Nuclear Weapons: Ten-Year Budget Estimates for Modernization Omit Key Efforts, and Assumptions and Limitations Are Not Fully Transparent
Published: 2014-06-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOE and DOD are undertaking an extensive effort to sustain and modernize the nuclear weapons stockpile, research and production infrastructure, delivery systems, and the nuclear command and control system. Completing this effort is expected to cost hundreds of billions of dollars over decades. Congress mandated the development of an annual report on the departments' plans and 10-year budget estimates for these efforts. Congress also mandated GAO to review the accuracy and completeness of the DOE and DOD report, with respect to the budget estimate contents and methodology.
This report addresses whether DOE's and DOD's 10-year budget estimates for sustaining and modernizing the nuclear deterrent are consistent with their funding plans, including whether the report provides complete information and a transparent methodology. GAO analyzed the DOE and DOD plans and estimates as of July 2013, and the DOE and DOD guidance and methodologies used to prepare their budget estimates.
section_title: What GAO Found
paragraphs: The Departments of Energy's (DOE) and Defense's (DOD) $263.8 billion, 10-year estimates in their report to Congress for sustaining and modernizing U.S. nuclear weapons capabilities are generally consistent with their funding plans through fiscal year 2018. However, GAO identified shortcomings with respect to the completeness of the budget estimates and the transparency of the assumptions and limitations that underlie the 10-year estimate. Specifically:
Nuclear stockpile and infrastructure: Based on GAO's recent review of DOE's long-term plans and estimates for sustaining and modernizing the nuclear enterprise, we found that DOE's $97.5 billion estimate in the report includes less funding than will be needed through fiscal year 2018 to meet program milestones for planned nuclear weapon life extensions, and through fiscal year 2023 to meet milestones for constructing key facilities.
Nuclear delivery systems: DOD's $125.5 billion estimate in the report does not include potential budget estimates for Air Force efforts to modernize intercontinental ballistic missiles or to develop a new bomber. Instead, DOD treated these efforts as zero-cost in the estimate. Consequently, DOD may be significantly underreporting its 10-year estimate, depending on the magnitude of the costs resulting from upcoming decisions about how to modernize these delivery systems.
Nuclear command, control, and communications (NC3): DOD's methodology for preparing its $40.8 billion estimate to sustain and modernize its system for assuring connectivity between the President and nuclear forces is not fully transparent because key assumptions and potential limitations are not documented in the report to Congress. As a result, Congress has a limited basis for understanding the estimate, or for comparing the estimates in one annual report to the next, as it assesses long-term affordability when allocating resources.
The report omits estimates for certain programs, such as the new bomber, and is not fully transparent in describing key assumptions and limitations for estimating nuclear command, control, and communications system funding, which limits its utility for budgetary planning. Key principles that GAO derived from federal budget guidance stress the importance of including all relevant funding estimates in the plan, as well as documenting methodological assumptions and potential limitations. However, DOD did not specifically direct the Air Force to include a range of potential budget estimates in the report for developing a new intercontinental missile or bomber, where a firm estimate was unavailable. DOD also did not direct that key assumptions and limitations be documented in the report for preparing its NC3 estimates. GAO reported in December 2013 that DOE's nuclear stockpile and infrastructure estimates did not include a range of preliminary budget estimates to account for known future expenses. GAO recommended that DOE include a range of potential budget estimates for preliminary projects and programs in future funding plans, and DOE generally agreed with this recommendation. Without a range of potential estimates and fully documented assumptions and limitations, the report is an incomplete tool for congressional oversight.
section_title: What GAO Recommends
paragraphs: To improve the completeness and transparency of subsequent joint reports, GAO recommends that the Secretary of Defense direct DOD components to (1) include at least a range of potential 10-year budget estimates for projects and programs, based on preliminary cost information (this is consistent with a December 2013 recommendation GAO made to DOE); and (2) document assumptions and limitations affecting its NC3 funding estimates. DOD agreed with these recommendations.
, or David Trimble at (202) 512-3841 or trimbled@gao.gov .

section_title: Letter
paragraphs: The Department of Energy (DOE), through its National Nuclear Security  Administration (NNSA), and the Department of Defense (DOD) are  undertaking an extensive, multifaceted effort to sustain and modernize  U.S. nuclear weapons capabilities, including the nuclear weapons  stockpile, research and production infrastructure, delivery systems, and  nuclear command, control, and communications (NC3) system. Strategic  missiles, submarines, aircraft, and the nuclear weapons they carry are  aging, and both delivery systems and nuclear bombs and warheads are  being deployed beyond their intended service lives. Key NNSA nuclear  weapons research, development, and production facilities date back to  the 1940s and 1950s, and, according to the administration, require  renovation or replacement to ensure a safe, secure, and effective nuclear  arsenal for as long as such weapons exist. Completing this effort is  expected to cost hundreds of billions of dollars over decades.
