Nuclear Weapons: NNSA and DOD Need to More Effectively Manage the Stockpile Life Extension Program
Published: 2009-03-02T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As a separately organized agency within the Department of Energy, the National Nuclear Security Administration (NNSA) administers the Stockpile Life Extension Program, whose purpose is to extend, through refurbishment, the operational lives of the weapons in the nuclear stockpile. NNSA encountered significant management problems with its first refurbishment for the W87 warhead. GAO was asked to assess the extent to which NNSA and the Department of Defense (DOD) have effectively managed the refurbishment of two other weapons--the B61 bomb and the W76 warhead. This report summarizes the findings of GAO's classified report on the refurbishment of the B61 bomb and W76 warhead.
section_title: What GAO Found
paragraphs: NNSA and DOD have not effectively managed cost, schedule, and technical risks for either the B61 or W76 life extension program. Regarding the B61 program, although NNSA completed the refurbishment of the strategic variants of the B61 bomb--the Mods 7 and 11--on schedule in November 2008, the refurbished weapons do not meet all refurbishment objectives. According to NNSA and DOD officials, NNSA established an unrealistic schedule and failed to fully implement its refurbishment guidance, known as the Phase 6.X process. NNSA was able to meet its refurbishment schedule and avoid significant cost overruns for the B61 program only because (1) some of the refurbishment objectives were changed, (2) NNSA was able to reuse, rather than manufacture, a critical component when B61 bombs were decommissioned, and (3) the Nuclear Weapons Council significantly reduced the number of B61 bombs in the stockpile. Despite DOD concerns about the adequacy of NNSA testing of the B61 bombs under certain conditions, NNSA continued refurbishing the weapons. Some of the B61 refurbishment problems could have been avoided if DOD had fulfilled its roles and responsibilities in overseeing NNSA's life extension program activities. For example, the Air Force did not adequately review NNSA's design, engineering, and testing activities--a review that would have alerted DOD that NNSA was missing some of its refurbishment objectives. Regarding the W76 program, NNSA did not effectively manage a high risk associated with manufacturing an essential material, known as Fogbank, needed to refurbish the W76 warhead. NNSA had developed a risk mitigation strategy to avoid potential cost overruns and schedule delays related to the manufacture of this key material but failed to effectively implement this strategy. As a result, NNSA's original plans to produce the first refurbished W76 weapon in September 2007 slipped to September 2008; NNSA spent $69 million to address Fogbank production problems; and the Navy faced logistical challenges owing to the delay. Furthermore, NNSA did not have a consistent approach to developing a cost baseline for the W76 program, which makes it difficult to track refurbishment costs over time and to know the actual cost of the program.

section_title: Letter
paragraphs: Nuclear weapons are an essential part of the nation’s defense strategy.  Nuclear weapons are an essential part of the nation’s defense strategy.  However, the end of the Cold War caused a dramatic shift in how the  However, the end of the Cold War caused a dramatic shift in how the  nation maintains these weapons. Instead of designing, testing, and  nation maintains these weapons. Instead of designing, testing, and  producing new nuclear weapons, the strategy has shifted to maintaining  producing new nuclear weapons, the strategy has shifted to maintaining  the existing nuclear weapons stockpile indefinitely. To implement this  the existing nuclear weapons stockpile indefinitely. To implement this  strategy, in January 1996, the Department of Energy (DOE) initiated the  strategy, in January 1996, the Department of Energy (DOE) initiated the  Stockpile Life Extension Program (life extension program). Now  Stockpile Life Extension Program (life extension program). Now  administered by the National Nuclear Security Administration (NNSA),  administered by the National Nuclear Security Administration (NNSA),  which is a separately organized agency within DOE, this program is  which is a separately organized agency within DOE, this program is  designed to extend the weapons’ operational life for an additional 20 to 30  designed to extend the weapons’ operational life for an additional 20 to 30  years and to certify the weapons’ military performance requirements  years and to certify the weapons’ military performance requirements  without underground nuclear testing. As the weapons age, however,  without underground nuclear testing. As the weapons age, however,  certain nuclear weapons components must be replaced or they will begin  certain nuclear weapons components must be replaced or they will begin  to undermine the reliability and performance of the weapon. While NNSA  to undermine the reliability and performance of the weapon. While NNSA  does not have complete cost data on the life extension program, it  does not have complete cost data on the life extension program, it  estimates that it spent approximately $2.1 billion on program activities  estimates that it spent approximately $2.1 billion on program activities  from fiscal years 2003 to 2008.  from fiscal years 2003 to 2008.
Within NNSA, the Office of Defense Programs is responsible for  Within NNSA, the Office of Defense Programs is responsible for  administering the life extension program. For those nuclear weapons that  administering the life extension program. For those nuclear weapons that  are refurbished, this office oversees the activities of the design  are refurbished, this office oversees the activities of the design  laboratories and production facilities that (1) determine which  laboratories and production facilities that (1) determine which  components, such as the nuclear explosives package, will need  components, such as the nuclear explosives package, will need  refurbishment to extend each weapon’s life; (2) design and produce the  refurbishment to extend each weapon’s life; (2) design and produce the  necessary components; (3) install the components in the weapons; and   necessary components; (3) install the components in the weapons; and   (4) certify that the changes do not adversely affect the yield, safety, and  (4) certify that the changes do not adversely affect the yield, safety, and  reliability of the weapons. Because research and development is needed to  reliability of the weapons. Because research and development is needed to  refurbish the nuclear weapons, the life extension program requires a  refurbish the nuclear weapons, the life extension program requires a  coordinated effort among NNSA’s three design laboratories and four  coordinated effort among NNSA’s three design laboratories and four  production facilities—collectively known as the nation’s nuclear weapons  production facilities—collectively known as the nation’s nuclear weapons  complex. NNSA also coordinates its life extension activities with the  complex. NNSA also coordinates its life extension activities with the  Department of Defense (DOD) to ensure that refurbished weapons meet  all military performance requirements.
