Modernizing the Nuclear Security Enterprise: NNSA Increased Its Budget Estimates, but Estimates for Key Stockpile and Infrastructure Programs Need Improvement
Published: 2015-08-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Nuclear weapons continue to be an essential part of the nation's defense strategy. The end of the cold war resulted in a shift from producing new nuclear weapons to maintaining the stockpile through refurbishment. Also, billions of dollars in scheduled maintenance for nuclear weapons infrastructure has been deferred. The 2010 Nuclear Posture Review identified long-term stockpile modernization goals for NNSA that include (1) sustaining a safe, secure, and effective nuclear arsenal and (2) investing in a modern infrastructure.
The National Defense Authorization Act for Fiscal Year 2011 included a provision for GAO to report annually on NNSA's nuclear security budget materials. This report (1) identifies changes in estimates to the 2015 budget materials from the prior year's materials, and (2) assesses the extent to which NNSA's 2015 budget estimates align with plans for major modernization efforts, and (3) addresses the agency's stated goal of stopping the growth of its deferred maintenance backlog.
GAO analyzed NNSA's 2014 and 2015 nuclear security budget materials, which describe modernization plans and budget estimates for the next 25 years, and interviewed NNSA officials.
section_title: What GAO Found
paragraphs: The National Nuclear Security Administration's (NNSA) 25-year budget estimates for modernizing the nuclear security enterprise in its fiscal year 2015 budget materials total $293.4 billion, which is an increase of $17.6 billion (6.4 percent) compared with the prior year's materials. NNSA's budget materials are (1) its 2015 congressional budget justification that includes the President's fiscal year budget request and information about 4 additional years of planned budget requests, and (2) its update to its Stockpile Stewardship and Management Plan that includes NNSA's long-range, 25-year plans for sustaining the stockpile and modernizing the nuclear security enterprise. Congress funds NNSA's 2015 budget estimates in four program areas: stockpile; infrastructure; science, technology, and engineering capabilities; and other weapons activities. GAO found that some budget estimates for individual programs within these four areas changed more significantly from 2014 to 2015 than the total budget estimates changed. For example, stockpile budget estimates to refurbish nuclear weapons through life extension programs (LEP) decreased by 31 percent in part due to changes in programs' production schedules. In contrast, infrastructure budget estimates for construction projects increased by 71 percent largely because the estimates were more complete than those GAO evaluated in 2014.
For NNSA's major modernization efforts—which include LEPs that are not in full scale production and major construction projects—near-term budget estimates for two of three LEPs align with plans, but estimates for construction projects are too preliminary to assess alignment. NNSA's near-term budget estimates to refurbish its B61 bomb and W88 warhead align with its plans because annual budget estimates reflect internally developed estimated cost ranges for the programs. However, the near-term budget estimates for the cruise missile LEP are not aligned with NNSA's 2015 plans because annual budget estimates are below the low point of the program's internally developed estimated cost range. A 2008 internal review of NNSA's project management stated that failure to request full funding can result in risks to programs' goals such as increased program costs and schedule delays. GAO's prior work has emphasized the importance of transparency in federal agencies' budget presentations because such information helps Congress understand how new funding requests relate to program decisions. Including information in future versions of budget materials on the potential risks to achieving LEPs' goals when funding requests are not aligned with plans would improve the quality of budget materials.
NNSA's infrastructure budget estimates are not adequate to address its reported $3.6 billion deferred maintenance backlog, and the backlog will continue to grow. One reason the backlog will continue to grow is that the 2015 budget estimates to address the problem fall below DOE infrastructure investment benchmarks for maintaining and recapitalizing existing facilities, activities that can reduce deferred maintenance. NNSA's goal to stop the growth of the backlog is stated in its budget materials, but these materials do not identify that budget estimates for maintenance and recapitalization fall below DOE's infrastructure investment benchmarks. Including information in future versions of budget materials on the potential risks to the achievement of infrastructure goals if budget estimates fall below internal benchmarks would improve the transparency of budget materials.
section_title: What GAO Recommends
paragraphs: GAO recommends improving the transparency of future budget materials by identifying potential risks to the achievement of program goals if budget estimates are lower than plans suggest are necessary. NNSA agreed with GAO's recommendations and outlined actions to address them.

section_title: Letter
paragraphs: Nuclear weapons have been and continue to be an essential part of the  nation’s defense strategy. During the cold war, the nation designed,  tested, and produced new nuclear weapons. Since then, the strategy has  shifted to maintaining the existing nuclear weapons stockpile indefinitely  without underground nuclear testing as the United States has observed a  moratorium on such testing since 1992. To ensure a credible U.S. nuclear  deterrent under the moratorium, the United States uses a science-based  approach to stockpile stewardship. This approach combines nonnuclear  experiments, physics modeling, and computer simulations to predict  nuclear weapon performance over a wide range of conditions and  scenarios. The Department of Energy’s (DOE) National Nuclear Security  Administration (NNSA) is responsible for activities in pursuit of this  nuclear weapons stockpile stewardship mission, which is largely executed  at eight government-owned, contractor-operated sites that comprise its  nuclear security enterprise. NNSA reports that 29 percent of the nuclear  security enterprise’s approximately 3,800 buildings are over 60 years old.
The 2010 Nuclear Posture Review identified long-term modernization  goals for NNSA, including sustaining a safe, secure, and effective nuclear  arsenal through the refurbishment of existing weapons to extend their  operational lives; increasing investments to rebuild and modernize the  nuclear security enterprise’s aging infrastructure; and strengthening the  science, technology, and engineering (ST&E) base. Of particular focus in  the 2010 Nuclear Posture Review is the need to recapitalize the nuclear  security enterprise’s infrastructure by performing major renovations  needed to keep existing facilities modern and relevant. In addition to the  modernization goals included in the Nuclear Posture Review, the Nuclear  Weapons Council established in 2012 a long-term plan for the nuclear  weapons stockpile to align NNSA nuclear weapon life extension programs  (LEP), DOD programs to modernize the delivery platforms that carry  those weapons, and initial operations for NNSA’s plutonium and uranium  infrastructure. According to a senior NNSA official, the agency considers  its current major modernization efforts to include three LEPs (currently at  various stages of development), as well as major construction projects to  replace aging, existing facilities for plutonium (the Chemistry and  Metallurgy Research Replacement-Nuclear Facility or its alternative) and  uranium (the Uranium Processing Facility).
NNSA refers to the cost figures included in its budget materials over the next 5 years as  “budget requirements” and those after 5 years as “estimated budget requirements.” We  refer to these figures as “budget estimates” throughout this report.
First, NNSA’s Stockpile Stewardship and Management Plan (SSMP)  provides information on modernization and operations plans and  budget estimates over the next 25 years. The SSMP is NNSA’s formal  means for communicating to Congress the status of certain activities  and its long-range plans and budget estimates for sustaining the  stockpile and modernizing the nuclear security enterprise. The SSMP  also discusses the current and projected composition and condition of  the nuclear weapons stockpile. NNSA has submitted annual plans  since 1998, except in 2013. NNSA’s 2015 SSMP contains  information, including budget estimates, on modernization plans for  the 5-year Future-Years Nuclear Security Program (FYNSP), as well  as long-range budget estimates through 2039.
Second, NNSA’s annual justification of the President’s budget  request, which typically includes the FYNSP, provides Congress with  recommended spending levels for programs, projects, and activities,  based on the President’s policy priorities. NNSA’s 2015 budget  justification and FYNSP provide information and estimates through  2019.
NNSA’s 2015 budget justification included a goal to stop the growth of the  agency’s deferred maintenance backlog—maintenance that was not  performed when it should have been or was scheduled to be and  therefore is put off or delayed for a future period—which is reported in the  2015 SSMP to be $3.6 billion. We have previously reported that  deferring maintenance can reduce the overall life of federal facilities, lead  to higher costs in the long term, and pose risks to safety and agencies’  missions.
The National Defense Authorization Act for Fiscal Year 2011 included a  provision for GAO to study and report annually on whether NNSA’s  nuclear security budget materials provide for funding that is sufficient to  modernize and refurbish the nuclear security enterprise, as well as   This is the fourth year that we have  recapitalize its infrastructure. undertaken work in response to this mandate. In June 2011, we briefed  the congressional defense committees on our findings based on NNSA’s  2012 nuclear security budget materials. We found, among other things,  that NNSA’s 2012 budget justification and associated FYNSP generally  supported the agency’s long-range plans, but that a number of issues  could affect these plans. These issues included the management of major  construction projects without firm cost and schedule baselines, which  could lead to project cost growth and schedule slippages that might  adversely affect NNSA’s modernization plans, as well as challenges in  refurbishing weapons using aging infrastructure. In June 2012, we sent a  letter to the Senate and House Armed Services Committees that  explained that we could not complete our review of the 2013 budget  materials because NNSA did not issue the documents required for our  review. In December 2013, we reviewed NNSA’s 2014 budget materials.  We found, among other things, that while total budget estimates for  modernization had increased compared with the 2012 budget materials,  the 2014 estimates may not represent total funding needed and therefore  did not fully align with aspects of these plans.not include in its budget estimates billions of dollars in planned major  construction projects because, according to agency officials, these  infrastructure plans were too preliminary.