Section 1070 of the National Defense Authorization Act for Fiscal Year 2008, Pub. L. No.  110-181 (2008) required the Secretary of Defense, in consultation with the Secretary of  Energy and Secretary of State, to conduct a comprehensive review of the nuclear posture  of the United States for the next 5 to 10 years. DOD published the conclusions and  recommendations from that review in the April 2010 Nuclear Posture Review Report.
United States Senate, the President further certified this administration’s  intent to modernize or replace the triad of strategic nuclear delivery  systems, which include a heavy bomber and air-launched cruise missile,  an intercontinental ballistic missile (ICBM), and a ballistic-missile  submarine (SSBN) and submarine-launched ballistic missile (SLBM). In  NNSA’s Fiscal Year 2014 Stockpile Stewardship and Management Plan,  the administration renewed the Nuclear Posture Review Report’s  commitments to refurbish and modernize the nuclear bombs and  warheads currently in the stockpile, and to construct new research and  production facilities to support these stockpile refurbishments.
GAO has assessed NNSA’s long-range plans and budget estimates for  modernizing U.S. nuclear weapons capabilities.  The Ike Skelton National  Defense Authorization Act for Fiscal Year 2011 mandated that GAO study  and report annually on whether NNSA’s nuclear security budget materials  provide for funding that is sufficient to modernize and refurbish the  nuclear security enterprise. Under this mandate we annually review  NNSA’s justification of the President’s budget request, which typically  includes a Future Years Nuclear Security Program (FYNSP),also reviewed NNSA’s Stockpile Stewardship and Management Plan,  which provides information on modernization and operations plans and   and have  budget estimates over the next 25 years. Our most recent report in  response to this mandate was published in December 2013.
Congress has also required reporting on DOD and DOE plans and  estimates for sustaining and modernizing U.S. nuclear weapons  capabilities. Section 1043 of the National Defense Authorization Act for  Fiscal Year 2012, as amended, requires the preparation of an annual  report coordinated with DOE and DOD (hereafter the “joint report”)  regarding the plan for the nuclear weapons stockpile, complex, systems, and command and control system. The report is to include  information on their 10-year budget estimates and nuclear sustainment  and modernization plans. The July 15, 2013, joint report included a 10- year sustainment and modernization estimate totaling $263.8 billion for  both departments through fiscal year 2023, including $122.3 billion from  fiscal years 2014 through 2018.
The National Defense Authorization Act for Fiscal Year 2013 mandated  GAO to annually review the accuracy and completeness of the joint report  with respect to the budget estimate contents and methodology. This  report assesses the extent to which DOE’s and DOD’s budget estimates  in the July 2013 joint report are accurate and complete (consistent) with  respect to their long-term nuclear modernization plans, including whether  the report provides complete information and a transparent  methodology.
Except when referencing the statutory requirement, this report hereafter refers to the  “nuclear weapons complex” as the “nuclear security enterprise.”
To address our objective, we examined the departments’ plans and  budget estimates for sustaining and modernizing the nuclear deterrent in  three areas: (1) DOE nuclear security enterprise modernization; (2) DOD  nuclear delivery systems; and (3) the DOD NC3 system. We applied a  two-step approach:
First, to assess the extent to which DOE’s and DOD’s budget  estimates in the July 2013 joint report are consistent with respect to  their long-term nuclear modernization plans, we obtained and  analyzed the DOE and DOD plans and estimates from their July 2013  joint report and compared them with each department’s fiscal year  2014 budget-justification materials and internal funding plans.  Drawing upon our recent work to review NNSA’s nuclear security  budget materials, which resulted in our December 2013 report, compared DOE’s estimates in the joint report through fiscal year 2018  with the NNSA’s funding plans in the FYNSP, and compared  estimates in the joint report for fiscal years 2019 through 2023 with  NNSA’s estimates in the Fiscal Year 2014 Stockpile Stewardship and  Management Plan. To evaluate DOD’s plans and estimates for  nuclear delivery systems and the NC3 system, we compared DOD’s  estimates in the joint report through fiscal year 2018 with the funding  plans in its Future Years Defense Program (FYDP). Because DOD  has not prepared formal funding plans used to formulate projected  defense budget requests that extend beyond fiscal year 2018, we  reviewed Air Force, Navy, and Defense Information Systems Agency  (DISA) plans, and discussed DOD’s long-term budget estimates in the  joint report with relevant DOD officials. We did not assess the overall  reliability of the FYNSP or FYDP, or the departments’ underlying  budget estimating processes, because such analysis exceeded the  scope of our mandate.
