STATEMENT OF ADMIRAL JAMES D. WATKINS, USN (Ret.) SECRETARY OF ENERGY U.S. DEPARTMENT OF ENERGY before the COMMITTEE ON ARMED SERVICES U.S. SENATE ATOMIC ENERGY DEFENSE ACTIVITIES (050 ACCOUNT) April 18, 1991 Mr. Chairman and Members of the Committee, I am pleased to appear before you today to present an overview of the Department of Energy's FY 1992 budget request for those national security programs funded by the 050 Atomic Energy Defense Activities Account. Programs in this category are administered by the Offices of Defense Programs; Environmental Restoration and Waste Management; New Production Reactors; Naval Reactors Program under the Office of Nuclear Energy; Security Affairs; Security Evaluations under the Assistant Secretary for Environment, Safety and Health; and Intelligence. Before I continue, I would like to thank the Members of the Committee for your support of the Department's $623 million FY 1991 Supplemental Authorization request. These funds will be used to assure that all necessary safety, security and environmental steps are taken to permit the resumption of plutonium manufacturing operations at Rocky Flats Plant, and for several high priority Environmental Restoration and Waste Management activities. Your continued support is an important ingredient in helping me change the course at the Department of Energy. As new dimensions take shape--sounder environmental stewardship, downsizing the production complex, and assuring the construction of a new production reactor for the 21st century--I look forward to working with you to secure the necessary resources and support to carry out effectively and completely the vitally important national security missions of the Department of Energy. Overview Nuclear deterrence has been the cornerstone of our national security policy since the end of World War II. It has been essential in preserving world peace and will remain a vital element of our national defense strategy for the foreseeable future. This is not to say that the world situation has not changed since I became Secretary of Energy. Rather, we find that nuclear stockpiles in Europe are being reduced and arms control treaties with the Soviet Union offer the promise of further number and mix of nuclear weapons in our stockpile are defined in the reductions in nuclear weapons. Regardless of that future promise, the Nuclear Weapons Stockpile Memorandum, which is negotiated between the Departments of Defense and Energy, approved by Secretary Cheney and me, and then forwarded to the President for final approval. Irrespective of ultimate stockpile requirements, federal budgets will be increasingly constrained, a trend that can be expected to continue. These and other impacts on the Department's national security programs are profound and must be considered as we position ourselves to move into the 21st century. The Department's overall Atomic Energy Defense Activities budget request for FY 1992 is $11.8 billion, almost two-thirds of the Department's total budget. The request is comprised of $6.75 billion for Defense Programs which includes $159 million for Security Affairs, and $50 million for Intelligence; $3.7 billion for Environmental Restoration and Waste Management activities; $500 million for the New Production Reactors Program, $801 million for the Naval Reactors program; and $15 million for Security Evaluations. Since the submission of the President's FY 1992 budget, the Department of Defense has decided not to fund the B 90 weapons system production activities in FY 1992. We are working closely with cognizant congressional staffs to allow DOE funding in FY 1992 for this weapons system to be reallocated to high priority needs such as the W 79 change requirement recently validated by the Secretary of Defense, support for increased weapon retirements, and other priority funding of Weapons an expanded nuclear weapon disposal capability at Pantex to handle Production and Surveillance requirements. I will describe my objectives for the programs comprising DOE's portion of the 050 account and the immediate concerns I see facing the Department of Energy. During 1991, my priority goals under the Atomic Energy Defense Activities Account are to achieve the following: o Conduct safe restart of the first production reactor at the Savannah River Site in South Carolina after a nearly three-year shutdown for safety deficiencies. o Conduct safe resumption of plutonium processing operations at the Rocky Flats plant in Colorado after a more than one year shut down for significant operational weaknesses. o Conduct safe start of the operational research test program at the Waste Isolation Pilot Plant (WIPP) in New Mexico to demonstrate compliance with disposal requirements for radioactive transuranic wastes. o Resolve the safety concerns related to the waste tanks at the Hanford site in Washington State. o Issue the Record of Decision for New Production Reactor capacity in December. o Continue to make significant progress in improving the safety, security, control and effectiveness of our nuclear weapons stockpile. o Continue efforts at Headquarters and each DOE facility to implement recommendations of the Secretary's Safeguards and Security Task Force, which I commissioned, and other initiatives to enhance protection of facilities, special nuclear materials, nuclear weapons and their component parts and classified information. As I noted earlier, this is an important year for the Department. It has not been easy getting to this point. I want to share with you the dilemma I faced regarding decisions for the Atomic Energy Defense Activities programs. I believe the Department's budget, including the FY 1991 supplemental, is the rock bottom amount required to support our national security programs in a safe and environmentally sound manner. This budget was arrived at only after much soul searching