration that derives from the prior construction and operation of a capital asset is to be included in the definition of a capital asset as provided for in OMB Circular A-11, would be beneficial.
A third area may be added to the above observations on applicability, one which the committee will further examine in the Phase 2 report when discussing the links from portfolio-to-program-to-project, as follows:
- Portfolio and program management. The Program Management Improvement Accountability Act (PMIAA) requires portfolio reviews4 as part of the agency’s annual strategic review process. PMIAA established a new position, the Program Management Improvement Officer (PMIO), responsible for implementing program management policies established under respective agencies (DOE). Currently, Order 413.3B represents itself as encompassing program management.
FINDING: The applicability of Order 413.3B is to “capital asset projects” which DOE describes as being construction projects, major items of equipment, and certain environmental cleanup projects. Projects less than $50 million total project cost are exempted. Order 413.3B applies to a small subset of EM’s budget, chiefly to construction projects and to “recorded” cleanup projects.
Demolition Protocol
The Department released a new Demolition Protocol on July 13, 2020. This is expressly for the “demolition of excess decontaminated buildings.”5 Formally called Office of Environmental Management Cleanup Project Management Protocol and Implementation Standard for Demolition Projects, the Protocol has the stated purpose “to establish tailored project management requirements that are applicable to EM demolition projects and consistent with DOE Order (O) 413.3B.” (DOE, 2020, p. 1). EM further elaborated that the Demolition Protocol is suited for activities that take place in a regulatory framework that governs the cleanup. It employs the same terminology as Order 413.3B.6
EM described the new Protocol in comparison to Order 413.3B in terms of the Critical Decision points in a high-level process map comparison.7 The largest differences are found at CD-0/CD-1, in which the Protocol requires a memorandum
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4 OMB defines program as the functions or activities which agencies are authorized and funded by statute to administer and enforce. Programs typically involve broad objectives. OMB views projects as temporary efforts with defined scopes to create products or services to improve the efficient and effective implementation of programs. Because programs are comprised of projects, programs inherently address the projects subsumed within them. Finally, OMB defines portfolios as organized groupings of programs whose coordination in implementation enables agencies to achieve their objectives (Office of Management and Budget, 2018, “Improving the Management of Federal Programs and Projects through Implementing the Program Management Improvement Accountability Act (PMIAA),” OMB Memorandum M-18-19, Washington, D.C., June 25).
5 Mark W. Menezes, Under Secretary of Energy, July 13, 2020, “Memorandum for Heads of Department Elements; Subject: Demolition Projects,” Washington, D.C.
6 Rodney Lehman, Director, EM Office of Project Management (EM-5.22), “Overview of DOE O[rder] 413.3B and EM Project Management Protocol for Demolition Projects,” presentation to the committee, February 24, 2020, Washington, D.C.
7 Ibid.
describing mission need and the framework under which the project will proceed. At those same CD points, Order 413.3B has a number of reviews and documentation steps. As of March 2020, EM intended to include five cleanup projects under the Demolition Protocol that were previously under Order 413.3B. The TPC of these was $1.084 billion.
The following sections discuss the Demolition Protocol in terms of its applicability and its relation to other DOE requirements.
FINDING: EM has created a new Demolition Protocol that applies to selected cleanup projects that were previously proceeding under Order 413.3B. DOE’s objective in creating this Protocol is to provide a set of requirements more suited for activities subject to regulatory frameworks. The Protocol is streamlined compared to Order 413.3B, particularly at the CD-0 and CD-1 stages.
ASSESSMENT OF ORDER 413.3B COMPARED TO OTHER PROJECT MANAGEMENT STANDARDS
The committee assessed DOE Order 413.3B against three reference systems for program and project management:
- Project Management Institute (PMI) best practices (nine elements)8
- Construction Industry Institute (CII) best practices9
- UK Government Functional Standard GovS 002: Project delivery—portfolio, programme, and project management10
The first of these three systems, the PMI’s best practices, encompasses nine elements of success. Founded in 1969, PMI is a professional extension of the project management trend that emerged from the 1960’s explosion of project management in the defense industries. Today, PMI has over 600,000 global members. PMI best practices were also considered in the Government Accountability Office’s (GAO’s) report entitled Nuclear Waste Cleanup: DOE Could Improve Program and Project Management by Better Classifying Work and Following Leading Practices (GAO, 2019). The second system was the CII best practices. CII is a consortium of more than 140 leading owner, engineering-contractor,
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8 See, for example, J.N. Salapatas, 2000, “Best Practices—The Nine Elements to Success,” paper presented at Project Management Institute Annual Seminars and Symposium, Newtown Square, PA: Project Management Institute.
