DOE Inspector General Audit: 'Opportunities Exist' After $1.36B Cost-Share for NuScale SMR Project Termination

The DOE's Office of Nuclear Energy awarded $1.36 billion to Carbon Free Power Project LLC and then failed to manage it. That is the central finding of audit DOE-OIG-26-25, released by the Department's Inspector General on March 31 and covering the now-terminated NuScale SMR demonstration at the Idaho National Laboratory. Of the $232 million the government actually obligated before the project collapsed, approximately $183 million was spent without achieving the project's key objective.

The OIG identified three specific management failures: the Office of Nuclear Energy did not effectively evaluate critical risks before making the award in October 2020, did not structure that award to monitor risks once they materialized, and did not perform sufficient oversight as costs and schedules deteriorated. Those compounding failures, the audit concluded, may have contributed directly to the project's termination.

The CFPP had an extraordinary trajectory of cost escalation before it folded. A 12-module, 500-megawatt design was cut to six 77-megawatt modules by July 2021. The estimated build cost jumped from $3.6 billion to $9.3 billion. By January 2023, UAMPS was quoting a target power price of $89 per megawatt-hour, up from the $55/MWh originally projected in 2016, a 62% climb that gave member utilities good reason to walk away from their power purchase commitments. On November 8, 2023, UAMPS and NuScale agreed to terminate by mutual consent. NuScale subsequently laid off 154 employees, 28% of its workforce.

The OIG titled its findings "Opportunities Exist to Improve the Department's Oversight of Demonstration and Deployment Projects." The language is measured; the substance is not. The audit identified that risk evaluation failures appeared before the award was even signed, meaning the Office of Nuclear Energy accepted $1.36 billion in cost-share exposure without adequate assessment of whether the project's risk profile was manageable.

That framing carries immediate weight because DOE is currently running several other advanced reactor demonstration programs, including multi-hundred-million-dollar Gen III+ SMR solicitations aimed at catalyzing initial fleet deployment. The OIG findings land squarely on how those awards are built: whether milestones are binding, whether risk monitoring is embedded in award conditions from the start, and whether performance gates exist before subsequent tranches are released.

The audit called for stronger internal controls within the Office of Nuclear Energy, improved documentation of decisions, and clearer conditions for continued funding. Congress may request hearings, and the Secretary's office and the Office of Nuclear Energy face corrective action responses. For the SMR commercialization community tracking DOE's next round of demonstrations, audit DOE-OIG-26-25 now stands as the clearest documented record of what happens when federal oversight of a first-of-a-kind nuclear project fails to keep pace with real-world cost and schedule risk.