For example, NNSA did  This report (1) identifies the extent to which budget estimates for  modernizing the nuclear security enterprise changed between the 2015  budget materials and the prior year’s materials, (2) assesses the extent to  which NNSA’s budget estimates for its current major modernization  efforts align with plans for those estimates, and (3) assesses the extent to  which NNSA’s 2015 budget estimates for modernizing the nuclear  security enterprise address the agency’s stated goal of stopping the  growth of the deferred maintenance backlog.
To identify the changes to NNSA’s budget estimates for modernizing the  nuclear security enterprise, we compared the information in the 2014  budget materials with the information in the 2015 versions of those  materials and interviewed key NNSA officials To assess the extent to  which the total 2015 budget estimates align with plans for major  modernization efforts—which the agency defines as nuclear weapon  LEPs and construction projects for plutonium and uranium  infrastructure—we compared the budget estimates included in NNSA’s  2015 budget materials with its long-range plans included in the SSMP.  We discussed any potential misalignments with NNSA officials and also  reviewed NNSA’s 2016 budget justification to determine whether  misalignments identified in the 2015 budget materials persisted.  Additionally, we reviewed prior GAO reports on modernization and the  specific programs or projects included in NNSA’s modernization plans, as  well as the GAO Cost Estimating and Assessment Guide. A list of  related GAO products is included at the end of this report. To assess the  extent to which NNSA’s budget estimates address the agency’s stated  goal of stopping the growth of the deferred maintenance backlog, we  reviewed DOE’s Real Property Asset Management Plan and   We also interviewed  departmental guidance for managing real property.NNSA officials responsible for the agency’s infrastructure planning efforts.
We compared estimates in the 2015 budget materials with infrastructure  investment benchmarks contained in DOE’s Real Property Asset  Management Plan and discussed potential misalignments with NNSA  officials.
To assess the reliability of the data underlying NNSA’s budget estimates,  we reviewed the data to identify missing values, outliers, or other  anomalies; interviewed knowledgeable NNSA officials about the data and  their methodologies for using the data to construct their estimates; and  compared the figures in the 2015 budget justification with those in the  2015 SSMP to ensure that they were consistent. We determined that the  data were sufficiently reliable for our purposes. However, we did not  assess the reliability of NNSA’s underlying budget estimating processes.  As in prior reviews, we limited the scope of our review to NNSA’s  Weapons Activities appropriations account, which is the account used to   All data are  fund modernization activities, according to agency officials.presented in current dollars unless otherwise noted. A detailed  description of our objectives, scope, and methodology can be found in  appendix I.
We conducted this performance audit from July 2014 to August 2015 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: Congress funds NNSA’s modernization efforts through various activities  and programs within the Weapons Activities appropriation that generally  address four areas: (1) stockpile, (2) infrastructure, (3) ST&E capabilities,   The four areas, which are described in  and (4) other weapons activities.greater detail below, are interconnected. For example, research and  experiments funded in the ST&E area contribute to the design and  production of refurbished weapons, funded in the stockpile area. The  infrastructure area offers critical support to both the stockpile and ST&E  capabilities areas by providing a suitable environment for their various  activities, such as producing weapons components and performing  research and experimentation activities. The other weapons activities  area offers support to the three other areas by, for example, providing for  the security of nuclear weapons and nuclear material. In fiscal year 2015,  the President requested $8.3 billion in total appropriations for Weapons  Activities, and the Congress appropriated $8.2 billion.
The stockpile area includes weapons refurbishments through LEPs and  other major weapons alterations and modifications; surveillance efforts to  evaluate the condition, safety, and reliability of stockpiled weapons;  maintenance efforts to perform certain minor weapons alterations or to  replace components that have limited lifetimes; and core activities to  support these efforts, such as maintaining base capabilities to produce  uranium and plutonium weapons components. Our analysis of NNSA’s  data indicates that about 40 percent of the budget estimates for the  stockpile area from 2015 to 2039 is for LEPs. The U.S. nuclear weapons  stockpile is composed of seven different weapon types, including air- delivered bombs, ballistic missile warheads, and cruise missile warheads  (see table 1).
The infrastructure area involves NNSA-owned, leased, and permitted  physical infrastructure and facilities supporting weapons activities.  NNSA’s 2015 nuclear security budget materials include information on  budget estimates for three major types of infrastructure activities:  operating and maintaining the existing infrastructure, recapitalizing  (improving) existing facilities, and constructing new facilities. Our analysis  of NNSA’s budget materials indicates that about 57 percent of the budget  estimates for infrastructure from 2015 to 2039 is for the operation,  maintenance, and recapitalization of existing facilities and about 27  percent is for new facilities construction.
The ST&E capabilities area is composed of five “campaigns,” which are  technically challenging, multiyear, multifunctional efforts to develop and  maintain critical science and engineering capabilities, including  capabilities that enable the annual assessment of the safety and reliability  of the stockpile, improve understanding of the physics and materials  science associated with nuclear weapons, and support the development  of code-based models that replace underground testing. Our analysis of  NNSA’s data indicates that about 36 percent of the budget estimates for  the ST&E capabilities area from 2015 to 2039 are for the Advanced  Simulation and Computing Campaign. This campaign procures  supercomputers; develops the computer code to simulate nuclear  weapons; and develops simulations to analyze and predict these  weapons’ performance, safety, and reliability and to certify their  functionality.
Other weapons activities include budget estimates associated with  nuclear weapon security and transportation, as well as legacy contractor  pensions, among other things. Our analysis of NNSA’s data indicates that  about 44 percent of the budget estimates for the other weapons activities  area from 2015 to 2039 are for nuclear weapon security.
NNSA’s modernization efforts in the areas described above include those  directed toward NNSA’s goal of stopping the growth of its deferred  maintenance backlog in its facilities and infrastructure.maintenance can be avoided either by conducting scheduled   Deferred  maintenance activities, recapitalization activities, or demolition activities.  Maintenance activities—including the replacement of parts, systems, or  components—are needed to preserve or maintain a facility in an  acceptable condition to safely operate. Regular maintenance throughout  a facility’s service life can minimize deferred maintenance or prevent it  from accumulating. NNSA’s budget materials contain two categories of  maintenance budget estimates: direct-funded and indirect-funded.  According to a NNSA official, estimates for direct-funded maintenance are  included in the budget in two places: (1) the maintenance account  specified in NNSA’s budget materials and (2) the program budgets for  certain NNSA programs that are the major users of key scientific and  production facilities, such as the Advanced Simulation and Computing  Facility at Lawrence Livermore National Laboratory and the Tritium  Extraction Facility at the Savannah River Site. Indirect-funded  maintenance represents activities that are budgeted and paid for as part  of a site’s overhead costs. According to NNSA officials, some sites, such  as Lawrence Livermore National Laboratory, use indirect-funded  maintenance as the primary way to budget and pay for maintenance. The  2015 budget materials estimate that NNSA will budget $1.6 billion for  direct-funded maintenance over the next 5 years and $2.3 billion for  indirect-funded maintenance over the next 5 years. NNSA identifies the  total direct and indirect budget estimates planned for maintenance at  each site and reports this information for the FYNSP in the congressional  budget justification. NNSA is required by DOE to collect this information  from its management and operating contractors through a DOE  prescribed tool known as the Integrated Facilities and Infrastructure  Crosscut Budget.
NNSA can recapitalize facilities or their subsystems (e.g., roofing,  ventilation systems, and electrical systems) when they wear out or  become outdated (i.e., reach the end of their useful service life). For  example, in 2016 NNSA plans to replace approximately 500 sprinkler  heads, which are about 50 years old, in a building that manufactures  nonnuclear components at its Y-12 National Security Complex in  Tennessee. Similarly, in 2015, NNSA continues to upgrade a control  tower’s electrical and mechanical components at its Sandia National  Laboratories site in New Mexico to support nonnuclear testing activities  for nuclear bombs. The 2015 budget materials estimate that $1.8 billion  will be spent on recapitalization over the next 5 years and that $11.5    billion will be spent on such recapitalization over the next 25 years. According to officials, if NNSA determines that a facility is no longer  needed for mission operations, the agency can demolish the facility. For  example, NNSA recently demolished building 9744 at the Y-12 plant  because the support structure was failing. Budget estimates for  demolition are included as a subprogram in the recapitalization estimates;  the 2015 budget materials contain 5-year budget estimates of $105  million and 25-year estimates of $230 million for demolition activities.
The current process by which NNSA prioritizes infrastructure investment  is based on data on a facility’s condition and importance to achieving  programmatic goals. Contractors that manage and operate each site  within the nuclear security enterprise are required by a DOE order to  inspect all facilities on their site at least every 5 years and are to update  DOE’s infrastructure database annually with information relating to the  condition of the site’s facilities. This information includes estimating the  amount of a facility’s deferred maintenance and its replacement plant  value, which is the cost to replace the existing structure with a new  structure of comparable size using current technology, codes, standards,  and materials. According to DOE’s real property asset management  order, a facility’s condition is determined based on the scale shown below  in figure 1.
