Nuclear Weapons: NNSA's Modernization Efforts Would Benefit from a Portfolio Management Approach
Released: 2020-03-03T00:00:00

Letter

NNSA Faces Challenges in Executing Ongoing and Planned Weapon Programs and Related Capital Asset Projects to Modernize the Nuclear Stockpile

NNSA is executing and plans to carry out multiple weapon programs and a range of related capital asset projects over the next 2 decades. First, NNSA is currently conducting four weapon modernization programs: the B61-12 LEP, the W88 Alteration 370, the W80-4 LEP, and the W87-1 Modification program. Table 1 provides more information on each of these programs based on our prior work, with selected updates on program schedules, cost estimates, and budgets from the Fiscal Year 2020 Stockpile Stewardship and Management Plan and NNSA testimony.

In addition to these four ongoing programs, the 2018 Nuclear Posture Review calls for NNSA to consider additional weapon programs— specifically, a program to develop a modern nuclear-armed sea-launched cruise missile, and another to develop a new submarine-launched ballistic missile warhead (now being referred to as the W93). The Nuclear Posture Review also instructs NNSA to maintain the B83-1 bomb until a suitable replacement can be found.

To support and enable ongoing and planned weapon programs, NNSA also plans to spend billions of dollars over the next 2 decades on capital asset projects and other infrastructure risk reduction and recapitalization efforts to modernize the production infrastructure NNSA uses to produce components and materials needed for its weapon programs. Table 2 provides more information on selected NNSA capital asset projects discussed in our recent reports, with selected updates on program schedules and cost estimates from the DOE Office of Project Management’s January 2020 Monthly DOE Project Portfolio Status Report.

According to NNSA’s plans, the agency must carry out many of its weapon programs while simultaneously modernizing the very infrastructure on which these weapon programs rely for components and other materials. Therefore, any delays or technical challenges that affect NNSA’s plans for its production facilities may be expected to result in delays and challenges to the weapon programs. Figure 1 shows the estimated schedules for the weapon programs and related capital asset projects described in tables 1 and 2 and reported on in our prior work, with updated information as presented in the Fiscal Year 2020 Stockpile Stewardship and Management Plan.

We have reported on the potential effects on NNSA’s weapon programs of delays or technical challenges in modernizing its production facilities. For example:

The W87-1 Modification program’s schedule may be particularly vulnerable to production challenges, including pit production challenges, because, as we reported in November 2018, it will require all newly-made components, including pits. In our most recent report on the W87-1 program, a classified report issued in February 2020, we found that NNSA’s past challenges in managing plutonium activities at Los Alamos and in executing projects of this size cast doubt on NNSA’s ability to produce 80 pits per year in 2030. As we note in that report, an independent assessment of NNSA’s pit production strategy in March 2019 concluded that no options evaluated by NNSA could be expected to produce 80 pits per year by 2030. The independent assessment further stated that NNSA had no precedent for major projects costing more than $700 million dollars that had been completed in fewer than 16 years, and that many similar projects were eventually cancelled.

Future weapon programs will require newly produced explosives, including some that NNSA has not produced at scale since 1993. As we reported in June 2019, NNSA officials stated that producing these materials will pose challenges that include replicating decades-old recipes for the materials and preparing for their full-scale production in aging facilities. As we noted in that report, similar problems restarting dormant production capabilities have delayed past weapon programs—notably, the W76-1 LEP, which NNSA completed in December 2018. As we reported in March 2009, NNSA had to delay first production of the W76-1 from September 2007 to September 2008 when it encountered problems restarting production of a key material, known as Fogbank. NNSA is working to reconstitute its high explosives capabilities, as we reported in June 2019.

Nonnuclear parts and components comprise over 80 percent of the items in a nuclear weapon, and NNSA’s Kansas City National Security Campus procures or produces most of these. In April 2019, we found that work on the B61-12 LEP and W88 Alteration 370 was expected to double at the Kansas City site during fiscal years 2020 through 2022. Our April 2019 report also identified challenges that could complicate work at the site. For example, disruption to the established supply chain for externally supplied parts—which comprise about 65 percent of the nonnuclear parts used at the Kansas City site—could result in production delays, and the site needs hundreds of thousands of additional square feet of manufacturing space to meet workload demands.

We have also recently completed work in which we reported on challenges integrating the schedules of NNSA’s weapon programs with the schedules for DOD’s modernized delivery systems. For example, the W87-1 warhead will need to be integrated on a delivery system that is under development, an intercontinental ballistic missile known as the Ground-Based Strategic Deterrent. We have ongoing work examining DOD and DOE plans to modernize and integrate warheads and delivery vehicles and expect to issue a classified report in spring 2020.

