National Nuclear Security Administration: A Plan Incorporating Leading Practices Is Needed to Guide Cost Reporting Improvement Effort
Published: 2017-01-19T00:00:00

Fast Facts:
The National Nuclear Security Administration has experienced a number of issues with contract management and oversight over the past several years, and submitted a plan to Congress in 2016 outlining its strategy to improve its financial management.
However, we found that this plan did not incorporate leading strategic planning practices, and that it lacked the necessary details to be a meaningful tool to improve financial oversight at the agency.
We recommended that NNSA develop a plan that fully incorporates leading strategic practices, such as defining strategies and identifying resources needed to achieve goals.

Highlights:
section_title: Why GAO Did This Study
paragraphs: Effective management and oversight of contracts, projects, and programs are dependent upon the availability of reliable enterprise-wide financial management information. Such information is also needed by Congress to carry out its oversight responsibilities and make budgetary decisions. However, meaningful cost analysis of NNSA programs, including comparisons across programs, contractors, and sites, is not possible because NNSA's contractors use different methods of accounting for and tracking costs.
The National Defense Authorization Act for Fiscal Year 2014 required NNSA to develop and submit to Congress a plan to improve and integrate its financial management. An explanatory statement accompanying the act included a provision for GAO to review the adequacy of NNSA's plan. This report evaluates the extent to which NNSA's plan (1) addresses the objectives of the act and (2) follows leading practices for planning. GAO reviewed NNSA's plan and compared it with legislative requirements and leading practices for planning and interviewed NNSA officials.
section_title: What GAO Found
paragraphs: On February 5, 2016, more than 13 months after the statutory reporting deadline, the National Nuclear Security Administration (NNSA) submitted to Congress a plan for improving and integrating its financial management. The plan includes the four elements required by the National Defense Authorization Act for Fiscal Year 2014—a feasibility assessment, estimated costs, expected results, and an implementation timeline—but contains few details related to each of these elements. For example, NNSA's feasibility assessment includes a list of implementation concerns—including general concerns related to the availability of resources and to identifying and implementing an information technology solution—but does not provide any specific information regarding these concerns. In addition, NNSA's plan includes a cost estimate of between $10 million and $70 million but provides no details on how the estimate was developed beyond stating that it is based on professional judgment and input from NNSA's contractors. The plan also includes a “notional” implementation timeline that calls for the plan's core elements to be completed in 3 to 5 years but does not include details on which elements are considered core elements.
NNSA's financial integration plan does not fully incorporate leading strategic planning practices, which limits its usefulness as a planning tool as well as the effectiveness of NNSA's effort to provide meaningful financial information to Congress and other stakeholders. As GAO has reported previously, in developing plans for implementing new initiatives, agencies can benefit from following leading practices for strategic planning. These leading practices include (1) defining the missions and goals of a program or initiative, (2) defining strategies and identifying resources needed to achieve goals, (3) ensuring leadership involvement, and (4) involving stakeholders in planning. However, NNSA's plan does not fully incorporate any of these leading practices. For example, beyond the high-level cost estimate provided, NNSA's plan does not include a description of the specific resources needed to meet specific elements of the plan or define strategies that address management challenges, including the implementation concerns identified in the plan's feasibility assessment. In addition, NNSA did not involve key stakeholders in developing its plan. Because NNSA's plan does not incorporate leading strategic planning practices, it has not provided a useful road map for guiding NNSA's effort. NNSA officials told GAO that the plan they submitted to Congress was never intended to provide a road map to guide their efforts. Instead, they said the purpose of the plan was to identify general principles and a strategic vision for achieving financial integration. The NNSA official responsible for overseeing the plan's execution told GAO, he has begun to develop a more comprehensive and actionable plan to guide NNSA's effort. However, it is unclear when the new plan will be finalized or the extent to which it will incorporate leading practices. Until a plan is in place that incorporates leading strategic planning practices, NNSA cannot be assured that its efforts will result in a cost collection tool that produces reliable enterprise-wide information that satisfies the needs of Congress and program managers. Such information would better position NNSA to address long-standing contract and project management challenges. Without proper planning, NNSA could waste valuable resources, time, and effort on its financial integration effort.
section_title: What GAO Recommends
paragraphs: To provide a road map to guide NNSA's financial management improvement effort, GAO recommends that the NNSA Administrator direct the Program Director of Financial Integration to develop a plan for producing cost information that fully incorporates leading planning practices. NNSA agreed to update its plan and address the items GAO identified.

