a

GAO

United States General Accounting Office

Report to the Chairman, Subcommittee 

on Strategic Forces, Committee on 

Armed Services, U.S. Senate

June 2004 NATIONAL NUCLEAR 

SECURITY 

ADMINISTRATION

Key Management 

Structure and 

Workforce Planning 

Issues Remain As 

NNSA Conducts 

Downsizing

GAO-04-545
www.gao.gov/cgi-bin/getrpt?GAO-04-545.

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and methodology, click on the link above. 

For more information, contact Robin Nazzaro 

at (202) 512-3841 or nazzaror@gao.gov. 

Highlights of GAO-04-545, a report to the 

Chairman, Subcommittee on Strategic 

Forces, Committee on Armed Services, 

U.S. Senate 

June 2004

NATIONAL NUCLEAR SECURITY 

ADMINISTRATION 

Key Management Structure and 

Workforce Planning Issues Remain As 

NNSA Conducts Downsizing 

NNSA’s reorganization has addressed some past problems by better 

delineating lines of authority and improving communication; however, NNSA 

has not formalized a program management structure that identifies program 

managers or details their responsibilities and qualifications as they relate to 

the direction and oversight of contractor activity under the new 

organization. Without first resolving such key management issues, NNSA 

cannot, among other things, ensure the improved discipline and 

accountability it seeks in managing its programs. 

NNSA’s reorganization is not likely to ensure that the agency has sufficient 

staff with the right skills in the right places because NNSA downsized its 

federal workforce without first determining the critical skills and capabilities 

needed to meet its mission and program goals. Consequently, NNSA will not 

know the composition of its workforce until it completes the 17 percent 

workforce reduction on September 30, 2004—the deadline specified in the 

reorganization plan—and then determines the knowledge, skills, and 

capabilities of its remaining employees. Without a functional long-term 

workforce plan, NNSA runs the risk of facing further, more serious staff 

shortages or skill imbalances, thereby diminishing its ability to adequately 

oversee its contractors. 

NNSA’s implementation of a proposed risk-based approach to rely more on 

contractors’ assurances and self-assessments and less on NNSA’s direct 

oversight may be premature because it has not yet established a program 

management structure or long-term workforce plan for ensuring sufficient 

staff with the right skills in the right places. Under this proposal, contractors 

will develop comprehensive assurance systems, or systems of management 

controls, and NNSA will primarily rely upon these contractor systems and 

controls to ensure that contractors properly execute their work. Although 

the overall concept of a risk-based approach to federal oversight has merit, 

NNSA’s proposed transition to conduct less direct federal oversight could be 

compromised by outstanding reorganization issues. 

NNSA Workforce Downsizing Progress 

Note: This graph reflects NNSA’s adjustments, as of March 6, 2004. It excludes certain offices not 

significantly affected by downsizing. 

The National Nuclear Security 

Administration (NNSA), a 

separately organized agency within 

the Department of Energy (DOE), 

is responsible for the management 

and security of the nation’s nuclear 

weapons, nonproliferation, and 

naval reactor programs. NNSA 

oversees contractors that operate 

its facilities to ensure that activities 

are effective and in line with 

departmental policy. In December 

2002, NNSA began implementing a 

major reorganization aimed at 

solving important long-standing 

organizational issues. GAO 

reviewed NNSA’s overall 

reorganization efforts to assess (1) 

the extent to which it is addressing 

in practice the past problems 

concerning the unclear delineation 

of authority and responsibility, (2) 

workforce planning, and (3) its 

impact on federal oversight of 

contractor activities. 

GAO is making recommendations 

to the Secretary of Energy and the 

Administrator of NNSA to increase 

the likelihood that NNSA’s 

reorganization will achieve NNSA’s 

goals of increased management 

discipline and contractor oversight. 

In its comments, NNSA agreed in 

principle with GAO’s 

recommendations, but felt its 

ongoing efforts were not 

sufficiently recognized. We have 

recognized NNSA’s efforts, but 

believe more needs to be done to 

ensure effective program 

management and contractor 

oversight. 
Page i GAO-04-545 National Nuclear Security Administration 

Letter 1

Results in Brief 4

Background 7

NNSA’s Reorganization Has Delineated Lines of Authority, but 

More Clarification Is Needed for Specific Program Management 

and Oversight Functions 12

NNSA’s Reorganization Will Not Ensure Sufficient Staff with the 

Right Skills in the Right Places to Meet the Agency’s Mission and 

Program Goals 16

NNSA’s Proposed Transition to Less Direct Federal Oversight 

Could Be Compromised by Outstanding Reorganization Issues 20

Conclusions 24

Recommendations for Executive Action 25

Agency Comments and Our Evaluation 25

Appendix I Comments from the National Nuclear Security 

Administration 27 

Appendix II GAO Contact and Staff Acknowledgments 31 

GAO Contact 31

Acknowledgments 31

Figures 

Figure 1: NNSA’s Organization Prior to December 2002 9

Figure 2: NNSA’s New Organization 10

Contents 

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Page 1 GAO-04-545 National Nuclear Security Administration 

June 25, 2004 

The Honorable Wayne Allard 

Chairman, Subcommittee on Strategic 

Forces, Committee on Armed Services 

United States Senate 

Dear Mr. Chairman: 

For years, the Department of Energy (DOE) has experienced long-standing 

management problems with its nuclear weapons programs, including 

unclear delineation of management authorities and responsibilities that 

have contributed to significant cost overruns on major projects and 

security problems at the national laboratories.1

 In 1999, the Congress 

created the National Nuclear Security Administration (NNSA) under Title 

32 of the National Defense Authorization Act for Fiscal Year 2000 to 

correct the problems that plagued DOE. NNSA, a separately organized 

agency within DOE, is responsible for the management and security of the 

nation’s nuclear weapons, nonproliferation, and naval reactor programs. 

Since its inception, however, NNSA has experienced its own management 

and security problems.2

NNSA conducts nuclear weapon and nonproliferation-related national 

security activities in research and development laboratories, production 

plants, and other facilities.3

 Specifically, NNSA operates three national 

nuclear weapon design laboratories—Lawrence Livermore National 

Laboratory, California; Los Alamos National Laboratory, New Mexico; and 

the Sandia National Laboratories, New Mexico and California—and four 

nuclear weapons production sites—the Pantex Plant, Texas; theY-12 Plant, 

Tennessee; the Kansas City Plant, Missouri; and the Savannah River Site, 

 1

U.S. General Accounting Office, Nuclear Weapons: Improved Management Needed to 

Implement Stockpile Stewardship Program Effectively, GAO-01-48 (Washington, D.C.: 

Dec. 14, 2000). 

2

See for example, U.S. General Accounting Office, National Ignition Facility: 

Management and Oversight Failures Caused Major Cost Overruns and Schedule Delays, 

GAO/RCED-00-271 (Washington, D.C.: Aug. 8, 2000) and U.S. General Accounting Office, 

Nuclear Security: NNSA Needs to Better Manage Its Safeguards and Security Program, 

GAO-03-471 (Washington, D.C.: May 3, 2003). 

3

The Office of Naval Reactors is managed as a separate entity within NNSA. 

United States General Accounting Office 

Washington, DC 20548 
Page 2 GAO-04-545 National Nuclear Security Administration 

South Carolina, as well as the Nevada Test Site. To implement its 

programs, NNSA relies on site contractors to manage the day-to-day site 

operations and to adhere to DOE policies when operating the laboratory, 

production, or other facilities within the complex. Because many NNSA 

sites handle special nuclear material, including nuclear weapons, 

plutonium, and highly enriched uranium, effective federal oversight is 

critical to ensuring that national security, human health and safety, and the 

environment are not adversely affected. 

