Department of Energy: NNSA Restructuring and Progress in Implementing Title 32
Published: 2002-02-26T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: Created to correct long-standing and widely recognized management and security problems at the Department of Energy (DOE), the National Nuclear Security Administration (NNSA) manages the nation's nuclear weapons, nonproliferation, and naval reactors programs. Although NNSA announced a new headquarters organization in May 2001, it did not meet the Administrator's promise of implementing a new structure for the entire organization by October 2001. Furthermore, NNSA lost momentum during the summer in its effort to implement a comprehensive planning, programming, and budgeting process. NNSA has used only 19 of the 300 excepted service positions authorized by Title 32 of the National Defense Authorization Act for Fiscal Year 2000. NNSA expects to report to Congress next month on its plans for using its excepted service authority. However, NNSA lacks a long-term strategic approach to ensure a well-managed, properly sized, and skilled workforce over the long run.

section_title: Letter
paragraphs: We are pleased to be here today to provide our views on the progress the  National Nuclear Security Administration (NNSA) has made in  implementing Title 32 of the National Defense Authorization Act for Fiscal  Year 2000 (P.L. 106-65). As the Panel is well aware, Title 32 established  NNSA as a semiautonomous agency within the Department of Energy  (DOE) with responsibility for the nation’s nuclear weapons,  nonproliferation, and naval reactors programs. NNSA was created to  correct long-standing and widely recognized management and security  problems at DOE.
At the Panel’s request, for over a year, we have monitored NNSA’s  progress in implementing key components of Title 32. As you will recall,  when we testified before the Panel in April 2001, we reported that NNSA  was making progress in implementing changes to its organization;  improving its planning, programming, and budgeting functions; and using  its new personnel authority. At that time, we noted that it might be several  months before we saw tangible evidence of these changes and that it might  be several years before these changes were fully implemented and could  be definitively assessed.
More recently, in December 2001 we reported to the Panel again on  NNSA’s progress in implementing Title 32.  Overall, we found that while  NNSA had made additional progress on some fronts, on other important  fronts genuine change had been more difficult to achieve.
While NNSA announced a new headquarters organization in May 2001,  it did not meet the Administrator’s promise of implementing a new  structure for the entire organization by October 2001. Struggles within  NNSA over long-standing issues such as the roles and responsibilities  of headquarters and field staff delayed the announcement of a new  organization which was expected February 25, 2002. Moreover, what  NNSA announced represents only a framework for its eventual  reorganization. Currently, no plan with milestones for accomplishing  the myriad of details needed to implement NNSA’s new organization  exists. While we are hopeful that resolution of long-standing  organizational issues may now be within NNSA’s grasp, without the  discipline of an implementation plan, reaching NNSA’s goals is likely to  be a long and arduous process that could take several years. Moreover,  unless the new organization’s chains of command are enforced and  federal and contractor staff are truly held accountable, this  reorganization could be simply another in a long line of missed  opportunities.
NNSA lost some momentum over the summer in its effort to implement  the comprehensive planning, programming, and budgeting process  envisioned by the Administrator. Although it has now established a  conceptual planning, programming, and budgeting process, NNSA still  has an enormous amount of work to do as it tries to implement its new  process during the fiscal year 2004 budget cycle. Furthermore, it is too  soon to tell whether the proposed process, when fully implemented,  will effectively address widely recognized problems in NNSA’s existing  planning, programming, and budgeting practices and will establish an  effective evaluation phase.
While it has developed an overall excepted service personnel policy,  NNSA has used only 19 of the 300 excepted service positions  authorized by Title 32. NNSA expects to report to the Congress on its  plans for using its excepted service authority next month. However,  NNSA does not yet have a long-term strategic approach to ensure a  well-managed, properly sized and skilled workforce over the long run.  Such a plan is vital to effective implementation of NNSA’s new  organization.
