DOE Project Management: NNSA Should Ensure Equal Consideration of Alternatives for Lithium Production
Released: 2015-07-13T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: An isotope of lithium is a key component of nuclear weapons and is essential for their refurbishment. NNSA halted certain aspects of its lithium production operation—conducted at its Y-12 site—in May 2013 due to the condition of the site's 72-year old lithium production facility. Y-12 management concluded that usable lithium could run out without additional actions. In response, NNSA developed a strategy that proposed a new lithium production facility by 2025 and identified “bridging” actions needed to meet demand through 2025. In January 2015, NNSA submitted for approval a mission need statement for lithium production capabilities.

Senate Report 113-176 included a provision for GAO to review lithium production at NNSA's Y-12 site. This report (1) describes the challenges NNSA has identified with its lithium production strategy, and (2) determines the extent to which NNSA developed a mission need statement that is independent of a particular solution, as called for in DOE's directive on project management.

To do this work, GAO reviewed relevant agency directives, guidance, and other documents and interviewed agency officials.

section_title: What GAO Found
paragraphs: The National Nuclear Security Administration's (NNSA) has identified various challenges in its lithium production strategy that may impact its ability to meet demand for lithium in the future, as well as actions that may mitigate these challenges. These challenges pertain to three key areas. First, NNSA may not have a sufficient supply of lithium material for defense program requirements. NNSA officials told GAO in April 2015 that, due to additional recent increases in demand, its supply of currently qualified lithium—lithium approved for use in weapon systems in refurbishment—will run out by 2018 without additional actions. Second, at NNSA's Y-12 National Security Complex in Oak Ridge, Tennessee, where lithium production operations are conducted, the existing lithium production facility and equipment are at risk of catastrophic failure. In March 2014, for example, a 300-pound slab of concrete fell from the ceiling into an active work area (this area is no longer in use). Third, fiscal constraints could cause delays in the construction of a new lithium production facility. NNSA, in its lithium production strategy, also identifies various actions that it could take to mitigate these challenges—including procuring lithium from outside sources and outsourcing certain aspects of the lithium production process. However, the mitigating actions are in early stages of development, and may bring additional challenges.

In developing and implementing its lithium production strategy, NNSA did not develop a mission need statement that is fully independent of a particular solution, contrary to the agency directive on Program and Project Management for the Acquisition of Capital Assets, which governs the design and construction of new facilities (DOE Order 413.3B). According to this directive, the mission need statement should be independent of a particular solution, and it should not be defined by the equipment, facility, technological solution, or physical end-item. This allows the program office responsible for the capital asset project to explore a variety of alternatives. In January 2015, NNSA program officials submitted a mission need statement for lithium production for approval to the Deputy Administrator for Defense Programs, NNSA. It was approved on June 10, 2015. The mission need statement included, among other things, a description of the capability gap, alternatives for addressing its mission need—such as building a new facility, leasing off-site facilities, or outsourcing lithium processing—and estimated cost and schedule ranges. However, the document expresses the capability gap in terms of a particular solution—specifically, a new facility. For example, it includes multiple references to an alternative facility to replace the existing facility, suggesting that NNSA gave preference to building a new facility. In addition, it did not include cost and schedule estimates for six of the seven alternatives presented in the mission need document. The mission need statement includes cost and schedule estimates only for the alternative of building a functioning facility at Y-12. NNSA officials told GAO that they plan to analyze other alternatives for meeting the mission need for lithium production. However, by seemingly giving preference to a particular solution in its mission need document, NNSA is not following DOE's project management order, which may preclude serious consideration of other potential viable alternatives. A mission need statement biased toward a particular solution may introduce bias into the rest of the analysis of alternatives process.

section_title: What GAO Recommends
paragraphs: GAO recommends that NNSA objectively consider all alternatives, without preference for a particular solution, as it proceeds with its analysis of alternatives process. NNSA neither agreed nor disagreed with GAO's recommendation; however, it disagreed with the conclusions. GAO continues to believe its conclusions are fair and well supported.

section_title: Letter
paragraphs: The National Nuclear Security Administration (NNSA), a separately  organized agency within the Department of Energy (DOE), is responsible  for the maintenance and refurbishment of nuclear weapons. The isotope  lithium-6 is a key component of nuclear weapons and is therefore  essential for the refurbishment of the nuclear weapons stockpile. Natural  lithium consists approximately of 7.5 percent of the isotope lithium-6 and  92.5 percent of the isotope lithium-7. NNSA’s Y-12 National Security  Complex in Oak Ridge, Tennessee, separated lithium-6 from lithium-7  using a process that required large quantities of mercury, and resulted in  worker exposure to mercury and environmental contamination, from 1954  through 1963.

