Modernizing the Nuclear Security Enterprise: Observations on DOE's and NNSA's Efforts to Enhance Oversight of Security, Safety, and Project and Contract Management
Released: 2013-03-13T00:00:00

Letter

Background

DOE is responsible for a diverse set of missions, including nuclear security, energy research, and environmental cleanup. These missions are managed by organizations within DOE and largely carried out by M&O contractors at various DOE sites. According to federal budget data, NNSA is one of the largest organizations in DOE, overseeing nuclear weapons, nuclear nonproliferation, and naval reactors missions at its sites. With an $11 billion budget in fiscal year 2012—nearly 40 percent of DOE’s total budget—NNSA is responsible for providing the United States with safe, secure, and reliable nuclear weapons in the absence of underground nuclear testing and maintaining core competencies in nuclear weapons science, technology, and engineering. Ensuring a safe and reliable nuclear weapons stockpile is an extraordinarily complicated task and requires state-of-the-art experimental and computing facilities, as well as the skills of top scientists in the field. To its credit, NNSA consistently accomplishes this task, as evidenced by the successful assessment of the safety, reliability, and performance of each weapon type in the nuclear stockpile since its creation. To support these capabilities into the future, in 2011, the administration announced plans to request $88 billion from Congress over the next decade to operate and modernize the nuclear security enterprise.

As discussed earlier, work activities to support NNSA’s national security missions are largely carried out by M&O contractors. This arrangement has historical roots. Since the Manhattan Project produced the first atomic bomb during World War II, NNSA, DOE, and predecessor agencies have depended on the expertise of private firms, universities, and others to carry out research and development work and efficiently operate the facilities necessary for the nation’s nuclear defense. Currently, DOE spends 90 percent of its annual budget on M&O contracts, making it the largest non-Department of Defense contracting agency in the government.

DOE generally regulates the safety of its own nuclear facilities and operations at its sites. In contrast, the Nuclear Regulatory Commission (NRC) generally regulates commercial nuclear facilities, and the Occupational Safety and Health Administration (OSHA) generally regulates worker safety at commercial industrial facilities. However, because of the dangerous nature of work conducted at many sites within the nuclear security enterprise—handling nuclear material such as plutonium, manufacturing high explosives, and various industrial operations that use hazardous chemicals—oversight of the nuclear security enterprise is multifaceted. First, DOE policy states that its M&O contractors are expected to develop and implement an assurance system, or system of management controls, that helps ensure the department’s program missions and activities are executed in an effective, efficient, and safe manner. Through these assurance systems, contractors are required to perform self-assessments as well as identify and correct negative performance trends. Second, NNSA site offices, which are collocated with NNSA sites, oversee the performance of M&O contractors. Site office oversight includes communicating performance expectations to the contractor, reviewing the contractor’s assurance system, and conducting contractor performance evaluations. Third, DOE’s Office of Health, Safety, and Security—especially its Office of Independent Oversight—conducts periodic appraisals to determine if NNSA officials and contractors are complying with safety and security requirements. Fourth, NNSA receives safety assessments and recommendations from other organizations, most prominently the Safety Board—an independent executive branch agency created by Congress to assess safety conditions and operations at DOE’s defense nuclear facilities. To address public health and safety issues, the Safety Board is authorized to make recommendations to the Secretary of Energy, who may then accept or reject, in whole or in part, the recommendations. If the Secretary of Energy accepts the recommendations, the Secretary must prepare an implementation plan.

DOE and some of its contractors have viewed this multifaceted oversight to be overly burdensome. To address this issue, in March 2010 the Deputy Secretary of Energy announced a reform effort to revise DOE’s safety and security directives and modify the department’s oversight approach to “provide contractors with the flexibility to tailor and implement safety and security programs without excessive federal oversight or overly prescriptive departmental requirements.” In the memorandum announcing this effort, the Deputy Secretary noted that burdensome safety requirements were affecting the productivity of work at DOE’s sites and that reducing this burden on contractors would lead to measurable productivity improvement. The Deputy Secretary noted that DOE’s Office of Health, Safety and Security in 2009 had begun reforming its approach to enforcement and oversight. Similar to, but independent of DOE’s safety and security reform effort, in February 2011, NNSA initiated its “governance transformation” project, which involved revising the agency’s business model to, among other things, place more reliance on contractors’ self-oversight through its contractor assurance system to ensure such things as effective safety and security performance. NNSA’s non-nuclear Kansas City Plant completed implementation of this new business model, and other NNSA sites—such as the Nevada National Security Site and the Y-12 National Security Complex—were in the process of implementing it, too, when the Y-12 security incident occurred.

