Nuclear Weapons: NNSA Has a New Approach to Managing the B61-12 Life Extension, but a Constrained Schedule and Other Risks Remain
Published: 2016-02-04T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Weapons in the U.S. nuclear stockpile are aging. NNSA and DOD undertake LEPs to refurbish or replace nuclear weapons' aging components. In 2010, they began an LEP to consolidate four versions of a legacy nuclear weapon, the B61 bomb, into a bomb called the B61-12 (see fig.). NNSA and DOD have stated they must complete this LEP by 2024 to uphold U.S. commitments to the North Atlantic Treaty Organization. As of September 2015, NNSA and DOD estimated that the B61-12 LEP would cost about $8.9 billion.
Senate Report 113-44 included a provision for GAO to periodically assess the status of the B61-12 LEP. This report assesses (1) NNSA's management approach for the B61-12 LEP and (2) the extent to which NNSA and the Air Force are managing risks in the LEP. GAO reviewed project plans, schedules, management plans, and other documents and program data, and visited the two NNSA national laboratories—Sandia and Los Alamos—that serve as the design agencies for the LEP.
section_title: What GAO Found
paragraphs: The B61-12 life extension program's (LEP) managers have developed a management approach that officials from the Department of Energy's (DOE) National Nuclear Security Administration (NNSA) and the Department of Defense (DOD) regard as improved over the management approach used for past LEPs, which experienced schedule delays and cost overruns. Among other things, the B61-12 LEP is the first LEP to use earned value management, a tool that measures the planned versus actual value of work accomplished in a given period, which may help NNSA ensure that work progresses on budget and on schedule. It is also the first LEP to integrate the schedules and cost estimates for activities at all participating NNSA sites. NNSA used this new approach to inform its first Program Execution Guide for defense programs, issued in August 2014, which applies to all NNSA defense programs. NNSA's new management approach notwithstanding, the B61-12 LEP faces ongoing management challenges in some areas, including staff shortfalls and an earned value management system that has yet to be tested. The new management approach may help the LEP address these potential challenges, but it is too soon to determine whether this will be the case.
To manage risks in the B61-12 LEP, NNSA and the Air Force use a risk management database and integrated schedules to categorize risks and incorporate risk management steps in the schedules. According to NNSA and Air Force officials, some risks have already been managed in this manner. For example, NNSA estimates that making a needed material procurement in advance prevented a potential delay of more than a year and a potential cost increase of more than $2 million. Remaining risks include the risk that components may fail in certain flight environments and risks related to testing of certain nonnuclear components. NNSA is also working to ensure future compatibility with the F-35 aircraft. NNSA and Air Force officials said they will not know for several years whether steps planned to manage these risks are adequate. A constrained development and production schedule—which DOE's and DOD's Nuclear Weapons Council characterized as having “little, if any, margin left”—complicates efforts to manage risks. Factors constraining the schedule include the aging of components in current versions of the B61, delays in starting the B61-12 LEP because of a lengthy design study, the effects of sequestration, and the need to complete the B61-12 LEP so that NNSA can begin other planned LEPs. GAO will continue to monitor these issues as it assesses the LEP in later stages.
section_title: What GAO Recommends
paragraphs: GAO is making no new recommendations but discusses the status of prior GAO recommendations in this report. In commenting on a draft of this report, DOE generally agreed with GAO's findings and provided technical comments that were incorporated, as appropriate. DOD provided technical comments that were also incorporated, as appropriate.

section_title: Letter
paragraphs: Many weapons in the U.S. nuclear stockpile have aged far beyond their  designed operational lives and, according to the Department of Defense  (DOD), require modernization to ensure that the nuclear arsenal is safe,  secure, and effective for as long as such weapons exist. Some of the  oldest of the weapons in the active stockpile are versions of the B61  bomb, an aircraft-delivered weapon that is a key component of the United  States’ commitments to the North Atlantic Treaty Organization’s (NATO)  nuclear deterrent. To maintain the readiness of the B61 and other  weapons in the stockpile, the Department of Energy’s (DOE) National  Nuclear Security Administration (NNSA) and DOD undertake life  extension programs (LEP) that entail refurbishing or replacing weapons’  components to extend the lives of weapons by 20 years or more. LEPs  may also enhance safety and security characteristics of weapons, as well  as consolidate the stockpile into fewer weapon types to minimize  maintenance and testing costs while preserving needed military  capabilities.
