Modernizing the Nuclear Security Enterprise: New Plutonium Research Facility at Los Alamos May Not Meet All Mission Needs
Published: 2012-03-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Plutoniuma man-made element produced by irradiating uranium in nuclear reactorsis vital to the nuclear weapons stockpile. Much of the nations current plutonium research capabilities are housed in aging facilities at Los Alamos National Laboratory in New Mexico. These facilities pose safety hazards. The National Nuclear Security Administration (NNSA) has decided to construct a multibillion dollar Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR) to modernize the laboratorys capabilities to analyze and store plutonium. GAO was asked to examine (1) the cost and schedule estimates to construct CMRR and the extent to which its most recent estimates reflect best practices, (2) options NNSA considered to ensure that needed plutonium research activities could continue, and (3) the extent to which NNSA's plans reflected changes in stockpile requirements and other plutonium research needs. GAO reviewed NNSA and contractor project design documents and visited Los Alamos and another plutonium facility at Lawrence Livermore National Laboratory in California.
section_title: What GAO Found
paragraphs: The estimated cost to construct the CMRR has greatly increased since NNSAs initial plans, and the projects schedule has been significantly delayed. According to its most recent estimates prepared in April 2010, NNSA determined that the CMRR will cost between $3.7 billion and $5.8 billionnearly a six-fold increase from the initial estimate. Construction has also been repeatedly delayed and, in February 2012 after GAO provided its draft report to NNSA for comment, NNSA decided to defer CMRR construction by at least an additional 5 years, bringing the total delay to between 8 and 12 years from NNSAs original plans. Infrastructure-related design changes and longer-than-expected overall project duration have contributed to these cost increases and delays. GAOs review of NNSAs April 2010 cost and schedule estimates for CMRR found that the estimates were generally well prepared, but important weaknesses remain. For example, a high-quality schedule requires a schedule risk analysis that incorporates known risks to predict the level of confidence in meeting a projects completion date and the amount of contingency time needed to cover unexpected delays. CMRR project officials identified hundreds of risks to the project, but GAO found that these risks were not used in preparing a schedule risk analysis. As a result of these weaknesses, NNSA cannot be fully confident, once it decides to resume the CMRR project, that the project will be completed on time and within estimated costs.
NNSA considered several options to preserve its plutonium-related research capabilities in its decision to build CMRR at Los Alamos. NNSA assessed three different sizes for a new facility22,500, 31,500, and 40,500 square feet. In 2004, NNSA chose the smallest option. NNSA officials stated that cost was the primary driver of the decision, but that building a smaller facility would result in trade-offs, including the elimination of contingency space. In the end, NNSA decided to build a minimally-sized CMRR facility at Los Alamos with a broad suite of capabilities to meet nuclear weapons stockpile needs over the long-term. These capabilities would also be used to support plutonium-related research needs of other departmental missions.
NNSAs plans to construct CMRR focused on meeting nuclear weapons stockpile requirements, but CMRR may not meet all stockpile and other plutonium-related research needs. NNSA analyzed data on past workload and the expected need for new weapon components to help ensure CMRRs design included the necessary plutonium-related research capabilities for maintaining the safety and reliability of the nuclear stockpile. However, some plutonium research, storage, and environmental testing capabilities that exist at Lawrence Livermore National Laboratory may no longer be available after NNSA consolidates plutonium-related research at Los Alamos. Furthermore, NNSA conducts important plutonium-related research in other areas such as homeland security and nuclear nonproliferation, but it has not comprehensively analyzed plutonium research and storage needs of these other programs outside of its nuclear weapons stockpile work and therefore cannot be sure that the CMRR plans will effectively accommodate these needs. As a result, expansion of CMRR or construction of more plutonium research and storage facilities at Los Alamos or elsewhere may be needed in the future, potentially further adding to costs.
section_title: What GAO Recommends
paragraphs: GAO is making recommendations to improve CMRRs schedule risk analysis and to conduct an assessment of plutonium research needs. NNSA agreed with GAOs recommendations to assess plutonium research needs, but disagreed that its schedule risk analysis should be revised, citing its recent decision to defer the project. GAO clarified the recommendation to specify that NNSA should take action when it resumes the project.

section_title: Letter
paragraphs: Plutonium—a man-made radioactive element produced by irradiating  uranium in nuclear reactors—is vital to the nation’s nuclear weapons  stockpile. Plutonium is used in “pits”—the spherical central core of a  nuclear weapon that is compressed with high explosives to create a  nuclear explosion. Several kilograms of plutonium are sufficient to make a  nuclear bomb, so plutonium must be stored under extremely high security  to protect it from theft. In addition, exposure to small quantities is  dangerous to human health, so that even inhaling a few micrograms  creates a long-term risk of lung, liver, and bone cancer and inhaling larger  doses can cause immediate lung injuries and death. Also, if not safely  contained and managed, plutonium can be unstable and spontaneously  ignite under certain conditions. Therefore, any facility that stores or  conducts research on plutonium must be robustly designed to safely  prevent the uncontrolled release of hazardous material to the  environment and to securely store the material to protect it from potential  theft.
Much of the nation’s current plutonium research and development  capabilities are housed at the Los Alamos National Laboratory in New  Mexico. The laboratory is one of the National Nuclear Security  Administration’s (NNSA) two primary laboratories responsible for  designing nuclear weapons components that contain plutonium; the other  is Lawrence Livermore National Laboratory in California. Los Alamos has  been supporting the production of new pits since the closure of the  Department of Energy’s (DOE) Rocky Flats Plant near Denver, Colorado,  in 1989, as well as homeland security activities, energy programs, and  nuclear nonproliferation activities.
The Chemistry and Metallurgy Research nuclear facility at Los Alamos  conducts plutonium-related research that is crucial to effectively maintain  the nuclear weapons stockpile. However, the facility is nearly 60 years  old, and its aging infrastructure poses safety hazards. In addition, the  facility is situated on a seismic fault line, raising concerns about the effect  of earthquakes on the safety and security of plutonium used for research  or stored at the facility. Because of these concerns, NNSA has decided to  construct a Chemistry and Metallurgy Research Replacement Nuclear  Facility (CMRR) at Los Alamos that will (1) modernize the laboratory’s  capabilities to analyze plutonium and (2) store plutonium in vaults that  provide a secure environment that protects against its accidental or  intentional misuse and minimizes health risks for workers and the  surrounding communities. Originally estimated to begin construction in  2008, the project has experienced several delays and, in February 2012  after we had provided a draft of this report to NNSA for its comments,  NNSA announced that it had decided to defer construction of the facility  for at least 5 years.
NNSA’s proposed construction of the CMRR is part of a larger strategic  effort to consolidate nuclear materials from other locations across the  United States and to modernize nuclear research, development, and  production facilities that support the nuclear weapons stockpile. For  example, NNSA’s plans call for some of the plutonium-related research  currently conducted at a high security facility at Lawrence Livermore  National Laboratory known as Superblock to be transferred to CMRR.  NNSA’s plans also call for much of the plutonium currently stored at  Livermore’s Superblock to be consolidated at Los Alamos for continued  research activities, and for the other material not needed for research at  Livermore or Los Alamos to be stored at DOE’s Savannah River Site  pending final disposition. In addition, the nuclear weapons stockpile’s  requirements for plutonium are evolving. Specifically, the New Strategic  Arms Reduction Treaty that the United States and Russia signed in April  2010 is to reduce the number of deployed strategic nuclear warheads by  30 percent. As a result of this treaty and NNSA’s approach for  modernizing the stockpile through the refurbishment of existing weapons,  demand for newly manufactured pits has fluctuated in recent years. In  light of these fluctuations, NNSA’s current strategy is to design the CMRR  around a broad suite of capabilities—equipment, processes, and  expertise—that it anticipates may be needed to fulfill the stockpile’s  requirements regardless of the specific demand for pits.
Because of the extensive safety and security measures required to  analyze and store plutonium, the cost of constructing new nuclear  facilities is typically a multibillion dollar venture. In the past, we have  reported on several major DOE and NNSA construction projects that  faced cost increases and schedule delays. DOE’s long-standing  difficulties in preparing cost and schedule estimates is one reason  contract management in NNSA and DOE’s Office of Environmental  Management is on our list of federal programs at high risk of fraud, waste,  abuse, and mismanagement. Because other federal agencies have also  had problems developing high-quality cost and schedule estimates, we  issued a cost-estimating guide in March 2009, consisting of best practices  drawn from across industry and government, to assist agencies to  develop cost and schedule estimates that are well-documented,  comprehensive, accurate, and credible.
