National Nuclear Security Administration: Observations on Management Challenges and Steps Taken to Address Them
Released: 2015-04-15T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: NNSA is responsible for managing the nation's nuclear security missions, which include ensuring a safe, secure, and reliable nuclear deterrent; achieving reductions in the nuclear weapons stockpile; and supporting nuclear nonproliferation efforts (known as DNN programs). NNSA executes its missions at eight sites that make up the nuclear security enterprise.

GAO's reports have highlighted challenges NNSA has faced for several years. These challenges contribute to GAO's continuing inclusion of NNSA's management of contracts and major projects on GAO's list of agencies and program areas that are high risk due to their vulnerabilities to fraud, waste, abuse, and mismanagement, or are in most need of transformation. A recent series of commissions on NNSA's management, governance, and structure—such as the Augustine-Mies Panel—highlights the importance of NNSA's mission.

This testimony is based on eight prior GAO products issued from December 2010 through February 2015 and discusses NNSA's (1) plans to modernize the nuclear security enterprise, (2) understanding of the causes of contract and project management problems and the extent to which it is has implemented GAO's related recommendations, (3) DNN programs' status in securing vulnerable nuclear materials, and (4) challenges in its governance of the nuclear security enterprise.

GAO is not making new recommendations in this statement.

section_title: What GAO Found
paragraphs: The National Nuclear Security Administration (NNSA) faces challenges implementing its plans to modernize the nuclear security enterprise. In its November 2014 report, the Augustine-Mies Panel observed that NNSA's Stockpile Stewardship Management Plan, which is intended to communicate long-range plans and cost estimates, has varied from year to year in the costs and schedules for the delivery of several major life extension programs and nuclear facilities. The panel concluded that the lack of a stable, executable plan for modernization is a fundamental weakness for NNSA. Similarly, GAO found in 2013 that the Stockpile Stewardship Management Plan has shown changes in long-term budget and schedule estimates from year to year—for example, NNSA's stockpile budget estimates for 2014 through 2031 increased by about $27 billion compared with the 2012 stockpile budget estimates for the same time period. GAO recommended that NNSA include in future plans a range of estimates that reflects projects that the agency knows are needed. NNSA agreed and appears to be implementing this recommendation.

As noted in GAO's 2015 high risk report, NNSA has a long history of identifying corrective actions and declaring them successfully resolved, only to follow with the identification of additional actions. As GAO has reported, this suggests that NNSA does not have a full understanding of the root causes of its contract and project management challenges. In its prior reports, GAO has made numerous recommendations to correct NNSA's project management problems. While NNSA has initiated some actions and made some progress, the agency has not taken action on many of these recommendations, including improving cost estimating capabilities and employing a rigorous analysis of alternatives to ensure that key capital asset and program decisions will both meet mission needs and be cost-effective. This suggests a lack of urgency or commitment on DOE's part to address identified challenges.

NNSA's Defense Nuclear Nonproliferation (DNN) programs have made progress securing vulnerable nuclear materials, but significant challenges remain. For example, GAO found in 2011 that NNSA faced challenges accounting for and ensuring the security of U.S. weapons-usable nuclear materials. GAO recommended that NNSA improve its process for securing these materials. Although NNSA disagreed, it has since taken some steps to prioritize its efforts. In addition, prior GAO work has raised concerns about the effectiveness of DNN program management and implementation, particularly with regard to execution of its plutonium disposition program, performance measures, and sustainability.

NNSA faces challenges in its governance of the nuclear security enterprise. The Augustine-Mies Panel highlighted such challenges in its report. The report addresses issues and concerns that GAO has also previously described in its work. For example, consistent with GAO's 2015 update to its high risk list, the Panel noted that NNSA major projects have been a continuing source of program schedule delays and cost overruns and that, as a result, NNSA needs to strengthen its cost estimating capabilities. The report also recommended that NNSA leadership employ a rigorous analysis of alternatives early in the decision process as the basis for assessing and validating program requirements, which is consistent with past GAO recommendations.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss our recent work on some of the  pressing management challenges the National Nuclear Security  Administration (NNSA) is facing. NNSA is responsible for managing the  nation’s nuclear security missions. These missions—ensuring a safe,  secure, and reliable nuclear deterrent; achieving designated reductions in  the nuclear weapons stockpile; and supporting the nation’s nuclear  nonproliferation efforts—are largely executed at eight sites that comprise  the nuclear security enterprise. NNSA sites include laboratories,  production plants, and a test site, which are owned by the U.S.  government but managed and operated by contractors. According to  NNSA documents, NNSA’s funding has increased steadily from $9.6  billion in fiscal year 2009 to $11.4 billion in fiscal year 2015— approximately 42 percent of the Department of Energy’s (DOE) total fiscal  year 2015 budget—to support its mission and related activities.

