MODERNIZING THE 

NUCLEAR SECURITY 

ENTERPRISE

Observations on the 

National Nuclear Security 

Administration’s Oversight 

of Safety, Security, and 

Project Management

Statement of Mark Gaffigan, Managing Director

Natural Resources and Environment

Testimony 

Before the Subcommittee on Oversight 

and Investigations, Committee on Energy 

and Commerce, House of Representatives

For Release on Delivery 

Expected at 10:00 a.m. EDT 

Wednesday, September 12, 2012

GAO-12-912T

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-912T, a testimony 

before the Subcommittee on Oversight and 

Investigations, Committee on Energy and 

Commerce, House of Representatives. 

September 12, 2012

MODERNIZING THE NUCLEAR SECURITY 

ENTERPRISE

Observations on the National Nuclear Security 

Administration’s Oversight of Safety, Security, and 

Project Management

Why GAO Did This Study

NNSA is responsible for managing 

nuclear weapon- and nonproliferationrelated national security activities in 

laboratories and other facilities, 

collectively known as the nuclear 

security enterprise. Major portions of 

NNSA’s mission are largely carried out 

by contractors at each site within the 

enterprise. GAO has designated

contract management at NNSA as an 

area at high risk for fraud, waste, and 

abuse. Progress has been made, but 

GAO continues to identify problems 

such as inadequate oversight of safety 

and security as well as cost and 

schedule overruns on major projects.

With NNSA proposing to spend tens of 

billions of dollars to modernize the 

nuclear security enterprise, it is 

important to ensure scarce resources 

are spent in an effective and efficient 

manner.

This testimony addresses (1) DOE’s 

and NNSA’s safety and security

oversight and (2) NNSA’s project and 

contract management. It is based on 

prior GAO reports issued from August 

2000 to July 2012.

DOE and NNSA continue to act on the 

numerous recommendations GAO has 

made to improve NNSA’s management 

of the nuclear security enterprise. GAO 

will continue to monitor DOE’s and 

NNSA’s implementation of these 

recommendations.

What GAO Found

The National Nuclear Security Administration (NNSA), a separately organized 

agency within the Department of Energy (DOE), has successfully ensured that 

the nuclear weapons stockpile remains safe and reliable by using state-of-the-art 

facilities as well as the skills of top scientists. Nevertheless, DOE’s and NNSA’s 

ineffective oversight of its contractors has contributed to many safety and 

security problems. As work carried out at NNSA’s sites involves dangerous 

nuclear materials such as plutonium and highly enriched uranium, stringent 

safety procedures and security requirements must be observed. In response to 

numerous serious safety incidents over several decades, DOE has taken steps 

to improve safety oversight. Recently, laboratory and other officials have raised 

concerns, however, that federal oversight has become excessive and overly 

burdensome. To address these concerns, DOE completed a safety and security 

reform effort to streamline or eliminate many DOE directives. However, GAO 

reported in April 2012 that the benefits of this reform effort are unclear because 

DOE did not determine if the original directives were, in fact, burdensome. In 

addition, the reform effort did not fully address safety concerns GAO and others 

identified in the areas of quality assurance, safety culture, and federal oversight. 

For example, the reform effort gives the NNSA site offices, rather than DOE’s 

Office of Independent Oversight staff, responsibility for correcting problems 

identified in independent assessments. Site office determinations of what issues 

require more formal contractor responses may be influenced by their

responsibility for keeping costs under control and work on schedule. NNSA has 

also experienced security deficiencies, including numerous incidents involving 

the compromise or potential compromise of classified information that pose the 

most serious threat to U.S. national security. NNSA has made progress

addressing these deficiencies—including the establishment of an effective 

headquarters security organization—but a recent and unprecedented security 

incident at an important NNSA site highlights the challenges the agency faces in 

fully implementing and sustaining safety and security improvements. 

NNSA continues to experience significant cost and schedule overruns on its 

major projects. For example, NNSA’s estimated cost to construct a modern 

Uranium Processing Facility at NNSA’s Y-12 National Security Complex 

experienced a nearly seven-fold cost increase from between $600 million and

$1.1 billion in 2004 to between $4.2 billion and $6.5 billion in 2011. In addition, 

NNSA’s estimated cost to construct a new plutonium research facility at Los 

Alamos National Laboratory experienced a nearly six-fold increase from between 

$745 million and $975 million in 2005 to between $3.7 billion and $5.8 billion in 

2010. The project has also been delayed between 8 to 12 years from NNSA’s 

original plans. DOE has recently taken a number of actions to improve 

management of major projects, including those overseen by NNSA. For example, 

DOE has updated program and project management policies and guidance in an 

effort to improve the reliability of project cost estimates, better assess project 

risks, and better ensure project reviews are timely, useful and identify problems 

early. However, in GAO’s view, DOE and NNSA need to (1) commit sufficient 

people and resources to resolve contract management problems, and (2) 

demonstrate, on a sustained basis, the ability to complete major projects on time 

and on budget.

