The United States’ nuclear weapons stockpile comprises nine nuclear weapons types, all of which were designed during the Cold War. Two of these systems—the B61 and the W76—are currently being refurbished to extend their useful lives for up to 30 years through NNSA’s Life Extension Program. In May 2008, we reported that, over the past few years, NNSA and DOD have considered a variety of scenarios for the future composition of the nuclear stockpile that would be based on different stockpile sizes and the degree to which the stockpile would incorporate new RRW designs. For example, NNSA and DOD have considered how large the stockpile needs to be in order to maintain a sufficiently robust and responsive manufacturing infrastructure to respond to future global geopolitical events. In addition, NNSA and DOD have considered the number of warheads that will need to be either refurbished or replaced in the coming decades. However, NNSA and DOD have not issued requirements defining the size and composition of the future stockpile. We discussed one effect of this lack of clear stockpile requirements in our May 2008 report on plutonium pit manufacturing. Specifically, we found that in October 2006, NNSA proposed building a new, consolidated plutonium center at an existing DOE site that would be able to manufacture pits at a production capacity of 125 pits per year. However, by December 2007, NNSA stated that instead of building a new, consolidated plutonium center, its preferred action was to upgrade the existing pit production building at LANL to produce up to 80 pits per year. Although DOD officials agreed to support NNSA’s plan, these officials also stated that future changes to stockpile size, military requirements, and risk factors may ultimately lead to a revised, larger rate of production. This uncertainty has delayed NNSA in issuing final plans for its future pit manufacturing capability. Once a decision is made about the size and composition of the stockpile, NNSA should develop accurate estimates of the costs of transforming the nuclear weapons complex. In September 2007, a contractor provided NNSA with a range of cost estimates for over 10 different Complex Transformation alternatives. For example, the contractor estimated that the cost of NNSA’s preferred action would be approximately $79 billion over the period 2007 through 2060. This option was also determined to be the least expensive. In contrast, the contractor’s estimate for a consolidated nuclear production center—another alternative that would consolidate plutonium, uranium, and weapons assembly and disassembly at one site—totaled $80 billion over the same period. Although these estimates differ by only $1 billion over 53 years, they are based on significantly different assumptions. Specifically, NNSA’s preferred action assumes a manufacturing capacity of up to 80 pits per year, and the alternative for a consolidated nuclear production center assumes a capacity of 125 pits per year. In addition, the contractor cautioned that because its cost analysis was not based on any specific conceptual designs for facilities such as the consolidated nuclear production center, it had not developed cost estimates for specific projects. As a result, the contractor stated that its estimates should not be used to predict a budget-level project cost. Historically, NNSA has had difficulty developing realistic, defensible cost estimates, especially for large, complex projects. For example, in March 2007, we found that 8 of the 12 major construction projects that DOE and NNSA were managing had exceeded their initial cost estimates. One project, the Highly Enriched Uranium Materials Facility nearing completion at the Y-12 Plant, has exceeded its original cost estimate by over 100 percent, or almost $300 million. We reported that the reasons for this cost increase included poor management and contractor oversight. In addition, NNSA’s cost estimate for constructing the Chemistry and Metallurgy Research Replacement Facility has more than doubled—from $838 million to over $2 billion—since our April 2006 testimony. This revised cost estimate is so uncertain that NNSA did not include any annual cost estimates beyond fiscal year 2009 in its fiscal year 2009 budget request to the Congress. Finally, the preliminary results of our ongoing review of NNSA’s Life Extension Program for this Subcommittee show that NNSA’s cost estimate for refurbishing each B61 nuclear bomb has doubled since 2002. NNSA does not expect to issue a record of decision on Complex Transformation until later this year. As a result, we do not know the ultimate decision that NNSA will make—whether to modernize existing sites in the weapons complex or consolidate operations at new facilities. We expect that once NNSA makes this decision, NNSA will put forward a transformation plan with specific milestones to implement its decision. Without such a plan, NNSA will have no way to evaluate its progress, and the Congress will have no way to hold NNSA accountable. However, over the past decade, we have repeatedly documented problems with NNSA’s process for planning and managing its activities. For example, in a December 2000 report, we found that NNSA needed to improve its planning process so that there were linkages between individual plans across the Stockpile Stewardship Program and that the milestones contained in NNSA’s plans were reflected in contractors’ performance criteria and evaluations. However, in February 2006, we reported similar problems with how NNSA is managing the implementation and reliability of the nuclear stockpile. Specifically, we found that NNSA planning documents did not contain clear, consistent milestones or a comprehensive list of the scientific research being conducted across the weapons complex in support of NNSA’s Primary and Secondary Assessment Technologies programs. These programs are responsible for setting the requirements for the computer codes and experimental data needed to assess and certify the safety and reliability of nuclear warheads. We also found that NNSA had not established adequate performance measures to determine the progress of the weapons laboratories in developing and implementing this new methodology. As we noted in July 2003, one of the key practices for successfully transforming an organization is to ensure that top leadership sets the direction, pace, and tone for the transformation. One of the key problems that NNSA has experienced has been its inability