For the last several years, we have monitored NNSA’s efforts to implement 

Title 32. In April 2001, we testified that NNSA’s efforts to establish a new 

organization looked promising.4

 However, among other things, we 

highlighted the need for NNSA to clearly define the roles and 

responsibilities of headquarters and field staff, and to establish clear lines 

of authority between NNSA and its contractors. In May 2001, in response 

to a series of external and internal studies detailing persistent 

management problems, NNSA announced plans to reorganize its 

headquarters operations. In December 2001, we noted that NNSA had set 

several important goals for its overall reorganization efforts, including 

establishing clear and direct lines of communication, clarifying the roles 

and responsibilities of NNSA’s headquarters and field offices, and 

integrating and balancing priorities across NNSA’s missions and 

infrastructure.5

 However, we found that NNSA’s headquarters 

reorganization did not contain a clear definition of the roles and 

responsibilities of the headquarters organizational units. 

In addition to reorganizing its headquarters, in February 2002, NNSA 

proposed a reorganization of its entire operation aimed at solving 

important long-standing organizational issues. Specifically, NNSA 

proposed a new organizational structure that would (1) remove a layer of 

management by making existing operations offices into support offices, 

(2) locate NNSA operational oversight close to laboratories and plants by 

strengthening its site offices, and (3) streamline federal staff and hold 

federal staff and contractors more accountable. In February 2002, we 

testified that with the proposed new organizational structure, resolution of 

 4

U.S. General Accounting Office, Department of Energy: Views on the Progress of the 

National Nuclear Security Administration in Implementing Title 32, GAO-01-602T

(Washington, D.C.: Apr. 4, 2001). 

5

U.S. General Accounting Office, NNSA Management: Progress in the Implementation of 

Title 32, GAO-02-93R (Washington, D.C.: Dec. 12, 2001). 
Page 3 GAO-04-545 National Nuclear Security Administration 

NNSA’s long-standing organizational issues appeared to be within NNSA’s 

grasp.6

 However, we noted that NNSA’s lack of a long-term strategic 

approach to ensure a well-managed workforce precluded it from 

identifying its current and future human capital needs, including the size 

of the workforce, its deployment across the organization, and the 

knowledge, skills, and capabilities needed to fulfill its mission. Finally, in 

December 2002, the Administrator of NNSA directed the implementation 

of the overall reorganization proposed in February 2002. Specifically, 

NNSA began implementing a new organizational structure that would 

(1) remove a layer of management by abolishing its three Operations 

Offices; (2) locate NNSA operational oversight close to laboratories and 

plants by strengthening its site offices; (3) consolidate business and 

technical support functions, such as procurement and contracting, in a 

single service center organization located in Albuquerque, New Mexico; 

and (4) adopt a challenging staff reduction target of about 17 percent to be 

achieved by the end of fiscal year 2004. 

You asked us to review NNSA’s overall reorganization efforts to assess 

(1) the extent to which NNSA’s reorganization is addressing in practice the 

past problems concerning the unclear delineation of authority and 

responsibility, (2) the likelihood that NNSA’s reorganization will result in 

sufficient staff with the right skills in the right places to meet its mission 

and program goals, and (3) how NNSA’s reorganization will impact its 

proposed plan for federal oversight of contractor activities. 

To assess the extent to which NNSA’s reorganization addressed past 

problems concerning the unclear delineation of authority and 

responsibility, we visited NNSA headquarters, the new Albuquerque 

Service Center, and four of the eight NNSA site offices and interviewed 

officials and reviewed pertinent documents on the effect of the 

reorganization on NNSA’s delineation of authority and responsibility. We 

developed a general list of interview questions—i.e., a semi-structured 

interview guide—to assist with our interviews of each NNSA site office 

 6

U.S. General Accounting Office, Department of Energy: NNSA Restructuring and 

Progress in Implementing Title 32, GAO-02-451T (Washington, D.C.: Feb. 26, 2002). 
Page 4 GAO-04-545 National Nuclear Security Administration 

manager.7 To assess NNSA’s efforts to ensure that NNSA had sufficient 

staff with the right skills in the right places to meet its mission and 

program goals, we reviewed NNSA workforce planning documents and 

interviewed NNSA officials, including using the interview guide for site 

office manager interviews, to determine if its plans had sufficient 

information to address NNSA’s future staffing needs and to identify 

emerging skill gaps. In addition, we reviewed our reports on human capital 

management and workforce planning.8

 To assess NNSA’s proposed plan 

for federal oversight of contractor activities under the new reorganization, 

we interviewed NNSA headquarters officials, site office managers (using 

the interview guide), and contractor officials, and reviewed documents 

pertaining to the ongoing implementation of this proposed oversight 

approach at Sandia National Laboratories. We focused our review on 

NNSA’s Office of Defense Programs because, according to NNSA officials, 

it was most affected by the December 2002 reorganization, and because 

the Office of Defense Programs, which manages weapons activity 

programs, accounts for about 73 percent of NNSA’s Fiscal Year 2005 

budget request. 

We conducted our review from June 2003 through April 2004 in 

accordance with generally accepted government auditing standards. 

NNSA’s reorganization has resulted in some progress in delineating lines 

of authority and improving communication between NNSA headquarters 

and its field offices, thus addressing some past problems; however, at the 

working level, NNSA has yet to determine who will give specific program 

direction to its contractors and how the actions of these program 

 7

For the site offices we did not visit, we used the interview guide to conduct telephone 

interviews. Also, the practical difficulties of administering a semi-structured interview 

guide may introduce errors, commonly referred to as nonsampling errors. For example, 

measurement errors are introduced if difficulties exist in how a particular question is 

interpreted or in the sources of information available to respondents in answering a 

question. To reduce measurement error, we conducted two pretests with site office 

managers to make sure questions and response categories in our interview guide were 

interpreted in a consistent manner. We made relevant changes to the questions based upon 

these pretests. 

8

See U.S. General Accounting Office, Human Capital: A Self-Assessment Checklist for 

Agency Leaders, GAO/OCG-00-14G (Washington, D.C.: Sept. 2000); U.S. General 

Accounting Office, A Model Of Strategic Human Capital Management, GAO-02-373SP

(Washington, D.C.: March 15, 2002); and U.S. General Accounting Office, Human Capital: 

Key Principles for Effective Strategic Workforce Planning, GAO-04-39 (Washington, D.C.: 

Dec. 11, 2003). 

Results in Brief 
Page 5 GAO-04-545 National Nuclear Security Administration 

managers will be coordinated. Specifically, NNSA officials report that the 

new structure has improved communication between headquarters and 

the field by eliminating a layer of management—the three operations 

offices—and consolidating administrative support functions into a new 

service center located in Albuquerque, New Mexico. In addition, the 

reorganization has strengthened the hand of local NNSA site office 

managers by granting them additional authority to manage contractors, 

specifically holding the site office managers accountable for the day-to-day 

security and safety of site operations. Important issues remain to be 

resolved. Specifically, NNSA has yet to formalize a program management 

structure that identifies its program managers, what their responsibilities 

and qualifications should be, and what their specific role will be in 

directing and overseeing contractor activity under the new organization. 

Moreover, NNSA has not determined how program managers, who are 

responsible for ensuring that program goals and requirements are met, will 

interact with contracting officers and their designated representatives, 

who are responsible for carrying out specific technical functions, such as 

monitoring and inspection. 