Under the B61 LEP, NNSA and the Air Force—the armed service  responsible for air-delivered weapons such as the B61—plan to  consolidate four of the five versions of the B61 bomb (B61 legacy  bombs), each of which was designed to fulfill specific military  requirements, into a single weapon known as the B61-12, which will be  equipped with a new tail kit guidance assembly that will enable it to meet  all military requirements. The consolidation of B61 legacy bombs into the  single B61-12 weapon is expected to allow NNSA and DOD to reduce the  number of nuclear gravity bombs in the stockpile by about one-half. In  addition, DOD and NNSA expect the B61-12 to provide mission  capabilities that will allow the retirement of a megaton-class weapon, the  B83-1 bomb, that would be expected to produce significantly more  collateral damage than the lower-yield B61-12. Altogether, the reduction  in the number of bombs and retirement of the B83-1 bomb will reduce the  amount of special nuclear material in the U.S. stockpile of gravity bombs  by more than one-half. Because critical components in B61 legacy  bombs are approaching the end of their operational lives, NNSA and  DOD have underscored the importance of beginning production of the  B61-12 in 2020 and completing the LEP by 2024 to uphold the United  States’ commitments to NATO’s nuclear deterrent. With thousands of  individual components, the B61-12 LEP is the most complicated and  expensive LEP undertaken since DOE initiated stockpile life extension  activities in January 1996.
We have examined other LEPs in past reports and found that NNSA and  DOD have had difficulty effectively managing these programs. In March  2009, for example, we found that, in LEPs for the W76 warhead and  legacy B61 bombs, NNSA and DOD established unrealistic schedules,  did not establish consistent cost baselines, and did not effectively  manage technical risks. These problems resulted in delays, additional  expenditures, difficulties tracking the cost of the W76 program, and a B61  refurbishment that did not meet all of NNSA’s and DOD’s technical  objectives. We recommended that NNSA develop and use consistent  budget assumptions and criteria for the baseline to track costs over time,  among other actions. NNSA agreed with our recommendation and has  taken steps toward improvement in this area, which we continue to  monitor. In addition, in a May 2011 report on the B61 LEP, we found that  NNSA and DOD had not yet prepared a long-term risk management plan  to help avoid operational gaps and ensure that the United States would  be able to maintain the capability to support its NATO commitments if the  LEP were delayed or canceled. We recommended in that report that the  appropriate DOD components, in coordination with NNSA, prepare an  operational risk management plan for the LEP, identifying the measures  required to ensure that the United States is able to maintain its  commitments to NATO with no gaps in operational capability, among  other recommendations. DOD and NNSA agreed with our  recommendations and, in September 2011, the Air Force, in coordination  with NNSA, issued an initial program delay risk mitigation plan. The plan  presented risk mitigation options in the event that the LEP was delayed.  The Air Force is currently updating the plan.
The cost and schedule of the B61-12 LEP have been subject to  significant changes since the LEP’s inception. Since our May 2011  report, NNSA’s and the Air Force’s total cost estimate for the LEP has  increased from an initial estimate of about $4 billion to about $8.9 billion,  as of September 2015, and the first production date has moved from  2017 to 2020. Much of the work under this LEP remains to be executed,  with the largest share of program spending yet to come; as of September  2015, about $1.6 billion has been spent on the LEP.
In this context, Senate Report 113-44, accompanying S. 1197, National  Defense Authorization Act for Fiscal Year 2014, includes a provision for  us to examine key elements of the B61-12 LEP and periodically review it  as it passes through the phases of the seven-step process—known as  the Phase 6.X process—under which NNSA and DOD jointly manage  LEPs. The B61-12 LEP is currently in Phase 6.3 of the process. In this  phase—the development engineering phase—NNSA and the Air Force  conduct experiments, tests, and analyses to develop and validate the  selected design option. This report assesses (1) NNSA’s management  approach for the B61-12 LEP and (2) the extent to which NNSA and the  Air Force are managing risks in the LEP.
To assess NNSA’s management approach for the LEP, we reviewed  documents that establish cost and schedule goals and track the  program’s progress toward those goals. These documents included  project plans, schedules, management plans, and selected acquisition  reports. In addition, we visited NNSA’s Sandia National Laboratories and  Los Alamos National Laboratory, the two laboratories that serve as  design agencies for the LEP, to view systems that track project activities,  cost and schedule information, and the execution of risk management  steps, as well as to meet program officials responsible for the design and  production of the B61-12 and see some of the components under  development. To assess the extent to which NNSA and the Air Force are  managing risks in the LEP, we reviewed the documents described above,  as well as viewed and discussed the LEP’s Active Risk Manager  database during our visit to Sandia National Laboratories. For both  objectives, we examined DOE directives, such as program orders and  guides, NNSA policy letters, and DOD instructions, as well as the B61-12  LEP’s program-developed guidance documents and the procedural  guidance for the Phase 6.X process. In addition, for criteria and context,  we used the GAO Cost Estimating and Assessment Guide (Cost Guide)  and our past reports on LEPs and NNSA cost estimating practices.  Throughout our work, we coordinated with a team from DOE’s Office of  Inspector General, which is in the process of conducting its own review of  the LEP and plans to issue a classified report. Our objectives, scope, and  methodology are described in more detail in appendix I.