Since the end of the cold war, key portions of the nuclear security  enterprise’s weapons production infrastructure have aged and become  outdated, prompting congressional and executive branch decision makers  to call on DOE to develop plans to modernize the infrastructure. The  2010 Nuclear Posture Review (NPR) identified long-term modernization  goals and requirements, including sustaining a safe, secure, and effective  nuclear arsenal through increasing investments to rebuild and modernize  the nation’s nuclear infrastructure, among other things.

Building on the  2010 NPR, the 2015 National Security Strategy states that the United  States must invest the resources necessary to maintain a safe, secure,  and effective nuclear deterrent as long as nuclear weapons exist. To  meet these goals, NNSA refurbishes weapons in the stockpile to extend  their operational lives; replaces or renovates research, development, and  production facilities that date back to the 1940s and 1950s; and performs  simulations and laboratory experiments to ensure existing nuclear  weapons remain safe and reliable. In fiscal year 2011, the administration  pledged over $88 billion to NNSA over 10 years for operations and  modernization, including the refurbishment of weapons in the current  stockpile and construction of facilities to support these refurbishments.

Building from the policy priorities communicated in the Nuclear Posture  Review, NNSA’s Stockpile Stewardship and Management Plan (SSMP),  which is updated annually, provides information on modernization and  operations plans and budget estimates over the next 25 years. The  SSMP is NNSA’s formal means for communicating to the Congress the  status of certain activities and its long-range plans and budget estimates  for sustaining the stockpile and modernizing the nuclear security  enterprise. The SSMP also discusses the current and projected  composition and condition of the nuclear weapons stockpile.

In addition to its defense programs, NNSA implements a range of  nonproliferation programs under its Office of Defense Nuclear  Nonproliferation (DNN). These programs include efforts to secure,  consolidate, and dispose of weapons-usable nuclear materials and  radiological sources; reduce the risks of nuclear smuggling; enhance  international export controls and International Atomic Energy Agency  (IAEA) nuclear safeguards; and support research and development of  new nonproliferation technologies.

Our past testimonies in September 2012, March 2013, and July 2013,  as well as reports we have issued over the past several years, have  highlighted various challenges that NNSA faces in carrying out its  mission-related responsibilities. These challenges contribute to our  continuing inclusion of NNSA’s management of contracts and major  projects on our list of agencies and program areas that are at high risk  due to their vulnerabilities to fraud, waste, abuse, and mismanagement,  or are most in need of transformation. NNSA continues to demonstrate  leadership commitment to address these challenges—a key criterion for  removal from our high risk list. However, as we reported in our most  recent update to the high risk list earlier this year, the agency has not  made progress on the other four criteria for removal: organizational  capacity, corrective action planning, monitoring effectiveness, and  demonstrating progress.

A recent series of external commissions and reports on NNSA’s  management and structure also speaks to the importance of NNSA’s  mission and seriousness of these continuing challenges. Notably, the Fiscal Year 2013 National Defense Authorization Act created the  Congressional Advisory Panel on the Governance of the Nuclear Security  Enterprise (Augustine-Mies Panel) to examine options and make  recommendations for revising the governance structure, mission, and  management of the nuclear security enterprise.report in November 2014.

My testimony today discusses (1) NNSA’s plans to modernize the DOE’s  nuclear security enterprise, (2) NNSA’s understanding of the causes of its  contract and project management problems, and the extent to which it  has implemented our related recommendations, (3) NNSA’s DNN  progress in securing vulnerable nuclear material and the remaining  challenges, and (4) issues that NNSA faces in governance of the nuclear  security enterprise. It summarizes key findings from eight reports issued  from December 2010 to February 2015. Detailed information about the  scope and methodology used to conduct this work can be found in each  of our issued reports. The work upon which this statement is based was  conducted in accordance with generally accepted government auditing  standards.
subsections: section_title: NNSA Faces Challenges Implementing Its Plans to Modernize the Nuclear Security Enterprise
paragraphs: NNSA manages a complex, decades-long effort to modernize the nuclear  security enterprise. In its recent report, the Augustine-Mies Panel  observed that NNSA’s SSMP, which is intended to communicate long- range plans and cost estimates, has varied from year to year in the costs  and schedules for the delivery of several major life extension programs  (LEP) and nuclear facilities, and the Panel concluded that the lack of a  stable, executable plan for modernization is a fundamental weakness for  NNSA. Our 2013 report similarly found that NNSA’s SSMP has shown  changes in plans and long-term budget estimates from year to year and  that some assumptions on future spending estimates may not be realistic.  For example, in 2013 we found that:

The planned schedules for key weapons LEPs had changed. For  example, key dates for the W78/88 LEP were pushed several years  into the future. Specifically, this program shifted from a 2021 first- production-unit and 2031 completion time frame in the fiscal year  2012 SSMP to a 2025 first-production-unit and 2036 completion time  frame in the fiscal year 2014 SSMP. We have ongoing work looking  at the fiscal year 2015 SSMP.