In this context, you asked us to review NNSA’s plans for constructing the  CMRR. Specifically, our objectives were to examine (1) NNSA’s cost and  schedule estimates for the construction of the facility and the extent to  which its most recent estimates reflect best practices, (2) options NNSA  considered to ensure that plutonium-related research activities will  continue as needed, and (3) the extent to which NNSA’s plans to  construct the CMRR and its consideration of options reflected changes in  nuclear weapons stockpile requirements and the plutonium-related  research needs of other departmental missions.
To examine NNSA’s cost and schedule estimates for the CMRR project  and the extent to which its current estimates reflect best practices, we  reviewed relevant NNSA documents and met with agency and Los  Alamos project officials to discuss the changes in the estimates that have  occurred to date and the reasons for them. We compared NNSA’s most  recent cost and schedule estimates––prepared in April 2010––with best  practices contained in our cost estimating guide and gave project officials  the opportunity to provide and discuss feedback on our assessment. To  examine the options NNSA considered to ensure that its plutonium- related work will continue, we reviewed NNSA and contractor documents  on plutonium research needs and the various options available to meet  those needs. We also met with NNSA and contractor officials to better  understand how these options were analyzed to determine the best  approach to fulfill NNSA’s mission. To determine the extent to which  NNSA’s plans reflect changes in nuclear weapons stockpile requirements,  we reviewed NNSA analyses that were used to support CMRR project  decisions and met with NNSA officials to determine if these analyses  were comprehensive and reflected up-to-date nuclear weapons stockpile  requirements. We also visited the Los Alamos and Lawrence Livermore  national laboratories. To ensure the data we used were sufficiently  reliable, we compared information gathered from a variety of data  sources. For example, we interviewed officials from both Los Alamos and  Livermore to obtain separate and independent perspectives on CMRR  project plans. We determined the data were sufficiently reliable for our  purposes.
We conducted this performance audit from February 2011 through  February 2012 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. Appendix I  contains a detailed description of our scope and methodology.
subsections: section_title: Background
paragraphs: In the mid-1990s, Congress directed DOE to develop the Stockpile  Stewardship Program to provide a single, highly integrated technical  program for maintaining the continued safety and reliability of the nuclear  weapons stockpile. Stockpile stewardship comprises activities associated  with conducting nuclear weapons research, design, and development;  maintaining the knowledge base and capabilities to support nuclear  weapons testing; and assessing and certifying nuclear weapons safety  and reliability. Stockpile stewardship includes operations associated with  producing, maintaining, refurbishing, surveilling, and dismantling the  nuclear weapons stockpile. The Stockpile Stewardship Program’s  objectives were updated as a result of the 2010 Nuclear Posture Review,  which establishes the U.S. nuclear policy for the next 5 to 10 years,  including the nation’s nuclear weapons stockpile requirements. The  Nuclear Posture Review and the Stockpile Stewardship Program  reinforce the New Strategic Arms Reduction Treaty between the United  States and Russia. As part of this treaty, the United States has agreed to  reduce the size of its strategic nuclear weapons stockpile from a  maximum of 2,200 to 1,550 weapons, with the remaining weapons in the  stockpile continuing to be an essential element of U.S. defense strategy.
Nuclear stockpile requirements include a pit production capacity that is  defined by estimating the number of pits NNSA needs to manufacture  annually to effectively support the nuclear weapons stockpile. The  demand for pits has fluctuated over the past decade for various reasons.  Until 2005, NNSA planned to produce pits in a large-scale manufacturing  plant to be built called the Modern Pit Facility, which would have  increased pit production capacity per year to a range of 125 to 450 pits.  This project was terminated and, at around the same time, NNSA began  to study a new approach for modernizing the stockpile, called the Reliable  Replacement Warhead program, which would have produced 50 pits per  year and which was also short-lived. Through this program, NNSA would  have designed new weapon components, including pits, to be safer and  easier to manufacture, maintain, dismantle, and certify without nuclear  testing. Since 2008, NNSA’s guidance has established pit capacity for  future production at about 20 pits per year, with an upper range limit of 80  pits per year. In addition, NNSA has recently determined that pit lifetimes  are longer than anticipated and that it may increase the reuse of existing  pits, reducing the demand for newly manufactured pits. Currently, pit  capacity requirements are uncertain and still in flux. Demand may again  fluctuate as a result of the Nuclear Posture Review and changes to the  Stockpile Stewardship Program. For example, there are still unknowns in  implementing the Nuclear Posture Review and modernization work on  each nuclear weapon type may require a varied number of new pits.
To execute the activities to maintain and refurbish the nation’s existing  nuclear weapons stockpile, NNSA oversees eight sites that comprise its  nuclear security enterprise—formerly known as the nuclear weapons  complex—which includes three national weapons laboratories, four  production plants, and a test site, all of which carry out missions to  support NNSA’s programs. One of these sites, Los Alamos National  Laboratory, plays a crucial role in carrying out NNSA’s maintenance of  the nuclear weapons stockpile, including (1) production of weapons  components, (2) assessment and certification of the nuclear weapons  stockpile, (3) surveillance of weapons components and weapon systems,  (4) assurance of the safe and secure storage of strategic materials, and  (5) management of excess plutonium inventories. Los Alamos was  established in 1943 during the Manhattan Project in northern New  Mexico. It is a multidisciplinary, multipurpose institution primarily engaged  in theoretical and experimental research and development. A significant  portion of Los Alamos’ work is focused on ensuring that nuclear weapons  stockpile needs are met. Since 2000, pit production has been established  within the Plutonium Facility Complex at Los Alamos’s Technical Area 55,  and certified pits have been produced over the past 5 years in that facility.
A particularly important facility at Los Alamos within Technical Area 55 is  the nearly 60-year-old Chemistry and Metallurgy Research facility. The  facility has unique capabilities for performing analytical chemistry,  material characterization, and research and development related to  plutonium. This includes activities that support the manufacturing,  development, and surveillance of nuclear weapons pits; programs to  extend the life of nuclear weapons in the stockpile; and nuclear weapon  dismantlement efforts. This pit production mission support work was first  assigned to Los Alamos in 1996. NNSA also currently maintains some  plutonium-related research capabilities at other facilities, such as  Livermore’s Superblock facility. These capabilities are necessary  components of NNSA’s overall stockpile management strategy. NNSA  and DOE also use the unique plutonium-related capabilities located at  Los Alamos and Livermore to support the plutonium-related research  needs of other national security missions and activities outside of the  nuclear weapons stockpile work, including nuclear nonproliferation  activities; homeland security activities, such as nuclear forensics and  nuclear counterterrorism; waste management; and material recycle and  recovery programs.
The Chemistry and Metallurgy Research facility was initially designed and  constructed to comply with building codes in effect during the late 1940s  and early 1950s. In 1992, recognizing that some of the utility systems and  structural components were aging, outmoded, and generally deteriorating,  DOE began upgrading the facility. These upgrades addressed specific  safety, reliability, consolidation, and security issues with the intent of  extending the useful life of the facility for an additional 20 to 30 years.  However, beginning in about 1997 and continuing to the present, a series  of additional operational and safety concerns have surfaced. In particular,  a 1998 seismic study identified two small parallel faults beneath the  northern portion of the Chemistry and Metallurgy Research facility. The  presence of these faults raised concerns about the structural integrity of  the building in the event of an earthquake. DOE and NNSA determined  that, over the long term, Los Alamos could not continue to operate the  mission-critical support capabilities in the existing Chemistry and  Metallurgy Research facility at an acceptable level of risk to worker safety  and health. To ensure that NNSA can fulfill its national security mission  for the next 50 years in a safe, secure, and environmentally sound  manner, NNSA decided in 2004 to construct a replacement facility, known  as the CMRR.
Federal agencies, including DOE and NNSA, have experienced long- standing difficulties in completing major projects within cost and on  schedule. To provide assistance in preparing high-quality cost and  schedule estimates, we compiled best practices used throughout  government and industry and, in March 2009, issued a guide outlining the  criteria for high-quality cost and schedule estimates. Specifically, our  guide identified four characteristics of a high-quality, reliable cost  estimate: (1) credible, (2) well-documented, (3) accurate, and (4)  comprehensive.should result in high-quality cost estimates and hundreds of best  practices drawn from across industry and government for carrying out  these steps. For example, one of the key steps includes conducting an  independent cost estimate––that is, one generated by an entity that has  no stake in the approval of the project but uses the same detailed  technical information as the project estimate. Having an independent  entity perform such a cost estimate and comparing it to the project team’s  estimate provides an unbiased test of whether the project team’s cost  estimate is reasonable.
