Modernizing the Nuclear Security Enterprise: Observations on the Organization and Management of the National Nuclear Security Administration
Published: 2012-06-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: During the late 1990s, DOE had difficulties with a lack of clear management authority and responsibility that contributed to security problems at the nations nuclear weapons laboratories and management problems with major projects. In response, Congress created NNSA as a separately organized agency within DOE under the NNSA Act. NNSA is responsible for managing nuclear weapon- and nonproliferation-related national security activities in laboratories and other facilities, collectively known as the nuclear security enterprise. GAO continues to identify problems across the nuclear security enterprise, from projects cost and schedule overruns to inadequate oversight of safety and security at NNSAs sites. With NNSA proposing to spend tens of billions of dollars to modernize its facilities, it is important to ensure scarce resources are spent in an effective and efficient manner.
This testimony addresses (1) NNSAs early experiences organizing and operating as a separately organized agency within DOE and (2) NNSAs efforts to correct long-standing management deficiencies. It is based on prior GAO reports issued from January 1995 to March 2012.
DOE and NNSA continue to act on the numerous recommendations GAO has made to improve NNSAs management. GAO will continue to monitor DOEs and NNSAs implementation of these recommendations.
section_title: What GAO Found
paragraphs: After the enactment of Title 32 of the National Defense Authorization Act for Fiscal Year 2000 (NNSA Act), the Department of Energy (DOE) and the National Nuclear Security Administration (NNSA) struggled to determine how NNSA should operate as a separately organized agency within the department. A number of factors contributed to this. First, DOE and NNSA did not have a useful model to follow for establishing a separately organized agency in DOE. Several federal agencies were suggested as models, such as the National Oceanic and Atmospheric Administration in the Department of Commerce. However, GAO reported in January 2007 that agency officials GAO interviewed did not consider their agency to be separately organized or believed that their agencys operational methods were transferable to NNSA. Second, DOEs January 2000 plan to implement the NNSA Act did not define how NNSA would operate as a separately organized agency within DOE. Internal DOE opposition to the creation of NNSA led the department to fill virtually every significant statutory position in NNSA with DOE officials (i.e., having DOE officials contemporaneously serve in NNSA and DOE positions). As GAO testified in April 2001, this practice of dual-hatting caused considerable concern about NNSAs ability to independently function. Also, lack of formal agreement between DOE and NNSA in a number of key areas such as, among others, budgeting and procurement, led to organizational conflicts that inhibited effective operations. Even where formal procedures were developed, interpersonal disagreements hindered effective cooperation. For example, a January 2007 GAO report described the conflict between NNSA and DOE counterintelligence offices, which led to Congress subsequently amending the NNSA Act to consolidate the counterintelligence programs of DOE and NNSA under DOE.
NNSA has made considerable progress resolving some of its long-standing management deficiencies, but significant improvement is still needed especially in NNSAs management of its major projects and contracts. GAO reported in June 2004 that NNSA has better delineated lines of authority and has improved communication between its headquarters and site offices. In addition, NNSAs establishment of an effective headquarters security organization has made significant progress resolving many of the security weaknesses GAO has identified. Nevertheless, NNSA continues to experience major cost and schedule overruns on its projects, such as research and production facilities and nuclear weapons refurbishments, principally because of ineffective oversight and poor contractor management. In some areas, NNSA can be viewed as a success. Importantly, NNSA has continued to ensure that the nuclear weapons stockpile remains safe and reliable in the absence of underground nuclear testing. At the same time, NNSAs struggles in defining itself as a separately organized agency within DOE, and the considerable management problems that remain have led to calls in Congress and other organizations to increase NNSAs independence from DOE. However, senior DOE and NNSA officials have committed to continuing reform, and DOEs and NNSAs efforts have led to some management improvements. As a result, GAO continues to believe, as it concluded in its January 2007 report, that drastic organizational change to increase independence is unnecessary and questions whether such change would solve the agencys remaining management problems.