NNSA categorizes each individual facility’s importance to accomplishing  its mission based on designations defined by the Federal Real Property  Council. The categories are as follows:
Mission critical. Facilities and infrastructure that are used to perform  activities—such as nuclear weapons production, research and  development, and storage—to meet the highest-level programmatic  goals, without which operations would be disrupted or placed at risk.  According to NNSA data, 245 (or 4.0 percent) of the agency’s 6,085  facilities are designated as mission critical.
Mission dependent, not critical. Facilities and infrastructure—such  as waste management, nonnuclear storage, and machine shops—that  play a supporting role in meeting programmatic goals. According to  NNSA data, 2,063 (or 33.9 percent) of the agency’s 6,085 facilities are  designated as mission dependent, not critical.
Not mission dependent. Facilities and infrastructure—such as  cafeterias and parking structures, that do not link directly to  programmatic goals but support secondary missions or quality-of- workplace initiatives. According to NNSA data, 3,777 (or 62.1 percent)  of the agency’s 6,085 facilities are designated as not mission  dependent.
section_title: Total Budget Estimates for Modernization Increased Compared with 2014 Plans
paragraphs: NNSA’s 2015 budget estimates for modernization total $293.4 billion over  25 years, an increase of $17.6 billion (6.4 percent) from the $275.8 billion  in estimates provided in 2014. These budget estimates are provided in  four program areas: stockpile, infrastructure, ST&E, and other weapons  activities. Some budget estimates for individual programs within these  four areas changed more significantly from 2014 to 2015 than the total  budget estimates changed—decreasing by as much as 31 percent and  increasing by as much as 71 percent—because of changes in programs’  production schedules, scope, the methodology used to develop certain  budget estimates, and budgetary structure. Figure 2 provides a  comparison of total budget estimates for nuclear modernization activities  in NNSA’s 2014 and 2015 budget materials.
Table 2, which appears on the next page, details the changes in NNSA’s  25-year budget estimates from 2014 to 2015 for modernization in four  program areas: stockpile, infrastructure, ST&E, and other weapons  activities.
Within these four program areas, we found that some budget estimates  for individual programs changed more significantly from 2014 to 2015  than the total budget estimates changed—decreasing by as much as 31  percent and increasing by as much as 71 percent—because of changes  in (1) programs’ scope, (2) production schedules, (3) the methodology  used to develop certain budget estimates, and (4) budgetary structure.  Table 3 shows the changes in the 25-year budget estimates for those  individual programs with estimates that changed more significantly than  the total and identifies the causes for those changes.
subsections: section_title: In the Stockpile Area and for Multiple Reasons, Budget Estimates for LEPs Decreased Significantly While Estimates for Stockpile Services Increased Significantly
paragraphs: The 25-year budget estimates for the stockpile area changed significantly  between the 2014 and 2015 budget materials for multiple reasons.  Specifically, budget estimates for LEPs decreased by $18.4 billion or 31  percent, and budget estimates for Stockpile Services increased by $11.3  billion or 37 percent. LEP budget estimates decreased due to, among  other things, delayed production schedules and changes in estimating  methodologies while estimates for Stockpile Services increased due to  changes in program scope and budgetary structure.
subsections: section_title: Reasons for Decrease in Budget Estimates for LEPs
paragraphs: The 2015 budget materials estimate that, over the next 25 years, $41.7  billion will be needed for nuclear weapon LEPs, which is a decrease of  $18.4 billion (31 percent) compared with the estimates contained in the  prior year’s budget materials. According to NNSA documents and  officials, one reason for this decrease in budget estimates is delayed  production schedules. The 2015 budget materials state that NNSA will  complete three LEPs—the W76-1, B61-12, and the cruise missile—as  well as the W88 alteration over the next 25 years, whereas the prior  year’s budget materials stated that the agency planned to complete these  and an additional LEP. The program that will no longer be completed  within the 25-year time frame of the 2015 budget materials is the  Interoperable Warhead 1 (IW-1) LEP. The first production unit for the  IW-1 LEP is now estimated to be in 2030, which is a 5-year delay over the  prior year’s plans, and no programmatic activities are planned to occur  during the 5-year FYNSP period from 2015 through 2019. According to  NNSA documents, this schedule delay is due, in part, to the agency  providing more time to study the concept of interoperability and to reduce  uncertainty about the agency’s ability to achieve necessary plutonium and  uranium capabilities to support the LEP. In addition, the 2015 budget  materials included a 3-year delay to the first production unit of the IW-2  LEP (now estimated in 2034) and a 4-year delay to the first production  unit of the IW-3 LEP (now estimated to be no earlier than 2041)  compared with the prior year’s plans. These schedule delays move some  budget estimates previously included in the 2014 budget materials  outside the 25-year time frame covered by the 2015 budget materials.  See figure 3 for a summary of changes to the production schedules for  the planned LEPs from the 2014 to the 2015 budget materials, and see  appendix II for a summary of schedule changes to major modernization  efforts since the 2010 Nuclear Posture Review.
Second, according to NNSA officials, DOD and NNSA made  programmatic decisions about one LEP’s scope that reduced  uncertainties and risks. Specifically, NNSA officials said that the agency  selected the W80 warhead for the cruise missile LEP (the B61 and the  W84 were also under consideration). The selection of a specific warhead,  according to NNSA officials, removed certain risks and uncertainties  associated with the potential of conducting research and development on  three separate warheads and allowed the agency to significantly lower its  program cost estimate. Further, NNSA officials said that the selection of  the W80 warhead allowed the agency to eliminate uncertainties related to  component design, technology development efforts, and certification  requirements. The 2015 budget materials estimate that $6.8 billion will be  needed to complete the cruise missile LEP, while the prior year’s  materials estimated that $11.6 billion would be needed. This change  represents a decrease of $4.8 billion or 42 percent.
Finally, to develop LEP budget estimates for the 2015 budget materials  NNSA used either (1) budget estimates contained in Selected Acquisition  Reports or (2) the midpoint between the high and low bounds of the  ranges in their cost estimates for LEPs and then applied a percentage  inflation rate, which was calculated based on numbers provided by the  Office of Management and Budget (OMB), according to NNSA officials.  This methodology differed from that in the prior year’s report, in which  NNSA used the low point of the estimated cost ranges and used an  inflation rate higher than that which would result from the application of  OMB guidance to account for uncertainties and risks. According to NNSA  officials, using the midpoint estimate is a better way to account for  uncertainties and risks, and using the OMB-recommended inflation rate  makes LEP inflation rates consistent with the rate applied to all other  NNSA programs.
section_title: Reasons for Increase in Budget Estimates for Stockpile Services
paragraphs: The 2015 budget materials estimate that, over the next 25 years, $42.2  billion will be needed for Stockpile Services, which is an increase of $11.3  billion (37 percent) compared with the estimates contained in the prior  year’s budget materials. For three Stockpile Services subprograms, the  2015 budget materials included increased program scope. According to  NNSA officials, this increased scope includes, among other things, (1)  expanded manufacturing capabilities, such as the capability related to  detonator production at Los Alamos National Laboratory, and (2)  increased weapon assembly/disassembly and stockpile surveillance  activities. For each of the three subprograms, the 25-year budget  estimates increased approximately $2.0 billion over the estimates in the  prior year’s materials. With regard to budgetary structure changes, the  2014 budget materials included the Tritium Readiness subprogram, with  its 25-year budget estimate of $3.6 billion, in the ST&E area. The joint  explanatory statement accompanying the Consolidated Appropriations  Act, 2014 stated that funding for NNSA’s Tritium Readiness subprogram  was being provided in the stockpile area. In its 2015 budget materials  NNSA included budget estimates for the Tritium Readiness subprogram,  with its 25-year budget estimate of $3.7 billion, in the stockpile area as a  Stockpile Services subprogram. This budgetary structure change  represents a significant increase to the budget estimate for Stockpile  Services and a corresponding decrease in the ST&E area’s budget  estimates, but the net increase to the overall budget estimates for  modernization attributable to Tritium Readiness was small ($70 million).
section_title: In the Infrastructure Area, Significant Increase in Budget Estimates for Line Item Construction Projects Was Due to a More Complete Methodology
paragraphs: The 2015 budget materials estimate that, over the next 25-years, $23.0  billion will be needed for construction projects, which is an increase of  $9.6 billion (71 percent) over the prior year’s materials. This increase in  budget estimates for line item construction in the 2015 budget materials is  because the estimates are more complete than those included in the  2014 budget materials. In December 2013, we found that the estimates  contained in NNSA’s 2014 budget materials omitted most of the budget  estimates for two multibillion dollar construction projects, the Uranium  Processing Facility and the Chemistry and Metallurgy Research  Replacement-Nuclear Facility. We recommended that NNSA include in  future modernization plans at least a range of potential budget estimates  for projects and programs that the agency knows are needed, and NNSA  generally concurred with the recommendation. Consistent with our  recommendation, in the 2015 budget materials, NNSA: (1) included  preliminary estimates (at the midpoint of a low-high cost range) for the  phase 2 and 3 Uranium Processing Facility and the Chemistry and  Metallurgy Research Replacement-Nuclear Facility and (2) increased  from $364 million to $851 million (current year dollars) budgeted for  construction projects scheduled for the 20 years after the FYNSP.