NNSA’s reorganization is not likely to ensure that it has sufficient staff 

with the right skills in the right places because NNSA chose to downsize 

its federal workforce without determining what critical skills and 

capabilities it needed to meet its mission and program goals. In December 

2001, we reported that NNSA did not have the coherent human capital and 

workforce planning strategies it needed to develop and maintain a wellmanaged workforce over the long run. Consequently, we recommended 

that NNSA develop a thorough human capital and workforce planning 

strategy. Instead of developing a workforce plan, according to a senior 

NNSA official, NNSA managers relied on their judgment about how much 

to reduce the federal staff and where those reductions should occur in 

carrying out its December 2002 reorganization. Consequently, NNSA will 

not know the composition of its workforce until it completes the 17 

percent workforce reduction on September 30, 2004—the deadline 

specified in the reorganization plan—and then determines the knowledge, 

skills, and capabilities of its remaining employees. While NNSA did 

develop a workforce plan in December 2003, which attempted to establish 

a framework for long-term workforce planning, this plan is of limited use 

without current statistics on workforce, positions, and organizational 

structures. We have found that when downsizings take place in such an 

unstructured environment agencies experienced significant challenges to 

deploying people with the right skills, in the right places, at the right time 

and performing its missions economically, efficiently, and effectively. In 

NNSA’s case, early indications are that the lack of planning is already 
Page 6 GAO-04-545 National Nuclear Security Administration 

contributing to skill imbalances. For example, NNSA site offices are 39 

staff short of their targets and some site offices, namely Pantex, Y-12, and 

Los Alamos, are having some difficulty filling critical skills in safety and 

security. At the Albuquerque Service Center, significant skill gaps exist for 

contract specialists—it has only 26 of 54 contract specialist positions 

filled. Without a functional long-term workforce plan, NNSA runs the risk 

of facing further, more serious staff shortages or skill imbalances, thereby 

affecting its ability to adequately oversee its contractors and ensure the 

safety and security of its various facilities in the future. 

NNSA’s implementation of its proposed approach to rely more on 

contractors’ assurances and self-assessments and less on NNSA’s direct 

oversight may be premature because NNSA’s reorganization has not yet 

generated or established a program management structure for directing 

and overseeing contractor activity or a long-term workforce plan for 

ensuring that it has sufficient staff with the right skills in the right places. 

According to the draft proposal, contractors will develop a comprehensive 

contractor assurance system, or system of management controls, and 

NNSA will primarily rely upon these systems and controls to ensure that 

the contractors’ missions and activities are properly executed in an 

effective, efficient, and safe manner. Under this proposal, NNSA will use a 

risk-based, graded approach to its oversight and tailor the extent of federal 

oversight to the quality and completeness of the contractors’ assurance 

systems and to evidence of acceptable contractor analysis of contractor 

performance. If implemented, NNSA’s oversight functions will include 

review and analysis of contractor performance data, direct observations of 

contractor work activities in nuclear and other facilities, annual 

assessments of overall performance under the contract, and certifications 

by the contract or independent reviewers that the major elements of risk 

associated with the work performed are being adequately controlled. 

NNSA has already begun taking steps to accommodate implementation of 

the new contractor oversight approach in parallel with its reorganization. 

Although the overall concept of a risk-based approach to federal oversight 

has merit, the unresolved issues stemming from NNSA’s major ongoing 

reorganization may affect its ability to effectively carry out this approach 

while successfully meeting its responsibility for safe and secure 

operations. 

In order to increase the likelihood that NNSA’s reorganization will achieve 

NNSA’s goal of increased management discipline and accountability in 

program management and contractor oversight, we are recommending 

that NNSA establish a structure for its program management, complete 

and implement a data-driven workforce plan for the longer term, and 
Page 7 GAO-04-545 National Nuclear Security Administration 

postpone any decrease in the level of NNSA’s direct federal oversight of 

contractors until it has a program management structure in place and has 

completed its workforce plan. 

In commenting on our draft report, NNSA agreed in principle with our 

recommendations; however, it felt that it already had efforts underway to 

address them. Specifically, with respect to our recommendation about 

program management, NNSA stated that it has established a formal 

process for using appropriately designated officials to direct contractor 

activity and that its formal program management policy was nearly 

established. We recognize in our report NNSA’s effort to develop 

processes and formalize its program management policy; however, we 

believe that NNSA needs not only a policy, but also a structure and 

implementation guidance so that the managers providing direction to 

NNSA’s contractors are clearly identified and can be held accountable. 

With respect to our recommendation on workforce planning, NNSA agreed 

with our recommendation, but it disagreed that its current plan was based 

on short-term or arbitrary management judgments. In this respect, our 

conclusions were based on discussions with knowledgeable senior agency 

officials at NNSA headquarters and site offices as well as a review of 

NNSA management council minutes. More importantly, we continue to 

believe in, and NNSA does not dispute, the need for a long-term data 

driven workforce plan that will ensure that NNSA meets its long-term 

goals. Finally, regarding our last recommendation on federal oversight of 

contractors, NNSA stated that it had no intention of further decreasing 

direct oversight of contractors, was hiring staff to fill vacant positions at 

site offices, and that its proposed contractor assurance systems would 

only be implemented after a site manager/contracting officer was 

convinced that the contractor’s system would be at least as effective as the 

current system. While we are pleased that NNSA has stated that it will not 

decrease its direct oversight, our recommendation is intended to ensure 

that NNSA has the critical systems it needs in place to perform its 

function—effective, direct federal oversight. 

NNSA, a separately organized agency within DOE, is responsible for the 

management and security of the nation’s nuclear weapons, 

nonproliferation, and naval reactor programs. To conduct these activities, 

NNSA’s fiscal year 2005 request is about $9 billion, with about $6.6 billion 

targeted for nuclear weapons programs managed by NNSA’s Office of 

Defense Programs. For many years, various external studies have found 

problems with the organization of NNSA’s principal activity—the Office of 

Defense Programs. For example, one such study found a dysfunctional 

Background 
Page 8 GAO-04-545 National Nuclear Security Administration 

management structure with convoluted, confusing, and often 

contradictory reporting channels, 9

 while another study cited ambiguities 

and overlaps in the roles of headquarters and the Albuquerque Operations 

Office as a primary source of inefficiencies and conflict within the 

program. 10 In December 2000, we reported organizational problems at 

three levels—within the Office of Defense Program’s headquarters 

functions, between headquarters and the field offices, and between 

contractor-operated sites and their federal overseers.11 These problems 

resulted in overlapping roles and responsibilities for the federal workforce 

overseeing the nuclear weapons program and confusion and duplication of 

effort for the contractors implementing the program at sites within the 

nuclear weapons complex. 

In December 2002, NNSA formally announced the beginning of an overall 

reorganization and workforce reduction intended to enhance its 

operational efficiency and programmatic effectiveness. Prior to its 

December 2002 reorganization, NNSA’s organization consisted of multiple 

layers. In particular, under the Office of Defense Programs—NNSA’s 

largest program—seven area offices reported to three operations offices 

that in turn reported to the Deputy Administrator for Defense Programs. 

The Deputy Administrator then reported to the Administrator. Figure 1 

shows NNSA’s prior organization. 

 9

President’s Foreign Intelligence Advisory Board, Science At Its Best, Security At Its 

Worst, (Washington, D.C.: June 1999). 

10Institute for Defense Analyses, The Organization and Management of the Nuclear 

Weapons Program, (Washington, D.C.: March 1997). 

