Modernizing the Nuclear Security Enterprise: A Complete Scope of Work Is Needed to Develop Timely Cost and Schedule Information for the Uranium Program
Released: 2017-09-08T00:00:00

Letter

Background

This section describes (1) Y-12’s role in NNSA’s Nuclear Security Enterprise; (2) NNSA policy for setting program requirements; (3) best practices for program cost and schedule estimating; and (4) best practices for technology readiness.

Y-12’s Role in NNSA’s Nuclear Security Enterprise

NNSA is responsible for managing national nuclear security missions: ensuring a safe, secure, and reliable nuclear deterrent; supplying nuclear fuel to the Navy; 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 the day-to-day operations at each of eight sites that comprise the agency’s nuclear security enterprise. These sites include laboratories, production plants, and a test site.

Of NNSA’s eight sites, the Y-12 National Security Complex in Tennessee is the primary site with enriched uranium processing capabilities. Y-12’s primary mission is processing and storing uranium, processing nuclear fuel for the U.S. Navy, and developing technologies associated with those activities, including technologies for producing uranium-related components for nuclear warheads and bombs. Construction of the 811- acre Y-12 site began in 1943 as part of the World War II-era Manhattan Project. Y-12’s enriched uranium processing and storage capability is primarily housed in the following buildings:

Building 9212: This building was constructed in 1945, at the end of World War II, and includes a number of support and storage facilities related to uranium purification and casting. According to a 2016 report from the DOE Office of Inspector General, all of the various support and storage facilities of Building 9212 contain radioactive and chemical materials in sufficient quantities that an unmitigated release would result in significant consequences. These facilities do not meet current safety requirements for such facilities in that they cannot withstand a seismic event, high wind event, or aircraft crash. The shutdown of Building 9212 operations that have the highest nuclear safety risk at Y-12 is a key NNSA uranium program goal. Because of these risks, according to NNSA officials, NNSA has substantially reduced the risks from high-hazard materials, such as enriched uranium in organic and aqueous solutions, with a focus on materials located in Building 9212. As such, according to these officials, the remaining material at risk in Building 9212 has been reduced to a level significantly below the facility’s administrative limit, and NNSA is implementing a four-phase exit strategy to systematically phase out mission dependency on Building 9212. The exit strategy includes actions necessary to remove material hold-up, complete all process relocations, transition personnel to the UPF, and complete post- operations cleanout of the facility, among other things, according to NNSA officials.

Building 9215: This building was constructed in the 1950s and consists of three main structures. Specific activities in Building 9215 include fabrication activities, such as metal forming and machining operations for highly enriched uranium, low-enriched uranium, and depleted uranium. NNSA and others, such as the Defense Nuclear Facilities Safety Board, have raised concerns about the future reliability of the building, particularly as the amount of deferred maintenance in Building 9215 has steadily increased over the past several years. According to NNSA officials, NNSA’s contractor has hosted a series of technical evaluations that identified and prioritized needed infrastructure investments over the next 15 years, including within Building 9215, that are intended to ensure facility reliability through the 2040s. NNSA is reviewing these initial proposed investments.

Building 9204-2E: This building, constructed in the late 1960s, is a three-story, reinforced concrete frame structure. Operations in this building include the assembly and disassembly of enriched uranium components with other materials. Also, according to NNSA officials, radiography capabilities have been successfully relocated out of Building 9212 and installed in Building 9204-2E. The design used for this facility predates modern nuclear safety codes.

Building 9720-82 (also called the Highly Enriched Uranium Materials Facility): This building became operational in January 2010. Built to current safety standards, the facility provides long-term storage of enriched uranium materials and accepts the transfer of some legacy enriched uranium from older facilities. According to NNSA officials, as part of the uranium program NNSA transferred 12.3 metric tons of enriched uranium to this facility in fiscal year 2015, 9.8 metric tons in fiscal year 2016, and anticipates transferring 6 metric tons in fiscal year 2017.

According to NNSA documents, Y-12’s enriched uranium operations have key shortcomings including (1) an inefficient workflow, (2) continually rising operations and maintenance costs due to facility age, and (3) hazardous processes that could expose workers to radiological contamination. To address these shortcomings, NNSA developed plans to replace aging infrastructure at Y-12 and relocate key processing equipment without jeopardizing uranium production operations. The first solution, proposed in 2004, envisioned relocating Y-12’s main uranium processing equipment into a new UPF. NNSA planned to construct this single, consolidated facility that would be less than half the size of existing facilities; reduce costs by using modern processing equipment; and incorporate features to increase worker protection and environmental health and safety. In 2007, NNSA estimated the UPF would cost from $1.4 billion to $3.5 billion to design and construct. In June 2012, the Deputy Secretary of Energy approved an updated cost estimate range for the UPF of from $4.2 billion to $6.5 billion. However, by August 2012, the UPF contractor concluded that the uranium processing and other equipment would not fit into the UPF as designed.

