The joint report is also to include a detailed description of costs included  in the budget estimates and the methodology used to create the  estimates.modernizing U.S. nuclear weapons capabilities—including nuclear  delivery systems, the nuclear command and control system, and the   DOE’s and DOD’s 10-year estimates for sustaining and  nuclear stockpile and nuclear security enterprise—total $263.8 billion  through fiscal year 2023. DOE’s and DOD’s 10- Year Estimates Are Incomplete, and DOD’s Methodology for Preparing Some Estimates Is Not Fully Transparent

DOE’s and DOD’s $263.8 billion budget estimates in the July 2013 joint  report are generally consistent with their internal funding plans through  fiscal year 2018, but their overall estimates in the joint report are  incomplete; although DOE’s methodological assumptions are transparent  in the related Fiscal Year 2014 Stockpile Stewardship and Management  Plan, key DOD methodological assumptions and limitations underlying  some estimates are not documented in the joint report, limiting the  report’s transparency. In December 2013 we recommended that DOE include a  range of preliminary budget estimates in future funding plans to improve  alignment, and DOE generally concurred with this recommendation. In  this review, we found that DOD’s $125.5 billion estimate for nuclear  delivery systems is generally consistent with its budget-justification  documents and funding plans, but DOD’s 10-year budget estimate did not  include potential estimates for key Air Force modernization efforts. Additionally, in preparing the $40.8 billion estimate for sustaining and  modernizing the NC3 system, DOD did not document key methodological  assumptions and limitations or make them transparent in the report. GAO Previously Reported That DOE’s Budget Estimates for Certain Near-Term and Long-Term Modernization Efforts Are Incomplete

DOE’s $97.5 billion estimate in the joint report for sustaining and  modernizing the nuclear stockpile and nuclear security enterprise is  consistent with the funding plans in its FYNSP and its Fiscal Year 2014  Stockpile Stewardship and Management Plan, and its methodological  assumptions for preparing this estimate are transparent, but as we found  in December 2013, these estimates are incomplete because they are  less than what will be needed through fiscal year 2023 to meet the  schedules of key modernization efforts. Consequently, DOD’s 10- year estimate in the joint report may be significantly underreported,  depending on the magnitude of the costs resulting from upcoming  decisions about how to modernize these delivery systems. By treating key Air Force modernization efforts as zero-cost,  instead of including a range of potential budget estimates based on  preliminary cost information, DOD limited the value of the joint report as a  congressional tool for understanding the estimate or for assessing the  long-term affordability of DOD’s modernization plans. As a result, it could be difficult for Congress to understand the  basis for this estimate, or compare one year’s estimates to the next, as it  assesses long-term affordability when allocating resources. Unless the  Secretary of Defense directs that key assumptions and limitations are  documented in future reports, the basis for its NC3 estimates may not be  adequately transparent for Congress to determine reasonable resource  allocations, and Congress may not be able to identify changes in the  estimates from one annual report to the next. Recommendations for Executive Action

We are making two recommendations to the Secretary of Defense to  improve subsequent joint reports to Congress on plans for sustaining and  modernizing U.S nuclear weapons capabilities:
To ensure the accuracy and completeness of DOD’s estimates for  sustaining and modernizing strategic delivery systems over the 10- year period covered in subsequent joint reports, we recommend the  Secretary of Defense direct the Secretary of the Air Force and  Secretary of the Navy, as appropriate, to include at least a range of  potential budget estimates for projects and programs in future  modernization plans that extend beyond the period covered by their 5- year internal funding plans, based on preliminary cost information. DOE generally agreed with this recommendation. Should you or your staffs have any questions about this report, please  contact John Pendleton at (202) 512-3489 or pendletonj@gao.gov, or  David Trimble at (202) 512-3841 or trimbled@gao.gov. Appendix I: Scope and Methodology