View GAO-12-912T. For more information, 

contact Mark Gaffigan at (202) 512-3841 or 

gaffiganm@gao.gov
 

Page 1 GAO-12-912T 

Chairman Stearns, Ranking Member DeGette, and Members of the 

Subcommittee:

Thank you for the opportunity to discuss our work on safety, security, and 

project management issues related to the nation’s nuclear security 

enterprise. As you know, the National Nuclear Security Administration 

(NNSA), a separately organized agency within the Department of Energy 

(DOE), is responsible for managing nuclear weapon- and 

nonproliferation-related missions in research and development 

laboratories, production plants, and other facilities—known collectively as 

the nuclear security enterprise.1 NNSA manages these national security 

missions, but work activities are largely carried out by management and 

operating (M&O) contractors at each site within the nuclear security 

enterprise. Working under M&O contracts, NNSA contractors apply their 

scientific, technical, and management expertise at NNSA’s governmentowned, contractor operated sites.2

Questions have been raised about DOE’s and NNSA’s management of 

the nuclear security enterprise. For example, we first designated DOE’s 

management of its contracts as an area at high risk of fraud, waste, 

abuse, and mismanagement in 1990 because of the department’s record 

of inadequate management and oversight of its contractors. During the 

late 1990’s, DOE experienced security problems at the nation’s nuclear 

weapons laboratories and significant cost overruns on major projects. 

According to a June 1999 report by the President’s Foreign Intelligence 

Advisory Board, DOE’s management of the nuclear weapons 

laboratories, while representing “science at its best,” also embodied 

“security at its worst” because of “organizational disarray, managerial 

neglect, and...a culture of arrogance.” The advisory board urged 

 

1

Specifically, NNSA manages three national nuclear weapon design laboratories—

Lawrence Livermore National Laboratory in California, Los Alamos National Laboratory in 

New Mexico, and Sandia National Laboratories in New Mexico and California. It also 

manages four nuclear weapons production plants—the Pantex Plant in Texas, the Y-12 

National Security Complex in Tennessee, the Kansas City Plant in Missouri, and the 

Tritium Extraction Facility at DOE’s Savannah River Site in South Carolina. NNSA also 

manages the Nevada National Security Site, formerly known as the Nevada Test Site.

2

M&O contracts are agreements under which the government contracts for the operation, 

maintenance, or support, on its behalf, of a government-owned or -controlled research, 

development, special production, or testing establishment wholly or principally devoted to 

one or more of the major programs of the contracting federal agency. Federal Acquisition 

Regulation, 48 C.F.R. § 17.601.

 
 

Page 2 GAO-12-912T 

Congress to create a new organization that, whether established as an 

independent agency or a semiautonomous agency within DOE, would 

have a clear mission, streamlined bureaucracy, and drastically simplified 

lines of authority and accountability. Responding to the board’s 

recommendations, Congress created NNSA under Title 32 of the National 

Defense Authorization Act for Fiscal Year 2000—the NNSA Act.3 The 

NNSA Act established NNSA as a “separately organized agency” within 

DOE. The act established the position of DOE Under Secretary for 

Nuclear Security, who was also designated as the Administrator of NNSA. 

The Secretary of Energy and the Deputy Secretary of Energy were 

allowed to establish policy for NNSA and to give direction to NNSA 

through the Administrator; however, other DOE employees were 

prohibited from directing the activities of individual NNSA employees. 

DOE directives remain the primary means to establish, communicate, and 

institutionalize policies, requirements, responsibilities, and procedures for 

multiple departmental elements, including NNSA, but the act gives the 

NNSA Administrator the authority to establish NNSA-specific policies, 

unless disapproved by the Secretary of Energy. NNSA does this through 

the issuance of Policy Letters.4

NNSA’s creation, however, has not yet had the desired effect of fully 

resolving these long-standing management problems. For example, 

security incidents, as well as safety issues, contributed to the temporary 

shut-down of facilities at both Los Alamos and Livermore in 2004 and 

2005.

5

 

3

Pub. L. No. 106-65, 113 Stat. 512, 953 (1999).

More recently, at the Y-12 National Security Complex, three 

trespassers gained access to the protected security area directly adjacent 

to one of the nation’s most critically important nuclear weapons-related 

facilities without being interrupted by the security measures in place. 

According to the Department of Energy’s Inspector General, this security 

breach was unprecedented and represented multiple system failures 

including failures to maintain critical security equipment, respond properly 

4

NNSA, Policy Letters: NNSA Policies, Supplemental Directives, and Business Operating 

Procedures, NA SD 251.1 (Washington, D.C.: July 5, 2011).

5

For additional information on the 2004 temporary shutdown of facilities at Los Alamos, 

see GAO, Stand-Down of Los Alamos National Laboratory: Total Costs Uncertain; Almost 

All Mission-Critical Programs Were Affected but Have Recovered, GAO-06-83 

(Washington, D.C.: Nov. 18, 2005).
 

