DOE Project Management: NNSA Needs to Clarify Requirements for Its Plutonium Analysis Project at Los Alamos
Released: 2016-08-09T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: In recent years, NNSA has spent billions of dollars designing large construction projects, only to revisit options after cost increases and schedule delays. At Los Alamos, NNSA reversed its prior decision to build a nuclear facility as part of the CMRR project after spending $450 million. The facility was to provide analysis equipment needed to support the production of pits as part of nuclear weapons life extension programs. Instead, NNSA approved a revised CMRR project to install plutonium analysis equipment in existing facilities.

Senate report 113-44 includes a provision for GAO to review NNSA's revised CMRR project. GAO's report assesses (1) the extent to which the revised CMRR project is expected to meet plutonium analysis needs, (2) how its cost and scope compare to the previously approved project, and (3) the extent to which its schedule and cost estimates reflect best practices, among other objectives. GAO reviewed project documentation, assessed cost and schedule estimates against GAO-identified best practices, and interviewed NNSA and DOE officials and CMRR contractor representatives.

section_title: What GAO Found
paragraphs: The Department of Energy's (DOE) National Nuclear Security Administration (NNSA) defined requirements for the revised Chemistry and Metallurgy Research Replacement (CMRR) project to provide plutonium analysis equipment at its Los Alamos site but did not specify the capacity for analyzing plutonium that the project should provide, making it possible that the project would not meet plutonium analysis needs. NNSA policy states that project requirements should include key performance parameters, which describe how well a project will perform its functions, expressed in terms such as processing rate or capacity. However, NNSA did not identify a key parameter that addresses a primary function of the project's analysis equipment—to analyze plutonium in support of producing an essential part of a nuclear weapon, known as a pit. NNSA has determined that it needs sufficient analysis capacity to support producing pits, including at planned rates of 10 pits per year in 2024 and 50 to 80 pits per year by 2030, but an NNSA analysis shows that the revised CMRR project may not support these rates. NNSA officials said the project's requirements do not include a pit production-related parameter because NNSA only tasked the CMRR project with replacing analysis equipment used in an aging facility, regardless of analysis capacity. Not identifying this parameter likely contributed to the project potentially not providing sufficient analysis capacity to support planned pit production and may have contributed to different understandings among senior agency officials about how well the project will support pit production. By identifying a pit production-related parameter that describes the analysis capacity that the revised CMRR project is to provide, NNSA could clarify the extent to which the project will support such pit production.

NNSA's total estimated cost for the revised CMRR project is lower than the cost of the previously approved CMRR project, which included a large nuclear facility, but NNSA may have overstated its cost savings. NNSA's estimated savings from cancelling the previously approved nuclear facility did not account for work that the agency deferred to future projects, including a storage vault and tunnel. NNSA's approach for the revised CMRR project allows costs to be spread out over time, improving NNSA's ability to concurrently fund other work. However, the revised CMRR project includes less scope and is likely to provide less plutonium analysis capacity than the previously approved nuclear facility.

The revised CMRR project schedule and cost estimates only partially met best practices. For example, the schedule did not include most of the work needed to complete the project. According to best practices, agencies should develop and maintain a schedule that contains all necessary work activities, but the revised project's schedule was limited to near-term work ending in 2017. When NNSA created the revised CMRR schedule, DOE did not specifically require projects to maintain complete schedules after project approval. Since then, DOE has issued a memorandum directing that all schedules contain the entire scope of work, but NNSA does not plan to develop a complete schedule for the entire CMRR project until mid-2017. Continuing to rely on a partial schedule limits managers' insight into how current activities might affect future completion dates, including NNSA's goal to end plutonium work in an aging facility at Los Alamos.

section_title: What GAO Recommends
paragraphs: GAO is making seven recommendations to NNSA, including that it identify a pit production-related parameter for the revised CMRR project and develop a CMRR project schedule that includes all necessary work activities. NNSA generally neither agreed nor disagreed with the recommendations but described some actions it was taking. GAO continues to believe that the recommendations are valid, as discussed in this report.

section_title: Letter
paragraphs: To accomplish its nuclear security missions, the National Nuclear Security  Administration (NNSA)—a separately organized agency within the  Department of Energy (DOE)—manages numerous efforts to design and  construct new facilities through a process known as capital asset  acquisition. In recent years, NNSA has spent billions of dollars designing  and partially constructing several one-of-a-kind major capital asset  projects (i.e., facilities with an estimated cost of $750 million or more),  only to later reassess alternatives for each project in the wake of  significant cost increases and schedule delays. In some cases, the  reassessments led to NNSA’s cancellation of an entire project or major  portions thereof, as we found in the case of the Chemistry and Metallurgy  Research Replacement (CMRR) project at NNSA’s Los Alamos National  Laboratory in New Mexico.

In 2005, NNSA approved the CMRR project to replace the aging  Chemistry and Metallurgy Research facility that had supported Los  Alamos’s plutonium work since the 1950s. Plutonium work at Los  Alamos contributes to multiple DOE and NNSA program missions,  including NNSA’s mission to maintain the nation’s nuclear weapons  stockpile. Meeting NNSA’s stockpile mission includes certifying the safety  of existing nuclear weapons’ plutonium pits and producing new pits to  extend the life of nuclear weapons in the stockpile, and NNSA conducts  plutonium analysis in the Chemistry and Metallurgy Research facility to  support these efforts. NNSA’s Fiscal Year 2016 Stockpile Stewardship  and Management Plan stated that the agency will increase its capability  to produce new pits over time, from 10 pits per year in fiscal year 2024 to  30 pits per year in fiscal year 2026 and as many as 50 to 80 pits per year  by 2030.

A set of aging facilities provides the backbone of NNSA’s plutonium work  at Los Alamos. The 64-year-old Chemistry and Metallurgy Research  facility at Los Alamos houses unique equipment for analyzing plutonium  through various techniques, including analytical chemistry and materials  characterization. NNSA uses plutonium analysis to run tests on existing  nuclear weapon pits to ensure their reliability and safety and to support  other activities, including efforts to dismantle surplus nuclear weapons.  Analytical chemistry, in particular, supports nuclear weapon pit  production, because it allows scientists to assess the plutonium used in  new pits to identify any defects. However, the Chemistry and Metallurgy  Research facility, which was built in 1952, is not sustainable in the long  term, because of its aging infrastructure and because it sits on a seismic  fault line, which raises concerns about the safety and security of the  public and those who work with plutonium at the facility in the event of an  earthquake. NNSA produces pits in a separate facility at Los Alamos— Plutonium Facility 4—the only high-hazard, high-security, fully operational  plutonium facility in the country for producing pits. Plutonium Facility 4  has been in operation for 38 years and also supports other DOE and  NNSA programs’ work with plutonium, such as producing heat sources for  space exploration used by the National Aeronautics and Space  Administration (NASA).

When NNSA approved the CMRR project in 2005, the project included  the design and construction of two new facilities at Los Alamos—a large  nuclear facility and a combination radiological laboratory and office  building (radiological lab)—to house plutonium analysis equipment that  would replace the analysis equipment that remained in the Chemistry and  Metallurgy Research facility. NNSA planned to install most of the  plutonium analysis equipment in the CMRR nuclear facility. In 2005  NNSA estimated that the two facilities would be completed by 2017, with  a cost ranging from $745 million to $975 million. NNSA constructed the  radiological lab and within it installed a set of plutonium analysis  equipment in 2013, for a total cost of about $400 million. In March 2012,  we found that NNSA’s cost estimate for the CMRR nuclear facility, which  remained in the preliminary design phase after nearly 7 years, had  increased to as much as $5.8 billion, and included an operational date as  late as 2022. Also in 2012, after spending more than $450 million, NNSA  deferred the remaining design and construction of the CMRR nuclear  facility for at least 5 years, stating that the deferral was intended to free  up funds for other higher priority projects, including the Uranium  Processing Facility in Tennessee. In a March 2013 memorandum, the  NNSA Administrator directed the agency to conduct an analysis to  compare the deferred CMRR nuclear facility with other options to meet  near- and long-term plutonium requirements, including a modular facility  concept that could be built in phases to meet additional capacity needs or  new mission requirements. NNSA also committed to ending plutonium  operations in the aging Chemistry and Metallurgy Research facility by the  end of 2019, given the safety concerns. In September 2013, we found  that deferring construction of the CMRR nuclear facility could create a  gap in the nation’s plutonium analysis capabilities if NNSA ended  operations in the Chemistry and Metallurgy Research facility before it  established them elsewhere. In particular, we found that the delay in  establishing new plutonium analysis capabilities could affect Los  Alamos’s ability to produce nuclear weapon pits.

In January 2014, NNSA’s Office of Defense Programs, responsible for  implementing NNSA’s stockpile mission, adopted a new strategy for  maintaining the ability to perform plutonium analysis and providing  plutonium infrastructure without constructing the CMRR nuclear facility.  The strategy included two parts: (1) maximizing the use of existing space  in two facilities at Los Alamos—the radiological lab and Plutonium  Facility 4—by purchasing and installing plutonium analysis equipment in  them to support ending plutonium operations in the Chemistry and  Metallurgy Research facility and (2) evaluating options to build an  undetermined number of modular nuclear facilities to add more high- hazard, high-security laboratory space at Los Alamos.

In August 2014, DOE formally cancelled plans to construct the CMRR  nuclear facility and approved the implementation of the first part of  NNSA’s new plutonium strategy—the revised CMRR project. The revised  CMRR project contained two subprojects: (1) the Radiological Laboratory  Utility Office Building Equipment Installation Phase 2 subproject, which  would involve purchasing and installing more plutonium analysis  equipment in the radiological lab than NNSA originally planned, and  (2) the Plutonium Facility 4 Equipment Installation subproject, which  would involve removing contaminated equipment that was no longer in  use in Plutonium Facility 4 and installing new plutonium analysis  equipment. NNSA estimated that the revised CMRR project would cost  from $1.5 billion to $2.0 billion and be completed by 2024. In addition, in  November 2015, DOE approved the mission need for the implementation  of the second part of the strategy: to build modular nuclear facilities to  add more high-hazard, high-security laboratory space at Los Alamos (the  Plutonium Modular Approach). NNSA estimated that the Plutonium  Modular Approach could cost from $1.5 billion to $3.0 billion and be  completed by the end of 2027.

In light of concerns about NNSA’s long-term plutonium plans given the  decision not to construct the CMRR nuclear facility at Los Alamos, the  Senate Armed Services Committee report accompanying S. 1197, the  National Defense Authorization Act for Fiscal Year 2014, includes a  provision for us to review the cost estimate for NNSA’s modular building  strategy. Our report assesses (1) the extent to which the revised CMRR  project is expected to meet NNSA and DOE programs’ plutonium analysis  needs at Los Alamos, (2) the extent to which the Plutonium Modular  Approach is expected to meet plutonium analysis needs at Los Alamos,  (3) how the revised CMRR project’s cost and scope compare with those  of the previously approved CMRR project, and (4) the extent to which the  revised CMRR project’s schedule and cost estimates reflect scheduling  and cost-estimating best practices.

To assess the extent to which NNSA’s revised CMRR project is expected  to meet NNSA and DOE programs’ plutonium analysis needs at Los  Alamos, we reviewed documentation on the project’s expected plutonium  analysis equipment, the analysis capacity that the project is expected to  provide, and NNSA and DOE programs’ planned plutonium analysis  needs at Los Alamos. We interviewed NNSA and DOE officials and  representatives from NNSA’s management and operating contractor at  Los Alamos familiar with the project. To assess the extent to which the  Plutonium Modular Approach is expected to meet plutonium analysis  needs at Los Alamos, we examined documentation supporting NNSA’s  approval of the mission need and interviewed NNSA officials and  contractor representatives familiar with the Plutonium Modular Approach.  To assess how the cost and scope of NNSA’s revised CMRR project  compare with those of the previously approved CMRR project, which  included constructing the CMRR nuclear facility, we reviewed documents  that described the revised CMRR project’s estimated cost and scope and  noted instances where the documents highlighted differences between  the revised project and the previously approved project. To assess the  extent to which the schedule and cost estimates for NNSA’s revised  CMRR project reflect scheduling and cost-estimating best practices, we  analyzed the agency’s August 2015 schedule estimate and August 2014  cost estimate in light of best practices identified in our May 2012 schedule  guide and our March 2009 cost guide, respectively—both of which are a  compilation of best practices drawn from across industry and  government. We did not assess the schedule and cost estimates for the  Plutonium Modular Approach because NNSA had not approved the  estimates when we started our review. Appendix I presents a more  detailed description of our objectives, scope, and methodology.