In 2014, because of the high cost and schedule concerns of a solution focused solely on constructing new buildings, NNSA prepared a high- level strategic plan for its uranium program that is now focused on ceasing operations in building 9212 through a combination of new construction, infrastructure investments in existing facilities, upgrades to and relocation of select processing technologies, and improved inventory management. This strategy includes replacing certain 9212 capabilities, with continued operation of 9215 and 9204-2E, and removing a considerable amount of the scope of work that had been included in the original UPF plan (as the functions performed in Buildings 9215 and 9204-2E are no longer included within the UPF project). Figure 1 below depicts the planned transfer of uranium processing capabilities out of Building 9212 and into a new UPF and existing facilities by 2025 under the new approach.

Under the new approach, the UPF is to provide less floor space, compared to the original UPF design, for casting, oxide production, and salvage and accountability of enriched uranium. NNSA has stated that this newly designed UPF is to be built by 2025 for no more than $6.5 billion through a series of seven subprojects. NNSA is required to manage construction of the new UPF in accordance with DOE Order 413.3B, which requires the project to go through five management reviews and approvals, called “critical decisions” (CD), as the project moves forward from planning and design to construction and operation. The CDs are as follows:

CD 0: Approve mission need.

CD 1: Approve alternative selection and preliminary cost estimate.

CD 2: Approve the project’s formal scope of work, cost estimate, and schedule baselines.

CD 3: Approve start of construction.

CD 4: Approve start of operations or project completion.

NNSA Policy for Setting Program Requirements

In March 2014, NNSA updated its Business Operating Procedure, clarifying its policy for developing and maintaining program requirements on construction programs and projects executed by the agency. According to this procedure, this program requirements policy is applicable to most projects constructed for NNSA or managed by NNSA personnel and that have an estimated total project cost of $10 million or greater, or the cost threshold determined appropriate by the Deputy Secretary of Energy. These projects include line item (capital asset) projects.

According to NNSA’s Business Operating Procedure policy, program officials should establish the mission- and program-level requirements that apply to the development and execution of the program or project. The policy also states that program officials should translate the “need” in the Mission Need Statement into initial top-level requirements addressing such concerns as performance, supportability, physical and functional integration, security, test and evaluation, implementation, and quality assurance. The policy states that experience has shown that a formal process resulting in an agreed-upon definition of requirements for new systems, new capabilities, and updates or enhancements to systems is a prerequisite to proceeding to system or capability design. Furthermore, according to the policy, failure to do this results in rework and unnecessary costs and delays in schedule. NNSA policy states that Program Requirements Documents shall contain both mission and program requirements and should include the “objective” value—the desired performance, scope of work, cost, or schedule that the completed asset should achieve, as well as the “threshold” value—representing the minimum acceptable performance, scope of work, cost, or schedule that an asset must achieve.

NNSA’s requirements policy also states that the development of mission requirements should include summary documentation on how the requirements were identified or derived and that the documentation should contain explanations of the processes, documentation, and direction or guidance that govern the derivation or development of the requirements. The policy also states that the basis for the requirements, where not obvious, should be traceable to decisions or source documentation and that details relating to the traceability of requirements may be included in an attachment to the program requirements document.

NNSA’s uranium modernization efforts under the broader program have focused on establishing NNSA program requirements, which NNSA considers in determining its infrastructure plans. In July 2014, NNSA appointed a uranium program manager to integrate all of the uranium program’s elements. According to NNSA uranium program officials and documents, uranium program elements include construction of the new UPF; repairs and upgrades to existing facilities; uranium sustainment activities for achieving specific uranium production capabilities and inventory risk reduction (the strategic placement of high-risk materials in lower-risk conditions); depleted uranium management; and technology development, deployment, and process relocation.

Best Practices for Program Cost and Schedule Estimating

In March 2009, we published a cost estimating guide to provide a consistent methodology that is based on best practices and that can be used across the federal government for developing, managing, and evaluating capital program cost estimates. The methodology outlined in the guide is a compilation of best practices that federal cost estimating organizations and industry use to develop and maintain reliable cost estimates throughout the life of a government acquisition program.

According to the cost estimating guide, developing accurate life-cycle cost estimates has become a high priority for agencies in properly managing their portfolios of capital assets that have an estimated life of 2 years or more. A life-cycle cost estimate provides an exhaustive and structured accounting of all resources and associated cost elements required to develop, produce, deploy, and sustain a particular program. According to the guide, a life-cycle cost estimate can be thought of as a “cradle to grave” approach to managing a program throughout its useful life. This entails identifying all cost elements that pertain to the program from initial concept all the way through operations, support, and disposal. A life-cycle cost estimate encompasses all past (or sunk), present, and future costs for every aspect of the program, regardless of funding source. According to the guide, a life-cycle cost estimate can enhance decision making, especially in early planning and concept formulation of acquisition, as well as support budget decisions, key decision points, milestone reviews, and investment decisions. The guide also states that a credible cost estimate reflects all costs associated with a system (program)—we interpret this to also mean that it must be based on a complete scope of work—and the estimate should be updated to reflect changes in requirements (which affect the scope of work). Because of the inherent uncertainty of every estimate due to the assumptions that must be made about future projections, once life-cycle costs are developed it is also important to continually keep them updated, according to the guide.

