Statement of Hazel R. O'Leary
 Secretary of Energy
 U. S. Department of Energy
 Before the
 Committee on Armed Services
 Military Application of Nuclear Energy Panel
 U. S. House of Representatives
 May 18, 1993
  
                                  INTRODUCTION
  
 Mister Chairman and members of the Committee, I am pleased to appear
 before you today to discuss the Department of Energy's Fiscal Year 1994
 budget request for atomic energy defense activities identified in the
 defense, intelligence and national security, and environmental
 restoration and waste management programs. I would like first to
 summarize the Department's priorities and plans for the future, and
 then discuss particular areas of interest such as the K-Reactor,
 weapons complex reconfiguration, and cleanup activities.
  
 Recent world changes, such as the dissolution of the Soviet Union
 and the end of the Cold War continue to shape DOE's changing roles
 and priorities. Who would have believed that today we would be
 dismantling thousands of weapons and buying highly enriched uranium
 from the Russians? Evolving international events have provided the
 Department an opportunity to redirect funds from weapons production
 activities to other critical DOE missions.
  
 Through the Environmental Restoration and Waste Management (EM)
 program, DOE is responsible for cleaning up 4,000 sites that represent
 26,000 acres of weapons- related hazardous wastes, contaminated soil ,
 groundwater, and structures. As the weapons complex is consolidated
 and downsized, facilities no longer needed will be turned over to
 EM for decontamination and decommissioning.
  
 The main tasks of the nuclear weapons complex will be the dismantlement
 of weapons, the protection of nuclear materials, and the maintenance
 and surveillance of the residual nuclear weapons stockpile.  As the
 complex i s consolidated, however, we plan to retain the capability to
 produce components for the stockpile if certain weapons deteriorate
 with age or we find that we must rebuild our arsenal.
  
                             SAVINGS
  
 The Administration is proposing significant savings in the atomic
 energy defense activities account.   Programmatic savings resulting
 from the redirection of National Defense Programs total $1.3 billion.
 Of this amount, $634 million is offset by the increased request in
 Defense Environmental Restoration and Waste Management, and $100
 million is offset by a comprehensive worker retraining assistance
 program for a net reduction of $598 million in the FY 1994 Atomic
 Energy Defense Activities budget request.
  
 Savings will accrue from reduced requirements, delaying non-nuclear
 consolidation reconfiguration initiatives, reducing laboratory
 nuclear weapons research and development, and transitioning
 K-Reactor to a cold standby status. DOE is also demonstrating
 innovative cleanup technologies such as sensors, that can greatly
 improve characterization/monitoring of contamination and save resources
 in the  future. We have developed a remote tank inspection system to
 characterize tank waste in-situ, eliminating any potential for
 exposing workers to the wastes from tanks similar to those at Hanford.
 The system can save an estimated $270 million over conventional
 solutions to this problem.
  
                           BUDGET OVERVIEW
  
 The Department's FY 1994 budget request for atomic energy defense
 activities is $11.5. Of this amount, the Department is requesting $4.7
 billion for the Office of Defense Programs (DP) and $5.5 billion for
 the Office of Environmental Restoration and Waste Management (EM).
 The remainder of the atomic energy defense activities request totals
 $1.3 billion, which includes funding for activities such as the Naval
 Reactors development, the Office of Intelligence and National Security,
 worker retraining, and waste disposal.
  
 Funding increases for energy-related activities, environmental
 restoration and waste management, and science and technology programs
 are more than offset by the major decrease in funding for national
 defense. The Department will continue its expansion of the nuclear
 weapons nonproliferation program that was initiated in FY 1993 as well
 as provide additional support for current and prospective arms control
 treaties and agreements.
  
 The FY 1994 funding request for weapons, research, development, and
 testing activities supports an estimated 16 percent decline in
 laboratory staffing for those activities from the FY 1993 level,
 although not all mission areas are projected to decline equally. Total
 employment at the three defense labs will be relatively stable as work
 shifts to other programs.  The Department has requested $4.7 billion
 for Defense Programs activities under the defense account. Emphasis
 will be placed on accelerated warhead dismantlement, storage, and
 disposal activities; preparation for limitations on underground
 testing; and technological support for reconfiguring the nuclear
 weapons complex.
  
 The Department's FY 1994 budget request for Intelligence and National
 Security is $527.5 million, a six percent increase from the FY 1993
 appropriation. This increase will support nuclear proliferation
 activities and strengthen the Department's assessments of worldwide
 nuclear weapons proliferation.  In addition, the request will
 enhance the Department's role in export controls, international
 safeguards, and other policy countermeasures.
  
 This request focuses on improving analyses of intelligence on nuclear
 supplier nations and their attendant procurement networks; on worldwide
 nuclear material production technology; and on proliferating countries'
 efforts to match warhead designs to delivery systems.  The
 Intelligence and National Security budget request also supports 390
 full-time-equivalents and includes $19.6 million for capital
 equipment.
  