DOE’s and NNSA’s Oversight of Security Performance Continues to Face Challenges

In response to the Y-12 security breach, multiple investigations and reviews of the incident were performed by NNSA, the DOE Office of Inspector General, and the DOE Office of Independent Oversight. These reviews identified numerous problems with NNSA’s and its contractors’ performance, including: physical security systems, such as alarms; protective force (i.e., NNSA’s heavily armed, contractor guard forces) training and response; failures to correct numerous known problems; and weaknesses in contract and resource management. In addition, at the request of the Secretary of Energy, an independent panel, composed of three former executives from Federal agencies and the private sector, and a NNSA Security Task Force found broader and systemic security issues across the nuclear security enterprise. The Secretary’s panel in December 2012 analyzed various models for providing security at DOE and NNSA sites but generally found that improvements to the security culture, management, and oversight were necessary, in addition to having an effective organizational structure. In addition, the leader of the NNSA Security Task Force testified before the House Armed Services Committee in February 2013 about significant deficiencies in NNSA’s entire security organization, oversight, and culture.

In response to the Y-12 security incident and these findings, DOE and NNSA took a number of immediate actions, including repairing security equipment, reassigning key security personnel, and firing the Y-12 protective force contractor. In February 2013, the Acting NNSA Administrator committed to implementing a three-tiered oversight process involving contractor self-assessment, NNSA evaluation of site performance, and independent oversight by DOE’s Office of Independent Oversight. The Acting Administrator testified before the House Armed Services Committee that she believed that such actions will help instill a culture that embraces security as an essential element of NNSA’s missions.

In assessing DOE’s actions to address the security breakdowns at Y-12, a central question will be whether these latest actions taken will produce sustained improvements in security at Y-12 and across the nuclear security enterprise. As we and others have reported, DOE has a long history of security breakdowns and an equally long history of instituting responses and remedies to “fix” these problems. For example, in examining the Y-12 security incident, NNSA’s former Acting Chief of Defense Nuclear Security and the leader of the NNSA’s Security Task Force testified in February 2013 about problems with NNSA’s federal security organization including poorly defined roles and responsibilities for its headquarters and field security organizations, inadequate oversight and assessments of site security activities, and issues with overseeing contractor actions and implementing improvements. As noted in table 1, 10 years ago we reported on very similar problems, and since that time DOE has undertaken numerous security initiatives to address them. We have not evaluated these recent initiatives but we have ongoing work to evaluate them as part of our review on security reform for the Subcommittee, which we will complete later this year.

It is also important to note that NNSA’s long-standing security problems are not limited to Y-12. DOE’s and NNSA’s work with nuclear materials such as plutonium and highly enriched uranium, nuclear weapons and their components, and large amounts of classified data require extremely high security, however, as we and DOE have reported, NNSA and DOE have a long history of poor security performance across the nuclear security enterprise, most notably at Los Alamos and Livermore national laboratories, as well as ongoing struggles to sustain security improvements, including information security.

Los Alamos National Laboratory

As we noted in our September 2012 testimony, Los Alamos National Laboratory (Los Alamos) experienced a number of high-profile security incidents in the previous decade that were subject to congressional hearings, including some held by this Subcommittee. Many of these incidents focused on Los Alamos’s inability to account for and control its classified resources. These incidents include the transfer or removal of classified information from authorized work areas or the laboratory itself, the temporary loss of two hard drives containing nuclear weapon design information, and difficulties in accounting for classified removable electronic media. In addition to these well-publicized incidents, security evaluations through 2007 identified other persistent, systemic security problems at Los Alamos. These problems included weaknesses in controlling and protecting classified resources, inadequate controls over special nuclear material, inadequate self-assessment activities, and weaknesses in the process that Los Alamos uses to ensure it corrects identified security deficiencies. Partly as a result of these findings, as we reported in 2008, Los Alamos underwent a 10 month shut-down of operations in 2004 and experienced a change in contractors in 2005. Moreover, the Secretary of Energy issued a compliance order in 2007 requiring Los Alamos to implement specific corrective actions to, among other things, address long-standing deficiencies in its classified information programs. We reported in January 2008 and testified before this Subcommittee in September 2008 that Los Alamos had experienced a period of improved security performance but that it was too early to determine whether NNSA and Los Alamos could sustain this level of improvement.

