KCP is increasing the percentage of nonnuclear  components purchased from external suppliers from about 54 to 70  percent. NNSA plans to have a new KCP  facility built on an undeveloped site in Kansas City, Missouri. Based on analyses conducted by KCP,  NNSA chose to lease a new facility for 20 years. However, KCP compared  financing alternatives using cost estimates limited to 20 years rather than  the full expected life of the proposed facility; therefore, NNSA cannot be  certain whether other financing alternatives might have offered lower  costs over the longer term. KCP Evaluated Several Alternatives for Modernizing the Facility

KCP evaluated several alternatives on behalf of NNSA for modernizing its  facility based on each alternative’s potential to satisfy key goals outlined in  NNSA’s strategic plans for modernizing the nuclear weapons complex,  among other things. Specifically, KCP officials told us that they sought an  option that (1) was consistent with NNSA’s goals for maintaining a smaller  facility for producing nuclear weapons and that could quickly adapt to  change; (2) met schedule commitments to Congress; (3) minimized costs  of constructing and annually operating and maintaining the facility; and,  (4) maximized chances of completing the relocation within the established  scope, cost, and schedule. Ultimately, based on KCP’s analysis, NNSA decided to build its  new facility on an available site in Kansas City about 8 miles from the  existing facility that is not on a flood plain. However,  20 years is far shorter than the useful life of a production facility that is  properly maintained; the current KCP facility has operated for more than  60 years. NNSA and KCP officials acknowledged  that while leasing a facility through GSA under a 20-year scenario is less  costly than a line item project, it can be more costly over a longer-term  scenario—possibly even beginning at about 22 years into the lease. However, KCP’s relocation schedule— which is critical to ensuring that the move does not disrupt production— did not initially adhere to all of GAO’s best practices for schedule  development. We assessed KCP’s initial schedule in February 2009 and  found that KCP did not fully adhere to GAO-identified best practices for  schedule development. We assessed its revised schedule in July 2009 and  found that KCP officials have taken steps to address some of the problems  identified in our initial review, but that the schedule still has some  shortcomings. However, KCP  lacks a formal, risk-based approach to identifying and mitigating risks  posed by components and technologies, including weapons-related design  drawings; unique production processes; and information that although  mostly unclassified, could be used by adversaries to develop or advance  their nuclear capabilities. KCP Has Not Conducted a Systematic Review to Identify Outsourced Technologies That Pose Nuclear Proliferation Risks

KCP has not implemented a systematic review process to identify specific  components, technologies, and information that although not considered  to be classified national security information, are subject to export  controls and could be used to advance the nuclear capabilities of  adversaries. As such, items that pose little apparent risk of contributing to potential  adversaries’ development of nuclear weapons, such as a commercially  available screw, are considered to be the same level of risk as complex  components, such as a mechanism designed to arm nuclear weapons. Furthermore, KCP’s primary export control measure rests on its suppliers’  compliance with a contract clause outlining their responsibility to abide by  export control laws and safeguard nuclear weapon component production  and design information. DOE and NNSA lack clear and up-to-date export control guidance. Appendix I: Objectives, Scope, and Methodology

Our objectives were to determine (1) how the Kansas City Plant (KCP)  developed plans for modernizing its facility, (2) actions KCP has taken  actions to ensure uninterrupted production of components needed to  support the nuclear weapons stockpile during and after the transition to  the new facility, and (3) actions KCP has taken to address the risks and  potential consequences of increased outsourcing of nonnuclear  components. To meet this objective, key activities  need to be logically sequenced in the  order that they are to be carried out. KCP officials  reported that they have no plans  to address this issue.
Why GAO Did This Study

Built in 1943, the Kansas City Plant (KCP)--the National Nuclear Security Administration's (NNSA) primary production plant for manufacturing nonnuclear components of nuclear warheads and bombs--is to be modernized because of its age and the high cost of maintenance and operation. Among other changes, NNSA plans to relocate KCP to a new facility and increase components obtained from external suppliers from about 54 to 70 percent. KCP's continued supply of these components is essential for maintaining a reliable nuclear weapons stockpile. GAO was asked to determine (1) how KCP developed plans for modernization, (2) actions KCP has taken to ensure uninterrupted production of components, and (3) actions KCP has taken to address the risks of outsourcing. GAO reviewed planning documents and met with officials from NNSA, KCP, and Sandia National Laboratories, which designs many of the components produced at KCP.

What GAO Found

KCP evaluated several alternatives on behalf of NNSA to modernize its facility based on whether the alternative (1) was consistent with NNSA's goals for maintaining a smaller facility for producing nuclear weapons and one that could quickly adapt to change, (2) met NNSA's commitments to Congress to operate a new facility by 2012, and (3) minimized costs and implementation risks. Based on KCP's analyses of alternatives, NNSA chose to have a private developer build a new building in Kansas City 8 miles from the current facility, which NNSA would then lease through the General Services Administration (GSA) for a period of 20 years. However, in evaluating a financing method, KCP compared alternatives using cost estimates limited to 20 years. Twenty years is far shorter than the useful life of a production facility that is properly maintained; the current facility has operated for more than 60 years. NNSA and KCP officials acknowledge that while leasing a facility through GSA under a 20-year scenario is less costly than purchasing, it can be more costly over the longer term. Because KCP's analysis did not consider costs beyond 20 years, NNSA cannot be certain if other alternatives, such as purchasing the facility, might have offered lower costs over the longer term. KCP officials developed extensive plans to ensure that the production of components is not interrupted because of the transition to the new facility. However, its schedule--which is critical to ensuring that the move does not disrupt production--does not fully adhere to best practices GAO identified for schedule development and related DOE scheduling guidance. In February 2009, GAO assessed KCP's schedule and found that, among other things, KCP had not adequately sequenced all activities in its schedule in the order in which they are to be carried out. GAO followed up in July 2009 and found that although KCP officials have made progress in addressing several of these problems, the schedule still has some shortcomings. KCP has taken steps to mitigate some risks of increased outsourcing, but NNSA has not provided adequate oversight or clear and up-to-date export control guidance tailored for NNSA production and laboratory sites to effectively manage associated nuclear weapons proliferation risks. As such, KCP has not implemented a formal, risk-based approach to identify specific components and technologies that may be used by potential adversaries to develop or advance their nuclear capabilities. Lacking effective NNSA-specific guidance and a risk-based approach, KCP instead treats all components as if they pose equal proliferation risks. As such, items such as a common, commercially available screw are considered to be at the same level of proliferation risk as a complex mechanism designed to arm nuclear weapons. Further, KCP's primary means of addressing this issue rests on its suppliers' self-enforced compliance with a contract clause that outlines the suppliers' responsibility to abide by applicable export control laws. Under this broadly applied approach to managing export control--where all components are treated as equal risks--NNSA may be missing opportunities at KCP to systematically identify and more effectively mitigate those risks that pose the greatest threats.