In addition, our cost guide lays out 12 key steps that  Our guide also identified nine best practices for effectively estimating  schedules: (1) capturing key activities, (2) sequencing key activities, (3)  assigning resources to key activities, (4) establishing the duration of key  activities, (5) integrating key activities horizontally and vertically, (6)  establishing the critical path for key activities, (7) identifying total float  (i.e., the time that activities can slip before the delay affects the  completion date), (8) performing a risk analysis of the schedule, and (9)  updating the schedule using logic and durations to determine dates. Many of these practices have also been incorporated into DOE’s recent  guidance for establishing performance baselines.
GAO-09-3SP.
section_title: CMRR’s Initial Cost Estimate Has Significantly Increased and Its Schedule Has Been Delayed
paragraphs: The estimated cost to construct the CMRR, according to estimates  prepared in April 2010, is nearly six times higher than the project’s initial  cost estimate that was prepared in 2005. The project’s estimated  completion date has also been delayed by at least 8 to 12 years. Our  review of these most recent detailed cost and schedule estimates for the  CMRR project found that the estimates generally reflect best practices,  but are not yet entirely reliable.
subsections: section_title: Estimated Cost to Construct CMRR Has Increased by Almost Six- Fold, and Its Scheduled Completion Has Been Delayed
paragraphs: Since CMRR was first proposed, its costs have risen significantly, and its  schedule has been repeatedly delayed. Specifically, in 2005, when DOE  developed initial plans for CMRR, it estimated that the project would cost  from $745 million to $975 million and would be completed between 2013  and 2017. This estimate was prepared using preliminary information— before a detailed project design was substantially under way—and was  therefore considered by DOE to be a rough estimate. In April 2010, NNSA  estimated that the CMRR will cost between $3.7 and $5.8 billion—a  nearly six-fold increase from the initial estimate—and that construction  will be complete by 2020—a 3- to 7-year delay. In February 2012, after  we had provided NNSA with a draft of this report for its comments, NNSA  announced that it had decided to defer CMRR construction by at least an  additional 5 years, bringing the total delay from NNSA’s original plans to 8  to 12 years.
NNSA officials explained that the majority of the cost increases occurred  because of changes to the facility’s design and because of project delays.  Specifically,
Modifications to the facility’s design. To address concerns about  seismic activity, the project design was modified to strengthen the  facility to withstand a potential earthquake. For example, significant  design changes resulted from the need to thicken the concrete walls  to satisfy increasingly stringent seismic requirements. In addition, to  proceed to final design, project officials had to evaluate the potential  effects of an earthquake on the facility’s complex ventilation system.  This effort included several studies, consultations with vendors and  other designers, and an assessment of the availability of equipment  that would meet seismic requirements. Overall, Los Alamos estimates  the seismic related design changes increased the project costs by  almost $500 million.
Delays in the construction start date and longer overall project  duration. CMRR construction was originally expected to begin in  2008, but was first delayed until 2013 and is now not expected to  begin before 2018. The initial delay in starting construction from 2008  to 2013 had varying causes, including facility design changes  described previously as well as the additional time needed for NNSA  to determine where and how to consolidate plutonium operations in  the nuclear security enterprise, according to project officials. This  delay starting construction pushed the estimated construction  completion date from between 2013 and 2017 to 2020—3 to 7 years  later than initially expected. At the time, the facility was expected to be  operational in 2022. These delays further increased costs, partly  because inflation meant that equipment and materials became more  expensive as time passed. In addition, the longer project duration also  contributes to increases in the cost of workers’ wages and salaries.  Overall, project officials estimate that about $1.2 billion in additional  costs resulted from these schedule delays. In February 2012, NNSA  announced another significant project delay—at least an additional 5- year deferral in starting the construction of the CMRR—resulting in a  total of an 8 to 12 year delay from NNSA’s original plans. However,  NNSA has not yet determined the impact to the project’s costs as a  result of this additional delay.
section_title: NNSA’s Most Recent Cost and Schedule Estimates Generally Meet Industry Best Practices, but Are Not Yet Entirely Reliable
paragraphs: Our review of NNSA’s most recent cost and schedule estimates for the  CMRR construction project found that the estimates were generally well  prepared but that important weaknesses remain. Specifically, we found  that the CMRR cost estimate prepared in April 2010 exhibits most of the  characteristics of high-quality, reliable cost estimates. As identified by the  professional cost-estimating community and documented in our cost- estimating guide, a high-quality cost estimate is comprehensive, well- documented, accurate, and credible. Our review of the CMRR cost  estimate found that the cost estimate exhibits three of the four  characteristics of a high-quality estimate by being substantially  comprehensive, well documented, and accurate, but only partially  credible, as shown in table 1. Appendix II contains additional information  about each of the four general best practice characteristics and our  assessment of the estimate compared to detailed best practices.
The CMRR cost estimate only partially met industry best practices for  credibility because project officials did not use alternate methods to  crosscheck major cost elements to see whether the results were similar  under different estimating methods. In addition, according to our guide,  there are varying methods of validating an estimate, but the most rigorous  method is the independent cost estimate that is generated by an entity  that has no stake in the approval of the project. Conducting an  independent cost estimate is especially important at major milestones  because it provides senior decision makers with a more objective  assessment of the likely cost of a project. A second, less rigorous method  for validating a project’s cost estimate—an independent cost review— focuses on examining the estimate’s supporting documentation and  interviewing relevant staff. Independent cost reviews address only the  cost estimate’s high-value, high-risk, and high-interest aspects without  evaluating the remainder of the estimate. An independent cost review on  the entire CMRR project was initiated in 2011, but the more rigorous  method of validating—conducting an independent cost estimate—has  only been used on a small portion of the project representing about 6  percent of the project’s total costs. According to NNSA officials, DOE  orders do not require NNSA to seek an independent cost estimate until  just prior to establishing the project baseline, and project officials told us  NNSA is preparing to have one conducted before the project baseline is  established. However, until a quality independent cost estimate is  completed on the entire project or another means of validating the  estimate for the project, DOE and NNSA officials cannot be confident that  the current cost estimate is completely credible.
With regard to CMRR’s schedule, the project’s schedule estimate fully  met two and substantially met six out of nine best practices for a high- quality schedule as identified by our guide and minimally met one. For  example, two of the best practices the estimate fully met concerned how  well it (1) captured all of the project’s activities, including design,  construction, and other tasks that collectively form a comprehensive  schedule, and (2) is successfully kept up-to-date. Table 2 lists best  practices along with our assessment of the extent to which the project’s  schedule met each best practice.
The CMRR schedule estimate minimally met industry best practices for  conducting a schedule risk analysis. Namely, according to our guide, a  high-quality schedule requires a schedule risk analysis that uses already  identified risks, among other things, to predict the level of confidence in  meeting a project’s completion date and the amount of contingency time  needed to cover unexpected delays. CMRR project officials identified and  documented hundreds of risks to the project, but these risks were not  used in preparing a schedule risk analysis. For example, project officials  identified the following three risks that are likely to occur: (1) a necessary  electrical system upgrade that might not be completed in time for  construction activities, (2) uncertainties associated with the flow of  simultaneous design changes, and (3) noncompliance with certain quality  assurance standards for nuclear facilities. These risks could cause  delays, ranging anywhere from 1 to 5 years. Nevertheless, the project’s  schedule risk analysis identified only a 1-year schedule contingency for  the entire project. If NNSA is unable to successfully mitigate these risks  and if they occur together, there is a high likelihood that the 1-year  contingency that NNSA established may be exceeded. As a result, project  officials cannot be certain the schedule estimate contains all identified  risks in its risk analysis. Project officials told us that, before the project  baseline is established, they expect to have a schedule risk analysis that  includes identified risks and that they are in the early stages of developing  a plan to do so.