9 Further information available at Construction Industry Institute, “Best Practices,” https://www.construction-institute.org/resources/knowledgebase/best-practices.
10 Available at Government of the United Kingdom, “Government Functional Standard GovS 002: Project Delivery,” last update July 18, 2019, https://www.gov.uk/government/publications/project-delivery-functional-standard.
and supplier firms from both the public and private arenas and includes the U.S. Department of Energy among its members. The final system considered in benchmarking is the UK Government Functional Standard GovS 002: “Project delivery—portfolio, programme and project management” (July 2017). This standard looks across portfolios, programs and projects and was specifically developed for government project use. Its program management standards will serve as a benchmarking basis for this committee’s second report focused more on programs.
In this section and as shown in Table 4.1, the committee assesses the extent to which Order 413.3B represents best practice for project management and will note areas for improvement for portfolio and program management, with “portfolio” not indicated as a coverage area for Order 413.3B (program and project). Table 4.1 is organized by major topical areas that cut across the various benchmarking standards. Within the topical areas the project life-cycle as described in DOE Order 413.3B is used as an organizing principle for comparison.
FINDING: DOE Order 413.3B generally compares favorably with benchmarks for project management practices, including those of PMI, CII, and the UK government.
FINDING: DOE Order 413.3B does not incorporate CII’s best practices for advanced work packaging, materials management, planning for modularization, or disputes prevention and resolution.
Program Management
- Portfolio and program management are not adequately addressed in Order 413.3B:
- Order 413.3B does not address the challenges, opportunities, and processes that affect project to project interfaces and efficient “end-state” oriented program delivery.
- Order 413.3B does not address the risks associated with the totality of a program and, more broadly, the EM program.
- Order 413.3B does not specifically address commercial and financial considerations, which are more typically found at the portfolio and program levels from a management perspective. Other governance documents will become important in evaluating the proposed use of end-state contracts using IDIQs.
CONCLUSION: Overall, DOE Order 413.3B represents best practice for project management, but there are opportunities for improvement for portfolio and program management, for example, by expanding its applicability to include portfolio in addition to program and project management.
TABLE 4.1 Evaluation of Order 413.3Ba versus Three Benchmarking Standards: Project Management Institute (referred to as “PMI” in the Table); Construction Industry Institute (“CII”); and UK Government Functional Standard GovS 002: Project Delivery – Portfolio, Programme and Project Management (“GovS 002”)
| Topic | Assessment | Growth Areas |
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| Governance Frameworks |
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| Topic | Assessment | Growth Areas |
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Total program cost grows with both the level of correlation between projects and the number of projects. Correlation in a program or portfolio is driven by common resources, project execution methods, management practices, common regulatory drivers and outcomes and schedule (precedence) interdependencies. These are all present. |
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CD-0
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CD-1
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| Topic | Assessment | Growth Areas |
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CD-2
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CD-4
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| Topic | Assessment | Growth Areas |
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| Control Documents |
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| Project Life-Cycle Control |
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a Order 413.3B refers to U.S. Department of Energy (DOE), 2018, Program and Project Management for the Acquisition of Capital Assets: Change 5. DOE O[rder] 413.3B: Change 5, Washington, D.C., April 12.
b DOE Office of Environmental Management, 2020, Office of Environmental Management Cleanup Project Management Protocol and Implementation Standard for Demolition Projects, EM Protocol, Final June 8, 2020, Washington, D.C.
c DOE G 413.3-15 refers to DOE Office of Project Management, 2018, Project Execution Plans: DOE G 413.3-15A, 9-14-2018, Washington, D.C.
d The Project Execution Plan, described in DOE G 413.3 and referenced throughout Order 413.3B, is interwoven with other requirements beginning at the CD-1 stage, including the Tailoring Strategy (Order 413.3B, p. A-6), the Integrated Project Team (p. A-6), the Risk Management Plan (p. A-7), the Funding Profile (p. A-9) and so forth.
e Mark W. Menezes, Under Secretary of Energy, “Memorandum for Heads of Department Elements; SUBJECT: Demolition Projects,” July 13, 2020.