We also published a schedule guide in December 2015—as a companion to the cost estimating guide—that identifies best practices for scheduling the necessary work. According to the schedule guide, a well-planned schedule is a fundamental management tool that can help government programs use funds effectively by specifying when work will be performed in the future and measuring program performance against an approved plan. Moreover, an integrated master schedule can show when major events are expected as well as the completion dates for all activities leading up to these events, which can help determine if the program’s parameters are realistic and achievable. An integrated master schedule may be made up of several or several hundred individual schedules that represent portions of effort within a program. These individual schedules are “projects” within the larger program. An integrated master schedule integrates the planned work, the resources necessary to accomplish that work, and the associated budget, and it should be the focal point for program management. Furthermore, according to the schedule guide, an integrated master schedule constitutes a program schedule that includes the entire required scope of work, including the effort necessary from all government, contractor, and other key parties for a program’s successful execution from start to finish. Conformance to this best practice—that the schedule should capture all activities or scope of work—logically leads to another key schedule best practice: the sequencing of all activities. This best practice states that activities must be listed in the order in which they are to be carried out and be joined with logic. Consequently, developing a complete scope of work or knowing all of the activities necessary to accomplish the project’s objectives is critical to adhering to these best practices. In other words, a schedule is not complete and reliable if significant portions of the scope of work are not yet developed or are still uncertain, including over the longer term.

In prior reports from February 2014, November 2014, and August 2016, we included recommendations concerning NNSA’s development of life- cycle cost estimates or an integrated master schedule for certain projects and programs, as called for in our cost estimating and schedule best practice guides. Specifically: In February 2014, we recommended that to develop reliable cost estimates for its plutonium disposition program, among other things, the Secretary of Energy should direct the NNSA office responsible for managing the program to, as appropriate, revise and update the program’s life-cycle cost estimate following the 12 key steps described in our Cost Estimating Guide for developing high-quality cost estimates.

In our November 2014 report, we recommended that to enhance NNSA’s ability to develop reliable cost estimates for its projects and for its programs that have project-like characteristics, the Secretary of Energy should revise DOE directives that apply to programs to require that DOE and NNSA and its contractors develop cost estimates in accordance with the 12 cost estimating best practices, including developing life-cycle cost estimates for programs.

In August 2016, regarding the preparation of integrated master schedules, we recommended that to ensure that NNSA’s future schedule estimates for the revised Chemistry and Metallurgy Research Replacement project—a key element of NNSA’s plutonium program—provide the agency with reasonable assurance regarding meeting the project’s completion dates, the Secretary should direct the Under Secretary for Nuclear Security, in his capacity as the NNSA Administrator, to develop future schedules for the revised project that are consistent with current DOE project management policy and scheduling best practices. Specifically, the Under Secretary should 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.

The agency generally agreed with these recommendations and has initiated various actions intended to implement them, including revising certain DOE orders, but it has not completed all actions needed to fully address the recommendations.

Best Practices for Technology Readiness

To ensure that new technologies are sufficiently mature in time to be used successfully, NNSA uses a systematic approach—Technology Readiness Levels (TRL)—for measuring the technologies’ technical maturity. TRLs were pioneered by the National Aeronautics and Space Administration and have been used by the Department of Defense and other agencies in their research and development efforts for several years. As shown in table 1, TRLs start with TRL 1, which is the least mature, and go through TRL 9, the highest maturity level and at which the technology as a total system is fully developed, integrated, and functioning successfully in project operations.

In November 2010, when NNSA’s original approach was to consolidate Y- 12’s uranium processing capabilities into a single large facility, we reported that NNSA did not expect to have optimal assurance as defined by TRL best practices that 6 of the 10 new technologies being developed for construction of the new UPF would work as intended before project critical decisions are made. Our November 2010 report also concluded that because all of the technologies being developed for construction of the new UPF would not achieve optimal levels of readiness prior to project critical decisions, NNSA might lack assurance that all technologies would work as intended. The report further stated that this could force the project to revert to existing or alternate technologies, which could result in design changes, higher costs, and schedule delays. In September 2011, DOE issued a technology readiness assessment guide for the agency, which states that new technologies should reach TRL 6 by CD 2, when the scope of work, cost estimate, and schedule baselines are to be approved. The guide also encouraged project managers to reach TRL 7 prior to CD 3, or when the start of construction is approved. In April 2014, we provided additional information on technology development efforts for the UPF and identified five additional technology risks since our November 2010 report. In May 2016, DOE strengthened TRL requirements and updated DOE Order 413.3B, Program and Project Management for the Acquisition of Capital Assets, which states that project managers shall reach TRL 7 prior to CD 2 for major system projects or first-of-a-kind engineering endeavors. In August 2016, we provided an exposure draft to the public to obtain input and feedback on our technology readiness guide, which identifies best practices for evaluating the readiness of technology for use in acquisition programs and projects.