section_title: Letter
paragraphs: The Department of Energy’s (DOE) National Nuclear Security  Administration (NNSA) is charged with ensuring a safe, secure, and  reliable nuclear deterrent; achieving designated reductions in the nuclear  weapons stockpile; and supporting the nation’s nuclear nonproliferation  efforts. NNSA is responsible for activities in pursuit of these missions,  which are largely executed at eight government-owned, contractor- operated sites that comprise the nuclear security enterprise. Since 1990,  however, DOE’s management of contracts and projects, including those  executed by NNSA, has been on our list of areas at high risk for fraud,  waste, abuse, and mismanagement. As we have reported over the past  several years, NNSA’s efforts to modernize the nuclear security  enterprise continue to involve cost overruns, schedule delays, and  problems with contract management and oversight. Effective  management and oversight of the contracts, projects, and programs that  support NNSA’s mission are dependent upon the availability of reliable  enterprise-wide management information. Such information is needed to,  among other things, prepare budget requests, identify the costs of  activities, and ensure the validity of cost estimates. Accurate and reliable  information on costs is also needed by Congress so it can carry out its  oversight responsibilities and make budgetary decisions.
As we have reported previously, however, NNSA and Congress have had  difficulty understanding and comparing costs across programs,  contractors, and sites because NNSA’s contractors use different methods  of accounting for and tracking costs. For example, in 2010 we found that  NNSA could not accurately identify the total costs to operate and maintain  weapons facilities and infrastructure because of differences in sites’ cost  accounting practices. Specifically, our analysis of sites’ responses to a  data collection instrument showed that the total cost to operate and  maintain weapons facilities and infrastructure likely significantly exceeded  the budget request submitted to Congress for fiscal year 2009 for  Readiness in Technical Base and Facilities—the program responsible for  providing the underlying physical infrastructure and operational readiness  for the nuclear security enterprise. We recommended that the  Administrator of NNSA develop guidance for contractors to consistently  collect information on the total costs to operate and maintain weapons  activities facilities. In response to our recommendation, NNSA developed  a tool to collect more consistent cost information. In 2013, however, we  found that NNSA was uncertain how it would use the data gathered by its  new cost collection tool and that data collected were reported at an  aggregate level and were not useful for comparing detailed costs across  contractors. We recommended, among other things, that NNSA clarify  the uses of the data gathered through its cost collection tool. Although  NNSA agreed to address our recommendation, NNSA officials have since  concluded that the cost collection tool is not capable of providing  enterprise-wide information in the way that NNSA had hoped.
Because the cost of activities at different NNSA sites cannot be easily  compared and analyzed, it can be challenging for Congress to determine  if NNSA is operating in an efficient, cost-effective manner and thereby to  provide effective oversight. To address this issue, section 3128 of the  National Defense Authorization Act for Fiscal Year 2014 required NNSA  to develop and submit to Congress a plan for improving and integrating  financial management of the nuclear security enterprise, including  reporting program and project costs consistently, by no later than  December 26, 2014. On February 8, 2016, more than 13 months after the statutory reporting deadline, NNSA submitted its Plan for  Improvement and Integration of Financial Management of the Nuclear  Security Enterprise. The Joint Explanatory Statement accompanying the  act includes a provision for us to review the adequacy of NNSA’s plan in  meeting the objectives of the act and to offer recommendations for  improvement. This report evaluates the extent to which NNSA’s plan (1)  addresses the objectives of the act and (2) follows leading practices for  strategic planning.