 The Department's FY 1994 budget proposal for Environmental Restoration
 and Waste Management totals $6.5 billion. Of this amount, $5.5 billion
 constitutes the Defense Environmental Restoration and Waste Management
 request. The Department will continue many Federal facility cleanup
 activities, initiate new projects, and complete a number of other
 environmental management activities. This request represents an
 increase of approximately $600 million, 12 percent above the amount
 appropriated in 1993 for defense atomic energy activities.
 Specifically, this increase includes $373.7 million of transfers
 for shutdown from Defense Programs.
  
 More detailed information on the FY 1994 budget request and
 related accomplishments can be found in the written statement and
 background material provided to the Panel by Mr. Grimm, Dr. Beckner,
 and Dr. Keliher in the April 28 hearing.   I will now summarize an
 important new safety and health initiative, and then discuss particular
 areas of interest in the Office of Defense Programs, the Office of
 Intelligence and National Security, and the Office of Environmental
 Restoration and Waste Management.
  
                    DOE SAFETY AND HEALTH INITIATIVE
  
 The Administration wants to solidify its commitment to protect the
 health and safety of workers, the public, and the environment. This
 month, I announced a comprehensive nuclear and occupational safety
 initiative to emphasize the Department's strong dedication to these
 issues. As part of this initiative, DOE will develop a Comprehensive
 Departmental Safety and Health Policy that clearly establishes the
 responsibility of DOE and its contractors to protect the health and
 safety of workers "inside the fence."  We will accelerate our process
 for issuing critical Price-Anderson Nuclear Safety Rules, and
 reinstate the authority of the Assistant Secretary for Environment,
 Safety, and Health (EH) to force cessation of unsafe operations
 involving imminent health and safety concerns. In addition, the
 Department will cancel the 60-day Notice requirement for scheduling
 field assessments, and develop a fatality policy with strengthened
 investigation procedures. Employees will be empowered to participate in
 this initiative site-wide through the establishment of
 Employee-Management Health and Safety Committees.
  
 The Department also plans to review current classification procedures
 and infomation policies to find ways to improve how we release
 environment, safety, and health information.  The public has a right
 to receive free and timely information as long as it is in accordance
 with legitimate national security interests.
  
                  OFFICE OF INTELLIGENCE AND NATIONAL SECURITY
  
 I created this office with two goals in mind.  First, to consolidate
 related functions so the Department can more efficiently support
 national security objectives and respond to areas of concern such as
 the proliferation dangers posed by the spread of nuclear weapons. And
 second, as part of the President's plan for re-inventing Government, to
 improve the daily effectiveness of the Department by reducing the
 number of organizations which report directly to the Secretarial
 level.
  
 The Office of Intelligence and National Security is composed of four
 offices: Arms Control and Nonproliferation, Security Affairs,
 Intelligence, and Emergency Management.
  
 The Office of Arms Control and Nonproliferation utilizes the
 Department's unique technical and analytical resources in support of
 the Administration's program to detect and monitor proliferation
 problems, verify treaty requirements, and control use of United
 States nuclear, nuclear- related, and dual-use technologies. The
 office also supports activities of such organizations as the
 International Atomic Energy Agency, Nuclear Suppliers Group, and
 Coordinating Committee on Multilateral Export Controls. The Office
 of Arms Control and Nonproliferation is especially active now in
 assisting the former Soviet Union republics on safe and secure
 transportation, storage, and dismantlement of nuclear warheads.
 In addition, it seeks to prevent the "brain drain" of their nuclear
 weapons scientists and engineers.
  
 The Office of Security Affairs directs the Department's safeguards and
 security program which includes responsibilities to establish
 policies for the classification and declassification of information;
 create sensible, cost- effective safeguards for the Department's
 facilities and technologies; and manage our security clearance
 program.
  
 The Office of Intelligence participates in government-wide activities
 to thwart attempt s by foreign intelligence to acquire classified and
 sensitive Departmental technology.  It also evaluates likely threats
 to our facilities and operations; and collect information on nuclear
 weapons security and proliferation.
  
 Finally, the Office of Emergency Management coordinates our response
 to energy-related emergencies and emergencies at Departmental
 facilities; serves as the Department's focal point and interagency
 contact for emergency preparedness and response activities; and
 maintains systems to detect emergencies, assess their severity and
 provide for effective response.
  
                       DEFENSE PROGRAMS MISSION
  
 The mission of Defense Programs is to maintain the Nation's nuclear
 deterrent. Defense Programs supports the enduring nuclear weapons
 stockpile with a focus on safety and security of existing weapons;
 research, development, and testing, and weapons dismantlement. The
 office also focuses on effective management of nuclear materials;
 environment, safety, and health compliance; emergency response
 preparedness; and reconfiguration of the weapons complex.
  