NNSA is taking steps to mitigate the risks that have been identified and,  because the project is still in early stages, many risks may be resolved.  For example, to mitigate the risk that the electrical system upgrade would  not be completed in time to avoid a delay in construction activities, project  officials have identified specific steps to help ensure that the upgrade is  performed in a timely manner. However, without a schedule risk analysis  that contains risks identified by CMRR project officials, NNSA cannot be  fully confident, once it decides to resume CMRR construction plans, that  sufficient schedule contingency is established to ensure that the project  will be completed on time and within estimated costs. As a result, overall  project costs could potentially exceed NNSA’s April 2010 estimate of  between $3.7 billion and $5.8 billion and NNSA had not yet determined  the impact to the project’s costs of its recent decision to defer CMRR  construction for at least 5 years. Appendix III contains additional  information on each practice and our assessment of the estimate  compared to best practices.
section_title: NNSA Considered Several Options to Preserve Plutonium- Related Research Capabilities, but Ultimately Chose to Build a Minimally Sized Facility at Los Alamos
paragraphs: To replace the plutonium-related research capabilities in Los Alamos’s  deteriorating Chemistry and Metallurgy Research facility, NNSA  considered several options. In the end, NNSA decided to build a  minimally sized CMRR facility at Los Alamos with a broad suite of  capabilities to meet nuclear weapons stockpile needs over the long-term.  These capabilities would also be used to support plutonium-related  research needs of other departmental missions. NNSA evaluated these  options based on their expected effect on cost, schedule, risk, and ability  to meet the plutonium-related research needs of the nuclear weapons  stockpile stewardship program.
NNSA first focused on identifying and replacing the capabilities necessary  to maintain and modernize the nuclear weapons stockpile. Specifically,  these capabilities included those necessary to study the chemical and  metallurgic properties of plutonium pits to ensure that they are properly  produced, certified, and monitored over time so they remain safe and  reliable. For example, to ensure that a nuclear weapon will function as  intended, the plutonium inside of the pits needs to meet strict  specifications. Meeting these specifications requires having the capability  to analyze and characterize the plutonium’s chemistry and material  properties. The specifications require NNSA to measure several chemical  attributes, including chemical composition and impurities, as well as the  pit’s structural attributes, such as the metal’s microscopic grain size, its  texture, any potential defects, and its weld characteristics. NNSA  identified at least 58 distinct capabilities that will be required in the new  facility to allow it to conduct the analyses necessary to build at least one  pit of every type currently in the stockpile.many as 79 capabilities may be required if NNSA needs to manufacture a  larger quantity of pits—up to its high estimate of 80 pits per year, which is  the Department of Defense’s published military requirement for pit  production. In addition to research capabilities, NNSA determined that the  new facility would need to provide other capabilities to support research  operations. In particular, long-term plutonium storage space is needed to  support plutonium-related research at CMRR.
To house these needed capabilities, NNSA assessed three potential  sizes for a new facility—22,500 square feet, 31,500 square feet, and  40,500 square feet. The 40,500 square foot option included about 10,500  square feet of unequipped space—known as contingency space—to  allow for program changes, such as increased pit manufacturing. In  addition, this contingency space could accommodate users outside Los  Alamos, such as researchers from Livermore. However, in 2004, NNSA  chose the smallest and least expensive option—22,500 square feet.  NNSA officials told us that cost was the primary driver of this decision.
NNSA’s choice to build a minimally sized facility was questioned in two  studies conducted subsequent to NNSA’s decision in 2004. Specifically, a  Los Alamos study conducted in 2006 found that increasing CMRR’s size  by 9,000 square feet—to a total of 31,500 square feet—would be the best  option based on cost, schedule, risk, and the facility’s ability to meet  plutonium-related research needs.independent study prepared for NNSA in 2006 determined that adding  9,000 square feet to CMRR would lower risk and increase facility flexibility   Furthermore, a separate  but could cost an additional $179 million.told us that a smaller sized facility had the best chance of minimizing  costs. NNSA officials acknowledge that the smaller size option poses  more risk because the facility will include no contingency space. This  space may be necessary, for example, to respond to potential increases  in pit production needs if in the future they unexpectedly approach or  exceed 80 pits per year. If this occurs, and no contingency space is  available, other plutonium-related research beyond that required for the  nuclear weapons stockpile will also likely be affected. According to NNSA  and Los Alamos officials, these risks could be mitigated by conducting  some nonnuclear weapons plutonium-related research at other facilities,  such as Los Alamos’s PF-4 pit production facility. However, PF-4 also has  ongoing laboratory and storage limitations and may not be able to  accommodate these other nonweapons plutonium activities.
Subsequent to its 2004 decision to build CMRR at Los Alamos, NNSA  continued to study other locations for consolidating plutonium-related  research within the nuclear security enterprise. Specifically, as part of its  development of a complexwide strategy to modernize nuclear research,  development, and production facilities that support the nuclear weapons  stockpile, NNSA studied consolidating the nation’s plutonium-related  research capabilities at Los Alamos, the Pantex Plant in Texas, the  Nevada National Security Site in Nevada, the Savannah River Site in  South Carolina, and the Y-12 National Security Complex in Tennessee. In  December 2008, NNSA decided to consolidate plutonium research at Los  Alamos and reaffirmed its earlier 2004 decision to locate the new CMRR  at Los Alamos. Consolidating plutonium-related research capabilities at  Los Alamos presented several advantages, including lower costs and  risks when compared to other locations. For example, colocating  plutonium analytical capabilities with Los Alamos’s pit manufacturing  capabilities reduced the costs and risks of protecting plutonium from  potential theft. As part of NNSA’s decision to consolidate plutonium  research at Los Alamos, NNSA also decided that the CMRR would be  used to support plutonium-related research needs of other non-weapons  activities, including nuclear nonproliferation activities; homeland security  activities, such as nuclear forensics and nuclear counterterrorism; waste  management; and material recycle and recovery programs. However, the  size of the planned CMRR facility—22,500 square feet—has not changed  since NNSA’s initial 2004 decision, which calls into question the facility’s  ability to support the needs of these other activities.
section_title: CMRR May Meet Nuclear Weapons Stockpile Requirements but May Not Accommodate Other Plutonium-Related Research Needs
paragraphs: NNSA’s plans to construct the CMRR focused on meeting changing  nuclear weapons stockpile requirements. However, CMRR may not be  able to accommodate all stockpile and other plutonium-related research  needs, particularly as other NNSA facilities reduce or end their plutonium  research activities as a result of broader NNSA plans to consolidate its  plutonium activities.
subsections: section_title: NNSA’s CMRR Plans Focus on Meeting Nuclear Weapons Stockpile Requirements, But Some Plutonium-Related Work for the Stockpile May Not Be Accommodated
paragraphs: NNSA’s plans to construct the CMRR primarily focus on maintaining  plutonium-related research capabilities that are necessary for meeting  nuclear weapons stockpile requirements. NNSA designed the CMRR to  support the capabilities necessary for maintaining the safety and reliability  of the nuclear stockpile––namely, the testing, manufacturing, and  certification of the pits––and, in particular, plutonium-related research  capabilities, such as analytical chemistry and materials characterization,  and associated special nuclear materials vault storage. More specifically,  in designing the CMRR, NNSA analyzed detailed data on past nuclear  weapons activities conducted at Los Alamos, including information on the  frequency of plutonium samples analyzed over time and the expected  annual requirement for manufacturing new pits to determine the  plutonium-related research capabilities the new facility would need to  meet NNSA weapons program requirements. For example, NNSA studied  the number of plutonium samples that had been processed in 2007 at the  old Chemistry and Metallurgy Research facility for analytical chemistry  and materials characterization work and used the number as an average  representation in assuming future workloads. In addition, NNSA  considered the numbers of specific pieces of equipment and the  associated square footage of laboratory space needed to conduct specific  analytical chemistry and material characterization work.
In its planning, NNSA considered how plutonium-related capabilities in  the CMRR could meet changing stockpile requirements, including  NNSA’s established upper limit of producing 80 pits per year. NNSA  designed the facility to ensure that it can meet the pit production  requirements regardless of the specific number of pits produced—or, in  other words, the number of pits produced each year will not significantly  affect the capabilities NNSA will need in the new facility, although  capacity limits cap the quantity of new pits at 80 pits per year. For  example, NNSA’s 2009 CMRR Program Requirements document states  that the new facility will have laboratory spaces designed in a way that is  flexible and modular to accommodate changes in the mission and the  dynamic conditions associated with normal processing and maintenance  activities in a laboratory environment.