Page 3 GAO-12-912T 

to alarms, and understand security protocols.6 Furthermore, the Inspector 

General found that contractor governance and federal oversight failed to 

identify and correct early indications of these multiple system 

breakdowns. Concerns have also been raised recently by national 

laboratory and other officials that DOE’s and NNSA’s oversight of the 

laboratories’ activities has become excessive and that the safety and 

security requirements the laboratories’ are subject to are overly 

prescriptive and burdensome, which has resulted in a negative effect on 

the quality of science performed at these laboratories. Regarding major 

projects, contract management at NNSA and DOE’s Office of 

Environmental Management remain on our high-risk list.7 In this context, 

there have been calls in Congress and other organizations to enhance 

NNSA’s ability to operate independently of DOE. For example, the 

Defense Science Board proposed in 2006 that a completely independent 

nuclear weapons agency be created.8 In January 2007, we reported9 that 

former senior DOE and NNSA officials with whom we spoke generally did 

not favor removing NNSA from DOE; we concluded that such drastic 

change was unnecessary to produce an effective organization and we 

continue to hold this view.10

My testimony today discusses DOE’s and NNSA’s management of the 

nuclear security enterprise. It focuses on our reports issued from August 

2000 to July 2012 on (1) oversight of safety and security performance in 

the nuclear security enterprise and (2) project and contract management. 

Detailed information about scope and methodology can be found in our 

issued reports. We conducted the performance audit work that supports 

 

6

DOE Office of Inspector General, Inquiry into the Security Breach at the National Nuclear 

Security Administration’s Y-12 National Security Complex, DOE/IG-0868, August 2012.

7

GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011).

8

The Defense Science Board provides the Department of Defense with independent 

advice and recommendations on matters relating to the department’s scientific and 

technical enterprise. See Defense Science Board Task Force, Nuclear Capabilities 

(Washington, D.C.: December 2006).

9

GAO, National Nuclear Security Administration: Additional Actions Needed to Improve 

Management of the Nation’s Nuclear Programs, GAO-07-36, (Washington, D.C.: Jan.19, 

2007).

10GAO, Modernizing the Nuclear Security Enterprise: Observations on the Organization 

and Management of the National Nuclear Security Administration, GAO-12-867T, 

(Washington, D.C.: June 27, 2012).
 

Page 4 GAO-12-912T 

this statement in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform 

audits to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

DOE is responsible for a diverse set of missions, including nuclear 

security, energy research, and environmental clean-up. These missions 

are managed by various organizations within DOE and largely carried out 

by M&O contractors at DOE sites. According to federal budget data, 

NNSA is one of the largest organizations in DOE, overseeing nuclear 

weapons, nuclear nonproliferation, and naval reactors missions at its 

sites. With a $10.5 billion budget in fiscal year 2011—nearly 40 percent of 

DOE’s total budget—NNSA is responsible for providing the United States 

with safe, secure, and reliable nuclear weapons in the absence of 

underground nuclear testing and maintaining core competencies in 

nuclear weapons science, technology, and engineering. Ensuring a safe 

and reliable nuclear weapons stockpile is an extraordinarily complicated 

task and requires state-of-the-art experimental and computing facilities as 

well as the skills of top scientists in the field. To its credit, NNSA 

consistently accomplishes this task, as evidenced by the successful 

assessment of the safety, reliability, and performance of each weapon 

type in the nuclear stockpile since its creation. In 2011, the administration 

announced plans to request $88 billion from Congress over the next 

decade to operate and modernize the nuclear security enterprise.

As discussed above, work activities to support NNSA’s national security 

missions are largely carried out by M&O contractors. This arrangement 

has historical roots. Since the Manhattan Project produced the first atomic 

bomb during World War II, NNSA, DOE, and predecessor agencies have 

depended on the expertise of private firms, universities, and others to 

carry out research and development work and efficiently operate the 

facilities necessary for the nation’s nuclear defense. Currently, DOE 

spends 90 percent of its annual budget on M&O contracts, making it the 

largest non-Department of Defense contracting agency in the 

government.

DOE generally regulates the safety of its own nuclear facilities and 

operations at its sites. In contrast, the Nuclear Regulatory Commission 

(NRC) generally regulates commercial nuclear facilities, and the 

Occupational Safety and Health Administration (OSHA) generally 

Background 
 

Page 5 GAO-12-912T 

regulates worker safety at commercial industrial facilities.11 However, 

because of the dangerous nature of work conducted at many sites within 

the national security enterprise—handling nuclear material such as 

plutonium, manufacturing high explosives, and various industrial 

operations that use hazardous chemicals—oversight of the nuclear 

security enterprise is multifaceted. First, DOE policy states that its 

contractors are expected to develop and implement an assurance 

system, or system of management controls that help ensure the 

department’s program mission and activities are executed in an effective, 

efficient, and safe manner.12 Through these assurance systems, 

contractors are required to perform self-assessments as well as identify 

and correct negative performance trends. Second, NNSA site offices, 

which are collocated with NNSA sites, oversee the performance of M&O 

contractors. Site office oversight includes communicating performance 

expectations to the contractor, reviewing the contractor’s assurance 

system, and conducting contractor performance evaluations. Third, 

DOE’s Office of Health, Safety, and Security—especially its Office of 

Independent Oversight—conducts periodic appraisals to determine if 

NNSA officials and contractors are complying with safety and security 

requirements.13 Fourth, NNSA receives safety assessments and 

recommendations from other organizations, most prominently the 

Defense Nuclear Facilities Safety Board (Safety Board)—an independent 

executive branch agency created by Congress to assess safety 

conditions and operations at DOE’s defense nuclear facilities.14

 

11DOE regulates the safety of most of its own sites with nuclear operations; NRC 

regulates several DOE nuclear facilities, and OSHA regulates occupational safety at DOE 

sites that have no nuclear function.

