This background section describes (1) objectives, milestones, and management considerations in the B61-12 LEP and (2) DOE directives and NNSA policy letters and how they apply to programs such as the B61-12 LEP. The B61-12 consists of two major assemblies: the bomb assembly and the tail kit guidance assembly. NNSA manages the development and production of the bomb assembly and the Air Force manages the development and production of the tail kit assembly, among other activities, as follows: NNSA responsibilities and the bomb assembly. According to NNSA officials and documents, the bomb assembly will include reused, refurbished, and new nuclear and nonnuclear components. The design approach for the LEP maximizes reuse of existing nuclear and nonnuclear components and is intended to improve the safety and security of the weapon using proven technologies. NNSA manages the development and production of the bomb assembly under the direction of a federal program office and federal program manager located at Kirtland Air Force Base in Albuquerque, New Mexico, which is also the site of NNSA’s Sandia National Laboratories. NNSA sites and laboratories involved in the LEP include Sandia National Laboratories, the design agency for nonnuclear components, a production agency for some components, and system- level integrator of the overall weapon design; Los Alamos National Laboratory, the design and production agency for the nuclear explosive package; the Kansas City National Security Campus, the Y- 12 National Security Complex, and the Savannah River Site, the production agencies for various new or refurbished weapon components; and the Pantex Plant, where some bomb components are produced and final assembly of the bombs takes place. In addition, Lawrence Livermore National Laboratory provides independent review of Los Alamos National Laboratory’s work on nuclear components. As of September 2015, NNSA’s expected costs for its share of the LEP work were approximately $7.3 billion. Air Force responsibilities and the tail kit assembly. According to Air Force officials and documents, the tail kit assembly will provide the B61-12 with a guided freefall capability that improves the accuracy of weapon delivery. The guided capability will enable the weapon to meet military requirements with a lower nuclear yield, allowing for the use of less special nuclear material. The B61-12 is designed to be compatible with existing dual-capable aircraft—the F-15, F-16, and PA-200—as well as the B-2 strategic bomber and planned future aircraft such as the F-35 fighter. The Air Force’s responsibilities include integrating the B61-12 with its delivery aircraft and the operational flight program software. This software is being upgraded in the F-15 and B-2 delivery aircraft so that these aircraft can work with the B61-12’s digital interface. The Air Force Nuclear Weapons Center at Kirtland Air Force Base manages technical integration, system qualification, and other LEP-related tasks required to certify and field the weapon as well as tail kit acquisition, as contracted to Boeing. As of September 2015, the Air Force’s expected costs for its share of the LEP work were approximately $1.6 billion. Figure 1 shows the B61-12. The joint 6.X guidance describes key high-level joint tasks and deliverables for each phase of nuclear refurbishment activities such as an LEP. Specifically, the 6.X guidance lists key milestones, such as tests and cost estimates, that a nuclear weapon refurbishment activity must undertake before proceeding to subsequent steps of the Phase 6.X process (see fig. 2). NNSA and DOD implement the Phase 6.X process under a guidance document, Procedural Guideline for the Phase 6.X Process, which was issued in 2000 and is undergoing its first revision. This document describes the roles and functions of DOD, DOE, and NNSA in nuclear weapon refurbishment activities conducted through the Phase 6.X process. It also describes the roles and functions of two joint bodies that provide oversight and approval functions to LEPs and other nuclear weapons–related activities: the Nuclear Weapons Council and its Standing and Safety Committee. In addition, the Nuclear Weapons Council charters a Project Officers Group for each weapon system to provide a technical forum for weapon development and management activities. Each Project Officers Group is led by a project officer from either the Navy or Air Force, the two military services that maintain and operate nuclear weapons. Importantly, for more detailed requirements and guidance on program management matters, DOE and DOD each utilize their own agency-specific directives. In the B61-12 LEP’s current phase—6.3, development engineering— NNSA coordinates with the Air Force to conduct experiments, tests, and analyses to develop and validate the selected design option. Key steps that have not yet taken place in Phase 6.3 of the B61-12 LEP include formally developing a program cost baseline—a more mature cost estimate than is currently in use—and finalizing the design definition. Program officials told us they expect to issue the