We conducted this performance audit from May 2015 to August 2016, 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: (1) Los Alamos’s role in NNSA’s nuclear security  enterprise; (2) DOE and NNSA programs’ plutonium analysis needs at  Los Alamos; (3) DOE and NNSA project management orders and  policies; and (4) best practices for project cost and schedule estimating.
subsections: section_title: Los Alamos’s Role in NNSA’s Nuclear Security Enterprise
paragraphs: NNSA is responsible for managing the nation’s nuclear security 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. NNSA directs these missions  but relies on management and operating contractors to carry them out  and manage day-to-day operations at each of its eight sites that comprise  the agency’s nuclear security enterprise. These sites include laboratories,  production plants, and a test site. Together, these sites implement  NNSA’s stockpile stewardship program. Specifically, under this program,  NNSA annually assesses the nation’s nuclear weapons stockpile and  (1) determines which components, including the pit, will need  refurbishment to extend each weapon’s life; (2) designs and produces the  necessary components; (3) installs components in the weapons; and  (4) certifies that the changes do not adversely affect the safety and  reliability of the weapons. The 2010 Nuclear Posture Review—which  outlines U.S. nuclear policy, strategy, capabilities, and force posture— identified long-term stockpile modernization goals for NNSA that include  sustaining a safe, secure, and effective nuclear arsenal through life  extension programs and investing in a modern infrastructure. NNSA has  identified the revised CMRR project as critical to its infrastructure  modernization efforts.

Of NNSA’s eight sites, the Los Alamos National Laboratory in New  Mexico houses most of the nation’s capabilities for plutonium analysis in  support of its nuclear weapons mission. Los Alamos also has a broader  plutonium-related research and analysis mission. For example, Los  Alamos conducts basic and applied research in the chemistry of  plutonium and other radiological materials for the study of nuclear  materials, including nuclear materials separation, processing, and  recovery.

Currently there are three main facilities at Los Alamos that support  plutonium analysis:

Chemistry and Metallurgy Research facility. This facility became  operational in 1952 and houses equipment for performing plutonium  analysis. With this equipment, NNSA conducts analysis activities that  support: the production, development, and testing of nuclear weapon  pits, programs to extend the life of nuclear weapons in the stockpile,  and efforts to dismantle surplus nuclear weapons. NNSA continues to  operate some plutonium analysis equipment in the facility, but the  agency has committed to ending plutonium operations in the facility by  the end of 2019.

Plutonium Facility 4. This facility began operations in 1978 and is  the nation’s only high-hazard, high-security, fully operational  plutonium facility that produces pits. Plutonium Facility 4 is also used  to support the production of plutonium-238 heat sources used for  NASA spacecraft missions as well as the development of methods for  fabricating advanced nuclear fuels.

Radiological Laboratory Utility Office Building (radiological lab).

NNSA began operations in the radiological lab in 2014. NNSA built  the radiological lab—consisting of office space, training areas, utilities,  and laboratory space for analysis—to complement the previously  approved CMRR nuclear facility. The radiological lab has the capacity  to handle small plutonium samples for use in analytical chemistry  analysis to support plutonium program missions in Plutonium  Facility 4.

section_title: DOE and NNSA Plutonium Analysis Needs at Los Alamos
paragraphs: Several DOE and NNSA program offices conduct plutonium analysis in  the three main plutonium facilities at Los Alamos. The following are the  primary users of plutonium analysis capabilities at Los Alamos.
subsections: section_title: NNSA Office of Defense Programs
paragraphs: This office is responsible for maintaining the reliability, security, and  safety of the nuclear weapons stockpile by assessing the reliability of  existing nuclear weapon pits and producing new pits to replace those  destroyed in the testing process, among other activities. The majority of  funding and scope associated with plutonium work at Los Alamos  supports the Office of Defense Programs’ missions. Pit production relies  on plutonium analysis to produce war reserve pits—pits that are certified  for inclusion in the nuclear weapons stockpile—in support of life extension  programs. Los Alamos has used its analytical chemistry equipment to  support pit production more than to support all other program activities  combined. From 2007 to 2012, NNSA produced a limited number of war  reserve pits at Los Alamos; according to NNSA, by 2011 the agency had  demonstrated a production rate of up to 10 pits per year. In 2008, the  Nuclear Weapons Council—a body that serves as the focal point of the  Department of Defense and DOE interagency activities to maintain the  nation’s nuclear weapons stockpile—established the requirement for  NNSA to develop pit production capabilities of 50 to 80 pits per year.

We found in March 2016 that modernizing NNSA’s pit production  capacity, including implementing the revised CMRR project, is  fundamental to supporting a multi-billion-dollar life extension program.

NNSA’s Fiscal Year 2016 Stockpile Stewardship and Management Plan  contains the agency’s plan for meeting the weapons council’s  requirement and supporting life extension programs. According to the  fiscal year 2016 plan, NNSA will develop the capability to produce at Los  Alamos an increasing number of new pits over time. These pits will be  of a different type than the pits produced earlier, so Los Alamos has  started a development process to establish a pit production capability for  a new pit type. Beginning in fiscal year 2024, NNSA plans to be able to  produce 10 war reserve pits per year, increasing to 30 war reserve pits  per year in fiscal year 2026, and 50 to 80 war reserve pits per year by  2030 (see table 1).

NNSA’s ARIES supports the disposition of surplus weapons-grade  plutonium by disassembling pits and converting the plutonium into a  plutonium oxide. NNSA established ARIES in Plutonium Facility 4 as a  technology development and demonstration project for pit disassembly  and conversion and has used plutonium analysis equipment there to  analyze plutonium samples from the oxide converted from existing pits.  According to NNSA, ARIES currently conducts most of its plutonium  analysis that supports disassembly and conversion at NNSA’s Savannah  River Site in South Carolina. However, ARIES will likely need more  analysis equipment in Plutonium Facility 4 if its mission at Los Alamos is  expanded, according to NNSA.

section_title: DOE Office of Nuclear Energy’s Office of Space and Defense Power Systems
paragraphs: This office provides plutonium-238 heat sources for electric generators  used on NASA spacecraft and for national security applications. The  plutonium-238 heat sources are also used to heat critical components on  NASA spacecraft. The office relies on plutonium analysis equipment to  support its work. The office recently stopped operating in the Chemistry  and Metallurgy Research facility and installed its plutonium analysis  equipment in Plutonium Facility 4. This DOE office shares the  plutonium-238 analysis equipment with NNSA to support work examining  existing pits.

section_title: DOE and NNSA Project Management Orders and Policies
paragraphs: DOE Order 413.3B governs NNSA’s capital asset acquisition activities.  The order establishes the critical decision (CD) process. This process  breaks down capital asset acquisition into project phases that progress  from a broad statement of mission need into requirements that guide  project execution, through design and construction, and conclude with an  operational facility. Each phase ends with a major approval milestone—or  “critical decision”—and each critical decision requires the successful  completion of the preceding phase. DOE’s capital asset acquisition  process, or critical decision process, is depicted in figure 1.

DOE Order 413.3B provides direction for preparing a mission need  statement at CD-0 (identify need). According to the order, a mission need  statement identifies the capability gap between the current state of a  program’s mission and the mission plan and is part of the first phase of  identifying and executing a capital asset project. The mission need,  however, should not identify a particular solution such as equipment,  facility, or technology.

In addition, Order 413.3B and NNSA’s business operating procedure for  creating program requirements documents for capital asset projects  (NNSA’s requirements policy) provide direction for preparing and  updating a program requirements document. According to Order 413.3B,  requirements identified in a program requirements document are  statements that define the ultimate goals a project must satisfy. According  to A Guide to the Project Management Body of Knowledge, defining  requirements for a project is a key step in developing a project because  the requirements dictate what is included—and what is not included—in a  project’s scope of work. Order 413.3B states that NNSA must prepare a  program requirements document for capital asset projects at CD-0. Order  413.3B directs project managers to implement NNSA’s requirements  policy when preparing the program requirements document at CD-0.  According to this policy, a project’s requirements should include a specific  type of requirement called a key performance parameter. Order 413.3B  states that key performance parameters define how well a project will  perform its functions, and appropriate parameters are those that express  performance in terms of capacity, throughput (i.e., the amount of material  or items passing through a system or process), or processing rate, among  others. These parameters, among other things, identify vital  characteristics, functions, or design bases that, if changed, would have a  major impact on facility or system performance, scope, schedule, cost, or  risk.

Under Order 413.3B, the first two decision points—CD-0 (identify need)  and CD-1 (select alternative)—span the analysis of alternatives  process. The use of the analysis of alternatives process is a key first  step to help ensure that the selected alternative best meets the agency’s  mission need. The majority of the analysis of alternatives process is  conducted during the conceptual design phase and ends with CD-1  approval.

section_title: Best Practices for Project Cost and Schedule Estimating
paragraphs: To provide assistance in preparing high-quality cost and schedule  estimates, we compiled best practices used throughout government and  industry in two guides. In March 2009, we issued our Cost Estimating and  Assessment Guide (cost guide). Drawing from federal cost estimating  organizations and industry, our cost guide provides best practices about  the processes, procedures, and practices needed for ensuring  development of high-quality—that is, reliable—cost estimates. A  high-quality cost estimate helps ensure that management is given the  information it needs to make informed decisions. The cost guide identifies  the following four characteristics of a high-quality cost estimate:  (1) comprehensive, (2) well documented, (3) accurate, and (4) credible.

We issued our Schedule Assessment Guide (schedule guide) in May  2012 as a companion to the cost guide. A well-planned schedule is a  fundamental management tool that can help government programs use  public funds effectively by specifying when work will be performed in the  future and measuring program performance against an approved plan.  The schedule guide identifies 10 best practices for developing and  maintaining a reliable, high-quality schedule. For example, the first best  practice is for the schedule to capture all activities necessary to complete  the project.

In May 2016, DOE published an update to Order 413.3B that  institutionalizes recent policies that the Secretary of Energy had  established in two memorandums, including one dated June 2015 that  related to, among other things, cost and schedule estimating best  practices. Specifically, the updated order incorporates policies first  established in the June 2015 memorandum that state (1) cost estimates  shall be developed, maintained, and documented in a manner consistent  with methods and best practices identified in our cost guide, DOE  guidance, and applicable acquisition regulations and Office of  Management and Budget guidance; and (2) projects shall develop and  maintain an integrated master schedule in a manner consistent with the  methods and best practices identified in our schedule guide and in the  National Defense Industrial Association’s Planning and Scheduling  Excellence Guide.

section_title: NNSA Did Not Identify the Plutonium Analysis Capacity That Its Revised CMRR Project Should Provide, So the Project May Not Meet DOE and NNSA Needs NNSA’s Requirements for the Revised CMRR Project Did Not Define the Plutonium Analysis Capacity the Project Should Provide
paragraphs: NNSA defined a set of requirements for the revised CMRR project, but  these requirements did not include key performance parameters, such as  the plutonium analysis capacity that the project should provide. NNSA  has initiated actions that could increase the project’s plutonium analysis  capacity, but these actions create risk for meeting the project’s estimated  cost and schedule. Even with the new actions that NNSA has initiated,  the agency is not designing the revised CMRR project to meet all DOE  and NNSA plutonium analysis needs at Los Alamos.