NNSA still has a large supply of lithium-6 in storage and in retired  weapons awaiting disassembly. NNSA relies on contractors to carry out  its lithium production operations at its Y-12 site. Since 1963, Y-12’s  lithium production operations have relied on existing supplies of lithium-6.  Specifically, to produce lithium for NNSA’s defense programs, Y-12  recovers lithium-6 from disassembled weapons, cleans it, and prepares  the cleaned lithium into forms suitable for refurbished weapons. Until May  2013, Y-12 relied on a cleaning process known as “wet chemistry.” Wet  chemistry involves purifying lithium from dismantled weapons and storing  it as lithium chloride. To be usable in refurbished weapons, the lithium  chloride must be converted first to lithium metal and then treated with  hydrogen gas to create lithium hydride or treated with deuterium gas to  create lithium deuteride. In May 2013, due to the deteriorating conditions  of NNSA’s 72-year old lithium production facility at the Y-12 site (building  9204-2), Y-12 suspended its wet chemistry and conversion operations. In  doing so, Y-12 suspended its ability to convert the existing inventory of  lithium chloride into lithium usable for refurbished weapons.

To meet lithium demand without its wet chemistry capabilities, Y-12  began in May 2013 to rely exclusively on a process known as Direct  Materials Manufacturing (DMM)—which involves recycling lithium hydride  and deuteride directly from disassembled weapons and manually sanding  the outer layer of the lithium material to remove impurities. At the same  time, however, projected demand for lithium for use in refurbished  weapons tripled. As a result, according to a 2013 assessment, Y-12  concluded that it could run out of usable lithium by 2020 if it does not take  additional actions.

In light of the deteriorating condition of building 9204-2, in August 2013,  NNSA’s Y-12 contractor proposed a strategy for meeting lithium demand  that included, among other things, increased use of DMM in existing Y-12  facilities for lithium production through 2025. The strategy, according to Y- 12’s proposal, called for the design and construction of a new lithium  production facility that would provide lithium production capabilities  beyond 2025. In a February 2014 memorandum from the Assistant  Deputy Administrator of Stockpile Management to the NNSA Production  Office Manager regarding “Lithium Production Capability and Supply,”  NNSA committed to working with Y-12 to implement the strategy. In  January 2015, Y-12 finalized a “Lithium Materials Production Transition  Implementation Plan” (Implementation Plan), which describes the major  elements of its lithium strategy—particularly the “bridging” actions  required to meet lithium demand until a new lithium production facility is  operational. This document also discusses challenges associated with  implementing the strategy and actions that may mitigate these  challenges. Together, these documents encompass NNSA’s lithium  production strategy—hereafter referred to as “the lithium production  strategy” or “the strategy.”

Also in January 2015, NNSA finalized its statement of mission need for  providing new lithium production capabilities, the approval of which marks  the end of the first phase—preconceptual design—of its capital asset  acquisition process. This statement was approved on June 10, 2015.  The design and construction of new NNSA facilities is governed by DOE  Order 413.3B, Program and Project Management (PM) for the Acquisition  of Capital Assets. The capital asset acquisition process begins with  identifying a mission need (independent of a particular solution), which  provides the basis for objectively analyzing alternative solutions.  Objectively analyzing alternatives helps ensure that the best alternative  that satisfies the mission need is chosen. According to Order 413.3B, the  mission need must be independent of a particular alternative, allowing the  program office responsible for the capital asset project to explore a  variety of alternatives. We previously found that DOE and NNSA officials  had acknowledged that unreliable analysis of alternatives is a risk factor  for major cost increases and schedule delays for NNSA projects. Also,  we have previously found that NNSA has selected preferred alternatives  for many projects, and then spent billions of dollars designing and  partially constructing several major capital asset projects, only to later  reassess alternatives for each project.

Senate Report 113-176 included a provision that GAO review lithium  production at NNSA’s Y-12 site in Tennessee. In response, this report (1)  describes the challenges, if any, NNSA has identified with its lithium  production strategy and (2) determines the extent to which NNSA  developed a mission need statement for lithium production that is  independent of a particular solution. DOE’s Office of the Inspector  General is conducting a related audit, with a planned issue date later in  2015. That audit is to address, among other things, projected lithium  supply and demand.

To describe any challenges NNSA has identified with its lithium  production strategy, we reviewed NNSA and Y-12 documents related to  lithium production and lithium requirements for fiscal years 2013 through  2015 and interviewed NNSA and Y-12 officials, as well as officials from  Los Alamos and Lawrence Livermore National Laboratories, NNSA’s  design laboratories that must qualify, or approve, the lithium produced at  Y-12. We also coordinated with DOE’s Office of the Inspector General,  which is conducting a related audit. To determine the extent to which  NNSA developed a mission need statement for lithium production  independent of a predetermined solution, in accordance with DOE  direction and guidance, we reviewed DOE Order 413.3B (“Program and  Project Management for the Acquisition of Capital Assets”) and DOE G  413.3-17 (“Mission Need Statement Guide”) to identify the direction and  guidance. We also reviewed our related past work. We interviewed  NNSA and Y-12 officials regarding the mission need statement and  overall strategy. Appendix I presents a more detailed description of our  objectives, scope, and methodology.