NNSA’s long-term budget estimates for the nuclear security enterprise   For example, we found  have continued to change from year to year. that NNSA’s stockpile budget estimates from 2014 through 2031  increased by about $27 billion compared with the 2012 stockpile  budget estimates for the same time period. We noted that some of  these changes were due to decisions made by the Nuclear Weapons  Council. For example, according to the 2014 SSMP, the Nuclear  Weapons Council directed changes to the planned schedules for  some of the LEPs to accommodate the number and scope of all  LEPs, which contributed to increases in the stockpile budget  estimates.

NNSA had not included estimated costs to construct both the Uranium  Processing Facility (UPF) and the Chemistry Metallurgy Replacement  Facility (CMRR). We recommended that NNSA include in its  estimates at least a range of budget estimates for known future  expenses for large capital projects even when a fully developed cost  estimate had not been developed. NNSA agreed with this  recommendation and the 2015 SSMP included estimates for these  major large capital projects, which had previously been excluded. In  addition, in the 2014 SSMP, NNSA also changed its methodology for  developing budget estimates for LEPs. For example, NNSA officials  said that the 2012 budget estimates for LEPs were based on an older  LEP because there was not enough data at that time from recent and  ongoing LEPs to develop cost models. In contrast, NNSA officials  told us that they based their 2014 estimates on more reliable data  from an ongoing LEP.

Our 2013 report also found that some assumptions in the SSMP may be  unrealistic. NNSA’s budget estimates to operate and maintain its existing  facilities and infrastructure remain relatively flat through 2031 at about  $1.5 billion per year (in constant dollars). However, much of NNSA’s  existing facilities and infrastructure were constructed more than 50 years  ago and are reaching the end of their useful lives. As a result, the agency  is undertaking a number of improvement projects to modernize and  maintain these facilities. We concluded that it may not be realistic for  NNSA to assume that its annual budget estimates for operations and  maintenance of facilities from 2014 to 2031 can remain relatively flat  when its aging facilities will likely need additional resources to maintain  them in the future.

section_title: NNSA Does Not Fully Understand the Causes of Its Contract and Project Management Problems and Appears Resistant to Implementing GAO’s Recommendations
paragraphs: In our February 2015 update to our high risk list, we expressed concern  that DOE, including NNSA, may not have adequately identified the root  causes of its contract and project management challenges. Our update  also found that NNSA appeared resistant to implementing some of the  recommendations we made in 2014 to correct these problems.
subsections: section_title: NNSA’s Continued Corrective Actions Suggest It Does Not Understand the Causes of Its Contract and Project Management Problems
paragraphs: DOE has undertaken numerous efforts over the years to understand and  address its contract and project management challenges. Our 2015 high  risk update described a sequence of actions starting in 2008, when DOE  issued a root cause analysis and a corrective action plan that identified  what DOE considered to be the 10 most significant issues in managing its  contracts and projects, and the actions needed to mitigate these issues.  These issues included problems with front-end planning, project funding,  accountability, cost estimating, contract and project management  workforce, and project oversight. DOE issued another report in 2011  that stated that the corrective actions it implemented from its 2008 plan  had effectively mitigated most of the root causes of these issues.  However, the department continued to identify additional root causes and  corrective actions and recommendations to address its persistent contract  and project management challenges. In 2010, DOE identified in a report  six additional barriers to improving contract and project management and  developed corrective actions to address these barriers.issued another report stating that it had completed or partially completed   In 2012, DOE  the corrective actions necessary to address these barriers. In November  2014, DOE issued another report on project management that identified  four key factors that contribute to project management success or failure  at DOE: front-end planning, project funding, accountability, and project  oversight. The report also included 21 recommendations to address  continuing project management challenges. Notably, all four of these  factors are among those discussed in DOE’s 2008 root cause analyses  and among those that DOE said in 2011 it had at least partially mitigated.  As we noted in our February 2015 update to our high risk list,long history of identifying additional corrective actions suggests that it has  not always fully understood the causes of its contract and project  management problems.

More importantly, DOE’s December 2014 project management report  included a description of actions to address the four key factors it had  identified; however it did not discuss why the previous attempts to  address these issues had either failed or why these problems had  reemerged. For example, the 2008 corrective action plan found front-end  planning as one of the top 10 issues contributing to the department’s  contract and project management problems. The corrective actions DOE  identified in that report included developing a more detailed internal front- end planning process, such as identifying and defining specific  assumptions for technical design and nuclear safety requirements.  However, this is contrary to DOE’s 2011 report that stated that the  department had fully or partially completed all corrective measures from  2008, including those related to front-end planning. In addition, the 2008  report identified a number of areas where DOE had continuing  challenges, including cost estimating and an inadequate number of  federal contracting and project management personnel. For cost  estimating, our November 2014 report also found that DOE and NNSA  cost estimating requirements and guidance for projects and programs  generally did not reflect best practices for developing cost estimates.  For federal personnel, our February 2015 high risk report found that DOE  did not meet the criteria for having the capacity (people and resources) to  resolve contract and project management problems. Our report cited a  DOE workforce analysis from 2013 that concluded that DOE had an  extremely low number of contract specialists. We also noted in our report  that this workforce analysis did not include the other key staff members  normally included in the description of the acquisition workforce, such as program and project managers and contracting officer representatives.In contrast to these findings, DOE reported, in 2011, that it would  complete its efforts to improve cost estimating later that year, and that  had substantially completed its efforts to enhance the federal contract and  project management workforce.