                            RESEARCH AND DEVELOPMENT
  
 Due to the continuing, though changed, threat of nuclear weapons
 worldwide, it is important to recognize that reductions in the nuclear
 stockpile and a potential moratorium on nuclear testing can yield some,
 but not necessarily proportional reductions in weapons research and
 development (R&D).  Even with a much smaller stockpile, appropriate
 R&D is still required to ensure the continued safety, security, and
 reliability of the stockpile. Research and development will also
 reassure our allies that this nation remains committed to its role of
 nuclear deterrence. The Departments' weapons laboratories will play key
 roles in the evolving requirements of the nation's nuclear weapons
 program and in the reconfiguration of the weapons complex to meet new
 challenges.
  
 With the dissolution of the Soviet Union, the potential proliferation
 of weapons of mass destruction has become an increasingly important
 security threat. Recent events in North Korea, Iraq, and the other
 parts of the world remind us that nuclear uncertainties still exist
 in four important areas: proliferation; arms control; dismantlement;
 and nuclear terrorism. Research and development at the laboratories is
 required to develop and maintain technologies to support our interests
 in all these areas.
  
 The DOE defense laboratories are the key repository of the technical
 understanding and the technologies required to control proliferation
 of nuclear weapons.  In addition, their expertise in verification and
 safeguards technologies, including satellite- and earth-based detection
 and monitoring, are critical to international efforts to monitor and
 control nuclear materials and/or device testing.
  
 Looking further into the future requirements of the Department, I have
 recently established a series of teams, comprised of policy-level and
 career officials throughout the Department, to address cross-cutting
 Departmental priorities. One of these teams will examine the roles,
 missions and core competencies of the multiprogram laboratories and the
 major program-dedicated laboratories. The team will focus on how these
 laboratories can be utilized to achieve the Department's priorities.
 Emphasis will be placed on viewing the laboratory system as a whole,
 with an eye toward maximizing the systems benefit to the Department and
 the Nation, while reducing redundancy and cost. The laboratories will
 be full participants in this review.
  
                        SAVANNAH RIVER K-REACTOR
  
 Based on a stockpile consistent with the START II Agreement, there is
 sufficient tritium in the inventory to meet projected tritium needs
 for DoD weapons and to maintain a reserve level well into the next
 decade. Therefore, the Department plans to transition the K-Reactor
 this year to a cold standby status with no planned provision for
 restart.
  
 Between now and the time when a new production source for tritium
 becomes available, the United States will rely on weapons
 dismantlements, recycling, and existing inventories of tritium to
 support weapons stockpile requirements. Sufficient time is available
 for the Department to plan responsibly for an appropriate and
 cost-effective replacement source for tritium to maintain our nuclear
 deterrent.
  
                                NUCLEAR TESTING
  
 The FY 1993 Energy and Water Appropriations Act places restrictions on
 nuclear testing, resulting in a test ban beginning October 1, 1996. The
 legislation allows the Department to conduct up to 15 tests, with no
 more than 5 tests per fiscal year during the period July 1, 1993, to
 September 30, 1996. This testing is subject to further Congressional
 approval of annual testing plans which would be submitted by the
 President.
  
 In January 1993 the previous Administration submitted a report to
 Congress as required by the FY 1993 Energy and Water Appropriations
 Act. This report lacked the required testing plan. On February 12,
 1993 President Clinton notified Congress of his intent to submit a
 new testing plan to Congress. This plan is now being finalized by
 the National Security Council, Department of Defense, the Department
 of Energy, and other Federal agencies for submittal to the Congress
 later this spring. It is inappropriate for me to comment further at
 this time.
  
                  RECONFIGURATION OF THE WEAPONS COMPLEX
  
 The current Weapons Complex is inefficient and burdened with excessive
 overhead costs compared to direct production costs. The goal of the
 reconfiguration program is to restructure the complex into a smaller,
 less diverse, and less expensive operation.
  
 That notwithstanding, the high level of technical excellence and
 sophistication that exists today at the weapons laboratories and
 production plants must not be compromised. The existing expertise can
 be utilized for normal stockpile surveillance, evaluation and
 maintenance, and to make nuclear weapons repairs when required. It can
 also be used to guard against technological surprise or to resume
 production, if directed by the President.
  
 Reconfiguration of the nuclear elements of the Nuclear Weapons Complex
 is being addressed through preparation of a Programmatic Environmental
 Impact Statement (PEIS). Since the initial public scoping meetings on
 the Reconfiguration PEIS in the Summer of 1991, significant changes in
 the future direction and needs of the weapons program have occurred.
 The Department is evaluating these changes and plans to discuss them
 and propose modifications to the scope of the PEIS in a revised Notice
 of Intent. The revised Notice of Intent will be published in the
 Federal Register this summer and distributed widely to affected
 stakeholders and the public for input and comments. Following this, a
 draft PEIS is scheduled for release to the public for comment late
 this year. The Department will then proceed to complete the PEIS in
 late 1994, and to issue a Record of Decision based on environmental,
 safety, and health analyses, costs, and other socioeconomic and
 technical factors in the PEIS.
  