section_title: In the ST&E Area, Budget Estimates for Certain Activities Increased Due to Budgetary Structure Changes and Increased Program Scope
paragraphs: The 2015 budget materials estimate that, over the next 25 years, $59.2  billion will be needed for all ST&E related activities, which is an increase  of $5.4 billion (10 percent) over the prior year’s budget materials. Across  ST&E activities, some increases in budget estimates are offset by  decreases, such as the budgetary structure change described above that  moved the Tritium Readiness subprogram from the ST&E area to the  stockpile area. The most significant increases in the ST&E area are as  follows:
The 25-year estimates in the 2015 budget materials for the Inertial  Confinement Fusion Ignition and High Yield Campaign are $15.4  billion, which is an increase of $5.0 billion (48 percent) over the prior  year’s materials. According to NNSA officials, approximately 86  percent of the $5.0 billion increase is due to a budgetary structure  change. Specifically, the 2014 budget materials split estimates for  operating the National Ignition Facility (NIF) at Lawrence Livermore  National Laboratory by including a portion within the campaign and  another portion within the laboratory’s site operations account  (infrastructure area). NNSA officials told us that, in accordance with  congressional direction received during the 2014 appropriations  process, the 2015 budget materials contain estimates for NIF  operations solely in the Inertial Confinement Fusion Ignition and High  Yield Campaign, increasing the campaign’s 2015 budget estimates by  $4.3 billion over the prior year’s estimates. While this budgetary  structure change increased budget estimates for the ST&E area and  decreased estimates for the infrastructure area, NNSA officials said  there was no net increase to the total budget estimates for  modernization.
The Science Campaign’s 2015 budget materials estimate that, over  the next 25 years, $16.1 billion will be needed, which is an increase of  $3.0 billion (23 percent) over the prior year’s budget materials.  Approximately 83 percent of this increase is dedicated to funding  increased plutonium experimentation to support future LEPs,  according to our analysis of NNSA’s budget materials.
The Advanced Simulation and Computing Campaign’s 2015 budget  materials estimate that over the next 25 years $21.0 billion will be  needed, which is an increase of $2.0 billion (11 percent) over the prior  year’s budget materials. Approximately 90 percent of this increase is  associated with new programmatic scope for NNSA’s exascale  computing efforts, which are being coordinated with DOE’s Office of  Science. According to NNSA officials, exascale computing budget  estimates were not included in the 2014 budget materials, but they  were included in the 2015 budget materials, based on congressional  direction received during the 2014 appropriation process.
section_title: In the Other Weapons Activities Area, Budget Estimates Increased Significantly Due to Budgetary Structure Change
paragraphs: The 2015 budget materials estimate that, over the next 25 years, $47.0  billion will be needed in the other weapons activities area, which is an  increase of $7.9 billion (20 percent) over the prior year’s budget materials.  This area funds activities associated with nuclear weapon security and  transportation as well as information technology, among other things. A  budgetary structure change for two of the agency’s emergency response  and counterterrorism programs was the primary reason for the increased  budget estimates. The 2014 budget materials did not include estimates  for these programs under Weapons Activities; rather the programs were  budgeted under Defense Nuclear Nonproliferation, an NNSA account that  is separate from that used to fund modernization activities. In the 2015  budget materials, NNSA included 25-year budget estimates of $7.9 billion  for the emergency response and counterterrorism programs. The 2015  budget materials included these programs based on congressional  direction received during the 2014 appropriation process. operations per second, which  according to NNSA officials will greatly increase NNSA’s ability to perform advanced  scientific and engineering simulations.
section_title: For NNSA’s Major Modernization Efforts, Near-Term Budget Estimates for Two of Three Life Extension Programs Align with 2015 Plans While Plans for Infrastructure Are Preliminary
paragraphs: NNSA considers its current major modernization efforts to include three  LEPs (currently at various stages of development and not in full scale  production), as well as major construction projects to replace aging,  existing facilities for plutonium (the Chemistry and Metallurgy Research  Replacement-Nuclear Facility or its alternative) and uranium (the Uranium  Processing Facility). The 5-year budget estimates contained in the 2015  budget materials for two of the three LEPs that NNSA considers major  modernization efforts align with NNSA’s 2015 plans. The 5-year budget  estimate for the remaining LEP does not align with the 2015 plans;  however, based on our review of whether this misalignment persisted in  NNSA’s 2016 budget materials, NNSA’s 2016 budget estimates appear to  be better aligned with 2016 plans. Project plans and associated budget  estimates for NNSA’s plutonium and uranium construction projects are  too preliminary for us to evaluate alignment, but NNSA’s 2015 budget  materials for these projects are improved in comparison to the 2014  version of these materials that we previously reviewed.
subsections: section_title: Near-Term Budget Estimates for Two of Three Life Extension Programs Align with NNSA’s 2015 Plans
paragraphs: The 5-year budget estimates contained in the 2015 budget materials for  two of the three LEPs that NNSA considers major modernization efforts  align with NNSA’s 2015 plans for these two programs. NNSA’s 5-year  budget estimates for the B61-12 LEP and the W88 alteration—both of  which are currently in the design phase and scheduled for first production  units in 2020—align with their associated plans. Specifically, we found that, for 2015-2019, NNSA plans to request approximately $672 million  annually for the B61-12 and $160 million annually for the W88 alteration.  In general, these annual budget estimates are consistent with the  midpoints of the program’s internally estimated cost ranges, indicating  that the budget estimates reflect program plans. In addition, NNSA  officials said that the budget estimates for the B61-12 LEP and the W88  alteration are consistent with these programs’ established cost baselines  as outlined in their Selected Acquisition Reports to the Congress. We  found that, compared with the prior year’s budget materials, which did not  include a high-to-low cost range for these LEPs, the 2015 budget  materials did include such a range. This inclusion is a positive  development in how budget estimates are presented because the range  reflects the uncertainty in these estimates for executing a technically  complex program and allows decision makers an opportunity to evaluate  where the budget estimates included in NNSA’s materials fall within this  range.
In contrast, the 5-year budget estimates contained in the 2015 budget  materials for the cruise missile LEP—which is currently in the design  phase and scheduled for a first production unit in the mid-2020s—are not  aligned with the program’s plans. In each year of the 2015 FYNSP,  budget estimates for the cruise missile LEP are below the low point of the  program’s internally developed cost range, which is the minimum funding  level that would be consistent with the internal cost estimate.  Specifically, the 2015 budget materials contain 5-year budget estimates  for the cruise missile LEP totaling approximately $480 million, which is  $220 million less than the approximately $700 million that is needed to  support the low point of the program’s internally estimated cost range. An  additional $150 million would be needed in the 5-year budget estimates  for these estimates to reflect the approximately $850 million midpoint of  the internally developed cost range for the cruise missile LEP. According  to NNSA officials, the shortfall against the low point and midpoints of the  cost estimate in the 5-year budget estimates reflects the difference  between an ideal budget environment where funding is unconstrained  and the trade-offs made in an actual budget environment where  constraints are imposed by competing priorities.
A 2008 DOE review to identify the underlying problems associated with  the department’s contract and project management identified that failure  to request full program funding can result in increased program costs and  schedule delays, which are risks to the achievement of program goals.
NNSA officials said that the longer-term budget estimates in the 2015  budget materials “buy back” the shortfall in later fiscal years so that the  total estimated cost of the cruise missile LEP is reflected in the budget  materials. Specifically, the 2015 budget materials include cruise missile  LEP budget estimates at the high end of its cost range for years 2020- 2027. The 2015 budget materials, however, do not explicitly state that the  budget request for the cruise missile LEP is not consistent with the total  amount needed to fund the program’s internal cost estimate for 2015-  2019 at even the low point. DOE guidelines state that the department  should aim to disseminate information to the public that is transparent to  its intended users and meets a basic level of quality. Aspects of quality  include the usefulness of the information to the intended users and  whether it is presented in an accurate, clear, complete, and unbiased  manner.  NNSA’s budget materials are a key source of information that  is used by Congress to make appropriation decisions. Including  information in future versions of budget materials that explicitly identify  potential risk to the achievement of program objectives and goals—such  as increased program cost and schedule delays, which may result from  shortfalls in LEP budget requests compared with internal cost estimates— would improve the transparency and quality of information available to  congressional decision makers. In addition, our prior work has  emphasized the importance of transparency in federal agencies’ budget  presentations because such information helps Congress have a clear  understanding of how new funding requests relate to funding decisions for  existing projects with continuing resource needs.