We conducted this work from July 2014 to February 2016 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 describes (1) objectives, milestones, and  management considerations in the B61-12 LEP and (2) DOE directives  and NNSA policy letters and how they apply to programs such as the  B61-12 LEP.
subsections: section_title: B61-12 LEP Objectives, Milestones, and Management Considerations
paragraphs: The B61-12 consists of two major assemblies: the bomb assembly and  the tail kit guidance assembly. NNSA manages the development and  production of the bomb assembly and the Air Force manages the  development and production of the tail kit assembly, among other  activities, as follows:
NNSA responsibilities and the bomb assembly. According to  NNSA officials and documents, the bomb assembly will include  reused, refurbished, and new nuclear and nonnuclear components.  The design approach for the LEP maximizes reuse of existing nuclear  and nonnuclear components and is intended to improve the safety  and security of the weapon using proven technologies. NNSA  manages the development and production of the bomb assembly  under the direction of a federal program office and federal program  manager located at Kirtland Air Force Base in Albuquerque, New  Mexico, which is also the site of NNSA’s Sandia National  Laboratories. NNSA sites and laboratories involved in the LEP include  Sandia National Laboratories, the design agency for nonnuclear  components, a production agency for some components, and system- level integrator of the overall weapon design; Los Alamos National  Laboratory, the design and production agency for the nuclear  explosive package; the Kansas City National Security Campus, the Y- 12 National Security Complex, and the Savannah River Site, the  production agencies for various new or refurbished weapon  components; and the Pantex Plant, where some bomb components  are produced and final assembly of the bombs takes place. In  addition, Lawrence Livermore National Laboratory provides  independent review of Los Alamos National Laboratory’s work on  nuclear components. As of September 2015, NNSA’s expected costs  for its share of the LEP work were approximately $7.3 billion.
Air Force responsibilities and the tail kit assembly. According to  Air Force officials and documents, the tail kit assembly will provide the  B61-12 with a guided freefall capability that improves the accuracy of  weapon delivery. The guided capability will enable the weapon to  meet military requirements with a lower nuclear yield, allowing for the  use of less special nuclear material. The B61-12 is designed to be  compatible with existing dual-capable aircraft—the F-15, F-16, and  PA-200—as well as the B-2 strategic bomber and planned future  aircraft such as the F-35 fighter. The Air Force’s responsibilities  include integrating the B61-12 with its delivery aircraft and the  operational flight program software. This software is being upgraded  in the F-15 and B-2 delivery aircraft so that these aircraft can work  with the B61-12’s digital interface. The Air Force Nuclear Weapons  Center at Kirtland Air Force Base manages technical integration,  system qualification, and other LEP-related tasks required to certify  and field the weapon as well as tail kit acquisition, as contracted to  Boeing. As of September 2015, the Air Force’s expected costs for its  share of the LEP work were approximately $1.6 billion.
Figure 1 shows the B61-12.
The joint 6.X guidance describes key high-level joint tasks and  deliverables for each phase of nuclear refurbishment activities such as an  LEP. Specifically, the 6.X guidance lists key milestones, such as tests  and cost estimates, that a nuclear weapon refurbishment activity must  undertake before proceeding to subsequent steps of the Phase 6.X  process (see fig. 2).
NNSA and DOD implement the Phase 6.X process under a guidance  document, Procedural Guideline for the Phase 6.X Process, which was  issued in 2000 and is undergoing its first revision. This document  describes the roles and functions of DOD, DOE, and NNSA in nuclear  weapon refurbishment activities conducted through the Phase 6.X  process. It also describes the roles and functions of two joint bodies that  provide oversight and approval functions to LEPs and other nuclear  weapons–related activities: the Nuclear Weapons Council and its  Standing and Safety Committee. In addition, the Nuclear Weapons  Council charters a Project Officers Group for each weapon system to  provide a technical forum for weapon development and management  activities. Each Project Officers Group is led by a project officer from  either the Navy or Air Force, the two military services that maintain and  operate nuclear weapons. Importantly, for more detailed requirements  and guidance on program management matters, DOE and DOD each  utilize their own agency-specific directives.
