INFORMATION: Special Report on "Management Challenges at the Department of Energy"

Responsible for some of the Nation's most important and technically advanced missions, the Department of Energy faces an array of challenges that are more wide-ranging and complex than at any time in its history. While its origins can be largely traced to the Manhattan Project, the Department has evolved into a multi-faceted agency that encompasses a broad range of scientific, environmental, and national security activities. Since its creation under the Department of Energy Organization Act in 1977, the Department has shifted its emphasis and priorities over time as the energy and security needs of the Nation have changed. The Department has recently refocused these efforts, adding particular emphasis on the science and renewable energy components of its portfolio. In this regard, the Department has taken a lead role in the implementation and execution of the energy technology initiatives related to the American Recovery and Reinvestment Act of 2009 (Recovery Act). As a means of accomplishing these initiatives, the Department received a substantial increase in its annual appropriation, rising from nearly $25 billion in 2008 to approximately $34 billion in 2009 as a result of additional funding in the Department's loan program and numerous science, energy, and national security initiatives. In addition, the Department was provided more than $36 billion in Recovery Act funding to be used over a two to three year period. Further, the Department, through existing authorities and those expanded by the Recovery Act, has been authorized to provide more than $100 billion in loan guarantees for innovative, clean energy technologies. To accomplish its vital missions, the Department employs approximately 115,000 Federal and contractor personnel and manages assets valued at more than $189 billion, including the 17 national laboratories at the heart of its science program. On an annual basis, the Office of Inspector General is required to identify what it considers to be the most significant management challenges facing the Department. Our effort addresses new or emerging issues and evaluates the Department's progress in resolving previously identified challenges. The challenges identified by this process represent risks inherent in the Department's wide ranging and complex operations, as well as those related to problems with specific management processes. As noted in past reports, we recognize that often these challenges cannot be resolved in a single year and must, therefore, be addressed through a concentrated, persistent effort over time. Consistent with our mission, the overall goal is to focus attention on significant issues with the objective of working with Department managers to enhance the effectiveness of agency programs and operations. During the past year, the Department has taken a number of actions to promote its ongoing strategy of resolving the management challenges identified in our prior reports. There have been many notable advances. However, in our judgment, on the basis of the results of our work during the past year and other risk assement tools, the following management challenges remain for Fiscal Year (FY) 2010: Contract Administration; Cyber Security; Energy Supply; Environmental Cleanup; Safeguards and Security; and Stockpile Stewardship. As with a number of Federal agencies, the Department received an unprecedented infusion of funds as a result of the Recovery Act. These funds, along with the overarching goals set forth in the Act, were transformative in nature. On a positive note, the Department and its staff have been energized by the new and evolving programmatic initiatives resulting from the Recovery Act. However, as would be expected in an effort of this magnitude, the Departmnent has experienced significantly increased management stresses and strains, impacting virtually every program and operation. In fact, the essentially unavoidable burden placed on existing human capital and other resources has, in our judgment, affected the Department's ability to resolve its existing management challenges, at least in the near term. To capture these emerging factors, as part of this report, we have added two additional Departmental management challenges: Recovery Act Implementation; and Human Capital Management