NNSA manages the refurbishment of nuclear warheads and bombs  according to a process called Phase 6.X, which was jointly developed with  DOD in 2000. NNSA’s process consists of seven steps, which involve,  among other things, establishing a cost and schedule baseline; conducting  experiments, tests, and analyses to validate design options and assess  production capabilities; preparing production facilities for manufacturing  parts and components; and entering full-scale production of refurbished  weapons. In addition, under the Phase 6.X process, DOD, including the  U.S. Strategic Command (STRATCOM), is responsible for developing,  reviewing, and updating the military requirements that specify the  performance characteristics for each warhead type and the environments  in which the warhead must perform or remain safe. As NNSA designs the  warhead or bomb and conducts tests to ensure that they meet these  requirements, DOD reviews NNSA’s actions in each phase of the  refurbishment. NNSA plans to use this same management process for the  design of a new warhead, known as the reliable replacement warhead,  which NNSA states is a way to replace the nation’s aging stockpile with  warheads that are safer, provide longer-term reliability, and are less  expensive to maintain than those currently in the stockpile.
In December 2000, we reported that the W87 warhead, which was  designed to be carried on the land-based Peacekeeper missile, had  experienced significant design and production problems that increased its  refurbishment costs by over $300 million and caused schedule delays of  about 2 years. As we reported, at the heart of many of the problems that  contributed to this outcome were an inadequate Office of Defense  Programs management process and unclear leadership, which prevented  the Office from adequately anticipating and mitigating the problems that  arose. In 2005, NNSA completed the refurbishment of the W87. This was  the first weapon to be refurbished under the life extension program.
In a follow-up study in July 2003, we reported that NNSA had not  adequately addressed the budgetary, cost accounting, and other  management issues that contributed to problems with the W87 as it began  research and development activities for refurbishing the B61 bomb and  W76 warhead. As of December 15, 2008, two nuclear weapons were being  refurbished—the B61 bomb and the W76 warhead. The B61 bomb is  designed to be carried on the B-52 or B-2 bomber by the Air Force. There  are two different types of strategic B61 bombs—the Mod 7 and the Mod 11.  The Mod 11 is used exclusively as an earth penetrator in free-fall mode to  destroy deeply buried targets. NNSA began refurbishment production in  June 2006 for the Mod 7 and January 2007 for the Mod 11 and completed  production for both weapons in November 2008. In addition to the  strategic variants of the B61, the Air Force maintains tactical B61 bombs— the Mods 3, 4, and 10. Unless otherwise specified, all subsequent  references to the B61 bomb in this report refer to the strategic variants— the Mods 7 and 11. The W76 is a submarine-launched warhead and the  refurbished W76 will be carried on the Trident II missile by the Navy. The  first refurbished W76 warhead was completed in September 2008. The W76  warhead is a significant part of the U.S. nuclear weapons stockpile.
NNSA has continued to face management challenges during the  refurbishment of the B61 bomb and W76 warhead. Specifically, while the  refurbished B61 entered full-scale production in 2006, NNSA still had not  met all its refurbishment objectives. In addition, the W76 warhead faced a  schedule delay and cost overruns related to manufacturing problems with  a critical material used in the W76.
In this context, you asked us to determine the extent to which NNSA and  DOD have effectively managed the B61 and W76 life extension programs.  While NNSA has faced numerous technical challenges in refurbishing the  B61 bomb and W76 warhead, this report focuses on two of the most  significant technical challenges that have had an impact on cost, schedule,  and meeting refurbishment objectives—the decision to reuse or  manufacture a new material for a critical component in the B61 bomb and  the manufacture of Fogbank for the W76. In January 2009, we reported to  you on the results of our work in a classified report. Subsequently, we  worked with NNSA and DOD to produce an unclassified version of our  report. This report summarizes the results of our classified report.
To assess the extent to which NNSA and DOD have effectively managed  the B61 and W76 life extension programs, we first analyzed NNSA’s  congressional budget requests, project plans, and acquisition reports to  determine whether the life extension activities for the B61 bomb and W76  warhead were within budget or facing cost overruns. We then reviewed  NNSA’s project plans for the B61 bomb and W76 warhead, life extension  guidance documents, risk management practices, briefing slides, and  strategic weapons directives to determine whether NNSA reached critical  milestones on time. To assess the technical challenges NNSA was facing in  refurbishing the B61 bomb and W76 warhead and the steps it was taking to  minimize technical risk, we interviewed officials from the Office of  Defense Programs at DOE in Washington, D.C.; the nuclear weapons  design laboratories, including Lawrence Livermore (LLNL) in California  and Los Alamos (LANL) and Sandia in New Mexico; and the weapons  production plants, including Y-12 in Tennessee, Pantex in Texas, and  Kansas City in Missouri. We also interviewed officials from the  Departments of the Air Force and the Navy, STRATCOM, and the Nuclear  Weapons Council to determine NNSA’s ability to meet military  performance requirements for the B61 bomb and W76 warhead and the  impact of any schedule delays on DOD’s mission requirements. Finally, we  toured the Y-12, Pantex, and Kansas City plants to observe the  manufacturing processes for nuclear and non-nuclear components for the  B61 bomb and W76 warhead. To assess the extent to which DOD fulfilled  its roles and responsibilities in overseeing NNSA’s life extension activities,  we reviewed guidance documents and project plans to determine DOD’s  roles and responsibilities. We also interviewed officials from NNSA, the  Departments of the Air Force and the Navy, STRATCOM, and the Nuclear  Weapons Council to determine how effective communication has been  between DOD and NNSA and who has authority to make decisions, such  as proceeding with full-scale production.