section_title: Letter
paragraphs: We are pleased to be here today to discuss the creation and  implementation of the National Nuclear Security Administration (NNSA)— a separately organized agency within the Department of Energy (DOE).  As you know, NNSA is responsible for the management and security of  the nation’s nuclear weapons, nuclear nonproliferation, and naval reactor  programs at research and development laboratories, production plants,  and other facilities known collectively as the nuclear security enterprise.
During the late 1990s, DOE experienced management difficulties with its  nuclear weapons program that contributed to security problems at the  nation’s nuclear weapons laboratories and significant cost overruns on  major projects. According to a June 1999 report by the President’s  Foreign Intelligence Advisory Board, DOE’s management of the nuclear  weapons laboratories, while representing “science at its best,” also  embodied “security at its worst” because of “organizational disarray,  managerial neglect, and…a culture of arrogance.” The board urged  Congress to create a new organization that, whether established as an  independent agency or a semiautonomous agency within DOE, would  have a clear mission, streamlined bureaucracy, and drastically simplified  lines of authority and accountability. Responding to the board’s  recommendations, Congress created NNSA under Title 32 of the National  Defense Authorization Act for Fiscal Year 2000—the NNSA Act.
The NNSA Act established NNSA as a “separately organized agency”  within DOE. The act established the position of DOE Under Secretary for  Nuclear Security, who was also designated as the Administrator of NNSA.  The Secretary of Energy and the Deputy Secretary of Energy were  allowed to establish policy for NNSA and to give direction to NNSA  through the Administrator; however, other DOE employees were  prohibited from directing the activities of individual NNSA employees. In  addition, the NNSA Act required that, among other things, NNSA develop  a planning, programming, and budgeting process to ensure that NNSA  operated under sound financial management principles. Using this  planning, programming, and budgeting process, NNSA is also required to  annually submit to Congress a Future Years Nuclear Security Program  (FYNSP) plan that details NNSA’s planned expenditures for the next 5  years.
DOE’s and NNSA’s management of the nuclear security enterprise has  been the subject of much criticism. The department’s problems are long- standing. For example, we first designated DOE’s management of its  contracts as an area at high risk of fraud, waste, abuse, and  mismanagement in 1990 because of the department’s record of  inadequate management and oversight of its contractors. In January  1995, we reported that DOE’s laboratories did not have clearly defined  missions that focus their considerable resources on accomplishing the  department’s changing objectives and national priorities. Noting that the  laboratories have made vital contributions to the nation’s defense and  civilian science and technology efforts, we reported that DOE had not  coordinated these laboratories’ efforts to solve national problems but had  instead managed each laboratory on a program-by-program basis. The  establishment of NNSA as a semiautonomous agency within DOE in  2000 was intended to correct these long-standing and widely recognized  DOE management problems, which had been underscored by significant  cost overruns on major projects and security problems at the national  laboratories.
NNSA’s creation, however, has not yet had the desired effect of fully  resolving these management problems. Progress has been made, but  NNSA and DOE’s Office of Environmental Management remain on our  high-risk list.nuclear security enterprise, ranging from significant cost and schedule  overruns on major projects to ineffective federal oversight of safety and   Furthermore, we continue to identify problems across the  security at NNSA’s sites.laboratory and other officials that DOE’s and NNSA’s oversight of the  laboratories’ activities has been excessive and that the safety and  security requirements the laboratories’ are subject to are overly  prescriptive and burdensome, which has resulted in a negative effect on  the quality of science performed at these laboratories.
Concerns have also been raised by national  In January 2007, we testified before this Subcommittee on the extent to  which NNSA has taken steps to improve security at its facilities, improve  its management practices, and revise its organizational structure. Similarly, in February 2012, we testified before this Subcommittee on  NNSA’s management of the nuclear security enterprise. My testimony  today, which is based on these and other reports and testimonies we  have issued since NNSA’s creation, discusses (1) NNSA’s early  experiences organizing and operating as a separately organized agency  within DOE and (2) NNSA’s efforts to correct long-standing management  deficiencies. Detailed information about scope and methodology can be  found in our issued reports. We conducted the performance audit work  that supports this statement in accordance with generally accepted  government auditing standards. Those standards require that we plan  and perform audits 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.