that included the deferral of many critical activities and severe cuts in our weapons production complex, in our weapons research and development program, and in our program to pursue new production reactor capacity to replace our aging reactors. The following chart depicts the current problem facing the Department in balancing all of its national security activities. [[[[[[ a graphical chart can be found with the original ]]]]]] This growth in resources allocated to environmental management is of particular concern to me since there are a significant number of uncertainties still confronting the Department as it strives to meet the requirements of applicable environmental statutes. Most of our sites are still in the characterization phase where problems are still being identified and proposed solutions studied. Once the study phase is over, we can anticipate further cost increases as the actual cleanup contributor to the uncertainty of the costs associated with achieving work begins on schedules with statutory milestones. Another compliance with environmental laws is the increasing number of compliance agreements we are negotiating with the States and the Environmental Protection Agency. When setting the requirements in these agreements, there is no incentive for the regulators to demand less than full compliance, as soon as possible, regardless of the degree of risk associated with any non-compliance condition that may develop. And their position is being supported through litigation. This situation puts the Department in a difficult position from the standpoint of controlling budgetary growth, since these resource requirements are driven, to a great degree, by our regulators. I am certain that the budgetary requirements for the Environmental Restoration and Waste Management effort will expand as environmental compliance and cleanup becomes better defined. That is why I am very uncomfortable with the trends that are portrayed on the chart. Status of the Nuclear Weapons Complex Over the past two years as Secretary of Energy, one of my key concerns has been correcting the problems brought about by past neglect in the management of the Department's nuclear weapons complex. As a result of my Ten Point Plan, issued in June 1989, to move the Department toward full accountability and compliance with environmental, safety, and health laws, we have made good progress toward achieving our objectives. From the onset, it was clear that instilling a new operating culture would take time and that new challenges and changing circumstances would require revisions to planned timetables. Nevertheless, we have made real and measurable progress in implementing new operating policies and procedures to bring the Department into compliance with Federal and State environmental, health, and safety regulations. Achieving both production and environmental, safety and security objectives are compatible goals. Operations at the Savannah River Site and Rocky Flats Plant will not resume until I am completely satisfied that they can be operated in a manner that assures the health and safety of the public and our workers, protects the environment, and complies with the Department's safeguards and security requirements. I will not be driven by rigid schedules. Furthermore, I remain committed to correcting existing deficiencies. The programs we have in place are sound. I am optimistic about our ability to achieve these goals in 1991. Savannah River Reactors On February 4, 1991, I signed the Record of Decision (ROD), completing the National Environmental Policy Act (NEPA) process, which reflects my decision to continue to operate the K Reactor at the Savannah River Site, defer until later the operation of the L Reactor, and defer indefinitely the operation of the P Reactor. Important milestones must still be achieved before the K Reactor can be ready for operation this summer, including: continuing with the safety upgrades as outlined in the Safety Evaluation Report; preparing for an Operational Readiness Review prior to a decision to restart; preparing an action plan for mitigation of any environmental impacts associated with the restart; completing system testing and security reviews. These and other milestones must be successfully completed; and I must be personally assured that applicable environmental, safety, health and security considerations have been satisfied before I will authorize the restart. Plutonium Operations at Rocky Flats Plant Also, this summer, I expect to authorize resumption of operations in the analytical laboratory, Building 559, at Rocky Flats. Although the laboratory is not a production facility, I believe it is prudent to use startup of the laboratory as a critical verification tool for other buildings at the plant. But again, I will not authorize resumption at Rocky Flats until I am personally satisfied that applicable environment, safety, health, and security considerations have been fully addressed. If all goes according to plan, I expect that pit fabrication at Rocky Flats will resume later this calendar year. As you know, it is vitally important that Savannah River and Rocky Flats resume operations in order to meet national defense requirements. This is especially important in view of the critical role these facilities have in the maintenance of our existing nuclear weapons stockpile and in improving the safety and security of the future stockpile. Nuclear Weapons Safety I have reviewed in detail the recommendations which the Drell Panel has made to the Congress regarding the safety of nuclear weapons in the stockpile. Both Secretary Cheney and I support the thrust and intent of the Drell Panel's recommendations, and we have charged the Nuclear Weapons Council to carry out promptly a course of action to deal with these recommendations. Environmental Restoration and Waste Management The