 The nonnuclear aspects of the weapons complex are being addressed in
 the Nonnuclear Consolidation Environmental Assessment, which was
 completed and distributed to affected States and Indian tribes for
 preapproval review on December 1992. These States and Indian tribes
 have provided comments, and the Environmental Assessment is being
 revised as appropriate.
  
 The preferred alternative analyzed in this Environmental Assessment
 would lead to the consolidation of most nonnuclear manufacturing
 activities at the Kansas City Plant. Tritium work would be consolidated
 at Savannah River where it is presently performed.  If the proposal is
 adopted, all weapons complex activities would be terminated at the
 Mound and Pinellas Plants, including nonnuclear manufacturing
 activities at the Rocky Flats Plant.  Under this scenario, certain
 selected technologies would be preserved at the weapons laboratories
 during the forthcoming period of reduced or no production. The
 Department has prepared a number of separate analyses and studies which
 discuss this matter.
  
 One such study, the Nonnuclear Reconfiguration Cost Effectiveness
 Report, has been challenged by several parties. In order to address
 these concerns, I directed the initiation of reviews by three
 independent consultants to evaluate the findings which support the cost
 effectiveness certification in the.report. These consultants were
 selected out of discussions with elected officials of the affected
 States. The consultants began their work in early April; I expect to
 receive their final reports by June 1, 1993.
  
 In the meantime, the Department is proceeding with internal review of
 the Nonnuclear Consolidation Environmental Assessment. The results of
 the consultants' independent reviews could have a bearing on
 Environmental Assessment analyses. The Department will not finalize
 the Environmental Assessment and issue a proposed Finding of No
 Significant Impact until the consultants' reviews are complete and a
 decision is made on whether to proceed.
  
                             WEAPONS DISMANTLEMENT
  
 The Department will continue to focus on the dismantlement of nuclear
 weapons and the management of the resulting inventory of special
 nuclear materials (plutonium and uranium). The disassembly of a nuclear
 device is a very exacting procedure and is conducted in a controlled
 environment at the Pantex Plant under strict supervision. Following
 disassembly, the plutonium and uranium components must be retained in
 controlled storage.
  
 In order to execute the large, planned stockpile reductions, Pantex
 disassembly operations need additional storage for pits. The Department
 has prepared an Environmental Assessment (EA) to address increased pit
 storage on an interim basis (six to ten year period).  If there are no
 significant environmental impacts identified in the EA, the Department
 expects to issue a Finding of No Significant Impact (FONSI). Upon
 issuing a FONSI, the Department would then proceed to increase the
 number of pits stored at Pantex by utilizing existing storage
 facilities and increasing their pit storage capacity.
  
 Until recently, long-term storage facilities for special nuclear
 material had not been addressed because we envisioned a large weapons
 stockpile. Disassembled components had simply been recycled back into
 new weapons. However, we are now faced with a much larger number of
 weapons retirements. As a consequence, long-term storage capacity for
 plutonium and highly enriched uranium is a necessity for the future
 weapons complex. Alternative sites for such facilities will be
 evaluated in the Reconfiguration PEIS which is scheduled for release
 and public comment late this year with a Record of Decision (ROD)
 following in late-1994.
  
                           ROCKY FLATS PLANT
  
 With no requirement to build new weapons in the foreseeable future,
 the continuing decline in stockpile requirements, and the focus on
 weapons dismantlement, there is no need to maintain a production
 capability for plutonium components at the Rocky Flats Plant. Instead,
 the Department will redirect funds toward environmental restoration and
 cleanup of the site, including worker and community assistance. The
 Department anticipates that a capability for plutonium component
 fabrication will be reestablished at another site early in the next
 decade as a part of the reconfiguration program for the weapons
 complex. In the meantime, any requirements for additional plutonium
 components for weapons will be met through pit reuse.
  
                             TECHNOLOGY TRANSFER
  
 The Defense Programs dual-use technology transfer program is designed
 to support the Department's nuclear weapons laboratories to maintain
 their core nuclear competencies, which are critical to ensuring a safe,
 secure, and reliable nuclear stockpile at a time of decreasing defense
 budgets. At the same time, the Department seeks to provide American
 industry with increased access to the world-class science and
 engineering talent of the laboratories. Leveraging the skills and
 limited research and development dollars of the weapons laboratories
 with those of American industry is an effective investment of
 resources.
  
 The weapons laboratories have traditionally worked on the leading edge
 of advanced technologies necessary to maintain the Nation's nuclear
 deterrent. Among others, these technologies include: microelectronics
 and photonics, precision engineering and manufacturing, computational
 modeling of processes and products, high performance computing,
 advanced materials development and processing, and the development of
 nondestructive analytical tools.  All of these technologies have
 application to American industry and are critical to competitive
 industrial activities.
  
