5

Portfolio and Contractor Oversight

INTRODUCTION

This chapter addresses Element C of the task statement for this study (see Box 1.1 in Chapter 1) to

The committee provides two additional findings and four additional recommendations to address two aspects of Task Element C:

1. How DOE-EM provides oversight of its portfolio of site-based cleanup projects.
2. How DOE-EM performs contractor oversight.

This chapter does not address stakeholder engagement because, as noted in Chapter 1, the committee was unable to interact directly with stakeholders during its virtual site visits.

PORTFOLIO OVERSIGHT

The Office of Management and Budget’s (OMB’s) Program Management Improvement Accountability Act (PMIAA) guidelines (OMB, 2018, Appendix 7) define projects, programs, and portfolios as follows:

• Project: “A temporary endeavor to create a unique product or service with a start date, a completion date, and a defined scope. Projects are executed in a manner to improve the efficient and effective implementation of program.”
• Program: “The mission, functions, projects, activities, laws, rules, and regulations which an agency is authorized and funded by statute to administer and enforce.”
• Portfolio: “A strategically structured, organized grouping of programs, activities, resources, or other efforts whose coordination and coherence in implementation enables the achievement of agency goals and objectives. Agencies will group programs and associated activities into portfolio in a manner that will best enable effective management and oversight of the portfolio.”

By these definitions, the DOE-EM portfolio is the collection of site-based programs consisting of capital asset projects and operational expenditures. Execution and oversight of this portfolio is the mission of DOE-EM.

DOE-EM’s Program Management Protocol (DOE, 2020) does not mention “portfolio management” or differentiate it from “program management.” Rather, it uses the terms “EM Program and site program” to differentiate the two (e.g., DOE, 2020, p. 7). The lack of differentiation is reflected in the lack of attention to priority-setting and prioritization across DOE-EM sites. As an initial step to more effective portfolio management, it would clarify and improve the application of the protocol if the terminology matched that used in the PMIAA.

OMB Circular A-11, Capital Programming Guide, Appendix 1 (OMB, 2016, p. 55), states that capital assets include “the environmental remediation of land to make it useful.” It also defines the cost of a capital asset as “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.” This definition is broader than the current DOE-EM definition of a project, which includes only construction projects, major items of equipment (MIEs), and some¹ environmental cleanup projects.

The second part of Recommendation C-2 restates part of Recommendation 4-1 in the Phase 1 report (NASEM, 2021):

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¹ For example, DOE-EM’s groundwater remediation activities are not currently being managed under Order 413.3B.

The committee uses the term portfolio-management framework to denote a structure for organizing DOE-EM’s cleanup programs and their projects to enable national prioritization and effective oversight with the goal of completing the cleanup mission in a safe, effective, and cost-efficient manner. DOE-EM “talks the talk” on portfolio management but does not yet “walk the walk.” Some of the DOE-EM documents reviewed by the committee provide many of the necessary elements of a portfolio-management framework (see Table 5.1), but additional actions are needed by DOE-EM to

• Manage cleanup as a portfolio rather than a collection of individual projects and activities at each site.
• Infuse innovation throughout the cleanup program (see Chapter 4) to identify, develop, and deploy effective and efficient cleanup approaches and technologies. This will require an increased investments focused on technology development and the timely sharing of lessons-learned and best practices across sites.²
• Develop a completion-mindset culture that emphasizes speed and efficiency of execution and an urgency to finish the cleanup mission. This could include identification of additional sites appropriate for completion contracts.

The committee saw little focus on portfolio or program management by DOE-EM headquarters or at individual sites. Rather, cleanup is being managed as a collection of projects and activities defined, prioritized, and executed by individual sites. DOE-EM headquarters has little or no role in establishing priorities and funding among sites to optimize the overall success of cleanup. Key DOE-EM documents such as the Program Management Protocol (DOE,

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² DOE-EM requires that lessons-learned reports be filed within 90 days of completing CD-4 (Critical Decision-4, Approve Start of Operations or Project Completion) for those projects being managed under Order 413.3B. There is no formal mechanism for capturing lessons-learned from activities that are not managed under 413.3B, which constitutes most of DOE-EM’s work. There also is no formal mechanism for ensuring that other DOE-EM sites use or reference these reports in preparing their cleanup strategies. Additionally, there appears to be no strategy for dissemination or adoption of practical, cost-effective processes and procedures developed at individual sites.

