Hearing Of The Strategic Forces Subcommittee Of The Senate Armed Services Committee - Environmental Management Stimulus Fund
Statement
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SEN. NELSON: And welcome to our hearing in the Strategic Subcommittee. Our witness is Dr. Inez Triay.
Did I say it right?
MS. TRIAY: Yes.
SEN. NELSON: The acting assistant secretary of Energy for environmental management, Dr. Triay is responsible for Energy's efforts to clean up the vast quantities of radioactive and other contamination generated during the Cold War.
Under the stimulus bill, the Department of Energy received $5.1 billion to address a substantial backlog of these cleanup projects, and it hopefully will meet the various legally binding commitments to the states and the EPA and accelerate the cleanup activities where it is possible.
In the long run, this accelerated cleanup ought to save money by reducing the number of sites and the facilities that have to be maintained. The funding under the stimulus bill for the environmental management program is about the same as the annual appropriation for fiscal year '09, which is approximately $6 billion.
Although the environment and management program has been underfunded in the last several years, receiving the equivalent of a full year's appropriation is a very large amount for a single program to absorb and to manage.
And so under the requirement of Section 1603 of the stimulus bill, the funds have to be obligated by September the 30th of next year -- 2010. Well, because the Environmental Management Program has been underfunded in the past several years the authorization bill for Defense from last year, which is this present year, '09, it authorized an additional ($)500 million to address the shortfall in '09.
Additional money is needed in this program, and the hearing today is to ensure that these extra funds and extra projects will be managed to ensure that the taxpayers are receiving good value for their money.
Dr. Triay, we look forward to hearing from you as how we're going to meet the goals of what the stimulus bill laid out -- what projects are going to be funded and how the projects will be managed, and the timetable.
Senator Sessions?
SEN. JEFF SESSIONS (R-AL): Thank you, Mr. Chairman.
And thank you, Dr. Triay. We appreciate your service. You certainly are challenged and very few people have any idea how significant a financial commitment this nation is being asked to make with regard to this cleanup. It's just stunning, breathtaking and beyond most anything anybody could imagine.
It will provide no real benefit, such as investing $100 billion in the Defense Department or energy efficiency or productivity. It's mainly clean up a spill and an environment hazard that has occurred, and so it really is not a real benefit to us.
And so I think of course it's a benefit in cleaning up, but I'm talking about the economy and the productivity of the nation is not much enhanced by this effort. So I guess my fundamental concern is the cost. I raised that several years ago at some length in this committee and remain baffled by the amount of money that we're investing here.
As the chairman indicated, in addition to your $6 billion base budget, the stimulus bill added another $6 billion. That is a huge amount of money. It's difficult for me to imagine how it could be spent effectively in the short time frame it's been suggested it would be spent, so you're challenged, no doubt.
The bipartisan Congressional Budget Office reports that only 40 percent of the emergency management recovery funding can be spent by the end of fiscal year '10, which I'm sure is true. You would just be throwing money away, probably, to try to spend it faster than that, and I'd be interested as to whether or not you can carry the money over, even though it was supposed to be stimulus in the two-year time frame, but we can't just waste that money. It's got to be productively utilized, and I hope that you will have that flexibility.
Dr. Triay, in this committee several years ago, maybe three -- I think I was chairman then, or maybe Senator Nelson had just taken over -- the Department of Energy official came in and I said blithely -- told us that there'd been an error in the computation of how much this cleanup cost would be nationwide, and it wasn't going to be 100, 120 billion dollars, I think; it was going to be $180 billion. And I remember declaring in amazement that that had to be the largest cost overrun in the history of the republic. Nothing had ever been seen like an $80 billion cost overrun before.
Now I'm hearing that that's low still. According to the 2009 report to Congress, the estimated total outstanding cost to complete clean up at all of the remaining facilities at this highest pristine standard that we're talking about ranged between 205 and 260 billion (dollars). And history being what it is, it probably will exceed ($)260 billion unless we can figure out a way to confront this problem.
You have a tremendous challenge. I don't know how you can do it. But I encourage you to stand up for the American taxpayer. I remember at that committee meeting, Senator Graham from South Carolina, Lindsey Graham, talked about how they were able to speed up the Savannah River site cleanup by 23 years and save the taxpayers $16 billion.
So my question and my concern is we have got to be realistic. How much good could we do, Mr. Chairman, with $100 billion or $150 billion? If we could figure out a way to do some of the things they did at Savannah River in South Carolina and improve that clean up, get the job done quicker, and do it at a cost is going to be exceedingly high by any standards but more realistic.
So I'm not against cleaning up. I'm not against the senators and congressmen who want to see everything possible done in their state.
But you're in a difficult spot and we're in a difficult spot. We have to protect the Treasury of the United States, and we've got to ask are there some alternatives that we can utilize, as in South Carolina, that could get the job done effectively, quicker and at less cost.
Thank you.
SEN. NELSON: Okay. Let's just start right there, and Ms. Triay, or Dr. Triay, who, by the way, you have good blood in you -- you were educated in the state of Florida. (Laughter.)
We will, of course, put your lengthy statement in the record and Senator Sessions and I are just going to start off with questions. So let's just start off with his -- what is it that you're cleaning up, and why is it necessary that we're going to spend all this money?
MS. TRIAY: First off, Senator Nelson, Senator Sessions, I share your concerns on behalf of the money and the taxpayers that are footing the bill for this cleanup. So you have the Environmental Management Program committee and the Department of Energy commitment that we're going to be good custodians of the taxpayers' dollars.
With respect to what are we going to clean up, the National Defense Authorization Act of 2008 require us to send a report, as you're aware, that delineated the life cycle costs of the cleanup and also delineated strategic planning business cases that we put together in order to do exactly what you have talked about this morning, which is to try to come up with ways of accelerating the cleanup and reducing the cost of the cleanup.
Those strategic planning business cases dealt with footprint reduction and near-term completions. As a matter of fact, as Senator Sessions mentioned, some of the acceleration at Savannah River site came from being able to close areas at the site and clean them completely up.
We came up with a business case so that by 2015 we would reduce the footprint -- that is, the contaminated, active area of the Environmental Management legacy complex -- by 90 percent by 2015. Based on that business case --
SEN. SESSIONS: Could I interrupt?
MS. TRIAY: Yes, please.
SEN. SESSIONS: Savannah River by 90 percent or the other sites you were talking about?
MS. TRIAY: The entire Environmental Management complex, and in particular Savannah River site, I believe, by 87 percent, and our Hanford site, which is the other very large cleanup -- those are the two major cleanups of the Environmental Management complex -- also by 90 percent.
So we wanted to come up with a way to reduce the complex only to its highest-risk priorities -- those are tank waste, special nuclear materials and spent nuclear fuel -- and do the majority of the cleanup for the remainder of the portfolio of Environmental Management -- transuranic waste, low-level waste, soils and groundwater, and the decontamination and demolition of excess facilities.
When the president as well as the Congress started looking at options for the recovery act, these particular business cases became part of the discussion and the business case that we have put forth essentially has us completing the reduction of the footprint at both Savannah River site and our Richland operation -- in other words, the Hanford site -- by 45 to 55 percent, essentially half of what we had analyzed in the report that we sent the Congress in January of 2009.
We would do that by 2009 and I would like to also mention that the activities in the recovery act funding that I have mentioned before -- TRU waste, low-level waste, soils and groundwater, and excess facilities decontamination and demolition -- are activities that by and large the Environmental Management program has done well.