section_title: DOE Appears Resistant to Implementing Recommendations Intended to Improve DOE Project Management Problems
paragraphs: We have previously noted instances where DOE appeared resistant to  implementing some of our recommendations to correct DOE’s project  management problems. For example, our February 2014 report included  an evaluation of NNSA’s mixed oxide (MOX) fuel fabrication facility, the  estimated cost of which NNSA had increased by more than $6.3 billion  from NNSA’s initial estimate in 1997 to about $7.7 billion in 2014.report, we recommended that DOE require a root cause analysis for  projects that experience cost increases or schedule delays exceeding a  certain threshold established by the department, including the MOX  facility. We noted that such an analysis would help ensure that future   In that  DOE projects benefit from lessons learned that reflect the causes of past  projects’ cost increases and schedule delays. DOE disagreed with our  recommendation, stating that such an analysis should not be required,  and that DOE program offices could decide on a case-by-case basis  when to conduct such an analysis. However, DOE’s requirements do not  define how or when a root cause analysis should be conducted and it is  not clear when or what would trigger a root cause analysis, which could  result in analyses not being conducted consistently or not being  conducted at all, hampering DOE’s ability to apply lessons learned from  past projects to ongoing or future projects. We continue to believe that a  root cause analysis should be conducted for all projects that experience  cost increases or schedule delays above a threshold established by the  department. We also note that our recommendation is consistent with a  requirement in the Weapon Systems Acquisition Reform Act of 2009,  under which that the Department of Defense must perform a root cause  analysis of a cost increase that exceeds a certain threshold.

Similarly, in 2014, we issued two reports with recommendations  addressing key elements of the front-end planning process for large  projects and programs. In both reports, DOE agreed with the  recommendations, but it did not indicate whether it would implement  them. In November 2014, we noted that DOE had a history of struggling  to complete many of its major construction projects within initial cost and  schedule estimates. We found that DOE and NNSA cost estimating  requirements and guidance for projects and programs generally do not  reflect best practices for developing cost estimates. We also found in  November 2014 that, because DOE and NNSA do not require reviews of  program cost estimates, the extent of weaknesses in program cost  estimates is largely unknown. DOE itself, in 2008, identified inadequate  cost estimating capability as one of the top 10 most significant issues  contributing to its contract and project management challenges. To  address these issues, we recommended that DOE, among other things,  revise its requirements and guidance for projects and programs to ensure  DOE and NNSA and its contractors develop cost estimates in accordance  with cost estimating best practices, and that independent reviews of  programs are conducted periodically. DOE agreed with these  recommendations. However, DOE did not specify a timeline for  implementing many of these recommendations, indicating to us DOE’s  lack of urgency or commitment in correcting these issues.

In the second report, issued in December 2014, we examined how DOE  selects approaches for its projects to meet mission requirements. In this  report, we found that several of DOE’s major construction projects,  including some of NNSA’s, had incurred significant cost increases and  schedule delays, and that DOE was in the process of reassessing the  originally selected project alternative for each project. We found that  neither DOE’s requirements nor its guidance for analyzing alternatives  conformed to best practices, and therefore DOE could not have  confidence that applying its requirements and guidance would lead to a  reliable analysis. A reliable analysis is critical to ensuring that key capital  asset and program decisions will both meet mission needs and be cost- effective. To address these issues, we recommended that DOE  incorporate all best practices into its analysis-of-alternatives  requirements. DOE agreed with this recommendation, but again, it did not  specify a timeline for implementing the recommendation, indicating to us  a lack of urgency and commitment to correct the problem.

section_title: NNSA’s DNN Programs Have Made Some Progress Securing Vulnerable Nuclear Material, but Significant Challenges Remain
paragraphs: Our reports have found that DNN has made some progress in securing  vulnerable nuclear material. Specifically, we reported in December 2010  on NNSA’s efforts to carry out the President’s April 2009 initiative (also  known as the Prague initiative) calling on the agency to secure all  vulnerable nuclear material around the world within 4 years.report, we found that NNSA’s Materials Protection, Control and  Accounting Program had made considerable progress securing Russian  nuclear warheads and materials at numerous Russian sites. The  president’s 2009 Prague initiative ended in December 2013, but DNN and  the U.S. government’s commitment to ensuring the security of worldwide  nuclear materials endures, and we have ongoing work examining it.