We conducted this performance audit from October 2014 to July 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: This section describes NNSA’s nuclear security enterprise, lithium  production, the process for qualifying lithium, DOE’s capital asset  acquisition process and mission need statement development, and  NNSA’s lithium production strategy.
subsections: section_title: NNSA’s Nuclear Security Enterprise
paragraphs: NNSA is responsible for the management of the nation’s nuclear  weapons, nuclear nonproliferation, and naval reactor programs. NNSA  relies on contractors to carry out these responsibilities and manage day- to-day operations at each of its eight sites. These sites include  laboratories, production plants, and a test site. Together, these sites  implement NNSA’s Stockpile Stewardship program that, among other  things, includes operations associated with maintenance, refurbishment,  and dismantlement of the nuclear weapons stockpile. As discussed  previously, lithium is a key component of nuclear weapons and is  therefore essential for the refurbishment of the nuclear weapons  stockpile. The following NNSA sites are involved in processes or  decisions that impact the supply of lithium:

The NNSA Production Office is responsible for overseeing contractor  performance at the Pantex Plant and Y-12 National Security Complex,  including the majority of the physical work on weapon refurbishment.

The Pantex Plant located near Amarillo, Texas, dismantles retired  nuclear weapons.

The Y-12 Nuclear Security Complex disassembles canned  subassemblies (CSA) from dismantled weapons; these CSAs contain  lithium components that are the source material for lithium production  for refurbished weapons. NNSA’s Y-12 site is also responsible for  lithium production, which involves recovering lithium-6 from  disassembled weapons, cleaning it, and preparing the cleaned lithium  into forms suitable for refurbished weapons.

NNSA’s Los Alamos and Lawrence Livermore National Laboratories  qualify, or approve, the lithium produced at Y-12 to ensure that it is  suitable for use in refurbished weapons.

NNSA program offices are responsible for overseeing and supporting the  activities performed by its contractors. NNSA’s Office of Stockpile  Management, within its Office of Defense Programs, oversees the  maintenance, refurbishment, and dismantlement of nuclear weapons—to  include overseeing Y-12’s plans for meeting lithium demand.

section_title: Lithium Production
paragraphs: The lithium production process at NNSA’s Y-12 National Security  Complex involves multiple steps and requires specialized equipment and  a controlled environment, according to NNSA’s lithium production  strategy. The lithium production process can be broken down into three  stages: (1) lithium recovery from disassembled weapons, (2) lithium  purification or cleaning, and (3) lithium forming and machining (see fig. 1).

Recovery. (Stage 1) The recovery of lithium source material from  disassembled weapons is performed at Y-12 in building 9204-2E. Y-12  recovers lithium hydride and deuteride from CSAs it receives from the  Pantex Plant.

Historic purification process. (Stage 2) The historic purification process  relied on wet chemistry, conducted at Y-12 in building 9204-2. Using wet  chemistry Y-12 purified the lithium hydride and deuteride (source  material) recovered from dismantled weapons using hydrochloric acid.  The resulting purified lithium chloride salt was then stored in 55-gallon  drums at Y-12 until it was needed for use. The lithium chloride was  subjected to electrolysis to produce lithium metal, which was then  placed in a reactor vessel with either hydrogen or deuterium gas for  conversion to lithium hydride or deuteride. The bulk lithium hydride or  deuteride resulting from this process was then ready for use as feedstock  for the lithium forming and machining phase.

Current cleaning process. (Stage 2) The current cleaning process relies  on DMM, which entails sanding and wiping the lithium hydride and  deuteride (source material) removed directly from the disassembled  weapons to remove impurities. This cleaned material becomes bulk  material feedstock for the lithium forming and machining phase. The  cleaning process is conducted in building 9202; the cleaned components  are packaged and moved to building 9204-2 for forming and machining.

Lithium forming and machining. (Stage 3) Lithium forming and  machining are conducted in building 9204-2 and involves preparing the  purified or cleaned lithium feedstock for use in refurbished weapons.  During this stage, the lithium hydride or deuteride (feedstock) is broken  into pieces and fed into a crusher/grinder to pulverize it into a powder,  which is then blended and loaded into molds for pressing. The resulting  blanks are machined into high-precision components. Historically, the  machine dust resulting from this process was purified using wet chemistry  and reused. Now, Y-12 stores this dust for future use but cannot recycle it  without wet chemistry capabilities.

section_title: Qualification Process
paragraphs: Regardless of whether lithium undergoes DMM or wet chemistry, the  resulting end product (i.e., lithium components suitable for refurbished  weapons) must be qualified through a process approved by the design  laboratories (Los Alamos and Lawrence Livermore National  Laboratories). Qualification entails testing for chemical and mechanical  homogeneity, density, and tensile properties, among other things.  Although only the end product (lithium component) must be qualified, Y- 12 prepares for qualification by evaluating the lithium material throughout  the production process. Y-12 may evaluate the source material (i.e.,  lithium components from retired weapons), the processes used to  produce lithium (i.e., cleaning, machining), and the feedstock for the  forming and machining (i.e., the purified or cleaned lithium). Wet  chemistry produced a homogeneous feedstock that only had to be  evaluated once for use in a given weapon system in production,  regardless of the source material. DMM feedstock, however, is not  necessarily homogeneous and the source material, which may contain  impurities, must be evaluated separately for each weapon system in  production.