To 

address public health and safety issues, the Safety Board is authorized to 

make recommendations to the Secretary of Energy, who may then accept 

or reject, in whole or in part, the recommendations. If the Secretary of 

12DOE, Department of Energy Oversight Policy, DOE P 226.1B (Washington, D.C.: 

Apr. 25, 2011). Contractor assurance systems are to cover the following operational 

aspects: (1) environment, safety, and health; (2) safeguards and security; (3) emergency 

management; and (4) cyber security.

13DOE reorganized offices within the Office of Health, Safety, and Security. The Office of 

Independent Oversight merged with the Office of Enforcement and was renamed the 

Office of Enforcement and Oversight. For the purposes of this report, we refer to it as the 

Office of Independent Oversight.

14The Safety Board provides oversight for all NNSA sites except the Kansas City Plant, 

which manufactures non-nuclear components.
 

Page 6 GAO-12-912T 

Energy accepts the recommendations, the Secretary must prepare an 

implementation plan. Other organizations that provide assessments and 

recommendations to NNSA on the management of its sites include DOE’s 

Office of Inspector General, the National Academy of Sciences, and 

GAO.

Work carried out at NNSA’s sites may involve plutonium and highly 

enriched uranium, which are extremely hazardous. For example, 

exposure to small quantities of plutonium is dangerous to human health, 

so that even inhaling a few micrograms creates a long-term risk of lung, 

liver, and bone cancer, and inhaling larger doses can cause immediate 

lung injuries and death. Also, if not safely contained and managed, 

plutonium can be unstable and spontaneously ignite under certain 

conditions. NNSA’s sites also conduct a wide range of other activities, 

including construction and routine maintenance and operation of 

equipment and facilities that also run the risk of accidents, such as those 

involving heavy machinery or electrical mishaps. The consequences of 

such accidents could be less severe than those involving nuclear 

materials but could also lead to long-term illnesses, injuries, or even 

deaths among workers or the public.

Long-standing DOE and NNSA management weaknesses have 

contributed to persistent safety problems at NNSA’s national laboratories. 

In October 2007, we reported that there had been nearly 60 serious 

accidents or near misses at NNSA’s national laboratories since 2000.15

 

15GAO, Nuclear and Worker Safety: Actions Needed to Determine the Effectiveness of 

Safety Improvement Efforts at NNSA’s Weapons Laboratories, 

These incidents included worker exposure to radiation, inhalation of toxic 

vapors, and electrical shocks. Although no one was killed, many of the 

accidents caused serious harm to workers or damage to facilities. For 

example, at Los Alamos in July 2004, an undergraduate student who was 

not wearing required eye protection was partially blinded in a laser 

accident. Our review of nearly 100 reports issued since 2000 found that 

the contributing factors to these safety problems generally fell into three 

key categories: (1) relatively lax laboratory attitudes toward safety 

procedures, (2) laboratory inadequacies in identifying and addressing 

safety problems with appropriate corrective actions, and (3) inadequate 

oversight by NNSA site offices. DOE’s Office of Inspector General has 

GAO-08-73 (Washington, 

D.C.: Oct. 31, 2007).

Ineffective DOE and 

NNSA Contractor 

Oversight Has 

Contributed to Safety 

and Security 

Problems Across the 

Nuclear Security 

Enterprise 
 

Page 7 GAO-12-912T 

also raised concerns about safety oversight by NNSA’s site offices. 

Specifically, the Inspector General reported in June 2011 that NNSA’s 

Livermore Site Office was not sufficiently overseeing the contractor to 

ensure that corrective actions were fully and effectively implemented for a 

program designed to limit worker exposure to beryllium, a hazardous 

metal essential for nuclear operations.16

In a March 2010 memorandum, the Deputy Secretary of Energy 

announced a reform effort to revise DOE’s safety and security directives 

and modify the department’s oversight approach to “provide contractors 

with the flexibility to tailor and implement safety and security programs 

without excessive federal oversight or overly prescriptive departmental 

requirements.” In the memorandum announcing this effort, the Deputy 

Secretary noted that burdensome safety requirements were affecting the 

productivity of work at DOE’s sites and that reducing this burden on 

contractors would lead to measurable productivity improvement. As we 

reported to this committee in April 2012, this reform effort reduced the 

number of safety related directives from 80 to 42 by eliminating or 

combining requirements the department determined were unclear, 

duplicative, or too prescriptive and by encouraging the use of industry 

standards.17

 

16DOE Office of Inspector General, Implementation of Beryllium Controls at Lawrence 

Livermore National Laboratory, DOE/IG-0851 (Washington, D.C.: June 2011).

However, the benefits of this reform effort are not clear 

because DOE did not (1) determine how the original requirements 

impaired productivity or added costs, (2) assess whether the cost to 

implement the revised directives would exceed the benefits, or (3) 

develop performance measures in order to assess how the reform effort 

will lead to improved productivity or lower costs. Furthermore, DOE’s 

safety reform effort did not fully address safety concerns we and others 

identified in the areas of quality assurance, safety culture, and federal 

oversight. In fact, some of the revisions DOE made to its safety-related 

directives may actually result in weakened independent oversight. For 

example, while DOE policy notes that independent oversight is integral to 

help ensure the effectiveness of safety performance, DOE’s Office of 

Independent Oversight staff must now coordinate its assessment 

activities with NNSA site office management to maximize the use of 

resources. This arrangement potentially raises concerns about whether 

17GAO, Nuclear Safety: DOE Needs to Determine the Costs and Benefits of Its Safety 

Reform Effort, GAO-12-347 (Washington, D.C.: Apr. 20, 2012).
 