In that  However, our reports have also identified key challenges NNSA faces in  its efforts to secure vulnerable nuclear materials. In our December 2010  report, we found that NNSA had estimated it would assist Russia in  consolidating its HEU to fewer, more secure locations by removing  material from five sites and 50 buildings completely by 2010; however, it  had achieved removal of all highly enriched uranium (HEU) from only one  site and 25 buildings. In addition, we found that NNSA had made little  progress in converting research reactors in Russia from the use of HEU.  At that time, NNSA planned to complete the conversion or verify the  shutdown of 71 HEU-fueled research reactors and related facilities in  Russia by 2020; however, Russia had not agreed to convert any of these  facilities. Nonetheless, Russia verified to NNSA in February 2010 that it  had shut down three of its research reactors, and NNSA achieved an  agreement in principle to conduct conversion feasibility studies on six  additional Russian research reactors.

In addition, in September 2011, we found that DNN and U.S. agencies  faced significant challenges in accounting for and ensuring the security of  U.S. weapons-usable nuclear materials as a result of foreign nuclear  research and commercial power activities. That report found that, of 55  visits by U.S. physical protection teams to overseas sites from 1994  through 2010, partner countries met international physical security  guidelines about half the time.

Moreover, we identified weaknesses in DNN’s and other U.S. agencies’  management of this effort. Among other concerns, we found in  September 2011 that DNN’s and U.S. agencies’ activities for prioritizing  and coordinating physical protection visits and measuring performance  did not meet GAO’s best practices for agency performance or DOE’s  standards for internal control. agencies had not systematically visited countries believed to be holding  the highest proliferation risk quantities of U.S. nuclear material. DNN and  U.S. agencies had not systematically revisited sites that did not meet  physical security guidelines in a timely manner, and NNSA and U.S.  agencies did not have a comprehensive, current inventory of U.S.

Specifically, we found that DNN and U.S.

GAO-11-920. weapons usable nuclear materials overseas. We suggested that the  Congress consider directing NNSA and the Nuclear Regulatory  Commission to compile an inventory of U.S. HEU and separated  plutonium overseas. We also recommended that NNSA develop a more  systematic process for identifying and prioritizing future physical  protection visits, and periodically review performance toward meeting  goals for the U.S. physical protection program visits. NNSA disagreed  with our recommendations. However, it has taken some actions to  address them including compiling an initial inventory of U.S.-origin HEU  overseas and developing a more systematic process for identifying and  prioritizing future protection visits.

We have also identified challenges in another element of DNN’s  mission—improving the capabilities of other countries to detect, deter and  interdict smuggled nuclear material. The Second Line of Defense  program—including the Megaports Initiative, which was consolidated into  Second Line of Defense in 2014—is essential to this effort.  In October  2012, we issued a report examining the Megaports Initiative and found  that the continuity and sustainability of the Megaports program could be a  concern going forward. We found that NNSA had not finalized a long-term  plan for ensuring the sustainability of the Megaports Initiative and  recommended that NNSA finalize a sustainability plan for ensuring  ongoing operations after NNSA transfers all equipment, maintenance,  operations, and related financial responsibilities to partner countries. We  also found that the initiative’s performance measures did not provide  sufficient information for decision making because they did not evaluate  the program’s impact and effectiveness. We recommended that NNSA  develop and maintain useful and reliable measures to assess the  performance of the initiative. NNSA agreed with our recommendations  and, in fiscal year 2014, added a new metric that tracks the cumulative  number of sites that are being maintained by the host country.

Finally, the effectiveness of NNSA’s nuclear nonproliferation mission  depends in part on the agency’s plutonium disposition program, and we  found in 2014 NNSA faces challenges in this regard. The plutonium  disposition program has represented a significant portion of the DNN  budget over the past 5 years, ranging from approximately 18 percent of  the DNN budget request in fiscal year 2015 to approximately 36 percent  of the DNN budget request in fiscal year 2013. This program is a key  element of the U.S. commitment to dispose of 34 metric tons of weapons  grade surplus plutonium under the Plutonium Management and  Disposition Agreement between the United States and Russia. The  construction of the MOX facility at DOE’s Savannah River Site in South  Carolina has been the central focus in meeting this commitment. In  February 2015, we reported on several challenges in this program,  including a cost increase of approximately $2.9 billion and a schedule  delay of about 3 years, and DOE generally agreed with our  recommendations to address these issues.construct the MOX facility and is conducting additional analyses of the  project, including independent cost and schedule estimates as well as an  analysis of alternatives approaches for plutonium disposition.

NNSA recently reorganized its DNN programs into a new structure, and  for several years has sustained an effort to assess “over the horizon”  nuclear and radiological proliferation threats and trends—in other words,  evolving threats over the next decade. However, according to NNSA officials, the Russian government recently decided to cease joint  cooperation with NNSA at most Russian weapons complex and civilian  nuclear sites as of December 2014, which presents new challenges for  NNSA and raises questions about the status of projects not yet completed  and the sustainability of progress already made. We will continue to follow  these issues and have ongoing work looking at NNSA’s nonproliferation  programs, including planning, management, and their effectiveness.

section_title: NNSA Faces Challenges in Its Governance of the Nuclear Security Enterprise
paragraphs: The Augustine-Mies’s Panel’s report highlighted the challenges NNSA  faces in its governance of the nuclear security enterprise. The issues  and concerns identified in this report appear to be consistent with those  that we have previously described in our work.