GAO, National Nuclear Security Administration: Security and Management  Improvements Can Enhance Implementation of the NNSA Act, GAO-07-428T  (Washington, D.C.: Jan. 31, 2007).
subsections: section_title: Background
paragraphs: DOE is responsible for a diverse set of missions, including nuclear  security, energy research, and environmental cleanup. These missions  are managed by various organizations within DOE and largely carried out  by contractors at DOE sites. According to federal budget data, NNSA is  the largest organization in DOE, overseeing nuclear weapons, nuclear  nonproliferation, and naval reactors missions at its sites. With a $10.5  billion budget in fiscal year 2011—nearly 40 percent of DOE’s total  budget—NNSA is responsible for, among other things, providing the  United States with safe, secure, and reliable nuclear weapons in the  absence of underground nuclear testing and maintaining core  competencies in nuclear weapons science, technology, and engineering.  Ensuring that the nuclear weapons stockpile remains safe and reliable in  the absence of underground nuclear testing is extraordinarily complicated  and requires state-of-the-art experimental and computing facilities, as well  as the skills of top scientists in the field. Over the past decade, the United  States has invested billions of dollars in sustaining the cold war-era  stockpile and upgrading the laboratories and, in 2011, the administration  announced plans to request $88 billion from Congress over the next  decade to operate and modernize the nuclear security enterprise and  ensure that base scientific, technical, and engineering capabilities are  sufficiently supported, and the nuclear deterrent in the United States can  continue to be safe, secure, and reliable.
Under DOE’s long-standing model of having unique management and  operating (M&O) contractors at each site, management of its sites has  historically been decentralized and, thus, fragmented. Since the  Manhattan Project produced the first atomic bomb during World War II,  NNSA, DOE, and their predecessor agencies have depended on the  expertise of private firms, universities, and others to carry out research  and development work and efficiently operate the facilities necessary for  the nation’s nuclear defense. DOE’s relationship with these entities has  been formalized over the years through its M&O contracts—agreements  that give DOE’s contractors unique responsibility to carry out major  portions of DOE’s missions and apply their scientific, technical, and  management expertise.
Currently, DOE spends 90 percent of its annual budget on M&O  contracts, making it the largest non-Department of Defense contracting  agency in the government. The M&O contractors at DOE’s NNSA sites  have operated under DOE’s direction and oversight but largely  independently of one another. Various headquarters and field-based  organizations within DOE and NNSA develop policies, and NNSA site  offices, collocated with NNSA’s sites, conduct day-to-day oversight of the  M&O contractors and evaluate the contractors’ performance in carrying  out the sites’ missions.
section_title: DOE and NNSA Struggled to Determine How NNSA Should Operate as a Separately Organized Agency
paragraphs: NNSA focused considerable attention on reorganizing its internal  operations; however, it and DOE have struggled with establishing how  NNSA should operate as a separately organized agency within the  department. Several factors contributed to this situation. First, DOE and  NNSA did not have a useful model to follow for establishing a separately  organized agency in DOE. The President’s Foreign Intelligence Advisory  Board’s June 1999 report suggested several federal agencies, such as  the National Oceanic and Atmospheric Administration in the Department  of Commerce, which could be used as a model for NNSA. However, as  we reported in January 2007, none of the agency officials we interviewed  considered their agency to be separately organized or believed that their  agency’s operational methods were transferable to NNSA. Second,  DOE’s January 2000 implementation plan, which was required by the  NNSA Act, did not define how NNSA would operate as a separately  organized agency within DOE. Instead, reflecting the opposition of the  then DOE senior leadership to the creation of NNSA, the implementation  plan “dual-hatted” virtually every significant statutory position in NNSA  with DOE officials (i.e., having DOE officials contemporaneously serve in  NNSA and DOE positions), including the Director of NNSA’s Office of  Defense Nuclear Counterintelligence and General Counsel. As we  testified in April 2001, this practice caused considerable concern about  NNSA’s ability to function with the independence envisioned in the NNSA  Act. Dual-hatting was subsequently forbidden by an amendment to the  NNSA Act.