Page 8 GAO-12-912T 

Office of Independent Oversight staff will be sufficiently independent from 

site office management. In addition, the reform effort gives the NNSA site 

office, rather than Office of Independent Oversight staff, increased 

responsibility for managing actions to correct problems identified in 

independent assessments. Site office determinations of what issues 

require more formal contractor responses may be influenced by the fact 

that the site offices also have responsibility for keeping costs under 

control and work on schedule.

Similar to, but independent of DOE’s safety and security reform effort, in 

February 2011, NNSA initiated its “governance transformation” project, 

which involved revising the agency’s business model to, among other 

things, place more reliance on contractor’s self-oversight through its 

contractor assurance systems to ensure such things as effective safety 

and security performance. NNSA’s Kansas City Plant has completed 

implementation of this new business model, and other NNSA sites—such 

as the Nevada National Security Site and the Y-12 National Security 

Complex—are currently making changes to implement it as well. In 

response to the new business model, the Safety Board and the DOE 

Office of Inspector General have raised concerns about contractor 

assurance systems. For example, in an April 2011 congressional 

testimony, the chairman of the Safety Board stated that contractor 

assurance systems at defense nuclear facilities have not achieved a 

degree of effectiveness that would warrant a reduction in federal safety 

oversight and that they are not expected to achieve this effectiveness in 

the foreseeable future. In May 2012, the DOE Office of Inspector General 

reported on weaknesses with Sandia National Laboratories’ Integrated 

Safety Management contractor assurance system.18

NNSA’s work with nuclear materials such as plutonium and highly 

enriched uranium, nuclear weapons and their components, and large 

amounts of classified data requires extremely high security. However, we 

Specifically, the 

report stated, among other things, that (1) contractor self-assessments 

often failed to identify weaknesses that were subsequently identified by 

independent assessments and (2) the NNSA site office had not always 

included goals in the contractor’s performance evaluation plans for 

correcting known weaknesses.

 

18DOE Office of Inspector General, Integrated Safety Management at Sandia National 

Laboratories, DOE/IG-0866 (Washington, D.C.: May 2012).
 

Page 9 GAO-12-912T 

have documented cases of poor security performance within the nuclear 

security enterprise. For example, in January 2008, we reported that Los 

Alamos experienced 57 reported security incidents involving the 

compromise or potential compromise of classified information from 

October 1, 2002, through June 30, 2007, according to DOE records.19

Thirty-seven (or 65 percent) of these reported incidents posed the most 

serious threat to U.S. national security interests. Of the remaining 20 

incidents, 9 involved the confirmed or suspected unauthorized disclosure 

of secret information, which posed a significant threat to U.S. national 

security interests. The remaining 11 reported security incidents involved 

the confirmed or suspected unauthorized disclosure of confidential 

information, which posed a threat to DOE security interests. Since that 

time, NNSA has made progress resolving some security issues. In our 

January 2007 report, we made 21 recommendations to the Secretary of 

Energy and the Administrator of NNSA that were intended to correct 

deficiencies in five areas, including security.20

Nevertheless, as the recent and unprecedented security incident at Y-12 

highlights, NNSA struggles to fully implement and sustain safety and 

security improvements while facing security challenges. In June 2008, we 

reported that significant security problems at Los Alamos had received 

insufficient attention.

Our security-related 

recommendations included having NNSA implement a professional 

development program for security staff to ensure the completion of 

needed training, develop a framework to evaluate results from security 

reviews and guide security improvements, and establish formal 

mechanisms for sharing and implementing lessons learned across the 

nuclear security enterprise. DOE and NNSA have taken important steps 

to address most of these recommendations. Specifically, NNSA’s 

establishment of an effective headquarters security organization has 

made significant progress implementing these recommendations by 

performing security reviews, developing security performance measures, 

and instituting a security lessons-learned center.

21

 

19GAO, Los Alamos National Laboratory: Information on Security of Classified Data, 

Nuclear Material Controls, Nuclear and Worker Safety, and Project Management 

Weaknesses, 

The laboratory had over two dozen initiatives 

GAO-08-173R (Washington, D.C.: Jan. 10, 2008).

20GAO-07-36

21GAO, Los Alamos National Laboratory: Long-Term Strategies Needed to Improve 

Security and Management Oversight, GAO-08-694 (Washington, D.C.: June 13, 2008). 
 

Page 10 GAO-12-912T 

under way that were principally aimed at reducing, consolidating, and 

better protecting classified resources. However, the laboratory had not 

implemented complete security solutions to address either classified parts 

storage in unapproved storage containers or weaknesses in its process 

for ensuring that actions taken to correct security deficiencies were 

completed. Furthermore, Los Alamos had implemented initiatives that 

addressed a number of previously identified security concerns but had not 

developed the long-term strategic framework necessary to ensure that its 

fixes would be sustained over time. In March 2009, we reported on 

numerous and wide-ranging security deficiencies at Livermore, 

particularly in the ability of Livermore’s protective forces to ensure the 

protection of special nuclear material and the laboratory’s protection and 

control of classified matter.22 Livermore’s physical security systems, such 

as alarms and sensors, and its security program planning and assurance 

activities were also identified as areas needing improvement. 

