July 1990 CHEMICAL WEAPONS Stockpile Destruction Delayed at the Amy’s Prototype Disposal - Facility RE!3TRICIZD-- Not to be released outside the General Accounting Office unless specifically approved by the OfTice of Congressional Relations. GAO/NSIAD-90-222 National Security and International Affairs Division B-239332 July 30, 1990 The Honorable John Glenn Chairman, Committee on Governmental Affairs United States Senate The Honorable John Conyers, Jr. Chairman, Legislation and National Security Subcommittee Committee on Government Operations House of Representatives The Honorable Earl Hutto Chairman, Subcommittee on Readiness Committee on Armed Services House of Representatives This report responds to your requests that we review the Department of Defense’s Chemical Stockpile Disposal Program. We discussed the Department’s overall efforts to dispose of chemical weapons in our earlier report entitled Chemical Weapons: Obstacles to the Army’s Plan to Destroy Obsolete U.S. Stockpile (GAO/NSIm90-155, May 24, 1990). This report discusses the operational delays at the Johnston Atoll Chemical Agent Disposal System-the Defense Department’s prototype disposal plant. Unless you publicly announce its contents earlier, we plan no further distribution of this report for 30 days. At that time, we will send copies to the Chairmen of the House and Senate Committees on Armed Services and on Appropriations, the Secretaries of Defense and the Army, the Director of the Office of Management and Budget, and other interested parties. This report was prepared under the direction of Richard Davis, Army Issues, who may be reached on (202) 275-4141 if you or your staff have any questions. Other major contributors are listed in appendix II. Frank C. Conahan Assistant Comptroller General Executive Summary In November 1985, the Congress enacted Public Law 99-145, requiring Purpose the Department of Defense to destroy the U.S. stockpile of chemical weapons by September 30, 1994. In September 1988, the Congress extended the completion date for chemical weapons disposal to April 30, 1997. The Army has concluded that high-temperature incineration is the preferred disposal method. In 1988, the Army completed construction of its prototype plant-the Johnston Atoll Chemical Agent Disposal System. However, this plant needs additional testing and verification before it becomes a fully operational chemical weapons disposal plant. The Chairmen of the Subcommittee on Readiness, House Committee on Armed Services; the Legislation and National Security Subcommittee, House Committee on Government Operations; and the Senate Committee on Governmental Affairs asked GAO to determine the status of the Johnston Island disposal program. Our objectives were to identify and assess (1) the program’s current schedule and cost estimates, (2) the causes of schedule slippage, (3) the impact of this slippage on the Army’s overall chemical disposal program, and (4) the Army’s con- tractor oversight activities. In fiscal year 1981, the Army planned to build a disposal facility on Background Johnston Island to destroy M55 chemical rockets. The Congress, in 1985, directed the Defense Department to destroy the entire U.S. chemical weapons stockpile, not just M55s. In that same year, the Army began to construct a disposal plant on Johnston Island. In 1986, the Army’s Western Command, headquartered in Hawaii, awarded an 8-year opera- tions and maintenance contract on a cost-plus-award-fee basis for the Johnston disposal plant. 32 months after the original February 1989 full-scale start-up date. The original full-scale start-up date was delayed about 22.5 months by the Army’s efforts to comply with the statutory requirements to ( 1) destroy all types of munitions, not just the M55 rockets, and (2) conduct opcra- tional verification tests. The start-up date slipped another 9.5 months because of technical and contractor staffing problems. Further delays are likely if problems continue at the facility. ‘As of this date, the Army had not begun these tests. The Army estimates that operar IOK>LS /iI tu*ym in the summer of 1990. Page 2 GAO/NSLAIMO-222 Army’s Chemical Weapons I)i.spcwd Plant Executive Summary Moreover, as of March 1990, the Army estimated that the total *Johnston disposal program will cost about $561 million to complete operations through 1994-an increase of $190 million over the Army’s 1985 esti- mate. Most of the increased estimated cost can be attributed to the two statutory requirements and the technical and contractor problems. If problems continue and the operations and maintenance contract is extended beyond July 1994, the estimated cost will continue to grow. Because of delays in operational testing at Johnston Island, the Army also delayed the construction of three follow-on facilities--at Anniston, Alabama; Pine Bluff, Arkansas; and Umatilla, Oregon. GAO estimated that the additional time required to store the munitions at Johnston Island and the three follow-on sites will cost the Army more than $33 