NNSA Has Made Progress in Developing a Revised Scope of Work, Cost Estimate, and Schedule for the New UPF

NNSA documents we reviewed and program officials we interviewed indicate that NNSA has made progress in developing a revised scope of work, cost estimate, and schedule for the new UPF, potentially stabilizing escalating project costs and technical risks experienced under the previous strategy. According to NNSA’s 2014 high-level strategic plan for the uranium program, NNSA changed its strategy for managing the overall uranium program, including the UPF, that year, which resulted in the need to develop a new scope of work. NNSA has reduced the scope of work for construction of the new UPF—the most expensive uranium program element—as a result of key adjustments NNSA had made to program requirements. For example, NNSA’s October 2014 revision of program requirements for construction of the new UPF resulted in the following changes:

NNSA modified the processing capability for casting uranium initially intended for construction of the new UPF, which then allowed the agency to scale back certain capabilities envisioned for the facility, potentially reducing project costs.

NNSA significantly simplified processing capabilities and reduced critical technologies needed for construction, due to the reduction in the scope of work for the new UPF from the 10 technologies the agency planned to use prior to 2014 to 3, according to program officials. NNSA officials told us that this change was needed to help control escalating costs and technical risks.

NNSA integrated graded security and safety factors into the new UPF design, which resulted in cost savings and schedule improvement for the UPF project, according to agency officials.

According to NNSA’s fiscal years 2017 and 2018 budget requests, NNSA expects to approve formal scope of work, cost, and schedule baseline estimates for construction of the new UPF as the designs for the Main Process and Salvage and Accountability Buildings subprojects—the two largest subprojects—reach at least 90 percent completion, which is consistent with DOE’s order on project management for construction of these types of facilities.

According to NNSA’s fiscal year 2017 and 2018 budget requests, construction of the new UPF will occur in distinct phases, by key subproject. The seven key subprojects are as follows:

Main Process Building Subproject: This subproject includes construction of the main nuclear facility that contains casting and special oxide production. Support structures include a secure connecting portal to the Highly Enriched Uranium Materials Facility.

Salvage and Accountability Building Subproject: This subproject includes work intended to construct a facility for handling chemicals and wastes associated with uranium processing, as well as decontamination capabilities, among other things.

Mechanical Electrical Building Subproject: This subproject includes work intended to provide a building for mechanical, electrical, heating, ventilating, air conditioning, and utility equipment for the Main Process and Salvage and Accountability buildings.

Site Infrastructure and Services Subproject: This subproject includes work intended for demolishment, excavation, and construction of a parking lot, security portal, and support building.

Process Support Facilities Subproject: This subproject includes work intended to provide chilled water and chemical and gas supply storage for the UPF.

Substation Subproject: This subproject includes work intended to provide power to the new UPF and additional capacity for the remainder of the Y-12 Plant.

Site Readiness Subproject: This subproject included work to relocate Bear Creek Road and construct a new bridge and haul road.

As of May 2017, NNSA had developed and approved a revised formal scope of work, cost, and schedule baseline estimates for four of the seven subprojects. NNSA expects to approve such baseline estimates for the all of the remaining subprojects—including the two largest subprojects—by the second quarter of fiscal year 2018. NNSA also plans to validate the estimates through an independent cost estimate at that time. Concurrently with its approval and validation of the formal baseline estimates—which constitutes CD 2 in NNSA’s project management process—NNSA intends to approve the start of construction, which constitutes CD 3 in that process. Table 2 shows estimated or approved time frames for CD 2, 3, and 4 milestones, as well as preliminary or (where available) formal cost baseline estimates for each subproject.

NNSA Has Not Developed a Complete Scope of Work, Life-Cycle Cost Estimate, and Integrated Master Schedule for Its Overall Uranium Program

NNSA has not developed a complete scope of work, life-cycle cost estimate, or integrated master schedule for its overall uranium program, and it has no time frame for doing so. In particular, it has not developed a complete scope of work for repairs and upgrades to existing facilities, nor has it done so for other key uranium program elements. Therefore, NNSA does not have the basis to develop a life-cycle cost estimate or an integrated master schedule for its overall uranium program.

Scope of Work for Repairs and Upgrades to Existing Facilities of the Overall Uranium Program Is Not Complete

NNSA has not developed a complete scope of work to repair and upgrade existing facilities for the overall uranium program, even though these activities could be among the most expensive and complicated non- construction portions of the uranium program. According to a July 2014 memorandum from the NNSA Administrator, the uranium program manager is expected to, among other things, identify the scope of work of new construction and infrastructure repairs and upgrades to existing facilities necessary to support the full uranium mission. NNSA is still evaluating a November 2016 initial implementation plan, proposed by the Y-12 contractor, for the repairs and upgrades that broadly outlines the scope of work.

We found that some areas of the scope of work are more fully defined than others. For example, NNSA’s implementation plan identifies the scope of work to conduct electrical power distribution repairs and upgrades in buildings 9215 and 9204-2E—which were constructed in the 1950s and 1960s, respectively—beginning in fiscal year 2017. However, NNSA does not have a complete scope of work to serve as the basis for its $400 million estimate. Officials we interviewed said that the agency intends to develop each year the complete and detailed scope of work to be done in the following year or two, including the work related to infrastructure investment.