GAO-14-45.
Second, to assess whether the joint report includes complete  information and a transparent methodology, we drew upon our  December 2013 report and obtained new information from DOE about  how it used the Fiscal Year 2014 Stockpile Stewardship and  Management Plan to prepare the plans and estimates in the joint  report for sustaining and modernizing the nuclear security enterprise  and nuclear weapons stockpile. We also obtained DOD guidance  (provided in a series of e-mails and a briefing) and methodologies  used to prepare the 10-year budget estimates for sustaining and  modernizing nuclear delivery systems and the nuclear command and  control system. We derived general principles for developing and  preparing long-term funding plans by reviewing key federal and  departmental guidance, standards, and practices for cost-estimating,  budget preparation, financial planning, and public reporting. We then  used these derived principles as criteria for evaluating DOE’s and  DOD’s guidance and methodologies for preparing the 10-year budget  estimates in the joint report. To the extent we determined differences  between the principles we derived and the departments’ guidance and  methodologies, we discussed the causes and potential effects with  relevant officials.
We conducted this performance audit from July 2013 to June 2014 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. Additional details of our scope  and methodology are included in appendix I.
subsections: section_title: Background
paragraphs: Section 1043 of the National Defense Authorization Act for Fiscal Year  2012 requires the President, in consultation with the Secretary of Defense  and Secretary of Energy, to submit a report on the plan for the nuclear  weapons stockpile, complex, delivery systems, and command and control  system for each of fiscal years 2013 through 2019.estimates are among several elements that Congress required in the joint  report. The other required elements include detailed descriptions of  DOE’s and DOD’s plans to enhance the safety, security, and reliability of the U.S. nuclear maintain, modernize, and replace delivery systems for nuclear  weapons stockpile;  sustain and modernize the nuclear weapons complex;  weapons;  sustain and modernize the nuclear weapons command and control  system; and  retire, dismantle, or eliminate any nuclear weapons, delivery systems,  or silos/submarines that carry such weapons or delivery systems.
A provision in the National Defense Authorization Act for Fiscal Year 2013  expanded the reporting requirement under section 1043 with respect to  costs.  As amended, section 1043 requires the joint report to include a  detailed estimate of the budget requirements associated with sustaining  and modernizing the U.S. nuclear deterrent and nuclear weapons  stockpile, including the costs associated with the plans outlined under the  elements above, over the 10-year period following the date of the report.  The joint report is also to include a detailed description of costs included  in the budget estimates and the methodology used to create the  estimates.modernizing U.S. nuclear weapons capabilities—including nuclear  delivery systems, the nuclear command and control system, and the   DOE’s and DOD’s 10-year estimates for sustaining and  nuclear stockpile and nuclear security enterprise—total $263.8 billion  through fiscal year 2023. These estimates are presented in figure 1.
NNSA is required to submit the FYNSP to Congress at or about the same  time as the President’s budget,NNSA’s annual budget-justification documents. NNSA’s Management and  Budget office aggregated the FYNSP for fiscal years 2014 through 2018  by incorporating inputs from relevant program offices, including the Office  of Defense Programs, Office of the Chief Information Officer, and Office  of Safeguards and Security.   and it is typically included as part of  The FYDP is DOD’s 5-year funding plan; it is updated annually and  provides DOD’s current budget request and budget estimates for at least  4 subsequent fiscal years. The FYDP includes thousands of discrete  program elements, each of which may include funding projections for  DOD’s appropriations accounts, including operation and maintenance;  research, development, test, and evaluation; and procurement. The  FYDP is maintained by DOD’s Director of Cost Assessment and Program  Evaluation, who works with the Office of the Under Secretary of Defense  (Comptroller) to ensure that the data presented in the annual budget- justification materials are equivalent to the FYDP estimates at the  appropriation account level.
section_title: DOE’s and DOD’s 10- Year Estimates Are Incomplete, and DOD’s Methodology for Preparing Some Estimates Is Not Fully Transparent
paragraphs: DOE’s and DOD’s $263.8 billion budget estimates in the July 2013 joint  report are generally consistent with their internal funding plans through  fiscal year 2018, but their overall estimates in the joint report are  incomplete; although DOE’s methodological assumptions are transparent  in the related Fiscal Year 2014 Stockpile Stewardship and Management  Plan, key DOD methodological assumptions and limitations underlying  some estimates are not documented in the joint report, limiting the  report’s transparency. DOE’s $97.5 billion estimate in the July 2013 joint  report is consistent with the budget estimates described in its Fiscal Year  2014 Stockpile Stewardship and Management Plan; however, as we  previously found, DOE’s budget estimates do not represent total funding  needed over the 10-year period covered by the joint report for key areas  of its modernization plans, and therefore do not fully align with aspects of  these plans. In December 2013 we recommended that DOE include a  range of preliminary budget estimates in future funding plans to improve  alignment, and DOE generally concurred with this recommendation. In  this review, we found that DOD’s $125.5 billion estimate for nuclear  delivery systems is generally consistent with its budget-justification  documents and funding plans, but DOD’s 10-year budget estimate did not  include potential estimates for key Air Force modernization efforts.  Additionally, in preparing the $40.8 billion estimate for sustaining and  modernizing the NC3 system, DOD did not document key methodological  assumptions and limitations or make them transparent in the report.