NNSA officials indicated that they are confident that the CMRR will  generally meet nuclear weapons activities needs and accommodate  changes in the nuclear weapons stockpile requirements, including the  ability to produce up to 80 pits per year. However, some weapons  activities capabilities that currently exist at other NNSA sites may no  longer be available to the nuclear security enterprise because of broader  NNSA modernization plans to consolidate plutonium activities. As part of  NNSA’s plan to consolidate plutonium related work at Los Alamos, the  CMRR was designed to absorb some plutonium-related research from  other facilities as those other facilities reduce or end their weapons  activities work. For example, Livermore’s Superblock facility is equipped  with the necessary systems to safely work with plutonium and to support  extending the life of certain warheads in the nuclear weapons stockpile.  Under NNSA’s strategy to consolidate plutonium work at Los Alamos, the  majority of Livermore’s plutonium is scheduled to be removed in 2012,  and some of this research will be discontinued at Superblock. NNSA  plans to have the CMRR take on much of this work; however, Livermore  officials told us they believe that NNSA may still lose some plutonium- related capabilities once some research is discontinued at Superblock.  For example, NNSA may face a gap in the plutonium-related capabilities  necessary to help improve nuclear warhead surety—that is, safety,  security, and use control. NNSA has not planned for another facility to  take over this work, and NNSA officials told us that the CMRR has not  been designed to support this surety research. Furthermore, NNSA and  Los Alamos officials told us that NNSA may also lose some pit testing  capabilities that only take place in the Superblock at Livermore and are  expected to be discontinued there in 2013. Pit testing includes thermal,  vibration, and other environmental tests on pits that ensure that the  weapon can successfully function from the time it is in the stockpile until it  is deployed and reaches a target. Livermore officials told us that CMRR  will not accommodate pit environmental testing because the systems  used to conduct the environmental tests could cause vibrations through  the rest of the facility. This could disrupt other work that requires precision  instrumentation. Livermore officials also told us that these pit  environmental testing capabilities are necessary to help meet nuclear  weapons stockpile requirements. Because the CMRR was not intended to  support all of these capabilities, NNSA will need to find another location if  this plutonium-related work currently being conducted at Livermore is to  be continued. NNSA has begun studying the extent to which the  environmental pit testing capabilities will be needed, and if so, where they  will be located. However, NNSA currently has no final plans for relocating  them elsewhere.
section_title: CMRR May Not Meet Other Plutonium-Related Research and Storage Needs As DOE and NNSA Have Not Fully Analyzed Programs Outside of Nuclear Weapons Stockpile Work
paragraphs: DOE and NNSA conduct important plutonium-related research in other  mission areas outside of nuclear weapons stockpile work, and it is  unclear whether the CMRR as designed will be large enough to  accommodate these nonweapons activities because they have not  comprehensively studied their long-term research and storage needs. A  NNSA record of decision states that the CMRR will support other national  security missions involving plutonium-related research, including  nonproliferation, nuclear forensics, and nuclear counterterrorism  programs. For example, NNSA plans to use analytical chemistry  capabilities in CMRR to perform nuclear forensics work that would be  needed to, among other things, identify the source of and individuals  responsible for any planned or actual use of a nuclear device.
However, DOE and NNSA have not comprehensively studied the long- term plutonium-related research and storage needs of programs outside  of NNSA’s nuclear weapons stockpile work and therefore cannot be sure  that the CMRR can accommodate them. In particular, DOE does not have  important information on departmentwide analytical chemistry and  material characterization research and storage needs, which can be  helpful in making fully informed planning decisions about its long-term  infrastructure and consolidation plans for the nuclear security enterprise.
As we have previously reported, conceptual planning for a building—a  process by which an organization’s facility needs are identified and  understood—is the critical phase of any successful building project  development. This conceptual planning results in a building design that  should be well defined according to an organization’s needs and include  input from all key stakeholders before it is designed. NNSA and Los  Alamos officials told us that the programs supporting mission areas  outside of the nuclear stockpile work—including NNSA’s Office of  National Technical Nuclear Forensics and Office of Fissile Materials  Disposition—were generally not involved in planning the CMRR. Los  Alamos officials said that they thought that there was too much time  before the new facility would be operating for other mission areas to know  their specific needs. However, by not including input from all the mission  areas during the design of CMRR, NNSA has risked not knowing all of the  potential needs and uses for the new facility to complement its important  missions outside of the nuclear weapons stockpile work.
NNSA and Los Alamos have considered using space in Los Alamos’ PF-4 plutonium  facility to handle additional plutonium-related research. However, NNSA officials told us  that operating at this high pit production range would also likely use all of PF-4’s capacity.  As a result, NNSA would have to consider reducing or eliminating other mission work  currently supported in PF-4 or modify CMRR to incorporate additional needed space at  additional cost. support nonweapons activity needs only if additional capacity remains  after all weapons-related activities are supported. If additional capacity is  not available, NNSA may face the prospect of not being able to use the  new facility for one of its intended purposes of supporting certain  plutonium-related research for missions outside of nuclear weapons  stockpile work. A 2004 NNSA study suggested that this could effectively  result in national security, nonproliferation, and environmental  management programs potentially not performing in a cost-effective,  compliant, and timely manner.
In addition, the CMRR has been designed to support Los Alamos and  NNSA’s mission need to store significant quantities of nuclear material  associated with the plutonium operations in a safe and secure manner  using vault storage. Specifically, NNSA plans to shift all of Los Alamos’  current vault storage materials from its existing chemistry and metallurgy  facility and overflow inventory from the PF-4 facility to the CMRR. However, Los Alamos officials told us that Los Alamos may not have  enough storage space even after the CMRR is complete. NNSA plans to  first use the newly available vault space in the CMRR for short-term, daily  storage of nuclear materials being used for programmatic work and then  use any remaining space for long-term storage. NNSA designed the  CMRR without much long-term vault storage because these materials  were initially planned to be shipped offsite for disposal. However, due to  broader departmental challenges with other NNSA sites receiving  materials for disposal, Los Alamos may not be able to ship its nuclear  material off-site. If this is the case, Los Alamos officials told us that they  may have to find additional long-term vault storage. This could also  potentially affect Los Alamos’ ability to receive nuclear materials from  other sites under NNSA’s consolidation strategy. In addition, Los Alamos  officials told us that NNSA is still considering facility layout options that  would allow for vault storage space to be configured for other operations  and lab space. If this space is used for functional laboratory space rather  than storage, less space will be available for short-term vault storage than  NNSA originally thought.
Los Alamos officials told us that one of the major uses of CMRR storage space will be to  relieve vault storage space at its plutonium facility that has already reached its available  storage capacity.
section_title: Conclusions
paragraphs: Once NNSA resumes the CMRR project and constructs the facility,  CMRR will play an important role in ensuring the continued safety and  reliability of the U.S. nuclear weapons stockpile. The CMRR can  potentially offer NNSA the opportunity to improve efficiency, save costs,  and reduce safety hazards for workers. Because of the facility’s  importance to the stockpile, multibillion dollar price tag, the inherent  challenges in building facilities that can safely and securely store  plutonium, and NNSA’s ongoing difficulties managing large projects, it is  critical that NNSA and Congress have accurate estimates of the project’s  costs and schedules, particularly when the CMRR project is resumed.  After facing a nearly six-fold increase in estimated cost and schedule  delays, NNSA’s most recent cost and schedule estimates generally meet  industry best practices, but there are important weaknesses that call  these estimates’ reliability into question. For example, an independent  cost estimate—the most rigorous method to validate major cost elements  that is performed by an entity that has no stake in the approval of the  project—has not yet been conducted. To its credit, NNSA plans to have  an independent cost estimate conducted prior to the completion of  CMRR’s project baseline once the project is resumed. With regard to the  project’s schedule estimate, however, NNSA cannot yet provide high  assurance that all project risks are fully accounted for in the project’s  schedule risk analysis that is used for updating the project’s schedule  contingency estimates. As a result, NNSA cannot yet be fully confident  that, once it decides to resume the CMRR project, the project will meet its  estimated completion date, which could lead to further delays and  additional costs.