To determine the extent to which NNSA’s plan addresses the objectives  of the act, we analyzed the statutory reporting requirements and  compared these with the information contained in the plan NNSA  provided to Congress in February 2016. To determine the extent to which  NNSA’s plan follows leading practices for strategic planning, we reviewed  information contained in NNSA’s financial integration plan and compared  it with leading practices in federal strategic planning, including practices  such as involving stakeholders in the development of mission, goals, and  strategies and developing strategies to address challenges that may  threaten an agency’s ability to achieve its goal. We also interviewed  NNSA officials in charge of developing and implementing the plan. In  addition, we interviewed a non-generalizable sample of NNSA and  contractor officials representing various program offices and sites to learn  about (1) the extent to which they had a role in developing NNSA’s  financial integration plan and (2) the current condition of cost collection,  including what systems are used to collect costs, what costs are  collected, and how they are collected. We selected our sample from the  program offices with the highest of fiscal year 2015 enacted  appropriations. We also interviewed officials from the Department of  Defense’s Office of Cost Assessment and Program Evaluation regarding  their experience in studying efforts to collect comparable contractor costs  at NNSA. We analyzed NNSA program offices’ documentation on  systems the program offices were developing to collect common cost  reporting data and reviewed our and the DOE Inspector General’s reports  on cost comparability at NNSA. We obtained written comments from the  DOE chief information officer (CIO) and interviewed the NNSA CIO to  understand their roles in developing the plan.
We conducted this performance audit from January 2015 to January 2017  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: This background section discusses (1) NNSA’s methods of accounting for  and tracking costs, (2) the legislative requirement for NNSA to develop a  plan to improve and integrate financial management, and (3) leading  practices for strategic planning.
subsections: section_title: NNSA’s Methods of Accounting for and Tracking Costs
paragraphs: NNSA contractors use different methods to account for costs, according  to NNSA officials. In general, federal Cost Accounting Standards govern  how federal contractors, including NNSA’s contractors account for costs.  Federal Cost Accounting Standards provide direction for the consistent  and equitable distribution of contractors’ costs to help federal agencies  more accurately determine the actual costs of their contracts, projects,  and programs. In particular, these standards establish requirements for  the measurement, assignment, and allocation of costs to government  contracts and provide criteria for the classification and allocation of  indirect costs.
To allocate costs to programs, contractors are to classify costs as either  direct or indirect. Direct costs, are assigned to the benefitting program or  programs. Indirect costs—those costs that cannot be assigned to a  particular program such as costs for administration and site support—are  to be accumulated, or grouped, into indirect cost pools. The contractor is  to estimate the amount of indirect costs (accumulated into indirect cost  pools) that will need to be distributed to each program and adjust the  costs to actual costs by the end of the fiscal year. The contractor then is  to distribute these costs based on a rate in accordance with the cost  allocation model. The final program cost is the sum of the total direct  costs plus the indirect costs distributed to the program.
In implementing this allocation process, federal Cost Accounting  Standards provide contractors with flexibility regarding the extent to which  they identify incurred costs directly with a specific program and how they  collect similar costs into indirect cost pools and allocate them among  programs. Therefore, similar costs may be allocated differently because  contractors’ cost allocation models differ. Specifically, cost models may  differ in how they (1) classify costs as either direct or indirect, (2)  accumulate these costs into indirect cost pools, and (3) distribute indirect  costs to benefitting programs. Examples follow:
Classification. Contractors may differ in how they classify costs as  direct or indirect. For example, electricity and other utility costs are  usually classified as indirect because they are not associated with a  single program; however, electricity costs could be charged directly if,  for example, a contractor installs a meter to track the electricity  consumption in a building used solely by one program.
Accumulation. Contractors may differ in how they accumulate indirect  costs into indirect-cost pools. The number and type of cost pools used  to accumulate indirect costs may vary.
Distribution. Management and Operating (M&O) contractors may  differ in how they distribute indirect costs accumulated into indirect- cost pools to programs.
Because similar indirect costs can be allocated differently by different  contractors and contractors may change the way they allocate indirect  costs over time, it is difficult to compare contractor costs among sites.
NNSA contractors also use different methods to track costs, according to  NNSA officials. Specifically, NNSA contractors use different work  breakdown structures (WBS) for tracking costs. A WBS is a method of  deconstructing a program’s end product into successive levels (of detail)  with smaller specific elements until the work is subdivided to a level  suitable for management control. Within WBSs, cost elements capture  discrete costs of a particular activity of work, such as labor, material, and  fringe benefits. The use of different methods to track cost makes it difficult  for NNSA and others to understand or compare costs for comparable  activities across programs, contractors, and sites. For example, in 2011  we concluded that the cost savings that NNSA anticipated from the  consolidation of the M&O contracts for two of its production sites were  uncertain, in part, because historic cost data were not readily available for  NNSA to use in its cost analysis. More specifically, we found that a key  step in NNSA’s process for estimating savings—developing a  comparative baseline of historical site costs––is a difficult and inexact  process because DOE and NNSA contractors use different methods for  tracking costs, and DOE’s cost data are of limited use in comparing sites.