As a matter of fact, here with me this morning, I believe I had the opportunity to -- the honor, actually, to introduce you to some of my colleagues that are with me, and we have not only Cynthia Anderson, who's the program manager for recovery funding, but we also have Frazier Lockhart, who's the federal project director certified at the highest levels that the Department of Energy certifies federal project directors.
The reason I bring this up is because Mr. Lockhart was the federal project director when we finished the Rocky Flats cleanup. I would like to mention just along the same lines that both of you have discussed this morning that the Rocky Flats cleanup finished 50 years ahead of the originally scheduled completion. That the Rocky Flats cleanup finished ($)20 billion under the originally scheduled -- excuse me, the original cost that was estimated.
Similar figures are also available for the Fernald cleanup, and even though I completely understand your concern and as a matter of fact the Environmental Management program has been heavily criticized for issues associated with project management, we have selected the activities in this portfolio for the recovery funding to play to our strengths.
And even though we have had issues in other areas of the program or in specific projects dealing with these four areas that we have delineated for this recovery funding, we are ready to be extremely effective when it comes to the activities in the recovery act funding portfolio.
SEN. NELSON: Can you share with us how you determined what the cleanup level would be?
MS. TRIAY: Environmental Management has a regulatory framework that is based on CERCLA and RCRA, as well as our own authority under the Atomic Energy Act. So the majority of those cleanup levels are the result of agreements between the Environmental Protection Agency, the state and the Department of Energy.
In addition to that we have stakeholders such as the other communities, and we have tribal nations that we have responsibility to consult with. So these are negotiated cleanup standards that are agreed to for the particular cleanup.
SEN. NELSON: And that's how you come to the percentage cleanup that you're going to achieve?
MS. TRIAY: That's correct.
SEN. NELSON: And the timetable in which you're going to do it, that's negotiated as well?
MS. TRIAY: The timetable is also negotiated and it depends on the funding profile that is assumed, it depends on the degree of maturity of the technology. But yes, the timetables are also negotiated among all of those parties.
SEN. NELSON: All right, tell me about of the material remaining, how do you go about accounting for all of that, of what you're not going to clean up? How are you going to manage those sites to account for the remaining material?
MS. TRIAY: We have, for instance, for nuclear materials, we are consolidating all of our nuclear materials at the Savannah River site from our Hanford site as well as Los Alamos National Laboratory, Lawrence Livermore National Laboratory, as well as other parts in the complex.
We have very strict controls associated with safeguards and security for ensuring the security of those nuclear materials that are being consolidated at the Savannah River site.
With respect to the radioactivity that when we clean up we may leave behind because we have not done 100 percent cleanup in terms of not leaving the site at pristine conditions, we do surveillance and maintenance monitoring to ensure the protection of the environment with respect to the level of cleanup that we have agreed to with the state and the Environmental Protection Agency and other parties.
SEN. SESSIONS: Yeah. I would like to follow up on these agreements.
Agreements can -- some made many years ago? When were these agreements, some of the major agreements -- when were they entered into?
MS. TRIAY: Some of them decades ago.
SEN. SESSIONS: And I've seen it -- for example, in agreements confirmed by federal judges like in desegregation cases, after 20, 30 years it becomes not a feasible thing and those things can be amended. So I guess my first question would be if you have provisions in those agreements that don't make sense for the taxpayers of America, have you undertaken any evaluation to see to what extent they can be amended to accomplish the goal and also to contain these incredibly surging costs?
MS. TRIAY: Senator, these agreements have been amended many times, and as a matter of fact, on an annual basis the majority of the agreements are discussed with our regulators and the communities where we actually have the cleanup agreements. And as I was describing before, we have significantly amended the agreements and delayed some of the completion of the cleanups.
SEN. SESSIONS: When you say that, does that have to be done with the consent of all the parties to the agreement?
MS. TRIAY: That is correct, sir. That's right.
SEN. SESSIONS: But now of course, if I signed an agreement I might find it politically difficult to agree to any modification that reduced spending, reduced employment in my area and would even minutely reduce the pristine nature of the cleanup. So if we're dependent completely on the consent of the local people who have an agreement, sometimes you have to go -- how do you -- have you considered legal avenues of amending that in light of changed circumstances?
MS. TRIAY: Senator, we -- this is one of the main things that we do in the Environmental Management program is to try to find a balance between the degree of the clean up and a balance that is respectful of the taxpayer.
So notwithstanding the fact that the agreements started many decades ago, as I was saying, the states as well as the regulators, EPA as well as state regulators, tribal nations, local communities, have negotiated with us and agreed to delay many of the completions as well as the degree of the cleanup. For instance --
SEN. SESSIONS: Well, then -- okay, so let me just say okay, you've made some progress here and I think that happened at Savannah River. I think the local people agreed to get a speedier cleanup and a less expensive cleanup.
But do you agree -- where did this 210 to 260 billion-dollar figure come from, and is that what we now expect to do under the existing plans that you have at Energy? Is that your number?
MS. TRIAY: These are the numbers -- yes, these are the numbers that we have published in the report that was sent to Congress. Those came strictly from that report.
Let me just elaborate a little bit on these life cycle costs. Scope, cost and schedule are difficult to be able to calculate for cleanups that are going to take decades, so what we do is we present a range, which is the range that you have quoted this morning.
And the reason for the proposal that we made or the concepts that we presented in this particular report to Congress was to tackle those large total project costs, total program costs, life cycle costs, as well as the duration of the cleanup.
We think that economies of scale, being able to have ability to accelerate the decontamination and decommissioning of some of these facilities that are deteriorating -- and once they deteriorate they become even more expensive to clean up -- was one of the ways to actually reduce the life cycle cost and reduce the amount of time of the cleanup.
So that was indeed the reason for the concept that was presented in the report that we sent to Congress in January of 2009.
SEN. SESSIONS: But you would admit that just a few years ago the high-side estimate for the clean up was $180 billion, I believe, and now the high side estimate's 260 (billion dollars). That's an incredibly huge overrun of just an estimate of a few years ago, am I wrong about that?
MS. TRIAY: Senator, let me address that. The General Accounting (sic) Office that has been very critical of the Environmental Management project management has said that in the cleanup projects the two main reasons for the issues were, number one, the fact that the assumptions that were used were very aggressive, and the second one was lack of reality in the funding profile that we used for the life cycle cost.
Of that life cycle cost that essentially you're discussing essentially an increase of $70 billion, 40 percent of that was because we re-baselined the entire program to recalculate the life cycle costs based on a funding profile that was more realistic, which was essentially around $6 billion as an assumption per year in terms of how we were going to conduct the cleanup.
When some of those agreements were signed, the annual budget that was assumed for some of those agreements was from 7.5 to 8 billion dollars. So by coming up with realism associated with the funding profile based on economic realities that we have in the country, 40 percent of that increase in the life cycle cost was simply a matter of delaying the clean up and moving it to the right so that per year, we could be on the order between 5.5 and 6 billion dollars per year.
Another 40 percent of that increase in the life cycle cost came from unrealistic assumptions, such as the amount of waste that we were going to be able to leave, for instance, in underground tanks; for instance, assumptions such as the nuclear materials portfolio of the Department of Energy was not going to be part of the Environmental Management cleanup but was going to be transferred out of the Environmental Management program.