subsections: section_title: GAO Previously Reported That DOE’s Budget Estimates for Certain Near-Term and Long-Term Modernization Efforts Are Incomplete
paragraphs: DOE’s $97.5 billion estimate in the joint report for sustaining and  modernizing the nuclear stockpile and nuclear security enterprise is  consistent with the funding plans in its FYNSP and its Fiscal Year 2014  Stockpile Stewardship and Management Plan, and its methodological  assumptions for preparing this estimate are transparent, but as we found  in December 2013, these estimates are incomplete because they are  less than what will be needed through fiscal year 2023 to meet the  schedules of key modernization efforts. Within DOE, NNSA’s Office of  Defense Programs prepared the Fiscal Year 2014 Stockpile Stewardship  and Management Plan and its included budget estimates, which also form  the basis for the budget estimates included in the joint report. As such,  both documents used inputs from the FYNSP and other relevant offices.
DOE described its sustainment and modernization plans for the nuclear  weapons stockpile and nuclear security enterprise in the June 2013 Fiscal  Year 2014 Stockpile Stewardship and Management Plan, and in the July  15, 2013, joint report. DOE’s plans focus substantially on efforts to  refurbish various types of warheads and bombs associated with DOD’s  weapon systems. Meeting production milestones for the planned scope of  work requires significant advanced investment. In these plans, DOE  stated its intentions to  continue to produce refurbished W76-1 SLBM warheads through  fiscal year 2019;  in fiscal year 2019, begin producing refurbished B61-12 gravity bombs  and replacing aging nonnuclear components in W88 SLBM warheads;  both of these activities would take place through the early 2020s;  in fiscal year 2024, begin producing a modernized cruise missile  warhead; and  in fiscal year 2025, begin producing an interoperable warhead—the  W78/88-1—for use on ICBM and SLBM systems, as reported in the  2010 Nuclear Posture Review Report.
NNSA’s production plans for nuclear weapons refurbishments, as of July  2013, are summarized in figure 2. To support these nuclear weapons  refurbishments, DOE’s plans also include constructing new plutonium and  uranium facilities, which would replace existing facilities that are decades  old, lack modern safety features, and are difficult and expensive to  sustain.
The joint report does not explicitly discuss NNSA’s methodology for  developing its plan and estimates, but the report refers to the Fiscal Year  2014 Stockpile Stewardship and Management Plan, which provides  information on how the estimates were developed. NNSA uses a system  of planning, programming, budgeting, and evaluation to develop its  annual budget requests and to plan for future budget requests. As we  reported in December 2013, NNSA incorporated an automatic increase of  2 percent per year to account for inflation for those activities after fiscal  year 2018 that were expected to continue to operate at the same level of  effort as during the FYNSP period. Further, we reported that for activities  where NNSA expected a change to the level of effort—such as life- extension programs—NNSA instead used available planning data. In the  case of life-extension programs, these data included cost estimates  based on an improved cost model that, according to NNSA officials, is  more likely to be accurate than estimates generated using the previous  approach because they are based on the costs of a life-extension  program that is in progress, rather than a program that was never  executed.
While DOE took steps to ensure that its total budget estimates for each  life-extension program would cover the programs’ costs to achieve their  first production units, in December 2013 we found that NNSA’s funding  plans included in the FYNSP are less than what will be needed to meet  schedules reflected in the joint report. DOE’s estimates in the joint report  include $43.4 billion through fiscal year 2018, which is consistent with  NNSA’s FYNSP and fiscal year 2014 budget submission. we concluded in December 2013, to meet planned milestones for key  warhead life-extension programs, additional funds above the estimates  included in the FYNSP will be needed. For example, we found that the  FYNSP understated NNSA’s budget estimates for both the cruise missile  warhead life-extension program, and for the W78/88-1 (“interoperable  warhead”) life-extension program, both of which, according to the joint  report, are to begin production in the mid-2020s. An NNSA official told us  that the agency shifted funding within its budget estimates for these two  programs beyond fiscal year 2019 to stay within guidelines set by the  Office of Management and Budget for the FYNSP period. According to  the official, the estimates beyond 2019 were not subject to funding targets  to the same extent as the estimates were for fiscal years 2014 through  2018. As a result, in December 2013 we concluded that DOE may need  additional funding before fiscal year 2019 in order to prepare for these  modernization efforts and meet its schedules.