million. To improve the contractor’s performance on the operations and mainte- nance contract, the Army withheld all or significant portions of the con- tractor’s award fee for several evaluation periods. Further, the Army attempted to strengthen its own oversight of the operations and mainte- nance contract, including controls over contractor overtime costs. How- ever, the Army’s oversight of contractor overtime needs to be further improved. Principal Findings Several Problems Caused The Johnston disposal program has expanded significantly since 1985. Until November 1985, when the Congress required the Defense Johnston Schedule Department to destroy the entire chemical stockpile, the Johnston Slippage and Estimated facility was intended to destroy only M55 rockets, beginning full-scale Cost Increases operations on February 1, 1989. In December 1987, the Congress passed Public Law 100-180, which required the Army to conduct full-scale ver- ification tests with lethal agents to demonstrate that the disposal tcch- nology could safely and efficiently destroy chemical weapons. These two statutory changes caused the Army’s original full-scale operations start date to slip 22.5 months-from February 1, 1989, to December 1.5, 1990. The Army moved the full-scale operational date back another I)..’ months-from December 15, 1990, to September 27, 1991-due to equipment, computer, and plant corrosion problems and the contrac.tor’s inability to fill some technical and management positions. Further Page 3 GAO/NSLAIMO-222 Army’s Chemical Weapons Dibpwal Plant Executive Summary delays are possible if, as in the past, the Army experiences major slip- page in any of the 279 operational testing start-up activities. For example, as of January 1990,42 of the 279 start-up activities had slipped an average of 22 days; some activities had slipped almost 2 months. In October 1985, the Army’s life-cycle cost estimate for the Johnston disposal program was $371 million. As of March 1990, the total esti- mated cost to complete operations through 1994 was about $561 million. The March 1990 estimate includes about $421 million for construction, equipment installation, and the operations and maintenance contract and about $140 million for base and logistical support and other costs. Schedule Slippage Delayed The schedule slippage in the Johnston program has resulted in construc- Follow-on Facilities’ tion delays at three stateside facilities-at Anniston, Pine Bluff. and Umatilla. Chemical weapons will have to be stored an additional Construction and 9.5 months on Johnston Island, 19 months at each of the Pine Bluff and Increased Munition Umatilla sites, and 10 months at Anniston. GAO estimated that the addi- Storage Costs tional time required to store, guard, inspect, and maintain the munitions at Johnston Island and the three follow-on sites will cost more than $33 million. Army Has Withheld Most In 1988 and 1989, the Army took action to correct contractor perform- ance on the operations and maintenance contract. In response to staffing of Contractor’s Award Fee and other problems, the Army gave the contractor successively lower Due to Unsatisfactory performance ratings from May 1988 through April 1989. For all ev.alua- Performance tion periods, beginning in August 1986 and ending in August 1989. the Army awarded 47 percent of the total available award fees. The &-my withheld the contractor’s entire award fee for one period covering January through April 1989. Improved Controls Needed According to the contracting officer’s representative, contract for Overtime Costs employees regularly worked 60 to 80 hours per week. GAO'S anal> SIS showed that in July 1989, 19 employees worked at least one 9c1-h I!II week. Army officials told GAO that the operations and maintcnan~ t’ (‘on- tract did not include provisions for the Army to ensure that t ht. 4I III tractor’s overtime was necessary or that charges were legitimatcn ‘l’ht Army tried to persuade the contractor to strengthen its review\ ;mct reporting procedures for overtime. In January 1990, according t I ) ! rmy officials, the contractor verbally agreed to have its department t 11’.1(is Page 4 GAO/NSIADQO-222 Army’s Chemical Weapon- lhnprrl Plant Executive Summary approve employee overtime in advance and to report to the Army on overtime usage. However, as of March 1990, the contractor had not fully complied with the terms of the verbal agreement. - GAO recommends that the Secretary of the Army direct the Army’s Recommendations Western Command to negotiate a formal agreement with the operations and maintenance contractor regarding the approval and the use of over- time and incorporate it into the existing contract. Such an agreement could help the Army in its oversight responsibility of the contractor’s use of overtime. Included in chapter 3 of this report are other recommendations to the Secretary of the Army, which are designed to improve the Army’s over- sight of contractor operations at the Johnston plant and at the follow-on disposal plants.