Regarding NNSA’s modernization efforts, the Augustine-Mies Panel  observed that the 2015 SSMP assumes a budget that may not be  achievable and that NNSA’s nuclear modernization plans are significantly  underfunded relative to identified needs. The panel further noted that the  SSMP reflected significant delays in the delivery of several major LEPs  and nuclear facilities, and that the lack of a stable, executable plan for  modernization is a fundamental weakness for NNSA. As noted earlier, our  work has found that NNSA’s long-term budget estimates for the nuclear  security enterprise have continued to change from year to year and that  some assumptions in the SSMP may be unrealistic.

In addition, consistent with our 2015 high risk update, the Augustine-Mies  Panel found that NNSA’s capital projects have been a continuing source  of cost overruns and schedule delays. The panel noted that these have  significantly undermined the agency’s credibility and recommended that  DOE strengthen its efforts to develop independent cost and resource  analysis capabilities and that leadership employ a rigorous analysis of  alternatives early in the decision process as the basis for assessing and  validating program requirements. The panel also recommended holding  managers accountable for implementing the department’s directive on  project management (Order 413.3B). The panel noted that while  adherence to DOE orders is mandatory, in practice, Order 413.3B has  been viewed more as guidance that is not always followed, and that  stricter enforcement is necessary. In addition, the Augustine-Mies Panel  found specific shortfalls in critical skills for program management, cost  estimation, and resource management and recommended that NNSA  leadership analyze the level and skill mix of the workforce necessary to  meet future needs and invest in the needed skills in the workforce. Our  high risk update noted that DOE, including NNSA, did not have the  capacity (people and resources) to resolve contract and project  management problems. We reported that DOE, including NNSA, had  taken some actions to address capacity issues, but these actions have  not yet ensured that the department has the capacity to fully address its  contract and project management challenges.

On implementation of corrective actions plans, the panel noted that there  have been numerous previous studies with numerous valid  recommendations, many of which recurred in the panel’s assessment as  well. The panel noted, however, that there was not a well-established  process for reviewing these recommendations, performing root cause  analysis of them, taking corrective action where appropriate, and then  following up to ensure that the corrective actions are institutionalized. The  panel recommended that nuclear security enterprise leadership develop a  process to provide accountability and follow up on findings and  recommendations from studies and reviews, both internal and external. In  December 2014, the Secretary issued a memo stating that DOE would  strengthen the role of the Energy Systems Acquisition Advisory Board  and establish a project management risk committee to provide agency- wide project management risk assessment and expert advice. As we  noted in our 2015 high risk update, this initiative demonstrates the  continued commitment of top leadership to address its contract and  project management challenges, but DOE’s cycle of identifying root  causes, recommendations and corrective actions—which DOE declares  successful, only to later issue another set of root causes and corrective  actions—raises concerns that DOE has not fully identified the root causes  behind these problems.

The panel also examined NNSA’s oversight of its management and  operating (M&O) contractors and raised questions regarding the impact  and effectiveness of contract requirements and performance metrics on  mission execution. We have ongoing work examining NNSA’s contract  oversight policies and guidance that examines NNSA’s approach to  overseeing and evaluating its M&O contractors and how NNSA  determines the extent to which it can use contractor assurance systems   This report is expected to be  for deciding M&O contractor award fees.completed in May 2015.

Chairman Sessions, Ranking Member Donnelly, and Members of the  Subcommittee, this completes my prepared statement. I would be  pleased to respond to any questions you may have at this time.

section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff members have any questions about this testimony,  please contact me at (202) 512-3841 or trimbled@gao.gov. Contact  points for our Office of Congressional Relations and Public Affairs may be  found on the last page of this statement. GAO staff who made key  contributions to this testimony are Nathan Anderson, Assistant Director;  Allison Bawden; Alisa Beyninson; Antoinette Capaccio; Daniel Feehan;  Jonathan Gill; Bridget Grimes; William Hoehn; Amanda Kolling; Michelle  Munn; Alison O’Neill; and Rebecca Shea.

section_title: Selected Recent GAO Products Assessing the Department of Energy’s and National Nuclear Security Administration’s Management Efforts
paragraphs: The following is a selection of GAO’s recent work assessing the  Department of Energy’s and National Nuclear Security Administration’s  management efforts:  High-Risk Series: An Update. GAO-15-290. Washington, D.C.: February  11, 2015.

DOE and NNSA Project Management: Analysis of Alternatives Could Be  Improved by Incorporating Best Practices GAO-15-37. Washington, D.C.:  December 11, 2014.