We also found that one significant area of the scope of work that has not been developed concerns repairs and upgrades to address certain safety issues confirmed by the Defense Nuclear Facilities Safety Board. For example, according to the board’s February 2015 letter to NNSA, earthquakes or structural performance problems in Buildings 9215 and 9204-2E could contribute to an increased risk for structural collapse and release of radiological material. NNSA officials said they have not fully developed the long-term scope of work to address the safety issues that the board confirmed because much of this work depends on the results of upcoming seismic and structural assessments the agency expects to be conducted in or after fiscal year 2018. According to these officials, the need for these assessments was not apparent until after 2014, when NNSA decided to rely, in part, on aging existing facilities to meet uranium program requirements. NNSA then had to adjust plans in alignment with the new circumstances that required repairs and upgrades to these facilities. According to NNSA program officials, the planned infrastructure repairs and upgrades will address many, but not all, of the safety issues identified by the board. For example, NNSA program officials stated that they do not expect building 9215, which it expects to be in operation through the late 2030s, to meet all modern safety standards even with planned upgrades. NNSA officials also stated that planned upgrades have not been finalized and will focus on the upgrades that balance cost and risks.

Other aspects of the scope of work for repairs and upgrades have been developed but may not be stable because NNSA continues to review and adjust program requirements that affect the scope of work. For example, during our examination of how NNSA established uranium purification requirements, NNSA program officials told us that they identified a more accurate program requirement for purified uranium that increased the required annual processing throughput capability for purified uranium from 450 to 750 kilograms. As a result, in August 2016, NNSA program officials told us that NNSA will need to add to the capacity of the equipment to be installed in Building 9215 to convert uranium that contains relatively high amounts of impurities, such as carbon, into a more purified form—increasing the scope of work for this upgrade. The uranium program manager told us that, in an effort to make the requirement more accurate, NNSA changed its approach to determining the requirement so that it relied less on historical data and more on data on the purification levels of uranium inventories on hand, among other considerations. This program manager also told us that accurate and stable program requirements establish the basis for the infrastructure and equipment that will be needed to meet program goals, such as processing uranium for nuclear components necessary to meet nuclear weapons stockpile needs. The ongoing review of program requirements, with minor adjustments, is expected and necessary to ensure accuracy, according to NNSA officials.

Scope of Work for Other Uranium Program Elements Are Not Fully Developed

We also found that NNSA has not developed complete scopes of work for other uranium program elements, including uranium sustainment activities, depleted uranium management, and technology development, based on our review of documents and discussion with NNSA officials. NNSA officials we interviewed told us that NNSA is working to develop these scopes of work, but the agency has no time frames for completion.

Uranium Sustainment Activities for Achieving Inventory Risk Reduction

We determined that NNSA has not yet developed the complete scope of work for activities to reduce the risk associated with and sustain its uranium inventory, based on our review of program documents and interviews with NNSA program officials. These activities include efforts to remove higher-risk materials from higher-risk conditions and strategically place them in lower-risk conditions. For example, NNSA expects to reprocess the uranium contained in organic solutions, which is a relatively higher-risk form of uranium storage, for repackaging and eventual removal from deteriorating, higher-risk buildings, such as Building 9212. These reprocessed materials and other materials that are more easily repackaged, such as nuclear components from dismantled nuclear weapons, are expected to be relocated to lower-risk storage areas, such as the Highly Enriched Uranium Materials Facility, which became operational in 2010. NNSA program officials told us that they have developed a detailed scope of work for the removal of higher-risk materials from some Y-12 areas but have not developed the complete scope of work for their removal from other facilities or for transferring these materials to the storage facility or other interim locations.

Depleted Uranium Management

NNSA officials we interviewed told us that the agency recognized in December 2015 that requirements for depleted uranium were incomplete, which could affect the scope of work for meeting these requirements. In December 2015, NNSA completed its initial analysis of depleted uranium needs, by weapon system, to determine potential gaps in material availability in the future. This initial analysis was an important first step in defining requirements for depleted uranium, but the program element is in an early stage of development, according to NNSA program officials. According to NNSA officials, NNSA is developing the scope of work necessary to sustain depleted uranium capabilities and infrastructure at Y-12, and it is evaluating strategies to procure or produce additional feedstock of high-purity depleted uranium to support production needs.

Technology Development

NNSA’s broad strategy to replace Building 9212 capabilities by 2025— through plans for the construction of a new UPF under a reduced scope of work—currently involves plans to install new uranium processing capabilities in other existing Y-12 buildings, including Buildings 9215 and 9204-2E, and will rely on developing and installing new technologies. Two of the uranium processing technologies—calciner and electrorefining— are at later stages of development, and the scope of work needed to bring them to full maturity is relatively straightforward, according to NNSA program officials. One technology—chip processing—is less mature, but the remaining activities necessary to potentially develop it to full maturity have been determined, according to NNSA program officials. Also, according to these officials, for one technology that has been deferred, the remaining activities necessary to develop it to full maturity are less clear.