Department is committed to managing its facilities in an environmentally sound manner, restoring environmentally damaged sites, promoting environment, safety and health oversight, and safely disposing of nuclear waste. Environmental Restoration and Waste Management (EM) is the fastest growing program area in the Department. My Five-Year Cleanup Plan is the cornerstone of the Department's long-term strategy to consolidate and coordinate the Department's billion being proposed under the Atomic Energy Defense Activities cleanup activities. The FY 1992 EM budget request contains $3.7 appropriation. This is an increase of approximately $1 billion over the FY 1991 appropriation. In order to clearly define the future course of this program, I have directed that a Programmatic Environmental Impact Statement (PEIS) be prepared for the Department's Environmental Restoration and Waste Management activities. Twenty- three public scoping hearings related to this PEIS were conducted throughout the country. Let me emphasize that this effort must be maintained independent of the PEIS for Complex Reconfiguration. The missions of these two programs is significantly different. Although future complex operations will generate additional compared to the large amount that already exists in the complex and waste for disposal, these volumes will be relatively small when must be managed under rigid regulations. These two efforts will be thoroughly coordinated to assure consistency, but they must be independently maintained. Implementation of the Environmental Restoration and Waste management program is indicative of our determination to manage the Department complex in an environmentally acceptable manner. There are sound reasons for the requested approximate one billion dollar program growth. Constraints on the 050 account dictate that we closely examine future program requirements, but the challenges are significant. For approximately one billion dollars from preliminary program estimates instance, in the process of validating requirements, we cut that came in from field activities and were fed into the Five Year planning information. In addition, closure of facilities and the transfer of activities from other programs represented approximately $700 million worth of real EM requirements. The infrastructure necessary to manage this program must be expanded to assure that funding. In 1992, the amount of real growth in this program in the appropriate controls are in place to effectively expand this level of defense area is only about 11 percent. Part of this real growth is driven by the significant increase in the number of compliance agreements negotiated with the States and the Environmental Protection Agency. At the end of FY 1990, 59 such agreements were in place; at the end of 1991, this number will increase to 82 with even more anticipated by the end of FY 1992. However, there is considerable uncertainty associated with negotiating the uncertainty is the fact that the Resource Conservation and Recovery Act requirements of some of our agreements. A major contributor to this (RCRA), which governs many of these agreements, was not written to provide specifically for mixed waste. Mixed waste is generically defined as having both radioactive and hazardous waste present and constitutes the major portion of the material in the Department complex. Therefore, the uncertainties of the regulatory requirements are of particular concern. It is essential that this situation be remedied during the current RCRA reauthorization process so that the Department can focus its attention on a consistent cleanup program. I am particularly pleased with our efforts in starting to manage the significant volume of Department waste and in minimizing current waste generation, as well as achieving parallel progress in environmental restoration. The nation's first geologic repository, the Waste Isolation Pilot Project or WIPP, is essentially completed. The test phase for the facility is scheduled to begin in June or July of this in achieving final disposal of the nation's transuranic waste. Another year. The ultimate opening of this facility is the essential component major step forward in waste management is the testing of the Defense Waste Processing Facility at Savannah River. This facility, which is currently in the cold operations phase, is a major link in the program designed to accomplish the ultimate disposal of the large volume of high level waste that is currently stored in underground tanks at Savannah River. In the area of environmental restoration, we are starting to make a dent in the substantial cleanup task that confronts us. Remedial assessments and major closures are proceeding on schedule. For example, to date, we have met 78 of 82 major compliance agreement related milestones in the Hanford Tri Party Agreement. Significant volumes of contaminated materials have been removed from Grand Junction and Rocky completed decontamination and decommissioning at the Los Alamos reactor Flats in Colorado and the Hanford solar basins. We have facilities and at a number of hot cells and buildings throughout the Department complex. The technology development activity in EM stated that we would initially try to come up with faster, better, safer and cheaper ways to accomplish the cleanup tasks. The Integrated Demonstration at Savannah River for treating ground water has been our first unqualified success. The initial test removed 15,000 pounds of trichloroethylene in 75 days in comparison to the existing system of pump, strip and treat that removed 15,000 pounds of trichlorethylene in 2 1/2 years at a cost of $54 million compared with a cost of $3 1/2 million for the integrated demonstration. Sustained progress in the area of environmental restoration and waste management is essential if the Department is going to continue to exhibit environmental