We recognize that NNSA’s implementation of Title 32 is an evolving  process. However, we believe the best time to address long-standing  problems is when the new organization and systems are first being laid out  and the momentum for change is at its highest. NNSA needs to move  forward aggressively so that this opportunity does not slip away and old  ways reemerge and harden. For NNSA to be ultimately successful in  correcting the long-standing management problems it inherited from DOE,  we believe it will need to jumpstart its efforts to implement its proposed  reorganization; regain momentum for implementing its revised planning,  programming, and budgeting process; and ensure a well-managed  workforce. After a brief overview of the factors that led to the creation of  NNSA, we will discuss each major management area in more detail,  including the underlying problems to be addressed, the status of NNSA’s  progress, and the challenges that still lie ahead.
subsections: section_title: Background
paragraphs: Since its creation in 1977, DOE has been responsible for developing,  producing, and maintaining nuclear weapons; preventing the proliferation  of weapons of mass destruction; and designing, building, and maintaining  naval nuclear propulsion systems. However, DOE historically has been  plagued by organizational and managerial problems that have resulted in  significant cost overruns and schedule delays on major projects, such as  the National Ignition Facility. There have also been a number of security  concerns at DOE facilities. In response to these problems, the Congress, in  Title 32 of the National Defense Authorization Act for Fiscal Year 2000,  created a new semiautonomous agency within DOE—the National Nuclear  Security Administration. Reflecting initial concerns about how DOE was  planning to implement Title 32, the Congress amended Title 32 in the  National Defense Authorization Act for Fiscal Year 2001 (P.L. 106-398) to  require, among other things, additional information on NNSA’s  organization, planning, programming, and budgeting be supplied to the  Congress.
As of October 2000, NNSA’s basic organizational structure consisted of  three program offices—Defense Programs, Defense Nuclear  Nonproliferation, and Naval Reactors; three operations offices—  Albuquerque, Nevada, and Oakland—that oversaw the operations of area  offices located at NNSA’s eight field sites and numerous area offices. All  but two of the area offices reported to an operations office. The other two  area offices—Oak Ridge Y-12 and Savannah River Tritium Operations—  reported directly to NNSA headquarters. In May 2001, NNSA restructured  its headquarters operations and created two support offices—the Office of  Management and Administration and the Office of Facilities and  Infrastructure. However, the field structure remained the same.
section_title: NNSA Has Taken Steps Toward Resolving Important Organizational Issues, but Areas of Concern Remain
paragraphs: The Congress established NNSA, in part, to correct the confused lines of  authority and responsibility within DOE’s nuclear weapons complex that  had contributed to a wide variety of problems—such as cost overruns and  schedule slippage on large projects, like the National Ignition Facility—as  well as security lapses. Past advisory groups, internal DOE studies, and  GAO have reported over the years on DOE’s dysfunctional organizational  structure. In particular, in December 2000, we reported on our  comprehensive study of the management of the Office of Defense  Programs, which constitutes over 70 percent of NNSA. We found that the  Office of Defense Programs suffered from organizational problems, such  as a lack of clear roles and responsibilities, at three levels: within its  headquarters organization, between headquarters and the field, and  between contractor-operated sites and their federal overseers. This  situation made it difficult for the program to be managed as an integrated  whole and for managers to make sound decisions.
While it did not specify exactly how NNSA was to be organized, Title 32  did establish certain NNSA positions, such as a general counsel, and gave  the Administrator the flexibility to determine the best organizational  structure for the new agency. Title 32 also laid out chains of command in  both DOE and NNSA intended to insulate NNSA from DOE decision- making, except at the level of the NNSA Administrator. In our April 2001  testimony, we reported that some progress had been made in establishing  a better-organized NNSA. We noted that the practice of “dual-hatting” had  been virtually eliminated, enabling NNSA to manage its programs more  independently. In addition, we noted that NNSA had established a new  support structure in its headquarters office that had as its goals  establishing clear and direct lines of communication, clarifying the roles  and responsibilities of NNSA’s headquarters and field offices, and  integrating and balancing priorities across NNSA’s missions and  infrastructure. Specifically, NNSA established two headquarters support  offices: one headed by an associate administrator for management and  administration, who is responsible for the planning, programming, and  budgeting; personnel; and procurement areas, and the other headed by an  associate administrator for facilities and operations, who is responsible for  managing NNSA’s infrastructure revitalization initiative and security  functions.