NNSA defined a set of requirements for the revised CMRR project, but  these requirements did not include key performance parameters, as  called for by NNSA’s requirements policy. Order 413.3B states that key  performance parameters define how well a project will perform its  functions, and appropriate parameters are those that express  performance in terms of capacity or throughput, among others. According  to NNSA documents, the revised CMRR project’s primary function is to  provide plutonium analysis capabilities in support of NNSA’s stockpile  stewardship program. The stockpile stewardship program includes  producing new plutonium pits, but the revised CMRR project’s  requirements document did not define the annual rate of pit production  that the project should support in a key performance parameter. NNSA’s  Fiscal Year 2016 Stockpile Stewardship and Management Plan stated  that the agency will increase its capability to produce new pits over time  to support life extension programs: 10 pits per year in 2024, 30 pits per  year in 2026, and 50 to 80 pits per year by 2030. According to NNSA  documents, the agency needs adequate quantities of plutonium analysis  equipment, namely analytical chemistry equipment, and the space in  which to house the equipment to support its planned pit production rates.  The higher the pit production rate, the more analytical chemistry  equipment will be needed. The project’s requirements document included  a list of plutonium analysis equipment that the project will provide and the  capacity that each piece of equipment will provide—expressed as a  number of plutonium samples processed per year. This information  indicates the analysis capacity the project may provide but does not  indicate the extent to which the project will support broader needs,  including pit production.

NNSA officials and Los Alamos contractor representatives said that the  program requirements document for the revised CMRR project does not  contain a pit production-related performance parameter because NNSA  tasked the revised project only with replacing plutonium analysis  equipment that had been located in the Chemistry and Metallurgy  Research facility. They explained that NNSA did not specifically task the  revised project with supporting specific pit production levels. Instead,  contractor representatives told us that they created the list of analysis  equipment to include in the revised project based on the capabilities that  needed to be transferred from the Chemistry and Metallurgy Research  facility and the amount of available space in the radiological lab and  Plutonium Facility 4. NNSA officials told us they do not plan to identify key  performance parameters for the revised CMRR project until CD-2 and  that they do not plan to establish a key performance parameter that  identifies pit production rates for the revised CMRR project to support in  the near future. These officials agreed, however, that having sufficient  plutonium analysis capacity is critical to supporting pit production.

Not identifying key performance parameters in the program requirements  document for the revised CMRR project, including a parameter related to  pit production, likely contributed to the project potentially providing  insufficient plutonium analysis capacity to support planned pit production  rates. In 2015, NNSA’s contractor at Los Alamos conducted an analysis,  calculating the pit production rate that the revised CMRR project’s  analysis equipment was expected to support, based on the amount of  equipment, location, and the amount of plutonium allowed in the  radiological lab and Plutonium Facility 4. The contractor’s analysis  showed that the revised CMRR project, as approved at CD-1 in  August 2014, may not provide sufficient analysis capacity to support a  10-pits-per-year production rate. Although NNSA previously  demonstrated that it could produce up to 10 war reserve pits per year at  Los Alamos, the pits were produced in Plutonium Facility 4 with support  from the Chemistry and Metallurgy Research facility. However, according  to contractor representatives, the radiological lab has stricter limits on the  amount of plutonium allowed in it than the Chemistry and Metallurgy  Research facility does, so supporting pit production in Plutonium Facility 4  with the radiological lab limits analysis capacity to support pit production.

Not identifying a key performance parameter related to pit production in  the requirements document may have also contributed to different  understandings of how the project will meet critical mission requirements.  For example, NNSA and DOE management officials we interviewed have  drawn their own, widely different conclusions about the extent to which  the revised CMRR project will support pit production. One NNSA official  involved in overseeing the project told us that the analysis equipment that  will be installed under the revised CMRR project would provide the  analysis capacity to support a production rate of 30 pits per year. A senior  NNSA official said the project would provide the same capabilities as the  previously approved CMRR project that included the nuclear facility but  said that he was not aware of the revised CMRR project’s expected  analysis capacity. A senior DOE official said that, when he reviewed the  CD-1 documentation and participated in meetings regarding the  August 2014 CD-1 approval for the revised CMRR project, he was not  aware that the project was needed to support pit production, and another  DOE official responsible for reviewing the project said the revised project  would support a production rate of about 10 pits per year.

We have previously found that poorly defined, incomplete, or missing  requirements make it difficult to hold projects accountable, result in  programs or projects that do not meet user needs, and can result in cost  and schedule growth. Notably, the memorandum approving CD-1 for the  revised CMRR project states that one of the main reasons that the CMRR  nuclear facility experienced significant cost and schedule growth was  because of poorly defined requirements for the facility. By updating the  program requirements document for the revised CMRR project to identify  a key performance parameter that describes the plutonium analysis  capacity that the revised CMRR project is required to provide to support  specific pit production rates, NNSA could clarify the extent to which the  project will support planned pit production, better enabling the agency to  identify whether it will need to acquire additional plutonium analysis  equipment or space by other methods.
subsections: section_title: NNSA Is Pursuing Actions to Increase Analysis Capacity
paragraphs: Even though NNSA did not identify pit production rates in a key  performance parameter in the program requirements document for the  revised CMRR project to support, the agency has taken steps since the  August 2014 CD-1 approval that may increase the plutonium analysis  capacity that the project will provide. For example, although the 2015  contractor analysis determined that the revised CMRR project as  approved in August 2014 may not support a 10 pits-per-year production  rate, the analysis also found that the project could support such a  production rate at project completion in 2024 if the contractor successfully  implements efforts to increase the efficiency of working in the radiological  lab. These efforts involve potentially increasing the project’s analysis  capacity by reducing the amount of plutonium used in each analysis, in  turn allowing scientists to conduct more analyses at a time. According to  contractor representatives we interviewed, they have not determined if  these efforts will be successful.

NNSA has initiated another action that could increase the plutonium  analysis capacity that the revised CMRR project will provide, according to  contractor documents. In November 2015, DOE approved a restructuring  of the revised CMRR project by splitting the Plutonium Facility 4  Equipment Installation subproject, one of the two subprojects that  comprised the revised CMRR project when it was approved in  August 2014, and adding a new subproject that would upgrade the  radiological lab from a radiological facility to a Hazard Category 3 nuclear  facility. Upgrading the radiological lab, according to NNSA and  contractor documents, would involve (1) renovating the radiological lab to  accommodate higher levels of plutonium, and (2) installing and operating  a set of plutonium analysis equipment in the radiological lab that was  otherwise slated to go into Plutonium Facility 4 as part of the revised  CMRR project. In May 2015, NNSA and its contractor conducted a  business case analysis of the upgrade that stated that the benefits of  increasing work performed in the radiological lab instead of in Plutonium  Facility 4 include increased operational efficiency and therefore increased  analysis capacity. In addition, the business case analysis stated that the  proposal offers the benefit of avoiding using the high-hazard, high- security space in Plutonium Facility 4 for analysis operations that do not  need that level of safeguarding. According to the separate 2015  contractor analysis, conducting more plutonium analysis in the  radiological lab instead of in Plutonium Facility 4—if combined with  successful efforts to reduce the amount of plutonium used in each  analysis—would likely increase the project’s plutonium analysis capacity  enough to support a 30-pits-per-year production rate. In a best case  scenario, the analysis found the project might be able to support  production at 80 pits per year.

NNSA’s efforts to increase the plutonium analysis capacity of the revised  CMRR project, however, may create risks for meeting the project’s  estimated cost and schedule. NNSA and DOE officials told us that the  agency has not increased an existing facility’s hazard category before  and that NNSA is working to identify all of the steps that will be involved in  upgrading the radiological lab to a Hazard Category 3 nuclear facility.  Also, the May 2015 business case analysis described some of the risks  associated with the upgrade, some of which carry potentially significant  cost and schedule effects if realized. For example, the business case  analysis stated that it is possible that a forthcoming nuclear safety  analysis could require modifying the building’s ventilation system or  increasing the safety rating of the gloveboxes used in the radiological lab  for handling plutonium. The business case analysis found that requiring  such modifications could negatively affect the upgrade’s schedule  because, for example, the contractor has already started procuring  gloveboxes for the radiological lab and changing their safety rating would  require modifying the procurement or the gloveboxes themselves. Also,  project costs could increase to the point where NNSA might decide it is  not affordable to pursue the upgrade. If NNSA does not pursue the  upgrade or the upgrade does not result in increasing the revised project’s  analysis capacity enough to support pit production rates of 50 to 80 pits  per year by 2030 to support life extension programs, NNSA officials told  us they do not currently have an alternate plan for acquiring and locating  the remaining analysis equipment needed to support those production  rates. Given the uncertainty surrounding the revised CMRR project’s  ability to support pit production rates of 50 to 80 pits per year, having a  plan for providing sufficient analysis capacity may better enable NNSA to  meet its pit production plans and support planned life extension programs  critical to the agency’s modernization efforts.

section_title: NNSA Is Not Designing the Revised CMRR Project to Directly Meet Plutonium Analysis Needs of All DOE and NNSA Programs at Los Alamos
paragraphs: Even considering the actions that NNSA is pursuing to increase analysis  capacity, the agency is designing the revised CMRR project to meet the  Office of Defense Programs’ plutonium analysis needs for its stockpile  management mission and not the analysis needs of other NNSA and  DOE programs that conduct plutonium analysis work at Los Alamos. This  is counter to the revised CMRR project’s requirements document for  CD-1. More specifically, the first project requirement states that the  revised CMRR project must provide infrastructure and equipment needed  to support program offices with missions assigned to Los Alamos that  involve plutonium analysis operations, including stockpile support and  national security and science stewardship. As stated, this requirement  appears to include all DOE and NNSA program offices with plutonium  analysis needs assigned to Los Alamos, including but not limited to the  needs of the program sponsor—the Office of Defense Programs—and  also other program offices, including the NNSA Office of Defense Nuclear  Nonproliferation’s ARIES and the DOE Office of Nuclear Energy’s Office  of Space and Defense Power Systems. The revised CMRR project’s first  requirement also directs readers to an appendix to the program  requirements document that shows a list of programs—both within and  outside of the Office of Defense Programs—that use plutonium analysis  capabilities at Los Alamos mapped against specific types of plutonium  analysis techniques. NNSA’s requirements policy states that mission  requirements should be a comprehensive set of what the project must  provide to satisfy the mission need. In addition, A Guide to the Project  Management Body of Knowledge states that mission requirements  provide the basis for defining a project’s scope.

According to NNSA officials and contractor representatives, however, the  revised CMRR project’s scope does not include dedicated analysis  equipment that specifically meets the needs of DOE and NNSA programs  outside of the Office of Defense Programs. These officials and contractor  representatives said that these programs’ plutonium analysis needs are  not specifically included in the first project requirement for the revised  CMRR project. They said that, as the project sponsor, it is Defense  Programs’ requirements that will dictate the specific analysis equipment  to include in the project’s scope of work. Officials we interviewed with  ARIES and the Office of Space and Defense Power Systems said they  are not customers of the revised CMRR project and that they did not  provide input about their plutonium analysis requirements to inform the  revised CMRR project’s program requirements document. The Space and  Defense Power Systems officials said that they have acquired dedicated  plutonium analysis equipment to meet their plutonium analysis needs  separately at Los Alamos, and the ARIES officials said they have moved  most of their plutonium analysis work to another site but that they may  seek to increase their analysis work at Los Alamos in the future if their  mission changes.