There's no question that some of that life cycle-cost increase is due to performance of our contractors, but the vast majority of that life cycle-cost increase were because of assumptions that were too aggressive and lack of reality in the funding profile.
In addition to that, this particular report that we're talking about that was sent to Congress in January of 2009 delineated the excess facilities that were not part of our Environmental Management portfolio and were delineated by other programs like nuclear energy, like NNSA, like the Office of Science -- facilities that were no longer needed and also needed to be cleaned up, decontaminated and demolished.
In that report to Congress we reported that the range of that particular amount of money to deal with those facilities was between almost 4 and 9 billion dollars, so about 15 percent of that life cycle-cost increase came from the excess facilities that were transferred to the EM portfolio as late as this year and excess facilities that are part of the liability of the Department of Energy.
SEN. NELSON: Senator Begich, I need to get through just a few questions here and then I'm going to have to excuse myself momentarily to go make a presentation in another committee. So if you will indulge me, let me just go on and do that and then I'll call on you.
With regard to what you're addressing to Senator Sessions, part of the growth that we've been talking about is growth in a number of projects. So while there has been the growth in cost of individual projects, there have been also a lot more projects that have been added to the Environmental Management.
And then in the future, as the weapons complex reduces those excess facilities that are no longer needed are themselves going to have to be transferred to Environmental Management to decontaminate and to tear them down. Is that --
MS. TRIAY: Correct.
SEN. NELSON: Okay. Now, let me ask you on the stimulus bill projects, how did you decide what projects were going to be funded?
MS. TRIAY: First projects that had an established regulatory framework.
The reasons that both you and Senator Sessions have been talking about when we don't have established regulatory framework becomes very difficult to be effective in the cleanup.
Second, proven technologies -- in other words, we have had issues, serious cost and schedule issues, in the Environmental Management program when we are doing first-of-a-kind projects. We made sure that the activities in the portfolio had proven technologies associated with the cleanup.
Number three, cost, schedule and scope: Those plans had already been delineated by the Environmental Management program so that we essentially had shovel-ready activities that could be started as soon as we received the funding.
SEN. NELSON: Are any of the stimulus funds used for ongoing construction projects?
MS. TRIAY: No funds in the recovery act portfolio are used for construction projects. All of the funding is for transuranic waste, low-level waste, soils and groundwater, and decontamination and demolition.
There is one exception, which is $300 million that have been given to the Office of River Protection in Hanford, and that is for them to improve the tank farm infrastructure to be ready for when the waste treatment plant starts -- becomes operational in 2019.
SEN. NELSON: So when you use the term "shovel-ready," you're talking about the projects you've just described.
MS. TRIAY: Absolutely.
SEN. NELSON: All right. Now, are the projects that are going to be funded first with the stimulus bill money, is this addressing the high risk and the most cost-effective projects?
MS. TRIAY: The highest risk of the Environmental Management program is indeed tank waste, special nuclear materials and spent nuclear fuel. Because the rules of engagement of the activities that we were going to put in the portfolio of the recovery act funding was established regulator framework, proven technologies and cost, scope and schedule baselines that were already established, we did not put any activities in the recovery act funding associated with tank waste, special nuclear materials, or spent nuclear fuel, which actually are the highest-risk activities of the Environmental Management program.
The reason for that, Senator, is that as you were describing in your opening remarks, we, over the years, because the Environmental Management program has been assigning their base program -- in other words, the annual appropriated funds -- to those highest-risk priorities, we have been deferring TRU waste, low-level waste, soils and groundwater and D&D to the point that some of our excess facilities have become deteriorated so that when our workers try to go in to clean them up they are at risk. And then all that happens is the cleanup takes all that much longer and it costs all that much more.
So that is the reason why the recovery act funding is associated with the part of the portfolio that is not the highest risk.
SEN. NELSON: Senator Begich, I'm going to call on you, and Senator Sessions will chair the meeting until I can get back.
Thanks.
SEN. MARK BEGICH (D-AK): Thank you very much, Mr. Chairman.
I want to kind of hone in on a couple things regarding -- I've just been, you know, scanning the report that was delivered in January, but let me kind of walk through the contractor lay of the land, and that is make sure I understand it.
You now have doubled your capacity in dollars from 6 to 12 billion dollars. The contractors that you currently have, your goal is to modify 90 percent or so of those, to do that additional work in those locations. And what is the current status of those modifications of those contracts? Have you done that, or when do you anticipate those contract modifications to be completed?
MS. TRIAY: We have established an internal deadline for those modifications. Let me explain a little bit, you know, how the process works.
The first thing that is done is that the government does an independent government estimate that is based on all the work that we have done on scope, schedule and scope baselines that I was describing a moment ago.
So then we put a modification to the contractor that is what we call undefinitized, meaning the department and the contractor have not agreed on how much the work is going to cost and how long it's going to take.
So essentially, all the scope is in those -- in that -- (inaudible) -- that is not definitized but the schedule and the scope are then negotiated. Those negotiations, based on the independent government estimates, are going to take on the order of three months.
SEN. BEGICH: So you anticipate that from today, maybe mid- summer, you'll have those modifications completed?
MS. TRIAY: That's correct.
SEN. BEGICH: Okay. Now let me ask you a couple questions on those -- the 90 percent, these contractors that you have, out of the contracting world that deals in this industry or this area, how much of the capacity will you consume? All of it?
MS. TRIAY: Senator --
SEN. BEGICH: Let me ask it another way, I'm sorry -- if I can interrupt. Are there contractors that are out there that are not going to be part of this new equation because they're not current contractors that could do this work?
MS. TRIAY: Part of what we were trying to accomplish with the recovery act funding was indeed to have contract vehicles that were in the ready so that we could move forward with the work.
In some cases, we have what is called a contract that we have already awarded in terms of the contractors that are capable of doing work -- it's like a task order contract -- where we can compete those tasks among the contractors that have already been pre-selected.
Some of the funds, like, for instance, all of the funds associated with the Oak Ridge National Laboratory decontamination and decommissioning of facilities in the laboratory will be competed through those task orders. The majority, however, just like you have delineated, is going to go to contracts that are already in place where the contractor has already been selected.
In terms of the capacity, you know, we're going to use all the capacity. We have required our contractors to utilize heavily subcontractors, especially small-business subcontractors, and in addition to that with respect to the capacity, you know, the amount of individuals that are out there looking for work; every time we have a day of people coming in to look for work, working for either the subcontractors or the prime contractor, we have a factor of 10 higher than the people that we need.
For instance, at Oak Ridge, we had 76 jobs that were being competed for and a thousand people showed up for 76 jobs. At Hanford, 4,000 individuals showed up to get the jobs that were available. South Carolina, Savannah River site, thousands of workers in the union halls and a tremendous success in terms of the people who want to work in this area.
So with respect to whether we can staff this work, I think that what the data that we have show is that we are going to be able to do that.
SEN. BEGICH: Let me ask you, if I can, just a couple more quick ones on the budget process, because I think, Senator Sessions, you brought up an interesting point of the escalation, and I want to -- you mentioned the independent cost estimates.
Do you have something that you could a least share with me? I don't know if other committee members would be of interest in this, but when you've done these cost estimations what the final outcome is based on that.