section_title: DOE’s Capital Asset Acquisition Process and Mission Need Statement Development
paragraphs: DOE Order 413.3B governs NNSA’s capital asset acquisition activities,  including the Critical Decision (CD) process. The CD process breaks  down capital acquisition into project phases that progress from a broad  statement of mission need into well-defined requirements. Each critical  decision point requires successful completion of the preceding phase and  marks an authorization to increase the commitment of resources by DOE.  Under Order 413.3B, the first two CDs—CD-0 (Approve Mission Need)  and CD-1 (Approve Alternative Selection and Cost Range)—span the  analysis of alternatives process; with the majority of the analysis of  alternatives being conducted during CD-1 and ending with CD-1  approval. CD-0 corresponds to the preconceptual design process.

DOE’s capital asset acquisition process, or its critical decision process, is  depicted in figure 2.

DOE’s Order 413.3B and DOE’s Mission Need Statement Guide (G  413.3-17) provide direction and guidance for preparing a mission need  statement. A mission need statement identifies the capability gap  between the current state of a program’s mission and the mission plan. It  is the first step in the identification and execution of a DOE capital asset  project. DOE’s Mission Need Statement Guide includes nonmandatory  approaches for meeting requirements and is not intended to be a  requirements document. The purpose of the guide is to provide  suggested content, definitions, and examples for creating a mission need  statement that fulfills DOE Order 413.3B. Suggested content, according  to the guide, includes, among other things (1) a description of the  capability gap, (2) alternatives, or approaches, for addressing the mission  need, and (3) a section for estimated cost and schedule ranges to acquire  various alternatives.

section_title: NNSA’s Lithium Production Strategy
paragraphs: NNSA’s lithium production strategy involves developing new lithium  production capabilities in the long term and using existing capabilities until  these long-term capabilities are available. As discussed previously, the  lithium production strategy calls for the design and construction of a new  lithium production facility that would provide lithium production capabilities  beyond 2025. To that end, NNSA began the process of identifying a  mission need for lithium capabilities in June 2014—the first step in the  identification and execution of a DOE project—and finalized its mission  need statement in January 2015.

NNSA’s lithium production strategy for meeting lithium demand through  2025 includes five key elements: (1) increasing DMM cleaning capabilities  and qualifying additional weapon systems to serve as lithium source  material; (2) converting its inventory of lithium chloride into a usable form;  (3) procuring available enriched lithium from an outside source; (4)  implementing new technologies for, among other things, purifying  machine dust; and (5) sustaining the existing facility through investments  in infrastructure and operations to support lithium operations until a new  facility is available. The strategy also discusses challenges associated  with implementing the strategy and actions that may mitigate these  challenges.

section_title: NNSA Has Identified Various Challenges in Its Lithium Production Strategy
paragraphs: NNSA has identified various challenges in its lithium production strategy  that may impact its ability to meet demand for lithium through and beyond  2025. NNSA has also identified actions that may mitigate these  challenges.
subsections: section_title: NNSA Has Identified Challenges in Three Key Areas
paragraphs: The challenges pertain to three key areas: (1) insufficient supply of  qualified lithium material, (2) catastrophic failure of buildings or  equipment, and (3) potential delays in the availability of the proposed new  lithium production facility (Lithium Production Capability facility).
subsections: section_title: Insufficient Supply of Lithium Material
paragraphs: NNSA has identified challenges associated with its strategy for ensuring  that it has a sufficient supply of lithium material for defense program  requirements through and beyond 2025. NNSA’s supply of currently  qualified lithium—lithium approved for use in weapon systems in  refurbishment—will run out by 2020, according to the lithium production  strategy. In April 2015, NNSA officials told us that due to additional recent  increases in demand, with no additional action to increase supply, this  date has moved to 2018. According to Y-12 officials, about 50 percent of  lithium is lost as machine dust in the machining process. Y-12 currently  stores this dust for future use but cannot recycle it without certain wet  chemistry capabilities. As a result, reliance on DMM alone will require  approximately twice the source lithium from dismantled weapons than  when wet chemistry is in operation. According to NNSA’s lithium  production strategy, however, increasing the supply of qualified lithium  material may be a challenge for the following three reasons.

First, dismantlement and disassembly schedule changes could delay  or reduce the availability of lithium source material. Because NNSA’s  weapons dismantlement and disassembly decisions drive the  availability of source material for DMM, changes to the schedules  could impact the available supply of lithium. According to Y-12  documents, NNSA’s decisions to hold certain weapons components  for eventual, but not immediate, reuse and to hold some in its  strategic reserve have decreased the amount of lithium material  available. We previously found that NNSA’s retention of certain  weapons components and uncertain policy decisions regarding when  some will be released for disassembly pose challenges to Y-12’s  ability to plan for future work. Y-12 officials told us that they estimate  future supply and base their planning on NNSA’s dismantlement and  disassembly schedule. However, uncertainty in the dismantlement  and disassembly schedule may make it difficult to determine whether  a sufficient supply of lithium is available for production.