To obtain more consistent information on costs, some program offices  have developed customized contractor cost reporting requirements and  designed various systems to collect the cost information needed to  manage their programs. For example, NNSA’s Office of Defense  Programs began developing a data system in 2007—the Enterprise  Portfolio Analysis Tool (EPAT)—to provide a consistent framework for  managing the planning, programming, budgeting, and evaluation  processes within Defense Programs. EPAT has evolved to incorporate a  common WBS to allow managers to compare the budget estimates for  analogous activities across the nuclear security enterprise regardless of  which contractor or program is conducting them. However, NNSA officials  told us that neither EPAT nor other customized, program-specific cost  collection systems satisfy the section 3128 requirements for establishing  an NNSA-wide approach to collecting cost information. According to  NNSA officials, EPAT is not suitable because, among other reasons, it is  not designed to reconcile with the DOE’s official accounting system.
section_title: Legislative Requirement for NNSA to Develop a Plan to Improve and Integrate Financial Management
paragraphs: Section 3128 of the National Defense Authorization Act for Fiscal Year  2014 requires NNSA to develop a plan for improving and integrating  financial management of the nuclear security enterprise. The Joint  Explanatory Statement accompanying the act states that NNSA is to  develop a plan for a common cost structure for activities at different sites  with the purpose of comparing how efficiently different sites within the  NNSA complex are carrying out similar activities. According to the act, matters to be included in the plan are: (1) an assessment of the feasibility  of the plan (2) the estimated costs of carrying out the plan, (3) an  assessment of the expected results of the plan, and (4) a timeline for  implementation of the plan.
In April 2014, to address the requirements of section 3128, NNSA formed  a Lean Six Sigma team of 20 federal and contractor staff. In December  2014, the team produced a report that summarized the results of the  team’s effort and included a number of recommendations to NNSA.  According to the report, the team’s work also addressed separate but  related requirements contained in a different section of the National  Defense Authorization Act for Fiscal Year 2014. Specifically, section 3112  requires the NNSA Administrator to establish a Director for Cost  Estimation and Program Evaluation to serve as the principal advisor for  cost estimation and program evaluation activities, including development  of a cost data collection and reporting system for designated NNSA  programs and projects. Therefore, according to the December 2014  report, the team focused on both the requirements of section 3128 and  the development of a cost data collection and reporting system required  by section 3112.
section_title: Leading Practices for Strategic Planning
paragraphs: We have previously reported that, in developing new initiatives, agencies  can benefit from following leading practices for strategic planning.  Congress enacted the GPRA Modernization Act of 2010 (GPRAMA) to  improve the efficiency and accountability of federal programs and, among  other things, to update the requirement that federal agencies develop  long-term strategic plans that include agencywide goals and strategies for  achieving those goals. The Office of Management and Budget (OMB)  has provided guidance in Circular A-11 to agencies on how to prepare  these plans in accordance with the GPRA Modernization Act of 2010  (GPRAMA) requirements. We have reported in the past that, taken  together, the strategic planning elements established under the  Government Performance and Results Act of 1993 (GPRA), as updated  by GPRAMA, and associated OMB guidance, along with practices we  have identified, provide a framework of leading practices that can be used  for strategic planning at lower levels within federal agencies, such as  planning for individual divisions, programs, or initiatives.
section_title: NNSA’s Financial Integration Plan Includes Required Elements but Contains Few Details Regarding Its Feasibility, Estimated Cost, Timelines, and Expected Result
paragraphs: In February 2016, more than13 months after the statutory reporting  deadline, NNSA produced a plan with the stated purpose of integrating  and improving the financial management of the nuclear security  enterprise. NNSA’s plan includes the four elements required under  section 3128—a feasibility assessment, estimated costs, expected  results, and an implementation timeline—but contains few details related  to each of these elements.
Feasibility assessment. NNSA’s plan includes a section entitled  feasibility, which lists concerns regarding the feasibility of  implementing the plan. The concerns listed are (1) the availability of  resources, (2) the identification and implementation of an information  technology solution, (3) the alignment of contractor systems and cost  models with a new standardized reporting framework, and (4) that the  use of the enterprise-wide approach may come at the expense of  specific ad hoc reporting requests. NNSA’s feasibility assessment  does not provide any specific information regarding these concerns. In  addition, it does not provide information on potential costs or benefits,  which will be needed to determine if the planned investment of time  and other resources will yield the desired results.