As we noted in our December 2001 report to the Panel, despite these  initiatives, fundamental organizational issues remained. Specifically, the  details on how the new NNSA headquarters support offices would work  with the established headquarters program offices—the Office of Defense  Programs and the Office of Defense Nuclear Nonproliferation—were  unclear. Many of the field managers we spoke with while developing our  2001 report were concerned that reporting relationships could become  more complex and confused rather than less because these various  headquarters offices could have different expectations. For example,  depending on how responsibility was divided, it was possible for field  offices to receive direction from multiple headquarters offices on such  areas as infrastructure and major construction projects. More importantly,  long-standing, fundamental issues regarding confused lines of authority  within NNSA’s headquarters organization, between headquarters and the  field, and between contractor-operated sites and their federal overseers  that directly affect how NNSA’s contractors are managed remained  unresolved. Direction and guidance to the NNSA contractors was still  being provided from multiple sources: NNSA local area office managers,  DOE and NNSA operations office managers, and NNSA headquarters  managers. As we have found in the past, when its contractors receive  multiple and sometimes conflicting guidance, NNSA’s ability to hold them  accountable for performance is undermined. As it attempted to address  these organizational issues, we urged NNSA to employ the organizational  principles cited in our April 2001 testimony before this Panel: focusing a  small headquarters staff on strategic management, policy, and  relationships with other federal agencies; moving program management  officials as close to the action as possible; establishing clear lines of  authority between NNSA and its contractors; and holding federal and  contractor employees accountable for meeting mission goals.
While the Administrator promised a solution to these problems by October  2001, NNSA’s report to the Congress on the organization and operations of  the NNSA was not expected until February 25, 2002. Our preliminary  analysis of NNSA’s proposal leads us to conclude that it contains some  positive features as well as some important weaknesses. Most  fundamentally, NNSA’s proposal represents only an overall plan of action,  and ironing out the details and implementing the proposed new structure  is likely to be a long and arduous process.
On the positive side, NNSA’s proposal has outlined some potentially  significant steps toward solving important long-standing organizational  issues by employing some of the principles cited above. Specifically,  NNSA’s proposal:
Clarifies the relationship between the headquarters program offices  and the headquarters support offices by establishing that program  direction will come exclusively from the program offices—the Office of  Defense Programs and the Office of Defense Nuclear  Nonproliferation—and by reducing the role of the Office of Facilities  and Operations to focus on the infrastructure revitalization initiative  and support functions such as security.
Establishes a framework for resolving the so-called “two headquarters”  problem of duplicative roles between the Office of Defense Programs  and the Albuquerque Operations Office by placing program direction  for weapons production—a traditional function of the Albuquerque  Operations Office—under the Office of Defense Programs.
Establishes clear lines of authority between NNSA and its contractors  by making the manager of each site office (formerly called an area  office) the contracting officer for that site and by providing that  direction to the contractor can only come from the contracting officer  or a formally appointed representative. In addition, all of the site office  managers will report to the Administrator through the Principal Deputy  rather than the current practice of some reporting through operations  offices and others reporting directly to headquarters.
Removes a management layer by making existing operations offices  into so-called “Centers of Excellence” that will provide support  functions such as financial management and security clearance  processing for all of NNSA.
Promises to streamline federal staff and to hold federal staff and  contractors more accountable for performing NNSA’s mission.
Despite these potential improvements, important areas of concern remain.
NNSA’s proposal does not address the fact that the weapons science  function and the weapons production function within the Office of  Defense Programs are managed separately, although their work must  be coordinated to achieve mission goals. As we noted in our December  2000 report, officials in DOE’s headquarters, field offices, labs, and  production plants repeatedly told us of numerous ways that the split  between the weapons science and weapons production portions of the  Stockpile Stewardship Program at the headquarters level negatively  affects coordination within the nuclear weapons complex.
NNSA’s proposal does not consistently apply the principles of  streamlining headquarters staff and moving federal program  management officials as close to the action as possible. While NNSA  expects the weapons production work to be managed by experts in the  field, NNSA continues the pattern of having the weapons science work  managed out of headquarters. This is problematic because, as we noted  in our report on the National Ignition Facility, inadequate oversight by  headquarters managers contributed to the cost and schedule problems  experienced at this facility.