I'm guessing here -- I come from being a city mayor. They're never right, the estimations, and the costs are much more. And the danger I worry about here is you're using -- I understand the timetable, but rushing, which then is costing us more money, is somewhat dangerous.
And why I say that is these contractors know they're getting the business. It's a guarantee -- you're going to do the work with them. And so when you've exceeded the cost of the independent government estimates, what has been the penalty for those contractors? Or have you just assumed that cost with (a negotiate ?)? Because I understand everything's negotiated; we do (sic) that a lot when I was in the city government, and you end up paying still, but you negotiate and they work that into their cost on the front end because that's how they do the business.
So I guess do you have something you could share, you know, if it's the last two, three, four years of work that you have had a cost estimate before the work is done, what the final work was done, and what did the contractor pay or not pay? And then on top of that, are there any of these contractors that are currently under any cloud with the federal government in any other work they do with your agency or any other agency?
And what I mean by that is are there contractors that have issues with the federal government on cost overruns in any other business they do with the federal government?
MS. TRIAY: Senator, let me answer the question in trying to tackle the serious issues that you have raised.
With respect to how we have analyzed the original cost and the actual cost, we do have some data indicating that since 2004 the actual projects that were completed -- we completed 19 projects and of those 84 percent had cost success, meaning within 10 percent, 95 percent have schedule success, and all of them completed all of their scope.
Having said that --
SEN. BEGICH: Can I ask you a quick --
MS. TRIAY: Yes, yes.
SEN. BEGICH: What was the total value of those projects?
MS. TRIAY: Way over $6 billion.
SEN. BEGICH: So 10 percent is a big number.
MS. TRIAY: Not for each one of them, I mean the total. Yeah, they range from $11 million all the way to $6 billion individually.
Having said that, as I have already stated, the Environmental Management program has had serious issues with schedule delays and increase of cost, so let me also tell you what we're doing to ensure that this doesn't happen moving forward.
First off, even though we have obligated 80 percent of the funds to the states, 80 percent of the ($)6 billion to the sites that we have in the different states, we have only authorized them to spend 30 percent of that 80 percent -- in other words, 24 percent of the $6 billion is the only thing that is going to be authorized for costing.
In addition to that, every time that we go from that 24 percent all the way to hopefully the 100 percent, meaning the $6 billion, every 20 percent increment has to be authorized not only by the office of Cynthia Anderson, who's the program manager for the recovery act funding, but also by the chief financial officer of the Department of Energy; the office of the chief financial officer also has to independently, from the Environmental Management program, sign off on that 20 percent interval authorization.
And let me tell you how we're going to decide whether the next 20 percent is going to be allocated or not. It's going to be based on cost performance index and schedule performance index. What that means is that we are going to require that those contractors that our field sites are asking for the next interval are going to be at a cost and schedule between .9 and 1 or of course above.
We're going to require that that performance is there based on a rigorous earned value management system, which means that we know how are they doing with respect to the plan that was put in place and the initial cost estimates that the government has recorded.
So we are not even -- it's not even a matter of what's going to happen after something happens, because it's not going to happen to start with. If there's a nonperforming contractor at a particular site, we're going to evaluate whether the problem can be resolved. If it cannot be resolved we're going to go to the next project in that site.
And if not, the money may very well have to be moved from one site to another one that is performing. This is about, of course, job creation but also about performance for the cleanup.
SEN. BEGICH: Very good. Thank you very much.
Thank you, Senator Sessions.
SEN. SESSIONS: Just one question: How many contractors in the last four years, to your knowledge, have been terminated for nonperformance or failure to performance -- (perform ?) on time?
MS. TRIAY: We have not terminated a contractor for nonperformance in the last four years. We have taken other contractual actions and we have the scope work from the contracts that that contractor is no longer going to do a part of the work, and we have competed then a particular part of the scope that was in the contract.
SEN. SESSIONS: Senator Graham?
SEN. BEGICH: Senator Graham, could I -- I apologize. There's another part of the question and you just triggered me, and if I could just ask to make sure we're clear. Can you provide to me or to the members of the committee who are interested if any, again, of these contractors that are currently doing the business and will be doing the business, if any of them have any issues in front of the federal government in regards to costs or other types of issues maybe with your agency or any other agency? Could you provide that?
I apologize, Senator Graham.
MS. TRIAY: Absolutely. We will provide that information, absolutely.
SEN. BEGICH: That was kind of -- you triggered me on that one.
SEN. LINDSEY GRAHAM (R-SC): Thank you.
Thank you for your willingness to do this job. I represent South Carolina, and obviously Savannah River site's a big issue for the state. And we've been through a couple administrations and I think the overall theme of the hearing here is that we seem to be spending a lot of money on cleanup and not advancing the cleanup agenda as much as everyone would like. And so we got a new chance here to start over.
As far as the stimulus money goes, whether it be Savannah River site or any other site, can you assure us that you're not taking one- time money and creating new programs with it?
MS. TRIAY: I can assure you of that, Senator. This work is work that was already clearly delineated in the report that the Department of Energy sent to Congress in January of 2009. There are not going to be future liabilities associated with starting any particular program or construction or anything of that nature. And we are committed to use the taxpayers' dollars wisely.
SEN. GRAHAM: So the bottom line is that the stimulus money, which is a two-year funding stream, is not going to be used to create a program that has a funding stream past two years?
MS. TRIAY: Absolutely. That's a correct statement.
SEN. GRAHAM: Okay, that's good.
Now, when it comes to energy independence, which is a laudable goal bipartisanly pursued here, the national laboratories, I think, can be very important pieces of that puzzle. What's your game plan to improve the infrastructure of the national labs? You know, I think the newest national lab is Savannah River site.
Can you tell me just briefly where do you see the national labs going in terms of the funding from DOE?
MS. TRIAY: We are very committed to the Savannah River National Laboratory -- (inaudible) -- laboratory in the Environmental Management program and coming back to some of the comments made by Senator Sessions on the daunting task of some of the part of the cleanup, as you know, the highly radioactive waste in underground tanks is something that needs to be aggressively pursued. And in Savannah River National Laboratory, my intent is for them to become the premier chemical separations laboratory in the world.
I think that they completely have the tools and the type of people, so we are going to invest in technology development not only at the Savannah River National Laboratory but where the talent is across the complex. But for chemical separations, clearly, a lot of the talent is there at the Savannah River National Laboratory.
SEN. GRAHAM: Two quick areas: One of the things we're doing at Savannah River site national lab in the community is research on the use of hydrogen to fuel cars. And I know that's going to be part of the energy mix is try to have vehicles fueled by hybrid hydrogen, so I'll talk to you about that later on more privately.
H-Canyon -- as you are I'm sure aware of that Savannah River site was chosen by the Clinton administration to be the MOX fuel facility where we would take 36 tons of weapons grade plutonium excess to our defense needs and the Russians would take a like amount, and take the plutonium pits that are nuclear bullets and turn them into plowshares to create commercial fuel.
That program has been -- you know, South Carolina has agreed to be a receiving site for this plutonium, so you could consolidate it there, save a lot of money, and eventually turn it into commercial grade fuel, taking what would have been a nuclear weapon grade material down to a commercial fuel level.
And we're way behind in construction there, and I know that's a different bailiwick, but the material that we receive from the weapons complexes that can't be "MOX'd" -- turned into commercial fuel -- the goal was to run it through H-Canyon and vitrify it.