We reviewed the July 15, 2013, joint report to Congress from the  Department of Energy (DOE) and the Department of Defense (DOD) that  describes their plans and 10-year budget estimates for sustaining and  modernizing U.S. nuclear weapons capabilities and assessed whether  their budget estimates in that report are accurate and complete  (consistent) with respect to their long-term plans, including whether the  report provides complete information and a transparent methodology, in  three areas: (1) DOE nuclear security enterprise modernization; (2) DOD  nuclear delivery systems; and (3) the DOD nuclear command, control,  and communications (NC3) system. To address our objective, we  obtained and analyzed the DOE and DOD plans and estimates from the  July 15, 2013, joint report, and analyzed the DOE and DOD data and  methodologies used to prepare their 10-year budget estimates.
Why GAO Did This Study

DOE and DOD are undertaking an extensive effort to sustain and modernize the nuclear weapons stockpile, research and production infrastructure, delivery systems, and the nuclear command and control system. Completing this effort is expected to cost hundreds of billions of dollars over decades. Congress mandated the development of an annual report on the departments' plans and 10-year budget estimates for these efforts. Congress also mandated GAO to review the accuracy and completeness of the DOE and DOD report, with respect to the budget estimate contents and methodology.
This report addresses whether DOE's and DOD's 10-year budget estimates for sustaining and modernizing the nuclear deterrent are consistent with their funding plans, including whether the report provides complete information and a transparent methodology. GAO analyzed the DOE and DOD plans and estimates as of July 2013, and the DOE and DOD guidance and methodologies used to prepare their budget estimates.

What GAO Found

The Departments of Energy's (DOE) and Defense's (DOD) $263.8 billion, 10-year estimates in their report to Congress for sustaining and modernizing U.S. nuclear weapons capabilities are generally consistent with their funding plans through fiscal year 2018. However, GAO identified shortcomings with respect to the completeness of the budget estimates and the transparency of the assumptions and limitations that underlie the 10-year estimate. Specifically:
Nuclear stockpile and infrastructure: Based on GAO's recent review of DOE's long-term plans and estimates for sustaining and modernizing the nuclear enterprise, we found that DOE's $97.5 billion estimate in the report includes less funding than will be needed through fiscal year 2018 to meet program milestones for planned nuclear weapon life extensions, and through fiscal year 2023 to meet milestones for constructing key facilities.
Nuclear delivery systems: DOD's $125.5 billion estimate in the report does not include potential budget estimates for Air Force efforts to modernize intercontinental ballistic missiles or to develop a new bomber. Instead, DOD treated these efforts as zero-cost in the estimate. Consequently, DOD may be significantly underreporting its 10-year estimate, depending on the magnitude of the costs resulting from upcoming decisions about how to modernize these delivery systems.
Nuclear command, control, and communications (NC3): DOD's methodology for preparing its $40.8 billion estimate to sustain and modernize its system for assuring connectivity between the President and nuclear forces is not fully transparent because key assumptions and potential limitations are not documented in the report to Congress. As a result, Congress has a limited basis for understanding the estimate, or for comparing the estimates in one annual report to the next, as it assesses long-term affordability when allocating resources.
The report omits estimates for certain programs, such as the new bomber, and is not fully transparent in describing key assumptions and limitations for estimating nuclear command, control, and communications system funding, which limits its utility for budgetary planning. Key principles that GAO derived from federal budget guidance stress the importance of including all relevant funding estimates in the plan, as well as documenting methodological assumptions and potential limitations. However, DOD did not specifically direct the Air Force to include a range of potential budget estimates in the report for developing a new intercontinental missile or bomber, where a firm estimate was unavailable. DOD also did not direct that key assumptions and limitations be documented in the report for preparing its NC3 estimates. GAO reported in December 2013 that DOE's nuclear stockpile and infrastructure estimates did not include a range of preliminary budget estimates to account for known future expenses. GAO recommended that DOE include a range of potential budget estimates for preliminary projects and programs in future funding plans, and DOE generally agreed with this recommendation. Without a range of potential estimates and fully documented assumptions and limitations, the report is an incomplete tool for congressional oversight.

What GAO Recommends

To improve the completeness and transparency of subsequent joint reports, GAO recommends that the Secretary of Defense direct DOD components to (1) include at least a range of potential 10-year budget estimates for projects and programs, based on preliminary cost information (this is consistent with a December 2013 recommendation GAO made to DOE); and (2) document assumptions and limitations affecting its NC3 funding estimates. DOD agreed with these recommendations.
, or David Trimble at (202) 512-3841 or trimbled@gao.gov .