baseline cost report, which will formalize the program’s cost baseline, and to approve the baseline design in the third quarter of fiscal year 2016. According to program officials, the LEP is on schedule to enter Phase 6.4 (production engineering) in the fourth quarter of fiscal year 2016. The B61-12 LEP is one of several LEPs or refurbishments that NNSA and DOD have plans to undertake or have already started. Other LEPs or refurbishments include the ongoing LEP for the W76 warhead, an alteration to the W88 warhead, and planned LEPs for the cruise missile and interoperable warheads. Some of these activities are or will be taking place concurrently, and several have had their completion dates revised over the years, as shown in table 1. In addition, NNSA plans to move important production operations into new or modified facilities during this time period. Because of overlapping LEPs and new infrastructure, NNSA and DOD officials told us that they recognize the need to continue to improve coordination and management of the nuclear security enterprise. Earned value management is a project management tool developed by DOD in the 1960s to help managers monitor project risks. Earned value management systems measure the value of work accomplished in a given period and compare the measured value with the planned value of work scheduled for that period and the actual cost of work accomplished. Earned value management’s intended purpose is to integrate a project’s cost, schedule, and technical efforts for management and provide reliable data to decision makers. DOE’s Departmental Directives Program, defined and established through a DOE order, classifies directives into several types. These directive types include orders and guides, which the Departmental Directives Program describes as follows: Orders. Orders establish requirements and should include detailed instructions describing how requirements are to be implemented. Guides. Guides provide information on how to implement the requirements contained in orders. They are a nonmandatory means for complying with these requirements and cannot be made mandatory by reference in other DOE directives. The National Nuclear Security Administration Act, through which Congress established the NNSA, also gives the NNSA Administrator the authority to establish NNSA-specific policies, unless disapproved by the Secretary of Energy. NNSA does so through the issuance of policy letters. These policy letters take the form of NNSA policies, supplemental directives, and business operating procedures. DOE manages the B61-12 LEP as a program. The department makes distinctions between programs and projects and uses different directives to prescribe the management approach for each, as follows: Programs. According to NNSA officials, no DOE order exists that provides management requirements for program activities, such as LEPs. As we found previously in our November 2014 report on DOE and NNSA cost estimating practices, for example, DOE and NNSA programs were not required to meet any cost estimating best practices. NNSA officials stated at that time that NNSA cost estimating practices for programs were limited, decentralized, and inconsistent, and were not governed by a cost estimating policy or single set of NNSA requirements and guidance. According to these officials, each NNSA program office used different practices and procedures for the development of cost estimates that were included in the NNSA annual budget. Projects. NNSA’s management of projects is governed by DOE Order 413.3B (DOE’s project management order). The order applies to capital asset projects above a certain cost threshold. It provides management direction for NNSA and other DOE offices, with the goal of delivering projects within the original performance baseline that are fully capable of meeting mission performance and other requirements, such as environmental, safety, and health standards. The order specifies requirements that must be met, along with the documentation necessary, to move a project past major milestones. It provides requirements regarding cost estimating (and, in some cases, the preparation of an independent cost estimate), technology readiness assessments, independent project reviews, and the use of earned value management systems, among other requirements. As we have previously found, DOE’s project management order applies to programs only in conjunction with a program’s acquisition of capital assets. The B61-12 LEP’s program managers have developed a management approach that was then used to inform a new NNSA policy that applies to NNSA defense program management. In addition, NNSA and DOD have identified some potential management challenges in the program; the new management approach and policy may help NNSA address these challenges, but it is too soon to evaluate the likelihood that they will adversely affect the program. The B61-12 LEP’s program managers have developed, documented, and are using program management practices and tools for the LEP to help identify and avoid cost and schedule overruns and technical issues.