However, reliable cost and schedule estimates for CMRR that fully meet  industry best practices are of little use if DOE’s and NNSA’s mission  needs are not met. Constructing CMRR is an important part of NNSA’s  strategy to modernize its nuclear weapons facilities into a smaller and  more responsive, efficient, and secure infrastructure to meet the changing  requirements of the nuclear weapons stockpile. The CMRR was intended  to support the plutonium-related research and storage needs of other  DOE and NNSA national security missions and activities outside of the  nuclear weapons stockpile work, including homeland security and nuclear  nonproliferation activities; but because NNSA decided early in the project  to reduce the size of the proposed facility to save money, CMRR may  now lack the ability to accommodate these other research needs. In  particular, the planned removal of most plutonium from Livermore  presents NNSA with a dilemma in that the primary benefit of consolidating  plutonium at Los Alamos—lower security costs—may be offset by the  need to replace Lawrence Livermore National Laboratory’s plutonium  research, storage, and environmental testing capabilities. Importantly,  when NNSA decided to consolidate plutonium operations at Los Alamos,  it did not fully consider whether planned or existing facilities at Los  Alamos would be capable of continuing plutonium work being conducted  elsewhere. For example, CMRR was not intended to accommodate the  thermal, vibration, and other environmental pit testing that Livermore  currently conducts because the vibrations this type of testing creates  could disrupt other work at CMRR that requires precision instrumentation.  Nevertheless, this type of testing is necessary to meet nuclear weapons  stockpile requirements and so must be conducted somewhere. The full  extent of the potential shortfall in plutonium research capabilities is not  well-understood because DOE and NNSA have not comprehensively  assessed their plutonium-related research, storage, and environmental  testing needs. Plutonium research for the nuclear weapons stockpile and  for other missions may have to compete for limited laboratory and storage  space in CMRR and other facilities at Los Alamos, especially if the  demand for newly manufactured pits unexpectedly increases. As a result,  expansion of CMRR or construction of costly additional plutonium  research, storage, and testing facilities at Los Alamos or elsewhere may  be needed sometime in the future.
section_title: Recommendations for Executive Action
paragraphs: To strengthen cost and schedule estimates for the CMRR and ensure  needed plutonium research needs are sufficiently accommodated, we  recommend that the Secretary of Energy take the following three actions:  1.  Once NNSA resumes the CMRR project and prior to establishing a  new cost and schedule baseline, incorporate all key risks identified by  CMRR project officials into the project’s schedule risk analysis, and  ensure that this information is then used to update schedule  contingency estimates, as appropriate. 2.  Conduct a comprehensive assessment of needed plutonium-related  research, storage, and environmental testing needs for nuclear  weapons stockpile activities as well as other missions currently  conducted at other NNSA and DOE facilities, with particular emphasis  on mitigating the consequences associated with eliminating plutonium  research, storage, and environmental testing capabilities from NNSA’s  Lawrence Livermore National Laboratory.  3.  Using the results of this assessment, report to Congress detailing any  modifications to existing or planned facilities or any new facilities that  will be needed to support plutonium-related research, storage, and  environmental testing needs for nuclear weapons stockpile activities  as well as other missions conducted by NNSA and DOE.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided NNSA with a draft of this report for its review and comment.  In its written comments, reproduced in appendix IV, NNSA generally  agreed with our recommendations to conduct a comprehensive  assessment of needed plutonium-related research, storage, and  environmental testing needs and to report to Congress on any  modifications to existing or planned facilities or any new facilities that will  be needed to support these needs. However, NNSA disagreed with our  recommendation to incorporate all key risks identified by project officials  into the project’s schedule risk analysis.
Specifically, NNSA stated that, subsequent to receiving our draft report  for its comments, the President’s budget request for fiscal year 2013 was  released and resulted in several changes to the funding and execution of  the CMRR project. In particular, construction of the CMRR is now to be  deferred for at least 5 years. Therefore, NNSA stated that it is conducting  additional analysis to determine the most effective way to provide  analytical chemistry, materials characterization, and storage capabilities  that were originally intended for the CMRR through the use of existing  infrastructure. As part of this analysis, NNSA stated that it will evaluate  options to use existing facilities at other sites. We believe this is  consistent with our recommendation that NNSA conduct a comprehensive  assessment of needed plutonium-related research, storage, and  environmental testing needs and that NNSA’s decision to defer  construction of the CMRR will give it sufficient time to conduct this  assessment.
NNSA also commented that it will continue to work with Congress and  other stakeholders as it adjusts its plutonium strategy. In our view, this is  also consistent with our recommendation to report to Congress on any  modifications to existing or planned facilities or any new facilities that will  be needed to support plutonium-related research, storage, and  environmental testing needs for nuclear weapons stockpile activities as  well as other missions conducted by NNSA and DOE.
With regard to our recommendation to incorporate all key risks identified  by CMRR project officials into the project’s schedule risk analysis, NNSA  commented that spending project money to update the CMRR project’s  schedule would not be prudent because of the construction delay.  Therefore, NNSA disagreed with the recommendation. NNSA stated that  its efforts in the near term would be focused on closing out the current  design and that any future efforts will require updated cost and schedule  estimates. We agree with NNSA that it is not necessary to update the  project’s schedule at this time because of the recently announced  construction delay; however, we maintain that it is important that all  project risks are fully accounted for in the CMRR’s schedule once the  project is resumed. Therefore, we clarified our recommendation to specify  that NNSA should take action to ensure that the CMRR’s schedule risk  analysis is appropriately revised to account for all project risks when  NNSA resumes the project and before it establishes a new cost and  schedule baseline.
We are sending copies of this report to the Secretary of Energy; the  Administrator of NNSA; the Director, Office of Management and Budget;  the appropriate congressional committees; 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 staffs have any questions about this report, 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 report. GAO staff who made major contributions to this report  are listed in appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to examine (1) changes in the cost and schedule  estimates for the construction of the facility and the extent to which its  most recent estimates reflect best practices, (2) options the National  Nuclear Security Administration (NNSA) considered to ensure that  plutonium-related research activities could continue as needed, and (3)  the extent to which NNSA’s plans to construct the Chemistry and  Metallurgy Research Replacement Nuclear Facility (CMRR) and its  consideration of options reflected changes in nuclear weapons stockpile  requirements and other plutonium-related research needs.
To examine the project’s cost and schedule estimates and the extent to  which its current estimates reflect best practices, we reviewed relevant  NNSA documents and met with agency and contractor officials on the  changes that have occurred to date and the reasons for them. We  compared NNSA’s most recent detailed cost and schedule estimates with  industry best practices contained in our cost estimating and assessment  guide and discussed them with project officials to give them the  opportunity to provide feedback on our assessment. Our review examined  specifically those NNSA cost estimates that were prepared in April 2010  and schedule estimates, which at the time of our review were updated as  of May 2011 or more recent for some portions of the schedule. As such,  the cost and schedule estimates we reviewed do not reflect NNSA’s 5- year construction deferral recently announced in February 2012 and  NNSA has not yet determined the potential long-term cost impact of this  delay.
To examine the options NNSA considered to continue plutonium-related  analytical work, we reviewed NNSA and contractor documents on  plutonium research needs and the various options available to meet those  needs. We also met with NNSA and contractor officials to better  understand how these options were analyzed to determine the best  approach to fulfill NNSA’s mission. While NNSA evaluated options on  how to best meet its mission needs, it may have also evaluated  alternatives based on the environmental impact of building the CMRR. As  such, our review examined the options NNSA assessed to maintain the  capabilities for plutonium-related analytical chemistry, material  characterization, and storage and did not address NNSA’s compliance  with requirements of the National Environmental Policy Act. We also met  with NNSA and contractor officials to gain a better understanding of how  these options were analyzed to determine the best approach to fulfill  NNSA’s mission.
To determine the extent to which NNSA’s plans reflect changes in nuclear  weapons stockpile requirements, we reviewed NNSA analyses that were  used to support CMRR project decisions and met with NNSA officials to  determine if these analyses were comprehensive and reflected up-to-date  nuclear weapons stockpile requirements. We also visited Los Alamos and  Lawrence Livermore National Laboratories. To ensure the data we used  were sufficiently reliable, we compared information gathered from a  variety of data sources. For example, we interviewed officials from both  Los Alamos and Lawrence Livermore National Laboratories to obtain  separate and independent perspectives on CMRR project plans. We  determined the data were sufficiently reliable for our purposes.
We conducted this performance audit from February 2011 through  February 2012 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: Summary Assessment of CMRR’s Cost Estimate Compared to Industry Best Practices
subsections: section_title: Best practice characteristic Comprehensive
paragraphs: Detailed best practice  The cost estimate includes all life  cycle costs.
Detailed assessment Substantially met. The total project cost for the  construction of the Nuclear Facility is $4.2 billion.  Government and contractor costs are included.  However, operations and retirement costs are not  included. These costs were not included because  there was no mandate to estimate them. The cost  estimate spans from start of construction in June  2010 to completion in 2020 with a schedule  contingency through 2022.
The cost estimate completely defines  the program, reflects the current  schedule, and is technically  reasonable.
Fully met. Technical descriptions were provided in  multiple documents such as the “CMRR Nuclear  Facility (NF) Estimate at Complete Forecast–April  2010,” the Los Alamos CMRR Mission Need  Statement, the Program Requirements Documents,  the WBS dictionary, and the “Final Environmental  Impact Statement for the Chemistry and Metallurgy  Project.”
