Thursday, September 25, 2014

DOE Inspector General Report on Contract Performance

The Department of Energy (DOE) Office of Inspector General issued a report yesterday that was critical not only of one of the Department's contractors but of the Department itself for failing to adequately monitor the progress of a clean-up contract.

The contract required demolition of a highly radioactive building. Initially, it was going to cost $581 million and completed by September 2013. Later, the cost estimate rose to $753 million with a completion date pushed out to September 2014. Well, September 2014 is pretty much gone and the building is still standing. The current estimate for completion is $932 million and a completion date of September 2016.

The DOE-IG was duly concerned about this cost growth and program extension so it set out to find the problems. It identified several and made some recommendations. Among the problems identified were:

  1. Unavailable or deficient work packages. In 2012, there were at least 40 instances where work shifts were not worked due to either unavailable or deficient work packages. Project officials commented that (Union) workers were encouraged to stop work when uncertain on how to proceed, and that in some cases, worker preferences on how work packages should be written, stopped the work. Really? This makes us wonder about who is managing who. Who is really calling the shots here, management or the union?
  2. Insufficient labor resources to perform work. Also in 2012, the DOE reported 47 instances where work shifts involving 9 to 12 employees per team, were not worked. The report doesn't say why those shifts did not work. By our estimate, this works out to $250 thousand (with fringes).
  3. Employees not always productively employed. Report identified employees reading books, playing chess and visiting on cell-phones for several hours. Sounds like they're running a tight management ship.
  4. Productivity issues. A 2013 study noted that 80 percent of planned work was not performed when scheduled in 2012. There were delayed starts, rescheduled work, and other events that impacted the schedule. Management acknowledged that this was a major concern. 

The report laid most of the blame for the delays and cost growth at DOE's management. DOE did not fully enforce contract requirements. DOE did not adequately track, trend, and resolve issued. DOE did not require the contractor to develop corrective action plans. DOE did not perform necessary QA audits and assessments.

The DOE-IG made some recommendations which DOE management concurred with. That really means that DOE management is going to get tougher on its contractors.

To read the full IG report, click here.

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