 Our vision gives the Department a more focused direction that will
 strengthen the Nation's preeminence in scientific institutions. This
 can be achieved by structuring our research and development activities
 to support not only mission-oriented defense, science, and energy
 research, but long-term benefits to the United States public in jobs
 and quality of life.
  
                       WORKER AND COMMUNITY ASSISTANCE
  
 As I mentioned previously, the Department is preparing a comprehensive
 worker retraining and economic adjustment assistance program for
 workers and communities affected by layoffs or other restructuring
 actions due to changes in the Department's priorities. This effort will
 address such matters as plans for work force retraining and
 reassignments; community economic adjustment plans; worker involvement
 in work force change decisions; retirement incentives; retraining;
 preference in hiring at other DOE facilities; outplacement services;
 training assistance in coordination with the Department of Labor and
 affected states; relocation assistance; and continuation of health
 benefits for 3 years. The key to success in our efforts will be direct
 involvement and coordination with Federal, State and local agencies,
 unions, industry, and other interested parties.
  
       OFFICE OF ENVIRONMENTAL RESTORATION AND WASTE MANAGEMENT
  
 The task of struggling with the environmental consequences of defending
 our nation over the last five decades has been and will continue to be
 difficult. The technical challenges are demanding. The managerial
 problems of building an efficient, cost effective organization are more
 demanding. Finally, the job of persuading the American people that the
 Department is honestly committed to the protection of the public health
 and the environment is perhaps the most difficult and necessary task of
 all.
  
                             CHALLENGES
  
 Before I review the various activities of the Environmental Restoration
 and Waste Management program, I would like to describe our specific
 challenges and possible solutions to current problems. I will also
 discuss plans for land use and review the steps we are taking to
 improve contractor accountability.
  
 The Administration has dedicated itself to honor the Government's
 obligation to clean up the DOE nuclear weapons complex to protect our
 environment and the health and safety of our citizens and workers. As
 previously stated, many obstacles exist, such as the magnitude and
 complexity of the cleanup task. The Department is also faced with
 incomplete land use planning, unspecified cleanup standards, and a lack
 of cost-effective, innovative technologies. There is excessive focus on
 characterization of sites rather than cleanup of sites, a lack of
 certainty in the availability of treatment and disposal sites, and a
 need for greater contractor accountability.
  
                       MANAGEMENT STRATEGIES & SOLUTIONS
  
 The job now is to reshape an environmental program that will sustain
 over long-term pressures. This can be done with a clear strategy
 followed by implementation that will gain the trust and confidence of
 Congress, the States, and our citizens. We must work hard to
 effectively address the truly urgent risks that exist at our sites.
 Although large sums of money have been spent to characterize and
 understand the problems in our system, we need to extend ourselves in
 this area to bring these problems under control.   We must also
 confront the problems with worker safety and health that exist
 throughout  the system. It is our obligation to provide safety to our
 employees and contractors - not only to minimize risks, but to maintain
 a loyal and efficient workforce.
  
 The Department must develop a system with better management and
 financial controls. Congress and other parties are asking us how we are
 spending taxpayers dollars. The Department is working to implement
 improved financial and accounting controls and earn more in terms of
 progress for each dollar that is spent.
  
 The Department needs to negotiate with Federal and State regulatory
 agencies and work toward reasonable, health- and risk-based standards.
 In order to establish sound standards, we must attempt to understand
 the risks posed by the contaminants and take into consideration
 site-specific issues including background concentrations, land use
 issues, and technological limitations.
  
 The Department plans to seek external independent evaluation of health
 and environmental threats of the defense complex. In this regard, DOE
 can better understand the risks at the existing facilities by reaching
 out to the academic and public health communities, States, regulators,
 citizens, and other stakeholders for their input.
  
 The Federal Facilities Environmental Restoration Dialogue Committee
 (Keystone) Report has a number of valuable insights and recommendations
 to support this approach and provides a good example of how parties can
 be brought together to address competing interests.
  
                                   LAND USE
  
 The development and selection of a particular site's ultimate end state
 will require extensive interactions with various stakeholders. The
 Department has achieved some success in considering the level of
 cleanup at the Hanford, Washington site with the Hanford Future Site
 Uses Working Group. This group was comprised of numerous stakeholder
 including regulators, concerned citizen groups, Indian tribes,
 environmentalists, labor, industry, and DOE representatives. This
 approach may be a useful model for land use planning and
 decision-making at other sites.
  
 While these decisions involve local participation, there is also a need
 to bring a national perspective to the ultimate fate of these lands.
 Through integrated risk management and long-range planning, we must do
 what we can to address potential threats. Land use restrictions may be
 "temporary" while new technologies are developed or while contamination
 is naturally decaying. Our first priority must always be safety and
 the protection of human health and the environment.
  