Calciner technology enables the processing of certain uranium- bearing solutions into a dry solid so that it can be stored pending further processing in the future. According to a NNSA uranium program official, NNSA had determined as of May 2015 that the calciner technology had reached TRL 6—the level required prior to CD 2 (when scope of work, cost, and schedule baselines are to be approved) under DOE’s technology readiness guide. After finishing calciner equipment installation in Building 9212 and project completion, expected in fiscal year 2022, NNSA plans to conduct a readiness review to demonstrate that the technology meets TRL 8 (meaning that it has been tested and demonstrated), according to a NNSA uranium program official.

Electrorefining technology applies a voltage that drives a chemical reaction to remove impurities from uranium. According to NNSA documents, using this technology eliminates various hazards associated with current chemical purification processes, such as using hydrogen fluoride and certain solvents, and allows a 4-to-1 reduction in square footage to operate compared with existing technologies. As of December 2015, NNSA had determined that the electrorefining technology had reached TRL 6, according to a key NNSA program official. After finishing electrorefining equipment installation in Building 9215 and project completion, expected in fiscal year 2022, NNSA plans to conduct a readiness review to demonstrate that the technology meets TRL 8, according to a NNSA uranium program official.

Direct electrolytic reduction technology could convert uranium oxide to uranium metal using an electrochemical process similar, but not identical, to electrorefining. It was assessed at TRL 4 as of September 2014. According to NNSA program officials, NNSA may pursue direct electrolytic reduction technology as a follow-on to electrorefining, but NNSA has not determined whether there is a mission need for this technology. Currently, NNSA has deferred funding for it until fiscal year 2019.

Chip processing technology converts enriched uranium metal scraps from machining operations into a form that can be re-used. This technology is already in use, but NNSA is investigating improved technology to potentially simplify the process and reduce the number of chip processing steps, according to NNSA program officials. As of July 2016, NNSA had determined that the new technology had reached TRL 5, and the agency plans to reach TRL 6 by June 2017.

NNSA Has Not Developed Life-Cycle Costs or an Integrated Master Schedule for the Uranium Program

Because NNSA has not developed a complete scope of work for the overall uranium program, it does not have the basis to develop a life-cycle cost estimate or an integrated master schedule for the program. As noted previously, NNSA has made progress in developing a cost estimate for the new UPF, and this estimate will be an essential component of a life- cycle cost estimate for the overall program. For other program elements, discussed below, NNSA either has rough or no estimates of the total costs. According to our analysis of information from NNSA documents and program officials, these program elements may cost nearly $1 billion over the next 2 decades.

Repairs and upgrades to existing facilities: NNSA’s contractor’s implementation plan includes a rough-order-of-magnitude cost estimate of $400 million over the next 20 years—roughly $20 million per year—for repairs and upgrades to existing facilities.

Uranium sustainment activities for achieving inventory risk reduction: Activities to reduce the risk associated with and sustain NNSA’s uranium inventory are expected to cost roughly $25 million per year in fiscal years 2017 through 2025 for a total of around $225 million, according to NNSA program officials.

Depleted uranium management: NNSA has not estimated costs for meeting depleted uranium needs for weapons systems. Current costs related to managing depleted uranium are broadly shared among various NNSA program areas. NNSA is exploring options and costs of increasing the supply of depleted uranium to meet NNSA needs.

Technology development: Estimated costs for development of technology to be installed in existing Y-12 buildings are roughly $30 million per year in fiscal years 2017 through 2025, for a total of around $270 million, according to NNSA program officials.

Our cost estimating guide states that a credible cost estimate reflects all costs associated with a system (program)—i.e., it must be based on a complete scope of work—and that the estimate should be updated to reflect changes in requirements (which affect the scope of work). Because NNSA has not developed the complete scope of work for each program element and the overall uranium program, NNSA does not have the basis for preparing a credible life-cycle cost estimate for the program. Having a life-cycle cost estimate can enhance decision making, especially in early planning and concept formulation of acquisition, as well as support budget decisions, key decision points, milestone reviews, and investment decisions, according to our cost estimating guide. For the uranium program, a life-cycle cost estimate could better inform decision making, including by Congress. Uranium program managers indicated that they plan to eventually develop a life-cycle cost estimate for the overall uranium program, but they have no time frame for doing so and said that it may take several years.

In addition, NNSA has not developed an integrated master schedule for its uranium program as called for in our schedule guide. An integrated master schedule for the uranium program would need to include individual schedules that represent portions of effort within the program— that is, program elements. As noted earlier, NNSA has made progress in developing a schedule for the UPF project and expects to complete development of schedule baselines for all UPF subprojects in 2018; this schedule information will be an essential component of an integrated master schedule for the overall program. For other program elements, however, NNSA does not have a basis to develop a complete schedule because, as discussed above, NNSA has not developed a complete scope of work.

