Modernizing the Nuclear Security Enterprise: Observations on DOE's and NNSA's Efforts to Enhance Oversight of Security, Safety, and Project and Contract Management
Published: 2013-03-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOE and NNSA are responsible for managing nuclear weapon- and nonproliferation-related national security activities in national laboratories and other sites and facilities, collectively known as the nuclear security enterprise. Major portions of NNSA's mission are largely carried out by contractors at each site. GAO has designated contract management of major projects (i.e., those $750 million or more) at DOE and NNSA as a high risk area. Progress has been made, but GAO continues to identify security and safety problems at DOE and NNSA sites as well as project and contract management problems related to cost and schedule overruns on major projects.
This testimony addresses DOE's and NNSA's oversight of (1) security performance, (2) safety performance, and (3) project and contract management in the nuclear security enterprise. It is based on prior GAO reports issued from August 2000 to December 2012.
DOE and NNSA continue to act on the numerous recommendations GAO has made to improve management of the nuclear security enterprise. GAO will continue to monitor DOE's and NNSA's implementation of these recommendations.
section_title: What GAO Found
paragraphs: The Department of Energy (DOE) and the National Nuclear Security Administration (NNSA), a separately organized agency within DOE, continue to face challenges in ensuring that oversight of security activities is effective. For example, in July 2012, after three trespassers gained access to the protected security area directly adjacent to one of the nation's most critically important nuclear weapon-related facilities, the Y-12 National Security Complex, DOE and NNSA took a number of immediate actions. These actions included repairing security equipment, reassigning key security personnel, and firing the Y-12 protective force contractor. As GAO and others have reported, DOE has a long history of security breakdowns and an equally long history of instituting remedies to fix these problems. For example, 10 years ago, GAO reported on inconsistencies among NNSA sites on how they assess contractors' security activities and, since that time, DOE has undertaken security initiatives to address these issues. GAO is currently evaluating these security reform initiatives.
DOE and NNSA continue to face challenges in ensuring that oversight of safety performance activities is effective. DOE and NNSA have experienced significant safety problems at their sites, and recent efforts to reform safety protocols and processes have not demonstrated sustained improvements. Long-standing DOE and NNSA management weaknesses have contributed to persistent safety problems at NNSA's national laboratories. For example, in October 2007, GAO reported that nearly 60 serious accidents or near misses had occurred at NNSA's national laboratories since 2000. DOE has undertaken a number of reforms to address persistent safety concerns. For example, in March 2010, the Deputy Secretary of Energy announced a reform effort to revise DOE's safety and security directives. However, GAO reported in September 2012 that DOE's safety reforms did not fully address continuing safety concerns that GAO and others identified in the areas of quality assurance, safety culture, and federal oversight and, in fact, may have actually weakened independent oversight.
DOE and NNSA have made progress but need to make further improvements to their contract and project management efforts. DOE has made progress in managing nonmajor projects--those costing less than $750 million--and in recognition of this progress, GAO narrowed the focus of its high-risk designation of DOE's Office of Environmental Management (EM) and NNSA to major contracts and projects. Specifically, as GAO noted in its December 2012 report on 71 DOE EM and NNSA nonmajor projects, GAO found the use of some sound management practices that were helping ensure successful project completion. However, major projects continue to pose a challenge for DOE and NNSA. For example, in December 2012, GAO reported that the estimated cost to construct the Waste Treatment and Immobilization Plant in Washington State had tripled to $12.3 billion since its inception in 2000, and the scheduled completion date had slipped by nearly a decade to 2019. Also, in March 2012, GAO reported that a now-deferred NNSA project to construct a new plutonium facility in Los Alamos, New Mexico, could cost as much as $5.8 billion, a nearly six-fold cost increase.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss our work on the security, safety,  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. NNSA directs 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 government- owned, contractor-operated sites.
GAO, Modernizing the Nuclear Security Enterprise: Observations on the National Nuclear  Security Administration’s Oversight of Safety, Security, and Project Management,  GAO-12-912T (Washington, D.C.: Sept. 12, 2012). significant cost overruns on major projects (i.e., $750 million or more).  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 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 advisory board’s  recommendations, Congress created NNSA under Title 32 of the National  Defense Authorization Act for Fiscal Year 2000—the NNSA Act. 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.