H-Canyon to me is sort of a national treasure. In 2001 we passed the Defense Authorization Act that said that H-Canyon would be required to maintain a high state of readiness. What is your view of H-Canyon?
MS. TRIAY: We are committed to H-Canyon. We're committed to the high state of readiness, and we, as we have discussed on some occasions with your staff, are always looking for ways to be efficient and effective, including H-Canyon.
As you know, that's a 50-year-old facility that we always are looking for improvements to the life cycle cost of that facility. We have had General Accounting Office questions with respect to H-Canyon and our plan is to continue to use H-Canyon for the excess plutonium processing.
But in addition to that, trying to accelerate the plutonium processing any way we can, for the obvious reasons.
SEN. GRAHAM: Yes, ma'am.
And one final question: If you close Yucca Mountain, which apparently is the game plan now, under the law that created Yucca Mountain, high-level defense waste would have priority, and a lot of the DOE sites have legacy materials from the Cold War.
You know, spent fuel is obviously a problem; the goal was to take our spent fuel from commercial reactors and store it in Yucca Mountain. But what has not been talked about nearly as much is high- level waste from the DOE complexes and Defense complexes that helped us win the Cold War.
In terms of timelines for disposition, if Yucca Mountain is no longer available, how does that change the timelines to dispose of this high-level waste, and what do we do with it?
MS. TRIAY: With respect to the timelines associated with the Environmental Management program, as you know, Yucca Mountain is not part of the responsibilities of the Environmental Management program.
SEN. GRAHAM: But it is a place you would send the materials.
MS. TRIAY: Of course. So with respect to the Environmental Management program activities themselves, we're a long ways away for the Yucca Mountain decision or a potential repository to change any of our plans.
As you know, we are constructing the Salt Waste Processing Facility at the Savannah River site to get on with the treatment of the tank waste and vitrification of that waste. As you also know, because you have visited all of these facilities and have been a leader, you know, for us for this work, we have the facility that vitrifies the waste and is vitrifying sludge today and has been for some time.
So we actually are going to continue with our plans and put all of the waste -- we're going to vitrify all of the high-level waste. As you know, that is a very robust waste form --
SEN. GRAHAM: Right, right.
MS. TRIAY: -- that affords a tremendous amount of protection to the environment. With respect to what happens after that, we're going to rely on the blue ribbon commission that Secretary Chu --
SEN. GRAHAM: But you don't see the timelines being changed because of the decision to close Yucca Mountain?
MS. TRIAY: I don't see the timeline of vitrifying the waste being changed in any way because of that decision, no.
SEN. GRAHAM: Okay, thank you. Look forward to working with you.
SEN. SESSIONS: Well, on that question, if Yucca Mountain is not opened, doesn't that -- what impact does that have on you, and could that even drive up the cost of cleanup even more?
MS. TRIAY: As I was saying to Senator Graham, we are decades away from any impact to the Environmental Management program. We have --
SEN. SESSIONS: So it's going to be decades before you -- but your ultimate plan was to transmit this waste to Yucca, correct?
MS. TRIAY: That is correct, but right now --
SEN. SESSIONS: What would you do with it if you didn't?
MS. TRIAY: We are going to vitrify it if it is high-level waste. If it is spent nuclear fuel it's going to go either into dry storage, or at Savannah River site it's going to be processed through H-Canyon and also vitrified.
Those are very protective waste forms and clearly dry storage for spent nuclear fuel is very protective of the environment. We are committed.
SEN. SESSIONS: But just let's -- no, it has impact if we don't use Yucca, because frankly, I share your view that the storage and dry cask storage on-site is not a danger, unless someone goes and sits on it. It's not going to blow up, it's not a threat to the safety if it's well managed, and it can stay there for decades, I have no doubt of that.
But in this political world we're in, most folks feel that's an unacceptable long-term solution. The long-term solution was to move it to Yucca.
A decision to cancel Yucca alters your long-term plan for the disposal of that waste, yes or no? Yes or no? If we cancel Yucca, doesn't that alter your long-term plans for disposal of this waste?
MS. TRIAY: As I was saying, for the next 20 years we were committed to get the waste into glass or into dry storage for spent nuclear fuel. So for the next two decades, it doesn't impact the Environmental Management program.
And whether it affects it for the longer term --
SEN. SESSIONS: Was the plan to transfer at some point in the future to a national storage center which has been generally considered to be Yucca, is that correct?
MS. TRIAY: That is correct.
SEN. SESSIONS: Well --
SEN. GRAHAM: Can I just --
SEN. SESSIONS: Yes.
SEN. GRAHAM: The reason this is important is because we've always wanted a pathway forward. You know, when Savannah River site agreed to take the 36 tons of weapons-grade plutonium, the Democratic governor at the time -- this was during the Clinton-Bush years -- threatened to lay down in the road. And I got a statute passed that put penalties on the federal government if they didn't hit their timelines because we sort of made a leap of faith here that we're going to take this material. And I told people in South Carolina it's going to -- you know, the pits are going to be disassembled. It's going to create good jobs. We're going to vitrify what can't be MOX'd and there'll be a pathway forward, either through MOX, vitrification, Yucca Mountain.
And I guess what Senator Sessions is saying is we need to reassure people that 20 years from now, whatever, that there's going to be a pathway forward out, because if we don't do that, then sites are going to be very reluctant in the future to embrace change.
You know, we also, with Senator Sessions' help, came up with a plan when it came to storage of -- tank waste storage in South Carolina -- we agreed the state of South Carolina and the Department of Energy and the last administration to leave some material in the heel of the tank that would save $16 billion instead of scraping it all out and sending it to Yucca Mountain to just fill the place up quickly with stuff that you could leave in South Carolina.
We made a sort of a bold decision at the time to leave some of this waste in the tank -- save a lot of money, wouldn't hurt South Carolina. We're behind schedule there. So I know you're new here. You'll get a chance to start over and I really do want to work with you, but the one thing we're going to have to do is to assure these states and sites that are willing to do things differently, you're not going to get stuck.
And that's the point. There's a lot of concern now that if Yucca Mountain is taken off the table, you know, have we been left holding the bag here 20 years from now or 15 years from now. And this agreement to leave the tank waste behind in South Carolina, if it's behind schedule, were we smart to do it?
So, you know, help us work through these issues, because I think we can save a lot of money if we'll just look at this whole stuff anew.
MS. TRIAY: We are completely committed to meeting our commitments to the states to have a path out for high-level waste as well as the spent nuclear fuel. As Secretary Chu has shared with you, we're looking at the blue ribbon commission to ensure that we have those options that are viable that will meet our commitments to the states.
SEN. GRAHAM: Thank you.
SEN. SESSIONS: Well, I know you don't want to, you know, get into the political fray here. I'll just do it. There are a lot of ramifications for not proceeding with Yucca. And it's not just commercial reactor spent fuel. It's nuclear Cold War residue fuels like this. And if we don't do Yucca after all we've spent on it, I don't know what we're going to do. There's no plan out there. Maybe this blue ribbon commission can solve it, but we've gone from having a plan to having no plan.
That's what Senator McCain has complained about and I think he's correct. Nuclear power is part of our reality and nuclear weapons are going to be part of our reality as long as I'm on this Earth, I assume, and it's just a problem that I'm worried about.
Senator Begich, you want to -- I haven't gotten --
SEN. BEGICH: I do. I just want to --
SEN. SESSIONS: -- finished up, but you interject right now, if you'd like.