Contractor representatives explained that they included programs outside  of Defense Programs in the revised CMRR project’s program  requirements document to be comprehensive and show that the project  may support customers beyond Defense Programs. They said that other  programs may use the plutonium analysis equipment installed as part of  the revised CMRR project, if and when the equipment is available.  However, writing the first project requirement in a broad manner may  provide the impression to senior managers and other stakeholders that  the revised CMRR project will include the dedicated analysis equipment  and space necessary to meet the plutonium analysis needs of programs  other than Defense Programs. It also adds to the uncertainty surrounding  the exact nature of the plutonium analysis capacity that the project will  provide. By updating the program requirements document for the revised  CMRR project to clarify whether the revised project will provide plutonium  analysis equipment to meet the needs of DOE and NNSA programs other  than those in the Office of Defense Programs, managers and  stakeholders may have a clearer understanding of the extent to which the  project will satisfy DOE and NNSA programs’ needs.

section_title: NNSA Did Not Define Key Parameters or Program Requirements for the Plutonium Modular Approach, Therefore It Is Unclear If It Will Meet Analysis Needs
paragraphs: In November 2015, DOE approved the mission need (CD-0) for the  Plutonium Modular Approach to examine building modular nuclear  facilities to support plutonium work at Los Alamos. However, it is unclear  whether the Plutonium Modular Approach will help meet DOE and NNSA  programs’ plutonium analysis needs at Los Alamos because NNSA did  not identify key performance parameters, as with the revised CMRR  project, or program-specific requirements in the mission need  documentation. Further, the Plutonium Modular Approach’s statement of  mission need prematurely identified a specific solution, which is counter  to Order 413.3B.
subsections: section_title: NNSA Did Not Specify Key Parameters, Including Plutonium Analysis Capacity
paragraphs: In its mission need documentation for the Plutonium Modular Approach,  NNSA adopted a mission need statement and an initial set of  requirements to meet the mission need. The mission need statement  defined two missions: (1) provide high-hazard, high-security laboratory  space to conduct operations to support enduring stockpile stewardship  and management activities and (2) enable NNSA to continue working in  Plutonium Facility 4 for longer than its planned life by moving some high- hazard operations out of the facility. The Plutonium Modular Approach  requirements document stated that the project is to build no less than two  modular nuclear facilities at Los Alamos adjacent to Plutonium Facility 4.  The requirements document also included a list of potential program  missions that the site might relocate from Plutonium Facility 4 into the  new modular facilities and a statement that the space should be designed  to accommodate any of the potential program missions listed. The  program missions included pit production, pit disassembly conducted by  ARIES, and plutonium-238 work conducted in part by the Office of Space  and Defense Power Systems.

As with the revised CMRR project, NNSA did not identify any key  performance parameters for the Plutonium Modular Approach to meet.  NNSA’s requirements policy directs NNSA to develop as many  requirements as can be determined, including key performance  parameters, in the program requirements document when it is first  developed at CD-0. Also, NNSA did not identify any requirements that are  specific to the needs of NNSA or DOE programs, including requirements  related to providing additional plutonium analysis capacity that could  support pit production. According to the best practices that we have  identified for conducting analyses of alternatives, setting project  requirements early in the analysis of alternatives process helps ensure  that the selected alternative best meets the agency’s needs. The  program requirements document for the Plutonium Modular Approach  states that NNSA plans to identify program-specific requirements at CD-2,  which is after the agency has selected the project alternative. NNSA  officials and contractor representatives told us that they did not identify  program-specific requirements for the Plutonium Modular Approach to  meet because they expect that these requirements will change between  now and project completion. They said that although additional high- hazard, high-security laboratory space is needed, the exact use for that  space has not been determined. In commenting on a draft of this report,  contractor representatives stated that the justification for the Plutonium  Modular Approach is “somewhat nebulous” because the mission need is  based on the need to extend the life of Plutonium Facility 4 rather than on  meeting specific program needs. Extending the life of Plutonium Facility 4  may be worthwhile, but by defining key performance parameters and  program-specific requirements before conducting the analysis of  alternatives, NNSA would have better information about program-specific  requirements to inform its analysis and to provide a clearer basis for  selecting a project alternative at CD-1.

Conducting the analysis of alternatives for the Plutonium Modular  Approach without considering program-specific requirements may  negatively affect programs that currently use space in Plutonium  Facility 4. For example, NNSA reported in the mission need  documentation that moving plutonium-238 activities out of Plutonium  Facility 4 and into a new modular facility is a key example of how NNSA  could extend the life of Plutonium Facility 4 by reducing nuclear safety  risks in the facility. NNSA officials and contractor representatives told us  that plutonium-238 activities is a top candidate to move into a modular  facility if the goal is to extend the life of Plutonium Facility 4. However,  NNSA did not consult the Office of Space and Defense Power Systems,  which conducts most of the plutonium-238 activities in Plutonium  Facility 4, when developing the mission need and requirements for the  Plutonium Modular Approach, according to officials with this office. These  officials told us that they were not involved in discussions regarding the  mission need for the project and that they had not heard about NNSA’s  potential plan to move plutonium-238 equipment out of Plutonium  Facility 4. They said that NNSA’s projected 2027 operational date for new  modular facilities could directly impede the office’s ability to meet NASA’s  future needs. They also said that if NNSA determines it needs to move  the plutonium-238 equipment out of Plutonium Facility 4 to reduce risks,  the Office of Space and Defense Power Systems may seek options for  housing their equipment at another site rather than move into a new  modular facility at Los Alamos.

section_title: Mission Need Prematurely Identified a Specific Solution
paragraphs: NNSA’s mission need statement for the Plutonium Modular Approach  may not provide NNSA with the flexibility to explore a variety of  alternatives without limiting potential solutions because it prematurely  identified a specific solution for the project, contrary to DOE Order  413.3B. According to the order, at CD-0 NNSA must develop statements  of mission need that do not identify a particular solution such as  equipment, facility, or technology. However, NNSA’s mission need  statement identifies a specific type of facility—high-hazard, high-security  laboratory space. Also, in the program requirements document supporting  CD-0, NNSA lists the Plutonium Modular Approach’s first mission  requirement as delivering no less than two new nuclear facilities with full  operating capability no later than 2027. The mission need statement  document states that a few options appear to be available to meet the  mission need that would involve upgrading existing facilities instead of  building new modular facilities, and NNSA officials told us that they will  consider a range of options as part of the analysis of alternatives to  support CD-1. However, by narrowly defining the mission need and the  first requirement in terms of building two modular nuclear facilities at Los  Alamos by 2027, there is effectively no project alternative other than the  modular approach that NNSA could select to satisfy this requirement and  the mission need as currently documented.

According to an NNSA official who helped develop the CD-0 project  documentation, NNSA included language about building two new nuclear  facilities in the project documentation to acknowledge congressional  direction contained in the national defense authorization acts for fiscal  years 2014 and 2015 about building new modular facilities. This official  characterized the mission need statement as balancing compliance with  congressional direction with compliance with Order 413.3B. The fiscal  year 2014 statutory language limited the funds that NNSA could spend on  pursuing an alternative other than the modular facilities, and the fiscal  year 2015 statutory language expressed the sense of Congress that the  best choice was to build two modular structures by 2027. The language  neither required NNSA to move forward with a specific strategy nor  relieved NNSA of its responsibility to analyze other alternatives.

Identifying a specific solution in the mission need statement may create a  potential bias against other potentially viable alternatives, limiting NNSA’s  ability to explore a variety of solutions. In our December 2014 report on  NNSA’s analysis of alternatives process, we found that conducting such  an analysis without a predetermined solution is a best practice. In that  report, DOE and NNSA officials acknowledged that an unreliable analysis  of alternatives is a risk factor for major cost increases and schedule  delays for NNSA projects. We recommended that NNSA 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 and in May 2016, the agency included language in  an update to Order 413.3B directing that analyses of alternatives be  conducted consistent with our published best practices. By rephrasing the  Plutonium Modular Approach mission need statement and requirements  so they are independent of a particular solution before conducting the  analysis of alternatives, NNSA may be better positioned to objectively  consider other alternatives before it makes its selection of an alternative  at CD-1.

section_title: NNSA’s Revised CMRR Project Has a Lower Estimated Total Cost than the Previously Approved CMRR Project, but Agency Estimates of Cost Savings May Be Overstated
paragraphs: The total estimated cost for the revised CMRR project is lower than the  total estimated cost for the previously approved CMRR project that  included constructing the CMRR nuclear facility, but estimates of cost  savings may be too high because the revised project includes less scope  and is likely to provide less plutonium analysis capacity. In internal  documents used to present information to senior decision makers as they  considered approving CD-1 for the revised CMRR project, DOE and  NNSA stated that cancelling the nuclear facility portion of the previously  approved CMRR project and approving the revised CMRR project would  save billions of dollars. For example, in an August 2014 slide presentation  to DOE’s acquisition advisory board, NNSA reported that the total cost of  its previously approved CMRR project—consisting of designing and  constructing both the radiological lab and the nuclear facility, and  installing equipment in both—would have reached up to approximately  $7 billion. The presentation showed that since the total estimated cost of  the revised CMRR project is up to approximately $3 billion—including  sunk costs spent on designing, constructing, and installing equipment in  the radiological lab and partially designing the nuclear facility—the  agency will reduce costs by approximately $4 billion as a result of  cancelling the CMRR nuclear facility. In a memorandum to the Deputy  Secretary of Energy dated a day after the presentation and  recommending approval of the revised CMRR project, DOE’s Office of  Management stated that approving the revised CMRR project would  reduce the total cost by more than $2 billion. In that memorandum and  in NNSA’s budget requests for fiscal years 2016 and 2017, the agency  stated that the revised CMRR project eliminated the need to construct the  CMRR nuclear facility, thereby serving as its replacement.

NNSA’s cost savings calculations—whether $2 billion or $4 billion—may  be overstated, however, because the revised CMRR project will likely  provide less plutonium analysis capacity and less work scope than the  previously approved CMRR project, which included the nuclear facility,  and the calculations did not include costs associated with the Plutonium  Modular Approach. More specifically:

The revised CMRR project will likely provide less analysis  capacity than the previously approved CMRR project. Before  NNSA deferred construction of the CMRR nuclear facility, NNSA’s  contractor at Los Alamos estimated that the nuclear facility could  support production of 40 pits per year in Plutonium Facility 4, and  found that supporting 80 pits per year would require additional  equipment and staff. NNSA reported that it expected the nuclear  facility to support the production of up to 80 pits per year. In contrast,  as discussed earlier, the 2015 contractor analysis determined that the  revised project, as approved at CD-1 in August 2014, may not support  the production of 10 pits per year and that the agency needs to  successfully implement efforts to increase the project’s analysis  capacity to support production rates of 10 pits per year and 30 pits per  year. In a best case scenario, the project might be able to support an  80-pits-per-year rate, according to the contractor’s analysis. NNSA’s  statement that the revised CMRR project replaces the CMRR nuclear  facility is based on the revised project providing the same analysis  “capabilities” as the planned nuclear facility but not the same analysis  capacity. NNSA uses the term capability to refer to specific types of  analysis techniques, such as radiochemistry. For example, according  to NNSA’s contractor at Los Alamos, the revised project will install a  set of plutonium analysis capabilities that is roughly comparable to the  set of capabilities that was planned for the nuclear facility. However,  contractor representatives added that, although the set of analysis  capabilities is comparable, the analysis capacity is likely to be less  because it is less efficient to conduct plutonium analysis in Plutonium  Facility 4 and the radiological lab than it would have been in the  CMRR nuclear facility.

The revised CMRR project includes less work scope than the  previously approved CMRR project. The CMRR nuclear facility was  to include, among other things: a 31,100 square foot nuclear material  storage vault; a 12,800 square foot tunnel system for secure transfer  of materials between Plutonium Facility 4, the nuclear facility, and the  radiological lab; and 7,200 square feet for staging waste drums before  they were to be shipped for disposal. The revised CMRR project  does not include the storage vault, tunnel, or a new waste staging  area. In its CD-1 documentation for the revised CMRR project, NNSA  stated that it eliminated these scope elements because they were not  needed at the time. However, NNSA also stated that it will eventually  need a tunnel connecting Plutonium Facility 4 to the radiological lab  and the future modular nuclear facilities and a waste staging area and  that although the need for a new storage vault has been delayed, it  has not necessarily been eliminated. As a result, removing these  scope elements from the revised CMRR project may result in a  reduction of the CMRR project’s total cost, but it may not represent a  net cost savings to the agency or the taxpayer, because some scope  elements that were removed will need to be constructed eventually.