NNSA’s creation, however, has not yet had the desired effect of fully  resolving long-standing management problems. For example, NNSA and  DOE’s Office of Environmental Management (EM) remain on our high-risk  list. Furthermore, we have frequently reported on security incidents and safety issues that have contributed to the temporary shutdown of  facilities, such as at Los Alamos and Lawrence Livermore National  Laboratories in 2004 and 2005, as well as the safety and security  initiatives that contractors at these laboratories put in place to help ensure  improvement. More recently, at the Y-12 National Security Complex, in  July 2012, three trespassers gained access to the protected security area  directly adjacent to one of the nation’s most critically important nuclear  weapon-related facilities without being interrupted by the security  measures in place. According to DOE’s Inspector General, this security  incident was unprecedented and represented multiple system failures  including failures to maintain critical security equipment, respond properly  to alarms, and understand security protocols. Furthermore, the Inspector  General found that contractor governance and federal oversight did not  identify and correct early indications of these multiple system  breakdowns.
DOE’s management approach to security over the years has shifted in  part due to concerns raised by some national laboratory, DOE, and NNSA  officials. These officials believed that DOE’s and NNSA’s oversight of the  laboratories’ activities had become excessive and that the safety and  security requirements for the laboratories are overly prescriptive and  burdensome, which had resulted in a negative effect on the quality of  science performed at these laboratories. Partly in response to these  concerns, DOE and NNSA embarked on reforms in 2010 and 2011 that  sought to streamline requirements and institute what has been called by  the National Research Council, the DOE Inspector General, the DOE  Office of Health and Safety Performance, and the Defense Nuclear  Facilities Safety Board (Safety Board) a “hands-off, eyes-on” role for  federal oversight. This approach placed more reliance on contractors’  self-oversight through its contractor assurance systems to ensure such  things as effective safety and security performance. Building on this theme, in February 2012, the National Research Council found that  “safety and security systems at the  Laboratories have been  strengthened to the point where they no longer need special attention.”
In this context, there have been calls 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. In January 2007, we reported that former senior DOE and  NNSA officials with whom we spoke generally did not favor removing  NNSA from DOE. Furthermore, in a June 2012 report, we concluded  that such a drastic change was unnecessary to produce an effective  organization, and we generally hold this view today. However, in the  wake of the Y-12 security incident and persistent problems with major  projects, there have been renewed calls to reexamine NNSA’s  organization. Most recently, the Fiscal Year 2013 National Defense  Authorization Act created the Congressional Advisory Panel on the  Governance of the Nuclear Security Enterprise to examine options and  make recommendations for revising the governance structure, mission,  and management of the nuclear security enterprise.
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 December 2012 on oversight of (1) security performance, (2)  safety performance, and (3) project and contract management in the  nuclear security enterprise. Detailed information about the scope and  methodology can be found in our previously issued reports. We  conducted the performance audit work that supports this statement in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit 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.
subsections: section_title: Background
paragraphs: DOE is responsible for a diverse set of missions, including nuclear  security, energy research, and environmental cleanup. These missions  are managed by organizations within DOE and largely carried out by  M&O contractors at various 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 an $11 billion budget in fiscal year 2012—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. To support these  capabilities into the future, 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 earlier, 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  regulates worker safety at commercial industrial facilities. However,  because of the dangerous nature of work conducted at many sites within  the nuclear 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 M&O  contractors are expected to develop and implement an assurance  system, or system of management controls, that helps ensure the  department’s program missions and activities are executed in an  effective, efficient, and safe manner. 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. Fourth, NNSA receives safety assessments and  recommendations from other organizations, most prominently the Safety  Board—an independent executive branch agency created by Congress to  assess safety conditions and operations at DOE’s defense nuclear  facilities. 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 Energy accepts the recommendations, the Secretary must  prepare an implementation plan.
DOE and some of its contractors have viewed this multifaceted oversight  to be overly burdensome. To address this issue, in March 2010 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. The Deputy Secretary noted that DOE’s Office  of Health, Safety and Security in 2009 had begun reforming its approach  to enforcement and oversight. 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  contractors’ self-oversight through its contractor assurance system to  ensure such things as effective safety and security performance. NNSA’s  non-nuclear Kansas City Plant 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—were in the  process of implementing it, too, when the Y-12 security incident occurred.
section_title: DOE’s and NNSA’s Oversight of Security Performance Continues to Face Challenges
paragraphs: In response to the Y-12 security breach, multiple investigations and  reviews of the incident were performed by NNSA, the DOE Office of  Inspector General, and the DOE Office of Independent Oversight.  These  reviews identified numerous problems with NNSA’s and its contractors’  performance, including: physical security systems, such as alarms;  protective force (i.e., NNSA’s heavily armed, contractor guard forces)  training and response; failures to correct numerous known problems; and  weaknesses in contract and resource management. In addition, at the  request of the Secretary of Energy, an independent panel, composed of  three former executives from Federal agencies and the private sector,  and a NNSA Security Task Force found broader and systemic security  issues across the nuclear security enterprise. The Secretary’s panel in  December 2012 analyzed various models for providing security at DOE  and NNSA sites but generally found that improvements to the security  culture, management, and oversight were necessary, in addition to having  an effective organizational structure.  In addition, the leader of the NNSA  Security Task Force testified before the House Armed Services  Committee in February 2013 about significant deficiencies in NNSA’s  entire security organization, oversight, and culture.