Finally, many important documents will need to be created and refined  before the changes proposed in NNSA’s report can become truly  operational. This is no small task. For example, the report notes that  one document that will need revision is a May 1968 memorandum that  defines the roles and responsibilities of the Office of Defense Programs  and the Albuquerque Operations Office. As we noted in our December  2000 report on the management of the Office of Defense Programs,  there have been several attempts to revise this relationship over the  years, none of them successful. Moreover, some of the proposals, such  as the Centers of Excellence, are merely concepts that need to be  further defined. In addition, streamlining the federal workforce is a  difficult undertaking that will take a significant amount of time to fully  implement. Currently, no plan with milestones exists for refining these  concepts and accomplishing the myriad of details needed to implement  them.
While we are hopeful that resolution of such long-standing issues may now  be within NNSA’s grasp, without the discipline of an implementation plan,  reaching NNSA’s organizational goals is likely to be a long and arduous  process that could take several years. Moreover, unless the new chains of  command are enforced and federal and contractor staff are truly held  accountable, this reorganization could be simply another in a long line of  missed opportunities.
section_title: Significant Effort Still Required to Develop an Effective Planning, Programming, and Budgeting Process
paragraphs: Numerous studies have identified problems in DOE’s planning,  programming, and budgeting, including the lack of a unified planning and  programming process, the absence of integrated long-range program  plans, and the failure to fully link existing plans to budgets and  management controls. Without sound, integrated planning, programming,  and budgeting, it has been difficult for officials to ensure that decisions  with resource implications are weighed against one another in a complete  and consistent fashion and that mission outcomes are linked to  management controls. In our December 2000 report, we recommended  that NNSA take action to improve and integrate its planning processes and  to improve its budgetary data to provide needed management information.
Title 32 mandates the use of sound planning, programming, budgeting, and  financial activities. It also requires that NNSA submit to the Congress each  year a Future Years Nuclear Security Program plan that details NNSA’s  planned expenditures for the next 5 years. Very early in his tenure, the  current NNSA Administrator indicated that he intended to comply with  Title 32 by instituting a planning, programming, and budgeting process  similar to that in use at the Department of Defense (DOD). While DOD’s  approach has not been without problems over the past 40 years, it is  generally recognized as a system that, when properly led and staffed, is  capable of making cost-effectiveness comparisons and of developing the  detailed program and budget plans called for in Title 32. The Administrator  originally set a goal of having fully established NNSA’s version of DOD’s  planning, programming, and budgeting process—now referred to as the  planning, programming, budgeting, and evaluation (PPBE) process—by  the fiscal year 2003 budget cycle. Subsequently, this date was pushed back  to the fiscal year 2004 budget cycle because development was taking  longer than expected.
In our April 2001 testimony before the Panel, we reported that despite the  delays NNSA was encountering, its initial attempts to develop its own  PPBE process offered the potential to help bring NNSA into compliance  with Title 32. It appeared that both NNSA headquarters and field units  appreciated the discipline that such a process could offer. We noted,  however, that an enormous amount of work would have to be completed  before NNSA had even a minimally functional PPBE process.
As we reported to the Panel in December 2001, beginning in the summer of  2001, the acting associate administrator of the Office of Management and  Administration and the acting director of the Office of Planning,  Programming, Budgeting, and Evaluation, began reevaluating NNSA’s  initial efforts. This shift in direction temporarily slowed NNSA’s  momentum in establishing a PPBE process and caused some confusion in  NNSA field offices. These officials began the reevaluation because they  believed that the initial approach was oriented too much toward DOD’s  program structure and that this approach failed to take into account the  uniqueness of NNSA’s programs and the type of contracting approaches  NNSA uses to do its work. As a result, NNSA proposed a PPBE process  that would use existing NNSA plans, practices, and processes as much as  possible.
Nevertheless, NNSA continued to refine its PPBE process and  communicated it to all NNSA program, support, and field offices on  September 12, 2001. Later, NNSA began to implement some of the planning  elements of the process for the fiscal year 2004 budget cycle. Examples of  some of these activities follow:
NNSA released draft strategic guidance developed by its Office of  Policy Planning on September 27, 2001. This long-range guidance  focuses on the key issues NNSA faces, such as the projected security  environment and size of the stockpile, and is intended to guide the  planning process. According to NNSA, the first step in its revised PPBE  process, the draft strategic guidance, will establish a basis for the  development of 5-year program plans for the individual programs  within NNSA.