NNSA’s top-line estimates in the joint report include an estimated $5.9 billion in budget  authority transfer from DOD, which is identified in DOD’s FYDP but not reported in the  joint report. savings. We also found that NNSA excluded most of the budget  estimates for a modernized plutonium capability, either for construction of  a Chemistry and Metallurgy Research Replacement-Nuclear Facility or an  alternative to this facility. DOE officials told us that their plans were not  yet developed enough to be included in the fiscal year 2014 budget  justification materials or the Fiscal Year 2014 Stockpile Stewardship and  Management Plan. Moreover, the estimates were not included in the July  2013 joint report because DOE officials told us that the department  adopted guidance requiring that the estimates in the joint report be  consistent with estimates in the budget justification and Stockpile  Stewardship and Management Plan. Key principles that we derived from  federal budgeting and cost-estimating guidance indicate that long-term  funding plans should include all relevant budget estimates of a program in  order to assist decision makers on how to allocate resources. As we  concluded in December 2013, in cases where complete budget  information is not yet known, funding plans could include a range of  potential budget estimates, based on preliminary cost information. We  further recommended in our December 2013 report that, to improve future  budget estimates, NNSA should include a range of potential budget  estimates for projects and programs that the agency knows are needed,  even when available budget information is preliminary; DOE generally  concurred with this recommendation. By not including preliminary  estimates or ranges for these projects and programs, DOE  underestimated the total anticipated cost and limited the utility of the joint  report.
section_title: DOD’s Delivery System Estimates Are Consistent with Its Funding Plans but Do Not Include Potential Estimates for Key Air Force Modernization Efforts
paragraphs: DOD’s estimates through fiscal year 2018 in the joint report for sustaining  the Minuteman III ICBM, heavy bombers, Ohio-class submarine, and  related delivery systems are generally consistent with DOD’s funding  plans and budget-justification documents for most appropriations  accounts, but the 10-year, $125.5 billion estimate does not include  potential budget estimates for Air Force efforts to modernize ICBMs and  bombers. DOD’s sustainment and modernization plans are described in  the joint report, in DOD’s fiscal year 2014 budget-justification documents,  and other planning documents. These plans are summarized in table 1.
Navy—in military personnel and operation and maintenance; $20.5 billion—$14 billion for the Air Force, and $6.5 billion for the  —in research, development, test, and evaluation; and $9.4 billion—$1.9 billion for the Air Force, and $7.5 billion for the  Navy—in procurement and ship construction.
This estimate does not include approximately $0.8 billion in NNSA funding for nuclear  reactor design for the Navy’s Ohio-replacement submarine. required for the report to Congress. As previously noted, key principles for  preparing long-term funding plans that we derived from federal budgeting  and cost-estimating guidance indicate that all relevant estimates should  be included in the plan, even if they are preliminary, to help decision  makers anticipate changes to the administration’s planned requirements  over the long term. Absent such estimates, decision makers are left to  speculate on those plans when assessing the estimates and considering  the long-term affordability of the administration’s near-term programmatic  decisions. However, the Air Force did not include potential estimates over  the 10-year period for replacing the Minuteman III ICBM, or the potential  estimates for developing and producing the new bomber that are likely to  occur beyond the FYDP. Rather than provide potential budget estimates,  DOD treated these efforts as zero-cost over the 10-year period of the  report. Additionally, the extent to which the Air Force’s estimate includes  all potential costs for replacing the air-launched cruise missile is uncertain  because at the time the report was prepared, DOD had not yet developed  its initial acquisition strategy for this program. Consequently, DOD’s 10- year estimate in the joint report may be significantly underreported,  depending on the magnitude of the costs resulting from upcoming  decisions about how to modernize these delivery systems. DOD’s 5-year  and 10-year budget estimates for sustaining and modernizing nuclear  delivery systems are summarized in table 2.