We conducted the work for the classified report between December 2007  and January 2009 in accordance with generally accepted government  auditing standards, and we conducted our work for the unclassified report  between January 2009 and February 2009. 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: The nation’s nuclear weapons stockpile remains a cornerstone of U.S.  national security policy. As a result of changes in arms control, arms  reduction, and nonproliferation policies, the National Defense  Authorization Act for fiscal year 1994 required that DOE develop a  science-based Stockpile Stewardship Program to maintain the stockpile  without nuclear testing. After this program was established, DOE, in  January 1996, initiated the Stockpile Life Extension Program. The purpose  of this program is to develop a standard approach for planning nuclear  weapons refurbishment activities so that the nuclear weapons complex  can extend the operational lives of the weapons in the stockpile by  another 20 to 30 years.
Within NNSA, the Office of Defense Programs is responsible for the  warheads and bombs in the stockpile. This responsibility encompasses  many different tasks, including the manufacture, maintenance,  refurbishment, surveillance, and dismantlement of weapons in the  stockpile; activities associated with the research, design, development,  simulation, modeling, and nonnuclear testing of nuclear weapons; and the  planning, assessment, and certification of the weapons’ safety and  reliability. A national complex of nuclear weapons design laboratories and  production facilities carries out the Office of Defense Programs’ mission.  Three national laboratories in this complex design nuclear weapons:  Lawrence Livermore National Laboratory in California, Los Alamos  National Laboratory in New Mexico, and Sandia National Laboratories in  New Mexico and California.
For the B61 and W76 life extension programs, Los Alamos National  Laboratory is responsible for designing and developing these weapons’  nuclear explosives package. Sandia National Laboratories design non- nuclear components, such as arming, fuzing, and firing systems, foams,  and electrical cables, and test the weapons’ non-nuclear components to  certify safety and reliability. Lawrence Livermore National Laboratory  peer reviews design and production activities. Los Alamos and Sandia  National Laboratories work closely with the production plants to ensure  that components meet design specifications. The complex’s four  production sites include the Y-12 National Security Complex plant in  Tennessee, the Kansas City Plant in Missouri, the Savannah River Site  plant in South Carolina, and the Pantex Plant in Texas. The Y-12 plant  manufactures critical nuclear components, such as parts made from  enriched uranium, for the nuclear explosives package. The Kansas City  plant produces and procures nonnuclear parts and electronic components  and manufactures the new arming, fuzing, and firing system for the W76  warhead. The Savannah River Site plant fills gas bottles it receives from  Kansas City with tritium and deuterium, which are used to facilitate the  nuclear explosion. Last, the Pantex plant assembles all components  supplied by other production plants to produce a weapon for the  stockpile. See figure 1 for a summary of this process.
An end to underground nuclear testing in 1992 in the United States  suspended the development of weapons with new, untested designs. This  suspension created a shift away from the strategy of replacing older  warheads with newer designs to a new strategy of retaining and  refurbishing previously produced warheads indefinitely, without nuclear  testing, and with no plans to replace the weapons. To manage this new  strategy of refurbishing nuclear weapons, NNSA uses a process called  Phase 6.X, which it jointly developed with DOD. This process consists of  the following elements:    Phase 6.1, concept assessment—conducting studies to provide planning  guidance and to develop information so that a decision can be made on  whether or not to proceed to phase 6.2.
Phase 6.2, feasibility study—developing design options and studying their  feasibility.
Phase 6.2A, design definition and cost study—completing definition of  selected design option(s) from phase 6.2 and determining the cost of  pursuing the design option(s).
Phase 6.3, development engineering—conducting experiments, tests, and  analyses to validate the design option and assess its potential for  production.
Phase 6.4, production engineering—making a strong commitment of  resources to the production facilities to prepare for stockpile production.
Phase 6.5, first production—producing a limited number of refurbished  weapons and then disassembling and examining some of them for final  qualification of the production process.
Phase 6.6, full-scale production—ramping up to full production rates at  required levels.
DOD oversees NNSA’s refurbishment activities through the military  services’ Lead Project Officer and the Nuclear Weapons Council’s Standing  and Safety Committee. The Air Force or the Navy appoint a Lead Project  Officer to provide day-to-day oversight over NNSA’s activities. The Lead  Project Officer meets regularly with officials from NNSA, the national  laboratories, and production facilities to monitor progress and understand  the technical challenges. The Nuclear Weapons Council Standing and  Safety Committee (NWCSSC) advises and assists the Nuclear Weapons  Council, which provides policy guidance and oversight of nuclear weapons  stockpile activities and is required to report regularly to the President on  the safety and reliability of the U.S. stockpile. Representatives from the  following organizations make up the NWCSSC: NNSA; the Office of the  Under Secretary of Defense for Policy; the Office of the Assistant  Secretary of Defense for Networks and Information Integration; the  Assistant to the Secretary of Defense for Nuclear, Chemical and Biological  Programs; the Joint Staff; STRATCOM; the Army; the Navy; the Air Force;  and the Defense Threat Reduction Agency. According to DOD officials, the  Lead Project Officer regularly updates the NWCSSC on the status of  refurbishment activities and proposes recommendations to the NWCSSC  on whether NNSA should proceed to the next phase. NNSA needs  approval from the NWC to proceed to Phases 6.2, 6.3, and 6.6.