Estimated cost. The plan includes information on the estimated cost of  its implementation plan. It states that total federal and contractor  implementation costs are estimated to be between $10 million and  $70 million, with the largest variable in the estimate being the cost of  the information technology system requirements. NNSA’s cost  estimate, however, provides no details regarding how the estimate  was developed, beyond stating that it is based on professional  judgment and input from NNSA’s contractors. Instead, the plan states  that NNSA will provide a more precise estimate as the agency  determines total staffing and information requirements.
Expected results. The plan does not explicitly include a discussion of  the expected results. However, the plan concludes that the collection  of standard performance and cost data will improve both program and  financial management through improved cost analysis, cost  estimating, and program evaluation. The language in the conclusion,  however, provides no details regarding the ways in which cost  analysis, cost estimating, and program evaluation will be improved.
Implementation timeline. The plan states that contractors will begin  reporting detailed cost data into a common NNSA system in fiscal  year 2019 and includes an implementation timeline for meeting this  goal. (see fig. 1). Elements of the timeline include developing and  implementing an enterprise-wide financial management policy,  exploring the feasibility of a common WBS for NNSA, and  standardizing direct and indirect cost elements. While NNSA’s plan  says its timeline is “notional,” the plan provides a specific time frame  of 3 to 5 years during which the core elements are expected to be  completed. Moreover, the plan does not identify which elements are  considered the “core elements” or explain the reasoning behind the  implementation timeframe of 3 to 5 years.
As of December 2016, NNSA has fully implemented one of the elements  included in the timeline by creating and filling the position of Program  Director of Financial Integration. Other elements that were scheduled  under NNSA’s implementation timeline to begin in fiscal year 2015 and  early fiscal year 2016 were not started according to the timeline but are  now underway. For example, the timeline indicates that NNSA will begin  developing and implementing an enterprise-wide financial management  policy during the second half of fiscal year 2015 but this effort was not  initiated until October 2016.
The elements listed in NNSA’s timeline correspond with the  recommendations included in the December 2014 internal NNSA report  The report recommended that NNSA: establish a clear and consistent program management policy  addressing common program management data reporting  requirements for all work performed with NNSA funding; establish a standard WBS for all work performed within the nuclear establish a clear and consistent policy and methodology for identifying  base capabilities and programs of record that is systematically  applied;  report financial data by standardized labor categories, labor hours,  functional elements, and cost elements; enhance or develop an agency data Warehouse and analytical tools; establish a knowledge management function; and appoint an “Executive Champion” to implement the recommendations  and plan.
However, NNSA’s plan does not include additional details regarding each  of the elements listed in its timeline or contain many of the details  included in its internal agency report. Instead of using the information and  recommendations from the December 2014 report as a basis for  developing an actionable implementation plan, NNSA summarized  portions of the report and issued the summary document as its official  plan. Moreover, differences between the internal report and the published  plan are not discussed or explained—potentially creating ambiguity as to  NNSA’s planned approach. For example, the internal agency report  recommends that NNSA establish a standard WBS for all work performed  within the nuclear security enterprise. NNSA’s plan, however, states that  NNSA will explore the feasibility of a common WBS—which leaves open  the option of not creating a common WBS.
section_title: NNSA’s Plan Does Not Fully Follow Leading Practices for Planning, Limiting Its Usefulness As a Road Map for Guiding NNSA’s Effort
paragraphs: NNSA’s plan does not fully incorporate leading practices, which limits its  usefulness as a planning tool and limits the effectiveness of NNSA’s effort  to provide meaningful financial information to Congress and other  stakeholders. Reliable financial information is important for making  programmatic and budgetary decisions and providing appropriate  oversight. To improve the consistency of this information, as discussed  previously, Congress directed NNSA to develop a financial integration  plan. In developing plans for implementing new initiatives, agencies— including NNSA—can benefit from following leading practices for strategic  planning. These leading practices include (1) defining the mission and  goals of a program or initiative, (2) defining strategies and identifying  resources needed to achieve goals, (3) ensuring leadership involvement  and accountability, and (4) involving stakeholders in planning. We  highlight these four practices because NNSA’s financial improvement and  integration initiative is still being developed, and these practices are  particularly relevant to the early stages of developing a strategic plan.  NNSA’s plan, however, does not fully incorporate any of these leading  practices. Table 1 shows our assessment of the extent to which NNSA  used these practices in developing its plan for improving and integrating  its financial management.