Unlike the budget estimates included in the 2015 budget materials,  NNSA’s 2016 budget justification contains 5-year budget estimates (2016  to 2020) for the cruise missile LEP that appear to be better aligned with  revised program plans. NNSA’s 2016 budget justification includes  approximately $1.8 billion in budget estimates for 2016-2020, which is  approximately $1.3 billion more than the 5-year budget estimates  contained in the 2015 budget materials, and more closely aligned with  NNSA’s updated midpoint cost estimate for the program. Further, both the  internal cost estimate and the $1.8 billion in near-term budget estimates  appear to support a change in the production schedule for the cruise  missile LEP based on a congressional requirement in the 2015 National  Defense Authorization Act that NNSA deliver the first cruise missile  warhead by September 2025, a 2-year acceleration to its 2015 production  schedule.
section_title: NNSA’s Plans for Its Plutonium and Uranium Construction Projects Are Too Preliminary for GAO to Assess
paragraphs: For NNSA’s major modernization efforts related to plutonium and uranium  infrastructure, the agency has not established a firm cost, schedule, and  scope baseline for either the Chemistry and Metallurgy Research  Replacement-Nuclear Facility (or its alternative) or the Uranium  Processing Facility, and the 2015 budget materials do not specify when  these projects will establish such a baseline. This precludes us from  assessing the extent to which budget estimates align with the agency’s  preliminary plans. We have previously reported on NNSA’s challenges— significant cost increases, schedule delays, and scope changes—in  executing these projects. conducted to provide continuing oversight of both of these projects. The  2015 budget materials do include estimates for both these projects which,  as stated above, is an improvement from the prior year’s budget materials  in which NNSA omitted most of the budget estimates for these projects.
See GAO, Modernizing the Nuclear Security Enterprise: New Plutonium Research  Facility at Los Alamos May Not Meet All Mission Needs, GAO-12-337 (Washington, D.C.:  Mar. 26, 2012), Nuclear Weapons: Factors Leading to Cost Increases with the Uranium  Processing Facility, GAO-13-686R (Washington, D.C.: July 12, 2013), and High-Risk  Series: An Update, GAO-15-290 (Washington, D.C.: Feb 11, 2015).
section_title: NNSA’s Budget Estimates for Infrastructure Are Not Adequate to Stop the Growth of Its Deferred Maintenance Backlog, and NNSA Is Taking Steps to Improve Information to Better Prioritize Investment
paragraphs: NNSA’s infrastructure budget estimates included in its 2015 budget  materials are not adequate to address its reported $3.6 billion deferred  maintenance backlog, and the deferred maintenance backlog will  continue to grow. One reason the backlog will continue to grow is that the  amounts in 2015 budget estimates to address the problem fall below DOE  infrastructure investment benchmarks for maintenance or recapitalization.  NNSA has calculated that it has $3.6 billion in deferred maintenance in its  backlog; however, NNSA has identified needed improvements to  information about the backlog that would help prioritize investment.  Specifically, the amount of the backlog that actually needs to be  addressed is unclear because approximately 40 percent of the backlog is  related to facilities that have little to no effect on programmatic operations,  and improvements in NNSA’s data would enhance the agency’s ability to  identify mission priorities to drive investment needs. NNSA is currently  undertaking a broad effort to improve its enterprise-wide data on facilities  and infrastructure.
subsections: section_title: NNSA’s Budget Estimates for Maintaining and Recapitalizing Its Aging Nuclear Infrastructure Fall Below DOE’s Planning Benchmarks
paragraphs: the National Nuclear Security Administration  as a manufacturing facility for nuclear  weapons components. The use of corrosive  substances in building 9204-2, which  produces lithium for the nuclear weapons  stockpile, has caused significant concrete and  metal degradation in several areas. In March  2014, a large section of concrete ceiling fell.  Large chunks of concrete rebounded into a  frequently used walkway and an adjacent  welding station. No personnel were struck by  the concrete, but workers had used the  welding station earlier that day. The sites’  management and operations contractor  reported the incident a “near miss.” The  photos below depict the ceiling and the floor  after the incident. maintenance budget estimates should be at least 2 percent of a site’s  replacement plant value in order to keep facilities in good working  order. We determined, based on NNSA’s reporting of real property  value, that the average, annual replacement plant value for the eight  sites within the nuclear security enterprise and other related  infrastructure over the 5-year FYNSP is about $50 billion, which  means that maintenance budget estimates should be approximately  $1 billion a year.contained in the 2015 budget materials are on average approximately  $772 million a year over the next 5 years, which is an average annual  shortfall of $224 million compared with the DOE maintenance  benchmark. These annual shortfalls amount to a $1.1 billion shortfall  over the next 5 years. According to NNSA’s Associate Administrator  for Infrastructure and Operations, NNSA is changing its investment  strategy to stop the decline of NNSA infrastructure and to improve  safety, working conditions, sustainability, and productivity. This  strategy will (1) invest more in infrastructure modernization including  recapitalization, sustainability, and disposition and (2) consider  reasonable increases to risk in operations and annual maintenance by  minimizing resources dedicated to annual maintenance. Further, the  2015 budget materials state that the agency plans to decrease annual  maintenance work scope by 10 percent at all sites across the nuclear  security enterprise, but the materials do not describe what, if any,  impact this decision will have on the deferred maintenance backlog or  the goal of stopping its growth.
However, the maintenance budget estimates
According to DOE’s benchmark for recapitalization, recapitalization  budget estimates should be 1 percent of a site’s replacement value to  keep existing facilities modern and relevant in an environment of  changing standards and missions. Again, based on NNSA’s  reporting of real property value, we determined that the average,  annual replacement plant value for the eight sites within the nuclear  security enterprise and other related infrastructure over the 5-year  FYNSP is about $50 billion, which means that recapitalization budget  estimates should be approximately $500 million a year. However, the  annual recapitalization budget estimates contained in the 2015 budget  materials are approximately $360 million a year over the next 5 years,  which is an average annual shortfall of $140 million as compared with  the DOE recapitalization benchmark. These annual shortfalls amount  to a $700 million shortfall over the next 5 years. Even though the  recapitalization budget estimates do not meet the DOE benchmark,  NNSA officials told us that this funding level is (1) an increase from  prior years and (2) the increase is responsive to direction from  NNSA’s Associate Administrator for Infrastructure and Operations to  maximize resources that can be dedicated to recapitalization.  According to agency officials, NNSA’s infrastructure investment  decisions are based on a risk reduction methodology to which the  amount of deferred maintenance is a key input. However, deferred  maintenance is not the only input the agency considers when planning  investment decisions. Other considerations include safety risk  reduction, increased program capabilities, and opportunities to  improve energy efficiency.
NNSA’s 2016 budget justification (covering the 2016-2020 FYNSP)  restates the agency’s commitment to increase investment to stop the  growth of deferred maintenance through maintenance and  recapitalization. NNSA has proposed a restructuring of its infrastructure  budget in its 2016 congressional budget justification.
Water Diverter at the Los Alamos National  Laboratory Radiochemistry Lab  The Radiochemistry Facility at Los Alamos  National Laboratory conducts radiological and  chemical analyses of samples and produces  medical isotopes. This photo depicts a water  intrusion incident that interrupted research  activities at the lab. No one was injured but  the lab could not be used for a few days and  work was relocated to another part of the  building. A water diverter was used to  immediately prevent further damage to the  lab. The roof has since been repaired and the  lab is back to full operation.
We found that the 5-year $1.1 billion shortfall in maintenance budget  estimates and the $700 million shortfall in recapitalization budget  estimates as compared with DOE infrastructure investment benchmarks  are not explicitly identified in NNSA’s 2015 budget materials. Further, the  budget materials do not identify the potential effects this shortfall may  have on the agency’s stated goal of stopping the growth of its deferred  maintenance backlog. As stated earlier, DOE guidelines state that the  department should aim to disseminate information to the public that is  useful to the intended users and presented in an accurate, clear,  complete, and unbiased manner. NNSA’s budget materials are a key  source of information for Congress as it makes appropriation decisions. In  addition, our prior work has emphasized the importance of transparency  in federal agencies’ budget presentations because such information helps  Congress have a clear understanding of how new funding requests relate  to funding decisions for existing projects with continuing resource need.  Historical underfunding of maintenance and recapitalization, among other  things, has led to the current level of deferred maintenance across the  nuclear security enterprise. According to a 2014 NNSA infrastructure  planning document, there are numerous examples within the nuclear  security enterprise where deteriorated infrastructure conditions have  affected mission performance. Therefore, it is important to identify the  risks, if any, associated with levels of maintenance and recapitalization  investment that fall below DOE benchmarks. Providing such information  would present Congress with key information it needs to make  infrastructure resource allocation decisions during the appropriations  process.
section_title: NNSA Has Identified Needed Improvements to Information to Better Prioritize Infrastructure Investment
paragraphs: NNSA has identified opportunities to improve information about its  reported $3.6 billion backlog that the agency needs in order to better  prioritize infrastructure investment. While NNSA’s reported $3.6 billion  total deferred maintenance backlog in the 2015 budget materials meets  the accounting requirements for real property reporting, the figure is not  useful for budget estimating because (1) approximately 40 percent of the  backlog is related to facilities that have little or no effect on programmatic  operations and is therefore low priority to be addressed and (2)  strengthening NNSA’s data would improve the agency’s ability to fully  prioritize investment needs. The agency has ongoing efforts to improve its  infrastructure data.