Lawrence Livermore National Laboratory

In March 2009, we reported on numerous and wide-ranging security deficiencies at Lawrence Livermore National Laboratory (Livermore), particularly in the ability of Livermore’s protective forces to ensure the protection of special nuclear material and the laboratory’s protection and control of classified matter. We also identified Livermore’s physical security systems, such as alarms and sensors, and its security program planning and assurance activities, as areas needing improvement. Weaknesses in Livermore’s contractor self-assessment program and the Livermore Site Office’s oversight of the contractor contributed to these security deficiencies at the laboratory. According to one DOE Office of Independent Oversight official, both programs were “broken” and missed even the “low-hanging fruit.” The laboratory took corrective action to address these deficiencies, but we noted that better oversight was needed to ensure that security improvements were fully implemented and sustained. In September 2012, NNSA and Livermore completed efforts to move the site’s most sensitive nuclear material to other sites, thereby easing the site’s security requirements.

Information Security

We also have reported extensively on NNSA’s challenges in maintaining effective and secure information security systems, particularly at Los Alamos. For example, in June 2008, we reported that significant information security problems at Los Alamos had received insufficient attention. The laboratory had over two dozen initiatives under way that were principally aimed at reducing, consolidating, and better protecting classified resources. However, the laboratory had not implemented complete security solutions to address either the problems of classified parts storage in unapproved storage containers or weaknesses in its process for ensuring that actions taken to correct security deficiencies were completed. In addition, in October 2009 we reported that Los Alamos needed to better protect its classified network.found significant weaknesses remained in protecting the confidentiality, integrity, and availability of information stored on and transmitted over its classified computer network. Moreover, we found the laboratory’s Specifically, we decentralized approach to information security program management has led to inconsistent implementation of policy.

DOE and NNSA’s Oversight of Safety Performance Continues to Face Challenges

DOE and NNSA have experienced significant safety problems at their sites, and recent efforts to reform safety protocols and processes have not demonstrated sustained improvements. As we testified in September 2012 before this Subcommittee, long-standing DOE and NNSA management weaknesses have contributed to persistent safety problems at NNSA’s national laboratories. For example, in October 2007, we reported that nearly 60 serious accidents or near misses had occurred at NNSA’s national laboratories since 2000. These accidents included worker exposure to radiation, inhalation of toxic vapors, and electrical shocks. Although no one was killed, many of these accidents caused serious harm to workers or damage to facilities. As we also reported, at Los Alamos in July 2004, an undergraduate student who was not wearing required eye protection was partially blinded in a laser accident. Our review of nearly 100 safety studies—including accident investigations and independent assessments by the Safety Board and others issued since 2000—found that the contributing factors to these safety problems generally fell into three key categories: (1) relatively lax laboratory attitudes toward safety procedures, (2) laboratory inadequacies in identifying and addressing safety problems with appropriate corrective actions, and (3) inadequate oversight by NNSA site offices. DOE’s Office of Inspector General has also raised concerns about safety oversight by NNSA’s site offices. Specifically, the Inspector General reported in June 2011 that NNSA’s Livermore Site Office was not sufficiently overseeing its contractor to ensure that corrective actions were fully and effectively implemented for a program designed to limit worker exposure to beryllium, a hazardous metal essential for nuclear operations.