In response to the Y-12 security incident and these findings, DOE and  NNSA took a number of immediate actions, including repairing security  equipment, reassigning key security personnel, and firing the Y-12  protective force contractor. In February 2013, the Acting NNSA  Administrator committed to implementing a three-tiered oversight process  involving contractor self-assessment, NNSA evaluation of site  performance, and independent oversight by DOE’s Office of Independent  Oversight. The Acting Administrator testified before the House Armed  Services Committee that she believed that such actions will help instill a  culture that embraces security as an essential element of NNSA’s  missions.
In assessing DOE’s actions to address the security breakdowns at Y-12,  a central question will be whether these latest actions taken will produce  sustained improvements in security at Y-12 and across the nuclear  security enterprise. As we and others have reported, DOE has a long  history of security breakdowns and an equally long history of instituting  responses and remedies to “fix” these problems. For example, in  examining the Y-12 security incident, NNSA’s former Acting Chief of  Defense Nuclear Security and the leader of the NNSA’s Security Task  Force testified in February 2013 about problems with NNSA’s federal  security organization including poorly defined roles and responsibilities for  its headquarters and field security organizations, inadequate oversight  and assessments of site security activities, and issues with overseeing  contractor actions and implementing improvements. As noted in table 1,  10 years ago we reported on very similar problems, and since that time  DOE has undertaken numerous security initiatives to address them. We  have not evaluated these recent initiatives but we have ongoing work to  evaluate them as part of our review on security reform for the  Subcommittee, which we will complete later this year.
It is also important to note that NNSA’s long-standing security problems  are not limited to Y-12. DOE’s and NNSA’s work with nuclear materials  such as plutonium and highly enriched uranium, nuclear weapons and  their components, and large amounts of classified data require extremely  high security, however, as we and DOE have reported, NNSA and DOE  have a long history of poor security performance across the nuclear  security enterprise, most notably at Los Alamos and Livermore national  laboratories, as well as ongoing struggles to sustain security  improvements, including information security.
subsections: section_title: Los Alamos National Laboratory
paragraphs: As we noted in our September 2012 testimony, Los Alamos National  Laboratory (Los Alamos) experienced a number of high-profile security  incidents in the previous decade that were subject to congressional  hearings, including some held by this Subcommittee. Many of these  incidents focused on Los Alamos’s inability to account for and control its  classified resources. These incidents include the transfer or removal of  classified information from authorized work areas or the laboratory itself,  the temporary loss of two hard drives containing nuclear weapon design  information, and difficulties in accounting for classified removable  electronic media. In addition to these well-publicized incidents, security  evaluations through 2007 identified other persistent, systemic security  problems at Los Alamos. These problems included weaknesses in  controlling and protecting classified resources, inadequate controls over  special nuclear material, inadequate self-assessment activities, and  weaknesses in the process that Los Alamos uses to ensure it corrects  identified security deficiencies. Partly as a result of these findings, as we  reported in 2008, Los Alamos underwent a 10 month shut-down of  operations in 2004 and experienced a change in contractors in 2005.  Moreover, the Secretary of Energy issued a compliance order in 2007  requiring Los Alamos to implement specific corrective actions to, among  other things, address long-standing deficiencies in its classified  information programs. We reported in January 2008 and testified before  this Subcommittee in September 2008 that Los Alamos had experienced  a period of improved security performance but that it was too early to  determine whether NNSA and Los Alamos could sustain this level of  improvement.
section_title: Lawrence Livermore National Laboratory
paragraphs: In March 2009, we reported on numerous and wide-ranging security  deficiencies at Lawrence Livermore National Laboratory (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. We also identified Livermore’s physical  security systems, such as alarms and sensors, and its security program  planning and assurance activities, 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 Office of  Independent Oversight 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.  In September 2012, NNSA and Livermore completed efforts to  move the site’s most sensitive nuclear material to other sites, thereby  easing the site’s security requirements.