2020) and DOE-EM’s 2022-2032 Strategic Vision report (DOE, 2022) provide no documentation showing how cleanup efforts are to be managed in a portfolio-management framework or describe the potential benefits of optimizing cleanup priorities across the portfolio.

TABLE 5.1 The Department of Energy’s Office of Environmental Management (DOE-EM) Documents That Provide Elements of a Portfolio-Management Framework

The committee examined program and project management at DOE-EM sites during its virtual site visits. The committee observed that sites used different definitions for “project” and “program.” Furthermore, although all of the sites visited by the committee had insights into what was required to complete their clean-up missions, none were able to provide integrated and prioritized lists of projects and activities.

Hanford was the only site visited by the committee that had a process in place for developing an integrated management plan and budget. The site also had a sitewide dashboard to track specific project and activity metrics. However, it was not clear to the committee how this dashboard was used to manage site cleanup projects and activities.

The committee discussed portfolio management with DOE-EM’s senior advisor Ike White in June 2021. He noted a variety of impediments to managing the cleanup program as an integrated portfolio—for example, meeting the expectations of DOE-EM’s regulators and other stakeholders, satisfying consent decrees, and executing congressional appropriations requirements within the narrow limitations of site appropriation budgets. The committee recognizes these

challenges but nevertheless judges that strong portfolio management is essential for the successful oversight and completion of the cleanup mission.

Recommendation C-3 calls on DOE-EM to develop and implement a portfolio-based strategy for program and planning that integrates site-by-site programs and projects into a national integrated program portfolio with national priorities. It also calls for the schema in DOE-EM’s Program Management Protocol (DOE, 2020), which were discussed in Chapter 4 of this report, to be applied across all capital asset and operations activities to establish an integrated portfolio with national priorities that can be used to manage, prioritize, and optimize cleanup.

CONTRACTOR OVERSIGHT

DOE-EM relies on the technical and operational expertise of contractors to carry out cleanup and related activities at all of its sites. DOE-EM staff provide oversight of these activities. The nature of that oversight can vary depending on whether the activity is subject to oversight under Order 413.3B.

Cleanup contracts subject to 413.3B use PARS to track project schedule, cost, technical progress, and other metrics. PARS data feed into EVMS,³ which provides monthly reports that DOE-EM can use to manage contract performance.

The committee reviewed a sample of these monthly reports. It observed that some were incomplete. For example, some reports contained “red” stoplight charts with “no explanation provided” for why the metric was red. The committee was also unable to document how reviews of these monthly reports, at sites and at headquarters, were conducted or how conflicts were resolved. The monthly reporting seems to be pro forma and not utilized in a consistent way to improve cleanup performance.

DOE-EM incentive contracts, which award fees based on contractor performance (see NASEM, 2021, pp. 96-97), are accompanied by PEMPs describing how contractor performance is to be evaluated to determine how much of the maximum fee to award. PEMPs are described in more detail in Chapter 7 of the Phase 1 report (NASEM, 2021).

The committee examined PEMPs for contracts at the Hanford site in Phase 1 of this study (NASEM, 2021, Chapter 7). This examination revealed inconsistencies in the application of objective and subjective criteria in the PEMPs in several cases. The committee asked but did not receive adequate explanations for these inconsistencies.

It should be noted that the committee’s assessment of the appropriateness of contractor oversight applies only to projects subject to Order 413.3B, which constitute about a quarter of its annual budget: construction projects, major items of equipment, and some environmental cleanup projects with total project costs equal or greater than $50 million (NASEM, 2021, p. 9). It is unclear to the committee how DOE-EM provides oversight of projects not subject to 413.3B, which constitute the other three-quarters of its annual budget. These include End State Contracting Model (ESCM) task order contracts less than $50 million and the majority of operational activities conducted at the sites.

As noted in Chapter 3, task orders issued under indefinite delivery/indefinite quantity (IDIQ) contracts under the ESCM are largely defined by incumbent contractors. The committee judges that DOE-EM should take a stronger role developing task orders, particularly during the initial implementation of ESCMs, as it learns how to use this contracting model. A stronger oversight role also will help ensure prioritization and integration of task orders within the ESCM framework.

As DOE-EM further implements the ESCM and issues more task orders, oversight workloads for DOE-EM staff will increase. DOE-EM will likely need

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³ EVMS and PARS are described in Annex 2.A in Chapter 2.

to increase the number of trained project management staff to handle these increased workloads. Additional training opportunities will become available after DOE-EM implements Recommendation C-2 in this chapter, which would subject more of its cleanup work to Order 413.3B.

REFERENCES