NNSA’s major programs—Defense Programs, Defense Nuclear  Nonproliferation, and Naval Reactors—and each of NNSA’s  headquarters support offices have drafted program integrated plans.  These plans are annual documents that delineate the responsibilities,  priorities, and performance commitments for an entire program.
Despite this progress, NNSA did not complete all the goals it set for its  PPBE planning phase for the fiscal year 2004 cycle. For example, NNSA  did not issue draft 5-year program and fiscal guidance or its strategic plan  in September 2001 as it had originally envisioned. These documents will  probably be issued in late February 2002. NNSA officials cited the far- reaching impact of the September 11, 2001, terrorist attacks; delays in the  fiscal year 2002 appropriations process; and the then-ongoing national  security program review as reasons for the delay in issuing both  documents. Nevertheless, both the draft program and fiscal guidance and  the strategic plan are important early components of the “cascade” of  NNSA planning documents that were to be used to shape the program  integrated plans mentioned earlier.
While NNSA did make some progress in implementing elements of its  fiscal year 2004 planning phase, NNSA still has an enormous amount of  work to do for the programming, budgeting, and evaluation phases of the  fiscal year 2004 budget cycle. Examples of the implementation activities  remaining follow:
NNSA has not finalized significant portions of the PPBE process, such  as the programming and evaluation phases. NNSA established  implementation teams to help create workable processes for those two  phases of its PPBE process. One of the teams has focused on the  programming phase, in which competing priorities and mission needs  will be evaluated, alternatives and trade-offs will be analyzed, and  resources will be allocated to meet the highest priorities. The other  team is working on an enhanced evaluation phase, which will establish  performance measures, indicators, and metrics to evaluate progress in  meeting programmatic goals. Both teams were scheduled to develop  recommendations and report to the NNSA senior leadership in  December 2001; however, these reports now have been delayed until  late February 2002. The initiation of the programming phase has  slipped from February to March 2002.
NNSA has begun to work on an automated system for the budget  execution phase of the PPBE process, but other decision and  information systems will still need to be revised to handle the new  process. In addition, NNSA’s systems will have to interface with both  DOE’s existing planning, financial, and budgeting systems and DOE’s  planned changes to these systems. NNSA and DOE officials report that  they are cooperating on these issues. However, NNSA officials report  that coordinating with the DOE Chief Financial Officer is causing some  delays in implementing NNSA’s PPBE process.
Except for budgeting, NNSA does not appear to have many personnel  on hand with the skills to conduct the analytical functions typically  associated with multiple phases of a PPBE process. These skills, which  were the trademark of DOD’s system when it was implemented 40  years ago, are especially important in the upcoming programming  phase where program alternatives and trade-offs are considered and  cost-effectiveness comparisons are made. NNSA officials report that  such factors as their recent hiring freeze have prevented them from  recruiting these kinds of analysts.
It is unclear if NNSA will submit a comprehensive Future Years  Nuclear Security Program plan to the Congress as required by Title 32.  Although NNSA previously had developed such plans, NNSA failed to  submit these plans to the Congress in 2000 and 2001. NNSA did include  a table containing the 5 years of budget data required for a Future  Years Nuclear Security Program plan in its fiscal year 2003 budget  request, and some NNSA officials have told us that a broad plan has  been prepared and may be released by the end of February 2002. All the  plans to date have been developed without the benefit of a functional  PPBE.