11GAO-01-48. 
Page 9 GAO-04-545 National Nuclear Security Administration 

Figure 1: NNSA’s Organization Prior to December 2002 

To remove a layer of management, NNSA closed the Albuquerque, 

Oakland, and Nevada operations offices. The new organization consists of 

eight site offices located at each of NNSA’s major contractors, one service 

center located in Albuquerque, New Mexico, and headquarters program 

offices that all report directly to the Administrator. NNSA headquarters 

sets requirements, defines policies, and provides high-level guidance. Site 

office managers are the designated contracting officers responsible for 

delivering federal direction to the contractor at each site and for ensuring 

the site’s safe and secure operation. The site office managers also manage 

each NNSA site office. Under the realignment, a single service center has 

been established in Albuquerque, New Mexico, to provide business and 

technical support services to the eight site offices and headquarters 

programs. Prior to the reorganization, about 200 staff provided these 

services in the Oakland and Nevada operations offices and in offices in 

Germantown, Maryland, and Washington, D.C. These services are now 

being consolidated in the new service center, resulting in the reassignment 

of the 200 staff to the Albuquerque service center. Figure 2 shows NNSA’s 

new organization structure. NNSA plans to staff the service center with 

475 employees, down from 678 in December 2002. 
Page 10 GAO-04-545 National Nuclear Security Administration 

Figure 2: NNSA’s New Organization 

As part of its reorganization, NNSA decided to reduce the size of its federal 

staff. Originally, NNSA set an overall staff reduction target of 20 percent. 

However, in August 2003, NNSA reduced the target to 17 percent. The 

current target includes a 26 percent reduction at headquarters and a 

30 percent reduction at the service center. Three site offices—Kansas City, 

Nevada, and Savannah River—are experiencing reductions, although 

overall staff size at all eight site offices will increase by 16 employees. 

NNSA is relying on a combination of buyouts, directed reassignments, and 

attrition to achieve these targets by its September 30, 2004, deadline. 

Standards that we have developed require federal agencies to establish 

and maintain an effective system of internal controls over their 

operations.12 Such a system is a first line of defense in safeguarding assets 

and preventing and detecting errors. Under our standards, managers 

should, among other things, ensure that their staffs have the required skills 

to meet organizational objectives, that the organizational structure clearly 

 12U.S. General Accounting Office, Standards for Internal Control in the Federal 

Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
Page 11 GAO-04-545 National Nuclear Security Administration 

defines key areas of authority and responsibility, that progress be 

effectively measured, and that operations be effectively monitored. 

In addition to these internal control standards, in January 2001, and again 

in January 2003, we identified strategic human capital management as a 

governmentwide, high-risk area after finding that the lack of attention to 

strategic human capital planning had created a risk to the federal 

government’s ability to perform its missions economically, efficiently, and 

effectively.13 In that context, we have stated that strategic workforce 

planning is needed to address two critical needs: (1) aligning an 

organization’s human capital program with its current and emerging 

mission and programmatic goals and (2) developing long-term strategies 

for acquiring, developing, and retaining staff to achieve programmatic 

goals.14 There are five key principles that strategic workforce planning 

should address irrespective of the context in which the planning is done. It 

should 

• involve top management, employees, and other stakeholders in 

developing, communicating, and implementing the strategic workforce 

plan; 

• determine the critical skills and competencies that will be needed to 

achieve current and future programmatic results; 

• develop strategies that are tailored to address gaps in number, 

deployment, and alignment of human capital approaches for enabling and 

sustaining the contributions of all critical skills and competencies; 

• build the capability needed to address administrative, educational, and 

other requirements important to support workforce planning strategies; 

and 

 13See U.S. General Accounting Office, High-Risk Series: An Update, GAO-01-263

(Washington, D.C.: January 2001), and U. S. General Accounting Office, High Risk Series: 

An Update, GAO-03-119 (Washington, D.C.: January 2003). Also, see U.S. General 

Accounting Office, Performance and Accountability Series—Major Management 

Challenges and Program Risks: A Governmentwide Perspective, GAO-01-241 (Washington, 

D.C.: January 2001). In addition, see the accompanying 21 reports (numbered GAO-01-242

through GAO-01-262) on specific agencies. 

14GAO-04-39. 
Page 12 GAO-04-545 National Nuclear Security Administration 

• monitor and evaluate the agency’s progress toward its human capital goals 

and the contribution that human capital results have made toward 

achieving programmatic results. 

In light of shortcomings in strategic human capital management reported 

by us, the President’s Management Agenda identified strategic 

management of human capital as a governmentwide initiative. Established 

in August 2001, the President’s Management Agenda identified a strategy 

for improving the management and performance of the federal 

government. The agenda included five governmentwide initiatives: the 

strategic management of human capital, competitive sourcing, improved 

financial performance, expanded electronic government, and budget and 

performance integration. 

Regarding strategic management of human capital, two principals are 

considered central to its success. One, people are assets whose value can 

be enhanced through investment. As with any investment, the goal is to 

maximize value while managing risk. Two, an organization’s human capital 

approach should be designed, implemented, and assessed by the standards 

of how well they help the organization achieve results and pursue its 

mission. Effective strategic workforce planning is considered an essential 

element of strategic human capital management. Also called human capital 

planning, it focuses on developing long-term strategies for acquiring, 

developing, and retaining an organization’s total workforce (including fulland part-time federal staff and contractors) to meet the needs of the 

future. 

NNSA’s reorganization has resulted in some progress in delineating lines 

of authority between NNSA headquarters and its field offices, thus 

addressing some past problems; however, at the working level, NNSA has 

not formalized a program management structure that identifies its 

program managers or what their responsibilities and qualifications should 

be, particularly regarding their role in directing and overseeing contractor 

activity under its new organization. Furthermore, the reorganization has 

created gaps in the responsibility for important safety oversight that need 

to be addressed. Without first clarifying such key management issues, 

NNSA cannot, among other things, ensure the improved discipline and 

accountability it seeks in managing its programs. 

By delineating lines of authority between NNSA headquarters and its field 

offices, NNSA’s reorganization has addressed past problems, such as 

communications problems resulting from overlapping roles and 

NNSA’s 

Reorganization Has 

Delineated Lines of 

Authority, but More 

Clarification Is 

Needed for Specific 

Program Management 

and Oversight 

Functions 
Page 13 GAO-04-545 National Nuclear Security Administration 

responsibilities of the federal workforce overseeing the nuclear weapons 

program. For example, according to NNSA site office managers, the 

streamlined structure has improved vertical communication because 

communication channels between headquarters and the field are more 

direct and do not involve an extra layer of management in the operations 

offices. Site office managers also state that by now reporting directly to 

the NNSA Administrator’s office, the time required to make decisions has 

been reduced. In addition, the realignment provides NNSA site office 

managers with additional authority to manage contractors and assigns 

them responsibility for the day-to-day security and safety of contractor 

operations. As a result, it has strengthened the hand of local NNSA site 

office managers who now have the authority to shut down operations at 

the sites, if necessary, due to security or safety concerns. 

Despite this progress NNSA’s reorganization still suffers from two 

shortcomings. First, the reorganization plan does not yet fully delineate 

the authority and responsibility of program managers, who are responsible 

for ensuring that program goals and requirements are met, or reconcile 

these responsibilities with the mutual responsibilities of contracting 

officers and their designated representatives who manage the contract. 

Specifically, under the new reorganization, the contracting officer is 

responsible for appointing contracting officer representatives to carry out 

specific functions, such as monitoring, inspection, and other functions of a 

technical nature not involving a change in the scope, cost, or terms and 

conditions of the contract. These contracting officer representatives then 

assist in directing and overseeing the contractor for the programs that they 

represent. NNSA is attempting to improve program management 

accountability and discipline by requiring program managers to direct all 

work to the contractors through a contracting officer or a designated 

contracting officer representative instead of through the now defunct 

operations offices or by bypassing the formal contract administrators and 

informally directing the contractor, as was done in the past. 