Mission and goals. NNSA’s plan does not explicitly include a mission  statement or strategic goals; as a result, it is difficult to understand  fully what NNSA’s plan is intended to do and how it will do it. More  specifically, it’s unclear if the sole purpose of the plan is to satisfy  section 3128 requirements and the information needs of Congress or  if it is also intended to satisfy the information needs of NNSA decision  makers. For example, the plan’s executive summary states that NNSA  developed the plan to address specific requirements set forth in  section 3128 of the National Defense Authorization Act for Fiscal Year  2014; however, information presented in the plan’s conclusions  suggests that the plan may also be intended to satisfy the information  needs of NNSA decision makers. In addition, while the plan concludes  that the collection of standard performance and cost data will improve  both program and financial management through improved cost  analysis, cost estimating, and program evaluation, it does not  explicitly present this as a goal either in the conclusions or earlier in  the plan.
Strategies and resources needed to achieve goals. NNSA’s plan does  not include strategies to address management challenges or describe  the specific resources needed to meet goals. We have previously  reported that when developing a strategic plan, it is particularly  important for agencies to define strategies that address management  challenges that threaten their ability to meet long-term strategic goals  and include a description of the resources, actions, time frames, roles,  and responsibilities needed to meet established goals. NNSA’s plan  includes a list of the challenges NNSA will face during implementation  of the plan—including challenges related to the availability of  resources and identifying and implementing an information technology  solution—and provides a “notional” implementation timeline with  milestones for certain significant actions. However, beyond the high- level cost estimate provided, NNSA’s plan does not include a  description of the specific resources needed to meet specific elements  of the plan or define strategies that address these management  challenges.
Leadership involvement and accountability. The CIOs for NNSA and  DOE were not involved in developing the NNSA financial integration  plan. An agency’s senior leadership is key to ensuring that strategic  planning becomes the basis for day-to-day operations. The NNSA  CIO told us that he was aware of Section 3128 but was not involved in  developing the plan or determining how to identify a system to meet  the section 3128 requirements. NNSA officials told us that they did not  think it was necessary to get the NNSA or DOE CIOs involved with  the team because the agency had yet to identify the requirements for  a new information technology system. However, this assertion is  inconsistent with information contained in NNSA’s December 2014  Lean Six Sigma report which states that a sub-team was formed to  determine the data system requirements for collecting and reporting  costs that would satisfy sections 3128 and 3112 of the National  Defense Authorization Act for Fiscal Year 2014.
Stakeholder involvement. Key stakeholders, such as program  managers were not involved in developing the mission, goals, or  strategies associated with the plan. We have previously reported that  it is important for agencies to involve stakeholders in developing their  mission, goals, and strategies to help ensure that the highest priorities  are targeted. However, NNSA did not involve key stakeholders in the  development of its financial integration plan. The Lean Six Sigma  team that NNSA formed to develop the plan was widely represented  in terms of geographic location and included representatives from  NNSA’s budget, financial management, information technology, and  cost-estimating communities, but key stakeholders, such as federal  program managers were not included in the effort. NNSA officials told  us that the biggest challenge NNSA will face in implementing the plan  will be overcoming cultural resistance to change and the parochial  interests of different program offices—particularly for program offices  that have developed their own independent technology solutions for  collecting the cost data they need to manage. Yet, the involvement  from NNSA program management offices was limited to budget and  finance staff. According to NNSA officials, program managers were  invited to participate in the Lean Six Sigma team but none  volunteered. Moreover, the federal program manager from one of  NNSA’s largest programs—the B-61 Life Extension Program—told us  that he was not involved in the team and was only vaguely aware of  the section 3128 requirement for NNSA to develop a financial  integration plan. Given that program managers are a primary user of  managerial cost information, obtaining their perspectives and getting  their buy-in is important. NNSA also did not solicit input from  congressional staff in the development of the plan. NNSA officials told  us that the only time they met with congressional staff regarding  Section 3128 was in May 2015 to brief staff on their progress, but this  was after they were done studying the issue.
