After the termination of the CFPP, the DOE’s Office of the Inspector General conducted an audit of the Office of Nuclear Energy’s handling of the project and funds. Its findings were released to the public this spring.
“Although [DOE-NE] stated that the project achieved some useful results in progressing deployment of SMRs in the United States, the project’s key objective was not met, and government funds of approximately $183 million were spent without key results,” the audit concluded.
Overall, DOE-NE “did not effectively manage the project” and the office’s “project management failures may have contributed to the project’s termination,” the audit said. Below are some key takeaways from the 26-page report.
Critical project risks not evaluated effectively: The DOE-NE employs a merit review on projects to assess an applicant’s ability to overcome the level of risk associated with the project. According to the DOE OIG’s audit, the merit review of the CFPP did not effectively evaluate the level of risk associated with the project prior to issuing the award.
In particular, the review did not properly evaluate the potential risks of the CFPP’s subscription approach. A certain customer subscription level was needed to move the project forward. The audit showed that actual subscriptions were not meeting the required numbers.
Award not structured to monitor risks: The DOE OIG determined that the award was structured in such a way that DOE-NE couldn’t properly mitigate and monitor performance during the project. There were no specific interim milestones, performance progress metrics, or reporting requirements to track subscription progress, the audit found.
For example, the award originally listed a full subscription milestone to track. However, this milestone was pulled because it was considered “duplicative” of a separate full-notice-to-proceed (FNTP) milestone. The problem was that the FNTP milestone wouldn’t be reviewed until 2026—six years into the project and three years after the scrapped subscription milestone.
“The significance of the risks, and more specifically subscription risk, warranted more frequent performance progress checks than FNTP in the sixth year of the project,” the audit said.
Insufficient oversight: DOE OIG also found weaknesses in DOE-NE's oversight of the project, including the following:
- Biweekly reports that contained limited information and didn’t mention subscription rates or efforts to increase rates.
- Quarterly reports that weren’t fully developed.
- The required number of semiannual reviews to evaluate progress on programmatic objectives and recommendations were not performed. The one semiannual review that was conducted did not document results or evaluate progress in meeting project objectives.
DOE OIG found that DOE-NE's “lack of experience with this type of award, undervaluing the risks threatening the project’s success, and not taking the appropriate level of shared responsibility also impacted post-award monitoring and oversight.”
Questions about costs: The audit found $143.5 million in unresolved costs that the CFPP may be liable to pay back as part of the cost-share agreement. According to the audit, this occurred because DOE-NE “agreed to front-load the cost-share, which placed the government at risk of losing approximately $143.5 million, given the project’s termination.”
Furthermore, the audit questioned approximately $8,876 in legal costs paid by DOE-NE that the DOE OIG considered potentially unallowable.
Recommendations: The audit listed five recommendations for DOE-NE and the Idaho Operations Office—which oversees INL—to move forward in future demonstration and deployment projects:
- Incorporate risk into project management principles (evaluation, identification, analysis, documentation).
- Incorporate performance measures into awards that take into account project risks.
- Ensure financial assistance terms and conditions are met with regard to awards.
- Determine the allowability of questioned legal costs.
- Resolve cost-share amounts.