In the B61-12 LEP’s current phase—6.3, development engineering— NNSA coordinates with the Air Force to conduct experiments, tests, and  analyses to develop and validate the selected design option. Key steps  that have not yet taken place in Phase 6.3 of the B61-12 LEP include  formally developing a program cost baseline—a more mature cost  estimate than is currently in use—and finalizing the design definition.  Program officials told us they expect to issue the baseline cost report,  which will formalize the program’s cost baseline, and to approve the  baseline design in the third quarter of fiscal year 2016. According to  program officials, the LEP is on schedule to enter Phase 6.4 (production  engineering) in the fourth quarter of fiscal year 2016.
The B61-12 LEP is one of several LEPs or refurbishments that NNSA and  DOD have plans to undertake or have already started. Other LEPs or  refurbishments include the ongoing LEP for the W76 warhead, an  alteration to the W88 warhead, and planned LEPs for the cruise missile  and interoperable warheads. Some of these activities are or will be  taking place concurrently, and several have had their completion dates  revised over the years, as shown in table 1. In addition, NNSA plans to  move important production operations into new or modified facilities  during this time period. Because of overlapping LEPs and new  infrastructure, NNSA and DOD officials told us that they recognize the  need to continue to improve coordination and management of the nuclear  security enterprise.
Earned value management is a project management tool developed by  DOD in the 1960s to help managers monitor project risks. Earned value  management systems measure the value of work accomplished in a  given period and compare the measured value with the planned value of  work scheduled for that period and the actual cost of work accomplished.  Earned value management’s intended purpose is to integrate a project’s  cost, schedule, and technical efforts for management and provide reliable  data to decision makers.
section_title: DOE Directives, NNSA Policy Letters, and Their Applicability to Programs
paragraphs: DOE’s Departmental Directives Program, defined and established  through a DOE order, classifies directives into several types. These  directive types include orders and guides, which the Departmental  Directives Program describes as follows:
Orders. Orders establish requirements and should include detailed  instructions describing how requirements are to be implemented.
Guides. Guides provide information on how to implement the  requirements contained in orders. They are a nonmandatory means  for complying with these requirements and cannot be made  mandatory by reference in other DOE directives.
The National Nuclear Security Administration Act, through which  Congress established the NNSA, also gives the NNSA Administrator the  authority to establish NNSA-specific policies, unless disapproved by the  Secretary of Energy. NNSA does so through the issuance of policy  letters. These policy letters take the form of NNSA policies, supplemental  directives, and business operating procedures.
DOE manages the B61-12 LEP as a program. The department makes  distinctions between programs and projects and uses different directives  to prescribe the management approach for each, as follows:
Programs. According to NNSA officials, no DOE order exists that  provides management requirements for program activities, such as  LEPs. As we found previously in our November 2014 report on DOE  and NNSA cost estimating practices, for example, DOE and NNSA  programs were not required to meet any cost estimating best  practices. NNSA officials stated at that time that NNSA cost  estimating practices for programs were limited, decentralized, and  inconsistent, and were not governed by a cost estimating policy or  single set of NNSA requirements and guidance. According to these  officials, each NNSA program office used different practices and  procedures for the development of cost estimates that were included  in the NNSA annual budget.
Projects. NNSA’s management of projects is governed by DOE Order  413.3B (DOE’s project management order). The order applies to  capital asset projects above a certain cost threshold. It provides  management direction for NNSA and other DOE offices, with the goal  of delivering projects within the original performance baseline that are  fully capable of meeting mission performance and other requirements,  such as environmental, safety, and health standards. The order  specifies requirements that must be met, along with the  documentation necessary, to move a project past major milestones. It  provides requirements regarding cost estimating (and, in some cases,  the preparation of an independent cost estimate), technology  readiness assessments, independent project reviews, and the use of  earned value management systems, among other requirements. As  we have previously found, DOE’s project management order applies  to programs only in conjunction with a program’s acquisition of capital  assets.
section_title: The Management Approach for the B61- 12 LEP Informed a New NNSA Program Management Policy for Defense Programs, but Potential Challenges Remain
paragraphs: The B61-12 LEP’s program managers have developed a management  approach that was then used to inform a new NNSA policy that applies to  NNSA defense program management. In addition, NNSA and DOD have  identified some potential management challenges in the program; the  new management approach and policy may help NNSA address these  challenges, but it is too soon to evaluate the likelihood that they will  adversely affect the program.
subsections: section_title: The B61-12 LEP Is Using a Management Approach That Informed New NNSA Policy for Defense Program Management
paragraphs: The B61-12 LEP’s program managers have developed, documented, and  are using program management practices and tools for the LEP to help  identify and avoid cost and schedule overruns and technical issues. As  noted above, we have found in past reports that NNSA and DOD  experienced program management challenges in LEPs, including the  B61-12 LEP and the ongoing LEP for the W76 warhead. We made  recommendations related to NNSA’s budget assumptions, cost tracking  methods, and risk management plans and continue to monitor NNSA’s  response. Since we issued those reports, the B61-12 LEP’s program  managers developed a management approach for the program that  draws on DOE directives and other sources, including our Cost Guide.  For example, we found in our November 2014 report on NNSA project  and program management that the B61-12 LEP’s managers used our  Cost Guide, as well as direction under the Phase 6.X process and DOE’s  project management order and cost guide, to develop their approach for  developing cost estimates.