Because NNSA’s plan does not fully incorporate leading strategic  planning practices, such as those included in table 1, it has not provided a  useful road map for guiding NNSA’s effort. According to the NNSA official  who is responsible for overseeing the execution of the plan—the Director  of Financial Integration—the plan NNSA submitted to Congress was not a  comprehensive or actionable plan. In addition, other NNSA officials told  us that the plan they submitted to Congress was never intended to  provide a road map to guide their efforts. More specifically, they said that  they disagree with the premise that the plan submitted to Congress  should have been a detailed, operational plan with specific milestones  and extensive information about costs, schedule, and risks. Instead,  according to these NNSA officials, the purpose of the plan was to identify  general principles and a strategic vision for achieving financial integration.  The Director of Financial Integration, who accepted this position in  January 2016 shortly before NNSA issued its plan, told us in July and in  November 2016 that he was in the process of developing an actionable  plan with specific goals, objectives, and milestones and acknowledged  that key stakeholders, such as program managers, would need to be  involved in the process. However, he did not tell us when the more  detailed, actionable plan would be finalized and, on the basis of planning  documents he provided us; it is unclear if the new plan will incorporate  leading practices. Until an actionable plan is in place that incorporates  leading strategic planning practices, NNSA cannot be assured that it has  established a roadmap to effectively guide and assess the success of this  initiative.
section_title: Conclusions
paragraphs: Effective management and oversight of the contracts, projects, and  programs that support NNSA’s mission are dependent upon the  availability of reliable enterprise-wide management information and, as  required, NNSA has provided Congress with a plan for improving and  integrating its financial management. Although NNSA’s plan includes the  elements required under section 3128, details are limited, and it appears  that this plan will not provide the framework needed to guide NNSA’s  efforts and ensure that Congress and other stakeholders have accurate,  reliable cost information that can be compared across programs,  contractors, and sites. In particular, NNSA’s plan has not provided an  effective framework for guiding NNSA’s effort because it does not  incorporate leading planning practices including (1) defining the missions  and goals of a program or initiative, (2) defining strategies and identifying  resources needed to achieve goals, (3) ensuring leadership involvement,  and (4) involving stakeholders in planning. In addition, differences  between NNSA’s internal report and the published plan are not discussed  or explained—potentially creating ambiguity as to NNSA’s planned  approach. NNSA officials have acknowledged that the plan they  submitted to Congress is not a comprehensive or actionable plan. The  Director of Financial Integration has taken steps to develop an actionable  plan, but it is unclear when the plan will be finalized or the extent to which  it will incorporate leading practices. Until a plan that incorporates leading  practices is in place, NNSA cannot be assured that its efforts will result in  a cost collection model that satisfies the information needs of Congress or  improves program and financial management through improved cost  analysis, cost estimating, and program evaluation. Such information  would better position NNSA to address longstanding contract and project  management challenges. Without proper planning NNSA could waste  valuable resources, time, and effort in its financial management  improvement and integration process.
section_title: Recommendation for Executive Action
paragraphs: To help provide a roadmap to effectively guide NNSA’s effort to integrate  and improve its financial management, we recommend that the NNSA  Administrator direct the Program Director of Financial Integration to  develop a plan for producing cost information that fully incorporates  leading practices.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to NNSA for its review and comment.  NNSA provided written comments, which are reproduced in appendix I,  and technical comments that were incorporated as appropriate. In its  written comments, NNSA stated that it will update the plan and address  the items GAO identified. Although NNSA has agreed to implement our  recommendation, in its written comments, NNSA states that given the  plan’s “early level of maturity” GAO’s evaluation of the plan against  leading practices resulted in a somewhat misleading conclusion. We  disagree. The purpose of a plan is to provide a roadmap to guide the  agency’s effort. Regardless of the plan’s maturity, incorporating leading  practices for strategic planning can improve its utility.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Energy, the Administrator of NNSA, and  other interested parties. In addition, the report is available at no charge on  the GAO website at http://www.gao.gov.
If you or your staff members have any questions about this report, 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 report. GAO staff who made major contributions to  this report are listed in appendix II.
section_title: Appendix I: Comments from the National Nuclear Security Administration
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Diane LoFaro (Assistant  Director), Mike LaForge (Assistant Director), Cheryl Harris; Charles  Jones, and Mark Keenan made key contributions to this report.