Fourteen Not So Easy Steps to a Successful Environmental Management Program

Alvin L. Alm

Editors' Summary: In 1989, the DOE created the Environmental Management (EM) program to clean up contamination caused by the production of nuclear weapons. In recent years, the DOE has suffered congressional criticism and reduced budgets. Although the EM program pushed for greater efficiency, its initiative lacked a coherent strategy necessary to address the overall cleanup program. This Dialogue identifies 14 principles that are vital to the cleanup of the DOE's nuclear weapons complex. The author argues that aggressive and competent implementation of these principles will increase both the success and cost-effectiveness of the DOE's cleanup. The author, however, concludes that, without increased authority and flexibility for the assistant secretary in charge of the EM program, such implementation is not possible under the DOE's current organizational structure.

Alvin L. Alm is the executive vice president of the Arlington, Virginia, consulting firm The Columbus Group, Mr. Alm served as the assistant secretary of the U.S. Department of Energy's Environmental Management program from February of 1996 to January of 1998. He has held executive positions with several companies including Science Applications International Corporation, Alliance Technologies Corporation, and Thermo Analytical Corporation. He has also served as deputy administrator of the U.S. Environmental Protection Agency (EPA), EPA's assistant administrator of Planning and Management, and staff director of the Council on Environmental Quality. In addition, Mr. Alm was a member of the faculty at the John F. Kennedy School of Government at Harvard University.

[28 ELR 10519]

The secret of success is constancy of purpose.

— Disraeli

The U.S. Department of Energy's (DOE's) Environmental Management (EM) program poses an almost unparalleled series of budgetary, technical, and political challenges. The technical uncertainties and problems encountered in such a daunting endeavor have led to finger pointing, distrust, and a tendency to run for the hills when political problems emerge. Budgetary limitations have precluded achieving all of the expectations of states and stake-holders at the site. Many observers have thrown up their hands and concluded the program is simply unmanageable. These dire observations, however, fail to take into account how far the EM program has come and the new management improvements that are laying a strong foundation for the future. The job of cleaning up the mess from 40 years of weapons production will not be easy, but it will not be insuperable.

Background

The DOE created the EM program in 1989¹ to clean up extensive contamination from the production of weapons. The creation of the program grew out of a political realization that the DOE needed to play by the same rules as the private sector in dealing with environmental contamination. After reluctantly agreeing to launch a cleanup program, the DOE entered into a series of regulatory agreements with states and the U.S. Environmental Protection Agency. The agreements were ambitious, and the DOE assumed funding would be commensurate with these commitments. In fact, participants in the DOE funding debate at one time assumed that the EM program would reach a funding level of $ 10 billion a year.

In an effort to stave off efforts to abolish the DOE,² Secretary of Energy Hazel O'Leary shaved $ 4.4 billion off of the future DOE estimates over a five-year period.³ This voluntary cost cutting coupled with budgetary threats from the 104th Congress led Tom Grumbly, a former DOE assistant secretary, to warn of an impending "train wreck" because funds were expected to be substantially less than necessary to meet existing regulatory requirements.⁴ Clearly, a new strategy would be necessary to avoid catastrophe.

To deal with this challenge, the EM program pushed for greater efficiency to spread funds further and proposed private-sector funding on large projects such as the tank waste cleanup at the Hanford, Washington, site and transuranic cleanup at the Idaho National Engineering and Environmental Laboratory. These efforts — impressive in their conception — helped alleviate some of the near-term problems, but still lacked a coherent strategy to cope with the magnitude of the overall cleanup program.

Any new strategy needs to reduce the huge fixed costs of the EM program. For instance, probably 60 percent of the program costs were devoted to merely babysitting the wastes in a safe and secure way. If the program could be [28 ELR 10520] greatly accelerated, these fixed costs could be dramatically reduced.

Implementation of a Successful Environmental Management Program

In June 1996, senior managers of the DOE developed a comprehensive vision for the EM program known as the 2006 Vision. The 2006 Vision, recently expounded in Accelerating Cleanup: Paths to Closure,⁵ is as follows:

By 2006, the Environmental Management program intends to complete cleanup at most of its remaining 53 sites. At a small number of sites, treatment will continue for the few remaining "legacy" waste streams. This vision will drive budget decisions, the sequencing of projects, and the actions needed to meet program objectives. This vision will be implemented in collaboration with stakeholders, regulators, and Tribal Nations.⁶

The strategy set forth in Accelerating Cleanup contains, by implication, the 14 principles discussed below. Implementation of each of these principles is critical to achieving a successful and cost-effective cleanup of the weapons complex.