Second, it may be more difficult to qualify lithium source material  under Y-12’s current cleaning process (DMM)—which may reduce the  supply of source material available. Because source material  undergoing DMM is purified only through a surface cleaning (i.e.,  manual sanding and wiping), according to the lithium production  strategy, ensuring that the end product can be chemically certified— part of the qualification—requires that the source material be selected  from a supply of recycled lithium components known to possess  sufficient chemical purity to meet specifications. In other words, not all  potential sources of lithium will be of sufficient purity or quality, which  may further reduce the available supply.

Third, it is more time-consuming to qualify lithium under Y-12’s current  cleaning process (DMM). According to Y-12 officials, qualifying lithium  produced through DMM is more rigorous and time-consuming  because the lithium source material recovered from each dismantled  weapon system must be qualified separately. In addition, the  feedstock—cleaned lithium ready for machining—must also be  qualified. In contrast, when source material is purified using wet  chemistry, the resulting feedstock is homogeneous and therefore the  source material and feedstock only have to be qualified once for use  in a given weapon system.

According to NNSA officials, with no additional action to increase supply,  Y-12 may run out of qualified lithium by 2018. According to the lithium  production strategy, Y-12  has plans and schedules in place to qualify, by  the end of fiscal year 2017, additional weapons systems as sources for  material. This would extend the supply of qualified DMM source material  into the early 2020s. Y-12 officials said that they are working with the  design laboratories to streamline the qualification process—for example,  to qualify multiple weapon systems as sources of DMM feedstock to  multiple weapon systems in refurbishment.

section_title: Catastrophic Failure of Buildings or Equipment
paragraphs: NNSA has identified the catastrophic failure of buildings or equipment as  a challenge that could impact its ability to meet lithium demand until a  new facility is available. For example, building 9204-2 is a key facility for  lithium production. However, according to the lithium production strategy,  the building, together with much of the equipment inside, has deteriorated  and is beyond its expected life span. Specifically, the building has  experienced both internal and external deterioration of concrete in the  roofs, walls, and ceilings from exposure to corrosive liquids and  processing fumes (see fig. 3). In March 2014, for example, a 300-pound  slab of concrete fell from the ceiling into an active work area—an area  that has since been roped off and is no longer in use (see fig. 4).  Moreover, according to the lithium production strategy, the building was  not built in accordance with current codes and standards, is costly to  operate, and has multiple vulnerabilities that could threaten the entire  production process. Y-12’s operations health risk assessments rate the  equipment for two parts of the lithium production process conducted in  9204-2 as among the highest health risks at Y-12, according to the  mission need statement for lithium production.

Although certain parts of the DMM process are conducted in a different  building (building 9202), moving material between buildings is inefficient  and may not be sustainable if the use of DMM is to increase, according to  the lithium production strategy. Specifically, DMM components are  cleaned—manually sanded—in a closed container in building 9202. The  cleaned components are packaged in sealed bags, placed in drums, and  moved to building 9204-2 for crushing and grinding. As future demand  increases and Y-12 meets this demand through increased use of DMM,  according to the lithium production strategy, this process will strain the  capacity of building 9202 and DMM cleaning capabilities will have to be  installed in building 9204-2.

section_title: Potential Delays in the Availability of the Proposed Lithium Production Capability Facility
paragraphs: NNSA has also identified as a challenge, potential delays in the  availability of the proposed Lithium Production Capability facility.  According to the lithium production strategy, because building 9204-2 has  been deteriorating rapidly in recent years and cannot be reasonably  upgraded to ensure an enduring source of lithium components for the  stockpile beyond 2025, the design and construction of a new lithium  production facility that would provide lithium production capabilities  beyond 2025 is called for. Key elements of the strategy—such as  qualifying additional weapon systems for use as source material for DMM  in order to meet demand for lithium—are based on the assumption that  the Lithium Production Capability facility will be designed and constructed  from 2016 to 2023 and ready for use by 2025. However, the lithium  production strategy notes that fiscal constraints could affect the  availability of this facility in 2025. We have previously found that NNSA  construction projects often experience schedule delays.

section_title: NNSA Has Identified Mitigating Actions to Address Some Challenges
paragraphs: To address the challenges it has identified, NNSA has identified several  mitigating actions, which are presented in its lithium production strategy.  Many of the same five elements discussed previously that make up the  strategy for meeting demand for lithium through 2025 are also cited as  mitigating actions intended to address challenges. Specifically, the lithium  production strategy cites varying combinations of the following mitigating  actions:

Accelerate the design and construction of the Lithium Production  Capability facility.

Procure lithium from outside sources.

Pursue outsourcing of lithium materials production.

Convert existing inventory of lithium chloride to a usable form of  lithium.  Identify and qualify additional weapon systems for use as lithium  source material for DMM.

Utilize leased or third party financed facilities for lithium production  activities.

Develop and deploy new purification and material production  technologies and techniques, including machine dust recycling.

Negotiate a dismantlement schedule that aligns the selected units for  dismantlement and the dismantlement schedule with mission needs.