As of December 15, 2008, two nuclear weapons were undergoing phase 6.X  refurbishment activities. The W76 warhead was in phase 6.5, first  production unit, and the B61 bomb was in phase 6.6, full-scale production.  NNSA originally planned to refurbish the W80 warhead and began phase  6.3, development engineering, but in 2007, NNSA cancelled refurbishment  activities for the W80 warhead because DOD planned to reduce the  number of W80 warheads in the nuclear stockpile. While complete cost  data on the W80 warhead do not exist, NNSA spent about $480 million  from fiscal years 2003 to 2007 on refurbishment activities for it.
section_title: NNSA Met the B61 Program Schedule, but Did Not Meet All Refurbishment Objectives
paragraphs: NNSA completed the refurbishment of the B61 bomb on schedule in  November 2008. However, according to NNSA and DOD officials, NNSA  was not able to meet all the refurbishment objectives because it  established an unrealistic schedule and failed to fully implement its Phase  6.X process. NNSA was able to meet its refurbishment schedule and avoid  significant cost overruns for the B61 only because (1) DOD changed some  of the refurbishment objectives, (2) NNSA was able to reuse, rather than  manufacture, a critical component for the B61, and (3) the Nuclear  Weapons Council significantly reduced the number of B61 bombs in the  stockpile. However, the refurbished B61 bombs still do not meet all  refurbishment objectives. Some of the B61 refurbishment problems could  have been avoided if DOD had fulfilled its roles and responsibilities in  overseeing NNSA’s life extension program activities.
subsections: section_title: NNSA’s Aggressive Schedule Did Not Leave Time to Address Significant Technical Challenges and Increased Costs
paragraphs: Since parts of the B61 bomb were beginning to age, NNSA proposed, in  1999, to refurbish the first B61 by September 2004, with full-scale  production ending in 2008. However, an NNSA study completed in 2001 by  the national laboratories and production facilities found that they could  not meet the September 2004 date given the requirements, production  capabilities, risk assessments, and Phase 6.X guidelines. Instead, the  national laboratories and production facilities concluded that they would  need until September 2008—4 years later than the September 2004 date  proposed by NNSA—to refurbish the first weapon. This proposed  schedule was considered low risk because it allowed NNSA to follow the  steps in the Phase 6.X process and included contingencies to address  technical challenges. NNSA did not approve this schedule, however. It was  concerned that the proposed production schedule for the B61 bomb would  conflict with the refurbishment of the W76 warhead, which was originally  scheduled for September 2007 and considered a DOD priority. NNSA  wanted to complete production of the refurbished B61 bomb before  beginning full-scale production of the W76 warhead because the  production facilities, such as the Y-12 plant, had limited capacity. To allow  the national laboratories and production facilities more time for design,  engineering, and production activities while avoiding conflicts with the  W76 life extension program, NNSA set a June 2006 date for the first  refurbished B61 bomb.
To meet this more aggressive and, as stated in NNSA’s program plan,  “success-oriented” schedule, NNSA adopted a modified Phase 6.X process  that compressed and overlapped the development engineering and  production engineering phases, leaving little time to conduct the  experiments, tests, and analyses needed to validate design options and to  certify that production facilities that manufacture and assemble parts  could meet design requirements. NNSA assumed that it would not need  time for development and production engineering because it would reuse  rather than manufacture critical materials—one of the most critical of  which was a plastic. Before fully determining whether the plastic could be  reused, NNSA developed a production schedule with fixed delivery dates.  However, additional tests showed that NNSA could not reuse this material  because it did not function properly under certain conditions. NNSA  therefore decided to develop an alternative material with superior  properties that would work under all conditions. Since NNSA did not  include any cost or schedule contingencies in its baseline to address  unforeseen technical challenges, development work on an alternative  material posed a significant risk to meeting the program’s milestones and  added $11 million to the program’s cost. NNSA was unable to produce a  substitute that could retain the shape needed for the B61 bomb and would  perform under all delivery conditions. NNSA’s effort to manufacture this  alternative material resulted in significant schedule delays and cost  overruns.
In addition to a lack of sufficient time for development and production  engineering work, NNSA’s B61 life extension program schedule did not  include contingencies for testing failures. NNSA assumed that modeling  and computational analysis would be sufficient to properly design a  component and a physical test of the design would be successful, avoiding  the need for follow-up tests. If a test revealed a problem with the design,  NNSA would have had to conduct additional tests or change the design,  which would have potentially increased cost and delayed the program.
As it turned out, NNSA’s tests were not all successful, and the Air Force  and Lawrence Livermore National Laboratory peer reviewers  recommended delaying production and conducting additional tests to test  the refurbished weapon. Nevertheless, NNSA proceeded with full-scale  production to meet its schedule milestones. The Air Force’s most  significant concern was that the testing of refurbished B61 bombs deviated  substantially from the original testing plan that NNSA designed and DOD  approved. NNSA subsequently conducted follow-on tests to address Air  Force concerns.
section_title: A Reduction in the Stockpile Allowed NNSA to Meet Its B61 Refurbishment Schedule, but It Did Not Achieve All Refurbishment Objectives
paragraphs: NNSA was able to meet its refurbishment schedule for the B61 only  because the following occurred:    NNSA sought and received a change in refurbishment objectives. In  response to NNSA’s request, STRATCOM, which is responsible for  developing and reviewing military mission requirements, reviewed the  military needs for the B61. After STRATCOM reviewed its needs, NNSA  was then able to abandon its attempt to develop an alternative material,  which it could not successfully manufacture to meet requirements, and  was able to reuse the original material in the B61 bomb.
Dismantlement of decommissioned B61 bombs allowed NNSA to obtain  the necessary material for the refurbished B61 bombs. Even though  NNSA abandoned its attempt to develop an alternative material after  refurbishment objectives changed, it still did not have the material it  needed because NNSA no longer manufactured it. However, NNSA found  material it could use in refurbished B61 bombs when it began dismantling  tactical B61 bombs. As a result, NNSA was able to extract the material,  which is used in both strategic and tactical B61 bombs.