NNSA’s program guidance recommends development of an integrated master schedule and states that having one supports effective management of program scope, risk, and day-to-day activities.

Specifically, the guidance states that during the initial phases of a program, an integrated master schedule provides an early understanding of the required scope of work, key events, accomplishment criteria, and the likely program structure by depicting the progression of work through the remaining phases. Furthermore, it communicates the expectations of the program team and provides traceability to the management and execution of the program. However, NNSA’s guidance does not always explicitly require the development of such a schedule—the guidance allows for the tailoring of the agency’s management approach based on the particular program being managed. Uranium program managers indicated that they plan to eventually develop an integrated master schedule for the uranium program but were uncertain when this schedule may be developed. In the meantime, NNSA plans to spend tens of millions of dollars annually on uranium program activities—including $20 million per year for repairs and upgrades to existing buildings—without providing decision makers with an understanding of the complete scope of work, key events, accomplishment criteria, and the likely program structure.

Under federal standards for internal control, management should use quality information to achieve the entity’s objectives, and, among other characteristics, quality information is provided on a timely basis. Without NNSA setting a time frame for when it will (1) develop the complete scope of work for the overall uranium program, to the extent practicable, and (2) prepare a life-cycle cost estimate and integrated master schedule, NNSA does not have reasonable assurance that decision makers will have timely access to essential program management information—risking unforeseen cost escalation and delays in NNSA’s efforts to meet the nation’s uranium needs.

Conclusions

NNSA is making efforts to modernize uranium processing capabilities that are crucial to our nation’s ability to maintain its nuclear weapons stockpile and fuel its nuclear-powered naval vessels. NNSA’s modernization efforts will likely cost several billions of dollars and take at least 2 decades to execute. As part of these efforts, NNSA is planning to construct a new UPF, using a revised approach intended to help control escalating costs and schedule delays. NNSA has made progress in developing a scope of work, cost estimates, and schedules for the new UPF.

However, the success of the new UPF approach, which relies on support capabilities outside of the new UPF project, depends on the successful completion and integration of many other projects and activities that comprise the overall uranium program, including repairs and upgrades to existing Y-12 facilities needed for housing uranium processing capabilities.

NNSA has not developed a complete scope of work for its overall uranium program, nor has it set a time frame for doing so. In the interim, NNSA cannot adhere to best practices, such as developing a credible life-cycle cost estimate or an effective long-term, integrated master schedule for the program because of gaps in information about future activities and their associated costs. Without NNSA setting a time frame for when it will (1) develop a complete scope of work for the overall uranium program, to the extent practicable, and (2) prepare a life-cycle cost estimate and an integrated master schedule for the program, NNSA does not have reasonable assurance that decision makers will have timely access to essential program management information for this costly and important long-term program.

Recommendation for Executive Action

We recommend that the NNSA Administrator set a time frame for when the agency will (1) develop the complete scope of work for the overall uranium program to the extent practicable and (2) prepare a life-cycle cost estimate and an integrated master schedule for the overall uranium program.

Agency Comments

We provided a draft of this report to DOE and NNSA for their review and comment. NNSA provided written comments, which are reproduced in full in appendix II, as well as technical comments, which we incorporated in our report as appropriate. In its comments, NNSA generally agreed with our recommendation. NNSA stated that the recommendation reflects the logical next steps in any program’s maturity and is consistent with its existing planning goals. NNSA further stated that while it is too early to have developed full scope and cost estimates for the entire program at this point, it fully intends to implement the recommendation at the appropriate times in the uranium program’s continuing development. In particular, NNSA stated that it is developing a complete scope of work, which is necessary for a fully informed program cost estimate, and anticipates this to be a multiyear effort. Regarding cost estimates, NNSA said that initial cost estimates it develops will continue to reflect strategies and emerging risks over the course of the Future Years Nuclear Security Plan—a 5-year plan typically used as part of the basis for NNSA congressional budget requests for each fiscal year. NNSA stated that once stable implementation plans are developed for its activities, it will consider whether there is value in further extending the time frame for estimates. NNSA further stated that it plans to complete an initial coordinated program schedule by December 31, 2018, and that the schedule would continue to be updated as plans and strategies evolve. NNSA also provided additional examples to illustrate the program’s progress in improving safety, relocating processes, improving infrastructure, and construction of the UPF, among other things. We incorporated several of these examples in the report where appropriate.

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

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

Appendix I: Objectives, Scope, and Methodology

To describe the status of the National Nuclear Security Administration’s (NNSA) efforts to develop a revised scope of work, cost estimate, and schedule for the new Uranium Processing Facility (UPF) project, we reviewed NNSA program planning documents, and any updates, concerning cost and budget and interviewed agency officials to determine the effect of uranium program strategy revisions on the UPF project’s scope of work, cost, and schedule. To examine the scope of work for the UPF project, which directly impacts the project’s cost and schedule, we reviewed NNSA business operating procedures for developing program requirements and the steps taken to identify and update requirements, which would apply to the construction of the new UPF. We interviewed program officials to understand how they defined and adjusted program requirements and to understand the potential effects of any adjustments on NNSA’s infrastructure plans. For example, NNSA officials stated that they followed key portions of the applicable Business Operating Procedure (BOP) regarding program requirements for construction projects. As such, we reviewed those portions of BOP-06.02 that the officials stated were applicable, including stipulations that requirements include the “threshold” value (the minimum acceptable performance, scope of work, cost, or schedule that construction of the new UPF must achieve), and “objective” value (the desired performance, scope of work, cost, or schedule that the new UPF should achieve). To review project requirements for the construction of the new UPF, we reviewed copies of the most recent requirements revision documents—NNSA’s project and program requirements documents. Specifically, we reviewed the requirements to determine whether requirements for the construction of the new UPF specified both threshold and objective requirements.

