DEPARTMENT OF

ENERGY

Views on the Progress

of the National Nuclear

Security Administration

in Implementing Title 32

Statement of Robert A. Robinson, Managing Director,

Natural Resources and Environment

United States General Accounting Office

GAO Testimony

Before the Special Oversight Panel on Department of

Energy Reorganization, Armed Services Committee, House

of Representatives

For Release on Delivery

Expected at

2.00 p.m.

Wednesday

April 4, 2001

GAO-01-602T
1

Mr. Chairman and Members of the Special Panel:

We are pleased to be here today to provide our observations on the progress the National

Nuclear Security Administration (NNSA) has made in implementing Title 32 of the

National Defense Authorization Act for Fiscal Year 2000 (P.L. No. 106-65). As the Panel

is well aware, Title 32 established NNSA as a semiautonomous agency within DOE with

responsibility for the nation’s nuclear weapons, nonproliferation, and naval reactors

programs. NNSA was created to correct long-standing and widely recognized

management problems at DOE, which had been underscored by significant cost overruns

on major projects and security problems at the national laboratories.

As you will recall, when we testified before the Panel last March, we were concerned

that DOE's approach to establishing NNSA had simply transferred many of DOE’s

historic shortcomings to the new agency.1

 These shortcomings included DOE officials

contemporaneously serving in NNSA and DOE positions (so called "dual-hatting”),

unclear lines of authority, a confusing field structure, and “business-as-usual”

approaches to planning, programming, and budgeting, and personnel issues. Frankly, it

was clear that NNSA had not gotten off to the best possible start. Since that time, at the

Panel’s request, we have been monitoring NNSA’s progress in implementing key

components of Title 32, including its reorganization efforts; integrated planning,

programming and budgeting improvements; and use of NNSA's personnel authority.

We are pleased to report that NNSA has begun to move in the right direction. The

agency is making progress in implementing changes to its organization; planning,

programming, and budgeting functions; and use of personnel authority. However, it may

be several months before we see real, tangible evidence of these changes. And it may be

several years before these changes are fully implemented and can be definitively

assessed. In this connection, much important work remains to be done in

Establishing an organization that clearly defines the roles and responsibilities of

headquarters and field staff; moves program management officials as close to the

action as possible, and establishes clear lines of authority between NNSA and its

contractors;

Implementing an integrated planning, programming, and budgeting system that can

deliver information to decision makers and the Congress in time for the 2003 budget

deliberations; and

Overcoming obstacles to using NNSA’s Excepted Service authority so that it can

attract and retain the technical personnel needed to effectively oversee its diverse

operations.

NNSA’s performance in addressing these three sets of challenges will go a long way

toward determining whether it will be successful in correcting DOE’s long-standing

management problems. After a brief overview of the factors that led to the creation of

 1

 See Department of Energy: Views on DOE’s Plan to Establish the National Nuclear Security

Administration (GAO/T-RCED-00-113, Mar. 2, 2000).
2

NNSA, we will discuss each major management area in more detail, including the

underlying problems to be addressed, the changes NNSA has made, and the challenges

ahead.

Background

Since its creation in 1977, DOE has conducted technically complex activities at its

facilities across the country. These activities include developing, producing, and

maintaining nuclear weapons; preventing the proliferation of weapons of mass

destruction, and designing, building and maintaining naval nuclear propulsion systems.

However, in conducting these activities, DOE has historically been plagued by

organizational and managerial problems that have resulted in significant cost overruns

and schedule delays on major projects, as well as the failure to complete and operate

some of those projects. These problems continue, as the recent cost overrun of over $1

billion and schedule delays with the National Ignition Facility demonstrate. There have

also been a number of security concerns at DOE facilities.

Ultimately, the Congress concluded that DOE, as configured at the time, could not be

counted on to correct these organizational and managerial problems. Accordingly, in

Title 32 of the National Defense Authorization Act for Fiscal Year 2000, the Congress

created a new semiautonomous agency within DOE—the National Nuclear Security

Administration. As required by the act, DOE issued an Implementation Plan for the

creation of NNSA in January 2000. The Implementation Plan called for three program

offices within NNSA, support offices, and a field office organization. In the Panel’s view,

DOE’s plan, as originally crafted, was not in keeping with the intent of Title 32. As a

result, the fiscal year 2001 National Defense Authorization Act (P.L. No. 106-398)

amended Title 32 to require, among other things, additional information on NNSA’s

organization, planning, programming, and budgeting.