The Nuclear Weapons Council significantly reduced the number of B61s  in the stockpile. Between 2003 and 2007, the Nuclear Weapons Council,  which reviews the size of the nation’s stockpile, directed NNSA to reduce  the total stockpile of nuclear weapons. Following the council’s stockpile  plan, NNSA reduced the number of B61s that needed refurbishment by  about two-thirds. According to officials from production facilities, NNSA  would not have been able to meet its November 2008 completion date if it  still had to refurbish the originally planned number of weapons. Moreover,  NNSA would not have been able to meet its cost baseline because the cost  of manufacturing each B61 had almost doubled.
Even though these events allowed NNSA to meet its schedule, the  refurbished B61 bombs do not meet all refurbishment objectives. To  address DOD concerns, in December 2007, NNSA agreed to conduct  additional tests. According to DOD officials, the additional tests NNSA  planned should resolve these concerns if successful in meeting the test  objectives.
section_title: DOD Failed to Adequately Oversee Critical NNSA Life Extension Activities for the B61
paragraphs: Some of the B61 refurbishment problems could have been avoided if DOD  had fulfilled its roles and responsibilities in overseeing NNSA’s life  extension program activities. First, DOD did not comprehensively review  military requirements for the B61 bomb before starting refurbishment  activities, which would have avoided unnecessary testing and  manufacturing of the alternative material. Specifically, NNSA tested the  B61 in conditions that it later learned were no longer used by DOD. In  conducting its tests, NNSA was following DOD’s specifications to meet all  of the weapon’s original requirements established in the 1960s. According  to the Phase 6.X process, a critical military requirement, which NNSA  relied on for its tests, should have been reviewed during the Phase 6.2/2A  study during 2001 and 2002. Instead, 2 years elapsed before STRATCOM  notified NNSA that the requirement was no longer necessary, and it took  another 2 years—until March 2006—to finally change the requirement. As  a result, NNSA dedicated time and resources to develop an alternative  material and conducted tests following the requirement, which  STRATCOM later criticized as being operationally unrealistic testing.
Second, the Air Force did not adequately review NNSA’s design,  engineering, and testing activities—a review that would have alerted it to  the fact that NNSA was unable to meet all refurbishment objectives.  According to Air Force officials, the Lead Project Officer failed to provide  the necessary oversight because he lacked the technical and managerial  expertise to do so. He did not alert the Air Force to significant concerns  with the testing of the refurbished B61. In particular, the Air Force did not  raise concerns about NNSA’s failure to complete all agreed-upon tests  until NNSA had completed a majority of its tests and was preparing for  full-scale production. After NNSA entered production, the Air Force  required NNSA to conduct additional tests to provide a greater level of  assurance that the refurbished B61 would perform as intended and last in  the stockpile for at least another 20 years. As we noted, NNSA agreed to  conduct additional tests and plans to complete them by the end of 2009.  Importantly, these tests will be completed after all the B61 bombs now  being refurbished are back in the stockpile.
section_title: NNSA Did Not Adequately Address One of the Highest Risks to the W76 Program, Which Led to Cost Increases, Schedule Delays, and an Unrealistic Production Schedule
paragraphs: NNSA developed a risk mitigation strategy to avoid potential cost overruns  and schedule delays related to the manufacture of Fogbank but failed to  effectively implement it. As a result, NNSA’s original plans to produce the  first refurbished W76 weapon in September 2007 slipped to September  2008. In addition, NNSA spent $69 million to address Fogbank production  problems, and the Navy faced logistical challenges in replacing old W76  warheads with refurbished ones on submarines owing to the delay.  Furthermore, NNSA did not use the same criteria and accounting practices  each fiscal year to develop a cost baseline for the W76 program, which  makes it difficult to track refurbishment costs over time.
subsections: section_title: NNSA Failed to Address One of Its Highest Risks to the Program
paragraphs: At the beginning of the W76 life extension program in 2000, NNSA  identified key technical challenges that would potentially cause schedule  delays or cost overruns. One of the highest risks was manufacturing  Fogbank because it is difficult to manufacture. In addition, NNSA had lost  knowledge of how to manufacture the material because it had kept few  records of the process when the material was made in the 1980s and  almost all staff with expertise on production had retired or left the agency.  Finally, NNSA had to build a new facility at the Y-12 plant because the  facilities that produced Fogbank ceased operation in the 1990s and had  since been dismantled, except for a pilot plant used to produce small  quantities of Fogbank for test purposes.
To address these concerns, NNSA developed a risk management strategy  for Fogbank with three key components: (1) building a new Fogbank  production facility early enough to allow time to re-learn the  manufacturing process and resolve any problems before starting full  production; (2) using the existing pilot plant to test the Fogbank  manufacturing process while the new facility was under construction; and  (3) developing an alternate material that was easier to produce than  Fogbank. However, NNSA failed to effectively implement these three key  components. As a result, it had little time to address unexpected technical  challenges and no guaranteed source of funding to support risk mitigation  activities.
subsections: section_title: NNSA Started the New Facility Late
paragraphs: After determining that 2 years was sufficient time to test and perfect the  Fogbank manufacturing process, NNSA set March 2005 as the target date  to begin operations of the new facility at the Y-12 plant and worked  backward from that date to establish a design, build, and test schedule for  the new facility, according to the official in charge of the project. Working  from lessons learned from the W87 life extension program, NNSA strove to  achieve an early operations start date to allow sufficient time to address  any potential problems in manufacturing Fogbank. In 2000, we reported  that production problems resulting from such factors as restarting an  atrophied production complex and addressing safety and technician  training issues led directly to slippage in the W87 life extension program  schedule and contributed to increased costs. In addition, NNSA’s own  lessons learned report on the W87 program identified the need to  demonstrate processes early and often and stated that, with limited  resources, assumptions such as “we did it before so we can do it again” are  often wrong.