responsibility. I am certain that the budgetary requirements for this program will continue to be assessed as the task of environmental compliance becomes better defined, unique special nuclear materials throughout the complex are classified as wastes and additional facilities are removed from service. We need to develop new construction projects. If implemented, the new requirements for recycle requirements allowing the recycle of old material for use in new have the potential to reduce both the amount of waste requiring disposal and overall program costs. Reconfiguration of the Nuclear Weapons Complex To assure that our nuclear weapons complex can meet future national security requirements, I directed that a plan be developed for reconfiguration of the nuclear weapons complex to assure that a safe, reliable, and efficient complex is available over the long term to support the nuclear deterrent. On February 7, 1991, I released to the public the Nuclear Weapons Complex Reconfiguration Study and provided individual copies to the members of this Committee. I am convinced that the Department's mission to produce defense materials is compatible with protection of the environment; one need not be sacrificed to obtain the other. This plan is the first step in bringing that about. We are now conducting an in- depth examination of the proposals contained in the Study, beginning with the preparation of a Programmatic Environmental Impact Statement (PEIS). The firm of Tetra Tech Inc., of Pasadena, California, has been selected to support the Department in the preparation of the PEIS. Public participation is encouraged in the public scoping meetings now under way near each of the major DOE sites, here in Washington, and when we publish the draft PEIS scheduled for November 1992. Three such meetings have been held to date and a fourth meeting is scheduled this week near the Department's Pinellas Plant in Florida. The PEIS will examine a number of options, ranging from no action to a restructuring that could reduce the complex from its present 13 sites to six or seven. Preferred options include relocating the Rocky Flats Plant to a new facility employing improved technology to minimize environmental and health impacts while facilitating economy of operation. Also preferred is consolidating nonnuclear manufacturing activities at one dedicated site. Other possible changes include sector; decommissioning at least one facility entirely; and examining transferring many nonnuclear manufacturing activities to the private the missions, facilities and operations of the three research and development laboratories for changes that could result in satisfying essential weapons requirements while streamlining research, development and testing facilities. The Department's plans for reconfiguration of the complex will require substantial resources at a time of significant federal budget constraints. In the meantime, significant resources must be devoted to maintaining the present complex and assuring it can carry out its production mission with required attention to health, safety, security, and the environment. Providing the funding for transition and reconfiguration is considered necessary to ensure continued viability of our nuclear deterrent. New Production Reactors Program The mission of the New Production Reactors (NPR) Program is to provide, on an urgent schedule, new production reactor capacity in a safe and environmentally sound manner for an assured supply of nuclear materials, primarily tritium, to maintain the Nation's deterrent capability. Future defense nuclear materials production cannot be met indefinitely with our present reactor capacity, which will be over 45 years old when new reactor capacity is scheduled to begin production. and sustaining this Nation's defense policy of nuclear deterrence. The The ability to produce tritium is a critical component to fulfilling proposed, state-of-the-art, new production reactor would provide, on an urgent schedule, the means necessary for the reliable production of tritium in a safe and environmentally sound manner well into the next century. To achieve this objective, I have decided that the former strategy of concurrently designing and constructing two new production reactors at two sites can no longer be supported given the multiple competing priorities within the Atomic Energy Defense Activities Account. My new strategy, as outlined in our FY 1992 budget request, is to continue the preliminary designs of both the Heavy Mater Reactor and the Modular High-Temperature Gas-Cooled Reactor, complete the final Environmental Impact Statement in November 1991 and then, make a final choice at the Record of Decision in December 1991. At that time, the Department will select one technology and one site, utilizing all safety, environmental, technical, and cost and schedule data needed to make the most sound and complete decision possible. Then, depending upon the decision, we will proceed to complete the design and construction of a single reactor technology at the chosen site. The design of the technology not selected will be terminated in an orderly fashion. As a contingency, the light water reactor target development effort will continue until its completion. The requested FY 1992 funding level of $500 million for the New Production Reactor Program consists of $152.3 million in operating budget authority; $336.5 million in construction funds for design and $11.2 million for capital equipment. These funds are needed to support the continued broad range of activities necessary to bring new production reactor capacity on line. On April 10, 1991, the draft Environmental Impact Statement on the siting, construction and operation of new production reactor capacity was released to the Congress. This begins a 60-day public comment period which will end in June. During that