CURRENT COVERAGE OF ORDER 413.3B
The scope and applicability of Order 413.3B to portfolios and programs is discussed above, as are two overly constrained interpretations of Order 413.3B. The first, noted above in the section “OMB Circular A-11 and PMIAA Applicability,” is DOE’s interpretation that Order 413.3B “applies ONLY to construction projects, major items of equipment (MIE’s) and (currently) environmental cleanup projects.”11 This appears to be inconsistent with the purpose as stated in the introduction to Order 413.3B. This interpretation of the scope of 413.3B in large part appears to have driven EM’s development of a Demolition Protocol (DOE, 2020) (discussed in detail below). The committee considered the possibility of increasing the applicability of Order 413.3B. Table 4.2 includes the committee’s analysis of what would be the effect of applying Order 413.3B to a greater number of projects in EM and also what would be the effect of adding provisions addressing certain issues. The latter include, for example, dispute prevention provisions, which are discussed further in Chapter 6.
The second instance of EM’s narrow interpretation and application of the DOE Order 413.3B is the exclusion, for example, of groundwater remediation. Here EM’s position could be seen as inconsistent with OMB Circular A-11, Preparation, Submission and Execution of the Budget—specifically the supplement, “Capital Programming Guide”—which states, “Capital assets include the environmental remediation of land to make it useful” (OMB, 2016, p. 55). This latter concern is somewhat mitigated by the issuance of the Demolition Protocol (DOE, 2020).
DOE further described its application of Order 413.3B to site-based contracts and projects. Where applicable (e.g., if the threshold requirements are met),
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11 Paul Bosco, Office of Project Management, DOE, “Project Management (PM) Governance, Systems and Training,” presentation to the committee, May 6, 2020, Washington, D.C.
Order 413.3B Section 3b requires a contractor requirements document (CRD), and Attachment 1 of the order elaborates a list of requirements applicable to the contract into which the CRD is inserted. As noted, much of the work under contracts awarded by EM is not subject to 413.3B. Management and operating (M&O) contractors have a stewardship role at two of EM’s sites (Savannah River Site and Waste Isolation Pilot Plant [WIPP]). In certain instances, M&Os are tasked with performing cleanups, such as at Savannah River,12 and capital asset projects (CAPs), such as at WIPP.13 To the extent M&Os are, or will be, conducting or overseeing cleanup contracts and CAPs, the committee believes EM should ensure the requirements of Order 413.3B are applied at the project level.
The incorporation of the Demolition Protocol into Order 413.3B was either planned or in progress during the committee’s study, and the specifics of how the incorporation was to be accomplished were not known to the committee. If this is to be accomplished by invoking one of the exemptions in Order 413.3B, the committee notes that section 3c(4) requires approval by the Deputy Secretary (S2) for any exemption to meeting the requirements of Order 413.3B and the meeting of all three requirements of this section. EM does not appear to meet the first requirement of an established Project Management Support Office (PMSO) with “adequate project management requirements, processes and procedures defined to enable project success,” given their high percentage of capital asset projects that they do not perform per DOE Order 413.3B.
The definition found in Section 3c(4) of Order 413.3B, third bullet point, defines eligibility for exemption as:
Completed 90% of projects across a three-year rolling average, not to exceed by more than 10% of the original cost baseline for the original approved scope at CD-2 for all capital asset projects with TPC [Total Project Cost] greater than $50 million. (DOE, 2018a, p. 4)
This definition implies a number of possible issues:
- There is acceptance of a 10 percent overrun.
- Performance is based on number of projects as opposed to aggregate cost performance of the portfolio of projects considered. In the proposed IDIQ approach EM disproportionately weighs many small projects toward their overall performance. A simple example to illustrate the point would be a group of 10 projects, 9 with TPC at $50 million and one with TPC of $1 billion. The 9 projects are each completed for $55 million
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12 For example, the Savannah River Nuclear Solutions LLC contract was expanded to include cleanups. See Fluor, 2020, “U.S. DOE Savannah River Site Management & Operations,” https://www.fluor.com/projects/savannah-river-nuclear-management-operations.