In summary, NNSA has experienced difficulty in fully implementing all the  activities it had envisioned for the planning phase of its PPBE process. The  need to implement the new programming phase, establish a more highly  automated budget execution phase, and upgrade evaluation activities  suggest that NNSA probably will face additional hurdles as it implements  its PPBE process for the fiscal year 2004 budget cycle. Rather than the  fully implemented system for the fiscal year 2004 cycle envisioned by the  Administrator, it is probably better to think of NNSA’s PPBE as a  prototype that will have to be more extensively refined and developed in  future years. Furthermore, it is too soon to tell whether the proposed  process, when fully implemented, will effectively address widely  recognized problems in NNSA’s existing planning, programming, and  budgeting practices and will establish an effective evaluation process.
section_title: NNSA Has Made Limited Progress in Implementing Its Excepted Service Authority
paragraphs: Retaining and recruiting the highly skilled scientific and technical  personnel needed to make our government run efficiently and effectively  challenges virtually every federal department and agency. NNSA, in  particular NNSA’s Office of Defense Programs, has had difficulty meeting  this challenge. According to NNSA officials, specific obstacles to  recruiting and retaining staff include the downsizing and resulting program  instability of the past decade, the high cost of living near some NNSA field  sites or their remote locations, a shortage of people trained in the relevant  scientific and engineering disciplines, relatively low federal salaries  compared with those offered by private high-technology companies, and  the lengthy process required to hire people into the federal workforce.  Moreover, we and others have concluded that the lack of technically  competent personnel has contributed to weak contract management and  to poorly managed projects that are often late or over budget.
In response to this situation, in Title 32 the Congress provided NNSA the  authority to create up to 300 excepted service positions specifically for  scientific, engineering, and technical staff. For excepted service positions,  each agency—in this case NNSA—develops, within basic requirements  prescribed by law or regulation, its own hiring system. NNSA’s system  establishes the evaluation criteria NNSA will use in filling the excepted  service positions. Specifically, NNSA may now hire staff through a  noncompetitive selection process and has greater flexibility in setting  salaries.
NNSA managers and human resource officials with whom we spoke had  mixed reactions to the excepted service authority granted by Title 32. In  general, NNSA officials were optimistic that the excepted service authority  would help make the agency more attractive to prospective employees.  NNSA currently employs about 2,500 people, including more than 800 in  scientific, engineering, and technical job series. Several managers told us  that additional pay flexibility would allow them to be competitive in their  efforts to hire new employees and to retain current employees. However,  managers also cautioned that the limited authority might create morale  problems for those NNSA employees not included in the excepted service.
In light of these concerns, NNSA managers told us that they would prefer  to have the entire agency in the excepted service, or at least enough  positions for all of the organization’s scientific, engineering, and technical  employees. Accordingly, NNSA pursued congressional authorization to  expand the excepted service authority granted in Title 32; however, the  Congress has not granted this authorization. At the same time, NNSA made  an initial allocation of about one-third of the 300 excepted service  positions provided by Title 32 to the field and headquarters units in  October 2001. At that time, NNSA had plans to use 68 positions to convert  employees in DOE’s excepted service and NNSA civil service to NNSA’s  excepted service and to use the other 29 positions to hire new staff. In the  interim, NNSA’s human resource officials had been reluctant to use the  limited authority and decided to use it only to hire critical new staff.  Subsequently, NNSA imposed a hiring freeze starting in October 2001 that  will remain in effect for the foreseeable future.
As we noted in our December 2001 report to the Panel, NNSA has made  limited progress toward using its new authority. The Administrator has  developed an interim excepted service policy that covers new staff and  NNSA employees originally hired into DOE’s excepted service systems  who will be converted to NNSA’s system. The Administrator has also  delegated the authority to implement the policy to headquarters and field  organizations. In addition, the Administrator created an NNSA Executive  Resources Board and appointed its members. The Board is responsible for  making hiring and promotion decisions affecting NNSA employees  assigned to the two highest levels of the excepted service, as well as to the  Senior Executive Service, Scientific and Professional, and Senior Level pay  systems.
According to NNSA’s deputy for workforce planning and management,  NNSA has also prepared the policies needed to cover civil service  employees who might consider making the conversion to excepted  service. Those policies are awaiting final approval from the Administrator  and DOE. In addition, in response to congressional direction, NNSA is  preparing a plan for using the remainder of the 300 authorized excepted  service positions. Because of the hiring freeze, the excepted service  positions will be used primarily to offer existing eligible employees the  opportunity to convert to the excepted service. Thus, NNSA expects that  most of the 300 positions will be filled within 90 days of the  Administrator’s final approval of the policies and plan by converting  existing employees.