to build an organization with clear lines of authority and responsibility. We also reported in January 2004 that NNSA, as a result of reorganizations, has shown that it can move from what was often called a “dysfunctional bureaucracy” to an organization with clearer lines of authority and responsibility. In this regard, we stated in our April 2006 testimony that NNSA’s proposed Office of Transformation needed to be vested with the necessary authority and resources to set priorities, make timely decisions, and move quickly to implement those decisions. It was our view that the Office of Transformation should (1) report directly to the Administrator of NNSA; (2) be given sufficient authority to conduct its studies and implement its recommendations; and (3) be held accountable for creating real change within the weapons complex. In 2006, NNSA created an Office of Transformation to oversee its Complex Transformation efforts. This office has been involved in overseeing early activities associated with Complex Transformation, such as the issuance of the December 2007 draft report on the potential environmental impacts of alternative Complex Transformation actions. However, the Office of Transformation does not report directly to the Administrator of NNSA. Rather, the Office reports to the head of NNSA’s Office of Defense Programs. In this respect, we are concerned that the Office of Transformation may not have sufficient authority to set transformation priorities for all of NNSA, specifically as they affect nuclear nonproliferation programs. Because NNSA’s ultimate decision on the path forward for Complex Transformation has not yet been made, it remains to be seen whether the office has sufficient authority to enforce transformation decisions or whether it will be held accountable within NNSA for these decisions. Madam Chairman, this concludes my prepared statement. I would be happy to respond to any questions that you or Members of the Subcommittee may have at this time. For further information on this testimony, please contact me at (202) 512- 3841 or aloisee@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Ryan T. Coles, Assistant Director; Allison Bawden; Jason Holliday; Leland Cogliani; Marc Castellano; and Carol Herrnstadt Shulman made key contributions to this testimony. This is a work of the U.S. government and is not subject to copyright protection in the United States. 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Summary: Over the past several years, a serious effort has begun to comprehensively reevaluate how the United States maintains its nuclear deterrent and what the nation's approach should be for transforming its aging nuclear weapons complex. The National Nuclear Security Administration (NNSA), a separately organized agency within the Department of Energy (DOE), is responsible for overseeing this weapons complex, which comprises three nuclear weapons design laboratories, four production plants, and the Nevada Test Site. In December 2007, NNSA issued a draft report on potential environmental impacts of alternative actions to transform the nuclear weapons complex, which NNSA refers to as Complex Transformation. NNSA's preferred action is to establish a number of "distributed centers of excellence" at sites within the existing nuclear weapons complex, including the Los Alamos National Laboratory for plutonium capabilities, the Y-12 Plant for uranium capabilities, and the Pantex Plant for weapons assembly, disassembly, and high explosives manufacturing. NNSA would continue to operate these facilities to maintain and refurbish the existing nuclear weapons stockpile as it makes the transition to a smaller, more responsive infrastructure. GAO was asked to discuss NNSA's Complex Transformation proposal. This testimony is based on previous GAO work. Transforming the nuclear weapons complex will be a daunting task. In April 2006 testimony before the Subcommittee on Energy and Water Development, House Committee on Appropriations, GAO identified four actions that, in its view, were critical to successfully achieving the transformation of the complex. On the basis of completed and ongoing GAO work on NNSA's management of the nuclear weapons complex, GAO remains concerned about NNSA's and the Department of Defense's (DOD) ability to carefully and fully implement these four actions. For this reason, GAO believes that the Congress must remain vigilant in its oversight of Complex Transformation. Specifically, NNSA and DOD have not established clear, long-term requirements for the nuclear weapons stockpile. While NNSA and DOD have considered a variety of scenarios for the future composition of the nuclear weapons stockpile, no requirements have been issued. It is GAO's view that NNSA will not be able to develop accurate cost estimates or plans for Complex Transformation until stockpile requirements are known. Further, recent GAO work found that the absence of stockpile requirements is affecting NNSA's plans for manufacturing a critical nuclear weapon component. NNSA has had difficulty developing realistic cost estimates for large, complex projects. In September 2007, a contractor provided NNSA with a range of cost estimates for over 10 different Complex Transformation alternatives. However, the contractor stated that (1) its analysis was based on rough order-of-magnitude estimates and (2) NNSA should not use its cost estimates to predict budget-level project costs. In addition, in March 2007 GAO reported that 8 of 12 major construction projects being managed by DOE and NNSA had exceeded their initial cost estimates. NNSA will need to develop a transformation plan with clear, realistic milestones. GAO expects that once NNSA decides the path forward for Complex Transformation later this year, NNSA will put forward such a plan. However, GAO has repeatedly documented problems with NNSA's ability to implement its plans. For example, in February 2006 GAO reported problems with the planning documents that NNSA was using to manage the implementation of its new approach for assessing and certifying the safety and reliability of the nuclear stockpile. Successful transformation requires strong leadership. In 2006, NNSA created an Office of Transformation to oversee its Complex Transformation activities. However, GAO is concerned that the Office of Transformation may not have sufficient authority to set transformation priorities for all of NNSA, specifically as they affect nuclear nonproliferation programs.