NNSA Has Taken Steps to Improve Its Management of Weapon Programs and Enabling Capital Asset Projects, but Additional Improvements Are Needed

As we have recently reported, NNSA has made improvements in its management of some weapon modernization programs and enabling capital asset projects. We have concluded that NNSA’s federal program and project management capacity is improving, as are the controls it has developed for program and project performance. For example:

We found in January 2018 that NNSA has established and strengthened management requirements for LEPs. Specifically, in January 2016, NNSA’s Office of Defense Programs issued a program management directive that designates risk-based program execution requirements that all programs must follow. The directive places LEPs in one of the highest-risk categories, meaning these programs are required to apply more rigorous management controls specified in the directive, including using earned value management. Further, in January 2017, NNSA issued two directives implementing requirements for NNSA’s Office of Cost Estimating and Program Evaluation to conduct independent cost estimates. In May 2018, we found that the program cost estimate for the B61-12 LEP substantially met the criteria for all four characteristics of a high-quality, reliable cost estimate, in part because it was the first LEP to undergo an independent cost estimate.

We reported in our February 2017 high-risk update that DOE demonstrated a strong commitment and top leadership support for improving project management. For example, DOE made changes to its revised project management order, issued in May 2016, in response to recommendations we made in prior years, such as requiring that projects develop cost estimates and analyses of alternatives according to best practices we identified.

In September 2017, we found that NNSA had made progress in developing a revised scope of work, cost estimate, and schedule for the Uranium Processing Facility project, which is to modernize uranium production efforts at the Y-12 National Security Complex. We reported at that time that these improvements may help NNSA stabilize escalating project costs and technical risks experienced under the previous strategy.

In November 2017, we found that NNSA had established programs to manage strategic materials—specifically, uranium, plutonium, tritium, and lithium—and had defined requirements and managerial roles for program managers. Since that time, NNSA has taken steps to implement a new enterprise-wide approach for managing explosives activities, as we found in our June 2019 report on those activities.

However, we have identified additional actions NNSA could take to further improve its management of weapon modernization programs and related projects. As NNSA’s workload increases, additional management rigor will help ensure that programs and projects are executed consistent with cost and schedule estimates, and that risk is effectively managed and communicated. For example:

We found in our January 2018 report that NNSA had not adopted the best practice of having an independent team validate its earned value management systems against the national standard for such systems, which could help the agency better manage risk in its LEPs. We also found that NNSA had not established specific benchmarks for technology readiness at LEP decision points, consistent with best practices. We recommended that NNSA require an independent team to validate contractor earned value management systems for LEPs and establish technology readiness requirements at LEP decision points. According to an update NNSA provided to us in September 2019, the agency has not taken action to address these recommendations. We continue to believe that it should do so.

We found in our September 2017 report that NNSA had not developed a complete scope of work, a life-cycle cost estimate, or an integrated master schedule for its overall uranium program—of which the Uranium Processing Facility is only one part—and had no time frame for doing so. We recommended that NNSA should set a time frame for when the agency would develop a complete scope of work, a life-cycle cost estimate, and an integrated master schedule for the overall uranium program. NNSA generally agreed with our recommendation and has taken actions to respond to it. We expect to issue a report on the Uranium Processing Facility and NNSA’s plans for its uranium program in March 2020.

As we reported in February 2020, the plutonium program has begun to develop a schedule for pit production. However, NNSA allows strategic materials programs such as the plutonium program to tailor their approach to developing schedules and does not require that they meet best practices for schedule estimating. We recommended that NNSA ensure that the plutonium program develop a schedule for pit production consistent with best practices for schedule development. NNSA agreed with our recommendation.

Our ongoing work includes reviews of NNSA’s management of other efforts essential to ongoing weapon modernization programs, such as the production of radiation-hardened microelectronics at Sandia National Laboratories in New Mexico and of depleted uranium at the Y-12 National Security Complex in Tennessee.

NNSA Needs a Portfolio-based Approach to Managing Its Weapon Modernization Programs and Related Efforts

NNSA’s weapon modernization programs and enabling infrastructure efforts have significant interdependencies that require integrated management across the portfolio of programs to effectively manage cost, schedule, and risk. Portfolio management best practices developed by the Project Management Institute state that organizations can optimize their portfolios of programs and projects by assessing their capability and capacity to finance specific portfolio components; determining which portfolio components should receive the highest priority; and identifying components to be suspended, reprioritized, or terminated. In our April 2017 report on NNSA’s budget materials and modernization plans, we found that NNSA did not clearly identify the extent to which its long-range budget estimates for its overall modernization program fell short of specific annual budget requests anticipated in this plan. We concluded that NNSA had not addressed the projected bow wave of future funding needs and the mismatch between those needs and the potential funding available in the years in question. By not addressing the risks associated with the potential funding shortfall, we concluded, NNSA raised questions about its ability to achieve its modernization program goals at cost and on schedule. As a result, as discussed above, we recommended that NNSA include an assessment of the affordability of its portfolio of modernization programs in future versions of the Stockpile Stewardship and Management Plan—for example, by presenting options NNSA could consider to bring its estimates of modernization funding needs into alignment with potential future budgets, such as potentially deferring the start of or canceling specific modernization programs. NNSA did not explicitly agree or disagree with our recommendation. The President’s fiscal year 2021 budget request for NNSA indicates that the bow wave has arrived, requesting an increase of about $3.1 billion over the funding enacted for Weapons Activities in fiscal year 2020—a year-to-year increase of over 25 percent.