section_title: Information Security
paragraphs: We also have reported extensively on NNSA’s challenges in maintaining  effective and secure information security systems, particularly at Los  Alamos. For example, in June 2008, we reported that significant  information security problems at Los Alamos had received insufficient  attention. The laboratory had over two dozen initiatives 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 the problems of classified  parts storage in unapproved storage containers or weaknesses in its  process for ensuring that actions taken to correct security deficiencies  were completed. In addition, in October 2009 we reported that Los  Alamos needed to better protect its classified network.found significant weaknesses remained in protecting the confidentiality,  integrity, and availability of information stored on and transmitted over its  classified computer network. Moreover, we found the laboratory’s   Specifically, we  decentralized approach to information security program management has  led to inconsistent implementation of policy.
section_title: DOE and NNSA’s Oversight of Safety Performance Continues to Face Challenges
paragraphs: DOE and NNSA have experienced significant safety problems at their  sites, and recent efforts to reform safety protocols and processes have  not demonstrated sustained improvements. As we testified in September  2012 before this Subcommittee, long-standing DOE and NNSA  management weaknesses have contributed to persistent safety problems  at NNSA’s national laboratories. For example, in October 2007, we  reported that nearly 60 serious accidents or near misses had occurred at  NNSA’s national laboratories since 2000. These accidents included  worker exposure to radiation, inhalation of toxic vapors, and electrical  shocks. Although no one was killed, many of these accidents caused  serious harm to workers or damage to facilities. As we also reported, 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 safety studies—including accident investigations and  independent assessments by the Safety Board and others 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 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 its 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.
DOE has undertaken a number of reforms to address persistent safety  concerns. In March 2010, the Deputy Secretary of Energy announced a  reform effort to revise DOE’s safety and security directives. The reform  effort was aimed at modifying 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.” As we reported to this  Subcommittee 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. However,  as we noted in September 2012 before this Subcommittee, DOE’s safety  reforms did not fully address safety concerns that we, as well as others,  have identified in the areas of quality assurance, safety culture, and  federal oversight and, in fact, these reforms may have actually weakened  independent oversight. We stated, for example, that 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 their assessment activities with  NNSA site office management to maximize the use of resources. This  arrangement raised our concern about whether Office of Independent  Oversight staff would be sufficiently independent from site office  management. In our April 2012 report, we recommended, among other  things, that DOE develop a detailed reform plan and clearly define the  oversight roles and responsibilities of DOE’s Office of Independent  Oversight staff to ensure that their work is sufficiently independent from  the activities of DOE site office and contractor staff. DOE has taken steps  to respond to these recommendations, including developing a plan aimed  at improving safety management and drafting a memo from the Secretary  of Energy reconfirming the department’s commitment to independent  oversight of safety and security.
GAO-12-912T.
A November 2012 report by DOE’s Office of Independent Oversight  raised concerns about safety culture issues at NNSA’s Pantex Plant.  Among the concerns were reluctance by workers to raise safety  problems for fear of retaliation and a perception that cost took priority  over safety.
At an October 2012 public hearing in Knoxville, Tennessee, the Safety  Board noted that safety controls to prevent or mitigate consequences  from accidents had not been fully incorporated into the design of a  new uranium processing facility at Y-12. The Safety Board noted the  facility’s safety basis—a technical analysis that identifies potential  accidents and hazards associated with a facility’s operations and  outlines controls to mitigate or prevent their impact on workers and  the public—did not adequately address controls to protect workers or  the public in the case of an earthquake or small fires, and did not  adequately calculate reasonably conservative radiation exposure  consequences that could lead to putting greater safety into the  facility’s design. The Safety Board further noted that these  deficiencies raise the potential for significant impacts on public and  worker safety.
A January 2013 Office of Independent Oversight report reviewing the  Los Alamos Site Office assessment of the contractor corrective action  system found that the contractor had not implemented effective  corrective actions for identified safety system problems. This report  noted that the site office concluded that more than half of the 62  safety system items needing corrective action had been closed  without adequate action or sufficient documentation. Moreover, in  October 2012, NNSA issued a Preliminary Notice of Violation to a Los  Alamos contractor for repeated electrical safety problems. NNSA’s  notice stated that insufficient oversight of subcontractor work by the  contractor safety staff was among the contributing factors. NNSA  fined the contractor $262,500.
section_title: DOE and NNSA Have Made Progress but Further Improvements Needed on Project and Contract Management
paragraphs: A basic tenet of effective management is the ability to complete projects  on time and within budget. DOE has taken a number of actions to  improve management of projects, including those overseen by NNSA. For  example, DOE has updated project and contract management policies  and guidance in an effort to improve the reliability of project cost  estimates, better assess project risks, and better ensure project reviews  that are timely and useful and identify problems early. In addition, in  December 2010, the Deputy Secretary of Energy convened a DOE  Contract and Project Management Summit to discuss strategies for  additional improvement in contract and project management. The  participants identified barriers to improved performance and reported in  April 2012 on the status of initiatives to address these barriers. DOE has  continued to release guides for implementing its revised order for  Program and Project Management for the Acquisition of Capital Assets  (DOE O 413.3B), such as for cost estimating, using earned value  management, and forming project teams. Further, DOE has taken steps  to enhance project management and oversight by requiring peer reviews  and independent cost estimates for projects with values of more than  $100 million and by improving the accuracy and consistency of data in its  central repository for project data.