Several officials from both NNSA and DOD characterized the B61-12  LEP’s overall program management approach as improved over the  approaches used in previous LEPs. This approach includes the following  practices and tools:  Improved management capability and authority. The B61-12  LEP’s program office has taken steps to improve management  capability and authority. According to NNSA officials, the LEP  successfully requested that the department enlarge its federal  program office staff to provide more management capability.  Specifically, the program office had 3 full-time equivalent (FTE) staff  at the beginning of the program; as of October 2015, it has 8 FTEs,  augmented by contractor staff of about 12 FTEs, according to  program officials. Moreover, since 2014, the federal program manager  said that he has successfully requested contingency and  management reserve funds of $983 million over the life of the  program—about 13.5 percent of NNSA’s estimated $7.3 billion total  project cost—which he has authority to use to help manage the  effects of realized risks or changes in funding, such as a continuing  resolution.
An earned value management system. According to NNSA and  DOD officials we interviewed, the B61-12 LEP is the first LEP to use  earned value management, a tool that may help NNSA ensure that its  work progresses on budget and on schedule. Each participating  NNSA site is responsible for reporting earned value data monthly  against the scope, schedule, and budget baselines established for  each site’s activities. According to NNSA officials involved with the  LEP, earned value management identifies schedule variances as they  happen so that the program is aware of any work that may be  progressing more slowly than expected and could go on to affect key  milestones.  Integrated master schedules. According to NNSA officials we  interviewed, the B61-12 LEP is also the first NNSA defense program  to summarize details from site schedules into a summary NNSA  Integrated Master Schedule (NIMS) for work at the participating NNSA  sites. The B61-12 LEP also has developed a top-level schedule that  all program participants use, the Joint Integrated Master Schedule  (JIMS). In past LEPs, according to the officials we interviewed,  NNSA did not fully reconcile and integrate its individual sites’  schedules, which may have contributed to program delays and cost  increases. The JIMS and other integrated master schedules are key  tools in the B61-12 LEP’s schedule and risk management strategy,  according to officials we interviewed.  Integrated cost estimates. An official from NNSA’s Office of Cost  Policy and Analysis told us that the B61-12 LEP is the first NNSA  defense program to issue a cost estimate that integrates all  participating sites’ costs into a single program cost estimate. In past  LEPs, according to the official, NNSA did not integrate its individual  sites’ cost estimates, which contributed to baseline costs being  underestimated.  Independent cost estimate. The official from NNSA’s Office of Cost  Policy and Analysis told us that the office annually prepares and  publishes an independent cost estimate for the NNSA portion of the  B61-12 LEP to help inform the cost estimate prepared by the B61-12  LEP program manager. This estimate is prepared without reference to  the program manager’s estimate and uses a different method. The  estimate can then be compared to the program manager’s estimate to  further refine it as the program develops the formal baseline cost  estimate known as the baseline cost report, one of the key steps  preceding the transition to Phase 6.4. As we found in our November  2014 report on NNSA cost estimating practices, having an  independent entity conduct an independent cost estimate and  compare it to a project team’s estimate provides an unbiased test of  whether the project team’s cost estimate is reasonable.
Technology and manufacturing readiness assessments.
According to B61-12 program officials, the B61-12 program  management team uses NNSA business practices to assess  technology and manufacturing readiness levels for the LEP. The  officials told us that all weapon components are maturing as planned  with respect to their technology or manufacturing readiness. Officials  also told us that they were conservatively applying NNSA business  practices and noted that some components that have been in use for  years may be assessed at lower readiness levels to account for other  design changes in the B61-12. In addition, NNSA is in the process of  planning for a technology readiness review later in 2015 by a group of  Sandia National Laboratories experts that are not otherwise part of  the B61-12 LEP. We have found in previous work that such  independent peer reviews can identify important technology issues.
Peer review of the nuclear explosive package. Nuclear weapons  designers at Lawrence Livermore National Laboratory, which is not  otherwise involved in the LEP, provide peer review of the nuclear  explosive package components being designed at Los Alamos  National Laboratory—a practice in keeping with past LEPs. Since the  United States ceased nuclear explosive testing in 1992, DOE and  NNSA have relied on, among other things, national laboratory peer  reviews to help ensure the continued safety, reliability, and  effectiveness of U.S. nuclear weapons without explosive testing.  According to the official in charge of the peer review, no significant  issues with the nuclear explosive package have emerged in the peer  review.