NNSA started the new facility’s operations about 1 year late because the  schedule for building the facility was unrealistic, disagreements on the  implementation of safety guidelines emerged, and the W76 program  manager lacked authority to control the schedule. Focused on meeting an  operations start date of March 2005, NNSA developed an aggressive  construction and operation start schedule with no contingency for cost  overruns or schedule delays. This schedule increased risk to meeting the  program schedule because any delay would leave less than 2 years to  conduct test production runs, which NNSA determined were necessary for  perfecting the process. In addition, the Fogank facility was the first new  manufacturing facility to be built at Y-12 in 30 years; therefore, a lack of  recent experience with construction project management and  implementing safety guidelines heightened the potential for problems. In  fact, the contractor building the facility underestimated the time needed to  complete preparations for start-up, including training and certifying staff  to use the equipment and calibrating instruments.
In addition, NNSA and the contractor disagreed on the interpretation and  implementation of safety guidelines. A lack of clarity about which  guidelines would apply and the proper interpretation of the guidelines  caused confusion over the course of the project. At a late stage, NNSA  directed the contractor to apply more conservative nuclear facility safety  requirements. As a result, the contractor needed additional time to address  safety concerns by, for example, installing weather- and earthquake-proof  equipment.
When these issues emerged, the W76 NNSA program manager did not have  the authority to manage the construction of the project or resolve the  dispute over safety guidelines even though a key risk mitigation strategy  was the timely start of facility operations. Construction and start-up of the  facility was managed by Y-12, which reported to the Y-12 Site Office, a  separate organization not under the authority of the program manager. As  soon as the March 2005 new facility start date was missed, the program  manager raised concerns and elevated them to the Deputy Administrator  for Defense Programs, the cognizant management organization at NNSA  headquarters, but the issues remained unresolved. Ultimately, start-up of  the new facility was postponed by approximately 1 year, leaving NNSA  with half the time originally planned to re-learn the Fogbank production  process.
section_title: NNSA Did Not Make Full Use of the Pilot Plant
paragraphs: NNSA planned to use the Y-12 pilot plant to gain a better understanding of  Fogbank properties and to test the production process on a small scale  while the new facility was under construction. The pilot facility could only  produce a small amount of Fogbank for the W76 program because it had  only a few machines. Although NNSA used the pilot plant from 2000 to  2003, it did not have funds to continue the effort because it shifted money  from the W76 program to support higher priority programs at the time,  such as the W87 and B61 life extension programs.
However, in 2004, anticipating delays in starting operations at the new  facility and recognizing the importance of continuing work at the pilot  plant, NNSA provided funding to pay for additional work at the pilot plant.  By completing this work, NNSA learned that certain techniques  significantly affected the quality of the end product and made adjustments  to meet requirements. However, NNSA did not conduct as much work as  originally planned and missed opportunities to learn more about the  manufacturing process before starting operations.
section_title: NNSA Delayed the Development of an Alternate Material until Fogbank Manufacturing Problems Arose
paragraphs: In 2000, NNSA considered replacing Fogbank with an alternate material  that was less costly and easier to produce but abandoned the idea because  NNSA was confident that it could produce Fogbank since it had done so  before. In addition, LANL’s computer models and simulations were not  sophisticated enough to provide conclusive evidence that the alternate  material would function exactly the same as Fogbank. Still further, the  Navy, the ultimate customer, had expressed a strong preference for  Fogbank because of its proven nuclear test record. In response to the  Navy’s preference and the lack of sufficient test data on the alternate  material, NNSA did not pursue the development of an alternate material  until 2007.
In March 2007, however, NNSA again considered producing an alternative  material when it was unable to produce usable Fogbank and was facing  the prospect of significant schedule delays. Computer models and  simulations had improved since 2001, enabling greater confidence in the  analysis of alternate materials. Thus, NNSA began a $23 million initiative  to develop an alternate material. LANL officials told us that NNSA plans to  certify the use of the alternative material by the end of 2009 for the W76  warhead and if NNSA faced additional Fogbank manufacturing problems  during full-scale production, the alternate material could then be used  instead of Fogbank. Had NNSA continued research and development of an  alternate material during the program, it would have had more information  on the viability of using the alternate material in the weapon before March  2007. This additional information also might have provided the Navy  greater assurance that an alternate material performed as well as Fogbank.
section_title: Ineffective Risk Management Led to Schedule Delays and Cost Increases
paragraphs: A failure to implement the three components of NNSA’s risk management  strategy for Fogbank led to a 1-year schedule delay and a $69 million cost  overrun. This cost overrun included $22 million to resolve Fogbank  production problems, $23 million to develop the alternate material, and  $24 million to maintain Pantex’s production capabilities. Regarding  Fogbank production problems, in March 2007, NNSA discovered that final  batches of the material had problems. To address the problems and try to  meet its September 2007 date for producing the first refurbished weapon,  NNSA launched a major effort—“Code Blue”—that made the manufacture  of Fogbank a priority for the design laboratories and production facilities.  However, this effort failed, and, as a result, NNSA delayed producing the  first refurbished weapon from September 2007 to September 2008, and it  began its efforts to develop an alternate material to Fogbank. Finally,  while Pantex was unable to begin assembling refurbished units in  September 2007 as planned, it still spent $24 million in fiscal year 2008 to  remain in “stand-by” mode, which includes maintaining the skills of the  technicians who will assemble refurbished W76 weapons.