                        CONTRACTOR ACCOUNTABILITY
  
 The Department needs a better system of managing, overseeing, and
 reviewing cost estimates made by its contractors. In addition,
 contractors need to be held to a higher standard of accountability.  We
 must improve the way we estimate the scope of work needed to meet our
 commitments in addition to the costs of performing that work so we can
 better understand and control cost growth. The Department will also
 work to make better use of independent estimating to help assure the
 validity of initial scope and cost estimates.
  
 Historically, DOE has been seen as deficient in the administration of
 its most significant contracts. In the past, management and operating
 (M&O) contractor costs short of "criminal actions" or "willful
 misconduct," were generally paid by the Government. Costs resulting
 from negligence were often paid, and the Department did not adequately
 consider performance when awarding fee to an M&O. In response, the
 Department is developing mechanisms to emphasize the importance it
 places on the responsibility and accountability of its M&O contractors.
 The evaluation standard is used to promote excellent performance,
 particularly in the areas of environment, safety, health, and cost
 performance.
  
 In order to assert control over the authorization of work, negotiated
 costs, and to deliver schedules under its M&O contracts, DOE published
 a final rulemaking in June, 1991. Under the rule, profit-making
 contractors and subcontractors are required to assume the financial
 risk for certain avoidable costs and expenses resulting from negligent
 actions or inactions. The penalty to the contractor is a reduction in
 award fee for the amount of loss - this number could reach the
 contract's maximum fee amount. The primary purpose of establishing this
 penalty is to provide DOE with another management tool under which M&O
 contractors would be encouraged through financial incentives to achieve
 higher levels of performance than were experienced in the past. Just as
 an award fee can be a positive tool, the penalty for negligence is an
 important device to encourage quality work from contractors.
  
  
 Although deficiencies still exist, we are making progress in several
 areas of contractor accountability as well as our management of
 contractors. We conduct periodic program management reviews and
 analyses, have established internal program tracking systems, and carry
 out independent self-assessments. Each month, the program offices use
 the DOE Approved Funding Program financial system to distribute funds
 to the Field Offices and then use the DOE Financial Information System
 to track fiscal performance against the amounts allocated. Headquarters
 program managers conduct periodic, in-depth reviews of Field Office
 activities.  Additionally, we are examining alternatives for
 strengthening EM's management of contractors at the site level, which
 requires optimizing the mix of resources and skills between
 headquarters and the field.
  
 In summary, the Department will ensure greater contractor
 accountability and expand upon previous efforts. Firm deadlines will be
 set for the establishment of project baselines that define the costs,
 schedules, and technical details of activities. These baselines will
 make it easier to measure contractor performance. Quantifiable cost
 objectives will be established to assure that management and cost
 controls are used effectively to achieve outcomes that are consistent
 with expectations. Performance will be measured by the containment of
 costs within established cost objectives, and managers will be held
 accountable at all levels for the success of program operations.
  
                   MANAGEMENT AND BUDGET EFFICIENCY
  
 The Department is committed to work toward the goal of continuous
 improvement by implementing stringent management and cost controls.
 We must first recognize our mistakes, and then correct them. For
 example, the cleanup program has received numerous recommendations for
 improvement in the form of reviews and reports issued by the General
 Accounting Office and other organizations. Although these reviews have
 pointed out areas of weakness, the Department has made many changes and
 is committed to further improvements to address the concerns that have
 been raised.
  
 In January 1991, because of concern over increasing costs, EM
 Headquarters line organizations mounted a unique budget validation
 effort in cooperation with field counterparts. Review teams went to the
 field to review the scope, schedule, and cost of the Field Office
 budget requests. Because of these reviews, the baseline process has
 resulted in updated and revised cost estimates for the entire program.
  
 Although the Department is making progress in the areas of cost
 estimating and funds tracking, we realize many more enhancements must
 be made in the future.
  
                          WASTE MANAGEMENT PROGRAM
  
 The mission of the Waste Management program is to provide for the
 safe, environmentally sound, and cost-effective treatment, storage, and
 disposal of radioactive, hazardous, mixed, and sanitary wastes
 generated by Departmental activities. The program has substantially
 upgraded the waste management systems at DOE sites and is correcting
 many instances of non-compliance.
  
                                  WASTE TYPES
  
 The Department is responsible for effectively managing many kinds of
 waste, including (1) high-level, (2) low-level mixed, (3) low-level,
 (4) transuranic, (5) hazardous, and (6) sanitary wastes.
  
                                HIGH-LEVEL WASTE
  
 High-level radioactive wastes (HLW) are stored in large underground
 tanks at DOE's Hanford, Savannah River, Idaho, and West Valley sites.
 Some of these wastes have been stored for almost 50 years. Age, the
 results of inadequate waste management practices, and poor maintenance
 have taken their toll. As a result, the resolution of tank safety
 issues is one of the Department's highest priorities. We have
 identified and prioritized issues relating to tank safety at the
 four high-level waste sites. In addition, the Tank Waste Remediation
 System has been formed to integrate all activities related to
 high-level waste stored at Hanford, including safety issue resolution,
 waste retrieval, treatment, and disposal.
  