Air Force officials told us that it would be premature to include potential  budget estimates for development programs in their early stages because  their long-term costs are uncertain. For example, at the time the joint  report was published, the Air Force had not yet completed its analysis of  alternatives for replacing the Minuteman III. As we reported in September  2013, the Air Force expects a wide range of costs for replacing the  Minuteman III ICBM, depending on the replacement option that DOD  selects. In contrast, the Navy’s Ohio Replacement Program included  $27.8 billion in research, development, test, and evaluation and ship  construction estimates over the 10-year period for a new SSBN.  However, the Navy’s submarine-replacement program is further along in  the acquisition process than either the Air Force’s ICBM-replacement  effort, or its new bomber program. DOD officials told us that it would be  highly speculative to include potential costs for replacing the Minuteman  III ICBM because that program is not yet defined. An Air Force official  added that specific estimates for the new bomber were considered too  sensitive to include in the report. Moreover, in its guidance for preparing  the joint report, provided in various e-mails and a briefing to DOD officials,  the Office of the Under Secretary of Defense for Policy sought  consistency with the President’s budget submission and DOD’s funding  plans, without specifically directing the Air Force or the Navy to project  potential budget estimates that would be required to bring such efforts to  completion. However, as we concluded in December 2013, departments  and agencies could include at least a range of potential budget estimates  in their funding plans for preliminary projects, based on available cost  information. By treating key Air Force modernization efforts as zero-cost,  instead of including a range of potential budget estimates based on  preliminary cost information, DOD limited the value of the joint report as a  congressional tool for understanding the estimate or for assessing the  long-term affordability of DOD’s modernization plans.
section_title: DOD’s Methodology for Estimating NC3 Sustainment and Modernization Costs Was Not Fully Transparent
paragraphs: DOD’s methodology for preparing its $40.8 billion estimate through fiscal  year 2023 for sustaining and modernizing the NC3 system was not fully  transparent because some assumptions and potential limitations are not  documented in the joint report. Among other functions, the NC3 system is  intended to enable informed and timely decisions by the President on  whether to execute nuclear response options. The NC3 system is highly  complex; it consists of satellites, early warning radars, aircraft,  communications networks, and other systems that are managed by the  Air Force, Navy, DISA, and other organizations. Moreover, many systems  that make up the NC3 system also support nonnuclear military  operations. DOD plans to enhance the NC3 system by improving its  resiliency, investing in secure voice-conferencing capabilities, and  modernizing aging systems so that they continue to meet operational  requirements. For the joint report, the DOD Chief Information Officer  (DOD CIO) prepared the plans and 10-year budget estimates for  sustaining and modernizing the NC3 system because of the system’s  crosscutting complexity.
Because of the complexity of the NC3 system, the DOD CIO made  certain assumptions at the outset to simplify the development of its  estimate. In particular, the DOD CIO used DISA’s October 2011 Nuclear  Command, Control, and Communications (C) System Program Tracking  Report as an authoritative source to begin identifying relevant programs  in the FYDP, and determining how much funding from these programs  should be allocated to the NC3 mission. However, the DISA report led to  a key methodological limitation because it did not associate all projects  and activities with specific FYDP programs. Specifically, the DISA report  associated only 85 of 120 NC3 projects and activities (71 percent) with  specific FYDP programs. As summarized in figure 3, the DISA report did  not associate any of the operation and maintenance activities, and  associated only 72 percent of the procurement activities directly to the  FYDP, leaving the DOD CIO without the means to prepare budget  estimates for these projects and activities directly. However, DOD did not  document the DISA report’s limitation and its potential effect on the NC3  estimate in the July 2013 joint report. Key principles for preparing funding  plans, which we derived from several federal guidance documents,  indicate that potential methodological limitations should be disclosed in  order to enhance the quality of the funding plan.
Although DOD did not disclose the limitation in the joint report, the DOD  CIO made further assumptions to overcome it, thereby covering all  affected NC3 activities in its 10-year estimate in the joint report. However,  in contrast to the key principles we identified, which indicate that key  assumptions should be clearly stated and well documented, DOD’s  guidance for preparing the joint report did not direct the DOD CIO to  describe its methodology for preparing this estimate, nor did DOD  document in the joint report the assumptions it made when preparing the  analysis. As a result, it could be difficult for Congress to understand the  basis for this estimate, or compare one year’s estimates to the next, as it  assesses long-term affordability when allocating resources.
section_title: Conclusions
paragraphs: Sustaining and modernizing the U.S. nuclear stockpile, nuclear security  enterprise, nuclear delivery systems, and the NC3 system is a long-term,  complex, multifaceted effort that requires resource planning and  commitment by both the administration and Congress that could cost  more than $250 billion over the next 10 years. The annual requirement for  DOE and DOD to report on their plans and estimate their 10-year budgets  is one means that Congress uses to gather information it needs to  measure the administration’s progress from year to year, and to  understand the administration’s plans to invest in nuclear deterrence  capabilities over the long term, given the constrained budget  environment. Under such circumstances, accurate and complete budget  estimates over the long term are needed to help decision makers assess  affordability when making tradeoffs among requirements.