According to NNSA data, facilities considered not mission dependent  comprise 40 percent ($1.4 billion) of the deferred maintenance backlog.  As stated earlier, these facilities that are not mission dependent—such as  cafeterias, parking structures, and excess facilities—do not link directly to  programmatic goals but only support secondary missions or quality-of- workplace initiatives. NNSA officials told us that deferred maintenance at  these facilities is low priority and unlikely to be addressed, beyond  keeping facilities in a safe condition, because the agency is targeting  scarce budgetary resources to mission critical facilities. As mentioned  above, DOE guidelines and our prior work have emphasized the  importance of transparency in federal agencies’ budget presentations to  help Congress have a clear understanding of how new funding requests  relate to funding decisions for existing projects with continuing resource  needs. Reporting the $3.6 billion deferred maintenance backlog without  explaining that over one-third of it has little or no effect on the  programmatic mission and is of low priority limits the transparency and  usefulness of the budget materials for the purpose of planning for  infrastructure investment. Clarifying the budget materials in this manner  would provide Congress with key information during the appropriation  process.
We also found that improvements in NNSA’s data would enhance the  agency’s ability to identify mission priorities to drive investment needs.  Specifically,
According to NNSA officials, the categories of mission-based  designations—defined by the Federal Real Property Council—that are  assigned to NNSA facilities and infrastructure do not always  accurately reflect the importance of facilities and infrastructure to  mission achievement and, therefore, are not fully useful for prioritizing  infrastructure investment. Among other things, NNSA’s current  process for prioritizing infrastructure budget estimates focuses on  those facilities and infrastructure identified as mission critical, but this  designation may not accurately target infrastructure investment  requirements because it understates the importance of some key  facilities and other infrastructure to its mission. For example, agency  officials said that current plutonium research and production facilities  at Los Alamos National Laboratory are designated as mission critical,  but the facility that treats the associated radioactive and hazardous  waste is designated mission dependent, not critical. According to  NNSA officials, if the waste treatment facility experienced an  unexpected shutdown, the research and production facilities could  slow down or stop operations since the waste could not be treated.  However, the designation assigned to the waste facility does not  elevate it to the highest priority for infrastructure investment. Elevating  the importance of all mission dependent, not critical, facilities does not  provide an optimal solution because doing so could similarly overstate  the importance of some facilities and infrastructure that are less  essential to mission achievement. NNSA officials with whom we  spoke agreed that improved data on the importance of facilities and  infrastructure to mission achievement, beyond the designations  defined by the Federal Real Property Council, could help NNSA better  identify needed infrastructure investment and improve the planning  basis for its budget estimates. To improve this information, NNSA is  planning to implement a “mission dependency index” that will  measure a facility’s importance based on (1) the direct loss of  capability and (2) how that loss effects other assets. According to  agency officials, this new index may result in increased investment for  supporting and enabling infrastructure (e.g., waste processing  facilities, power lines, HVAC systems, etc.) that is currently  considered mission dependent, not critical. According to NNSA plans,  this ongoing effort is currently being used to inform program execution  and is scheduled to be completed by the time the agency develops its  2017 budget materials.
NNSA is improving data about the condition of its facilities and  infrastructure at a level of detail to inform investment prioritization  decisions. NNSA currently reports on conditions at the facility level  and is in the process of implementing a method to report the condition  of a facility’s subsystems, according to agency officials we  interviewed. These officials told us that a facility’s overall condition  can be assessed as good even if the facility has a failing subsystem  that is essential to its operation. A failure of a critical subsystem could  stop programmatic activities at the entire facility. For example, a leak  in the fire suppression system shut down operations at the Device  Assembly Facility, a mission critical facility at the Nevada National  Security Site, for 10 days. Further, according to officials, a  subsystem within a facility could be in better condition than the rating  of the entire facility might otherwise indicate making prioritization  within such facilities challenging. NNSA officials with whom we spoke  agreed that improved data about the condition of subsystems could  help NNSA better identify needed investment and improve the basis  for its budget estimates. To improve this information, NNSA is  adopting a standardized condition assessment process and  infrastructure database used by the Department of Defense.  According to officials, NNSA plans to implement a revised facility  inspection program that (1) conducts more detailed and more frequent  inspections of its key facilities—those that are mission critical, and  mission dependent (not critical)—and those facilities’ key subsystems  and (2) uses statistical modeling that is based on, among other things,  material used and component age to predict the optimal time to  conduct maintenance or recapitalization activities on these  subsystems. According to NNSA plans, this ongoing effort is currently  being used to inform program execution and is scheduled to be  completed by the time the agency develops its 2017 budget materials.
section_title: Conclusions
paragraphs: NNSA faces a complex, decades-long task in planning, budgeting, and  ensuring the execution of interconnected activities to modernize the  nuclear security enterprise. Because NNSA annually submits a budget  justification and updates its SSMP, the agency has an opportunity each  year to improve its nuclear security budget materials so that they are  more useful for congressional decision makers. DOE guidelines on data  quality state that information should be useful to the intended users and  presented in an accurate and complete manner, and our prior work has  emphasized the importance of transparency in federal agencies’ budget  presentations. NNSA’s 2015 budget materials continue to demonstrate  weaknesses, particularly with respect to (1) internal cost estimates for  LEPs that are not fully supported by near-term budget estimates, which  could affect the programs’ cost and schedule, and (2) near-term budget  estimates for maintenance and recapitalization that do not achieve DOE  benchmarks for infrastructure investment, which could impair NNSA’s  ability to meet its goal of stopping the growth in its reported $3.6 billion  deferred maintenance backlog. Providing information in the budget  materials on the potential risks to the achievement of program objectives  when near-term budget estimates are not aligned with plans would  improve the transparency of budget materials and benefit Congress  during appropriation deliberations.
With particular regard to the total deferred maintenance backlog reported  by NNSA, it is not useful for budget estimating because it includes  deferred maintenance that is unlikely to be addressed. DOE guidelines  and our prior work have emphasized the importance of transparency in  the information federal agencies provide, such as in their budget  presentations. Such information helps Congress have a clear  understanding of how new funding requests relate to funding decisions for  existing projects with continuing resource needs. By not explicitly  identifying that some deferred maintenance is unlikely to be addressed,  the agency cannot fully target infrastructure investment across the  nuclear security enterprise or clarify programmatic scope to Congress.  NNSA has ongoing efforts to improve its data on the relationship between  facilities and infrastructure and the missions they support, as well as the  level of detail it has on facility condition.
section_title: Recommendations for Executive Action
paragraphs: To improve transparency in future NNSA budget materials so that they  are more useful for congressional decision makers, we recommend that  the Administrator of NNSA take the following three actions:  In instances where NNSA’s internal cost estimates for a life extension  program suggest that additional funding may be needed beyond what  is included in the 5-year budget estimates to align with the program’s  plan, identify the amount of the shortfall in its budget materials and,  what, if any, effect the shortfall may have on the program’s cost and  schedule or the risk of achieving program objectives.
In instances where budget estimates do not achieve DOE  benchmarks for maintenance and recapitalization investment over the  5-year budget estimates, identify in the budget materials the amount  of the shortfall and the effects, if any, on the deferred maintenance  backlog.
Until improved data about the importance of facilities and  infrastructure to mission is available, clarify in the budget materials for  the 5-year FYNSP period the amount of the deferred maintenance  backlog associated with facilities that has little to no effect on  programmatic operations and is therefore low priority to be addressed.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOE and NNSA for their review and  comment. NNSA provided written comments, which are reproduced in full  in appendix III, as well as technical comments, which we incorporated in  our report as appropriate. In its comments, NNSA agreed with our  recommendations and outlined planned actions to incorporate these  recommendations into the agency’s fiscal year 2017 budget materials,  which is the next opportunity for such incorporation.
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 IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) identify the extent to which the National  Nuclear Security Administration’s (NNSA) budget estimates for  modernizing the nuclear security enterprise changed between the 2015  budget materials and the prior year’s material, (2) assess the extent to  which NNSA’s budget estimates for its current major modernization  efforts align with plans, and (3) assess the extent to which NNSA’s 2015  budget estimates for modernizing the nuclear security enterprise address  its stated goal of stopping the growth of the deferred maintenance  backlog. All years in this report refer to fiscal years, unless otherwise  noted.