About 4 years after the B61-12 LEP began, NNSA incorporated elements  of the B61-12 LEP management approach into a new policy for defense  program management. Specifically, in August 2014, NNSA issued its  Defense Programs Program Execution Guide (Program Execution Guide)  regarding program management practices in NNSA defense programs,  including LEPs. It applies to all ongoing and planned LEPs, including the  B61-12 LEP. NNSA officials told us that the B61-12 LEP’s program  management approach served as a model for many of the management  practices and tools established in the Program Execution Guide. These  practices include the use of earned value management systems,  integrated master schedules, and risk management systems. NNSA  officials told us that the name of the Program Execution Guide has  created some confusion, and that it is not a DOE Guide—which provides  nonmandatory means for meeting DOE requirements—but rather an  NNSA policy letter. To allay the confusion, the officials told us, NNSA is  in the process of renaming the document the Defense Programs Program  Execution Instruction. As noted above, DOE does not have an order that  provides requirements for the management of programs more generally;  the Program Execution Guide applies only to those programs and  projects managed by NNSA’s Office of Defense Programs.
section_title: The B61-12 LEP Faces Potential Management Challenges, but It Is Too Soon to Evaluate How They May Affect the Program
paragraphs: In undertaking its new management approach, NNSA has taken steps to  address some of our prior recommendations, including drawing on our  Cost Guide, but the B61-12 LEP still faces potential challenges regarding  program management. The LEP’s new management approach, along  with practices outlined in the Program Execution Guide, may help NNSA  address these challenges, but it is too soon to evaluate how the  challenges may affect the LEP.
Potential challenges NNSA and DOD have identified include the  following:
Limited management capability and authority. According to an  NNSA official, even with the increase in federal staff, NNSA needs  two to three times more personnel in the federal program manager’s  office to ensure sufficient federal management and oversight. As  noted above, the NNSA federal program office employs about 20  people—8 federal FTEs and about 12 FTE-equivalent contractors—to  manage NNSA activities. In contrast, the Air Force office employs  about 80 federal FTEs and contractors to manage Air Force activities.  In addition, the November 2014 report of the Congressional Advisory  Panel on the Governance of the Nuclear Security Enterprise raised  issues about the sufficiency of NNSA program managers’ authority.  Specifically, the report states, “Although NNSA designates  government program managers for each major program, their  authorities have been very limited. Most importantly, they have lacked  control over resources necessary to exercise needed leadership. In  practice, they could more accurately be described as program  coordinators than as program managers.” Similarly, in our March 2009  report, we found that NNSA’s program manager for the W76 LEP did  not have sufficient authority over the construction or operation of a  facility that was critical to the LEP, which played a role in resulting  cost and schedule overruns.
Untested earned value management. NNSA and DOD officials we  interviewed noted that NNSA’s earned value management system will  be useful only insofar as good data are entered into the system and  the system is used to inform program management. We have similarly  noted in our Cost Guide that using earned value management  represents a culture change and requires sustained management  interest, as well as properly qualified and trained staff to validate and  interpret earned value data. According to the officials we  interviewed, the system is too new for them to determine conclusively  whether the data are accurate and the earned value management  system is being used effectively. The officials said that work to  validate the data in the system is ongoing, with formal reviews to  assess the quality of the system planned for 2016.
Cost estimating requirements and practices that have not  followed best practices. In our November 2014 report, we found that  NNSA defense programs generally, and the B61-12 LEP specifically,  were not required to follow cost estimating best practices. For  example, in that report, we found that the B61-12 LEP’s team- produced guidance for the program cost estimate did not stipulate that  NNSA program managers or its contractors must follow any DOE or  NNSA requirements or guidance to develop the B61-12 cost estimate.  We recommended in the report that DOE revise its directives that  apply to programs to require that DOE and NNSA and its contractors  develop cost estimates in accordance with best practices. DOE  agreed with this recommendation and, in June 2015, the Secretary of  Energy issued a memorandum directing the heads of all department  elements to use established methods and best practices, including  practices identified in our Cost Guide, to develop, maintain, and  document cost estimates for capital asset projects. We note that the  memorandum pertains to departmental policy related to project  management, not to program management. In the area of programs,  NNSA officials described actions that it had begun taking to address  our recommendation regarding cost estimating practices. We  continue to monitor DOE’s response to our recommendation.