Under a separate statutory mandate, we reported on DOE’s plans and  25-year budget estimates for sustaining and modernizing the nuclear  stockpile and nuclear security enterprise in December 2013. As we  reported at that time, DOE’s estimates do not represent the total funding  needed for nuclear weapons life-extension programs or infrastructure- modernization efforts. In that report we recommended that DOE should  include at least a range of potential budget estimates for future projects  and programs that it knows are needed. DOE generally concurred with  our recommendation.
In reviewing DOD’s plans and estimates for sustaining and modernizing  nuclear delivery systems, we found that DOD’s guidance for preparing the  joint report sought consistency between the report’s estimates and the  fiscal year 2014 budget submission and 5-year funding plans. However,  this resulted in a missed opportunity to identify the potential long-term  costs for these efforts. Unless the Secretary of Defense directs the  Secretary of the Air Force and Secretary of the Navy to include in future  reports at least a range of potential budget estimates for key  modernization programs based on preliminary cost information, its  estimates in subsequent annual joint reports will be incomplete and  understated.
Finally, estimating the costs for sustaining and modernizing the NC3  system is perhaps the most difficult and challenging task that DOD faced  in preparing its contributions to the report. The DOD CIO was able to  simplify the complexity of the NC3 system in its estimates to some  degree, but it did not describe the assumptions behind its analysis, nor  did it characterize its potential limitations in the joint report. Unless the  Secretary of Defense directs that key assumptions and limitations are  documented in future reports, the basis for its NC3 estimates may not be  adequately transparent for Congress to determine reasonable resource  allocations, and Congress may not be able to identify changes in the  estimates from one annual report to the next.
section_title: Recommendations for Executive Action
paragraphs: We are making two recommendations to the Secretary of Defense to  improve subsequent joint reports to Congress on plans for sustaining and  modernizing U.S nuclear weapons capabilities:
To ensure the accuracy and completeness of DOD’s estimates for  sustaining and modernizing strategic delivery systems over the 10- year period covered in subsequent joint reports, we recommend the  Secretary of Defense direct the Secretary of the Air Force and  Secretary of the Navy, as appropriate, to include at least a range of  potential budget estimates for projects and programs in future  modernization plans that extend beyond the period covered by their 5- year internal funding plans, based on preliminary cost information.
To improve the transparency of the joint report’s methodologies,  thereby assisting Congress in understanding the basis for DOD’s NC3  estimates in subsequent joint reports, we recommend the Secretary of  Defense direct the DOD CIO to document in the report the  methodological assumptions and limitations affecting the report’s  estimates for sustaining and modernizing the NC3 system.
We are not making recommendations to the Secretary of Energy because  in our December 2013 report reviewing NNSA’s nuclear security budget  materials we recommended that the Administrator of NNSA should  include in future modernization plans at least a range of potential budget  estimates for projects and programs that the agency knows are needed,  based on available information about these projects’ and programs’ future  costs. DOE generally agreed with this recommendation.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided DOE and DOD with copies of our draft report for their review  and comment. In response, we received written comments from both  departments, which are reprinted in appendixes II and III, respectively.  DOD agreed with both of our recommendations. DOD also provided a  document describing the methodology it used to prepare the estimates for  sustaining and modernizing the NC3 system, and the limitations inherent  in that methodology. We believe that had DOD included such  documentation in the joint report, as we have recommended, it would  have helped Congress to better understand the assumptions and  limitations that underpin these estimates. DOE neither agreed nor  disagreed with our report, as we made no new recommendations to  NNSA. Both departments also provided technical comments, which we  incorporated, as appropriate.
We are sending copies of this report to the appropriate congressional  committees and to the Secretary of Defense; Chairman, Joint Chiefs of  Staff; Secretary of the Air Force; Secretary of the Navy; Secretary of  Energy; and Administrator, NNSA. This report is also available at no  charge on the GAO website at http://www.gao.gov.
Should you or your staffs have any questions about this report, please  contact John Pendleton at (202) 512-3489 or pendletonj@gao.gov, or  David Trimble at (202) 512-3841 or trimbled@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made contributions to this  report are listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: We reviewed the July 15, 2013, joint report to Congress from the  Department of Energy (DOE) and the Department of Defense (DOD) that  describes their plans and 10-year budget estimates for sustaining and  modernizing U.S. nuclear weapons capabilities and assessed whether  their budget estimates in that report are accurate and complete  (consistent) with respect to their long-term plans, including whether the  report provides complete information and a transparent methodology, in  three areas: (1) DOE nuclear security enterprise modernization; (2) DOD  nuclear delivery systems; and (3) the DOD nuclear command, control,  and communications (NC3) system. To address our objective, we  obtained and analyzed the DOE and DOD plans and estimates from the  July 15, 2013, joint report, and analyzed the DOE and DOD data and  methodologies used to prepare their 10-year budget estimates. We  compared their plans and estimates from fiscal year 2014 through fiscal  year 2018 with their fiscal year 2014 budget-justification materials and  each department’s internal funding plans.