13 Catherine Bohan, Office of Environmental Management, DOE, “NAS 3133 Response to Request for Additional Information #1 dated 03062020 (Item 5),” April 6, 2020.
- The Demolition Protocol (DOE, 2020) objectives could also be accomplished as a PEP for a class of projects within the context of Order 413.3B and is consistent with the PEP approach taken by NNSA. The formal incorporation of the Demolition Protocol into Order 413.3B was still either planned or in progress during the study and therefore not known to the committee.
(10 percent overrun and deemed acceptable); the 10th project experiences a 20 percent overrun and deemed unacceptable). That is, 90 percent of the projects have been completed within 10 percent, but the aggregate of the 10 projects is an overrun of nearly 17 percent.
FINDING: Adoption of Order 413.3B to specific projects or project types is best carried out through effective use of the PEPs as successfully demonstrated in NNSA.
The committee considered the possibility of increasing the applicability of Order 413.3B. Table 4.2 includes the committee’s analysis of what would be the effect of applying Order 413.3B to a greater number of projects in EM and also what would be the effect of adding provisions addressing certain issues. The latter include for example dispute prevention provisions that are discussed further in Chapter 6.
COMPARISON OF ORDER 413.3B AND NEW PROPOSED CLEANUP PROTOCOL
DOE presented its rationale for why the Demolition Protocol was needed and why the protocol is envisaged to be separate from Order 413.3B:
EM often demolishes and disposes of facilities where the design elements common to construction may not be applicable. Further, demolition projects are often conducted against the requirements of a regulatory framework, court orders, consent decrees, or site-specific cleanup agreements that are legally binding and may govern their processes, schedules, alternative selections, technical approaches, scope, end states, decision points and required approvals. The work is frequently covered by a Record of Decision (ROD) or Action Memorandum. The draft Protocol establishes a standard tailored approach to comply with project management requirements specifically related to demolition projects within the framework of DOE O[rder] 413.3B, by allowing substitution of equivalent processes, and consolidating Critical Decision (CD) phases.14
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14 Rodney Lehman, EM-5.22, DOE, “Responses to NAS Questions” sent to committee staff June 30, 2020.
TABLE 4.2 Assessment of Benefits and Challenges of Broader Application of Order 413.3B to EM Projects
| Coverage of Order 413.3B | Benefits | Challenges |
|---|---|---|
| Increase Order 413.3B coverage | Generally represents best practice for project management and should be broadly applied within EM to improve the overall quality of project execution and the results obtained Acts to strengthen the culture of project management required to deliver EM’s mission |
Increases the need for FPDs and associated PM staff Requires a broad consistent PM culture to be built across the sites Requires a resource sharing culture to be built across sites to meet evolving EM priorities Requires strengthening of EM project support capabilities and potential elevation of these within the organization when program management needs are considered in the second part of our report |
| Address relationship to PMIAA and expand coverage to address relationship of programs and projects to portfolios | Strengthens links between portfolio, program, and project Creates defined linkage between portfolio outcomes, program end states (and defined portions thereof), and projects including those awarded under a task order approach, if appropriate | |
| Clarify that scope of coverage includes capital assets as defined in A-11, not just construction projects, including the full life-cycle, through environmental restoration, of projects related to a capital asset | Ensures Order 413.3B coverage of EM projects of all types within established size thresholds | |
| Explicitly recognize the circumstances that allow for a combined CD-1,2,3 approach | Maintains EM as consistent with Order 413.3B and can be accomplished through the PEP process as contrasted with the inclusion of the protocol as an Appendix to Order 413.3B | |
| Coverage of Order 413.3B | Benefits | Challenges |
|---|---|---|
| Life-cycle cost accumulation and links to portfolio and program goals need to be expanded | Strengthens links between portfolio, program, and project and provides increased transparency of overall EM progress toward ultimate cleanup outcomes | |
| Links to DOE Order 210.2A related to lessons learned should be strengthened | The committee found the lessons learned process to be an opportunity for improvement | |
| Changes to the baseline schedule should require Chief Executive for project management approval | Increased focus on program and project schedule performance | |
| Dispute prevention and resolution should be added to Order 413.3B | Growing reliance on single-award IDIQs for end-state contracting require strengthening of dispute prevention | |
| Retain Order 413.3B coverage for EM projects without the proposed addition of the issued protocol as an appendix to Order 413.3B | NNSA has demonstrated how to comply with Order 413.3B through appropriate use of PEPs. This approach is viewed as appropriate for EM and retains Order 413.3B best practices | |