Weaknesses in Livermore’s contractor self-assessment program and the 

Livermore Site Office’s oversight of the contractor contributed to these 

security deficiencies at the laboratory. According to one DOE official, both 

programs were “broken” and missed even the “low-hanging fruit.” The 

laboratory took corrective action to address these deficiencies, but we 

noted that better oversight was needed to ensure that security 

improvements were fully implemented and sustained. Following the 

security incident at Y-12, which resulted in a 2 week suspension of 

nuclear operations at the site, DOE and NNSA have taken a number of 

actions to address both site-specific and enterprise-wide security issues. 

For example, DOE and NNSA: (1) required the entire site workforce to 

undergo additional security training; (2) increased the number of 

protective force patrols that review alarm assessments; and (3) tasked a

senior agency official to conduct an assessment of NNSA’s enterprisewide security oversight model.

 

22GAO, Nuclear Security: Better Oversight Needed to Ensure That Security Improvements 

at Lawrence Livermore National Laboratory Are Fully Implemented and Sustained, 

GAO-09-321 (Washington, D.C.: Mar. 16, 2009). 
 

Page 11 GAO-12-912T 

A basic tenet of effective management is the ability to complete projects 

on time and within budget. For more than a decade and in numerous 

reports, we have found that NNSA has continued to experience significant 

cost and schedule overruns on its major projects, principally because of 

ineffective oversight and poor contractor management. Specifically:

• In August 2000, we reported that poor management and oversight of 

the National Ignition Facility construction project at Lawrence 

Livermore National Laboratory had increased the facility’s cost by $1 

billion and delayed its scheduled completion date by 6 years.23

Among the many causes for the cost overruns or schedule delays, 

DOE and Livermore officials responsible for managing or overseeing 

the stadium-sized laser facility’s construction did not plan for the 

technically complex assembly and installation of the facility’s 192 laser 

beams. They also did not use independent review committees 

effectively to help identify and correct issues before they turned into 

costly problems. Similarly, in April 2010, we reported that weak 

management by DOE and NNSA had allowed the cost, schedule, and 

scope of ignition-related activities at the National Ignition Facility to 

increase substantially.24

• We have issued several reports on the technical issues, cost 

increases, and schedule delays associated with NNSA’s efforts to 

extend, through refurbishment, the operational lives of nuclear 

weapons in the stockpile. For example, in December 2000, we 

reported that refurbishment of the W87 strategic warhead had 

experienced significant design and production problems that 

increased its refurbishment costs by over $300 million and caused 

Since 2005, ignition-related costs have 

increased by around 25 percent—from $1.6 billion in 2005 to over $2 

billion in 2010—and the planned completion date for these activities 

has slipped from the end of fiscal year 2011 to the end of fiscal year 

2012 or beyond.

 

23GAO, National Ignition Facility: Management and Oversight Failures Caused Major Cost 

Overruns and Schedule Delays, GAO/RCED-00-271 (Washington, D.C.: Aug. 8, 2000).

24Ignition-related activities consist of the efforts separate from the facility’s construction 

that have been undertaken to prepare for the first attempt at ignition—the extremely 

intense pressures and temperatures that simulate on a small scale the thermonuclear 

conditions created in nuclear explosions. See GAO, Nuclear Weapons: Actions Needed to 

Address Scientific and Technical Challenges and Management Weaknesses at the 

National Ignition Facility, GAO-10-488 (Washington, D.C.: Apr. 8, 2010).

NNSA Needs to Make 

Further 

Improvements to Its 

Management of Major 

Projects and 

Contracts 
 

Page 12 GAO-12-912T 

schedule delays of about 2 years.25 Similarly, in March 2009, we 

reported that NNSA and the Department of Defense had not 

effectively managed cost, schedule, and technical risks for the B61 

nuclear bomb and the W76 nuclear warhead refurbishments.26

• In October 2009, we reported on shortcomings in NNSA’s oversight of 

the planned relocation of its Kansas City Plant to a new, more modern 

facility.

For the 

B61 life extension program, NNSA was only able to stay on schedule 

by significantly reducing the number of weapons undergoing 

refurbishment and abandoning some refurbishment objectives. In the 

case of the W76 nuclear warhead, NNSA experienced a 1-year delay 

and an unexpected cost increase of nearly $70 million as a result of 

its ineffective management of one of the highest risks of the 

program—manufacturing a key material known as Fogbank, which 

NNSA needed to refurbish the warhead but did not have the 

knowledge, expertise, or facilities to manufacture.

27

• We reported in March 2010 that NNSA’s plutonium disposition 

program was behind schedule in establishing a capability to produce 

the plutonium feedstock necessary to operate its Mixed-Oxide Fuel 

Rather than construct a new facility itself, NNSA chose to 

have a private developer build it. NNSA would then lease the building 

through the General Services Administration for a period of 20 years. 