time, the Department will conduct 13 public hearings in five states (South Carolina, Georgia, Idaho, Oregon, and Washington) regarding this proposed action. The final EIS is scheduled to be completed in November 1991, with the Record of Decision scheduled for December. In the immediate future, the NPR Program will proceed with those activities necessary to complete the final EIS, concurrently with engineering development, confirmatory testing and project design efforts. These activities will all lead to supporting detailed design and construction as soon as possible after the Record of Decision. The Weapons Research and Development Laboratory To meet national security requirements, our National Laboratories at Los Alamos, Lawrence Livermore, and Sandia carry out research, development, and testing of nuclear weapons. They also perform the vital function of monitoring the stockpile to assure continued safety, security and effectiveness. This core mission has been the technical cornerstone of our nuclear deterrent since its inception with research expanding the frontiers of science and technology. They have the Manhattan Project. In addition, these laboratories engage in vital made substantial contributions in such fields as materials research, chemistry, nuclear physics, solid-state physics, microelectronics, mathematics, and computer science. As testament to this versatility, our weapons laboratories made substantial contributions to Operations Desert Shield and Desert Storm. Meanwhile, I am very concerned with the downward trend in laboratory staffing which has resulted from increasingly constrained Federal budgets. Since FY 1987, there has been a decline in laboratory personnel dedicated to weapons research, development, and testing of nearly 30 percent; in addition, laboratory employment in this core program is expected to decline by an additional 6 percent during FY 1991, resulting in the loss of approximately 500 additional positions. Moreover, it is anticipated that reductions in the defense budget will also significantly impact the laboratories inasmuch as approximately 25 percent of laboratory funding has been associated with work for others, largely funded by the Department of Defense. The erosion of laboratory technical capability is a major concern to me. In recognition of this and changing national priorities, I have established a task force under the Secretary of Energy's Advisory Board to develop plans to help me better utilize the intellectual capital in our national laboratories. This task force will review and recommend changes in the roles and responsibilities of these laboratories, while preserving the core mission of weapons research, development, and testing. During the coming year, I expect a report which will provide a framework for utilizing these assets to maximize military and economic security objectives and to meet changing national priorities. One of those future priorities that our Defense Programs laboratories are actively pursuing is technology transfer. We have worked aggressively to develop an enhanced program to improve the process by which we transfer knowledge from the laboratories and into the economy. We are increasing our funding for technology transfer at our defense laboratories by 60 percent in FY 1992. If the United States is to maintain its competitive edge and remain a leading economic power, we must move quickly to adapt this technical knowledge to our practicalneeds. Naval Reactors Naval Reactors' objectives remain unchanged from last year -- they are charged with providing militarily effective Naval nuclear propulsion plants and ensuring their continued safe and reliable operation. Naval Reactors' outstanding safety and environmental record -- 3,800 reactor-years of operation without a reactor accident or significant impact on the environment -- is the most eloquent statement of the tremendous job they're doing. Naval Reactors' success is the result of hard work, dedication, and a philosophy of personal responsibility for safety, control of radioactivity, and environmental preservation. The FY 1992 request of approximately $801 million supports their "cradle-to-grave" responsibilities for Naval nuclear propulsion and includes such key work efforts as: o Keeping Advanced Fleet Reactor (AFR) work on-schedule for the SEAWOLF Class attack submarine; AFR is planned to be tested in the existing land-based S8G prototype plant prior to fleet introduction; o Maintaining an integrated, comprehensive research and development effort, including work on new plant and reactor equipment concepts and post-AFR reactor development; o Continuing land-based prototype reactor operations, maintenance, and servicing to ensure an effective testing effort which will meet programmatic needs well into the next century; o Meeting all environmental, safety, security, and health requirements; o Ensuring that continued technical excellence and high quality mark all Naval Nuclear Propulsion Program work; and o Providing enriched materials to meet Naval fuel needs. Nuclear-powered warships remain an essential investment even in times of defense "belt-tightening" -- nuclear attack submarines and surface ships provide unparalleled flexibility in reaching global trouble spots and delivering measured responses, while fleet ballistic missile submarines are the most reliable leg of the strategic defense triad. The nuclear fleet is a cost-effective backbone for the strong Navy we need to protect our maritime interests now and into the 21st Century. Intelligence The Department faces daily challenges of a global nature spanning the spectrum from national defense and energy security issues to issues involving nuclear reactor safety and nuclear waste disposal. To meet these challenges, the Department's intelligence element was reorganized in April of 1990 with an expanded mission to