                             LOW-LEVEL MIXED WASTE
  
 In the area of low-level mixed waste, DOE continues to provide safe
 storage for approximately 70,000 cubic meters of waste. A current
 inventory report was recently completed and submitted to the States and
 EPA as required under the Federal Facility Compliance Act. Draft site
 treatment plans will be completed and submitted to the States in FY
 1994.
  
                                LOW-LEVEL WASTE
  
 The DOE sites dispose of an estimated 55,000 cubic meters of low-level
 waste (LLW) each year. Shipments of this waste are expected to continue
 from smaller generator sites to disposal sites at Nevada and Hanford.
 At the Mound Plant, construction will begin on low-level waste storage
 facilities, and DOE plans to upgrade the Oak Ridge low-level liquid
 waste system.
  
                              TRANSURANIC WASTE
  
 The Department stores safely 61,600 cubic meters of transuranic waste
 at Los Alamos, Idaho, Nevada, Oak Ridge, Richland, Rocky Flats, and
 Savannah River. This waste decays slowly and requires long-term
 isolation. As the Department continues to take actions required under
 the Waste Isolation Pilot Plant Land Withdrawal Act and plans to meet
 the requirements of 40 CFR191, construction of the Idaho Transuranic
 Waste Storage Modules will begin.
  
                               HAZARDOUS WASTE
  
 In the area of hazardous waste management, DOE accumulates, stores, and
 then ships the waste to commercial facilities for treatment and
 disposal. In FY 1991, a moratorium was imposed by the Department on
 off-site shipments of hazardous waste stored in radiologically
 controlled areas. The ban is now being lifted on a site-by-site basis
 as sites demonstrate their ability to meet Department-wide requirements
 for identifying radioactively-contaminated waste.
  
                                SANITARY WASTE
  
 There are essentially two types of sanitary wastes: (1) solid sanitary
 waste such as garbage and rubble and (2) liquid sanitary waste such as
 sanitary sewage and industrial wastewater. The management of sanitary
 waste is regulated by Federal and State laws and regulations.
  
                          WASTE ISOLATION PILOT PLANT
  
 The enactment of the Waste Isolation Pilot Plant Land Withdrawal Act
 in FY 1993 imposed new statutory requirements on DOE, the
 Environmental Protection Agency, and other Federal agencies. The FY
 1994 request allows the Department to meet its Land Withdrawal Act
 requirements and to continue moving toward a disposal decision. At the
 same time, DOE will maintain the readiness of the Waste Isolation Pilot
 Plant site to begin and conduct a multi-year Test Phase with limited
 quantities of transuranic waste when all statutory conditions have been
 met, including the requisite approvals by EPA.
  
                               PLANNED ACTIVITIES
  
 With its FY 1994 funding for waste management, DOE will continue
 studying Tank Waste Remediation Systems technology options and
 treatment concepts for the Hanford site, and continue resolving tank
 safety issues there during fiscal year 1994. DOE also plans to continue
 calcining operations at the Idaho site and to start radioactive
 operations at the Defense Waste Processing Facility at Savannah River.
 In addition, DOE intends to treat 32,000 drums of raw sludge at the
 K-25 site in Oak Ridge.
  
                            ENVIRONMENTAL RESTORATION
  
 The objectives of the Environmental Restoration program are to conduct
 necessary remedial actions, stabilize radioactive waste, and carry out
 decontamination and decommissioning (D&D) at Departmental and
 statutorily authorized non-government facilities and sites. The
 environmental restoration program is responsible for conducting site
 characterizations and assessments for the Department, and is also
 responsible for implementing appropriate remediation remedies at the
 majority of Department sites and numerous off-site locations across the
 country.
  
                              PLANNED ACTIVITIES
  
 As part of DOE's environmental restoration activities planned for FY
 1994, interim actions will be conducted at the Idaho Field Office,
 including Pit 9 remedial design and remedial actions. A groundwater
 characterization-program is being implemented at the 1,350 square mile
 Nevada Test Site, and environmental monitoring will continue at eight
 off-site nuclear testing areas.
  
 In Colorado, the Department is supporting several remediation efforts
 to protect the environment and surrounding population. Off-site
 activities being performed will protect the Standley Lake from plant
 run-off and replace the Great Western Reservoir with a new water
 supply.
  
 At the Hanford site, characterization and interim remedial actions
 will continue into FY 1994, and decontamination and decommissioning
 efforts will begin at several contaminated facilities. In addition,
 site-wide well plugging and remediation will be carried out at the Oak
 Ridge National Laboratory.
  