NNSA’s first Administrator, General John A. Gordon, was sworn in on June 28, 2000.

Since the Administrator’s appointment, NNSA has undertaken a number of actions to

comply with Title 32, including announcing a proposed headquarters restructuring effort,

with a field restructuring proposal to be announced in May 2001; undertaking the

development of a formal Planning, Programming, and Budgeting System (PPBS),

including developing a Future Years Nuclear Security Program plan; and drafting a

proposal to use NNSA’s Excepted Service personnel authority.

NNSA’s Reorganization Holds Promise,

but Important Challenges Remain

NNSA was established, in part, to correct the confused lines of authority and

responsibility within DOE’s nuclear weapons complex that contributed to a wide variety

of problems, such as cost overruns and schedule slippage on large projects, as well as

security lapses. Past advisory groups, internal DOE studies and GAO have reported over

the years on DOE’s dysfunctional organizational structure. In particular, in December

2000, we concluded a comprehensive study of the management of the Office of Defense

Programs, which makes up over 70 percent of the NNSA. We found that the Office of
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Defense Programs did not have a clear organizational structure or, until recently, formal

control over all of the sites performing its work. In addition, we found that the Office

was fragmented at the headquarters level and, more importantly, that the division of

roles and responsibilities between headquarters and the field was unclear. This situation

made it difficult for the program to be managed as an integrated whole and for managers

to make decisions about balancing competing resource priorities.

As I noted earlier, to bring a fresher, more independent approach to these kinds of

issues, the Congress established NNSA as a semiautonomous agency within, although

distinct from, DOE. While it did not specify exactly how NNSA was to be organized, the

act did establish certain positions, including the Administrator; Deputy Administrators

for Defense Programs, Nuclear Nonproliferation, and Naval Reactors; and a General

Counsel. It also established certain offices, including counterintelligence and nuclear

security. The act laid out chains of command in both DOE and NNSA that would insulate

NNSA from DOE decision making, except at the level of the NNSA Administrator. This is

because the Administrator is under the immediate authority of the Secretary. Initially,

however, the previous Secretary of Energy chose to fill numerous key NNSA positions

with DOE officials—thus, these officials had both DOE and NNSA responsibilities and

were dubbed "dual-hatted." This practice caused considerable concern on this Panel and

with others, including GAO, that NNSA might not be able to function with the

independence envisioned in the NNSA Act.

Following this rocky start, I am pleased to report that progress is being made in the area

of establishing a better-organized NNSA. The practice of dual-hatting has been

eliminated, providing NNSA with the opportunity to exercise a more independent role in

managing its programs. Just as importantly, NNSA has recently proposed reorganizing

its headquarters operations. In announcing the reorganization, NNSA set as its goals

establishing clear and direct lines of communications for laboratory directors and plant

managers, clarifying the roles and responsibilities of NNSA headquarters and field

offices, and integrating and balancing priorities across NNSA’s missions and

infrastructure. To achieve these goals, the Administrator is proposing to establish an

Associate Administrator for Management and Administration and an Associate

Administrator for Facilities and Operations. He is also proposing to establish, through

legislative change, the position of Principal Deputy Administrator to assist him. The

Principal Deputy Administrator; Associate Administrators; and the Deputy

Administrators for Defense Programs, Nonproliferation, and Naval Reactors would serve

on a management council with the Administrator and his staff to make integrated

decisions for the entire NNSA. The reorganization also established the other offices

required by Title 32, such as the Office of Defense Nuclear Counterintelligence.

Currently, only a broad outline of the major functions of these new offices have been

defined.

This structure holds significant promise for addressing the long-standing deficiencies we

and others have identified, in particular because it can reduce the fragmentation at the

headquarters level and can allow for integrated decision making across NNSA’s disparate

parts. However, the new structure does not yet realize all of NNSA’s goals because it

leaves several major organizational deficiencies unaddressed. Specifically, the
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reorganization does not address clearly define the roles and responsibilities of each of

the headquarters offices. It also does not address the critical issue of the relationship

between NNSA headquarters and its field offices and whether headquarters or field

officials will direct and oversee NNSA’s contractors. Finally, it does not directly address

the relationships between NNSA and DOE, in such areas as whether final decisions on

NNSA personnel appointments will be made by the Administrator or the Secretary.