Project and Program Management: DOE Needs to Revise Requirements  and Guidance for Cost Estimating and Related Reviews. GAO-15-29.  Washington, D.C.: November 25, 2014.

Nuclear Weapons: Some Actions Have Been Taken to Address  Challenges with the Uranium Processing Facility Design. GAO-15-126.  Washington, D.C.: October 10, 2014.

Plutonium Disposition Program: DOE Needs to Analyze the Root Causes  of Cost Increases and Develop Better Cost Estimate.  GAO-14-231.Washington, D.C.: February 13, 2014.

Modernizing the Nuclear Security Enterprise: NNSA’s Budget Estimates  Do Not Fully Align with Plans. GAO-14-45. Washington, D.C.: December  11, 2013.

Modernizing the Nuclear Security Enterprise: Observations on NNSA’s  Options for Meeting Its Plutonium Research Needs. GAO-13-533.  Washington, D.C.: September 11, 2013.

Department of Energy: Observations on DOE’s Management Challenges  and Steps Taken to Address Them. GAO-13-767T. Washington, D.C.:  July 24, 2013.

National Nuclear Security Administration: Laboratories’ Indirect Cost  Management Has Improved, but Additional Opportunities Exist.  GAO-13-534. Washington, D.C.: June 28, 2013.

Nuclear Nonproliferation: IAEA Has Made Progress in Implementing  Critical Programs but Continues to Face Challenges. GAO-13-139.  Washington, D.C.: May 16, 2013.

Department of Energy: Observations on Project and Program Cost  Estimating in NNSA and the Office of Environmental Management.  GAO-13-510T. Washington, D.C.: May 8, 2013.

Modernizing the Nuclear Security Enterprise: Observations on DOE’s and  NNSA’s Efforts to Enhance Oversight of Security, Safety, and Project and  Contract Management. GAO-13-482T. Washington, D.C.: March 13,  2013.

High-Risk Series: An Update. GAO-13-283. Washington, D.C.: February  2013.

Department of Energy: Better Information Needed to Determine If  Nonmajor Projects Meet Performance Targets. GAO-13-129.  Washington, D.C.: December19, 2012.

Combating Nuclear Smuggling: Megaports Initiative Faces Funding and  Sustainability Challenges. GAO-13-37. Washington, D.C.: October 31,  2012.

Modernizing the Nuclear Security Enterprise: Observations on the  National Nuclear Security Administration’s Oversight of Safety, Security,  and Project Management. GAO-12-912T. Washington, D.C.: September  12, 2012.

Modernizing the Nuclear Security Enterprise: Observations on the  Organization and Management of the National Nuclear Security  Administration. GAO-12-867T. Washington, D.C.: June 27, 2012.

Modernizing the Nuclear Security Enterprise: NNSA’s Reviews of Budget  Estimates and Decisions on Resource Trade-offs Need Strengthening.  GAO-12-806. Washington, D.C.: July 31, 2012.

Modernizing the Nuclear Security Enterprise: Strategies and Challenges  in Sustaining Critical Skills in Federal and Contractor Workforces.  GAO-12-468. Washington, D.C.: April 26, 2012.

Modernizing the Nuclear Security Enterprise: New Plutonium Research  Facility at Los Alamos May Not Meet All Mission Needs. GAO-12-337.  Washington, D.C.: March 26, 2012.

Nuclear Weapons: NNSA Needs to Improve Guidance on Weapon  Limitations and Planning for Its Stockpile Surveillance Program.  GAO-12-188. Washington, D.C.: February 8, 2012.

Department of Energy: Additional Opportunities Exist to Streamline  Support Functions at NNSA and Office of Science Sites. GAO-12-255.  Washington, D.C.: January 31, 2012.

Nuclear Nonproliferation: Action Needed to Address NNSA’s Program  Management and Coordination Challenges. GAO-12-71. Washington,  D.C.: December 14, 2011.

High-Risk Series: An Update. GAO-11-278. Washington, D.C.: February  2011.

Nuclear Nonproliferation: U.S. Agencies Have Limited Ability to Account  for, Monitor, and Evaluate the Security of U.S. Nuclear Material  Overseas. GAO-11-920. Washington, D.C.: September 8, 2011.

Nuclear Nonproliferation: Comprehensive U.S. Planning and Better  Foreign Cooperation Needed to Secure Vulnerable Nuclear Materials  Worldwide. GAO-11-227. Washington, D.C.: December 15, 2010.

Nuclear Weapons: National Nuclear Security Administration’s Plans for Its  Uranium Processing Facility Should Better Reflect Funding Estimates and  Technology Readiness. GAO-11-103. Washington, D.C.: November 19,  2010.

Nuclear Nonproliferation: National Nuclear Security Administration Has  Improved the Security of Reactors in its Global Research Reactor  Program, but Action Is Needed to Address Remaining Concerns.  GAO-09-949. Washington, D.C.: September 17, 2009.