NNSA’s calculations did not include costs associated with the  modular facilities. NNSA stated in the revised CMRR project’s CD-1  documentation that the overall strategy for maintaining plutonium  operations at Los Alamos without the CMRR nuclear facility consists  of both the revised CMRR project and the Plutonium Modular  Approach. The documentation mentioned that building new modular  nuclear facilities will accommodate activities that are not included in  the revised CMRR project or that are needed to facilitate the project.  Therefore, without including some costs associated with the  Plutonium Modular Approach, any cost savings calculations from  cancelling the CMRR nuclear facility are likely to be overstated.

According to NNSA officials and contractor representatives, NNSA’s  cancellation of the previously approved CMRR project’s nuclear facility  may yield benefits in terms of an improved funding profile. These officials  and representatives explained that one benefit of pursuing the revised  CMRR project and the Plutonium Modular Approach lies in improving the  agency’s ability to fund the two projects. They said that although the total  cost to build a set of modular nuclear facilities is not necessarily less than  building one large nuclear facility, acquiring smaller nuclear facilities over  time may be more affordable because NNSA can spread out the facilities’  effect on the budget over a greater period of time. However, we found in  our March 2016 report on NNSA’s modernization plans and the budget  estimates to implement these plans that the total costs of NNSA’s  plutonium infrastructure strategy at Los Alamos included in the plans  were uncertain and may be underestimated because NNSA had not  determined the number of modular facilities that may be required.  Therefore, the actual amount of any cost savings that NNSA may realize  has yet to be determined.

section_title: NNSA’s Schedule and Cost Estimates for the Revised CMRR Project Partially Met Best Practices
paragraphs: NNSA’s estimated schedule and costs for completing the revised CMRR  project partially met best practices. Importantly, the schedule estimate did  not include all work activities required for the project’s successful  execution. The cost estimate exhibited two of the four characteristics of  reliable cost estimates; as a result, NNSA cannot have confidence that it  can meet its schedule and cost goals, including supporting the agency’s  commitment to end plutonium operations in the Chemistry and Metallurgy  Research facility by the end of 2019.
subsections: section_title: NNSA’s Schedule Did Not Include Most Activities Needed to Complete the Project
paragraphs: NNSA did not maintain a schedule for the revised CMRR project that  included all activities needed to complete the project and did not  sufficiently analyze risks to determine whether the project’s estimated  completion dates are reasonable. In August 2014, in support of the CD-1  decision, NNSA estimated that it would complete the revised CMRR  project’s first subproject—installing plutonium analysis equipment in the  radiological lab—in December 2019 and that it would complete the  second subproject—installing plutonium analysis equipment in Plutonium  Facility 4—in February 2024. NNSA’s contractor at Los Alamos updated  the schedule subsequent to CD-1 approval. We reviewed an updated  project schedule from August 2015 and assessed the extent to which it  reflected best practices for creating a high-quality, reliable schedule. We  found that NNSA had not maintained an integrated master schedule that  contained all work activities needed to complete the project consistent  with best practices or conducted a schedule risk analysis to determine the  likelihood of meeting completion dates. Also, the agency may not meet  the December 2019 completion date for the first subproject to install  analysis equipment in the radiological lab, which supports NNSA’s  commitment to end plutonium operations in the Chemistry and Metallurgy  Research facility.
subsections: section_title: NNSA Had Not Maintained an Integrated Master Schedule
paragraphs: We found that NNSA’s August 2015 updated schedule for the revised  CMRR project substantially or fully met several scheduling best practices,  but the schedule was limited to short-term work that ends in 2017. The  project schedule estimate fully met the best practice of establishing  durations for those activities that the contractor included in the schedule.  This best practice allows managers to more easily track progress and  ensures that the schedule realistically reflects how long each activity will  take. The schedule also substantially met the best practice of being  horizontally and vertically traceable, meaning that related activities were  correctly linked to intended outcomes, so that changing the amount of  time planned for an activity would appropriately affect forecasted dates  and that varying levels of activities were properly aligned. In addition, the  updated schedule also substantially met the best practices for assigning  resources to activities and sequencing activities. These best practices  help ensure that resources, such as labor and equipment, are available  when needed and that activities are listed in the order in which they are to  be carried out.

However, we found that NNSA had not maintained a schedule for the  revised CMRR project that contained all the activities within the project’s  scope of work, as called for by best practices. NNSA’s August 2015  updated schedule that we reviewed did not contain most of the planned  work necessary to complete the project. According to best practices, a  project team should develop and maintain an integrated master schedule  that includes the entire scope of work required for a project’s successful  execution. An integrated master schedule should include near-term and  long-term activities throughout the life of the project, and a project team  may account for uncertainty in future years by using a lesser level of  detail to describe future activities. Among other things, an integrated  master schedule provides managers with a plan for carrying out the  project and a mechanism for measuring progress and identifying potential  problems in meeting schedule milestones. An integrated master schedule  is also important for meeting other best practices, such as assigning  resources to activities and validating the critical path.

An NNSA official and contractor representatives we interviewed who are  members of the CMRR project team told us that they developed an  integrated master schedule to support the project’s CD-1 decision, but  they did not maintain the integrated master schedule after CD-1. Rather,  the August 2015 updated project schedule we reviewed was limited to  work activities scheduled to occur in the short-term, including design and  site preparation activities that support progress toward CD-2 and long- lead procurement of analysis equipment. According to schedule  documentation, these activities represent about 7 percent of the total  remaining project, by cost. Specifically, these activities were scheduled to  end in 2017 at an estimated cost of approximately $134 million. In  contrast, the project’s entire scope of work is not scheduled to end until  2024 at an approximate cost of up to $2 billion.

An NNSA project team member said the team did not maintain the  integrated master schedule after CD-1 because, in general, they do not  update a CD-1 schedule until they develop the project’s schedule  baseline before CD-2. NNSA directed contractor team members to create  the project’s updated schedule based on a plan—finalized in September  2014—to implement the project through CD-2. Project team members  said that the updated schedule was sufficient for managing the project  until CD-2. Project team members also said limiting the updated schedule  to short-term work allows them to focus attention on near-term, critical  activities as they manage and execute the project. At the time of the  revised CMRR project’s CD-1 approval in August 2014, Order 413.3B  directed agencies to develop project schedules before multiple critical  decisions, but the order did not specify when, and if, projects should  create and maintain an integrated master schedule. By maintaining a  schedule that is limited to short-term work ending in 2017, however,  NNSA and its contractor have limited insight into how current  performance affects completion dates beyond 2017, including completing  the first subproject to install analysis equipment in the radiological lab in  December 2019—in support of ending operations in the Chemistry and  Metallurgy Research facility—and completing the rest of the revised  CMRR project by 2024.

Subsequent to approving CD-1 in August 2014, DOE updated its direction  to project managers for developing and maintaining integrated master  schedules. In June 2015, the Secretary of Energy issued a department- wide memorandum directing NNSA to, among other things, develop,  maintain, and document an integrated master schedule consistent with  the methods and best practices identified by our schedule guide. In  May 2016, DOE incorporated these policies into an update to  Order 413.3B. Project team members said that they are creating a new  project schedule to support the revised CMRR project’s first CD-2  decision scheduled to occur by the end of September 2016, but according  to an NNSA project team member, this schedule will be limited to  activities estimated to end in 2019, primarily involving the installation of  equipment in the radiological lab and, to a lesser extent, in Plutonium  Facility 4. As a result, this new schedule may not meet the criteria for an  integrated master schedule and may not conform to the May 2016 update  to Order 413.3B. NNSA plans to approve additional schedule baselines at  a second CD-2 decision in mid-2017 for the remaining portions of the  project, including activities needed to support upgrading the radiological  lab to a Hazard Category 3 nuclear facility and installing most of the  analysis equipment planned for Plutonium Facility 4. An NNSA project  team member said that the remaining portions will be added to the overall  project schedule estimate once their schedule baselines are approved at  the second CD-2 decision. By using this approach, however, NNSA will  not develop an integrated master schedule that includes all activities until  the second CD-2 decision in mid-2017. Without developing and  maintaining an integrated master schedule that includes all project  activities under all subprojects prior to approving the first CD-2 decision  for the revised CMRR project, NNSA does not have reasonable  assurance that it has a mechanism for measuring progress and  identifying potential problems in meeting schedule milestones for the  revised CMRR project. Appendix II contains additional information about  the details supporting our assessment of the August 2015 updated project  schedule.

section_title: NNSA Did Not Conduct a Schedule Risk Analysis
paragraphs: We found that NNSA developed the revised CMRR project schedule  without sufficiently analyzing risks to determine whether the project’s  estimated completion dates are reasonable, contrary to best practices.

Project teams should conduct a schedule risk analysis to examine risks  and opportunities for the project, according to scheduling best practices.  This analysis determines the level of confidence that the agency can have  in whether it will meet its estimated completion dates, typically expressed  as a percentage. For example, an agency may learn from a schedule risk  analysis that it can have 70 percent confidence that it will finish the  project by the estimated completion date. For the revised CMRR project,  NNSA reported that it created an “aggressive” schedule to finish its first  subproject by the end of 2019 to support ending plutonium operations in  the Chemistry and Metallurgy Research facility. However, because NNSA  did not conduct a schedule risk analysis, the agency does not have  information about the level of confidence associated with meeting the first  subproject’s estimated completion date, and therefore cannot determine if  that date is reasonable.

Instead of a schedule risk analysis, the CMRR project team completed a  different kind of analysis called a risk assessment to support the  August 2014 CD-1 approval decision, but this assessment minimally met  best practices for a schedule risk analysis. The risk assessment provided  information about, among other things, the potential effects of selected  technical and programmatic risks on the schedule but was less  comprehensive than a schedule risk analysis. The project team told us  that they did not conduct a schedule risk analysis because they did not  have sufficient detail about activities in the schedule, including those that  would occur beyond CD-2. However, according to best practices, a  schedule risk analysis can be performed on a summary version of the  schedule if some activities are not well defined.

We previously found weaknesses in the schedule risk analysis that NNSA  conducted on the previously approved CMRR project’s schedule. In  March 2012, immediately after NNSA deferred construction of the CMRR  nuclear facility, we found that NNSA’s schedule risk analysis did not  include all risks identified by the project team, and we recommended that  the agency conduct a new schedule risk analysis when it resumed the  CMRR project and before establishing the schedule baseline at CD-2.  NNSA disagreed with our recommendation, stating that it would not be  prudent to update the project’s schedule at that time because the agency  had just deferred the project. However, NNSA did not conduct a schedule  risk analysis when it later resumed the project in 2014. Project team  members told us that they plan to complete separate schedule risk  analyses before each CD-2 decision for the revised CMRR project.  According to the Secretary of Energy’s June 2015 memorandum on  project management and the May 2016 update to Order 413.3B, NNSA is  to develop project schedules consistent with the methods and best  practices found in our schedule guide; these best practices include  conducting a schedule risk analysis on a complete project schedule.  Since NNSA will not create an integrated master schedule that includes  all project activities until mid-2017, the schedule risk analysis that the  agency will conduct on the portion of the project that NNSA is to approve  at the first CD-2 decision by the end of September 2016 will be limited  and may not account for all project risks. As a result, the schedule risk  analysis may provide NNSA with information about the confidence level  associated with meeting the first subproject’s December 2019 completion  date, but may not provide information on the likelihood of meeting the  project’s overall 2024 completion date. Without conducting a  comprehensive schedule risk analysis that applies to the integrated  master schedule to identify the likelihood that the revised CMRR project  can meet all of its estimated completion dates, NNSA does not have  reasonable assurance that it can meet the project’s overall 2024  completion date.

section_title: NNSA May Not Meet Its Estimate to Complete the CMRR Subproject That Supports Ending Operations in the Chemistry and Metallurgy Research Facility
paragraphs: According to NNSA documentation, the agency may not meet its  December 23, 2019, estimate for completing the first subproject of the  revised CMRR project because the schedule for the first subproject does  not include any schedule contingency to account for risks to the  “aggressive” schedule that may be realized. NNSA’s risk assessment  identified four risks to the subproject that could require from 19 to  20 months, or more, of schedule contingency if the risks are realized.  Therefore, if NNSA needs to add more than 8 days to the schedule as  contingency to mitigate risks, the subproject’s completion date extends  into 2020; if NNSA needs the entire schedule contingency, the completion  date extends into 2021. Project team officials told us that they set the  completion date for the first subproject so that it would finish before the  end of 2019 to support NNSA’s commitment to end plutonium operations  in the Chemistry and Metallurgy Research facility in 2019. According to  NNSA documents, the project team streamlined some activities, including  glovebox design work, to support the 2019 completion date. Unless its  “aggressive” schedule stays precisely on track, the agency is likely to  need at least some of its schedule contingency, extending the first  subproject’s completion date to beyond 2019.