However, when choosing to lease rather than construct a new facility 

itself, NNSA allowed the Kansas City Plant to limit its cost analysis to 

a 20-year life cycle that has no relationship with known requirements 

of the nuclear weapons stockpile or the useful life of a production 

facility that is properly maintained. As a result, NNSA’s financing 

decisions were not as fully informed and transparent as they could 

have been. If the Kansas City Plant had quantified potential cost 

savings to be realized over the longer useful life of the facility, NNSA 

might have made a different decision as to whether to lease or 

construct a new facility itself.

 

25GAO, Nuclear Weapons: Improved Management Needed to Implement Stockpile 

Stewardship Program Effectively, GAO-01-48, (Washington, D.C.: Dec. 14, 2000).

26GAO, Nuclear Weapons: NNSA and DOD Need to More Effectively Manage the 

Stockpile Life Extension Program, GAO-09-385 (Washington, D.C.: Mar. 2, 2009).

27GAO, Nuclear Weapons: National Nuclear Security Administration Needs to Better 

Manage Risks Associated with Modernization of Its Kansas City Plant, GAO-10-115 

(Washington, D.C.: Oct. 23, 2009).
 

Page 13 GAO-12-912T 

Fabrication Facility currently being constructed at DOE’s Savannah 

River Site in South Carolina.28

• In November 2010, we reported that NNSA’s plans to construct a 

modern Uranium Processing Facility (UPF) at its Y-12 National 

Security Complex in Oak Ridge, Tennessee, had experienced 

significant cost increases.

In addition, NNSA had not sufficiently 

assessed alternatives to producing plutonium feedstock and had only 

identified one potential customer for the mixed-oxide fuel the facility 

would produce. In its fiscal year 2012 budget justification to Congress, 

NNSA reported that it did not have a construction cost baseline for the 

facility needed to produce the plutonium feedstock for the mixed-oxide 

fuel, even though Congress had already appropriated over $270 

million through fiscal year 2009 and additional appropriation requests 

totaling almost $2 billion were planned through fiscal year 2016. 

NNSA stated in its budget justification that it was considering options 

for producing necessary plutonium feedstock without constructing a 

new facility.

29

• We reported in March 2012 on NNSA’s plans to construct the 

Chemistry and Metallurgy Research Replacement Nuclear Facility 

(CMRR) at Los Alamos, which is intended to modernize the 

laboratory’s capability to analyze and store plutonium.

Originally estimated in 2004 to cost from 

$600 million to $1.1 billion, NNSA revised its cost estimate in 2007, 

more than doubling the estimated cost to construct the facility to 

between $1.4 billion and $3.5 billion. Costs have continued to rise 

since we issued our report. As of September 2011, NNSA estimated 

that the facility would cost from $4.2 billion to $6.5 billion to 

construct—a nearly seven-fold cost increase from the original 

estimate.

30

 

28GAO, Nuclear Nonproliferation: DOE Needs to Address Uncertainties with and 

Strengthen Independent Safety Oversight of Its Plutonium Disposition Program, 

Specifically, 

we found that in 2005, when DOE developed initial plans for CMRR, it 

GAO-10-378 (Washington, D.C.: Mar. 26, 2010). Mixed-oxide fuel contains plutonium 

blended with natural uranium, reprocessed uranium, or depleted uranium.

29GAO, Nuclear Weapons: National Nuclear Security Administration’s Plans for Its 

Uranium Processing Facility Should Better Reflect Funding Estimates and Technology 

Readiness, GAO-11-103 (Washington, D.C.: Nov. 19, 2010).

30GAO, Modernizing the Nuclear Security Enterprise: New Plutonium Research Facility at 

Los Alamos May Not Meet All Mission Needs, GAO-12-337 (Washington, D.C.:

Mar. 26, 2012).
 

Page 14 GAO-12-912T 

estimated that the project would cost from $745 million to $975 million 

and would be completed between 2013 and 2017. In April 2010, 

NNSA estimated that CMRR will cost between $3.7 and $5.8 billion—

a nearly six-fold increase from the initial estimate—and that 

construction will be complete by 2020—a 3- to 7-year delay. In 

February 2012, after we had provided NNSA with a draft of our report 

for its comments, NNSA announced that it had decided to defer 

CMRR construction by at least an additional 5 years, bringing the total 

delay from NNSA’s original plans to 8 to 12 years. Furthermore, even 

though CMRR as designed may be large enough to meet nuclear 

weapon stockpile requirements, it is unclear if the facility will be large 

enough to accommodate DOE’s nonweapons activities that involve 

plutonium—such as nonproliferation, nuclear forensics, and nuclear 

counterterrorism programs—because the department has not 

comprehensively studied their long-term research and storage needs.

• In July 2012, we identified concerns with NNSA’s framework for 

planning, prioritizing, funding, and evaluating its program activities.31

For example, we found that NNSA’s formal process for assessing 

budget estimates is not sufficiently thorough to ensure that the 

agency’s budget is credible and reliable because (1) it is limited to 

assessing the processes used to develop budget estimates rather 

than the accuracy of the resulting estimates and, (2) it is conducted 

for a small portion of NNSA’s budget—approximately 1.5 percent in 

2011. Furthermore, NNSA lacks an independent analysis unit to verify 

cost estimates and review proposals for program activities, as called 

for by prior DOE Inspector General and GAO recommendations.32

As discussed above, NNSA remains on our high-risk list as vulnerable to 

fraud, waste, abuse, and mismanagement. DOE has recently taken a 

number of actions to improve management of major projects, including 

those overseen by NNSA. For example, DOE has updated program and 

project management policies and guidance in an effort to improve the 

reliability of project cost estimates, better assess project risks, and better 

 

31GAO, Modernizing the Nuclear Security Enterprise: NNSA’s Review of Budget 

Estimates and Decisions on Resource Trade-offs Need Strengthening, GAO-12-806 

(Washington, D.C., July 31, 2012). 