1. Articulate a Goal for the Program and Stick With It

No entity can clean up a large and complex problem without some clear goal. Such a goal must not only deal with the level of cleanup, but must also include the costs and schedule of the cleanup — unless one assumes that resources are unlimited. The entire program must be built around the goal, driving both funding and programmatic decisions.

To be operational, the goal must establish both schedules and funding levels. The 2006 Vision, as defined above, not only provides this goal, but it also contains a management program to implement it. The purpose of the 2006 Vision is not to plan for planning sake, but to drive the program forward to reduce costs and risks to communities.

2. Reduce the Fixed Costs (Mortgages) in the Most Cost-Effective Way Possible

Because the EM program contains such high fixed costs, substantial cost reduction is possible through accelerating the program. For example, in 1995, the estimated costs for cleaning up the Rocky Flats facility in Denver, Colorado, were $ 37 billion over 40 years.⁷ The current estimate is $ 6.3 billion over 10 years.⁸

Comparable savings are possible for individual projects. For example, internal DOE estimates predicted that deactivating the plutonium purification facilities at the Hanford site would save approximately $ 350 million over 10 years. These funds can be devoted to other projects at this facility, which will further reduce the mortgage costs.

3. Decentralize the Responsibility for Results

While program goals must be established nationally, implementation must be the responsibility of field managers. The desirability of decentralizing responsibility and enhancing accountability has been borne out by private-sector experience in recent years. Headquarters must set goals and monitor progress, but field installations, including their contractors, must be held accountable. If this clear accountability is not established, no one is responsible for failure, and no one can be rewarded for success.

4. Maintain Level Funding Among the Sites

It is important to maintain level funding among the sites to the extent possible. If major efforts are undertaken to improve the efficiency of the EM program, sites must have the incentive to cut costs to devote funds to other activities at that site. If savings are diverted to other sites, no incentive will exist to cut costs. While shifts among sites may seem attractive in the short run, such a strategy will be counterproductive in the long run, resulting in make-work activities to maintain funding and employment.

5. Use Contracting Incentives to Achieve Results

As has been borne out in the private sector, creating the right incentives is the key to achieving both cost and schedule objectives. Traditionally, the incentives inherent in the old management and operating contracts encouraged perpetual work on activities. The contracts encouraged inefficiency because profits were based on the volume of work. As part of the DOE's contract reform effort, incentives have been built into contracts to encourage efficiency and greater adherence to schedules. For example, the Rocky Flats cleanup will be completed decades earlier than originally planned. Strong incentives in the current management and integration contract encourage adherence to schedules and cost reduction. Not all of the early incentives were optimum, but taken as a whole, performance-based contracting is making a positive difference.

With the experience to date, the following contracting strategies are the most promising:

* "Pure integrator" contracts, such as that employed at the Oak Ridge, Tennessee, site, make the most sense at the large sites that will not be finished by 2006. Under these contract vehicles, the contractor does not perform the work itself, but is responsible for assuring that subcontractors meet schedule and cost restraints. The actual work is conducted by subcontractors at a fixed price or under incentive contracts. Pure integrator contracts assure that individual projects are conducted at the best price by the best contractor, rather than tying the DOE to only members of the winning team. Moreover, projects will be completed under subcontract, avoiding the need to change contractors on individual projects. Recent cost increases at the K basins at Hanford, which are currently around $ 300 million,⁹ illustrate the problem of lack of accountability. [28 ELR 10521] Since two contractors have been involved with this project, it is not clear who is to blame. More importantly, no incentive clearly exists for one contractor to achieve cost and schedule objectives at the site.

* Completion contracts can be issued for sites that will be finished by 2006. Completion contracts are awarded based on a contractor's plan to close down a site at a certain date with appropriate incentives for success and disincentives for failure. These completion projects should be based on incentives in order to assure completion on time and within budget. Currently, the Mound site in Miamisburg, Ohio, has entered a similar contract, which is directed at completing cleanup of the site by 2004.

* Multiyear incentives should be built in wherever possible, creating a strong impetus to achieve completion and cost efficiency goals.

* Contracting strategies need to be tied directly to the 2006 goals. Contractors need some latitude in performing work, but schedules, and budgets must be clearly articulated.

6. Convert All Activities to Project Baseline Summaries

The basic planning and budgeting structure of the EM program has been converted from activity data sheets to project baseline summaries. Activity data sheets are based on continuing activities over an indeterminate period of time, while project baseline summaries are based on completing projects over a specified period of time within a budget level. By establishing budgets, schedules, and management efficiencies on the basis of individual projects, project baseline summaries provide a way to manage efficiently, establish the right incentives, and measure progress.

7. Pay Attention to Project Personnel

The quality of personnel offered for a project is the most important single factor for success. It is much more important than the overall reputation of a firm because a project is almost always a direct result of the skill and efforts of the project manager and other key personnel. Since project management is a skill that can elude even successful managers in other businesses, the DOE should carefully check management references to assure that project managers have successfully managed projects similar to those contemplated.