SEN. BEGICH: If I could. Thank you very much.
Let me -- because I'm new to this whole process here, let me make sure I understand this right. When you say that for two decades your -- approximately two decades -- could be more, could be -- you know, but that, you feel very secure that you have ability to move the waste and put it properly away. It's a question of after that that you're now planning for but not yet definitive of where that is. Is that --
MS. TRIAY: That is exactly correct -- however, committed to finding a path out.
SEN. BEGICH: Now when I look at -- and I got to look at the name of this report. And I think this is the same one you referenced a couple of times. I think -- yeah, the January '09 report?
MS. TRIAY: Correct.
SEN. BEGICH: You know, I've been just kind of flicking through it real quick here, but on Page 79, it's kind of your summary. It's, you know, it's not the appendix that has all the detail by each project within the projects, but it's a pretty good summary and it shows the remaining cost in '08, and I have a high and low number on that.
And then you have planned completion date date range. When I did a quick check here, a lot of these projects will be done within the 20 years. I mean, there are some big ones that aren't; I recognize that. But help me understand, just so I get the connection between these project completed, the concern that Senator Sessions has and Senator Graham that -- are we talking about the remaining projects that I've checked off here that are, in some cases, 75 percent complete at that stage, but are they -- what's the --
MS. TRIAY: We only have high-level waste and spent nuclear fuel with respect to the projects that are listed here on Page 79 -- three sites.
SEN. BEGICH: Which ones are those, just so I'm clear?
MS. TRIAY: The Hanford site, Savannah River site and the Idaho site.
SEN. BEGICH: What was the last one? I'm sorry.
MS. TRIAY: Savannah River site, Hanford site, and the Idaho site.
SEN. BEGICH: Oh, Idaho. Okay.
MS. TRIAY: So those are the three sites that we are committed to delineating a solution for a path out for the spent nuclear fuel and the high-level waste. And as you can see, those sites, you know, have --
SEN. BEGICH: A longer period?
MS. TRIAY: A longer period to -- for completion and in Idaho in particular the agreement that we have with the state in one of the negotiated agreements is for the year 2035.
SEN. BEGICH: 2035, okay. Let me end on that, but I'll go back. I have some other questions, but I'll -- they're a separate issue.
SEN. SESSIONS: Just to note that this $6 billion increase in funding was a stimulus package bill that DOE projects would create 13,000 jobs. But to give an indication of how much money $6 billion is, that averages, just by mathematics, $461,000 per job. So I want to say, first of all, in terms of a pure jobs package, this is not. It can only be considered as a -- money to get this job done, an advance payment to you, the Department of Energy, to perhaps accelerate it and keep up with where we need to be with regard to cleanup.
MS. TRIAY: Senator Sessions, the -- that figure that you quoted, of course, if -- we would have to divide that by the amount of years, because obviously we don't want to hire somebody and then fire them. In other words, we would hire one person for two and a half years.
So having said that, let me just address, you know, your concern --
SEN. SESSIONS: Well, first of all, I know you got to -- you're going to have to buy technology equipment and machinery, all of which h makes the cost per employee go up. I'm just saying as a pure jobs bill, this is not a big winner in terms of jobs per dollar invested, but it does create jobs, no doubt.
Secondly, what I want to stress with you as I stressed with Secretary Bodman and your predecessors is that I consider the amount of money we're talking about unacceptable; $260 billion is unacceptable. And we're paying you to do something other than business as usual. Are you bringing in experts, thoughtful people who can help you do some of the things that were done in Savannah River that got the project quicker, saved $16 billion and got us on the right track in a better way?
Now, we need to save this money. If you took $1 billion, $2 billion a year and used it to incentivize windmills or hybrid cars or other things that could benefit this country -- research and development into clean coal and the things of that nature -- it would be huge over the next 20 years. It would be huge.
So right now we're spending it on a cleanup program that continues -- it's indisputable -- it continues to go up in dramatic fashion. It was $120 billion, as I recall, just a few years ago. Then we were -- it was announced in this committee -- this subcommittee that it was 180 and now you announce in January with your report that it's 220 to 260 (billion dollars). These -- it just continues to go up and somehow we've got to get off this treadmill.
Are you looking creatively? Are you demanding of every employee under you that they are thinking on how we can do this project in an effective way? And it may require some renegotiation of contracts and agreements. I understand that's driving some of this, but if an agreement no longer makes sense, Senator Graham worked with you to make that change that seemed to be effective. Are you thinking in that way?
MS. TRIAY: Absolutely, Senator Sessions. The reason I brought up the strategic planning that led to footprint reduction and near- term completions is because that strategic planning as delineated in this report also talks about tank waste which is half of that life cycle cost and in addition talks about spent nuclear materials and spent nuclear fuel.
We are looking at every possible opportunity but in particular at transformational technologies and concepts. Secretary Chu has talked to me in no uncertain terms about his expectations of us looking at those transformational technology developments or concepts that are actually going to dramatically -- could dramatically reduce tank waste, spent nuclear materials and --
SEN. SESSIONS: Well, let's just follow from what Senator Graham suggested that, as I understand it -- I may be wrong, but as I understand the South Carolina agreement was that you get 90 percent of the waste removed and then you've got a tank that has some residue -- a minor residue that's not easily recoverable except by digging up the entire tank and treating the entire tank as a nuclear waste. And they agreed that you get every bit of it out of the tank that's possible. And they agreed that you could leave the remainder there to gradually decay over the years in years to come.
Is our plan at the other sites the complete, pristine removal of the tanks and is that a factor in the higher cost at the other sites?
MS. TRIAY: No, sir. We don't have plans at other sites to remove the tanks, but just so that I can tell you, Senator Sessions, I was the lead technical assistant to Congress from the Department of Energy on Section 3116 of the National Defense Authorization Act of 2005, which I believe is the section that you're talking about, where we were able, as a result of that, to leave waste, after consultation with the Nuclear Regulatory Commission, as low-level waste as part of the tanks.
So we are completely committed to making sure that we look at these transformational technologies and concepts that can reduce the cost, especially in the area of tank waste, spent nuclear fuel and special nuclear materials. And you have my commitment for the Environmental Management program to work with this subcommittee and ensure that we work collaboratively but expeditiously to reduce the life cycle costs and reduce the amount of time that this cleanup is going to take.
You are completely right about the fact that we need to look very creatively at how to deal with this cleanup.
SEN. SESSIONS: Well, thank you. It's just nothing comes from nothing. The money spent should compete with other energy environmental concerns and $260 billion is a lot of money that could -- I think, if we did this thing right, we could reduce that cost and save $100 billion and that $100 billion could be better used in other ways to improve the environment would be my thinking.
And I certainly hope that we're not locked into some sort of agreement we made 30 years ago or a mind-set in Energy that does not look for these new creative ways to deal with it. I'm glad to hear you're committed to that. I did talk to Dr. Chu about it and he -- I think he understands the immensity of the money that this cleanup program costs. And it provides an opportunity to do better things with limited dollars if we can save them.
Thank you, Mr. Chairman, and thank you for your good leadership. I do have to make another appointment and I know you're pleased with the new FEMA director from your state. He had to go introduce him at the committee hearing today. I hear good things about him.
SEN. NELSON: Indeed, and thank you for your continued leadership, Senator Sessions, and it's a pleasure to work with you.