Maintain spares and develop required specifications for backup of key  process equipment.

Maintain technical and operational skills and knowledge by  establishing a prototype wet chemistry operation.

The mitigating actions identified in the lithium production strategy are in  early stages of development, and may bring additional challenges. For  example, the strategy offers as a mitigating action the conversion of Y- 12’s existing inventory of lithium chloride to lithium metal. However,  NNSA cannot convert this material to lithium metal without restarting  certain steps in the wet chemistry process or outsourcing the conversion  of lithium chloride to lithium metal to an external vendor. With either  option, as stated in the lithium production strategy, after the stored lithium  chloride is converted to lithium metal, Y-12 plans to convert the lithium  metal to lithium hydride on-site. According to the strategy, this would  require a significant investment in the existing facility (building 9204-2) to  address deferred maintenance and refurbish key equipment.

section_title: NNSA’s Mission Need Statement for a Lithium Production Capability Is Not Fully Independent of a Particular Solution
paragraphs: NNSA did not develop a mission need statement for lithium production  that is fully independent of a particular solution, contrary to the direction of  DOE Order 413.3B. In January 2015, NNSA program officials submitted a  statement of mission need, or CD-0, for lithium production for approval to  the Deputy Administrator for Defense Programs, NNSA. This statement  was approved on June 10, 2015. As part of the preconceptual design  (CD-0) approval process, the mission need—which DOE defines in Order  413.3B as a credible gap between current capabilities and those required  to meet the goals articulated in the strategic plan—and functional  requirements—the general parameters that the selected alternative must  have to address the mission need—must be identified. The order directs  that the mission need should be independent of a particular solution.  According to the order and related guidance, this approach allows a  program office the flexibility to explore a variety of solutions. NNSA’s  mission need statement for lithium production, however, expresses the  gap in terms of a particular solution—specifically, a new facility.

The Lithium Production Capability mission need statement is a 24-page  document that includes, among other things, a description of the  capability gap, alternatives for addressing its mission need, and a section  for estimated cost and schedule ranges. Specifically, the document  describes the capability gap that exists due to the deteriorating condition  of building 9204-2 and states that the mission need for lithium production  is aligned with NNSA’s strategic plans—citing passages from NNSA’s  strategic plan. For example, the document describes the primary  capability gap as the loss of Y-12’s wet chemistry process due to the  degraded condition of building 9204-2. The mission need statement  details this gap in terms of functional and operational gaps, including (1)  the continued physical deterioration of the building where lithium  operations are being conducted and the resulting shortage of  components; (2) the continuous deterioration of mechanical and electrical  systems in the existing facility (building 9204-2), with increasing  unsustainable energy costs and greenhouse gas emissions, which will  affect controlled work environments, ongoing operations, and delivery of  mission work; (3) the inability to introduce new technologies into the  facility due to its degraded condition; and (4) the facility’s noncompliance  with current codes. NNSA’s mission need statement also characterizes  the capability gap in terms of demand for lithium but devotes most of the  mission need statement to describing the current condition of its existing  lithium production facility. According to the mission need statement,  specific lithium requirements are contained in the Fiscal Year 2015  Production and Planning Directive and the classified annexes of the  Stockpile Stewardship and Management Plans. This is the only  characterization in the mission need statement of the capability gap in  terms of demand for lithium. The remaining discussion describes the  capability gap in terms of the degraded condition of building 9204-2.  Order 413.3B and related guidance do not state that the capability gap  should be defined in terms of program requirements.

NNSA’s mission need statement lists seven alternatives for addressing its  mission need: do nothing, outsource the lithium processing capability, refurbish/repurpose one or more of the existing Y-12 facilities,  lease off-site suitable facilities,  secure third-party financing to build one or more new facilities,  consider new modular facilities to transfer missions from existing  facility or facilities that are beyond repair, and build a complete and functioning facility at Y-12.

According to DOE Order 413.3B, the mission need should be  independent of a particular solution, and should not be defined by the  equipment, facility, technological solution, or physical end-item. In  addition, the DOE order states that the mission need should be described  in terms of the general parameters of the solution, how it fits within the  mission of the program, and why it is critical to the overall  accomplishment of the department’s mission, including the benefits to be  realized. However, some of language used and information included in  NNSA’s mission need statement suggests that NNSA may have given  preference to a single alternative—building the Lithium Production  Capability facility at Y-12—before identifying a mission need and  conducting an analysis of alternatives. For example, the section  describing the benefits from closing the capability gap includes phrases  such as, an alternative facility that is code compliant, and replacing the existing facilities with an alternative facility will  significantly improve NNSA’s capability and efficiency in performing its  Stockpile Stewardship and other national security missions at Y-12.

In addition, NNSA included in its mission need statement rough-order-of- magnitude estimates of the project cost and schedule ranges for only one  alternative—build and equip a functioning facility at Y-12. According to its  mission need statement, NNSA estimates that construction of the new  facility will cost $302 million to $646 million (with $431 million “likely”) and  includes a schedule range estimate for project completion between fiscal  year 2024 and fiscal year 2026. Providing such estimates for only one  alternative is contrary to DOE guidance that states that a mission need  statement should provide a rough order of magnitude estimate of the  project cost and schedule ranges to acquire various capability alternatives  that address the stated mission need.