The 1-year delay led to logistical challenges for the Navy and an aggressive  production schedule of refurbished W76 warheads to make up time. The  Navy originally planned to start replacing old W76 warheads with  refurbished ones on submarines in April 2008. However, owing to W76  production delays, the Navy had to replace aging parts of W76 warheads in  its current arsenal and has had to delay replacing old warheads with newly  refurbished weapons until April 2009. Furthermore, to make up for initial  schedule setbacks caused by Fogbank production problems, NNSA has  increased the rate at which it plans to produce refurbished W76 weapons.  NNSA will produce more weapons per year than originally planned, an  annual increment that over time will enable it to still finish production at  the originally planned end date. However, a higher rate of production  requires more resources and leaves less room for error because any  slowdown will have a greater impact on the larger number needed to be  produced. NNSA production officials have indicated that they may not be  able to meet this more compressed schedule if they do not receive extra  resources or if they encounter any production problems, both considered  realistic possibilities.
section_title: NNSA Lacks a Consistent Approach to Developing the W76 Cost Baseline
paragraphs: NNSA does not have a consistent approach for developing a cost baseline for  the W76 program. NNSA has changed its baseline almost every year since  2001 to reflect changes in the number of warheads needed in the stockpile  and changes in NNSA reporting guidelines. For example, in fiscal year 2004,  the cost estimate for the W76 program was $2.1 billion; in fiscal year 2005, it  was $6.2 billion; and in fiscal year 2006, it was $2.7 billion (see fig. 2).
Changes in the baseline were the result of changes in the percent of the  stockpile to be refurbished, which ranged from 25 percent to 86 percent.  As the number of weapons to be refurbished changed, the baseline moved  correspondingly because it costs more to refurbish more weapons. For  example, NNSA planned to refurbish significantly more weapons in 2005  than 2004, based on official guidance, accounting for part of the $4.1  billion differential between those years.
Significant changes in the baseline were also driven by inconsistent NNSA  accounting practices. For example, in fiscal year 2005, NNSA required  program managers to include all indirect costs, such as the overhead costs  of operating facilities, as well as direct costs in the baseline. The next year  it dropped this requirement. Prior to fiscal year 2005, NNSA did not tie  overhead costs to specific weapon systems. However, in an attempt to  provide a more accurate estimate of total costs by weapon, NNSA created  accounts for the W76 warhead that captured a pro-rated portion of general  costs, such as research and production support at the laboratories and  production facilities. For example, NNSA included the pro-rated cost of  forklift operators, who load and unload trucks for all weapon systems.  Thus, a portion of these overhead costs was added to the 2005 baseline to  better account for the full the costs of the program. However, NNSA  discovered that this approach constrained flexibility. If priorities shifted  and changes needed to be made to overhead activities, resources could  not be easily redirected to different weapon systems. Any change would  require congressional approval because such overhead costs were tied to a  specific weapon system as a budget line item. Consequently, in fiscal year  2006, NNSA reported the production and research support accounts  separately. While this change restored some flexibility for overall NNSA  complex management, the transition reduced clarity about the total cost of  a weapon system. Accounting changes have persisted, with, for example,  some baseline years including large expense items, such as employee  benefits, and other baseline years excluding such costs. A lack of a  consistent baseline approach with similar cost assumptions and criteria  makes it difficult to track the costs of the program over time and  determine how well NNSA develops cost estimates.
section_title: Conclusions
paragraphs: Refurbishing the nuclear weapons stockpile is a difficult task. NNSA must  draw on the scientific expertise of the nuclear weapons laboratories and  the manufacturing and engineering expertise of the nuclear weapons  production facilities. Recognizing this challenge, NNSA and DOD have  developed multiple tools for managing the refurbishment effort: Phase 6.X,  risk management strategies, test and evaluation plans, and a lessons  learned document from the W87 life extension program.
By selectively using these guidance documents, however, NNSA has  incurred significant cost increases and schedule delays that it could have  avoided. In addition, NNSA did not include any cost or schedule  contingencies in its baseline to address the unforeseen technical  challenges that arose. If NNSA had more carefully followed the Phase 6.X  process, it might have had sufficient time in its schedule to develop and  test key materials that it had not manufactured in decades and address  unforeseen technical issues.
Moreover, NNSA did not fully implement its risk management strategy to  address one of the highest risks to the W76 life extension program—the  manufacturing of Fogbank. If NNSA had effectively implemented its risk  management strategies, schedule delays and cost increases might have  been avoided or mitigated. Most importantly, if NNSA had started  operations of the new facility on schedule, it would have had more time to  address manufacturing challenges. In fact, the 1-year delay in the startup  of the new Fogbank facility corresponded almost exactly to the 1-year  program delay. In addition, without the authority to control the  construction and start of operations of the new facility, the W76 program  manager could not help resolve the disagreement over the safety  regulations needed at the facility. Potentially compounding these  problems, NNSA committed to an ambitious production schedule to make  up for delays related to Fogbank—a schedule that does not leave time to  address any future production problems. Furthermore, NNSA cannot be  held accountable to meeting its cost targets without a consistent approach  in developing a cost baseline for the W76 program. The ability to track  cost over time and assess how well an agency holds to a cost baseline is  fundamental for proper management and oversight.
Finally, because DOD failed to adequately oversee the B61 refurbishment  program, as Phase 6.X requires, NNSA spent unnecessary time and money  trying to find an alternative material. In addition, because the Lead Project  Officer for the B61 bomb did not adequately monitor NNSA’s activities  during critical phases or have the technical expertise to do so, the Air  Force did not have sufficient time to ask NNSA to conduct additional tests  before NNSA entered full-scale production.