And we've got a lot of work to do in this subcommittee.
SEN. SESSIONS: Yes, we do, and I look forward to -- we're working on a time with you to discuss you trip to Eastern Europe -- (off mike).
SEN. NELSON: Good. Thanks.
Following up on this, Dr. Triay, Environmental Management was going to focus on a number of sites that could be cleaned up and closed much more quickly, and Rocky Flats was one of those. And Congress went along with that on the condition that when Rocky Flats was finished, the savings would be applied to accelerate cleanup at other sites.
Well, with the accelerated cleanup at Rocky Flats, there were substantial savings, but those savings were not used to accelerate cleanup at other sites. What are you going to do with this stimulus money to accelerate cleanup?
MS. TRIAY: The stimulus money will be used to deal with those deferred projects that constituted the portfolio of accelerated cleanup at some of these other sites. We are going to ensure that we reduce the footprint at our two largest sites, Hanford as well as Savannah River, by between 45 and 55 percent. We are going to ensure that we disposition of transuranic -- thousands of cubic meters of transuranic waste and low-level waste. And in addition to that we're going to deal with some of the main issues associated with contaminated soil and ground water.
In my testimony in particular, I talk about Idaho, Oak Ridge, Savannah River site, Hanford. If you actually look at the majority of our life cycle costs, it deals with Savannah River, Hanford, Idaho and Oak Ridge. Savannah River, we have -- we're going to be closing major contaminated areas and two nuclear reactors.
We also think that it is imperative that if we are able to reduce the footprint, we see reductions to our surveillance and maintenance costs. In other words, the cost of opening the doors every morning and being able to maintain the complex in a safe and secure posture.
So I believe that, Senator, that you're not going to be disappointed with the dramatic amount of decontamination and decommission that is going to be done with the recovery act funding and with the amount of waste that is going to be dispositioned.
SEN. SESSIONS: Back on the jobs, do you have an estimate of the new jobs that are created by the stimulus bill? How many are going to be federal and how many in the private sector?
MS. TRIAY: With respect to the federal jobs, we are going to be hiring on the order of 90 individuals -- 90 employees into the federal work force. The rest of -- up to the 13,000 jobs are going to be in the commercial sector.
SEN. SESSIONS: Now, after the stimulus bill money is over, which is in a couple of years, what happens to those jobs?
MS. TRIAY: What we had in mind was to partner with the energy sector of the Department of Energy. So essentially what part of our vision in proposing this dramatic decrease in the footprint was to have vast tracts of land that were then cleaned up and would become an asset to that particular community.
We in the Environmental Management program are focused on the cleanup. However, there are other parts of the Department of Energy that are focused on energy and other parts that are focused on other missions like science, like other parts of defense.
So we thought that by cleaning up these vast tracts of land, we would be then be able to put this resource on the table for ideas, such as, for instance, energy parks in the different sites that now those lands were in and then ready for beneficial re-use.
So our thought was that by doing that amount of footprint reduction, we would be able to give the communities the opportunity to use the infrastructure, very well trained work force, as well as the ability, based on a lot of geohydrological characterization of those sites over the years, to explore, even within the department or outside the department in a totally commercial venture, the opportunity to continue with those jobs past the two and a half years, because then those vast, cleaned-up tracts of land would become an asset to the community.
SEN. NELSON: Okay, now, you've got to have, at the same time that you're dealing with the stimulus money, you've got to handle and manage your own regular cleanup activities. How are you going to do both of them together?
MS. TRIAY: We have stood up an office for the recovery act funding. As a matter of fact, the program manager, Cynthia Anderson, was the (P ?) division director at South Carolina, as I was saying. Frazier Lockhart was the federal project director of Rocky Flats.
So we have very good talent, but in addition to that, the Environmental Management program in 2007 was at 1,370 employees. Today we have hired and -- or extended offers so that we increase our employees to essentially by 300 to 1,680.
That doesn't count the 90 individuals that we're going to hire specifically for economic recovery. So we have -- we're going to have an increase of on the order of 400 employees between 2007 and today.
And we believe that we're going to be very demanding customers of this economic recovery activities and that we're well poised. We have hired individuals in the area of science and engineering but also acquisitions and project management.
In the area of project management and contract management in particular, we have gone from -- we essentially have increased by 116 employees. In addition to the federal employees, we have partnered with the U.S. Army Corps of Engineers so that they can also provide augmentation to the federal employees that are in the Environmental Management program.
We have over 50 individuals deployed from the U.S. Army Corps of Engineers and their contractors, so that we can strengthen project management and contract management in addition to the strengthening that we have done of our own federal staff.
SEN. NELSON: It's your intention to obligate the rest of this money within the next five months and have the work completed in two and a half years -- by the end of '11. And yet we've seen that's what's gotten us into a fix in the past, where we do these accelerated projects. So what is your plan to develop realistic baselines or milestones for each of these stimulus bill projects?
MS. TRIAY: Cost, scope and schedule baselines have been developed for 90 percent of the portfolio before the economic recovery act and I have, as part of this increase of 300 employees in the Environmental Management program, we have stood up a cost-estimating group in our Consolidated Business Center for independent government estimates, and we're going to have the Office of Engineering and Construction Management continue to perform independent audits of all of our baselines, including the baselines that are associated with this work.
As I was saying before, in this case in addition to having realistic baselines to start the work, we're going to put also independent verifications before we increase the ability for the contractors to cost work at 20 percent intervals that will require not only the Environmental Management program but the office of the chief financial officer.
We are extremely aware of the fact that we need to perform, that we have to ensure that we use this money effectively, and the baselines that are going to be put in place are going to be realistic. They are going to have independent auditing of their degree of integrity, and we're going to have risk-management plans so that we identify the vulnerabilities that we have associated with the work and that we are vigilant about dealing with those risks before we commit further dollars that can be costed against the economic recovery act activities.
SEN. NELSON: Thank you, Dr. Triay.
Senator Begich, will you adjourn the meeting when you're through with your questions?
SEN. BEGICH: That'll be fine, Mr. Chairman.
SEN. NELSON: I'm going to slip on out to another appointment.
Dr. Triay, thank you. You came very well prepared. I want to commend you. If you would, go ahead and introduce your colleagues that you said you wanted to and we'll make it part of the record.
MS. TRIAY: Thank you, sir.
Cynthia Anderson is the program manager for the recovery act and she was the (P ?) division director from South Carolina, from the Savannah River Site.
Frazier Lockhart was the federal project director that pushed closure of Rocky Flats, highest level of certification from the Department of Energy.
And I would also like to introduce Merle Sykes, who is the deputy assistant secretary responsible for the life cycle costs as well as the strategic planning, also seated with the Environmental Management program.
SEN. NELSON: Thank you.
Senator Begich?
SEN. BEGICH: Thank you very much, Mr. Chairman. I'll be brief. I just have a couple of quick questions.
And I might have missed this so if you could clarify this: If I got the number right, there's about -- with the stimulus bill and the 11,000 or so or 12,000 private contractor employees, there's about 90 that will enter your agency as agency employees.
Is that -- give or take a few?
MS. TRIAY: Yes, 90 additional federal employees.
SEN. BEGICH: Right. Do you -- so as the stimulus winds down in two-plus years, two, two and a half years, these 90 are intended to stay on because you believe there's additional responsibilities and work for them in the future, is that what I understand? Or potentially could be?