 The Department will also initiate all field investigations at the
 Pantex Plant in Texas, complete all groundwater contamination
 assessment activities at the Pinellas Plant in Florida, and expects to
 receive approval of the first Record of Decision for the Mound Plant in
 Ohio. In addition, we will perform remedial actions at 133 vicinity
 properties at the Climax Mill site at Grand Junction.
  
 DOE also plans to issue the final Site 300 Site-Wide Remedial
 Investigation Report at Lawrence Livermore National Laboratory, which
 consolidates- assessment and characterization activities for six
 operable units. DOE intends to complete the final feasibility study
 documents for each operable unit and provide them to EPA and the State
 during FY 1994.
  
                            TECHNOLOGY DEVELOPMENT
  
 The EM Office of Technology Development's primary mission is to
 establish and maintain program for applied research, development,
 demonstration, testing, and evaluation. This program aims to address
 the technical, regulatory, institutional, and economic issues
 associated with waste management and remediation by improving current
 technologies that are incomplete, expensive, or pose unnecessary safety
 risks.
  
 The Department uses the resources of the national laboratories,
 management and operating contractors, industry, universities, and the
 international community to generate innovative technology concepts for
 implementation at DOE sites. Since 1990, the Department has signed 19
 Cooperative Research and Development Agreements and technology
 licenses to successfully transfer advances to the private sector.
  
 The Department also analyzes compliance agreements to identify dates by
 which its.research, development, demonstration, testing, and evaluation
 activities must be completed. The results point to a narrow window of
 opportunity within which to introduce new and innovative technology
 solutions. If DOE is to realize significant returns on United States
 investment in technology development, then research, development,
 demonstration, testing, and evaluation activities must be near
 completion by the late 1990s.
  
                              PLANNED ACTIVITIES
  
 In the area of technology development, the Department plans to close
 out the first of EM's Integrated Demonstrations for cleanup of volatile
 organic compounds in non-arid soils. In addition, we will also conduct
 scaled-up field tests of technologies for treating Fernald uranium pit
 sludge into stable final waste forms. In the area of waste retrieval
 and processing, the Department will demonstrate characterization and
 retrieval systems for contaminated buried waste and deploy a remotely
 operated excavation system to retrieve waste and soil at three DOE
 labs/sites.
  
 Last year, DOE signed a Memorandum of Understanding (MOU) with the
 Western Governors and four Federal agencies. The MOU committed the
 Administration and the Western Governors to speed the development,
 demonstration, and transfer of innovative technologies. In June of this
 year, I will meet with the Western Governors and members of the
 Clinton Administration to continue discussions on how to accelerate
 the application of advanced cleanup technologies at Federal sites in
 Western States. This first-of-a-kind initiative will bring together
 Federal agencies, States, regulators, private industry, and public
 interest groups to jointly develop innovative solutions to the
 pressing environmental problems that face the Nation.
  
                       FACILITY TRANSITION AND MANAGEMENT
  
 The end of the Cold War has accelerated efforts to identify facilities
 that are surplus to the defense mission and to redirect programs toward
 long-term safe shutdown. Key facility transition issues include the
 change of DOE focus from production to cleanup, the transfer of
 management responsibility, and the implementation of a graded approach
 to standards for deactivation. Once facilities are transferred, the
 necessary decontamination and decommissioning activities will commence.
 Sensitivities such as work force concerns, economic impacts to local
 communities, and stakeholder involvement will be considered when
 redirecting programs from production to cleanup.
  
 The Office of Facility Transition and Management, established in July
 1992 within the Environmental Restoration and Waste Management program,
 has been given responsibility for deactivating key facilities at the
 Idaho Chemical Processing Plant and the Rocky Flats Plant.
 Responsibility for the Fast Flux Test Facility at Richland has also
 been transferred to this office, along with landlord functions at the
 Hanford and Idaho sites.
  
                              PLANNED ACTIVITIES
  
 In FY 1994, the office will assume responsibility for 16 former
 isotope production facilities at the Oak Ridge National Laboratory and
 EM will become the landlord at Rocky Flats.
  
 The magnitude of the FY 1994 budget request primarily results from the
 transfer of funding from Defense Programs and Waste Management. The
 budget request supports future transition activities at 10 sites,
 including the following: Los Alamos National Laboratory, Mound Plant,
 Pinellas Plant, Idaho Chemical Processing Plant, part of Y-12 and the
 Oak Ridge National Laboratory in Oak Ridge, Richland, Rocky Flats, San
 Francisco, and Savannah River.
  
                                  CONCLUSION
  
 Many challenges lie ahead for the Department. We are confident,
 however, that the obstacles can be identified and overcome before they
 become barriers to progress. My aim is to build a strong consensus
 among internal and external stakeholders on Departmental priorities and
 to find ways of achieving measurable results rather than merely
 managing programs.
  
 Mr. Chairman, thank you for the opportunity to address the Armed
 Services Committee regarding the 1994 budget request for atomic energy
 defense activities and the Department's programs and plans in this
 area.