32DOE Office of Inspector General, National Nuclear Security Administration’s Planning, 

Programming, Budgeting, and Evaluation Process, DOE/IG-0614, (Washington, D.C.: 

August 2003) and GAO-07-36. 
 

Page 15 GAO-12-912T 

ensure project reviews that are timely and useful and identify problems 

early. These are positive steps, and we will continue to monitor and 

evaluate DOE’s and NNSA’s implementation of these actions. However, 

DOE needs to ensure that NNSA has the capacity—that is, the people 

and other resources—to resolve its project management difficulties so 

that its major projects do not continue to experience major cost overruns 

and schedule delays.

In conclusion, the critical nature of the work NNSA performs and the highhazard operations it conducts—often involving extremely hazardous 

materials, such as plutonium and highly enriched uranium, that must be 

stored under high security to protect them from theft—requires careful 

oversight and stringent safety and security requirements. With regard to 

the concerns that DOE’s and NNSA’s oversight of the laboratories’ 

activities have become excessive and that safety and security 

requirements are overly prescriptive and burdensome, we agree that 

excessive oversight and micromanagement of contractors’ activities is not 

an efficient use of scarce federal resources. Nevertheless, in our view, 

the problems we continue to identify in the nuclear security enterprise are 

not caused by excessive oversight, but instead result from ineffective 

oversight. NNSA has made significant progress—including the 

establishment of an effective headquarters security organization—

resolving many of the safety and security weaknesses we have identified, 

but, as demonstrated by the recent security incident at Y-12, the agency 

faces challenges in ensuring these improvements are fully implemented 

and sustained.

Regarding management of major projects and contracts, NNSA has, to its 

credit, successfully ensured that the nuclear weapons stockpile remains 

safe and reliable in the absence of underground nuclear testing, 

accomplishing this complicated task by using state-of-the-art facilities, as 

well as the skills of top scientists. NNSA faces a complex task in planning, 

budgeting, and ensuring the execution of interconnected activities across 

the nuclear security enterprise. Among other things, maintaining

government-owned facilities that were constructed more than 50 years 

ago and ensuring M&O contractors are sustaining critical human capital 

skills that are highly technical in nature are difficult undertakings. Over the 

past decade, we have made numerous recommendations to DOE and 

NNSA to improve their management practices. DOE and NNSA have 

acted on many of these recommendations and have made considerable 

progress. Nevertheless, enough significant management problems 

remain to prompt some to call for removing NNSA from DOE and either 

moving it to another department or establishing it as a separate agency. 
 

Page 16 GAO-12-912T 

However, we do not believe that such drastic changes are necessary. 

Importantly, we are uncertain whether such significant organizational 

changes to increase NNSA’s independence would produce the desired 

effect of creating a modern, responsive, effective, and efficient nuclear 

security enterprise. Nevertheless, DOE and NNSA must continue their 

efforts to (1) commit sufficient people and resources to resolve project 

and contract management problems and (2) demonstrate, on a sustained 

basis, the ability to complete major projects on time and on budget. As 

NNSA is proposing to spend decades and tens of billions of dollars to 

modernize the nuclear security enterprise, Congress and the American 

taxpayer have the right to know whether investments made in the nuclear 

security enterprise are worth the cost.

Chairman Stearns, Ranking Member DeGette, and Members of the 

Subcommittee, this completes my prepared statement. I would be 

pleased to respond to any questions you may have at this time.

If you or your staff have any questions about this testimony, please 

contact me at (202) 512-3841 or gaffiganm@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this statement. GAO staff who made key contributions 

to this testimony are Allison Bawden, Ryan T. Coles, and Jonathan Gill, 

Assistant Directors; and Patrick Bernard, Senior Analyst.

A special acknowledgement is due to Gene Aloise, who recently retired 

after 38 years of federal service. For the past 10 years, Gene was GAO’s 

senior executive responsible for issues related to United States and 

international nuclear security and cleanup. The assessments of federal 

initiatives conducted under his direction on a wide range of nuclear 

issues, including efforts to modernize the U.S. nuclear weapons complex, 

hold the Department of Energy accountable for significant cost and 

schedule overruns on major projects, protecting the nation from the 

dangers of nuclear proliferation, and cleaning up the legacy of the United 

States’ production of nuclear weapons during the Cold War, have 

provided the Congress with valuable information for making informed 

policy decisions on and providing oversight of these very complex and 

controversial issues. We wish Gene well in his new position as Deputy 

Inspector General at the Special Inspector General for Afghanistan 

Reconstruction (SIGAR).

GAO Contact and 

Staff 

Acknowledgments

(361424)
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube. 

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts. 

Visit GAO on the web at www.gao.gov. 

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations 

Public Affairs

Please Print on Recycled Paper.