NNSA’s policy on program management, however, is still being developed. 

NNSA’s Assistant Deputy Administrator for the Office of Program 

Integration told us that the exact number of program managers within the 

Office of Defense Programs has yet to be determined because 

disagreement exists within the program about who currently is or is not a 

program manager. Furthermore, NNSA has not yet articulated its 

qualification standards for program managers. These standards are 

important to program success. As we noted in our report on NNSA’s 

Stockpile Life Extension Program, problems with the W-87 refurbishment 

were caused, in part, because the assigned program manager was not 
Page 14 GAO-04-545 National Nuclear Security Administration 

qualified to perform all required tasks and was not enrolled in DOE’s 

project management qualification program.15 Senior NNSA officials in 

headquarters expect NNSA’s policy to be issued by May 2004, and 

implementation plans for this policy to be developed by summer 2004. 

NNSA officials told us that even after the policy is issued, its 

implementation is expected to take some time because it will likely require 

a change in the behavior and culture of program managers and the manner 

in which they operate. 

NNSA’s delay in issuing program management policy and appointing 

program managers is currently creating confusion. According to NNSA’s 

existing policy concerning the appointment of contracting officer 

representatives, headquarters-based program officials must first be 

designated as program managers before they can be designated as 

contracting officer representatives for a site.16 As a result, any uncertainty 

surrounding the number of program managers and their responsibilities 

has the potential to disrupt the appointment of contracting officer 

representatives. However, despite the present uncertainty surrounding the 

designation of program managers, site offices are appointing contracting 

officer representatives. For example, the Sandia Site Office appointed 25 

of its 36 contracting officer representatives using available NNSA 

headquarters staff, as of June 2003. However, NNSA provided us with a list 

of its designated program managers as of December 2003 (the latest date 

for which data were available) that did not officially recognize 21 of the 25 

headquarters-based contracting officer representatives that had been 

formally appointed by the Sandia Site Office. Until NNSA fully implements 

its policies to delineate program management authority and responsibility, 

it remains unclear under the new reorganization and management 

structure how program management authorities and responsibilities will 

be exercised in the day-to-day management of contractors and site 

operations and NNSA cannot ensure that the full discipline and 

accountability it seeks through its reorganization is fully achieved or that 

its long-standing organizational structure problems are corrected. 

 15U.S. General Accounting Office Nuclear Weapons: Opportunities Exist to Improve the 

Budgeting, Cost Accounting, and Management Associated with the Stockpile Life 

Extension Program, GAO-03-583 (Washington, D.C. July 28, 2003). 

16In commenting on our report, NNSA stated that for its weapons programs, it does have 

contracting officer representatives that are supervisors of program managers. 
Page 15 GAO-04-545 National Nuclear Security Administration 

The second outstanding problem with NNSA’s reorganization is that it has 

created gaps in the responsibility for safety oversight that need to be 

addressed. For example, managers at NNSA’s Pantex Site Office, which 

oversees the contractor operating the Pantex Plant—an 

assembly/disassembly plant for nuclear weapons in Amarillo, Texas—

stated that authority and responsibility for certain safety-related oversight 

is unclear. Specifically, according to the Pantex Site Office manager, when 

the realignment abolished the Albuquerque Operations Office, it left a void 

regarding who would take over certain nuclear explosive safety oversight 

activities previously performed by that office. Among other things, nuclear 

explosives safety oversight includes activities such as evaluating the 

adequacy of controls associated with tooling, testers, and operational 

processes to prevent and/or minimize the consequences of an accident 

involving nuclear explosives. While NNSA’s Assistant Deputy 

Administrator for Military Application and Stockpile Operations—an 

NNSA program—assumed overall responsibility for nuclear explosive 

safety, NNSA has not resolved exactly who is to provide the day-to-day 

oversight previously conducted by the Albuquerque Operations Office. In 

this regard, the Pantex Site Office manager stated that there is no clear 

procedure for conducting oversight to ensure the prevention of deliberate, 

unauthorized use of a nuclear weapon—an important goal of NNSA. The 

Pantex Site Office manager—the risk acceptance official for the site—

stated that he would therefore not authorize the continuation of certain 

work related to one current weapon system requiring use of a particular 

safety process. Furthermore, in October 2003, NNSA issued its safetyoriented “Functions, Responsibilities, and Authorities Manual” intended 

to clarify issues concerning delineation of authority. However, according 

to the Assistant Manager for Nuclear Engineering at the Pantex Site Office, 

the manual still does not clarify the authority and responsibility of nuclear 

explosives safety oversight. Senior NNSA headquarters officials stated that 

they are aware of problems concerning nuclear explosive safety oversight 

and that corrective action plans have been recently developed and are 

scheduled to be implemented through 2006. 

The Defense Nuclear Facilities Safety Board recently expressed broader 

concerns in a December 8, 2003, letter to NNSA’s Administrator that many 

orders, directives, standards, supplemental directives, and site office 

procedures, which had been issued to help ensure the safe operation of 

NNSA’s defense nuclear facilities, have not been modified to reflect 

current roles and responsibilities within NNSA. The board further stated 

that in some cases, particularly those involving supplemental directives 

that the now-defunct Albuquerque Operations Office had issued, the 

documents may no longer have a clear owner within the NNSA 
Page 16 GAO-04-545 National Nuclear Security Administration 

organization, and deviations from the processes that these directives 

prescribed are now becoming more frequent within NNSA. 

NNSA’s reorganization is not likely to ensure that it has sufficient staff 

with the right skills in the right places because NNSA chose to downsize 

its federal workforce without first determining what critical skills and 

capabilities it needed to meet its mission and program goals. 

Consequently, NNSA will not know the composition of its workforce until 

it completes the 17 percent workforce reduction on September 30, 2004—

the deadline specified in the reorganization plan—and then determines the 

knowledge, skills, and capabilities of its remaining employees. Without a 

functional long-term workforce plan, NNSA runs the risk of facing further, 

more serious staff shortages or skill imbalances, thereby affecting its 

ability to adequately oversee its contractors. 

In December 2001, in addressing NNSA’s use of its excepted service 

authority, we reported that NNSA did not have the coherent human capital 

and workforce planning strategies it needed to develop and maintain a 

well-managed workforce over the long run.17 As a result, we recommended 

that NNSA not allocate any additional excepted service positions until it 

developed comprehensive human capital and workforce planning 

strategies. Subsequently, in February 2002, we testified that NNSA’s lack 

of a long-term strategic approach to ensure a well-managed workforce 

precluded it from identifying its current and future human capital needs, 

including the size of the workforce, its deployment across the 

organization, and the knowledge, skills, and abilities needed to fulfill its 

mission.18

Despite these earlier recommendations to develop thorough human capital 

and workforce planning strategies, NNSA embarked on a major initiative, 

expected to span nearly 2 years, not only to reorganize, but also to reduce 

the size of its workforce. NNSA’s December 2002 reorganization plan 

called for a reduction in its federal workforce from 1,695 to 1,356 staff, or 

a reduction of about 20 percent, by September 30, 2004. The planned 20 

percent reduction involved a 29 percent reduction in headquarters staff, a 

26 percent reduction in administrative support staff through the closure of 

the three operations offices and the consolidation of administrative 

 17GAO-02-93R. 