The cost estimate work breakdown  structure is product-oriented,  traceable to the statement of  work/objective, and at an appropriate  level of detail to ensure that cost  elements are neither omitted nor  double-counted.
Partially met. The work breakdown structure and  work breakdown structure dictionary are product  oriented and the work breakdown structure flows  down to level 4 of the program, project, or task. A  statement of work was provided in the form of a  mission need statement; however, it is not easily  reconciled with the work breakdown structure  dictionary.
The estimate documents all cost- influencing ground rules and  assumptions.
Fully met. Cost influencing ground rules and  assumptions can be found in the CMRR Estimate  Update Execution Plan. Budget constraints and  escalation are addressed. A list of high-level risk  drivers along with the handling costs and risk input  information was provided. Exclusions to the cost  estimate are noted in the documents.
The documentation captures the  source data used, the reliability of the  data, and how the data were  normalized.
Partially met. The data was analyzed and high-level  cost drivers have been addressed as well as unit  rates and quantities. Source data used to develop  the estimate were found. The cost estimate was  based on historical data from other Department of  Energy (DOE) sites and the data was normalized.  However, the independent review team found  inconsistencies and discrepancies of quantities  (hours) and costs. In addition, the review team  reported that even though the basis of estimate  referred to current contract awards or proposals, no  reference was made to specific contracts or  proposals by date and number.
section_title: Best practice characteristic
paragraphs: Detailed best practice  The documentation describes in  sufficient detail the calculations  performed and the estimating  methodology used to derive each  element’s cost.
Detailed assessment Substantially met. While not explicitly stating what  methodology was used, the pricing approach  summary indicates that the estimate was developed  using a combination of the build-up method and  extrapolation from pricing information and  productivity rates from other DOE sites. However  the calculations involved were not clearly shown.
The documentation describes, step by  step, how the estimate was developed  so that a cost analyst unfamiliar with  the program could understand what  was done and replicate it.
Substantially met. The documentation for the  estimate contains a summary narrative about the  project as well as high-level cost summaries. The  documentation discusses risk and contingency  reserve. However, it does not address sensitivity  although a sensitivity analysis was performed.  Narrative on how the sensitivity analysis was  conducted was not provided.
The documentation discusses the  technical baseline description and the  data in the baseline is consistent with  the estimate.
Substantially met. There are technical descriptions  discussed in the documentation that are consistent  with the basis of estimate and the work outlined in  the detail cost estimate spreadsheets. However, we  are unable to map specific technical descriptions as  outlined in the requirements document to cost  elements in the high-level or detailed cost  estimates. During the site visit, project officials  showed us how the scope of work in the work  breakdown structure dictionary was written in a way  to illustrate how the scope of work was captured.
The documentation provides evidence  that the cost estimate was reviewed  and accepted by management.
Partially met. Los Alamos policy states that reviews  shall be performed. According to project officials,  these reviews typically include an integrated project  team review, functional manager review, directorate  review, and in the case of projects of high  complexity or risk, an external corporate review  and/or DOE Los Alamos Site Office review. A  CMRR functional review was held March 12, 2010,  and the review of the current estimate was listed on  the meeting agenda. However, without further  documentation we are unable to determine whether  or not a briefing was given to management that  clearly explains the detail of the cost estimate— including presentation of lifecycle costs, ground  rules and assumptions, estimating methods and  data sources as they relate to each work  breakdown structure element, results of sensitivity  analysis, risk and uncertainty analysis, and if a  desired level of confidence was reached.  Additionally, it is not clear that an affordability  analysis, contingency reserve, conclusions, or  recommendations were discussed with  management. The documentation also does not  show management’s acceptance of the cost  estimate.
section_title: Best practice characteristic Accurate
paragraphs: Detailed best practice  The cost estimate results are  unbiased, not overly conservative or  optimistic, and based on an  assessment of most likely costs.
Detailed assessment Substantially met. Risk and uncertainty analyses  were performed providing an 84 percent confidence  level. There are three components that contribute to  the total contingency value established for the  project—schedule, estimate, and technical and  programmatic risk analysis.
The estimate has been adjusted  properly for inflation.
Substantially met. The documentation contained  information on escalation rates. However, it is  unclear how the cost estimate data were  normalized. For example, costs are listed but are  not labeled as constant or then-year dollars.  Detailed calculations on how escalation was  applied to the cost estimate are not documented.
The estimate contains few, if any,  minor mistakes.
Substantially met. The numbers shown in the  estimate at complete document and the cost  estimate spreadsheet are accurate and the  independent review team found only one minor  mistake in their review of the estimate. However,  we were not provided access to the detailed  calculations behind the spreadsheet to check that  the estimate was calculated correctly.
The cost estimate is regularly updated  to reflect significant changes in the  program so that it always reflects  current status.
Substantially met. The CMRR Project Control Plan  outlines a formal change control process that is to  be executed in accordance with the Los Alamos  Project Management and Site Services Directorate  as well as the CMRR Baseline Change Control  Board. These documents provide an approach to  document, communicate, and approve potential  changes to scope, cost, and schedule, and they  provide the basis for incorporating changes into the  project baseline and/or the forecast estimate at  completion. These documents also describe the  activities and responsibilities for making changes to  the baseline.
Any variances between planned and  actual costs are documented,  explained, and reviewed.
Substantially met. Earned value is entered for each  work package based on the earned value method  indicated for that work package. Progress is  reported in terms of percent complete by work  package and is verified, analyzed, and reported to  the project controls team. This information is then  analyzed by the project controls team and control  account managers and reviewed with CMRR  management as the final reports are completed and  published. However, there is no evidence of the  cost estimate being updated to capture variances  from the earned value system.
section_title: Best practice characteristic
paragraphs: Detailed best practice  The estimate is based on a historical  record of cost estimating and actual  experiences from other comparable  programs.
Detailed assessment Substantially met. Part of the estimate was  developed using the engineering build up method  which includes historical data from other  DOE/NNSA sites (Waste Treatment Plant, Mixed  Oxide Fuel Fabrication Facility, and two chemical  demilitarization facilities). The reliability of the data  is documented where confidence levels associated  with quantity, productivity, labor, and nonlabor  pricing are addressed. However, for some of the  data, the sources were not provided and there was  no evidence that earned value data was used to  develop or update the estimate.
The cost estimate includes a  sensitivity analysis—a technique that  identifies a range of possible costs  based on varying major assumptions,  parameters, and data inputs.
Substantially met. CMRR conducted some sort of  sensitivity analysis. No documentation was given  providing a narrative on how the sensitivity analysis  was conducted—including whether high  percentages of cost were determined and how their  parameters and assumptions were examined.  Additionally, it cannot be determined whether the  outcomes were evaluated for parameters most  sensitive to change or how this analysis was  applied to the estimate. However, during a site visit,  Los Alamos officials provided a copy of a report that  shows how a sensitivity analysis was applied to the  nuclear facility cost estimate. For this assessment,  a high and low range was determined. Some of the  factors that were varied included overhead and  General and Administrative rates, and escalation.
section_title: Best practice characteristic
paragraphs: Detailed best practice  A risk and uncertainty analysis was  conducted that quantified the  imperfectly understood risks and  identified the effects of changing key  cost driver assumptions and factors.
Detailed assessment Substantially met. The cost estimate includes  contingency costs for schedule ($99 million), cost  estimate ($508 million) and technical and  programmatic risks ($404 million). While a schedule  risk analysis was performed that identified $99  million in schedule contingency, it is not clear how  this analysis was done as no supporting  documentation was provided. An independent  review team assessed the schedule risk analysis  and found that the risk model did not contain  enough detail to allow specific risk events to be  associated with the schedule activities they affect.  Documentation supporting the cost estimate ($508  million) risk and uncertainty analysis was conducted  via a Monte Carlo simulation which established an  84 percent confidence level for cost estimate  uncertainty. The process by which this analysis was  done is well documented and includes the  contingency level range results. However, this risk  and uncertainty analysis only reviewed classic cost  estimate contingency and did not assess technical,  programmatic or schedule risks. In addition, the  independent review team found that the cost risk  uncertainty analysis was done at a summary level  so it does not fully reflect the uncertainty of the  design costs associated with uncertainty related to  quantities or prices listed.
Major cost elements were crossed  checked to see whether results were  similar.
Partially met. Documentation was provided that  shows comparison of selected CMRR cost  elements against cost estimates of other sites.