DOE has undertaken a number of reforms to address persistent safety concerns. In March 2010, the Deputy Secretary of Energy announced a reform effort to revise DOE’s safety and security directives. The reform effort was aimed at modifying the department’s oversight approach to “provide contractors with the flexibility to tailor and implement safety and security programs without excessive federal oversight or overly prescriptive departmental requirements.” As we reported to this Subcommittee in April 2012, this reform effort reduced the number of safety related directives from 80 to 42 by eliminating or combining requirements the department determined were unclear, duplicative, or too prescriptive and by encouraging the use of industry standards. However, as we noted in September 2012 before this Subcommittee, DOE’s safety reforms did not fully address safety concerns that we, as well as others, have identified in the areas of quality assurance, safety culture, and federal oversight and, in fact, these reforms may have actually weakened independent oversight. We stated, for example, that while DOE policy notes that independent oversight is integral to help ensure the effectiveness of safety performance, DOE’s Office of Independent Oversight staff must now coordinate their assessment activities with NNSA site office management to maximize the use of resources. This arrangement raised our concern about whether Office of Independent Oversight staff would be sufficiently independent from site office management. In our April 2012 report, we recommended, among other things, that DOE develop a detailed reform plan and clearly define the oversight roles and responsibilities of DOE’s Office of Independent Oversight staff to ensure that their work is sufficiently independent from the activities of DOE site office and contractor staff. DOE has taken steps to respond to these recommendations, including developing a plan aimed at improving safety management and drafting a memo from the Secretary of Energy reconfirming the department’s commitment to independent oversight of safety and security.

GAO-12-912T.

A November 2012 report by DOE’s Office of Independent Oversight raised concerns about safety culture issues at NNSA’s Pantex Plant. Among the concerns were reluctance by workers to raise safety problems for fear of retaliation and a perception that cost took priority over safety.

At an October 2012 public hearing in Knoxville, Tennessee, the Safety Board noted that safety controls to prevent or mitigate consequences from accidents had not been fully incorporated into the design of a new uranium processing facility at Y-12. The Safety Board noted the facility’s safety basis—a technical analysis that identifies potential accidents and hazards associated with a facility’s operations and outlines controls to mitigate or prevent their impact on workers and the public—did not adequately address controls to protect workers or the public in the case of an earthquake or small fires, and did not adequately calculate reasonably conservative radiation exposure consequences that could lead to putting greater safety into the facility’s design. The Safety Board further noted that these deficiencies raise the potential for significant impacts on public and worker safety.

A January 2013 Office of Independent Oversight report reviewing the Los Alamos Site Office assessment of the contractor corrective action system found that the contractor had not implemented effective corrective actions for identified safety system problems. This report noted that the site office concluded that more than half of the 62 safety system items needing corrective action had been closed without adequate action or sufficient documentation. Moreover, in October 2012, NNSA issued a Preliminary Notice of Violation to a Los Alamos contractor for repeated electrical safety problems. NNSA’s notice stated that insufficient oversight of subcontractor work by the contractor safety staff was among the contributing factors. NNSA fined the contractor $262,500.

DOE and NNSA Have Made Progress but Further Improvements Needed on Project and Contract Management

A basic tenet of effective management is the ability to complete projects on time and within budget. DOE has taken a number of actions to improve management of projects, including those overseen by NNSA. For example, DOE has updated project and contract management policies and guidance in an effort to improve the reliability of project cost estimates, better assess project risks, and better ensure project reviews that are timely and useful and identify problems early. In addition, in December 2010, the Deputy Secretary of Energy convened a DOE Contract and Project Management Summit to discuss strategies for additional improvement in contract and project management. The participants identified barriers to improved performance and reported in April 2012 on the status of initiatives to address these barriers. DOE has continued to release guides for implementing its revised order for Program and Project Management for the Acquisition of Capital Assets (DOE O 413.3B), such as for cost estimating, using earned value management, and forming project teams. Further, DOE has taken steps to enhance project management and oversight by requiring peer reviews and independent cost estimates for projects with values of more than $100 million and by improving the accuracy and consistency of data in its central repository for project data.