The Fiscal Year 2020 Stockpile Stewardship and Management Plan, issued in July 2019, includes a new section on affordability analysis and states that the section was added in response to our April 2017 recommendation. However, our review of this section indicates that it does not fully respond to our recommendation because it does not provide information about how potential misalignment between NNSA’s modernization budget estimates and projections of the President’s modernization budgets may be addressed, or about the potential impacts of adjusting program schedules or cost or schedule overruns. Since the issuance of the 2018 Nuclear Posture Review, NNSA’s portfolio of planned programs has only grown more extensive and complex. We continue to believe that NNSA, by assessing its portfolio of modernization programs in future versions of the Stockpile Stewardship and Management Plan—for example, by presenting options NNSA could consider to bring its estimates of modernization funding needs into alignment with potential future budgets, such as potentially deferring the start of or canceling specific modernization programs—could help congressional and NNSA decision makers better understand NNSA’s priorities and trade-offs that it may need to undertake in the future, depending on funding and program performance.

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

GAO Contact and Staff Acknowledgments

If you or your staff members have any questions about this testimony, please contact me at (202) 512-3841 or bawdena@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions to this testimony are Jason Holliday, Assistant Director; Antoinette C. Capaccio; Julia Coulter; Rob Grace; John Hocker; Dan Royer; and Kiki Theodoropoulos.

Related GAO Products

The following is a selection of GAO’s recent work assessing the National Nuclear Security Administration’s management of nuclear weapon programs and related capital asset projects: Nuclear Weapons: NNSA Should Further Develop Cost, Schedule, and Risk Information for the W87-1 Warhead Program. GAO-20-207C. Washington, D.C.: February 28, 2020.

Nuclear Weapons Sustainment: Improvements Made to Budget Estimates in Fiscal Year 2019 Joint Report, but Opportunities Remain to Enhance Completeness. GAO-20-37R. Washington, D.C.: November 7, 2019.

Nuclear Weapons: Additional Actions Could Help Improve Management of Activities Involving Explosive Materials. GAO-19-449. Washington, D.C.: June 17, 2019.

Modernizing the Nuclear Security Enterprise: NNSA Is Taking Action to Manage Increased Workload at Kansas City National Security Campus. GAO-19-126. Washington, D.C.: April 12, 2019.

High-Risk Series: Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas. GAO-19-157SP. Washington, D.C.: March 6, 2019.

Nuclear Weapons: NNSA Has Taken Steps to Prepare to Restart a Program to Replace the W78 Warhead Capability. GAO-19-84. Washington, D.C.: November 30, 2018.

B61-12 Nuclear Bomb: Cost Estimate for Life Extension Incorporated Best Practices, and Steps Being Taken to Manage Remaining Program Risks. GAO-18-456. Washington, D.C.: May 31, 2018.

Nuclear Weapons: NNSA Should Clarify Long-Term Uranium Enrichment Mission Needs and Improve Technology Cost Estimates. GAO-18-126. Washington, D.C.: February 16, 2018.

Nuclear Weapons: NNSA Should Adopt Additional Best Practices to Better Manage Risk for Life Extension Programs. GAO-18-129. Washington, D.C.: January 30, 2018.

Nuclear Weapons: NNSA Needs to Determine Critical Skills and Competencies for Its Strategic Materials Programs. GAO-18-99. Washington, D.C.: November 14, 2017.

Modernizing the Nuclear Security Enterprise: A Complete Scope of Work Is Needed to Develop Timely Cost and Schedule Information for the Uranium Program. GAO-17-577. Washington, D.C.: September 8, 2017.

National Nuclear Security Administration: Action Needed to Address Affordability of Nuclear Modernization Programs. GAO-17-341. Washington, D.C.: April 26, 2017.

High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others. GAO-17-317. Washington, D.C.: February 15, 2017.

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

DOE Project Management: NNSA Should Ensure Equal Consideration of Alternatives for Lithium Production. GAO-15-525. Washington, D.C.: July 13, 2015.

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

GAO Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs. GAO-09-3SP. Washington, D.C.: March 2009.

Nuclear Weapons: Opportunities Exist to Improve the Budgeting, Cost Accounting, and Management Associated with the Stockpile Life Extension Program. GAO-03-583. Washington, D.C.: July 28, 2003.

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