To identify the changes to NNSA’s budget estimates, we compared the  estimates in the 2014 budget materials with the estimates in the 2015  version of those materials. NNSA’s budget materials are composed of two  key policy documents that are issued annually: the agency’s budget  justification, which contains estimates for the 5-year Future-Years Nuclear  Security Program (FYNSP), and the Stockpile Stewardship and  Management Plan (SSMP), which provides budget estimates over the  next 25 years. We compared the budget estimates down to the  subprogram and line item construction project level. If we identified  changes between the 2015 and 2014 budget materials, we reviewed both  versions of the materials and interviewed knowledgeable officials from  NNSA to determine the reasons for those changes. We reviewed prior  GAO reports on modernization and specific programs or projects included  in the plans to provide context for NNSA’s plans and changes in the  plans. A list of related GAO products is included at the end of this report.  We also reviewed the GAO Cost Estimating and Assessment Guide,  which highlights best practices for developing, managing, and evaluating  cost estimates for capital programs.
To assesses the extent to which the total 2015 budget estimates align  with plans for major modernization efforts—which the agency defines as  nuclear weapon life extension programs (LEP) and projects for plutonium  and uranium infrastructure—we compared the budget estimates included  in NNSA’s 2015 budget materials with its long-range plans included in the  SSMP. In addition to new issues that we identified as part of our review of  the 2015 budget materials, we also followed up on the findings identified  in our December 2013 report, such as the extent to which NNSA’s 2015  budget materials include estimates for plutonium and uranium infrastructure projects that were omitted in the prior year’s materials.Additionally, we reviewed prior GAO reports to provide context for the  concerns we identified and discussed areas where budget estimates did  not appear to align with its modernization plans with knowledgeable  officials from NNSA. If we identified areas in the 2015 budget materials  where estimates did not appear to align with modernization plans, we  reviewed the 2016 FYNSP included in NNSA’s 2016 budget justification  to determine the extent to which this misalignment persisted.
To determine the extent to which NNSA’s budget estimates for  modernizing the nuclear security enterprise address its stated goal of  stopping the growth of the deferred maintenance backlog, we compared  budget estimates contained in the 2015 budget materials over the 5 years  of the FYNSP for (1) maintenance and (2) recapitalization to infrastructure  investment benchmarks contained in the Department of Energy’s (DOE)  2005 Real Property Asset Management Plan. DOE’s 2005 plan states  that budget estimates for maintenance should be at least 2 percent of the  replacement plant value, which is the cost to replace the existing structure  with a new structure of comparable size using current technology, codes,  standards, and materials. NNSA’s 2015 budget materials include the total  replacement plant value for all eight sites in the nuclear security  enterprise. DOE’s 2005 plan states that budget estimates should be  dedicated toward recapitalization activities, but the plan did not provide a  specific benchmark. The plan’s associated 2015 budget guidance (issued  in March 2013) states that DOE programs, including NNSA, should  institute a “recapitalization strategy” that is equal to 1 percent of  replacement plant value if the program’s overall facility condition fell   According to NNSA data, its overall facility  below a certain threshold.condition was below the established threshold. These “recapitalization  strategy” budget estimates were to be added to the agency’s  maintenance budget account because NNSA at that time did not have a  separate recapitalization budget account. NNSA made its first targeted  request for recapitalization in the 2015 budget materials. We compared  the budget estimates contained in the specific recapitalization control to  the investment benchmark of 1 percent of replacement plant value. NNSA  officials confirmed that this approach was reasonable. We then calculated  the amount of budget estimates for maintenance (2 percent of  replacement plant value) and recapitalization (1 percent of replacement  plant value) that would be equal to DOE’s own infrastructure investment  benchmarks.  We then compared these benchmarks with annual budget  estimates in NNSA’s 2015 budget justification for maintenance and  recapitalization over each year of the FYNSP to determine if the total  budget estimates met, exceeded, or fell short of the benchmarks. We  discussed with knowledgeable officials from NNSA areas where these  budget estimates did not appear to align with the stated policy goal.
We also reviewed NNSA’s Infrastructure Data Analysis Center system to  identify the estimated value of NNSA’s real property and the total amount  of deferred maintenance across the nuclear security enterprise. We did  not assess the reliability of these estimates because they were mostly  used to determine whether NNSA was meeting its own stated goal of  reducing deferred maintenance and dedicating benchmarked proportions   We also  of replacement plant value to maintenance and recapitalization.reviewed documentation and received briefings from NNSA officials on  the agency’s ongoing efforts to improve its infrastructure data and  resource prioritization.
To assess the reliability of NNSA’s budget estimates and DOE’s real  property management system, we conducted manual and electronic tests  of the data, looking for missing values, outliers, or other anomalies.  Additionally, we interviewed knowledgeable NNSA officials about the data  and their methodologies for using the data to construct their estimates,  including discussing missing data that we identified in our tests of the  data. During our review, we found that NNSA had omitted 20 years of  budget data for site operations at the Y-12 National Security Complex in  Tennessee after 2019. We brought this to the attention of agency officials  who confirmed the omission and provided GAO with corrected budget  estimates. We determined that the corrected Y-12 data and the data  underlying the budget estimates were sufficiently reliable for our  purposes, which was to report the total amount of budget estimates and  those estimates dedicated to certain programs and projects. We also  found that the limited amount of data we used from DOE’s real property  information management system were also sufficiently reliable for our  purposes, which was to report the total amount of deferred maintenance  and replacement plant value in the nuclear security enterprise, as well as  the amount of deferred maintenance and replacement plant value  associated with specific facility designations (i.e., not mission dependent).  However, we did not assess the reliability of NNSA’s underlying budget  estimating processes or independently verify the reliability of specific  budget estimates because such analysis exceeds the scope of our  mandate.
We limited the scope of our review to NNSA’s Weapons Activities  appropriation. NNSA does not have a definition of “modernization,” but  NNSA officials consider all of the programs in the Weapons Activities  appropriation to directly or indirectly support modernization. This scope is   Additionally, we focused our  consistent with our December 2013 review.review on those programs or projects with the potential to have a  significant impact on NNSA’s modernization plans or budgets. All data are  presented in current dollars, which include projected inflation, unless  otherwise noted. NNSA’s budget estimates do not incorporate reductions  for sequestration. As stated in NNSA’s 2014 SSMP, incorporating such  reductions would lead to adjustments to future plans.
We conducted this performance audit from July 2014 to August 2015 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: Comparison of Budget Estimates and Schedules for Planned Key Modernization Activities in the 2010 Nuclear Posture Review and Subsequent Budget Materials
paragraphs: All years in this report refer to fiscal years, unless otherwise noted. The 2014 SSMP  stated that NNSA did not submit the 2013 SSMP to Congress because analytic work  conducted by DOD and NNSA to evaluate future needs for nuclear modernization  activities across the nuclear security enterprise was ongoing and, as such, predecisional.
President’s policy priorities. The FYNSP is generally consistent with  the first 5 years of NNSA’s plan presented in its SSMP. In addition,  the report that the Department of Energy (DOE) jointly submits with  the Department of Defense (DOD) in accordance with section 1043 of  the National Defense Authorization Act for Fiscal Year 2012 as  amended is required to provide 10-year budget estimates and plans to  enhance the reliability of the nuclear weapons stockpile and  modernize infrastructure. Similarly, the FYNSP is generally  consistent with the first 5 years of NNSA’s plan presented in this joint  report.
The 2010 Nuclear Posture Review included discussion of a number of  planned major modernization efforts for NNSA, while other efforts have  been identified in later versions of the planning documents discussed  above. In particular, the Nuclear Posture Review identified three planned  LEPs, one for the W76—a warhead delivered by submarine launched  ballistic missile—another for the B61—a gravity bomb delivered by  aircraft—and also discussed the potential for a common warhead  developed through refurbishment and for use on both Navy and Air Force  delivery vehicles. NNSA’s planning documents for 2015 continue to  include LEPs for the W76 and B61 and the 2015 SSMP further developed  the concept of a common warhead, now termed an “interoperable”  warhead (IW), including long-range plans for three IWs. In addition,  NNSA’s 2015 planning documents include an LEP for the Air Force’s  cruise missile warhead and a major alteration (ALT) of the Navy’s W88  warhead, also delivered on a submarine launched ballistic missile, neither  of which was discussed in the Nuclear Posture Review. The Nuclear  Posture Review also discussed major line item construction projects to  replace aging facilities for NNSA’s plutonium and uranium processing  missions. The project for plutonium processing is known as the Chemistry  and Metallurgy Research Replacement-Nuclear Facility (CMRR-NF), and  the project for uranium processing is known as the Uranium Processing  Facility (UPF). Both projects are being reconceptualized as a result of  project execution challenges and increasingly escalating cost estimates.  Table 4 summarizes changes to the schedules for these major  modernization efforts as reported in NNSA’s annual updates to its  planning documents.
Figure 4 presents budget information from fiscal year 2011 through fiscal  year 2019, comparing planned budget estimates for modernization  presented in the Fiscal Year 2011 Joint NNSA and Department of  Defense Report (baseline) to estimates in budget materials for  subsequent years.
NNSA’s total budget estimates for modernization generally address four  areas: (1) stockpile; (2) infrastructure; (3) science, technology, and  engineering (ST&E) capabilities; and (4) other weapons activities.