NNSA officials told us that the agency remains committed to ending  plutonium operations in the Chemistry and Metallurgy Research facility by  the end of 2019. In commenting on a draft of this report, NNSA stated that  the Office of Defense Programs may choose to accept risk or a gap in  plutonium analysis capabilities to support this commitment if the first  CMRR subproject is not completed by the end of 2019. One official also  said NNSA is evaluating options to account for any gaps in capabilities  and has worked with contractor representatives to prioritize establishing  the most important capabilities first so that any gaps would involve less  critical capabilities.

section_title: NNSA’s Cost Estimate Exhibited Two of Four Characteristics of Reliable Estimates
paragraphs: NNSA’s cost estimate for the revised CMRR project exhibited two of the  four characteristics of a high-quality, reliable estimate. We reviewed and  assessed NNSA’s August 2014 CD-1 cost estimate covering the entire  revised CMRR project—a cost range from $1.5 billion to $2.0 billion— against the four characteristics of reliable cost estimating:  (1) comprehensive, (2) well documented, (3) accurate, and (4) credible.  We found that NNSA’s cost estimate was substantially comprehensive  and well documented. For example, the estimate recorded all ground  rules and assumptions and fully defined the project’s scope, including  technical characteristics and performance, design, and quality assurance  requirements, which are important for comprehensiveness. The estimate  also sufficiently described the methods used to calculate the cost of each  component of the estimate, which helps make an estimate well  documented. Figure 2 shows our assessment of NNSA’s cost estimate  and appendix III contains additional information about the details  supporting our assessment.

We found that NNSA’s cost estimate was partially accurate, in part,  because the project team did not determine the project’s most likely costs  when calculating management reserve and the total cost range for the  project. Specifically, the project team generally used appropriate  estimating techniques to develop the point estimate. The team, however,  then increased the point estimate by as much as 50 percent to include  funds for management reserve. According to our cost guide,  management reserve is typically the amount of funds the contractor may  need to spend to account for uncertainty. According to best practices,  managers should use analyses, such as a risk analysis, to calculate a  project’s most likely costs, and the estimate should not be overly  conservative or optimistic. Contractor project team members told us that  they set the amount of management reserve funding based on their  subject matter experts’ assessments about the uncertainty related to the  project and not on a formal risk analysis.

Similarly, contractor project team members told us that they created the  top end of the total cost range by applying the highest amount possible  under DOE guidance rather than using a risk analysis to calculate the  most likely costs. DOE guidance suggests that NNSA could have added  from 20 percent to 100 percent to the point estimate to create the top end  of the range, depending on the level of information available about the  project’s scope of work. Project team members said they determined  that the highest amount possible was appropriate based on their subject  matter experts’ opinion that the project carried high levels of uncertainty.  However, adding the highest amount possible above the point estimate  may increase the high end of the cost range more than necessary.  Because NNSA calculated management reserve and the total cost range  based on assumptions rather than analyses, the high end of the cost  range may overestimate the funds that will be needed and may not  provide management with reliable information to inform its decisions.
subsections: section_title: Cost Estimate Was Partially Credible
paragraphs: We found that NNSA’s cost estimate was partially credible, in part,  because NNSA did not follow the best practice to conduct a sensitivity  analysis. A sensitivity analysis quantifies the extent to which the cost  estimate could vary because of changes in key assumptions and ground  rules. Performing such an analysis increases the chance that decisions  that influence the design of the project will be made with a focus on the  elements that have the greatest effect on cost. The CMRR project team  created a document that it labeled a sensitivity analysis to support its cost  estimate, but this analysis did not follow most of the steps for conducting  a sensitivity analysis as called for by best practices. The project team  members said that they plan to conduct a sensitivity analysis to support  the baseline cost estimate at CD-2. This would be in keeping with the  Secretary’s June 2015 memorandum and the May 2016 update to Order  413.3B, which direct project managers to develop cost estimates in  accordance with best practices found in our cost guide, including  sensitivity analysis.

The cost estimate also was partially credible because NNSA did not  conduct an independent cost estimate of the revised CMRR project.  According to best practices, an independent cost estimate is generated  by an entity that has no stake in approval of the project and provides an  unbiased test of whether a project estimate is reasonable. Prior to CD-1,  DOE conducted an independent cost review of the project estimate,  which addresses a cost estimate’s high-value, high-risk, and high-interest  aspects without evaluating the remainder of the estimate, as permitted  under Order 413.3B. The independent cost review identified a number of  problems with NNSA’s cost estimate, such as estimation errors, and  according to DOE officials, NNSA incorporated some of the independent  cost review team’s comments and recommendations prior to CD-1.  Nevertheless, an independent cost estimate is a more thorough analysis  than an independent cost review. We have previously recommended that  DOE require independent cost estimates for all major projects at CD-1 to  improve the credibility of cost estimates at this stage, but DOE has made  independent cost estimates optional at CD-1. Project officials told us  NNSA is preparing to have an independent cost estimate conducted to  support the CD-2 cost estimate, which is required by Order 413.3B.

section_title: Conclusions
paragraphs: NNSA has committed to improving its performance in managing major  construction projects and has recently taken important steps toward  achieving that end. However, NNSA’s planning for the revised CMRR  project at the Los Alamos National Laboratory indicates that the agency  still has work to do. Specifically, NNSA did not identify a type of  requirement called a key performance parameter in the revised CMRR  project’s requirements document, contrary to NNSA’s requirements  policy. These performance parameters are important because they define  how well a project will perform its functions, expressed in terms such as  capacity or throughput. One of the revised CMRR project’s primary  functions is to provide plutonium analysis to support producing new  plutonium pits for life extension programs that are critical to NNSA’s  nuclear modernization efforts. NNSA needs a sufficient amount of  plutonium analysis capacity to support the agency’s pit production plans,  but it is currently unclear how well the project will support NNSA’s plan to  develop the capability to produce 50 to 80 pits per year by 2030. By  updating the program requirements document for the revised CMRR  project to identify a key performance parameter that describes a pit  production rate, NNSA could clarify the extent to which the project will  support pit production plans, better enabling the agency to identify  whether it will need to acquire additional plutonium analysis equipment or  space by other methods. Also, NNSA officials told us that if the revised  CMRR project does not provide sufficient plutonium analysis capacity to  support a 50 to 80 pits-per-year rate by 2030, they do not have an  alternate plan for obtaining that capacity. Given the uncertainty  associated with the revised CMRR project supporting a 50 to 80 pits-per- year rate, having a plan for providing sufficient analysis capacity if the  revised CMRR project will not support this rate may better enable NNSA  to meet its pit production plans and support planned life extension  programs critical to the agency’s modernization efforts.

In addition, NNSA’s broadly stated first requirement for the revised CMRR  project suggests that the project must meet plutonium analysis needs of  all DOE and NNSA program offices with plutonium analysis operations at  Los Alamos. However, the revised CMRR project’s scope is focused on  exclusively meeting the needs of the Office of Defense Programs. Other  DOE and NNSA offices may use the plutonium analysis equipment  installed for the CMRR project, if and when it is available, but NNSA is not  including plutonium analysis equipment in the scope of the project  specifically to meet their needs. NNSA’s requirements policy states that  the project’s requirements should be a comprehensive set of what the  project must provide to satisfy the mission need. By updating the program  requirements document for the revised CMRR project to clarify whether  the CMRR project will provide plutonium analysis equipment to meet the  needs of DOE and NNSA programs other than those in the Office of  Defense Programs, managers and stakeholders may have a clearer  understanding of the extent to which the project will satisfy DOE and  NNSA programs’ needs.

We commend the Secretary of Energy for issuing the May 2016 update to  Order 413.3B—and the June 2015 department-wide memorandum that  preceded it—directing project teams to develop and maintain integrated  master schedules consistent with the best practices in our schedule  guide. Such a step is likely to improve schedule outcomes for the agency.  However, NNSA did not maintain the integrated master schedule it  created at CD-1 for the revised CMRR project, and the schedule that the  agency plans to create to support the first CD-2 decision by the end of  September 2016 may not meet the criteria for an integrated master  schedule and, therefore, may not conform to the May 2016 update to  Order 413.3B. Without developing and maintaining an integrated master  schedule that includes all project activities under all subprojects prior to  approving the first CD-2 decision for the revised CMRR project,  consistent with current DOE project management policy and scheduling  best practices, NNSA does not have reasonable assurance that it has a  mechanism for measuring progress and identifying potential problems in  meeting schedule milestones for the revised CMRR project. Also, waiting  until the second CD-2 decision in mid-2017 to create the integrated  master schedule means NNSA will not conduct a schedule risk analysis  for the entire project until then. Conducting a schedule risk analysis to  support the first CD-2 decision by the end of September 2016 may  provide NNSA with information about the level of confidence that the  agency can have in its ability to complete the first subproject by the end of  2019. However, without conducting a comprehensive schedule risk  analysis that applies to the integrated master schedule to identify the  likelihood that the project can meet all of its estimated completion dates,  NNSA does not have reasonable assurance that it can meet the project’s  overall 2024 completion date.

Regarding the Plutonium Modular Approach, NNSA has approved the  mission need for another potentially multi-billion dollar project at Los  Alamos. NNSA, however, prematurely identified a specific solution when  it approved the mission need—contrary to Order 413.3B and best  practices—by stating that the Plutonium Modular Approach would  construct high-hazard, high-security laboratory space. NNSA also  specifically set the project’s first requirement as building no less than two  modular nuclear facilities at Los Alamos with full operating capability by  2027. By defining the mission need and requirements in terms of this  specific type of laboratory space and nuclear facility, NNSA has  effectively predetermined that it is the only alternative that can meet the  mission need and satisfy requirements. By rephrasing the mission need  statement and requirements so they are independent of a particular  solution before conducting the analysis of alternatives, NNSA may be  better positioned to objectively consider other alternatives before making  its selection of a project alternative at CD-1.

Also, when approving the mission need for the Plutonium Modular  Approach, NNSA did not identify key performance parameters or  program-specific requirements in the program requirements document.  NNSA’s requirements policy directs NNSA to develop requirements that  include key performance parameters in the program requirements  document when it is first developed, and according to the best practices  that we have identified for conducting analyses of alternatives, setting  requirements early in the analysis of alternatives process helps ensure  that the selected alternative best meets the agency’s needs. By defining  key performance parameters or program-specific requirements before  conducting the analysis of alternatives, NNSA would have better  information about programs’ specific needs to inform its analysis and to  provide a clearer basis for selecting a project alternative at CD-1.

section_title: Recommendations for Executive Action
paragraphs: We are making seven recommendations to the Secretary of Energy.

To ensure that NNSA will acquire sufficient plutonium analysis equipment  and space to meet its needs, including pit production to support critical life  extension programs, we recommend that the Secretary direct that the  Under Secretary for Nuclear Security, in his capacity as the NNSA  Administrator: update the program requirements document for the revised CMRR  project to identify a key performance parameter that describes the  plutonium analysis capacity the CMRR project is required to provide  to support specific pit production rates and  specify plans for how the agency will obtain additional plutonium  analysis capacity if the revised CMRR project will not provide  sufficient plutonium analysis capacity to support NNSA’s pit  production plans.