8. Push Productivity Goals

The EM program cannot succeed without achieving continued, substantial efficiencies because budgetary levels are not sufficient to address regulatory obligations without additional funds. Such efficiencies appear imminently achievable based on experience in the private sector. The current U.S. economy has grown at a rapid rate in recent years with virtually no inflation due to continued improvement in productivity. Just like the U.S. economy, initial improvements in the EM program will occur from belt tightening, while subsequent improvements will result from industry consolidation, reengineering, and application of technology.

To date, total baseline savings of $ 5.6 billion have been incorporated into the 2006 Vision, and sites have targeted an additional $ 2.5 billion.¹⁰ Unfortunately, during this same time, some sites incurred some unexpected scope growth, offsetting some of the gains to be made with efficiency improvements.

The DOE has achieved $ 1.1 billion in savings in fiscal year 1998-1999 alone.¹¹ This has been accomplished by reducing support costs, maximizing contract incentives, reducing mortgage costs, applying new technology, reengineering, and other means. These savings resulted from setting goals and conducting workouts at the site with DOE field staff, contractors, regulatory agencies, and, in the case of the Hanford site, with stakeholders. These workouts need to be held frequently to continuously evaluate ways to make the EM program more efficient.

9. Integrate the Activities of the Complex

In the summer of 1996 while assistant secretary of the DOE's EM program, I requested the major DOE contractors to evaluate possibilities to integrate the activities of the DOE complex by taking advantage of treatment and disposal operations across the complex. Integration assumes that DOE facilities take advantage of the least costly treatment and disposal solution at DOE facilities across the entire complex. Integration efforts resulted in a draft that set forth a number of ways to reduce costs through integration. The DOE Integration Strategy was published in May of 1997, offering substantial savings across the DOE complex.¹² The pacesetting effort was recently honored, receiving the highest award of the American Academy of Environmental Engineers.¹³

The integration effort not only sets forth a number of potential transfers of wastes among sites, but also systematically traces wastes from generation through treatment and disposal. This disciplined road map will help the EM program spot and highlight technology needs. Although shipping wastes between sites is very controversial, integration is increasingly occurring at DOE sites. The 1998 fiscal year budget, for example, contains funds to upgrade a reactor at the Savannah River, South Carolina, site to store plutonium from Rocky Flats and Hanford.¹⁴

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10. Use Technology to Cut Costs and Deal With Otherwise Intractable Problems

Over the long term, most project efficiencies will result from application of new technology. By 1998, more than 140 new technologies had been used to characterize and treat waste and to remediate contaminated soil and groundwater.¹⁵ Site versions of the 2006 Vision have identified 543 science and technology needs based on the designation of technical programmatic risk in the projects.¹⁶ The EM program intends to bring more that 100 new technologies to bear in the next four years.¹⁷

The DOE has established a 10-point program to speed up deployment of new technology.¹⁸ That program places accountability for technology deployment on line managers and creates a mechanism in the 2006 Vision to budget for and manage the deployment of innovative technology.

11. Privatization Represents a Critical Tool to Speed Up the Program

Privatization can speed up the EM program through the use of private-sector capital to finance projects. Without privatization, it would be extremely difficult to finance the Tank Waste Remediation System at Hanford or the Advanced Mixed Waste Treatment facility at the Idaho National Engineering and Environmental Laboratory from existing funds. If these activities were funded from regular appropriated funds, the entire EM program would be reduced in scope, leading to later closures, higher costs, and compliance failure.

12. Involve the Public in Decisionmaking

The 2006 Vision involves a massive public participation effort. The 2006 Vision was subjected to stakeholder review at the DOE sites and written comments on the total document. In addition, the DOE conducted a national dialogue through the auspices of the League of Women Voters. These efforts were designed to give stakeholders an unprecedented opportunity to review and comment on the totality of the DOE EM program. Thus, under the 2006 Vision stake-holders receive an in-depth view of the EM program and participate meaningfully in the program. Stakeholders can understand the detailed plan and funding not only for the individual sites, but also for the entire DOE complex. The 2006 Vision makes the entire EM program transparent to stakeholders to an extent never before achieved.

As part of the public participation process, EM officials met with stakeholders at the sites, elected officials, associations of state and local governments, tribal nations, and others. The DOE requested public comments on the original discussion draft and on the draft of Accelerating Cleanup. The department has also sponsored workshops with the League of Women Voters to assist the public in understanding the EM program. These efforts are designed to give the public an unprecedented chance to review the entire EM program — not just annual budgets at specific sites.