provide special support over a broader range of issues. The primary missions of the reorganized element are to ensure that the Department's intelligence information requirements are met and to provide specialized DOE intelligence expertise to other elements of the Intelligence Community. During FY 1990, the Department provided support to the nation's top intelligence priorities as identified by the President's Foreign Intelligence Priorities Committee. These efforts continue during the current fiscal year. In addition to ongoing activities, the Department provided support to Operations Desert Shield and Desert Storm in a wide range of areas. Activities included analysis of energy impacts and the potential economic, environmental and military impacts of the Iraqi use of oil as a defensive weapon. Finally, the Office of Intelligence provided the Joint Chiefs of Staff and Defense Intelligence Agency with assessments of the Iraqi nuclear weapons program and its capabilities. The FY 1992 request reflects a $8 million increase over the FY 1991 appropriation. The additional funds will provide for: (1) the Department's direct support of-the implementation of the Threshold Test Ban Treaty and the Peaceful Nuclear Explosions Treaty; (2) expanded activities in support of Intelligence Community requirements in the areas of nuclear proliferation and U.S. energy security; and (3) increased analysis of international terrorist activities that could affect DOE interests. Security Affairs The Department's Safeguards and Security estimate for FY 1992 is $1.1 billion, compared to $1 billion in FY 1991. This total funding is identified in the Department's crosscut estimate, which is a summation of Safeguards and Security items in all the Department's program requests, including the Nuclear Safeguards and Security budget at $96 million and the Security Investigations budget at $62.6 million which I will address separately. The Defense Programs' portion is $908 million in FY 1992, compared to $846 million in FY 1991. The Department is currently engaged in a massive effort to enhance the safeguards and security posture at Rocky Flats. Physical security upgrades and enhanced nuclear materials control measures are being made to ensure a high confidence that nuclear materials are satisfactorily protected. In addition, we are working to ensure an enhanced security posture at Savannah River, when resumption of operations begin at this facility. We are making significant progress toward increasing the level of protection of our facilities and the protection of DOE assets. Our ability to mitigate the potential outsider threat remains at an acceptable level at our nuclear weapons facilities. Current efforts are focused in ensuring adequate protection against the potential insider threat. We are making progress, but at a much slower pace than we would like. The budgets of Nuclear Safeguards and Security and Security Investigations which I mentioned above, addresses such elements as safeguards and security operations, technology development, international safeguards, classification and technology policy, and security investigations. Through these budgets, the Office of Security procedures to prevent the theft of nuclear weapons or materials, the Affairs carries out its responsibilities in policy, guidelines, and sabotage of Departmental facilities, and the compromise of classified information. The safeguards and security budget request supports increased Headquarters assistance to field operations, while the security investigations request will enable the Department to conduct initial investigations for security clearances for new employees while reducing the backlog of overdue reinvestigations for personnel who currently possess a security clearance. Last year, I directed that a thorough review be conducted of the safeguards and security activities of the Department necessary to assure the protection of nuclear weapons, materials, and facilities. A task force of uniquely qualified individuals was formed to accomplish this review. The task force issued its report on December 20, 1990. In response to this assessment, I directed the reassignment of the security affairs functions from the Office of the Assistant Secretary directly to the Under Secretary of Energy, effective April 1, 1991. for Defense Programs to a new Office of Security Affairs reporting This was done in order to improve the Department's policy making aspects of safeguards and security, which not only affects Defense Programs, but many Departmental programs as well. Many other initiatives related to actions recommended in this report are underway. Such actions include an Accelerated Access Authorization pilot project designed to significantly reduce processing times for "Q" clearances for contractor employees (from 180 to 40-50 days). This project is focused at Rocky Flats and is being conducted in cooperation with our on-site contractors and early indications are that this voluntary program is being well received by contractor employees. We are also developing a new program designed to dramatically reduce the number of "Q" clearances and increase the access afforded by "L" clearances. This program is currently in the conceptual phase. Consistent with report recommendations, our classified document control initiatives include new accountability requirements for Secret documents. This change will provide adequate and proper control of classified material while reducing the administrative burden. We have initiated several actions to review and streamline Master Safeguards and Security Agreements (MSSA). For instance, we have initiated a comprehensive review of the MSSA process, and have prepared a draft MSSA Verification Guide and Team Handbook which will assist in standardization of MSSA's across the complex. The items which I have identified to you today are just