Moniz demands more accountability in Energy projects

This story has been corrected to clarify that the Energy Department temporarily halted work at an uranium processing facility, not an environmental cleanup project, in Oak Ridge, Tennessee.

In his year and a half leading the Energy Department, Secretary Ernest Moniz has played the sheriff as much as the scientist.

The department last month withheld more than 90 percent of the annual fee it pays the operator of Los Alamos National Lab. Rather than $63.4 million, Los Alamos National Security got $6.25 million for causing a radiation leak that forced the department to shutter its only underground storage facility for nuclear waste.

The episode tees up a major change for Energy’s varied and far-flung assets, including 17 national labs, major environmental cleanup efforts and nuclear security facilities. Moniz said he is “institutionalizing” risk management in a way the department has never seen before.

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“Clearly we have important missions in energy, science, climate change. We have a very important mission in nuclear security but, frankly, the feeling was, without raising our game in management and performance, our mission accomplishments get compromised,” he said.

Moniz spoke with Federal News Radio Thursday before announcing new risk-management initiatives at a National Academy of Public Administration gathering in Washington.

Some Energy divisions have a history of managing projects collectively, rather than making a single manager responsible for their success or failure. Taking a cue from the department’s Office of Science, Moniz is drawing clear lines of authority. Each project will have an “owner,” a senior official “whose budget will be hammered if the project doesn’t succeed,” he told the audience.

Moniz is raising the profile of the Energy Systems Acquisition Advisory Board, which will keep closer watch on projects as they progress. While the panel has been around for a while, Moniz described it as “ad hoc,” with its last meeting more than two years ago. Now, it will meet quarterly, he said. A lower-level risk assessment committee will meet every other week.

“We are going to be on top of problems before they get out of control,” he said. The changes stem from a report by a committee of the department’s top project managers. The panel was led by John MacWilliams, a confidant of Moniz who now serves as his senior finance adviser.

“We met every week or two and had very, very candid exchanges,” MacWilliams said of the committee members. The result “is not a typical department report in that it represents the views of these individuals, not the programs. But it was meant to be groundtruth.”

The report highlighted a lack of peer reviews and other oversight measures during the planning and design phases of major projects. In one notable case, it said, Energy managers relied too heavily on contractors’ estimates of the costs and scope, only to learn that the project would cost billions more when finished. It also said that some managers tended to underestimate their budgets for fear that Congress would withhold funds if lawmakers knew the costs were likely to run higher.

MacWilliams will oversee much of the risk-management effort, he said.

The changes build upon a reorganization of the department that began last year. Moniz rearranged the duties of the three undersecretaries so that one of the positions would focus solely on performance and management. The department has had trouble filling that position, however. President Barack Obama’s first choice, Beth Robinson, ran into opposition from some senators who criticized her work as NASA’s chief financial officer. Moniz said he’s hopeful the President will nominate someone else soon.

Putting that difficulty aside, Moniz said he already has seen signs of success. Following the reorganization, the department halted work at its uranium processing facility at Oak Ridge, when it spied early signs of cost overruns. A “red hat” team headed by a national laboratory director took another look at the project and recommended structural changes, including a “modular” approach that adjusted the safety standards required for each step in the process, he said. He now expects the project to finish on time in 2025 under a fixed budget cap of $6.5 billion.

More generally, the Government Accountability Office has removed Energy’s management of environmental projects under $750 million from its high-risk list, something Moniz points to with pride.

Moniz acknowledged that the new measures are a change for Energy employees and contractors alike. After a year of discussions and a few iterations, employees “are excited to move forward,” he said.

Contractors, looking to the Los Alamos episode as a foreshadowing of what’s to come, may not take it so well.

“This was unprecedented,” Moniz said. “It has certainly caught their attention and the attention of many others.”

But if Los Alamos is a warning sign, Moniz said there is a flip side too.

“Better performance, better reward for the contractor,” he said.

The department is exploring ways to structure contracts with incentives for companies to perform well, he said, although it has not yet done so.

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