A lack of formal agreement between DOE and NNSA in a number of key  areas—budgeting, procurement, information technology, management  and administration, and safeguards and security—resulted in  organizational conflicts that inhibited effective operations. Even where  formal procedures were developed, interpersonal disagreements  hindered effective cooperation. For example, our January 2007 report  described the conflict between NNSA and DOE counterintelligence  offices. Specifically, NNSA and DOE counterintelligence officials  disagreed over (1) the scope and direction of the counterintelligence  program, (2) their ability to jointly direct staff in the headquarters  counterintelligence program offices, (3) the allocation of  counterintelligence resources, (4) counterintelligence policy making and  (5) their roles and responsibilities in handling specific counterintelligence  matters. Subsequently, Congress amended the NNSA Act to consolidate  the counterintelligence programs of DOE and NNSA under the  Department of Energy.
The Defense Science Board provides the Department of Defense with independent  advice and recommendations on matters relating to the department’s scientific and  technical enterprise See Defense Science Board Task Force, Nuclear Capabilities  (Washington, D.C.: December 2006). organized status, maintains a costly set of distinctly separate overhead  and indirect cost operations that often duplicate existing DOE functions.  For example, NNSA retains separate functions in areas such as, among  others, congressional affairs, general counsel, human resources,  procurement and acquisition, and public affairs. According to this  November 2011 report, these redundant operations are costly and can  complicate communications and program execution. There have been  continuing calls for removing NNSA from DOE and establishing it as a  separate agency. We reported in January 2007 that former senior DOE  and NNSA officials with whom we spoke generally did not favor removing  NNSA from DOE; we concluded that such drastic change was  unnecessary to produce an effective organization.
section_title: NNSA Has Made Considerable Improvements, but Deficiencies Persist, Especially in Management of Major Projects and Contracts
paragraphs: Since its creation, NNSA has made considerable progress resolving  some of its long-standing management deficiencies. For example, we  reported in June 2004 that NNSA had better delineated lines of authority  and improved communication between NNSA headquarters and its site  offices. Furthermore, our January 2007 report contained 21  recommendations to the Secretary of Energy and the Administrator of  NNSA that were intended to correct deficiencies in five areas— organization, security, project management, program management, and  financial management. DOE and NNSA have taken important steps to  address most of these recommendations. For example, to improve  security, we recommended that the Administrator of NNSA, among other  things, implement a professional development program for security staff  to ensure the completion of needed training, develop a framework to  evaluate results from security reviews and guide security improvements,  and establish formal mechanisms for sharing and implementing lessons  learned across the weapons complex. NNSA’s establishment of an  effective headquarters security organization has made significant  progress implementing these recommendations by performing security  reviews, developing security performance measures, and instituting a  security lessons-learned center.
Nevertheless, NNSA continues to experience significant deficiencies,  particularly in its management of major projects and contracts. As we  testified in February 2012, a basic tenet of effective management is the  ability to complete projects on time and within budget. However, for  more than a decade, NNSA has continued to experience significant cost  and schedule overruns on its major projects, principally because of  ineffective oversight and poor contractor management. We have reported  that NNSA’s efforts to extend the operational lives of nuclear weapons in  the stockpile have experienced cost increases and schedule delays, such  as a $300 million cost increase and 2-year delay in the refurbishment of  the W87 nuclear warhead and a $70 million cost increase and 1-year  delay in the refurbishment of the W76 nuclear warhead. Furthermore,  we reported that the estimated cost to construct a modern Uranium  Processing Facility at NNSA’s Y-12 National Security Complex  experienced a nearly sevenfold cost increase from between $600 million  and $1.1 billion in 2004 to between $4.2 billion and $6.5 billion in 2011.  We also reported in March 2012 that NNSA’s project to construct a new  plutonium research facility at Los Alamos National Laboratory—the  Chemistry and Metallurgy Research Replacement Nuclear Facility— would cost between $3.7 billion and $5.8 billion—nearly a sixfold increase  from NNSA’s original estimate. NNSA’s February 2012 decision to defer  construction of this facility for at least 5 years will result in a total delay of  between 8 and 12 years from its original plans.