To ensure that NNSA will provide clear information to stakeholders about  the program needs that the revised CMRR project will satisfy, we  recommend that the Secretary direct the Under Secretary for Nuclear  Security, in his capacity as the NNSA Administrator, to update the  program requirements document for the revised CMRR project to clarify  whether the project will provide plutonium analysis equipment to meet the  needs of DOE and NNSA programs other than those in the Office of  Defense Programs.

To ensure that NNSA’s future schedule estimates for the revised CMRR  project provide the agency with reasonable assurance regarding meeting  the project’s completion dates, we recommend that the Secretary direct  the Under Secretary for Nuclear Security, in his capacity as the NNSA  Administrator, to develop future schedules for the revised CMRR project  that are consistent with current DOE project management policy and  scheduling best practices. Specifically: develop and maintain an integrated master schedule that includes all  project activities under all subprojects prior to approving the project’s  first CD-2 decision and  conduct a comprehensive schedule risk analysis that applies to the  integrated master schedule to identify the likelihood the project can  meet its completion dates.

To ensure that NNSA is better positioned to objectively consider  alternatives before making its selection of an alternative for the Plutonium  Modular Approach, we recommend that the Secretary direct the Under  Secretary for Nuclear Security, in his capacity as the NNSA Administrator,  before completing the analysis of alternatives, to rephrase the statement  of mission need and requirements for the Plutonium Modular Approach so  that they are independent of a particular solution.

Finally, to ensure that NNSA has information about program-specific  needs to inform its analysis of alternatives for the Plutonium Modular  Approach and to provide a clearer basis for selecting a project alternative,  we recommend that the Secretary direct the Under Secretary for Nuclear  Security, in his capacity as the NNSA Administrator, before completing  the analysis of alternatives, to identify key performance parameters and  program-specific requirements for the Plutonium Modular Approach.

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOE and NNSA for their review and  comment. In its written comments, reproduced in appendix IV, NNSA  generally neither agreed nor disagreed with our recommendations,  although it outlined actions taken and planned to address each of our  recommendations. NNSA also provided technical comments, which we  incorporated in the report as appropriate.

Concerning our findings, in its comments, NNSA stated that the report  substantially misinterprets the relationship between the CMRR project  and plutonium pit production. NNSA also stated that the report incorrectly  implies that the driver for the CMRR project and the project's ultimate  success depend on meeting plutonium pit production needs when the  goal of the project is to replace specific plutonium analysis capabilities.  We state in this report that the revised CMRR project’s purpose is to  provide plutonium analysis capabilities to facilitate replacing the aging  Chemistry and Metallurgy Research facility. However, we also state that,  according to NNSA documents, one of the primary functions of these  analysis capabilities is to support NNSA’s efforts to produce new  plutonium pits for life extension programs that are critical to nuclear  modernization efforts. As such, the revised CMRR project plays a key role  in supporting NNSA’s pit production plans. We agree that the success of  the CMRR project should not be measured in terms of actual pits  produced, but rather in terms of the plutonium analysis capacity the  project provides in support of production efforts and other stockpile  stewardship needs. As a result, we continue to believe that it is important  for the agency to be clear about how well the CMRR project will support  NNSA’s pit production plans. In addition, NNSA stated that the report  does not reflect the depth and breadth of steps NNSA has taken in the  last 2 years to improve project management in accordance with the  Secretary of Energy's new policies. As we state in the report, we are  pleased with the steps that NNSA has recently taken to improve project  management, including the Secretary’s new policies, and we are hopeful  that they will lead to improved outcomes.

Concerning our recommendations, in its written comments NNSA outlined  planned actions that are responsive to two of our seven  recommendations. Specifically, the first of these two recommended that  NNSA specify plans for how the agency will obtain additional plutonium  analysis capacity if the revised CMRR project will not provide sufficient  capacity to support pit production plans. In its written comments, NNSA  stated that it will update its plutonium strategy to include estimates of the  requirements and additional means, if needed, to achieve the required  capacity. NNSA stated that this action will be completed by  September 30, 2017. The second of these two recommended that NNSA  update the CMRR program requirements document to clarify whether the  project will provide plutonium analysis equipment to meet the needs of  DOE and NNSA programs other than those in the Office of Defense  Programs. NNSA stated that it will update this document to clarify that the  project will not install any unique analysis equipment required solely for  non-defense-related programs. NNSA estimated the completion date for  this activity to be December 31, 2017, or the next planned revision of the  program requirements document.

Regarding our other five recommendations, NNSA outlined actions  planned or taken that we do not believe are sufficiently responsive.  Specifically, regarding our recommendation that NNSA identify a key  performance parameter for the CMRR project that describes the  plutonium analysis capacity needed to support specific pit production  rates, NNSA stated that it is important to understand how the revised  CMRR project will support the agency’s overall plutonium strategy,  including pit production and other NNSA programs. However, NNSA did  not agree that it would be appropriate to establish a key performance  parameter for the revised CMRR project related to supporting a specific  pit production rate. The agency stated that incorporating such a key  performance parameter would require the project to rely on factors  beyond its control to demonstrate that it had met such a performance  parameter before the project was completed. Instead, NNSA stated that it  will perform an analysis to estimate a pit production capacity range that  the project will support and include a reference to this analysis in its next  revision to the program requirements document. Although conducting this  analysis and including a reference to it in the program requirements  document may be helpful, it may not be sufficient to describe how well the  CMRR project will perform one of its primary functions—conducting  plutonium analysis that is essential to supporting NNSA’s pit production  activities. As a result, we continue to believe that it is important for NNSA  to define this information in a key performance parameter.

Regarding our recommendation that NNSA develop and maintain an  integrated master schedule that includes all project activities contained  within the revised CMRR project, NNSA stated that it does not intend to  create one integrated master schedule. Instead, NNSA reiterated its  plan—described earlier in this report—to create a separate schedule for  each subproject as it reaches CD-2 rather than create an integrated  master schedule that includes all project efforts. NNSA stated that,  because the subprojects are minimally interdependent, there is little value  to be gained by developing an integrated master schedule for the entire  project. NNSA also stated that the subproject schedules will reflect best  practices defined in our schedule guide, including representing effort  beyond the near-term that is less well defined as planning packages. We  are pleased that DOE plans to incorporate the scheduling best practices  into the subproject schedules. However, NNSA’s proposed action does  not meet the criteria for an integrated master schedule because it will not  result in a schedule that includes all activities needed to complete the  project when NNSA approves the first schedule baseline by the end of  September 2016. At that time, the project schedule will reflect work  activities only through 2019. Given that the entire CMRR project schedule  is anticipated to extend into the mid-2020s, we continue to believe that it  is necessary for NNSA to follow the best practice of creating an integrated  master schedule that reflects the entire project because it provides the  transparency needed to properly manage this complex project.

Similarly, regarding our recommendation that NNSA conduct a  comprehensive schedule risk analysis for the revised CMRR project,  NNSA stated that, rather than conduct a risk analysis that applies to an  integrated master schedule, it would conduct separate schedule risk  analyses for each of the subproject schedules in accordance with our  schedule guide. We are pleased that NNSA will follow best practices  when conducting these analyses. Conducting individual schedule risk  analyses on each subproject schedule could provide information  regarding the level of confidence associated with meeting the subprojects’  estimated completion dates. However, a comprehensive risk analysis  performed on an integrated master schedule—a best practice—is  important to identify threats and opportunities that may affect multiple  subprojects and the entire CMRR project.

Regarding our recommendation that NNSA rephrase the statement of  mission need and requirements for the Plutonium Modular Approach to  be independent of a particular solution, NNSA stated that it concurs with  the recommendation. However, NNSA stated that it believes the  conclusions articulated in our report that the agency has preselected an  alternative for the Plutonium Modular Approach are incorrect and that it  initiated the analysis of alternatives process in May 2016, which was  always intended to be independent of a particular solution. We are  encouraged by NNSA’s statement that it intends to conduct the analysis  of alternatives independent of a particular solution. However, we do not  believe that NNSA’s actions are responsive to this recommendation  because these actions do not include rephrasing the mission need  statement and requirements. Since the mission need statement provides  the foundation on which the analysis of alternatives process is based, we  believe that continuing to define the mission need in terms of a specific  solution—constructing high-hazard, high-security laboratory space— creates a potential bias against other potentially viable alternatives.

Regarding our recommendation that NNSA identify key performance  parameters and program-specific requirements before conducting the  analysis of alternatives for the Plutonium Modular Approach, NNSA  stated in its written comments that it plans to develop initial key  performance parameters, consistent with applicable DOE policy, after it  completes the analysis of alternatives. The applicable policy, however, is  NNSA’s. Under NNSA policy, NNSA is directed to define these  parameters prior to approving the mission need at CD-0 rather than after  the agency completes the analysis of alternatives, as NNSA is proposing  to do. Therefore, we continue to believe that NNSA should identify these  parameters before completing the analysis of alternatives that they have  already begun.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Energy, the Administrator of NNSA, and  other interested parties. In addition, this 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 significant  contributions to the report are listed in appendix V.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: In this report, we assessed: (1) the extent to which the National Nuclear  Security Administration’s (NNSA) revised Chemistry and Metallurgy  Research Replacement (CMRR) project is expected to meet NNSA and  other Department of Energy (DOE) programs’ plutonium analysis needs  at Los Alamos National Laboratory; (2) the extent to which the Plutonium  Modular Approach is expected to meet plutonium analysis needs at Los  Alamos; (3) how the revised CMRR project’s scope and cost compare  with those of the previously approved CMRR project; and (4) the extent to  which the revised CMRR project’s schedule and cost estimates reflect  scheduling and cost estimating best practices.

To assess the extent to which NNSA’s revised CMRR project is expected  to meet NNSA and DOE programs’ plutonium analysis needs, we first  identified the plutonium analysis equipment, space for that equipment,  and the analysis capacity that the project is expected to provide. This  information was contained in a set of documents that NNSA and its  management and operating contractor at Los Alamos developed to  support the revised project’s most recent critical decision (CD) milestone  in August 2014, CD-1, including the mission need statement and program  requirements document. We also reviewed documents that NNSA and its  management and operating contractor at Los Alamos created after the  revised CMRR project’s CD-1 approval, including analyses that estimated  the project’s plutonium analysis capacity. We reviewed the revised CMRR  project’s mission need statement and program requirements document in  light of DOE’s project management directive Order 413.3B and  accompanying DOE guidance and NNSA’s business operating procedure  for program requirements documents, as appropriate. We interviewed  officials from the CMRR project sponsor, NNSA’s Office of Defense  Programs’ Office of Major Modernization Programs, and other project  stakeholders, including NNSA’s Office of Acquisition and Project  Management, DOE’s Office of Project Management Oversight and  Assessments, and DOE’s Office of Enterprise Assessments, about the  revised CMRR project. We also interviewed Los Alamos contractor  representatives involved with the revised CMRR project during a visit to  the Los Alamos site in August 2015 and later by telephone. We then  reviewed documentation of NNSA and DOE programs’ planned plutonium  analysis needs at Los Alamos, as summarized in planning documents  created by the Los Alamos contractor and as contained in the CD-1  documentation. We discussed the information in these documents with  officials from NNSA’s Offices of Defense Programs and other relevant  program offices, including the NNSA Office of Defense Nuclear  Nonproliferation’s Advanced Recovery and Integrated Extraction System  (ARIES) and the DOE Office of Nuclear Energy’s Office of Space and  Defense Power Systems. We selected these program offices because  after the Office of Defense Programs, they conduct the most plutonium  analysis at Los Alamos.