Guidance on technology readiness that has not followed best  practices. An NNSA business practice requires technology readiness  reviews for LEPs, but it does not specify technology readiness  requirements for entering into first production—Phase 6.5 of the 6.X  process. Best practices followed by other federal agencies suggest  and our prior recommendations state that new technologies should  reach TRL 7—the level at which a prototype is demonstrated in an  operational environment, has been integrated with other key  supporting subsystems, and is expected to have only minor design  changes—at the start of construction. In our November 2010 report,  we recommended that the Secretary of Energy evaluate where DOE’s  guidance for gauging the maturity of new technologies is inconsistent  with best practices and, as appropriate, revise the guidance to be  consistent with federal agency best practices. DOE generally agreed  with our recommendation. Concerning projects, in his June 2015  memorandum, the Secretary of Energy directed that critical  technologies should reach TRL 7 before major system projects— those with a total cost of greater than $750 million—receive approval  of their performance baselines. Concerning programs, NNSA  officials told us they recently issued technology readiness assessment  guidance that was not used in the B61-12 LEP but will be used in the  W80-4 and Interoperable Warhead LEPs.
The new management approach that the B61-12 LEP’s program  managers have implemented, along with the new Program Execution  Guide, may help NNSA address the potential management challenges  that NNSA officials and others have identified with previous LEPs, but it is  too soon to determine whether this will be the case.
section_title: NNSA and the Air Force Have Risk Management Plans for the B61-12 LEP, but Managing Future Risks May Be Challenging Because the LEP Schedule Is Constrained
paragraphs: NNSA and the Air Force have instituted a process to identify risks within  the B61-12 LEP and develop plans to manage those risks. However, a  constrained development and production schedule—driven by the aging  of legacy B61 bombs and the need to start work on other LEPs, among  other factors—could complicate risk management efforts.
subsections: section_title: NNSA and the Air Force Have Instituted a Process to Identify and Manage Risks
paragraphs: According to NNSA and Air Force officials, the B61-12 LEP risk analysis  and management approach uses the program’s integrated master  schedules in conjunction with a risk register, the Active Risk Manager  database. Specifically, the LEP’s 48 product realization teams (PRT)—the  groups of scientists, engineers, and subject-matter experts that perform  the ground-level project work on B61-12 components and  subassemblies—are responsible for identifying risks. Most risks are  managed at the PRT level, but risks that have the potential to affect top- level schedule milestones or the program’s ability to deliver a weapon that  meets performance requirements are presented to joint review boards for  inclusion in the Active Risk Manager database. These higher-level risks— referred to as joint risks—are categorized according to the likelihood of  their occurrence and the consequences should they occur. Joint risks with  the highest likelihood and consequence are color coded as “red” risks,  with successively lower-likelihood and –consequence risks labeled as  “yellow” and “green,” respectively. Program officials develop risk  management steps for each joint risk, document and make time for these  steps in both the Active Risk Manager database and the relevant  integrated master schedules, and brief the Nuclear Weapons Council on  the status of joint risks. Additionally, NNSA identifies and documents  opportunities—program areas with the potential to realize saved time and  cost.
According to NNSA and Air Force officials, some of the joint risks  identified through this process have already been successfully managed.  For example, NNSA officials told us that they were able to avoid the risk  of a shortage of a type of glass necessary for electrical connections by  procuring the glass for the entire program in advance. NNSA estimates  that avoiding this risk prevented a program delay that could have lasted  for more than a year and increased program costs by more than $2  million.
Other joint risks may affect later stages of the B61-12 LEP, so it is too  soon to tell if plans to manage them will be effective. Joint risks in the  “red” category (i.e., high risk) include risks related to the compatibility of  the B61-12 with the still-developing F-35 aircraft, the risk of temperature- related component failures in certain flight environments, and schedule  risks related to the hydrodynamic testing of certain changed nonnuclear  components. In November 2015, the federal program manager for the  LEP reported that these risks remain “red” but are “trending” in a positive  direction. Based on our discussions with program officials and our review  of NNSA and Air Force documentation, the steps necessary to manage  these and other risks will occur over several years.
section_title: Agencies’ Management of Future Program Risks May Be Complicated by the LEP’s Constrained Schedule
paragraphs: Complicating efforts to manage future LEP risks—especially if risks are  realized or new ones materialize—is a constrained development and  production schedule. NNSA and DOD officials acknowledged the  schedule’s constraints, which they say are driven by factors including  delays in starting the B61-12 LEP because of a lengthy design study, the  effects of sequestration, and the need to complete work on the B61-12  LEP to enable NNSA to start work on planned future LEPs. In testimony  given to the Strategic Forces Subcommittee of the Senate Committee on  Armed Services in March 2015, the Nuclear Weapons Council  characterized the B61-12 LEP’s schedule as having “little, if any, margin  left.” DOD officials have testified before Congress that the B61-12 LEP  must be completed on the current schedule to ensure that the aging of  B61 legacy bombs does not affect the United States’ ability to maintain its  commitments to NATO, and DOE officials have testified that the LEP  must be completed to ensure that DOE can effectively manage other  ongoing and planned LEPs and stockpile stewardship activities. These  activities are set to intensify in the coming years. For example, according  to NNSA documents, NNSA plans to execute at least four LEPs per year  simultaneously in fiscal years 2021 through 2025—along with several  major construction projects, including efforts to modernize NNSA’s  uranium and plutonium capabilities. Figure 3 shows the schedules for  NNSA’s planned LEPs and major alterations.