| Modify the definition of eligibility for exemption found at Section 3c(4), point 3, as described previously | Reinforces a higher standard of performance, which is increasingly important given increased use of IDIQ | |
| Reduce threshold for Order 413.3B applicability to $20 million consistent with current pilot project in NNSA | PEPs for small projects can adapt Order 413.3B to improve project management systems and practices and build the broader project management culture that task order contracting requires. This would foster greater cross-site consistency of implementation of Appendix D |
The rationale given above for the need for a separate Demolition Protocol, however, still appears to take a narrower view of the applicability of Order 413.3B, as follows:
- The OMB Circular A-11 supplement, “Capital Programming Guide,” includes in its scope environmental restoration (i.e., “decontamination and decommissioning efforts”) in its Appendix on Definition of Capital Assets (OMB, 2016, p. 55); and
- There is limited overall coverage of EM outlays (i.e., spending) by Order 413.3B. In particular, it is the committee’s understanding that projects below $50 million are not covered15,16 although equivalency is encouraged through a DOE (2018b) policy (issued by memorandum in August 31, 2018).17 Deactivation projects were described as not covered by Order 413.3B.
The committee’s concerns are underscored by the committee’s finding that Order 413.3B is generally a best practice with respect to project management.
The Demolition Protocol appears to exclude roles for the Project Management Risk Committee (PMRC) and the Energy Systems Acquisition Advisory Board (ESAAB), which were in Order 413.3B. Given the scale of the demolition challenge, it is possible that specific projects may exceed the $750 million threshold laid out for major systems projects that would otherwise require Deputy Secretary approval, whereas, in the Demolition Protocol, approval has been delegated to a lower organizational level (S4). In addition, although the Protocol’s development was heavily influenced by the regulatory processes that are often present, the demolition projects that would be covered include those for which such regulatory frameworks are not present. Such projects would have been amply covered by Order 413.3B and its PEP process. It also appears that certain independent reviews called for per Order 413.3B (e.g., independent project reviews (IPRs) and external independent reviews (EIRs), have been replaced with Independent Field Office and Headquarters Assessments. Many of the features that contribute to Order 413.3B representing a “best practice” for project management have been diluted by or not included in the Protocol.
The new Demolition Protocol discusses end states as they relate to specific projects. The protocol further advises, “Federal teams should consider how best to package their site program and/or projects within a task order or series of task
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15 Paul Bosco, Office of Project Management, DOE, “Project Management (PM) Governance, Systems and Training,” presentation to the committee, May 6, 2020, Washington, D.C.
16 The National Nuclear Security Administration (NNSA) has a pilot project setting this threshold at $20 million for four projects. See Bob Raines, NNSA, “NNSA and DOE O[rder] 413.3B,” presentation to the committee, May 6, 2020, Washington, D.C.
17DOE (2018b) reiterates that “all projects equal to or less than $50 million shall follow the Project Management Principles as established in Appendix C of DOE O[rder] 413.3B.”
orders, if possible.” As noted previously, EM has expressed an intent to utilize an IDIQ form of contract.18 Some observations about this approach include the following:
- End-state or outcomes-type contracts are desirable but EM’s interpretation of end state is not aligned with past examples. Historically, Fernald and Rocky Flats (from year 2000 onward, when the closure contract took over from the cleanup contract [see Table 6.1, in Chapter 6]) represented DOE best practices toward “end-state” contracts, and EM can further improve on these examples in current projects by incorporating the lessons learned from each project and defining end states that represent significant integral portions of remaining portions of EM’s mission.
- The shortcomings EM finds in Order 413.3B are fully addressed within the context of Order 413.3B through effective use of PEPs. The committee noted both deficiencies in maintaining PEPs, as well as the successful approach adopted by NNSA.
- EM’s application of the IDIQ contract form does not follow traditional procurement practices. IDIQ contracts place less burden on agencies to be precise about the scope of work, which is instead defined when task orders are issued. The contractor can heavily influence the subsequent task order statements of work, and the negotiations for scope of work and cost. The schedule goals in a single-award IDIQ are determined on a sole-source basis, further adding to the risk. Multiple-award contracts, such as is the case with EM’s multiple contractor award for a national deactivation contract at the Paducah Gaseous Diffusion Plant, maintain effective competition throughout the acquisition.