To examine the extent to which NNSA has developed a complete scope of work, life-cycle cost estimate, and integrated master schedule for the overall uranium program, we reviewed NNSA program-planning documents concerning cost and budget and interviewed NNSA’s program manager and other program and contractor officials. We examined information regarding the broader uranium program, including NNSA’s efforts to repair and upgrade existing Y-12 facilities and other key uranium program elements. Specifically, to examine the scope of work for key elements of the overall uranium program—this scope of work directly impacts the program’s cost and schedule—we reviewed NNSA planning, strategy, and implementation-related documents for the program. We reviewed NNSA business operating procedures for developing program requirements and the steps taken to identify and update requirements for unique processing capabilities to be housed in existing facilities external to the UPF. We interviewed program officials to understand how they defined and adjusted program requirements and to understand the potential effects of any adjustments on NNSA’s infrastructure plans. In particular, we reviewed requirements external to the construction of the new UPF that were determined to be critical in meeting key program goals, according to NNSA officials, such as uranium purification requirements. We interviewed officials to determine the approach/process used for requirement-setting, the data used, and how NNSA analyzed the data. In addition, we reviewed detailed program planning documents, such as the Y-12 Enriched Uranium Facility Extended Life Program Report and Highly Enriched Uranium Mission Strategy Implementation Plan to learn about the infrastructure repairs and upgrades NNSA identified it needs to meet facility safety and other requirements. To obtain the views of independent subject matter experts on the structural, seismic, and safety condition of existing Y-12 facilities, we reviewed the Defense Nuclear Facilities Safety Board 2014 report that addressed the subject and that included conclusions and recommendations. In September 2016, we also spoke with board officials to determine if there were updates, additions, or changes to its letter; the officials said there were none and that the Y-12 facility structural concerns expressed in the 2014 letter remain.

To further examine the estimated cost and schedule for the overall uranium program from a broader perspective, we gathered and analyzed information regarding the extent to which NNSA has developed a life- cycle cost estimate and an integrated master schedule as called for in best practices. We reviewed best practices for cost and schedule as described in our Cost Estimating Guide and Schedule Guide. For the cost estimating guide, GAO cost experts established a consistent methodology that is based on best practices that federal cost estimating organizations and industry use to develop and maintain reliable cost estimates. Developing a life-cycle cost estimate and an integrated master schedule for the overall program are critical to successfully managing a program. We identified the benefits of using these best practices and interviewed program officials to obtain information on the status of their adherence to these best practices in managing the overall uranium program.

Appendix II: Comments from the National Nuclear Security Administration

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the individual named above, Jonathan Gill (Assistant Director), Martin Campbell, Antoinette Capaccio, Jennifer Echard, Cynthia Norris, Christopher Pacheco, Sophia Payind, Timothy M. Persons, Karen Richey, Jeanette Soares, and Kiki Theodoropoulos made significant contributions to this report.

Related GAO Products

Program Management: DOE Needs to Develop a Comprehensive Policy and Training Program. GAO-17-51. Washington, D.C.: November 21, 2016.

DOE Project Management: NNSA Needs to Clarify Requirements for Its Plutonium Analysis Project at Los Alamos. GAO-16-585. Washington, D.C.: Aug. 9, 2016.

Modernizing the Nuclear Security Enterprise: NNSA’s Budget Estimates Increased but May Not Align with All Anticipated Costs. GAO-16-290. Washington, D.C.: March 4, 2016.

Modernizing the Nuclear Security Enterprise: NNSA Increased Its Budget Estimates, but Estimates for Key Stockpile and Infrastructure Programs Need Improvement. GAO-15-499. Washington, D.C.: August 6, 2015.

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

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

Department of Energy: Interagency Review Needed to Update U.S. Position on Enriched Uranium That Can Be Used for Tritium Production. GAO-15-123. Washington, D.C.: October 14, 2014.

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

Nuclear Weapons: Technology Development Efforts for the Uranium Processing Facility. GAO-14-295. Washington, D.C.: April 18, 2014.

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

Nuclear Weapons: Information on Safety Concerns with the Uranium Processing Facility. GAO-14-79R. Washington, D.C.: October 25, 2013.

Nuclear Weapons: Factors Leading to Cost Increases with the Uranium Processing Facility. GAO-13-686R. Washington, D.C.: July 12, 2013.

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