NNSA officials said that they did not include cost and schedule estimates  for other alternatives because there is no DOE requirement to do so.  These officials acknowledged that DOE guidance states that a mission  need statement is to provide cost estimates for various alternatives, but  noted that this provision is not a requirement. NNSA officials noted that  they plan to analyze other alternatives for meeting the mission as part of  CD-1. However, because NNSA’s mission need statement did not include  rough-order-of-magnitude estimates of the project cost and schedule  ranges for other alternatives, it appears to be biased toward a particular  solution and may introduce bias into the rest of the analysis of  alternatives process. This, in turn, could undermine the purpose of the CD  process: to help ensure that NNSA chooses the best alternative that  satisfies the mission need on the basis of selection criteria, such as  safety, cost, or schedule.

Giving preference to a particular solution may exclude serious  consideration of other potential viable alternatives. In our December 2014  report on the analysis of alternatives process applied by NNSA, we found  that conducting such an analysis without a predetermined solution is a  best practice. In that report, DOE and NNSA officials acknowledged that  unreliable analysis of alternatives is a risk factor for major cost increases  and schedule delays for NNSA projects. We recommended that DOE  incorporate best practices into its analysis of alternatives requirements to  minimize the risk of developing unreliable analyses of alternatives and  incurring major cost increases and schedule delays on projects. DOE  agreed with our recommendation, but we noted in the report that DOE’s  unspecified, open-ended date for responding to this recommendation may  have indicated a lack of urgency or concern about the need to implement  these recommendations.

section_title: Conclusions
paragraphs: We are encouraged that NNSA officials plan to analyze alternatives for  meeting the mission need for lithium production requirements as they  proceed with the conceptual design phase of their capital asset  acquisition process. However, by completing its preconceptual design  (CD-0) phase with a mission need statement that is not fully independent  of a particular solution, NNSA is not following DOE’s project management  order and may limit objective consideration of the other six alternatives  identified for meeting mission requirements. Having prepared cost and  schedule estimate ranges for only one of the seven alternatives—thus  demonstrating preference for that alternative—may affect the rest of  NNSA’s analysis of alternatives process. This preference could potentially  undermine NNSA’s ability to choose the best alternative that satisfies the  mission need.

section_title: Recommendation for Executive Action
paragraphs: To improve NNSA’s ability to choose the best alternative that satisfies the  mission need for lithium production, we recommend that the Secretary of  Energy request that NNSA’s Deputy Administrator for Defense Programs  take steps to ensure that NNSA objectively consider all alternatives,  without preference for a particular solution, as it proceeds with the  analysis of alternatives process. Such steps could include clarifying the  statement of mission need for lithium production so that it is independent  of a particular solution.

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this product to NNSA for comment. NNSA  provided written comments, which are reproduced in full in appendix II, as  well as technical comments, which we incorporated in our report as  appropriate. In its comments, NNSA neither agreed nor disagreed with  our recommendation. However, it stated that our conclusion that the  agency has pre-selected an alternative for the Lithium Production  Capability is not correct. It further stated that NNSA will conduct an  Analysis of Alternatives, beginning in July 2015, and that it fully intends to  evaluate multiple options, such as the use of an existing facility, the use  of a new facility, or outsourcing.

We maintain that our conclusion is well supported. We did not conclude  that NNSA would not conduct an analysis of alternatives, but that its  mission need statement for lithium production was not fully independent  of a particular solution, and that demonstrating preference for one  alternative—a replacement facility for lithium production—may affect the  rest of NNSA’s analysis of alternatives process and could potentially  undermine NNSA’s ability to choose the best alternative that satisfies the  mission need. Such a focus may introduce a bias into the analysis  alternatives process. We stand by our recommendation that NNSA  objectively consider all alternatives, without preference for a particular  solution, as it proceeds with the analysis of alternatives process.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Energy, and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found   on the last page of this report. GAO staff who made key contributions to  this report are listed in appendix III.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To describe the challenges the National Nuclear Security Administration  (NNSA) has identified with its lithium production strategy, we reviewed  NNSA and Y-12 National Security Complex documents related to lithium  production and lithium requirements. These documents included the  Lithium Production Capability (LPC) CD-0 package—comprising LPC  Mission Need Statement, Y-12 National Security Complex and the LPC  Program Requirements Document; the Lithium Materials Production  Transition Implementation Plan; the Y-12 Materials Production Strategy;  and the Building 9204-2 Ops Plan for Sustainment Activities. We also  conducted a site visit to Y-12 and interviewed NNSA and Y-12 officials, as  well as officials from the weapons design laboratories—Los Alamos and  Lawrence Livermore National Laboratories. We coordinated with the  Department of Energy’s (DOE) Office of the Inspector General (DOE-IG),  which is/was conducting a related audit, to scope our work. Specifically,  DOE-IG conducted an in-depth analysis of Y-12’s forecasting of lithium  supply and demand, coordination among NNSA program offices  responsible for funding and implementation of lithium matters, facility  conditions and maintenance and their impact on lithium production, and  Y-12’s lithium production strategy.