MS. TRIAY: Potentially. The National Academy of Public Administration published a report in 2007 indicating that the Environmental Management program needed to increase their staff from 1,370 by 200 immediately. And they have done some benchmarking on comparable industry, such as NASA, meaning one of the main comparable industries to the Environmental Management type of projects. And they indicated that at some of those other agencies we would have two to six times the oversight that we have in the Environmental Management program.
So the Environmental Management program really has been, in the past several years, understaffed when it comes to oversight, General Accounting (sic) Office, other bodies have heavily criticized our work in a performance of, in our projects and in particular the oversight that we have provided to a project management and contract management and we think that those 90 individuals would probably have opportunity to continue to work in Environmental Management.
SEN. BEGICH: So you anticipate it would be 2011 or 2012 budget that you would see an increment in order to provide continual funding for those 90? Because in theory, the stimulus money runs out, these guys are temporary full time, in my definition, but your point is that they could be utilized in the future. So you would see an increment in would it be 2012?
MS. TRIAY: In terms of program direction, which is the account where those monies would come from, as I was stating before, we have augmented our federal staff from other agencies such as the U.S. Army Corps of Engineers, has over 50 individuals that through their own contractors have been part of our efforts to improve our projects and our contracts. So in terms of bottom-line increase of the dollar amount, that is not a given. In other words, we can't --
SEN. BEGICH: Understood.
MS. TRIAY: -- (within ?) the account make sure that we mentor some of our own federal employees to take over for that assistance that is being provided to us from others that have had more success and are more experienced in project management and contract management.
SEN. BEGICH: But in order to do that, and I would just give you a cautionary flag on the corps because we do a lot of business in Alaska with the corps, they have ($)4-plus billion in the stimulus bill they have to manage. I have concerns over their capacity to manage that. They're following similar steps that you have existing projects, they don't want to create new projects, so forth, which I commend them for that. And there's very specific in the stimulus bill how we detail how the corps could do projects or not with the stimulus money. So a little flag of caution there only because of their capacity is of question.
But in saying that, when you mentor up your folks to then supplant what the corps was doing, I mean, I guess my question is, is it 2011 or 2012 that you -- I mean, you've got to have an increment; you can't just -- 90 people added to your payroll comes from somewhere.
MS. TRIAY: Right. I mean, all I was trying to say is that it may not be necessarily straight math, you know, that we need to add 90 individuals times $140,000 per year --
SEN. BEGICH: Gotcha, no.
MS. TRIAY: -- and that that is a straight math of how the program direction dollars are going to increase in 2012.
SEN. BEGICH: Gotcha.
MS. TRIAY: Obviously, it would be in --
SEN. BEGICH: But 2012 is approximately --
MS. TRIAY: Yes, it's approximate. Yes.
SEN. BEGICH: Okay. And then two quick ones, on the -- again, that chart on Page 79, which is a great summary -- are those, when I look at the high and low, just so I understand how you've done this, over the life span of the project, then those are inflation-adjusted or are they in today's dollars?
MS. TRIAY: The life cycle costs is escalated, you know, the ones that are here on Page 79 --
SEN. BEGICH: Okay, so when I --
MS. TRIAY: And just so that you know, in terms of the ranges of the years that some of them that you were reading, I mean the ranges of the funding, the life cycle-cost funding, it goes from a 50 percent confidence level to 80 percent confidence level. That range comes from that.
SEN. BEGICH: No, I -- that's great. What I just wanted to make sure, so what has the greatest bearing on this number, on these numbers, is if you got additional increments above what you projected, which is 5.5 to 6 billion (dollars), this number has a potential of going to the lower spectrum. Is that -- I just want to make sure we're on the same page.
MS. TRIAY: Absolutely, absolutely. That is why I was telling, I believe, Senator Sessions that 40 percent of the life cycle costs was when we adjusted the funding per year down to between 5.5 and 6 we have to move the activities to the right, and therefore the escalation of the dollars costs 40 percent of the increase in life cycle.
SEN. BEGICH: And that life cycle change, that 40 percent number that you've identified, I might have not heard you correctly earlier, the old estimate was like 7.5 billion, 8 billion (dollars) per year? Is that right, am I right in that range, so that --
MS. TRIAY: That is correct.
SEN. BEGICH: So the increment of 1.5 to 2 billion (dollars) has an impact of 40 percent? Let me rephrase that: 1.5 billion to 2 billion (dollars) per year has an increment increase of 40 percent on these projects?
MS. TRIAY: That is correct.
SEN. BEGICH: Am I saying that right? I just want to make sure I get the --
MS. TRIAY: That is exactly correct.
SEN. BEGICH: I'm trying to keep the math as simple as I can manage it, dealing with folks from -- dealing with nuclear energy and so forth. So I'm just trying to keep it in my mind. So, well, that helps a lot because what it argues is, you know, if you can adjust up the budget over time back to that number, making it more realistic, the amount of money potential savings is huge. I mean -- in theory.
MS. TRIAY: That is true --
SEN. BEGICH: In theory, in theory; I mean, it's not --
MS. TRIAY: In theory, but you know that they're, of course you know, Senator, that there are economic realities --
SEN. BEGICH: Sure.
MS. TRIAY: -- and that we need to do our part, you know, to allow other parts of the federal government to do their job effectively as well.
SEN. BEGICH: I appreciate that and I thank you.
The last question, or actually two quick ones: You mention with the contractors you have a lot of small-business component, or potential small-business component; do you keep track of your DBE, your disadvantaged business enterprise, or your disadvantaged business percentage on these contracts, and what participation, and if so, did I get that at some point? I don't need that right now, but on the contracts that you have that are going to be extended -- let me put it that way; let's just be stimulus only -- the ones that will be added to and modified for the purpose of stimulus, what percentage of DBE or disadvantaged business or minority-owned businesses have part of that business? Can you get that to us -- to me?
MS. TRIAY: Absolutely, we will definitely do that. We keep track of it; the Environmental Management program is very successful, actually, in having small business and do a major part of our work, so we will definitely give you that information.
SEN. BEGICH: That'd be great. And then, the last question, and then I'll close off the meeting, and that is, of the amounts that you get, again, now let's put stimulus aside, the 5.5, 6 (billion dollars) that you roll through on an annualized basis, of that, not what is obligated but what is actually expended in work per year, do you have a number that you could share with me now or maybe again at a later time, the last four years of not what's obligated but actually expended in actual completion in work? Is there such a number that you might have available?
MS. TRIAY: I'm having Merle Sykes identify herself and come to the table, but I believe that that number is 80 percent. But, by all means, Merle, please.
SEN. BEGICH: About 80 percent. So about ($)4.8 billion, give or take a little bit there because your number may vary, is actually expended on contractual and/or work completed regarding or in relation to these projects and that 20 percent is obligated for work that may occur, you know, 12, 14, 16, 18 months out or whenever that obligation period is? Is that --
MS. TRIAY: That is correct.
SEN. BEGICH: Okay, great. Thank you very much, and as a new member I appreciate allowing me to ask a few questions, some of them very naive but learning a little bit more about the process. I need to adjourn the meeting, but I want to make sure it's noted for the record that the record will be -- remain open until Monday night for additional questions. For the record, I just want to again thank you, your staff for all the work you've done.
MS. TRIAY: Thank you, Senator.
SEN. BEGICH: This meeting is adjourned. Thank you.
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