Nuclear Weapons: Actions Needed to Identify Total Costs of Weapons  Complex Infrastructure and Research and Production Capabilities.  GAO-10-582. Washington, D.C.: June 21, 2010.

Nuclear Nonproliferation: DOE Needs to Address Uncertainties with and  Strengthen Independent Safety Oversight of Its Plutonium Disposition  Program. GAO-10-378. Washington, D.C.: March 26, 2010.

Implemented and Sustained. GAO-09-321. Washington, D.C.: March 16,  2009.

Nuclear Weapons: NNSA and DOD Need to More Effectively Manage the  Stockpile Life Extension Program. GAO-09-385. Washington, D.C.: March  2, 2009.

Nuclear Nonproliferation: DOE’s Program to Assist Weapons Scientists in  Russia and Other Countries Needs to Be Reassessed. GAO-08-189.  Washington, D.C.: December 12, 2007.

Nuclear and Worker Safety: Actions Needed to Determine the  Effectiveness of Safety Improvement Efforts at NNSA’s Weapons  Laboratories. GAO-08-73. Washington, D.C.: October 31, 2007.

Securing U.S. Nuclear Material: DOE Has Made Little Progress  Consolidating and Disposing of Special Nuclear Material. GAO-08-72.  Washington, D.C.: October 4, 2007.

Nuclear Nonproliferation: Progress Made in Improving Security at  Russian Nuclear Sites, but the Long-term Sustainability of U.S.-Funded  Security Upgrades Is Uncertain. GAO-07-404. Washington, D.C.:  February 28, 2007.

National Nuclear Security Administration: Additional Actions Needed to  Improve Management of the Nation’s Nuclear Programs. GAO-07-36.  Washington, D.C.: January 19, 2007.

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Question-summary annotations: questions: question: What does GAO's 2015 high risk report note?
answer: As noted in GAO's 2015 high risk report, NNSA has a long history of identifying corrective actions and declaring them successfully resolved, only to follow with the identification of additional actions.
child_questions: question: What are the implications of this pattern?
answer: As GAO has reported, this suggests that NNSA does not have a full understanding of the root causes of its contract and project management challenges.

question: What has GAO done to correct this?
answer: In its prior reports, GAO has made numerous recommendations to correct NNSA's project management problems.
child_questions: question: Has NNSA followed these recommendations?
answer: While NNSA has initiated some actions and made some progress, the agency has not taken action on many of these recommendations, including improving cost estimating capabilities and employing a rigorous analysis of alternatives to ensure that key capital asset and program decisions will both meet mission needs and be cost-effective.
child_questions: question: What does this indicate?
answer: This suggests a lack of urgency or commitment on DOE's part to address identified challenges.

questions: question: What has the NNSA made progress in?
answer: NNSA's Defense Nuclear Nonproliferation (DNN) programs have made progress securing vulnerable nuclear materials, but significant challenges remain.
child_questions: question: What challenges does the NNSA face?
answer: For example, GAO found in 2011 that NNSA faced challenges accounting for and ensuring the security of U.S. weapons-usable nuclear materials. In addition, prior GAO work has raised concerns about the effectiveness of DNN program management and implementation, particularly with regard to execution of its plutonium disposition program, performance measures, and sustainability.
child_questions: question: What did GAO recommend the NNSA do to overcome these challenges?
answer: GAO recommended that NNSA improve its process for securing these materials.
child_questions: question: How did the NNSA respond to this recommendation?
answer: Although NNSA disagreed, it has since taken some steps to prioritize its efforts.

questions: question: What does the NNSA face challenges in?
answer: NNSA faces challenges in its governance of the nuclear security enterprise.
child_questions: question: Where were these challenges highlighted?
answer: The Augustine-Mies Panel highlighted such challenges in its report.
child_questions: question: What does the Augustine-Mies Panel's report address?
answer: The report addresses issues and concerns that GAO has also previously described in its work.
child_questions: question: What issues and concerns does the report address?
answer: For example, consistent with GAO's 2015 update to its high risk list, the Panel noted that NNSA major projects have been a continuing source of program schedule delays and cost overruns and that, as a result, NNSA needs to strengthen its cost estimating capabilities. The report also recommended that NNSA leadership employ a rigorous analysis of alternatives early in the decision process as the basis for assessing and validating program requirements, which is consistent with past GAO recommendations.

questions: question: What do GAO's reports highlight?
answer: GAO's reports have highlighted challenges NNSA has faced for several years.
child_questions: question: What do these challenges contribute to?
answer: These challenges contribute to GAO's continuing inclusion of NNSA's management of contracts and major projects on GAO's list of agencies and program areas that are high risk due to their vulnerabilities to fraud, waste, abuse, and mismanagement, or are in most need of transformation.

question: What highlights the NNSA's importance?
answer: A recent series of commissions on NNSA's management, governance, and structure—such as the Augustine-Mies Panel—highlights the importance of NNSA's mission.