Given NNSA’s past problems in executing LEPs, and a schedule with little  room for delays, NNSA and Air Force may face challenges in the future in  ensuring that risks are not realized and do not affect the program’s  schedule, its cost, or the performance of the B61-12. We will continue to  assess the B61-12 LEP as it passes through later stages of the Phase  6.X process, in keeping with the Senate report provision that gave rise to  this report.
section_title: Agency Comments and Our Evaluation
paragraphs: We are not making new recommendations in this report. We provided a  draft of this report to DOE and DOD for review and comment. In its written  comments, reproduced in appendix II, DOE generally agreed with our  findings. DOD did not provide formal comments. Both agencies provided  technical comments that we incorporated, as appropriate.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Energy, the Secretary of Defense, 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 III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report assesses (1) the Department of Energy’s (DOE) National  Nuclear Security Administration’s (NNSA) management approach for the  B61-12 Life Extension Program (LEP) and (2) the extent to which NNSA  and the Air Force are managing risks in the LEP.
To assess NNSA’s management approach for the B61-12 LEP, we  reviewed the program-developed documents that establish cost and  schedule goals and track the program’s progress toward those goals.  These documents included the program’s Joint Integrated Project Plan,  Joint Top-level Schedule, Master Schedule, and Selected Acquisition  Reports. In addition, we reviewed other program-developed guidance  documents that the program management team prepared for the B61-12  LEP. These included the Integrated Phase Gate Implementation Plan,  Project Controls System Description, Systems Engineering Plan, Quality  Plan, and Configuration Management Plan. We also reviewed the  Procedural Guideline for the Phase 6.X Process, which describes the  roles and functions of DOE, the Department of Defense (DOD), and the  Nuclear Weapons Council in nuclear weapon refurbishment activities  such as the B61-12 LEP. In addition, we examined DOE and DOD  directives and NNSA policy letters to understand departmental  requirements for the management of the LEP. For DOE, these included  DOE Order 251.1C, Departmental Directives Program; DOE Order  413.3B, Program and Project Management for the Acquisition of Capital  Assets; DOE Guide 413.3-4A, Technology Readiness Assessment  Guide; and NNSA’s Defense Programs Program Execution Guide. For  DOD, these included DOD Instruction 5000.02, Operation of the Defense  Acquisition System, and DOD Instruction 5030.55, DoD Procedures for  Joint DoD-DOE Nuclear Weapons Life-Cycle Activities. For information  on the management of the B61-12 LEP in the broader context of joint  DOE-DOD stockpile stewardship activities, we also reviewed documents  such as DOD’s Nuclear Posture Review Report of 2010 and DOE’s  Stockpile Stewardship and Management Plan.
To assess the extent to which NNSA and the Air Force are managing  risks in the LEP, we reviewed the documents described above. In  addition, we visited NNSA’s Sandia National Laboratories and Los  Alamos National Laboratory to view systems that track project activities,  cost and schedule information, and the execution of risk management  steps, as well as to meet program officials responsible for the design and  production of the B61-12 and see some of the components under  development. The systems we reviewed included the B61-12 LEP’s  Active Risk Manager database and the systems holding classified  elements of project plans and schedules.
For both objectives, in the course of our site visits to the laboratories  named above, we interviewed federal officials and contractors involved  with the B61-12 LEP. We also interviewed officials in NNSA offices  responsible for providing guidance, oversight, and program review for the  B61-12 LEP and other such defense programs. For criteria and context,  we used the GAO Cost Estimating and Assessment Guide and our past  reports on LEPs and NNSA cost estimating practices. Throughout our  work, we coordinated with a team from DOE’s Office of Inspector  General, which is conducting its own review of the B61-12 LEP and plans  to issue a classified report.
We conducted this work from July 2014 to January 2016 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.
section_title: Appendix II: Comments from the Department of Energy
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Jonathan Gill (Assistant  Director), Antoinette C. Capaccio, Penney Harwell Caramia, Pamela  Davidson, Dan Feehan, Alex Galuten, Jennifer Gould, Rob Grace, Alison  O’Neill, Tim Persons, Ron Schwenn, Sara Sullivan, and Kiki  Theodoropoulos made key contributions to this report.