Energy Department faces broad management challenges, IG reports

Auditors in the Energy Department's inspector general office identified six major management challenges that threaten operations unless department leaders can successfully address the deficiencies in the coming months and years. The challenges include contract administration, cybersecurity, energy supply management, environmental cleanup, nuclear security and nuclear stockpile stewardship.

In a memo to Energy Secretary Samuel Bodman accompanying the report, Inspector General Gregory Friedman noted, "These challenges are not amenable to immediate resolution and must, therefore, be addressed through a concentrated, persistent effort over time."

The list won't be news to most Energy employees. In its 2008 financial report issued in November, department officials identified nine leadership challenges that largely mirror the IG's concerns.

For a department whose contract personnel vastly outnumber its federal employees, the issue of contract administration is fundamental. At the end of fiscal 2008, Energy had 13,973 federal employees and 93,094 contract employees, according to the financial report. The majority of department operations are carried out through contracts, some of which have been poorly managed with little effective oversight.

Last spring, Energy officials completed an analysis of root causes of contract and project management deficiencies, and in July issued a corrective action plan for improving performance.

Among the underlying causes Energy identified as contributing to poor contract administration was an inadequate number of federal contracting and project management personnel with appropriate skills to plan, direct and oversee contracts. As a result, Energy is developing a comprehensive federal staffing plan to recruit, train and retain sufficient personnel for contract administration and acquisition activities.

"Successful implementation of the [corrective action] plan should help address historic project and contract management issues," the IG noted.

Cybersecurity has been another vulnerable area for Energy. Independent auditing firm KPMG LLP found significant weaknesses in computer security in a 2008 audit detailed in the department's financial report.

"Specifically, we noted weaknesses in the areas of user access controls, password management, network services, configuration management, and use of versions of application and operating system software that were outdated or not appropriately patched to correct known vulnerabilities," KPMG reported.

The auditors noted that some organizations within Energy consistently failed to implement mandatory governmentwide security measures, despite departmental directives ordering the changes and the fact that other organizations within Energy were able to meet the standards.

"The identified weaknesses in unclassified network and information systems security increase the risk that malicious destruction or alteration of data or unauthorized processing could occur," KPMG reported.

In the area of energy supply, the IG noted that the 2005 Energy Policy Act gave the department the opportunity to aggressively lead the effort to increase national investment in alternative fuels and clean energy technologies through loan guarantees. The approval process for projects under the loan guarantee program have not been completed, and as such, will give the incoming Obama administration an opportunity to shape the next generation of energy technologies.

"Providing the leadership to ensure reliable, affordable and environmentally sound energy supply represents a significant management challenge for the department," the IG reported.

After more than five decades of nuclear defense and energy research, environmental cleanup represents one of Energy's most difficult management challenges. There currently are more than 1.5 million cubic meters of solid radioactive waste and 88 million gallons of radioactive liquid waste that require disposal with cleanup costs projected to be in the hundreds of billions of dollars.

In a series of reviews in 2008 the IG found it is unlikely Energy will meet many milestones and obligations contained in environmental agreements that have been negotiated over many years.

Additionally, security at nuclear facilities and stockpile stewardship remains an ongoing challenge for Energy, the IG found.