NNSA’s planning, programming, and budgeting process has also  experienced a setback, which raises questions about the process’s  capability and flexibility. Specifically, NNSA’s modernization and  operations plans are detailed and annually updated in the agency’s  Stockpile Stewardship and Management Plan (SSMP), which provides  details of nuclear security enterprise modernization and operations plans  over the next two decades. In addition, as discussed above, the NNSA  Act requires NNSA to annually submit to Congress an FYNSP—a budget  document approved by the Office of Management and Budget that details  NNSA’s planned expenditures for the next 5 years. Furthermore, Section  1043 of the National Defense Authorization Act for Fiscal Year 2012  requires the Department of Defense and NNSA to jointly produce an  annual report that, among other things, provides a detailed 10-year  estimate of modernization budget requirements. NNSA neither submitted  an FYNSP based on “programmatic requirements” nor the Section 1043  annual report with its fiscal year 2013 budget submission. In addition,  NNSA has yet to release an updated SSMP. According to the Secretary  of Energy, the August 2011 Budget Control Act created “new fiscal  realities” that have caused the agency to revise its long-range  modernization and operations plans and budget. An NNSA official told  us that the revised plans, which will include the FYNSP, Section 1043  annual report, and updated SSMP should be completed in July 2012. We  are currently reviewing NNSA’s planning, programming, and budgeting  process in response to a request from the Subcommittee on Energy and  Water Development, Senate Committee on Appropriations, and we  expect to issue a report on this work in the next few months.
In conclusion, producing a well-organized and effective agency out of  what was widely considered a dysfunctional enterprise has been a  considerable challenge. In some areas, NNSA can be viewed as a  success. In particular, NNSA has successfully ensured that the nuclear  weapons stockpile remains safe and reliable in the absence of  underground nuclear testing, accomplishing this complicated task by  using state-of-the-art facilities, as well as the skills of top scientists. As we  testified in February 2012, maintaining government-owned facilities that  were constructed more than 50 years ago and ensuring M&O contractors  are sustaining critical human capital skills that are highly technical in  nature and limited in supply are both difficult undertakings. Careful federal  oversight over the tens of billions of dollars NNSA proposes to spend to  modernize nuclear facilities will be necessary to ensure these funds are  spent in as an effective and efficient manner as possible, especially given  NNSA’s record of weak management of its major projects.
Over the past decade, we have made numerous recommendations to  DOE and NNSA to improve their management and oversight practices.  DOE and NNSA have acted on many of these recommendations and  have made considerable progress. Nevertheless, enough significant  management problems remain that prompt some to call for removing  NNSA from DOE and either moving it to another department or  establishing it as a separate agency. As we concluded in January 2007,  however, we do not believe that such drastic changes are necessary, and  we continue to hold this view today. Importantly, we are uncertain  whether such significant organizational changes to increase NNSA’s  independence would produce the desired effect of creating a modern,  responsive, effective, and efficient nuclear security enterprise. In light of  the substantial leadership commitment to reform made by senior DOE  and NNSA officials, and the significant improvements that have already  been made, we believe that NNSA remains capable of delivering the  management improvements necessary to be an effective organization,  and we will continue to monitor NNSA’s progress making these  improvements.
Chairman Turner, Ranking Member Sanchez, and Members of the  Subcommittee, this completes my prepared statement. I would be  pleased to respond to any questions you may have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff members have any questions about this testimony,  please contact me at (202) 512-3841 or aloisee@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this testimony. GAO staff who made key  contributions to this testimony are Allison Bawden, Ryan T. Coles,  Jonathan Gill, and Kiki Theodoropoulos, Assistant Directors, and Patrick  Bernard, Senior Analyst.
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