NNSA officials recognize these weaknesses. They have promised to resolve these issues

in an implementation plan they will submit to the Congress by May 1, 2001, and to

complete the reorganization by October 1, 2001. However, NNSA officials have told us

that they are concerned about their ability to address all of the difficult issues that will

need resolution before these deadlines—a concern we share.

Creating a new organization will constitute a major cultural change for all of the

components of NNSA—a change that has occurred very infrequently. For example, the

headquarters/field relationships for much of the Office of Defense Programs were last

officially defined in 1968. Numerous attempts to update these relationships have been

unsuccessful. Moreover, the Office of Naval Reactors is a unique joint Department of

Defense (DOD)-DOE operation that has enjoyed an independence of operation within

DOE since its creation by Admiral Rickover. In order to effectively reorganize and

achieve the goals the Administrator has set for the organization, NNSA will have to (1)

clearly understand the existing roles of its disparate program offices, (2) identify

opportunities to reduce duplication and achieve efficiencies both in headquarters and in

the field, and (3) ensure that the right people are in the right places by hiring or moving

them to their new organizational unit. This process will take time to "get it right."

As NNSA moves forward, we believe that it needs to employ the organizational principles

endorsed in the Institute for Defense Analyses’ 120-Day Study, the Chiles Commission

report, and our review of the management of the Office of Defense Programs.2

 These

principles include

establishing a small headquarters staff focused on top-level management tasks, such

as strategic management and working with external customers;

moving program management officials as close to the action as possible;

establishing clear lines of authority between NNSA and its contractors; and

holding federal and contractor employees accountable for meeting mission goals.

NNSA Is Taking Steps to Improve Its

Planning, Programming, and Budgeting,

but Much Remains to Be Done

Numerous studies, including the 120-Day Study, the Chiles Commission, our report on

the management of the Stockpile Stewardship Program, and the Foster Panel have

 2

 See The Organization and Management of the Nuclear Weapons Program, Institute for Defense Analyses

(known as the 120-Day study) (Mar. 1997) and Report of the Commission on Maintaining United States

Nuclear Weapons Expertise to the Congress and the Secretary of Energy, Commission on Maintaining

United States Nuclear Weapons Expertise (known as the Chiles Commission) (Nov. 1999).
5

identified problems in DOE's planning, programming, and budgeting.3

 These problems

have included the lack of a unified planning and programming process, the absence of

integrated long-range program plans, and plans that were not fully linked to budgets and

management controls. Without sound planning, programming, and budgeting, it has been

difficult for officials to ensure that decisions with resource implications are weighed

against one other in a complete and consistent fashion.

Title 32 mandates the use of sound planning, programming, budgeting, and financial

activities. However, in its original implementation plan for NNSA, DOE said that existing

DOE planning, programming, and budgeting processes would fulfill Title 32

requirements. Needless to say, given the history of management problems at DOE, we,

as well as others, did not believe this response was adequate. To his credit, neither did

the Administrator. He made a commitment to prepare a multiyear budget and program

plan, as required by Title 32, by establishing a programming, planning, and budgeting

system—generally referred to as PPBS—similar to the system used by DOD for 40 years.

While the use of PPBS has not been without problems in DOD, it is generally recognized

as a system that, when properly led and staffed, is capable of making cost-effectiveness

comparisons and of developing the detailed program and budget plans called for in Title

32. In DOD, PPBS has served generally to increase the visibility of the budget process,

provide a “roadmap” for future priorities, and facilitate congressional oversight. The

Administrator set a goal of having NNSA's PPBS fully established by the fiscal year 2003

budget cycle.

While NNSA has made progress over the past several months, key components of a fully

operational PPBS have yet to be finalized or, in some cases, even initiated. Specifically,

program elements—the building blocks of PPBS—are still in the “brainstorming” phase.

The necessary guidance and documentation needed to describe and explain the PPBS to

the NNSA staff have not been finalized. Decision and information systems, which are

key components of a modern PPBS, will not even be discussed until the summer.

Moreover, these systems will have to interface with existing DOE financial and budget

systems. Few PPBS-trained personnel are available to staff the central NNSA PPBS

office, although NNSA estimated that it might need as many as 15 analysts. While NNSA

advertised for a senior person to head its PPBS office earlier in the year, it did not attract

any qualified candidates and NNSA will probably have to re-advertise the position.