DOE has made progress in managing nonmajor projects—those costing  less than $750—million and in recognition of this progress, we narrowed  the focus of our high-risk designation to major contracts and projects.  Specifically, as we noted in our October 2012 report on DOE’s EM  cleanup projects funded by the American Recovery and Reinvestment  Act, at the time of our analysis, 78 of 112 projects had been completed.  Of those completed projects, 92 percent met the performance standard of  completing project work scope without exceeding the cost target by more  than 10 percent, according to EM data. However, we made four  recommendations to DOE in this report aimed at improving how EM  manages and documents projects, particularly with respect to establishing  key performance parameters such as project scope targets and baselines  for cost and schedule. DOE concurred with all of our recommendations,  recognizing that improvements could be made and that lessons learned  from these projects can be applied to EM’s broader portfolio of projects  and activities. In addition, in December 2012, we reported that EM and  NNSA were making some progress in managing the 71 nonmajor  construction and cleanup projects that we reviewed and are expected to  cost an estimated $10.1 billion in total. For example, we identified some  NNSA and EM nonmajor projects that used sound project management  practices, such as the application of effective acquisition strategies, to  help ensure the successful completion of these projects. We also  recommended that NNSA and EM clearly define, document, and track the  scope, cost, and completion date targets for each of their nonmajor  projects and that EM clearly identify critical occupations and skills in its  workforce plans. NNSA and EM agreed with these recommendations.
GAO, 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).
More recently, in September 2011, NNSA estimated that  increases.the facility would cost from $4.2 billion to $6.5 billion to construct—a  nearly seven-fold cost increase from the original estimate.  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. We  reported that, since 2005, ignition-related costs have increased by  around 25 percent—from $1.6 billion in 2005 to over $2 billion in  2010—and that the planned completion date for these activities had  slipped from the end of fiscal year 2011 to the end of fiscal year 2012  or beyond. Ten years earlier, in August 2000, we had 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.  In March 2010, we reported that NNSA’s Mixed-Oxide Fuel  Fabrication Facility currently being constructed at DOE’s Savannah  River Site in South Carolina had experienced delays, but project  officials said that they expected to recover from these delays by the  end of 2010 and planned for the start of operations on schedule in  2016. In addition, after spending about $730 million on design, NNSA  has cancelled the pit disassembly and conversion facility and is now  planning to use existing facilities at DOE’s Savannah River and Los  Alamos sites and will add equipment to the mixed oxide facility.   NNSA is working on a cost and schedule estimate for the use of these  existing facilities and for adding the additional equipment.
We have also 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 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. 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. Earlier, in December 2000, we similarly had 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 schedule delays of about 2 years.
In conclusion, the actions that DOE and NNSA have taken to address  weaknesses in oversight of security, safety, and contract and project  management are very important, but problems persist. While we have  noted progress in the area of project management, we also observe that  NNSA and DOE EM have not begun a new major project since taking  these actions. The Y-12 security incident was an unprecedented event for  the nuclear security enterprise and perhaps indicates that NNSA’s  organizational culture, over a decade after the agency was created to  address security issues, still has not embraced security as an essential  element of its missions. In terms of safety, DOE has recently taken the  initiative to examine the safety culture at its sites. We believe, as do other  organizations, including the DOE Inspector General and Safety Board,  that a “hands off, eyes on” oversight approach for security, safety and  contract and project management is insufficient and unwarranted until the  department can demonstrate sustained improvement in all three areas.  We will continue to monitor DOE’s and NNSA’s implementation of actions  to resolve its safety, security, and contract and project management  difficulties and to assess the impact of these actions.
Chairman Murphy, 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.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff have any questions about this testimony, please  contact me at (202) 512-3841 or trimbled@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, Jonathan Gill, and Kiki  Theodoropoulos, Assistant Directors; and Nancy Kintner-Meyer, Michelle  Munn, and Jeff Rueckhaus, Senior Analysts.
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