18GAO-02-451T. 

NNSA’s 

Reorganization Will 

Not Ensure Sufficient 

Staff with the Right 

Skills in the Right 

Places to Meet the 

Agency’s Mission and 

Program Goals 
Page 17 GAO-04-545 National Nuclear Security Administration 

support staff in a new Service Center, and a 6 percent reduction in Site 

Office staff. A senior NNSA official stated that “getting things done” was a 

primary factor in deciding to quickly implement the reorganization and 

workforce reduction. As such, NNSA officials stated that the staff 

reduction targets were based more on judgment than a rigorous workload 

analysis. A senior NNSA official explained that NNSA managers knew that 

there was work overlap and redundancy in the organization, but were 

concerned that a more formal, rigorous analysis of requirements or 

workload could hamper what they believed was an urgent need to achieve 

organizational realignment and workforce reduction results. The official 

also said that NNSA management had decided that if and when staffing 

changes became necessary, such adjustments would then be made. 

The NNSA Administrator implemented what it termed a managed staffing 

process soon after the workforce reduction target was announced in an 

effort to focus on its short-term staff reduction targets and deadline. He 

asked NNSA headquarters, service center, and site office managers to 

report their organization’s existing functions and staff in 2003, their 

anticipated changes to functions and associated staff requirements by the 

end of fiscal year 2004, and any staff surplus or deficit. Based on regular 

updates of this information, the NNSA Administrator has adjusted the total 

staff reduction target twice since December 2002, once in April 2003 and a 

second time in August 2003, to its current 17 percent target—primarily to 

accommodate an increase of 38 positions. This new target is to be 

accomplished by an increase of 23 positions in headquarters and 40 

positions in the site offices, respectively, and a decrease of 25 positions at 

the Albuquerque Service Center. A February 2004 status report stated that 

NNSA created and staffed the 38 new positions to perform functions not 

previously identified, or for which original staffing targets were not 

adequate for mission accomplishment. 

NNSA is progressing towards its staff reduction targets and deadline 

primarily through buyouts, directed reassignments, and attrition combined 

with a freeze on hiring and promotions, although exceptions can be 

allowed to fill critical positions. A total of 174 staff have thus far taken the 

buyout, which could be as high as $25,000 per person depending on such 

factors as length of federal service and grade level. NNSA human capital 

managers report that 99 of the 200 administrative support staff in Oakland, 

Las Vegas, Germantown, and Washington, D.C., offices have formally 

stated that they would relocate to the Albuquerque Service Center. 

However, officials are not sure how many staff will actually relocate 

because, for example, they believe that some staff do not really want to 
Page 18 GAO-04-545 National Nuclear Security Administration 

relocate and are seeking alternative employment. As of March 6, 2004, 

NNSA is 13 staff short of achieving its 17 percent staffing reduction target. 

NNSA has also begun a number of specific workload reduction initiatives 

intended to accomplish its mission with fewer federal personnel. However, 

the outcome of these initiatives may not be known for some time so their 

affect on NNSA’s workforce capabilities both in the short-term and longterm cannot be predicted. For example, in the area of safety, NNSA 

reduced the number of Site Office Facility Representatives from 68 in 

December 2002 to 53 in December 2003. Site Office Facility 

Representatives are typically responsible for day-to-day oversight of 

contractor operations to ensure that the contractor’s work practices and 

performance are being completed in a safe and environmentally 

responsible manner. NNSA is pursuing changes to the Facilities 

Representative Program, among other things, to allow for greater coverage 

in areas of higher risk to the public, such as nuclear safety, and reduced 

coverage of standard industrial hazard facilities. NNSA is also considering 

shifting federal responsibility for employee safety to the contractor. 

While continuing to pursue its short-term workforce reduction goals, 

NNSA began to develop a framework to determine its long-term human 

capital needs. In December 2003, NNSA issued a workforce plan designed 

to comprehensively meet the requirements of DOE’s Human Capital 

Management Improvement Program and the strategic workforce planning 

aspect of the President’s Management Agenda. The framework specifically 

identified strategic workforce planning as a means to mitigate the impact 

of losing a large percentage of the NNSA workforce and as the process for 

ensuring that the right people with the right skills are in the right place at 

the right time. The workforce planning model for the longer term—

Workforce Plan 2004—called for the analysis of present workforce 

competencies, the identification of competencies needed in the future, a 

comparison of future needs with the present workforce in order to identify 

competency gaps and surpluses, the preparation of plans for building the 

workforce needed in the future, and an evaluation process to ensure that 

the workforce planning model remains valid and that mission objectives 

are being met. 

Despite this effort, NNSA’s workforce plan is of limited usefulness 

because it depends on workforce data that are either already obsolete or 

not yet available. For example, the number, skill, position, and location of 

employees are a moving target and subject to continuous change until the 

downsizing effort is completed in September 2004. Furthermore, several 

NNSA site office managers acknowledged that their workforce focus has 
Page 19 GAO-04-545 National Nuclear Security Administration 

been on their short-term downsizing objective. A senior NNSA official 

agreed that the agency’s workforce planning needed to be more long-term, 

but added that under the circumstances of NNSA’s organizational 

downsizing, management primarily focused on meeting short-term needs. 

NNSA human capital officials also told us that NNSA’s decreased reliance 

on DOE for practically all human capital management, resulting from 

NNSA’s creation as a separately organized agency under DOE in 2000, 

required the building of a human resource structure, staff, and operation, 

which has taken some time to get up and running. NNSA plans to update 

information in its workforce plan, including its workforce composition 

and skills, as well as determine workforce needs for the long-term. With 

this information, NNSA can then conduct a skill gap analysis that is 

necessary to target recruitment, hiring, and training programs long-term. 

As we have found in other government agencies, by carrying out 

downsizing without sufficient consideration of the strategic consequences, 

NNSA runs the risk of not having the right skills in the right place at the 

right time, thereby affecting its ability to adequately oversee its 

contractors and ensure the safety and security of its various facilities in 

the future. The situation may be further exacerbated by the fact that, 

according to NNSA estimates, 35 percent of NNSA employees will be 

eligible to retire in the next 5 years. The lack of adequate strategic and 

workforce planning in the course of downsizing efforts can negatively 

affect the agency’s ability to provide quality service and lead to such 

negative effects as the loss of institutional memory and an increase in 

work backlogs. The impact of gaps in the numbers and skills of staff used 

to carry out its contractor oversight mission is already becoming apparent. 

For example, NNSA site offices are 39 staff short of their targets and some 

site offices, namely Pantex, Y-12, and Los Alamos, are having some 

difficulty filling critical skills in safety and security. At the Albuquerque 

Service Center, significant skill gaps exist for accountants and contract 

specialists. For example, the service center has only 26 of 54 contract 

specialist positions filled. NNSA’s preoccupation with more short-term 

downsizing objectives and staffing strategy without the benefit of a 

strategic human capital plan may have contributed to the workforce 

imbalances it now is experiencing. 
Page 20 GAO-04-545 National Nuclear Security Administration 

NNSA’s implementation of its proposed risk-based approach to rely more 

on contractors’ assurances and self-assessments and less on NNSA’s direct 

oversight may be premature because NNSA’s reorganization has not yet 

established a program management structure or long-term workforce plan 

for ensuring that it has sufficient staff with the right skills in the right 

places. Others and we have reported on a number of problems over the 

years related to NNSA’s performance of effective federal oversight of its 

contractors. Against this backdrop, NNSA has begun taking steps to 

accommodate implementation of the new contractor oversight approach 

in parallel with its reorganization. Under this new approach, contractors 

will develop comprehensive contractor assurance systems, or systems of 

management controls, and NNSA will primarily rely upon these systems 

and controls to ensure that contractors properly execute their missions 

and activities. Although the overall concept of a risk-based approach to 

federal oversight has merit, the unresolved issues stemming from NNSA’s 

major ongoing reorganization may compromise its ability to effectively 

carry out this approach while successfully meeting its responsibility for 

safe and secure operations. 