13. Protect the Safety of Workers

Since a major goal of the EM program is to protect the public health and safety, the department must give its highest priority to protecting its workers — the most vulnerable group by far. As more work iscontracted out, providing this protection becomes more challenging. The DOE needs to make worker protection not only a management challenge, but also a moral imperative.

14. Maintain Level Funding for the Program

Funding for the EM program should be level and predictable to reduce the total liability that the government has assumed. The liability for cleaning up the DOE's weapons complex sites resulted from the national security benefits that production of nuclear weapons afforded all U.S. citizens. The liability arising from this production of nuclear material is something like a debt, except that failure to pay off that debt results in a health risk in the interim and greater total costs in the future. These future costs arise not only from the high fixed cost of maintaining nuclear material in a safe and secure way, but also because the former production facilities are decaying and contamination is growing in many places.

It makes no sense to defer cleaning up the weapons complex as a way to reduce the national debt because the costs of delay are much greater than the interest costs entailed. Metaphorically, it would be like putting money in the bank, while maintaining high credit card balances. The wise consumer will pay off the credit cards first.

Conclusion

In sum, I believe the EM program can be managed if these principles are implemented aggressively and competently. I do not, however, believe it is manageable under the current organizational structure. The assistant secretary faces responsibilities equal to those of agency heads in terms of complexity, controversy, and direct funding levels. That awesome responsibility is not matched by authority.

My solution would be to give the head of the EM program much greater flexibility in operating the program, particularly with respect to personnel. Vice President Gore's initiative to create performance-based organizations would represent the type of organization that would advance the program. The organizational change is not the key to programmatic success. Implementing the 2006 Vision aggressively is the key; strengthening the role of the EM manager is merely, but importantly, a facilitating step.

1. U.S. DOE, The Office of Environmental Management (last modified Nov. 11, 1997) http://www.em.doe.gov/emprimer/emorgl.html.

2. Peggy Roberson, Energy Department Faces Some Tough Issues, New Head Faces Tough Questions in Congress, CONG. GREEN SHEETS ENV'T & ENERGY SPECIAL REP., Jan. 30, 1997, at 1.

3. $ 12 Billion Sought for Cleanup Work Handled by Energy, Defense Departments, 25 Env't Rep. (BNA) 1900 (Feb. 10, 1995).

4. Thomas P. Grumbly, Remarks at the Smith Barney National Conference on Federal Environmental Programs 3 (Jan. 24, 1995) (transcript available at: http://www.em.doe.gov/grumbly).

5. OFFICE OF ENVTL. MANAGEMENT, U.S. DOE, ACCELERATING CLEANUP: PATHS TO CLOSURE (June 1998).

6. Id. at 1-3.

7. OFFICE OF ENVTL. MANAGEMENT, U.S. DOE, ESTIMATING THE COLD WAR MORTGAGE: THE 1995 BASELINE ENVIRONMENTAL MANAGEMENT REPORT CO 37 (Mar. 1995).

8. OFFICE OF ENVTL. MANAGEMENT, U.S. DOE, supra note 5, at 3-8.

9. Jeff Barber, Hanford Delay Is Costlier Than Expected, INSIDE ENERGY WITH FEDERAL LANDS, Dec. 29, 1997, at 1.

10. OFFICE OF ENVTL. MANAGEMENT, U.S. DOE, supra note 5, at 4-14.

11. OFFICE OF ENVTL. MANAGEMENT, U.S. DOE, DRAFT ACCELERATING CLEANUP: PATHS TO CLOSURE 104 (Feb. 1998).

12. COMPLEX-WIDE EM INTEGRATION TEAM, U.S. DOE, A CONTRACTOR REPORT TO THE DEPARTMENT OF ENERGY ON ENVIRONMENTAL MANAGEMENT BASELINE PROGRAMS AND INTEGRATION OPPORTUNITIES (May 1997).

13. The American Academy of Environmental Engineers' Superior Achievement Award in Excellence in Environmental Engineering presented to Lockheed Martin, the U.S. Department of Energy, and Al Alm (Apr. 10, 1998) (presented at the National Press Club, Washington, D.C.).

14. National Defense Authorization Act of 1998, Pub. L. No. 105-85, § 3101, 111 Stat. 2024 (1997).

15. OFFICE OF ENVTL. MANAGEMENT, U.S. DOE, supra note 5, at 4-8.

16. Id.

17. Id.

18. Memorandum from Al Alm, Assistant Secretary for Environmental Management, U.S. Department of Energy, to the U.S. Department of Energy (July 3, 1997) (on file with the author) (discussing the following 10 points of technology deployment; responsibility, establishment of an internal technology acceleration committee, site-specific deployment plans, performance metrics and goals, cost savings analysis, information collection and dissemination, review committee, management reforms, review of 1998 fiscal year technology development projects, and technology deployment initiative).