All of these management issues raise significant questions about NNSA’s  ability not only to complete life extension programs on time and on budget  that meet all refurbishment objectives, but also its ability to manage the  design and production of new weapons, such as the proposed reliable  replacement warhead. NNSA and DOD state that the reliable replacement  warhead is a way to replace the nation’s aging stockpile with a safer, more  reliable, and more secure warhead than those currently in our stockpile, and  plan to use the Phase 6.X process to design and manufacture this warhead.  Because NNSA did not properly follow the Phase 6.X process, meet all  refurbishment objectives for the B61 bomb, and conduct all planned tests, it  raises questions about NNSA’s ability to design a new weapon that meets  DOD’s needs and also provides sufficient confidence to DOD that a new  weapon will perform as expected without conducting underground nuclear  tests. In addition, NNSA’s failure to implement its risk mitigation strategy for  the highest risk to the program and implement lessons learned from prior life  extensions, like the W87 warhead, does not inspire confidence in its ability to  achieve the program’s goals on time and on budget.
section_title: Recommendations
paragraphs: To improve the management of the stockpile life extension program, we  recommend that the Administrator of NNSA direct the Deputy  Administrator for Defense Programs to take the following six actions:    Develop a realistic schedule for the W76 warhead and future life extension  programs that allows NNSA to (1) address technical challenges while  meeting all military requirements and (2) build in time for unexpected  technical challenges that may delay the program.
Assess the cost and include funding in the baseline for risk mitigation activities  that address the highest risks to the W76 and future life extension programs.
Before beginning a life extension program, assess the risks, costs, and  scheduling needs for each military requirement established by DOD.
Ensure that the program managers responsible for overseeing the  construction of new facilities directly related to future life extension  programs coordinate with the program managers of such future programs  to avoid the types of delays and problems faced with the construction and  operation of the Fogbank manufacturing facility for the W76 program.
Ensure that program managers for the construction of new facilities for  future life extensions base their schedule for the construction and start-up  of a facility on the life extension program managers’ needs identified in  their risk mitigation strategies.
Develop and use consistent budget assumptions and criteria for the  baseline to track costs over time.
To improve DOD’s oversight over NNSA’s life extension activities and  ensure that refurbished weapons meet all military requirements, we  recommend that the Secretary of Defense take the following three actions:    Direct STRATCOM and the Secretary of the responsible Service to  comprehensively review military requirements for a weapons system prior  to entering Phase 6.2A of a life extension program.
Direct STRATCOM and the Secretary of the responsible Service to work  with NNSA to assess the cost and schedule implications for meeting each  military requirement prior to entering Phase 6.3.
Direct the Secretaries of the Air Force and the Navy to ensure that their  respective Lead Project Officers have the technical and managerial  expertise and resources to review NNSA’s progress and technical  challenges throughout the life extension program.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided NNSA and DOD with draft copies of our classified report for  their review and comment. In addition to their official comments, which are  reprinted in appendixes I and II, NNSA and DOD provided technical  comments, which we incorporated as appropriate. As discussed in our  classified report, NNSA agreed with our recommendations and plans to take a  number of steps to implement them. First, NNSA plans to assess the risks,  costs, and scheduling needs for each military requirement DOD establishes  during the early phases of a life extension program. NNSA will consult  officials from the production facilities to better understand the potential  impact on cost and schedule of manufacturing critical nuclear and non- nuclear materials. In addition, NNSA plans to adopt an Integrated Phase Gate  process that establishes well-defined milestones, or gates, throughout the  Phase 6.X process. Before proceeding to the next gate, NNSA and DOD  officials must identify any risks to cost and schedule and can opt to delay the  life extension program if the risks are too high and additional actions, such as  testing, should be taken. Second, NNSA will include funding needs for risk  mitigation activities that address the highest risks to future life extension  programs in budget reports to Congress. Third, NNSA plans to better  coordinate construction activities at the production facilities with the needs  of life extension program activities. Last, according to NNSA, it developed a  methodology to establish a baseline with consistent budget assumptions and  criteria to track costs over time. We believe that these actions could  significantly improve the management of the life extension program.
DOD partially agreed with our recommendations. DOD agreed with our two  recommendations directed at the department, but asked us to make  modifications to the language of the recommendations to better target the  responsible service or agency that has authority to implement them. We  modified our recommendations by (1) including the Department of the Navy  because it is responsible for reviewing NNSA’s refurbishment activities for  certain nuclear weapons, such as the W76, and (2) specifying during which  phase of the phase 6.X process DOD should comprehensively review its  military requirements and assess the cost and schedule implications for  meeting each military requirement. DOD also expressed concern that the report  placed an undue burden of responsibility for program delays for the B61 life  extension program on DOD and that there were other technical issues NNSA  faced that were not discussed in this report that led to program delays. We  believe that our report fairly attributes management problems with the B61 life  extension program to both NNSA and DOD. As we state in the report, NNSA  did not include any cost or schedule contingencies in its baseline to address  unforeseen technical challenges in refurbishing the B61 bomb, and its  aggressive schedule posed a significant risk to meeting the program’s  milestones. This report did not address all of the technical challenges that  NNSA faced in refurbishing the B61 bomb because some did not have an  impact on cost and schedule and others were additional examples of problems  NNSA faced by compressing the development and engineering schedule. As we  noted on page 3 of this report, the scope of our discussion of the B61 was  limited to the most significant technical challenge that had an impact on cost,  schedule, and weapon performance and reliability—the decision to reuse or  manufacture a new material for a critical component. NNSA had the burden of  completing the refurbishment on time and on schedule, but DOD failed to  provide the necessary oversight. Last, we recognize that the Air Force has taken  steps to strengthen the management and oversight of nuclear activities, such as  consolidating nuclear activities under a newly established Air Force Nuclear  Weapons Center. However, it is too early to assess the impact these actions  have had on the Air Force’s oversight of the life extension program.
We are sending copies of this report to the Secretary of Energy, the  Administrator of NNSA, the Secretary of Defense, and interested  congressional committees.  In addition, the report will be available at no  charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-3841 or aloisee@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix III.
section_title: Appendix I: Comments from the National Nuclear Security Administration
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Marc Castellano, Leland Cogliani,  Jonathan Gill, Marie Mak, James Noel, Omari Norman, Tim Persons, Carol  Herrnstadt Shulman, and John Smale made significant contributions to  this report.