NNSA’s reliance on contractors to operate its facilities and carry out its 

missions makes effective oversight of contractor activities critical to its 

success. Over the years, we have reported on problems related to NNSA’s 

performance of effective federal oversight of its contractors. For example: 

• In May 2003, we reported on problems with NNSA’s oversight, particularly 

regarding assessing contractors’ security activities.19 We noted that, 

without a stable and effective management structure and with ongoing 

confusion about security roles and responsibilities, inconsistencies had 

emerged among NNSA sites on how they assessed contractors’ security 

activities. Consequently, we stated that NNSA could not be assured that all 

facilities are subject to the comprehensive annual assessments that DOE 

policy requires. 

• Weaknesses in NNSA oversight also occurred at the Lawrence Livermore 

National Laboratory. Specifically, in our May 2003 report on a new waste 

treatment facility at the laboratory,20 we concluded that a delay in initiating 

 19U.S. General Accounting Office, Nuclear Security: NNSA Needs to Better Manage Its 

Safeguards and Security Program, GAO-03-471 (Washington, D.C.: May 30, 2003). 

20U.S. General Accounting Office, Radioactive Waste: DOE Has Acted to Address Delay in 

New Facility at Livermore Laboratory, but Challenges Remain, GAO-03-558 (Washington, 

D.C.: May 15, 2003). 

NNSA’s Proposed 

Transition to Less 

Direct Federal 

Oversight Could Be 

Compromised by 

Outstanding 

Reorganization Issues 
Page 21 GAO-04-545 National Nuclear Security Administration 

storage and treatment operations at the new facility occurred because 

NNSA managers did not carry out their oversight responsibilities to 

provide clear requirements and ensure contractor compliance with these 

requirements. 

• In July 2003, we reported on problems with NNSA’s oversight, particularly 

with regard to cost and schedule, of the Stockpile Life Extension 

Program.21 In particular, we found that Life Extension Program managers 

used reports that contained only limited information on cost growth and 

schedule changes against established baselines. We also found that 

program managers believed that they had not been given adequate 

authority to properly carry out the life extensions. 

• In February 2004, we reported on problems with NNSA’s oversight with 

regard to business operations at the Los Alamos National Laboratory.22

Beginning in the summer of 2002, a series of problems with business 

operations surfaced at the Los Alamos National Laboratory, raising 

questions about the effectiveness of controls over government purchase 

cards and property. Among the questions raised were allegations of 

fraudulent use of government purchase cards and purchase orders, 

concerns about the adequacy of property controls over items such as 

computers, and disputed rationales for the laboratory’s firing of two 

investigators. DOE and NNSA identified multiple causes for these business 

operations problems, one of which was that NNSA’s oversight was too 

narrowly focused on specific performance measures in the contract rather 

than on overall effectiveness. 

In addition to these concerns, DOE ‘s Office of Inspector General has 

raised broader concerns about the adequacy of oversight. For example, in 

November 2003, DOE’s Office of Inspector General released its annual 

report on management challenges, including oversight of contracts and 

project management as two of three internal control challenges facing the 

department.23

 21U.S. General Accounting Office, Nuclear Weapons: Opportunities Exist to Improve the 

Budgeting, Cost Accounting, and Management Associated with the Stockpile Life 

Extension Program, GAO-03-583 (Washington, D.C.: July 28, 2003). 

22U.S. General Accounting Office, Department of Energy: Mission Support Challenges 

Remain at Los Alamos and Lawrence Livermore National Laboratories, GAO-04-370

(Washington, D.C.: Feb. 27, 2004). 

23Department of Energy, Management Challenges at the Department of Energy, DOE/IG0626 (Washington, D.C.: Nov. 12, 2003). 
Page 22 GAO-04-545 National Nuclear Security Administration 

Against this backdrop and in the midst of a major reorganization and staff 

reduction effort, NNSA is proposing to change its contractor oversight 

approach. NNSA’s August 2003 draft Line Oversight and Contractors’ 

Assurance System policy would rely more on contractor self-assessment 

and reporting, among other methods, and less on NNSA’s direct 

oversight.24 The proposal would require a comprehensive contractor 

assurance system, or system of management controls, to be in place and 

would primarily rely upon these systems and controls to ensure that its 

missions and activities are properly executed in an effective, efficient, and 

safe manner. NNSA would use a risk-based, graded approach to its 

oversight and tailor the extent of federal oversight to the quality and 

completeness of the contractors’ assurance systems and to evidence of 

acceptable contractor performance. NNSA’s oversight functions would 

include review and analysis of contractor performance data, direct 

observations of contractor work activities in nuclear and other facilities, 

annual assessments of overall performance under the contract, and 

certifications by the contractor or independent reviewers that the major 

elements of risk associated with the work performed are being adequately 

controlled. NNSA stated in its draft policy and in public meetings before 

the Defense Nuclear Facilities Safety Board that the department plans to 

phase in this new oversight approach over the next few years. 

NNSA has already begun taking steps to accommodate implementation of 

the new contractor oversight approach in parallel with its reorganization. 

For example, the new contract effective October 1, 2003, between Sandia 

Corporation and NNSA’s Sandia Site Office describes 10 key attributes for 

its assurance system, such as having rigorous, risk-based, and credible 

self-assessments, feedback, and improvement activities, and using 

nationally recognized experts and other independent reviewers to assess 

and improve its work process and to carry out independent risk and 

vulnerability studies. Sandia’s contractor plans to implement “assurance 

systems” beginning with its low-risk activities in fiscal year 2004, and 

medium- and high-risk activities in fiscal year 2005. Once satisfied that the 

contractor’s assurance system is effective and results in an improvement 

 24Historically, NNSA has depended upon a combination of contractor controls and direct 

federal oversight to help manage the risks associated with the work conducted at its 

laboratories. However, there are diverse views on the proper balance between federal 

oversight and reliance on contractors’ systems of internal controls. Since 1990, others and 

we have criticized NNSA for inadequate federal oversight and failure to hold contractors 

accountable. In contrast, a 1995 Secretary of Energy Advisory Board task force report on 

alternative futures for the national laboratories criticized DOE for excessive oversight and 

micromanagement of contractors’ activities. 
Page 23 GAO-04-545 National Nuclear Security Administration 

in the contractor’s performance in key functional areas, NNSA will 

consider conducting oversight at the assurance systems level rather than 

at the level of individual transactions. At the time of our review, NNSA 

officials at the Sandia Site Office did not know how they would assess or 

validate the contractor assurance system or what level of assurance they 

would require before they would shift from “transactional” oversight to 

“systems level” oversight. 