To determine the extent to which NNSA developed an independent  mission need statement for lithium production independent of a particular  solution, in accordance with DOE direction and guidance, we identified  the requirements and guidance by reviewing DOE Order 413.3B  (“Program and Project Management for the Acquisition of Capital Assets”)  and DOE G 413.3-17 (“Mission Need Statement Guide”). We also  reviewed our previous report entitled DOE and NNSA Project  Management: Analysis of Alternatives Could Be Improved by  Incorporating Best Practices to better understand the analysis of  alternatives process. We then reviewed the Lithium Production Capability  (LPC) CD-0 package; the Lithium Materials Production Transition  Implementation Plan; the Y-12 Materials Production Strategy; and the  Building 9204-2 Ops Plan for Sustainment Activities, and compared these  documents with the direction and guidance. We also conducted a site visit  to Y-12 and interviewed NNSA and Y-12 officials regarding the mission  need statement and overall strategy.

We conducted this performance audit from October 2014 to July 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: Comments from the Department of Energy

section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: David C. Trimble, (202) 512-3841 (trimbled@gao.gov)

section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Diane LoFaro, Assistant  Director; Alisa Beyninson; Kevin Bray; R. Scott Fletcher; Cynthia Norris;  Steven Putansu; Dan Royer; and Kiki Theodoropoulos made key  contributions to this report.


Question-summary annotations: questions: question: To what extent has the NNSA reviewed its lithium production strategy?
answer: The National Nuclear Security Administration's (NNSA) has identified various challenges in its lithium production strategy that may impact its ability to meet demand for lithium in the future, as well as actions that may mitigate these challenges.

question: To what extent is the NNSA's supply of lithium adequate?
answer: First, NNSA may not have a sufficient supply of lithium material for defense program requirements.
child_questions: question: How long will the current supply last?
answer: NNSA officials told GAO in April 2015 that, due to additional recent increases in demand, its supply of currently qualified lithium—lithium approved for use in weapon systems in refurbishment—will run out by 2018 without additional actions.

question: How safe are the lithium operations?
answer: Second, at NNSA's Y-12 National Security Complex in Oak Ridge, Tennessee, where lithium production operations are conducted, the existing lithium production facility and equipment are at risk of catastrophic failure. In March 2014, for example, a 300-pound slab of concrete fell from the ceiling into an active work area (this area is no longer in use).

question: How well-funded are lithium operations?
answer: Third, fiscal constraints could cause delays in the construction of a new lithium production facility.

question: How is NNSA addressing these issues?
answer: NNSA, in its lithium production strategy, also identifies various actions that it could take to mitigate these challenges—including procuring lithium from outside sources and outsourcing certain aspects of the lithium production process. However, the mitigating actions are in early stages of development, and may bring additional challenges.

questions: question: How did the NNSA lithium mission need statement not follow federal directives?
answer: In developing and implementing its lithium production strategy, NNSA did not develop a mission need statement that is fully independent of a particular solution, contrary to the agency directive on Program and Project Management for the Acquisition of Capital Assets, which governs the design and construction of new facilities (DOE Order 413.3B).

question: How was the mission need statement approved?
answer: In January 2015, NNSA program officials submitted a mission need statement for lithium production for approval to the Deputy Administrator for Defense Programs, NNSA. It was approved on June 10, 2015.

question: What did the mission need statement contain?
answer: The mission need statement included, among other things, a description of the capability gap, alternatives for addressing its mission need—such as building a new facility, leasing off-site facilities, or outsourcing lithium processing—and estimated cost and schedule ranges.
child_questions: question: What were flaws of the mission need statement?
answer: However, the document expresses the capability gap in terms of a particular solution—specifically, a new facility. For example, it includes multiple references to an alternative facility to replace the existing facility, suggesting that NNSA gave preference to building a new facility. In addition, it did not include cost and schedule estimates for six of the seven alternatives presented in the mission need document.
child_questions: question: Why was it an issue that NNSA seemed to give preference to one specific solution?
answer: However, by seemingly giving preference to a particular solution in its mission need document, NNSA is not following DOE's project management order, which may preclude serious consideration of other potential viable alternatives. A mission need statement biased toward a particular solution may introduce bias into the rest of the analysis of alternatives process.

questions: question: For what is lithium used?
answer: An isotope of lithium is a key component of nuclear weapons and is essential for their refurbishment.

question: Why did NNSA halt parts of operations at the Y-12 site?
answer: NNSA halted certain aspects of its lithium production operation—conducted at its Y-12 site—in May 2013 due to the condition of the site's 72-year old lithium production facility.
child_questions: question: How did NNSA follow up with this issue?
answer: In response, NNSA developed a strategy that proposed a new lithium production facility by 2025 and identified “bridging” actions needed to meet demand through 2025.

question: What mission need statement did NNSA submit?
answer: In January 2015, NNSA submitted for approval a mission need statement for lithium production capabilities.