We performed our review at both DOE and DOD. For our review of DOE’s  plans and estimates, we drew upon our December 2013 report. We  compared DOE’s estimates in the joint report with the NNSA’s funding  plans in the Future Years Nuclear Security Program (FYNSP) and the  Fiscal Year 2014 Stockpile Stewardship and Management Plan, which  includes estimated funding requirements for NNSA modernization that  cover the time required for the joint report and beyond. For our review of  DOD’s plans and estimates for nuclear delivery systems and the nuclear  command and control system, we used DOD’s fiscal 2014 budget- justification submission and its funding plans in its Future Years Defense  Program (FYDP). Because DOD has not prepared internal funding plans  used to project estimated budget requests beyond fiscal year 2018, we  reviewed Air Force, Navy, and defense-wide plans, including the Air  Force’s Core Function Master Plan for Nuclear Deterrence, the Navy’s  long-range shipbuilding plan, DOD’s 30-year aviation inventory plan, and  the Defense Information Systems Agency’s (DISA) Nuclear Command,  Control, and Communications (C We did not assess the overall reliability  of DOE’s and DOD’s internal funding plans themselves, or the  departments’ underlying budget-estimating processes because such  analysis exceeded the scope of our mandate. We also did not  independently verify the reliability of DOD’s or DOE’s specific budget  estimates, but rather determined the estimates to be sufficiently accurate  and complete if the budget estimates in the joint report were consistent  with their funding plans, including their respective budget-justification  materials, FYNSP, and FYDP. GAO has previously reported on DOD’s  and DOE’s challenges in generating reliable budget estimates and  programming data.
We relied on findings developed for our December 2013 review of  NNSA’s Fiscal Year 2014 Stockpile Stewardship and Management Plan  to identify reasons for any inconsistencies we identified when comparing  relevant documents, and further discussed these causes and potential  effects with NNSA officials. At DOD, we met with officials from a range of  components responsible for developing and preparing the department’s  contributions to the joint report. In addition to the Air Force, Navy, and  Department of Defense Chief Information Officer (DOD CIO), we met with  officials from the Office of the Secretary of Defense and from joint  components, including
Office of the Deputy Assistant Secretary of Defense for Nuclear and
Office of the Deputy Assistant Secretary of Defense for Strategic and
Office of the Deputy Assistant Secretary of Defense for Nuclear
Office of the Under Secretary of Defense (Comptroller);
Office of the Director, Cost Analysis and Program Evaluation;
Joint Staff, J5; and
United States Strategic Command, J8.
To analyze DOE’s and DOD’s methodologies for preparing their 10-year  estimates, we first obtained documentation of DOE’s and DOD’s  methodologies and their source data for creating the 10-year estimates in  the joint report. For DOE, we drew upon our December 2013 report to  describe how DOE used the Fiscal Year 2014 Stockpile Stewardship and  Management Plan to prepare the plans and estimates in the joint report  for sustaining and modernizing the nuclear security enterprise and  nuclear weapons stockpile. We also met with NNSA officials to discuss  how the joint report was prepared. At DOD, we obtained Air Force, Navy,  and DOD CIO documentation of their methodologies used to create  DOD’s 10-year estimates for sustaining and modernizing nuclear delivery  systems and the nuclear command and control system. We also obtained  guidance in the form of e-mails and a briefing from the Office of the Under  Secretary of Defense for Policy, and interviewed officials from those  offices and from U.S. Strategic Command. We then compared DOE’s  information and DOD’s guidance and methodologies with the key  principles for developing and preparing long-term funding plans that we  derived by reviewing key federal and departmental guidance, standards,  and practices for cost-estimating, budget preparation, financial planning,  and public reporting. Such federal guidance included Circular No. A-11,  Preparation, Submission, and Execution of the Budget, Capital  Programming Guide version 3.0, and Guidelines for Ensuring and  Maximizing the Quality, Objectivity, Utility, and Integrity of Information  Disseminated by Federal Agencies, all published by the Office of  Management and Budget, and the GAO Cost Estimating and Assessment  Guide. To the extent we determined differences between the principles  we derived and the departments’ guidance and methodologies, we  discussed the causes and potential effects with relevant officials. We  conducted this performance audit from July 2013 to June 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Energy
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, Penney Harwell Caramia,  Assistant Director; Allison B. Bawden, Assistant Director; Hilary Benedict;  Grace Coleman; Jennifer Echard; Bridget Grimes; Carol Henn; Kevin L.  O’Neill; Karen Richey; Michael Shaughnessy; Michael Silver; and Amie  Steele made key contributions to this report.