Although the overall concept of a risk-based approach seems reasonable, 

we are concerned about NNSA’s ability to effectively carry it out. For 

example, considerable effort is needed at the Los Alamos and Lawrence 

Livermore National Laboratories to successfully implement a risk-based 

approach to laboratory oversight.25 According to the Associate Director for 

Operations at the Los Alamos National Laboratory, the laboratory’s ability 

to manage risk is at a beginning level of maturity. Other officials at the Los 

Alamos laboratory, including officials from the Performance Surety 

Division and the Quality Improvement Office, said that the laboratory and 

NNSA have different perceptions of risks at the laboratory and how to 

manage those risks. In our February 2004 report, we expressed concerns 

about NNSA’s oversight approach and warned that such autonomy for the 

laboratories was inadvisable this soon into the process of recovery from a 

string of embarrassing revelations. We recommended that NNSA needs to 

maintain sufficient oversight of mission support activities to fulfill its 

responsibilities independently until the laboratories have demonstrated 

the maturity and effectiveness of contractor assurance systems and the 

adequacy of the contractor’s oversight have been validated. NNSA 

disagreed with our view of its proposal to rely more on a contractor’s 

system of management controls and less on NNSA’s own independent 

oversight, but acknowledged that there have been problems with oversight 

in the past. NNSA officials remained convinced that the proposed riskbased approach will be successfully implemented, resulting in improved 

contractor oversight. 

We continue to be concerned about whether NNSA is ready to move to its 

proposed system. For example, during this review, officials from NNSA’s 

Nevada Site Office expressed concerns about the performance of the 

management and operating contractor for the Nevada Test Site, citing 

 25U.S. General Accounting Office, Department of Energy: Mission Support Challenges 

Remain at Los Alamos and Lawrence Livermore National Laboratories, GAO-04-370

(Washington, D.C.: Feb. 27, 2004). 
Page 24 GAO-04-545 National Nuclear Security Administration 

repeated problems with contractor’s compliance with basic procedures. 

For example, officials from NNSA’s Nevada Site Office expressed concern 

that there were repeated incidents where the contractor did not follow 

lock-out/tag-out procedures, resulting in, for example, the contractor 

drilling holes into wires that would cause power systems to shut down. 

Furthermore, the Defense Nuclear Facilities Safety Board, in recent public 

meetings, has expressed concerns about nuclear safety under the 

proposed NNSA contractor assurance policy and said that NNSA should 

not delegate responsibility for such an inherently high-risk area of 

operations. Finally, because NNSA has not fully determined (1) who will 

give program direction to its contractors and (2) through a comprehensive 

workforce plan, that it has sufficient staff with the right skills in the right 

places, NNSA’s proposed approach to rely more on contractors’ 

assurances and self-assessments and less on NNSA’s direct oversight may 

be premature. 

NNSA is concurrently making significant and fundamental changes to its 

organization, workforce composition, and contractor oversight approach 

that require careful management forethought, strategy, and analysis. 

Preliminary indications are that some of these changes have had a positive 

effect on certain aspects of NNSA, but the final impact of these changes 

will not be apparent for several years. Specifically, NNSA’s reorganization 

has resulted in some progress in delineating authority and improving 

communication between headquarters and the field. However, the 

reorganization has not resolved confusion regarding authority over 

program management. In addition, by downsizing its federal workforce 

without first determining what critical skills and capabilities it needed, 

NNSA’s workforce reduction targets were more arbitrary than data-driven, 

contributing to short-term skill imbalances and making data-driven 

workforce planning for the longer term more difficult. Specifically, NNSA 

cannot begin to conduct a formal, substantive skill gap analysis to plan for 

the long term until it completes the current workforce reduction and 

collects critical workforce data on knowledge, skills, and competencies, 

among other things. Finally, because important program management and 

workforce issues still need to be resolved, NNSA’s implementation of its 

proposal to rely more on contractors’ assurances and self-assessments and 

less on NNSA’s direct oversight appears to be premature. 

Conclusions 
Page 25 GAO-04-545 National Nuclear Security Administration 

In order to increase the likelihood that NNSA’s reorganization will achieve 

NNSA’s goal of increased management discipline and accountability in 

program management and contractor oversight, we are making three 

recommendations to the NNSA Administrator and the Secretary of Energy: 

• establish a formal program management structure, policy, and 

implementation guidance for directing the work of its contractors, 

especially concerning how program managers will interact with 

contracting officers at site offices to help direct and oversee contractor 

activity; 

• complete and implement data-driven workforce planning for the longer 

term that (1) determines the critical skills and competencies that will be 

needed to achieve current and future programmatic results, including 

contractor oversight; (2) develops strategies tailored to address gaps in 

number, skills and competencies, and deployment of the workforce; and 

(3) monitors and evaluates the agency’s progress toward its human capital 

goals and the contribution that human capital results have made toward 

achieving programmatic results, and 

• postpone any decrease in the level of NNSA’s direct federal oversight of 

contractors until NNSA has a program management structure in place and 

has completed its long-term workforce plan. 

We provided NNSA with a draft of this report for review and comment. 

NNSA agreed in principle with our recommendations; however, it felt that 

it already had efforts underway to address them. Specifically, with respect 

to our recommendation about program management, NNSA stated that it 

has established a formal process for using appropriately designated 

officials to direct contractor activity and that its formal program 

management policy was nearly established. We recognize in our report 

NNSA’s effort to develop processes and formalize its program 

management policy; however, we believe that NNSA needs not only a 

policy, but also a structure and implementation guidance so that the 

managers providing direction to NNSA’s contractors are clearly identified 

and can be held accountable. With respect to our recommendation on 

workforce planning, NNSA agreed with our recommendation, but it 

disagreed that its current plan was based on short-term or arbitrary 

management judgments. In this respect, our conclusions were based on 

discussions with knowledgeable senior agency officials at NNSA 

headquarters and site offices as well as a review of NNSA management 

council minutes. More importantly, we continue to believe in, and NNSA 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 26 GAO-04-545 National Nuclear Security Administration 

does not dispute, the need for a long-term data driven workforce plan that 

will ensure that NNSA meets its long-term goals. Finally, regarding our last 

recommendation on federal oversight of contractors, NNSA stated that it 

had no intention of further decreasing direct oversight of contractors, was 

hiring staff to fill vacant positions at site offices, and that its proposed 

contractor assurance systems would only be implemented after a site 

manager/contracting officer was convinced that the contractor’s system 

would be at least as effective as the current system. While we are pleased 

that NNSA has stated that it will not decrease its direct oversight, our 

recommendation is intended to ensure that NNSA has the critical systems 

it needs in place to perform its function—effective, direct federal 

oversight. 

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after the 

date of this report. At that time, we will send copies to the Secretary of 

Energy and the Administrator of NNSA, the Director of the Office of 

Management and Budget, and appropriate congressional committees. We 

will make copies available to others on request. In addition, the report will 

also be available at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please call me at 

(202) 512-3841. Major contributors to this report are listed in appendix II. 

Sincerely yours, 

Robin M. Nazzaro 

Director, Natural Resources and 

 Environment 
Appendix I: Comments from the National Nuclear Security Administration 

Page 27 GAO-04-545 National Nuclear Security Administration 

Appendix I: Comments from the National 

Nuclear Security Administration 
Appendix I: Comments from the National Nuclear Security Administration 

Page 28 GAO-04-545 National Nuclear Security Administration 
Appendix I: Comments from the National Nuclear Security Administration 

Page 29 GAO-04-545 National Nuclear Security Administration 
Appendix I: Comments from the National Nuclear Security Administration 

Page 30 GAO-04-545 National Nuclear Security Administration 
Appendix II: GAO Contact and Staff 

Acknowledgments 

Page 31 GAO-04-545 National Nuclear Security Administration 

James Noel (202) 512-3591 

In addition to the individual named above, Arturo Holguin, Robert Kigerl, 

Jonathan McMurray, Christopher Pacheco, Anthony Padilla, Judy Pagano, 

and Ellen Rubin made key contributions to this report. 

Appendix II: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Acknowledgments 

(360337) 
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