- EM’s Demolition Protocol for demolition projects states, “Disaggregation of site program work into smaller, discrete work activities is encouraged as it provides better project definition and clarity, is more manageable, reduces time horizons and risks, and is consistent with the project management best practices found in DOE O[rder] 413.3B.” (DOE, 2020, p. 3) The committee does not agree with this assessment. Specifically, a multiplicity of projects transfers a greater burden for project management to the DOE from a selected contractor; increases responsibilities with respect to interface management; creates a growing level of risk in the “white space” between individual projects; partitions risks which were demonstrated to be best aggregated on both Rocky Flats and Fernald; and limits the scope for innovations in project delivery and the opportunity for accruing meaningful incentives by the contractor. Industry best practices on large complex programs have sought to maximize risk aggregation consistent
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18 Norbert Doyle, Deputy Assistant Secretary, Office of Acquisition & Project Management (EM-5.2), “Contracting Overview,” presentation to the committee, February 24, 2020, Washington, D.C.
with industry appetite and capabilities and provide sufficient scope for innovation. The committee was unable to identify a clear reference to this as a best practice in Order 413.3B.19
FINDING: M&O contractors have a stewardship role at two of EM’s sites (Savannah River Site and the Waste Isolation Pilot Plant). In certain instances, such as the Savanah River Nuclear Solutions contract, M&Os are tasked with performing cleanups.
CONCLUSIONS AND RECOMMENDATIONS
CONCLUSION: The rationale for creating a new set of requirements outside of Order 413.3B that applies to projects proceeding under the Demolition Protocol is not apparent. There is a risk that these projects will have insufficient oversight.
CONCLUSION: The current focus of Order 413.3B is on project management. The Order lacks attention to program management issues that are included in its stated purpose.
RECOMMENDATION 4-1: The committee recommends that the Department of Energy (DOE) confirm, clarify, and expand DOE Order 413.3B to establish its applicability to all capital asset projects (not just construction and major instruments and equipment and certain cleanup projects) and all Office of Environmental Management projects, whether major systems projects or work carried out by a management and operating (M&O) contractor. The committee makes the following specific recommendations regarding the Order as well:
- Pending the outcome of the National Nuclear Security Administration pilot project, reduce the threshold value for applicability of Order 413.3B from $50 million to $20 million;
- Continue applying the requirements of Order 413.3B to M&O contract work on capital asset projects—the latter including construction projects, major items of equipment and cleanup projects;
- Clarify the definition related to project performance found at Section 3c(4), point 3 to calculate performance on aggregate value and not number of projects; and
- Shift eligibility for project overruns, currently 10 percent per project, to be applied instead based on the aggregate value.
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19 This will be further considered when the committee turns its attention to program management, as risk and end state must be considered from a programmatic perspective recognizing that the sum of project risks is less than the programmatic risk in large complex programs.
RECOMMENDATION 4-2: The Department of Energy should clarify Order 413.3B to incorporate best practices with respect to dispute prevention and resolution, which will be of growing significance as the Office of Environmental Management implements the end-state contracting approach. Sources for such best practices include the Construction Industry Institute.
RECOMMENDATION 4-3: The Office of Environmental Management should apply the requirements for project execution plans equivalent to those in Order 413.3B to those projects that are not formally managed under Order 413.3B.
REFERENCES
DOE (U.S. Department of Energy). 2018a. Program and Project Management for the Acquisition of Capital Assets: Change 5. DOE O 413.3B. Washington, D.C. April 12.
______. 2018b. “Office of Environmental Management Policy for Management of Capital Asset Projects with Total Project Cost Equal to or Less than $50 Million.” EM Policy. April.
______.2020. Office of Environmental Management Cleanup Project Management Protocol and Implementation Standard for Demolition Projects. EM Protocol. Final June 8. Washington, D.C.
GAO (U.S. Government Accountability Office). 2019. Nuclear Waste Cleanup: DOE Could Improve Program and Project Management by Better Classifying Work and Following Leading Practices. GAO-19-223. Washington, D.C.
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