Finally, NNSA will have to take action to make sure that its PPBS helps satisfy the

requirements for performance measures called for in Title 32 and in the Government

Performance and Results Act.

PPBS offers the potential to help bring NNSA into compliance with some aspects of Title

32. Nevertheless, the fiscal year 2003 budget cycle is just around the corner and, given

the enormous amount of work that will need to be completed before NNSA has even a

minimally functional PPBS, it seems likely that NNSA's fiscal year 2003 budget, as well as

the fiscal year 2003-08 Future Years Nuclear Security Program plan, will not be able to

make full use of PPBS. Some NNSA officials have conceded that, without the use of

 3 FY 1999 Report of the Panel to Assess the Reliability, Safety, and Security of the United States Nuclear

Stockpile, Foster Panel (Nov. 1999).
6

PPBS tools, the value of the current Future Years Nuclear Security Program plan, now

with the Office of Management and Budget for review, may be limited.

NNSA Is Developing Plans to Use the Personnel

Authority Granted Under Title 32

Retaining and recruiting the highly skilled scientific and technical personnel needed to

make our government run efficiently and effectively challenges virtually every federal

department and agency. DOE, and in particular the Office of Defense Programs, has had

difficulty meeting this challenge because of downsizing and program instability over the

past decade. We and others have concluded that the lack of technically competent DOE

personnel has contributed to weak contract management and to poorly managed

projects that are often late or over budget.

In response to this situation, Title 32 provided NNSA with hiring and salary flexibility

under Excepted Service rules for 300 positions for scientific, engineering, and technical

staff. To date, NNSA has not used this personnel authority. While NNSA has hired only a

small number of staff (less than 20), it has done so under pre-existing DOE authorities

for General Schedule, Excepted Service, and Senior Executive Service personnel. NNSA

also continues to utilize personnel services provided by DOE’s Human Resources office,

and senior NNSA hires must be approved by DOE’s Executive Resources Board, which is

chaired by the Secretary of Energy. While this arrangement has been satisfactory at

present, NNSA officials are concerned that the DOE system will probably not be capable,

flexible, or timely enough to handle NNSA's hiring needs in the future.

NNSA has drafted a proposal that will allow it to use the personnel authority established

under Title 32. This proposal includes features such as pay-for-performance criteria and

pay banding for the 300 positions specified by the law. In contrast, the rest of NNSA’s

approximately 1700 federal employees would remain in the standard federal General

Schedule system, except for those in the Senior Executive Service. It also requests that

the Secretary of Energy delegate the authority to NNSA for its own Executive Resources

Board, which would allow the NNSA Administrator to select his own senior-level staff.

In addition, NNSA’s proposed headquarters reorganization includes a human resource

office as part of the Management and Administration organization.

NNSA faces a number of challenges in implementing its personnel proposal. For

example, DOE's analysis shows that as many as 800 NNSA positions may qualify for the

type of scientific, technical, or engineering personnel specified in the law, but Title 32

provides for only 300 positions. As a result, if only some NNSA positions are converted

to Excepted Service, with its pay-banding, pay-for-performance, and bonus provisions,

NNSA federal employees doing the same work could receive significantly different levels

of compensation. This could be especially troublesome for the Office of Naval Reactors,

which is currently staffed from three sources—NNSA civilian employees, Navy civilian

employees, and Navy military employees. NNSA officials are cognizant of these

problems, and believe that eventually NNSA may need to move to the model used by

organizations like the Nuclear Regulatory Commission, which is almost all Excepted

Service, to fully address these issues. Also, according to NNSA officials, the use of
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Excepted Service flexibilities may be opposed by labor unions. While less than 10

percent of NNSA’s workforce is unionized, NNSA officials and Office of Personnel

Management officials have told us that they believe organized labor generally opposes

Excepted Service. NNSA officials noted that the unions have already requested massive

amounts of data on NNSA’s reorganization and that union opposition has delayed the

reorganization of DOE’s Office of Environmental Management for over 18 months.

- - - - -

Our work was performed during March and April 2001 in accordance with generally

accepted government auditing standards. Mr. Chairman, this concludes my testimony. I

would be happy to respond to any questions you or Members of the Special Panel may

have.

(360070)