NNSA’s stockpile area represents the largest portion of NNSA’s overall  budget estimates for modernization (about 35 percent of the total budget  estimates in 2015) and includes LEPs. Figure 5 presents budget  information from fiscal year 2011 through fiscal year 2019, comparing  planned budget estimates for the stockpile area presented in the Fiscal  Year 2011 Joint NNSA and Department of Defense Report (baseline) to  estimates in budget materials for subsequent years.
NNSA’s infrastructure area represents the second largest portion of  NNSA’s overall modernization plans (about 29 percent of the total budget  estimates in 2015) and includes construction of new facilities as well as  operations and maintenance of existing facilities and infrastructure. Figure  6 presents budget information from fiscal year 2011 through fiscal year  2019, comparing planned budget estimates for the infrastructure area  presented in the Fiscal Year 2011 Joint NNSA and Department of  Defense Report (baseline) to estimates in budget materials for  subsequent years.
NNSA’s ST&E capabilities area represents the third largest portion of  NNSA’s overall modernization plans (about 20 percent of the total budget  estimates in 2015) and includes technically challenging, multiyear,  multifunctional efforts to develop and maintain critical science and  engineering capabilities in support of the stockpile. Figure 7 presents  budget information from fiscal year 2011 through fiscal year 2019,  comparing planned budget estimates for the ST&E area presented in the  Fiscal Year 2011 Joint NNSA and Department of Defense Report  (baseline) to estimates in budget materials for subsequent years.
NNSA’s other weapons activities represent the smallest portion of  NNSA’s overall modernization plans (about 16 percent of the total budget  estimates in 2015) and includes nuclear weapon security and  transportation as well as legacy contractor pensions, among other things.  Figure 8 presents budget information from fiscal year 2011 through fiscal  year 2019, comparing planned budget estimates for other weapons  activities presented in the Fiscal Year 2011 Joint NNSA and Department  of Defense Report (baseline) to estimates in budget materials for  subsequent years.
section_title: Appendix III: Comments from the National Nuclear Security Administration
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: David C. Trimble, (202) 512-3841 or trimbled@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Allison B. Bawden (Assistant  Director), Patrick Bernard, Pamela Davidson, Tom Fullum, and Jason  Trentacoste made key contributions to this report.
section_title: Related GAO Products
paragraphs: Nuclear Weapons: Actions Needed by NNSA to Clarify Dismantlement  Performance Goal. GAO-14-449. Washington, D.C.: April 30, 2014.
ICBM Modernization: Approaches to Basing Options and Interoperable  Warhead Designs Need Better Planning and Synchronization.  GAO-13-831. Washington, D.C.: September 20, 2013.
Modernizing the Nuclear Security Enterprise: Observations on NNSA’s  Options for Meeting Its Plutonium Research Needs. GAO-13-533.  Washington, D.C.: September 11, 2013.
Nuclear Weapons: NNSA Needs to Improve Guidance on Weapon  Limitations and Planning for Its Stockpile Surveillance Program.  GAO-12-188. Washington, D.C.: February 8, 2012.
Nuclear Weapons: DOD and NNSA Need to Better Manage Scope of  Future Refurbishments and Risks to Maintaining U.S. Commitments to  NATO. GAO-11-387. Washington, D.C.: May 2, 2011.
Nuclear Weapons: NNSA and DOD Need to More Effectively Manage the  Stockpile Life Extension Program. GAO-09-385. Washington, D.C.: March  2, 2009.
Nuclear Weapon:, Annual Assessment of the Safety, Performance, and  Reliability of the Nation’s Stockpile. GAO-07-243R. Washington, D.C.:  February 2, 2007.
Nuclear Weapons: Improved Management Needed to Implement  Stockpile Stewardship Program Effectively. GAO-01-48. Washington,  D.C.: December 14, 2000.
DOE Facilities: Better Prioritization and Life Cycle Cost Analysis Would  Improve Disposition Planning. GAO-15-272. Washington, D.C.: March 19,  2015.
DOE Real Property: Better Data and a More Proactive Approach Needed  to Facilitate Property Disposal. GAO-15-305. Washington, D.C.: February  25, 2015.
Nuclear Waste: DOE Needs to Improve Cost Estimates for Transuranic  Waste Projects at Los Alamos. GAO-15-182. Washington, D.C.: February  18, 2015.
Nuclear Weapons: Technology Development Efforts for the Uranium  Processing Facility. GAO-14-295. Washington, D.C: April 18, 2014.
Federal Real Property: Improved Transparency Could Help Efforts to  Manage Agencies’ Maintenance and Repair Backlogs. GAO-14-188.  Washington, D.C.: January 23, 2014.
Nuclear Weapons: Factors Leading to Cost Increases with the Uranium  Processing Facility. GAO-13-686R. Washington, D.C.: July 12, 2013.
Department of Energy: Observations on Project and Program Cost  Estimating in NNSA and the Office of Environmental Management.  GAO-13-510T. Washington, D.C.: May 8, 2013.
Department of Energy: Concerns with Major Construction Projects at the  Office of Environmental Management and NNSA. GAO-13-484T.  Washington, D.C.: March 20, 2013.
Modernizing the Nuclear Security Enterprise: Observations on DOE’s and  NNSA’s Efforts to Enhance Oversight of Security, Safety, and Project and  Contract Management. GAO-13-482T. Washington, D.C.: March 13,  2013.
Modernizing the Nuclear Security Enterprise: Observations on the  National Nuclear Security Administration’s Oversight of Safety, Security,  and Project Management. GAO-12-912T. Washington, D.C.: September  12, 2012.
Modernizing the Nuclear Security Enterprise: New Plutonium Research  Facility at Los Alamos May Not Meet All Mission Needs. GAO-12-337.  Washington, D.C.: March 26, 2012.
Nuclear Weapons: NNSA Needs More Comprehensive Infrastructure and  Workforce Data to Improve Enterprise Decision-making. GAO-11-188.  Washington, D.C.: February 14, 2011.
Nuclear Weapons: National Nuclear Security Administration’s Plans for Its  Uranium Processing Facility Should Better Reflect Funding Estimates and  Technology Readiness. GAO-11-103. Washington, D.C.: November 19,  2010.
Nuclear Weapons: Actions Needed to Identify Total Costs of Weapons  Complex Infrastructure and Research and Production Capabilities.  GAO-10-582. Washington, D.C.: June 21, 2010.
Science, Technology, and Engineering Capabilities  Nuclear Weapons: National Nuclear Security Administration Needs to  Ensure Continued Availability of Tritium for the Weapons Stockpile.  GAO-11-100. Washington, D.C.: October 7, 2010.
Nuclear Weapons: Actions Needed to Address Scientific and Technical  Challenges and Management Weaknesses at the National Ignition  Facility. GAO-10-488. Washington, D.C.: April 8, 2010.
Modernizing the Nuclear Security Enterprise: Strategies and Challenges  in Sustaining Critical Skills in Federal and Contractor Workforces.  GAO-12-468. Washington, D.C.: April 26, 2012.
Department of Energy: Progress Made Overseeing the Costs of  Contractor Postretirement Benefits, but Additional Actions Could Help  Address Challenges. GAO-11-378. Washington, D.C.: April 29, 2011.
Nuclear Weapons: NNSA Needs More Comprehensive Infrastructure and  Workforce Data to Improve Enterprise Decision-making. GAO-11-188.  Washington, D.C.: February 14, 2011.
High-Risk Series: An Update. GAO-15-290. Washington, D.C.: February  11, 2015.
DOE and NNSA Project Management: Analysis of Alternatives Could Be  Improved by Incorporating Best Practices. GAO-15-37. Washington,  D.C.: December 11, 2014.
Project and Program Management: DOE Needs to Revise Requirements  and Guidance for Cost Estimating and Related Reviews. GAO-15-29.  Washington, D.C.: November 25, 2014.
Nuclear Weapons: Ten-Year Budget Estimates for Modernization Omit  Key Efforts, and Assumptions and Limitations Are Not Fully Transparent.  GAO-14-373. Washington, D.C.: June 10, 2014.
National Nuclear Security Administration: Agency Report to Congress on  Potential Efficiencies Does Not Include Key Information. GAO-14-434.  Washington, D.C.: May 15, 2014.
Modernizing the Nuclear Security Enterprise: NNSA’s Budget Estimates  Do Not Fully Align with Plans. GAO-14-45. Washington, D.C.: December  11, 2013.
Modernizing the Nuclear Security Enterprise: NNSA’s Reviews of Budget  Estimates and Decisions on Resource Trade-offs Need Strengthening.  GAO-12-806. Washington, D.C.: July 31, 2012.
National Nuclear Security Administration: Observations on NNSA’s  Management and Oversight of the Nuclear Security Enterprise.  GAO-12-473T. Washington, D.C.: February 16, 2012.
Department of Energy: Additional Opportunities Exist to Streamline  Support Functions at NNSA and Office of Science Sites.  GAO-12-255. Washington, D.C.: January 31, 2012.