At the request of congressional leadership, the Office of Inspector General has for the past several years identified what it considers to be the most significant management and performance challenges facing the Department of Energy. This effort, which was codified as part of the Reports Consolidation Act of 2000, is now done on an annual basis and includes an assessment of the agency's progress in addressing each challenge area. As in the past, the methodology employed by this office relies on recent and on-gong audit, inspection, and investigation work. The process places great emphasis on the identification of those programs and operations with demonstrated performance problems and those which are, in our judgment, inherently the most difficult to manage. While any analysis of this sort is subjective, we believe that the result is a balanced, comprehensive depiction of Departmentwide challenges.