a few of the major undertakings which I have directed as a result of the findings in the Task Force Report. I will continue to work with the Congress to ensure that the protection of the Department's national security assets continues as one of our highest priorities. Security Evaluations Also funded in the Atomic Energy Defense Activities appropriation is the Office of Security Evaluations (OSE) which is responsible for the independent oversight of the Department's safeguards and security activities. Since I was confirmed as Secretary of Energy I have focused on changing the environment in DOE. A key element of the change is the reorganization I outlined in my Notice SEN 6A. This reorganization unequivocally placed the responsibility for executing and monitoring required environmental, safety, health, and security actions within the technical program offices as a line management function. Additionally, my position is very clear that safety, health, environment and security activities would not be subordinate to production. I have also moved OSE from the Assistant Secretary for Defense Programs to the Assistant Secretary for Environment, Safety and Health. OSE acts as the principal focal point for all safeguards and security inspection and evaluation matters and serves as my independent oversight assessing the posture of safeguards and security of the Department of Energy. This function is carried out by conducting assessments and special studies and performing other functions as inspections at field sites and Headquarters, preparing topical directed. During FY 1992, OSE's budget request is for $15 million to continue these oversight activities which will include eight comprehensive inspections and ten short notice reviews. Additional Management Improvements I would also like to mention recent management improvements I have undertaken to increase staffing, enhance worker health and safety, improve contractor performance, and strengthen the management capability within Defense Programs to address current priorities. STAFFING Departmental staffing has increased significantly above the FY 1990 Full Time Equivalent (FTE) usage, and staffing growth for the major Department programs is almost 16 percent above FY 1990 levels. These increases will provide FTEs to staff the critical, high priority workloads in the Department in FY 1992. However, the Department is continuing its comprehensive review of manpower resource requirements, which was begun in FY 1990, to assure the most effective deployment of containing much desired critical pay and dual compensation provisions its limited staffing resources. Enactment last year of legislation promises to us in staffing these positions with men and women who have the skills necessary to perform the required functions. Further legislative changes that would allow highly skilled National Laboratory personnel to rotate into and out of Department service would provide a significant additional source of scientific and technical excellence in the management of the Department's nuclear complex. Worker Health and Safety In the area of worker health and safety, I requested a comprehensive evaluation a year ago in view of the workplace safety deficiencies found during DOE environment, safety and health "Tiger Team" compliance appraisals at our facilities. The Department of Labor recently released its report entitled, "Evaluation of the Department of Energy's (DOE's) Safety and Health Programs for it's Government-Owned and Contractor-Operated Facilities." The findings in this report were significant and, in response, I directed that a series of actions take place to build on our existing programs: o The existing capability of DOE and contractor line programs to administer and oversee workplace safety effectively will be promptly surveyed; specific recommendations on staffing, equipment and qualifications and training needs are to be provided within 90 days. o The role of self-assessment programs in DOE and contractor line operating programs will be expanded to address occupational safety and health. o All cost-plus-award-fee determinations will address occupational safety and health compliance as an explicit performance element. o Independent--oversight by the Assistant Secretary for Environment, Safety and Health will be strengthened by elevating its OSHA oversight role through the development of revised mission and function statements, and the reallocation of resources required to create a new Office of Occupational Safety Programs. I expect this office to serve as a 'technical catalyst' for fostering needed changes in the way the Department approaches workplace safety and health technology and practice. 0 On a longer-term basis, I have issued tasking memoranda that prescribe internal assessments to be performed over the next few months to address all of the findings and recommendations contained in the OSHA report. 0 Also, DOE Orders governing workplace safety and health will be revised within six months to correspond more closely to OSHA regulations and these will be used as the basis for considering adoption of DOE occupational safety and health requirements through rulemaking. I believe these, as well as future steps for worker safety and health, will help focus initiatives already mandated to make DOE line programs fully accountable for operational programs and activities. M&O Contractor Rule Another recent initiative involves increasing the Department's efforts to improve how we and our contractors are carrying out our fiscal responsibilities. By the very nature of how DOE conducts its business, the Department depends almost entirely on contractors to perform the tasks assigned. While it is essential that DOE exercise proper technical control over this effort, it is equally essential that DOE exercise proper fiscal control. As custodians of the taxpayers