To determine the extent to which NNSA’s Plutonium Modular Approach is  expected to meet plutonium analysis needs, we reviewed documentation  supporting DOE’s November 2015 approval of the mission need (CD-0),  including the mission need statement and program requirements  document. We reviewed the mission need statement in light of DOE  Order 413.3B and accompanying DOE guidance. We interviewed NNSA  officials with the Office of Defense Programs’ Office of Major  Modernization Programs—the Plutonium Modular Approach sponsor— and other stakeholders, including NNSA’s Office of Acquisition and  Project Management and DOE’s Office of Project Management Oversight  and Assessments. We also interviewed Los Alamos contractor  representatives during our August 2015 site visit and officials with the  Office of Space and Defense Power Systems and ARIES to discuss their  involvement with the project.

To assess how the cost and scope of NNSA’s revised CMRR project  compare with those of the previously approved CMRR project, which  included the construction of a nuclear facility, we reviewed the revised  project’s CD-1 documentation and noted instances where the revised  CMRR project CD-1 documentation discussed the difference between the  cost estimates for the previously approved project and the revised project,  including in the CD-1 approval memo signed by the Deputy Secretary of  Energy and in a slide presentation that NNSA provided to a DOE  acquisition advisory board. Regarding the projects’ scopes of work, we  also reviewed the revised project’s CD-1 documentation and noted  instances where it discussed the scope that NNSA planned to include in  the previously approved project but that the agency eliminated from the  revised project. We also reviewed an analysis conducted by the  Department of Defense’s Office of Cost Assessment and Program  Evaluation that included a comparison of the scope of the CMRR nuclear  facility with the scope of the two subprojects that make up the revised  CMRR project and the Plutonium Modular Approach, and we interviewed  officials from this office about their analysis.

To assess the extent to which the revised CMRR project schedule and  cost estimates reflect scheduling and cost-estimating best practices, we  compared the schedule and cost estimates with best practices.  Specifically, for our assessment of the revised CMRR project schedule  estimate, we used the criteria in the May 2012 GAO Schedule  Assessment Guide (schedule guide). The schedule guide identifies  10 best practices associated with effective scheduling: (1) capturing all  activities, (2) sequencing all activities, (3) assigning resources to all  activities, (4) establishing the duration of all activities, (5) verifying that the  schedule can be traced horizontally and vertically, (6) confirming that the  critical path is valid, (7) ensuring total reasonable float, (8) conducting a  schedule risk analysis, (9) updating the schedule using actual progress  and logic, and (10) maintaining a baseline schedule. We assessed an  August 2015 version of the revised CMRR project schedule that NNSA’s  contractor at Los Alamos had updated since the project’s August 2014  CD-1 approval. We did not assess the August 2014 project schedule  estimate that NNSA developed to support CD-1 approval, because the  agency did not provide us with an electronic copy of the CD-1 schedule,  which was necessary to conduct our analysis. NNSA provided the  August 2015 project schedule to us in two parts, one for each of the two  subprojects that make up the revised CMRR project. We assessed each  subproject’s schedule estimate against the criteria in our schedule guide  and then combined the scores to create the overall schedule assessment.  For our assessment of the revised CMRR project cost estimate, we used  the criteria in the GAO Cost Estimating and Assessment Guide (cost  guide). The cost guide identifies best practices for the development of  reliable cost estimates and summarizes these best practices into four  characteristics of high-quality cost estimating—comprehensive, well  documented, accurate, and credible. We reviewed the revised CMRR  project cost estimate that NNSA prepared to support the CD-1 approval in  August 2014 and assessed the extent to which it exhibited the  characteristics of high-quality cost estimating and the associated best  practices. We also reviewed the project’s CD-1 documentation that  supported the cost estimate. For the schedule and cost assessments, we  interviewed members of the CMRR project team, which consisted of  NNSA officials and Los Alamos contractor representatives who helped  develop and maintain the estimates, to determine the policies and  procedures the project team had followed to develop the estimates. We  also interviewed officials with DOE’s Office of Project Management  Oversight and Assessments to understand the department’s schedule  and cost estimating policies and guidance, and we reviewed those  policies and guidance. After conducting our initial assessments of the  schedule and cost estimates, we shared our draft analyses with NNSA  officials and contractor representatives and obtained comments and  additional information, which we then incorporated as appropriate. We did  not assess the schedule or cost estimates for the Plutonium Modular  Approach because NNSA had not approved the estimates when we  started our review.

We conducted this performance audit from May 2015 to August 2016 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: Assessment of NNSA’s Schedule Estimate for the Revised Chemistry and Metallurgy Research Replacement Project
paragraphs: When the National Nuclear Security Administration (NNSA) approved  critical decision (CD) 1 (select alternative) for the revised Chemistry and  Metallurgy Research Replacement (CMRR) project at Los Alamos  National Laboratory in New Mexico in August 2014, the project’s future  work was organized under two subprojects. The first subproject,  Radiological Laboratory Utility Office Building Equipment Installation  Phase 2, involved installing plutonium analysis equipment in the  radiological laboratory. The second subproject, Plutonium Facility 4  Equipment Installation, involved installing new plutonium analysis  equipment in Plutonium Facility 4, the only high-hazard, high-security,  fully operational plutonium facility in the country for producing plutonium  pits, after removing contaminated equipment in space no longer in use.  For our assessment of the revised CMRR project schedule, we used the  criteria in the GAO Schedule Assessment Guide (schedule guide), which  identifies 10 best practices associated with effective scheduling. We  assessed an August 2015 version of the revised CMRR project schedule  that NNSA’s contractor at Los Alamos had updated since the project’s  approval in August 2014. We did not assess the project schedule  estimate that NNSA developed to support the August 2014 CD-1 approval  because the agency did not provide us with an electronic copy of that  schedule. NNSA provided the August 2015 project schedule to us in two  parts, one for each of the subprojects. We assessed each subproject’s  schedule estimate against the criteria in our schedule guide and then  combined the scores to create the overall schedule assessment. Table 2  presents our assessment, including a narrative summary of the  subprojects’ schedule estimates and overall scores in terms of the 10  best practices.

section_title: Appendix III: Assessment of NNSA’s Cost Estimate for the Revised Chemistry and Metallurgy Research Replacement Project
paragraphs: The GAO Cost Estimating and Assessment Guide (cost guide) identifies  best practices for the development of reliable cost estimates. The cost  guide identifies the following four characteristics of a high-quality, reliable  cost estimate: comprehensive, well documented, accurate, and credible.  Using the criteria in our cost guide, we assessed the extent to which the  National Nuclear Security Administration’s (NNSA) August 2014 cost  estimate for both subprojects of the revised Chemistry and Metallurgy  Research Replacement (CMRR) project exhibited the characteristics of  high-quality cost estimating and the related best practices. NNSA created  the cost estimate in June 2014 to support the revised CMRR project’s  August 2014 critical decision (CD) 1 (select alternative). Table 3 shows  scores for both the characteristics and the best practices, including a  narrative summary of our findings for each best practice.

section_title: Appendix IV: Comments from the National Nuclear Security Administration

section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Dan Feehan (Assistant  Director), Andrew Berglund, Antoinette Capaccio, John Delicath, Jennifer  Echard, Emile Ettedgui, Keith Hornbacher, Jason Lee, Leslie Kaas  Pollock, Sara Sullivan, and Kiki Theodoropoulos made significant  contributions to this report.


Question-summary annotations: questions: question: What did NNSA fail to specify regarding the CMRR project's plutonium analysis?
answer: The Department of Energy's (DOE) National Nuclear Security Administration (NNSA) defined requirements for the revised Chemistry and Metallurgy Research Replacement (CMRR) project to provide plutonium analysis equipment at its Los Alamos site but did not specify the capacity for analyzing plutonium that the project should provide, making it possible that the project would not meet plutonium analysis needs.

question: What does NNSA policy state?
answer: NNSA policy states that project requirements should include key performance parameters, which describe how well a project will perform its functions, expressed in terms such as processing rate or capacity.
child_questions: question: What key parameter did NNSA not identify?
answer: However, NNSA did not identify a key parameter that addresses a primary function of the project's analysis equipment—to analyze plutonium in support of producing an essential part of a nuclear weapon, known as a pit.

question: How may the CMRR project support the planned pit production rates?
answer: NNSA has determined that it needs sufficient analysis capacity to support producing pits, including at planned rates of 10 pits per year in 2024 and 50 to 80 pits per year by 2030, but an NNSA analysis shows that the revised CMRR project may not support these rates.

question: Why did the project not include a pit production-related parameter?
answer: NNSA officials said the project's requirements do not include a pit production-related parameter because NNSA only tasked the CMRR project with replacing analysis equipment used in an aging facility, regardless of analysis capacity.
child_questions: question: Not identifying this parameter likely contributed to what?
answer: Not identifying this parameter likely contributed to the project potentially not providing sufficient analysis capacity to support planned pit production and may have contributed to different understandings among senior agency officials about how well the project will support pit production.

questions: question: How does the NNSA's total estimated cost for the revised CMRR project differ from the previously approved CMRR project?
answer: NNSA's total estimated cost for the revised CMRR project is lower than the cost of the previously approved CMRR project, which included a large nuclear facility, but NNSA may have overstated its cost savings.

question: What might have caused NNSA to overstate or misestimate its cost savings?
answer: NNSA's total estimated cost for the revised CMRR project is lower than the cost of the previously approved CMRR project, which included a large nuclear facility, but NNSA may have overstated its cost savings. NNSA's estimated savings from cancelling the previously approved nuclear facility did not account for work that the agency deferred to future projects, including a storage vault and tunnel.

question: What advantages are there to NNSA's approach for the revised CMRR?
answer: NNSA's approach for the revised CMRR project allows costs to be spread out over time, improving NNSA's ability to concurrently fund other work.
child_questions: question: What disadvantages may there be in the revised CMRR project?
answer: However, the revised CMRR project includes less scope and is likely to provide less plutonium analysis capacity than the previously approved nuclear facility.

questions: question: How well did the revised CMRR project meet best practices?
answer: The revised CMRR project schedule and cost estimates only partially met best practices.
child_questions: question: How did the schedule compare to best practices?
answer: For example, the schedule did not include most of the work needed to complete the project. According to best practices, agencies should develop and maintain a schedule that contains all necessary work activities, but the revised project's schedule was limited to near-term work ending in 2017.
child_questions: question: Why might NNSA not have maintained a complete schedule?
answer: When NNSA created the revised CMRR schedule, DOE did not specifically require projects to maintain complete schedules after project approval.

question: How does relying on a partial schedule affect other parts of the project?
answer: Continuing to rely on a partial schedule limits managers' insight into how current activities might affect future completion dates, including NNSA's goal to end plutonium work in an aging facility at Los Alamos.

questions: question: What obstacles did the NNSA encounter in their current approach to budgeting for the design of large construction projects?
answer: In recent years, NNSA has spent billions of dollars designing large construction projects, only to revisit options after cost increases and schedule delays.

question: What loss was incurred as a result of NNSA reversing its decision to build a nuclear facility?
answer: At Los Alamos, NNSA reversed its prior decision to build a nuclear facility as part of the CMRR project after spending $450 million. The facility was to provide analysis equipment needed to support the production of pits as part of nuclear weapons life extension programs.
child_questions: question: Why might have NNSA reversed their decision?
answer: In recent years, NNSA has spent billions of dollars designing large construction projects, only to revisit options after cost increases and schedule delays. Instead, NNSA approved a revised CMRR project to install plutonium analysis equipment in existing facilities.
child_questions: question: How might NNSA's new approved project still benefit the CMRR project?
answer: Instead, NNSA approved a revised CMRR project to install plutonium analysis equipment in existing facilities.

questions: question: What provision does senate report 113-44 include for GAO?
answer: Senate report 113-44 includes a provision for GAO to review NNSA's revised CMRR project.

question: What does GAO's report assess?
answer: GAO's report assesses (1) the extent to which the revised CMRR project is expected to meet plutonium analysis needs, (2) how its cost and scope compare to the previously approved project, and (3) the extent to which its schedule and cost estimates reflect best practices, among other objectives.
child_questions: question: What does GAO review in their report?
answer: GAO reviewed project documentation, assessed cost and schedule estimates against GAO-identified best practices, and interviewed NNSA and DOE officials and CMRR contractor representatives.