An independent cost estimate was  conducted by a group outside the  acquiring organization to determine  whether other estimating methods  produce similar results.
Partially met. An independent cost estimate was not  conducted by a group outside of the acquiring  organization. However, an independent cost review  was performed by the U.S. Army Corps of  Engineers in conjunction with an experienced  contractor. This independent cost review resulted in  the identification of key findings which require a  Corrective Action Plan. The independent cost  review focused on engineering design, and nuclear  facility special facility equipment engineering  design. The independent cost review team had 24  key findings and recommendations.
The ratings we used in this analysis are as follows: “Not met” means the CMRR provided no  evidence that satisfies any of the practice. “Minimally met” means the CMRR provided evidence that  satisfies a small portion of the practice. “Partially met” means the CMRR provided evidence that  satisfies about half of the practice. “Substantially met” means the CMRR provided evidence that  satisfies a large portion of the practice. “Fully met” means the CMRR provided evidence that  completely satisfies the practice.
section_title: Appendix III: Summary Assessment of CMRR’s Schedule Estimate Compared to Industry Best Practices
paragraphs: Explanation   The schedule should reflect all activities as defined  in the program’s work breakdown structure, to  include activities to be performed by both the  government and its contractors.
Detailed assessment Fully met. The schedule integrates all of the effort of  NNSA, its contractor, and its major subcontractors.
The schedule should be planned so that it can meet  critical program dates. To meet this objective, key  activities need to be logically sequenced in the  order that they are to be carried out. In particular,  activities that must finish before the start of other  activities (i.e., predecessor activities) as well as  activities that cannot begin until other activities are  completed (i.e., successor activities) should be  identified. By doing so, interdependencies among  activities that collectively lead to the  accomplishment of events or milestones can be  established and used as a basis for guiding work  and measuring progress.
Substantially met. While we found that about 16 percent  of the activities were missing predecessors and  successors, or had constraints, lags, and leads, the  majority (84 percent) of the activities were logically  sequenced. There are more than 2,400 activities (5  percent) with missing or dangling predecessors or  successors. There are summary tasks linked with logic (3  percent), but we have determined that they do not affect  the credibility of the schedule. There are 123 activities  (less than 1 percent) with start-to-finish logic. There are  460 activities (less than 1 percent) that have 10  predecessors or more. There are 590 activities (1  percent) scheduled with constraints, in addition to or  substituting for complete logic.
The schedule should reflect what resources (i.e.,  labor, material, and overhead) are needed to do the  work, whether all required resources will be  available when they are needed, and whether any  funding or time constraints exist.
Substantially met. Not all activities in the project schedule  are resource loaded—only 3,757 activities (8 percent) out  of the 45,429 activities with positive remaining duration  have resources assigned in the schedule we received.  However, there is credible evidence that the program and  Los Alamos manage resources in various ways outside  the project schedule and that their resource solutions are  fed back to the project schedule so that it is feasible  given resource limits.
The schedule should realistically reflect how long  each activity will take to execute. In determining the  duration of each activity, the same rationale, data,  and assumptions used for cost estimating should  be used. Further, these durations should be as  short as possible and they should have specific  start and end dates. Excessively long periods  needed to execute an activity should prompt further  decomposition of the activity so that shorter  execution durations will result.
Substantially met. There are 1,642 activities (4 percent)  with durations 44 days or greater, which means that the  majority of the activities (96 percent) have activities that  are of short duration. Contributing to this is the rolling  wave approach to the schedule, where the near-term  activities are detailed while activities further in the future  are left in large planning packages until they become  near-term, at which point they are broken down into their  component activities.
The schedule should be horizontally integrated,  meaning that it should link the products and  outcomes associated with already sequenced  activities. These links are commonly referred to as  handoffs and serve to verify that activities are  arranged in the right order to achieve aggregated  products or outcomes. The schedule should also be  vertically integrated, meaning that traceability exists  among varying levels of activities and supporting  tasks and subtasks. Such mapping or alignment  among levels enables different groups to work to  the same master schedule.
Substantially met. As discussed previously in the  “sequencing all activities,” there are activities missing  predecessor and successor logic as well as the presence  of constraints, lags, and leads that call into question the  adequacy of horizontal traceability. Vertical traceability  was confirmed. The schedule hierarchy includes five  levels, increasing in detail and specificity from top to  bottom.
Explanation   Using scheduling software, the critical path—the  longest duration path through the sequenced list of  key activities—should be identified. The  establishment of a program’s critical path is  necessary for examining the effects of any activity  slipping along this path. Potential problems that  may occur on or near the critical path should also  be identified and reflected in the scheduling of the  time for high-risk activities.
The schedule should identify float so that schedule  flexibility can be determined. As a general rule,  activities along the critical path typically have the  least amount of float.
Detailed assessment Substantially met. This schedule’s critical path has 5,479  activities with zero or negative total float. There are so  many critical activities because of a number of  constraints on intermediate milestones which is causing  negative float on paths to those activities. However, these  activities do not all drive the final delivery. Los Alamos  officials said that when they baseline the schedule, they  plan to remove many of the constraints that are causing  negative float. Many of these constraints are there to  enable Los Alamos to monitor status of intermediate  milestones.  Substantially met. Of the remaining activities, 22 percent  have unexplained large positive and large negative total  float values. Even with agency review, these were  present in the schedule. The total float values in many  cases are several years long. There are 4,611 activities  (10 percent) that have total float over 1,000 days or about  3.8 years. These high total float values are likely related  to the incomplete logic described in the “sequencing all  activities” best practice.
A schedule risk analysis should be performed using  a schedule built using a good critical path method  and data about project schedule risks, as well as  statistical analysis techniques (such as Monte  Carlo) to predict the level of confidence in meeting  a program’s completion date. This analysis focuses  not only on critical path activities but also on  activities near the critical path, since they can  potentially affect program status.
Minimally met. There is no evidence that a risk analysis  has been conducted on this schedule or any summary  schedule derived from this schedule. Los Alamos officials  said that they have conducted a risk analysis using  Monte Carlo simulation based on a prior and more  concise schedule a full year before the version we  reviewed was developed. The version we reviewed  contained 90,000 activities and was developed in the  Spring of 2010—a full year after Los Alamos conducted  its risk analysis and Monte Carlo simulation. Los Alamos  did not conduct a risk analysis on this more recent  schedule, nor did it prepare and simulate a summary  schedule based on this more recent schedule. The  summary schedule that Los Alamos simulated was based  on critical and near critical paths. This schedule  comprised the main, secondary and tertiary critical paths.  As a result, we believe that the schedule did not cover  the entire work of the project, and therefore may have  excluded some activities or paths that have risk sufficient  to affect the finish date. Instead, Los Alamos selected  about 2,100 activities based on total float, but this  practice is risky because they may not have included all  of the activities that risks in the risk register may affect.
Explanation   The schedule should use logic and durations in  order to reflect realistic start and completion dates  for program activities. The schedule should be  continually monitored to determine when forecasted  completion dates differ from the planned dates,  which can be used to determine whether schedule  variances will affect downstream work. Maintaining  the integrity of the schedule logic is not only  necessary to reflect true status, but is also required  before conducting a schedule risk analysis.
Detailed assessment Fully met. The CMRR schedule is updated at least  monthly, although much of it is updated weekly. The  schedule integrity is checked after each update and  metrics are compiled on problems to determine if the  schedule’s integrity is improving with each update.  There are no activities in the past that lack the  designation of actual start or actual finish. There are  some activities on or after the data date that have actual  start or finish designations, but that may be because  there are 15 schedules combined in the Integrated  Master Schedule and some were updated somewhat  after May 9, 2011.
The ratings we used in this analysis are as follows: “Not met” means the CMRR provided no  evidence that satisfies any part of the practice. “Minimally met” means the CMRR provided evidence  that satisfies a small portion of the practice. “Partially met” means the CMRR provided evidence that  satisfies about half of the practice. “Substantially met” means the CMRR provided evidence that  satisfies a large portion of the practice. “Fully met” means the CMRR provided evidence that  completely satisfies the practice.
section_title: Appendix IV: Comments from the National Nuclear Security Administration
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, Ryan T. Coles, Assistant  Director; John Bauckman; Jennifer Echard; Eugene Gray; David T. Hulett;  Jonathan Kucskar; Alison O’Neill; Christopher Pacheco; Tim Persons;  Karen Richey; Stacey Steele; Vasiliki Theodoropoulos; and Mary Welch  made key contributions to this report.