money, it is up to us to ensure that it is properly spent. I do not believe we have done a good Job in this respect. As a result, I have directed that certain actions be taken to improve the way DOE discharges its fiscal responsibilities in the management of our contractors. One such action is directed at increasing the accountability of our M&O contractors and restructuring the award fee system to provide incentives for improved performance. On January 25, 1991, 1 announced an Interim final Rule to hold the Department's profit-making M&O contractors, rather than the government, responsible for costs that could have been avoided by proper contractor performance. This new rule represents the most far-reaching changes in the contracting practices of the Department since the Manhattan Project and has been almost two years in the drafting. Historically, the Department has reimbursed its contractors for almost every cost or expense and indemnified them from virtually every risk, without regard to the amount of care and responsibility exercised by the contractors. accountability of DOE's contractors and will provide the Department The Interim Final Rule is designed to enhance the performance and with another management tool to promote excellence in performance by its contractors. The new regulations, which will be effective for all new or extended M&O contracts, will apply to contractors who manage and operate DOE's facilities for profit. In their recent five year contract extension, Martin Marietta Energy Systems has substantially agreed to the provisions in the Interim Final Rule. We anticipate reaching similar agreements with our other M&O contractors in the future. Defense Programs Management Changes I have also taken steps to strengthen the management, organization, performance and oversight within the Office of Defense Programs for two new activities critical to our success. Two new positions have been created. The Deputy Assistant Secretary for Weapons Complex Reconfiguration will be responsible for directing headquarters guidance and oversight of all activities leading to a Secretarial decision concerning the reconfiguration options; and subsequently to all activities leading to full operation of a reconfigured nuclear weapons complex. The Deputy Science and Technology Advisor (Defense) will be responsible for providing advice and recommendations to the Assistant Secretary for Defense Programs and the Department's Science and Technology Advisor to optimize the utilization, performance, and contribution of the three weapons laboratories and the Idaho National Engineering Laboratory. Summary As the Committee proceeds with the difficult process of reaching final decisions on our FY 1992 budget request, I want to reiterate the dilemma I face regarding decisions for the Atomic Energy Defense Activities programs. I believe the Department's FY 1992 budget, including the FY 1991 Supplemental, is the bare minimum amount required to support our national security programs in a safe and environmentally sound manner. This budget was arrived at only after much soul searching same time there is necessary growth in the Environmental Restoration that included the deferral of many critical activities. However, at the and Waste Management program. This growth was anticipated and is vitally needed to support infrastructure expansion as we strive to meet our statutorily dictated environmental requirements. In a sense, this puts me between a rock and a hard place. In the outyears, there is a cap on the 050 account which must be met; however, there is no doubt that budgetary increases will be needed to meet the Department's ways to assure all programs are operating efficiently, and I have expanding production and environmental obligations. We are looking at directed that the Department undertake a program to reduce costs by improving our business management practices, but there are no easy solutions. However, two others factors exist which contribute to potential future funding adjustments in environmental restoration and waste management. The first factor involves the transfer of responsibility for retired production facilities and other related activities to the Office of Environmental Restoration and Waste Management. We have the ability to plan for these anticipated changes. However, the other factor involves the potential cost increases to meet environmental compliance. This is of particular concern to me since, as I already mentioned, there are a significant number of uncertainties confronting the Department as it strives to meet the requirements of applicable environmental statutes. Budget realities dictated constraints such that I had to make severe cuts in our weapons production complex, in our weapons research and development program, and in our program to pursue new production reactor capacity to replace our aging reactors. As I have already stated, those cuts required me to provide for restart of only one reactor at Savannah River, prematurely terminate the two reactor Program, reduce critical laboratory personnel employment dedicated to strategy before the Record of Decision on the New Production Reactor maintaining nuclear weapons competence by about 6 percent, limit significantly important underground nuclear testing to its lowest levels since the testing moratorium in the 1960s, and continue to defer necessary maintenance and facility upgrades throughout the nuclear weapons complex. I do not believe it prudent to continue to make these reductions in critical activities that support our national security. The situation for next year will not be better. I need your support so that I can provide the Nation with the appropriate national security programs this Department must statutorily provide. I would be pleased to answer any questions you may have.
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