DOE has made progress in managing nonmajor projects—those costing less than $750—million and in recognition of this progress, we narrowed the focus of our high-risk designation to major contracts and projects. Specifically, as we noted in our October 2012 report on DOE’s EM cleanup projects funded by the American Recovery and Reinvestment Act, at the time of our analysis, 78 of 112 projects had been completed. Of those completed projects, 92 percent met the performance standard of completing project work scope without exceeding the cost target by more than 10 percent, according to EM data. However, we made four recommendations to DOE in this report aimed at improving how EM manages and documents projects, particularly with respect to establishing key performance parameters such as project scope targets and baselines for cost and schedule. DOE concurred with all of our recommendations, recognizing that improvements could be made and that lessons learned from these projects can be applied to EM’s broader portfolio of projects and activities. In addition, in December 2012, we reported that EM and NNSA were making some progress in managing the 71 nonmajor construction and cleanup projects that we reviewed and are expected to cost an estimated $10.1 billion in total. For example, we identified some NNSA and EM nonmajor projects that used sound project management practices, such as the application of effective acquisition strategies, to help ensure the successful completion of these projects. We also recommended that NNSA and EM clearly define, document, and track the scope, cost, and completion date targets for each of their nonmajor projects and that EM clearly identify critical occupations and skills in its workforce plans. NNSA and EM agreed with these recommendations.

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

More recently, in September 2011, NNSA estimated that increases.the facility would cost from $4.2 billion to $6.5 billion to construct—a nearly seven-fold cost increase from the original estimate. In April 2010, we reported that weak management by DOE and NNSA had allowed the cost, schedule, and scope of ignition-related activities at the National Ignition Facility to increase substantially. We reported that, since 2005, ignition-related costs have increased by around 25 percent—from $1.6 billion in 2005 to over $2 billion in 2010—and that the planned completion date for these activities had slipped from the end of fiscal year 2011 to the end of fiscal year 2012 or beyond. Ten years earlier, in August 2000, we had reported that poor management and oversight of the National Ignition Facility construction project at Lawrence Livermore National Laboratory had increased the facility’s cost by $1 billion and delayed its scheduled completion date by 6 years. In March 2010, we reported that NNSA’s Mixed-Oxide Fuel Fabrication Facility currently being constructed at DOE’s Savannah River Site in South Carolina had experienced delays, but project officials said that they expected to recover from these delays by the end of 2010 and planned for the start of operations on schedule in 2016. In addition, after spending about $730 million on design, NNSA has cancelled the pit disassembly and conversion facility and is now planning to use existing facilities at DOE’s Savannah River and Los Alamos sites and will add equipment to the mixed oxide facility. NNSA is working on a cost and schedule estimate for the use of these existing facilities and for adding the additional equipment.

We have also issued several reports on the technical issues, cost increases, and schedule delays associated with NNSA’s efforts to extend, through refurbishment, the operational lives of nuclear weapons in the stockpile. For example, in March 2009, we reported that NNSA and the Department of Defense had not effectively managed cost, schedule, and technical risks for the B61 nuclear bomb and the W76 nuclear warhead refurbishments. For the B61 life extension program, NNSA was only able to stay on schedule by significantly reducing the number of weapons undergoing refurbishment and abandoning some refurbishment objectives. Earlier, in December 2000, we similarly had reported that refurbishment of the W87 strategic warhead had experienced significant design and production problems that increased its refurbishment costs by over $300 million and caused schedule delays of about 2 years.

In conclusion, the actions that DOE and NNSA have taken to address weaknesses in oversight of security, safety, and contract and project management are very important, but problems persist. While we have noted progress in the area of project management, we also observe that NNSA and DOE EM have not begun a new major project since taking these actions. The Y-12 security incident was an unprecedented event for the nuclear security enterprise and perhaps indicates that NNSA’s organizational culture, over a decade after the agency was created to address security issues, still has not embraced security as an essential element of its missions. In terms of safety, DOE has recently taken the initiative to examine the safety culture at its sites. We believe, as do other organizations, including the DOE Inspector General and Safety Board, that a “hands off, eyes on” oversight approach for security, safety and contract and project management is insufficient and unwarranted until the department can demonstrate sustained improvement in all three areas. We will continue to monitor DOE’s and NNSA’s implementation of actions to resolve its safety, security, and contract and project management difficulties and to assess the impact of these actions.

Chairman Murphy, Ranking Member DeGette, 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 have any questions about this testimony, 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 statement. GAO staff who made key contributions to this testimony are Allison Bawden, Jonathan Gill, and Kiki Theodoropoulos, Assistant Directors; and Nancy Kintner-Meyer, Michelle Munn, and Jeff Rueckhaus, Senior Analysts.

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