NNSA’s Methods of Accounting for and Tracking Costs

NNSA contractors use different methods to account for costs, according  to NNSA officials. Legislative Requirement for NNSA to Develop a Plan to Improve and Integrate Financial Management

Section 3128 of the National Defense Authorization Act for Fiscal Year  2014 requires NNSA to develop a plan for improving and integrating  financial management of the nuclear security enterprise. NNSA’s plan includes the four elements required under  section 3128—a feasibility assessment, estimated costs, expected  results, and an implementation timeline—but contains few details related  to each of these elements. Feasibility assessment. NNSA’s feasibility assessment  does not provide any specific information regarding these concerns. NNSA’s cost  estimate, however, provides no details regarding how the estimate  was developed, beyond stating that it is based on professional  judgment and input from NNSA’s contractors. Moreover, the plan does not identify which elements are  considered the “core elements” or explain the reasoning behind the  implementation timeframe of 3 to 5 years. NNSA’s Plan Does Not Fully Follow Leading Practices for Planning, Limiting Its Usefulness As a Road Map for Guiding NNSA’s Effort

NNSA’s plan does not fully incorporate leading practices, which limits its  usefulness as a planning tool and limits the effectiveness of NNSA’s effort  to provide meaningful financial information to Congress and other  stakeholders. In developing plans for implementing new initiatives, agencies— including NNSA—can benefit from following leading practices for strategic  planning. NNSA’s plan, however, does not fully incorporate any of these leading  practices. For example, the plan’s executive summary states that NNSA  developed the plan to address specific requirements set forth in  section 3128 of the National Defense Authorization Act for Fiscal Year  2014; however, information presented in the plan’s conclusions  suggests that the plan may also be intended to satisfy the information  needs of NNSA decision makers. NNSA’s plan  includes a list of the challenges NNSA will face during implementation  of the plan—including challenges related to the availability of  resources and identifying and implementing an information technology  solution—and provides a “notional” implementation timeline with  milestones for certain significant actions. However, beyond the high- level cost estimate provided, NNSA’s plan does not include a  description of the specific resources needed to meet specific elements  of the plan or define strategies that address these management  challenges. However, NNSA did not involve key stakeholders in the  development of its financial integration plan. Because NNSA’s plan does not fully incorporate leading strategic  planning practices, such as those included in table 1, it has not provided a  useful road map for guiding NNSA’s effort. In addition, other NNSA officials told  us that the plan they submitted to Congress was never intended to  provide a road map to guide their efforts. Instead,  according to these NNSA officials, the purpose of the plan was to identify  general principles and a strategic vision for achieving financial integration. Conclusions

Effective management and oversight of the contracts, projects, and  programs that support NNSA’s mission are dependent upon the  availability of reliable enterprise-wide management information and, as  required, NNSA has provided Congress with a plan for improving and  integrating its financial management. In particular, NNSA’s plan has not provided an  effective framework for guiding NNSA’s effort because it does not  incorporate leading planning practices including (1) defining the missions  and goals of a program or initiative, (2) defining strategies and identifying  resources needed to achieve goals, (3) ensuring leadership involvement,  and (4) involving stakeholders in planning. The  Director of Financial Integration has taken steps to develop an actionable  plan, but it is unclear when the plan will be finalized or the extent to which  it will incorporate leading practices. Until a plan that incorporates leading  practices is in place, NNSA cannot be assured that its efforts will result in  a cost collection model that satisfies the information needs of Congress or  improves program and financial management through improved cost  analysis, cost estimating, and program evaluation. Such information  would better position NNSA to address longstanding contract and project  management challenges. Without proper planning NNSA could waste  valuable resources, time, and effort in its financial management  improvement and integration process. Recommendation for Executive Action

To help provide a roadmap to effectively guide NNSA’s effort to integrate  and improve its financial management, we recommend that the NNSA  Administrator direct the Program Director of Financial Integration to  develop a plan for producing cost information that fully incorporates  leading practices. In its  written comments, NNSA stated that it will update the plan and address  the items GAO identified.
Why GAO Did This Study

Effective management and oversight of contracts, projects, and programs are dependent upon the availability of reliable enterprise-wide financial management information. Such information is also needed by Congress to carry out its oversight responsibilities and make budgetary decisions. However, meaningful cost analysis of NNSA programs, including comparisons across programs, contractors, and sites, is not possible because NNSA's contractors use different methods of accounting for and tracking costs.
The National Defense Authorization Act for Fiscal Year 2014 required NNSA to develop and submit to Congress a plan to improve and integrate its financial management. An explanatory statement accompanying the act included a provision for GAO to review the adequacy of NNSA's plan. This report evaluates the extent to which NNSA's plan (1) addresses the objectives of the act and (2) follows leading practices for planning. GAO reviewed NNSA's plan and compared it with legislative requirements and leading practices for planning and interviewed NNSA officials.

What GAO Found

On February 5, 2016, more than 13 months after the statutory reporting deadline, the National Nuclear Security Administration (NNSA) submitted to Congress a plan for improving and integrating its financial management. The plan includes the four elements required by the National Defense Authorization Act for Fiscal Year 2014—a feasibility assessment, estimated costs, expected results, and an implementation timeline—but contains few details related to each of these elements. For example, NNSA's feasibility assessment includes a list of implementation concerns—including general concerns related to the availability of resources and to identifying and implementing an information technology solution—but does not provide any specific information regarding these concerns. In addition, NNSA's plan includes a cost estimate of between $10 million and $70 million but provides no details on how the estimate was developed beyond stating that it is based on professional judgment and input from NNSA's contractors. The plan also includes a “notional” implementation timeline that calls for the plan's core elements to be completed in 3 to 5 years but does not include details on which elements are considered core elements.
NNSA's financial integration plan does not fully incorporate leading strategic planning practices, which limits its usefulness as a planning tool as well as the effectiveness of NNSA's effort to provide meaningful financial information to Congress and other stakeholders. As GAO has reported previously, in developing plans for implementing new initiatives, agencies can benefit from following leading practices for strategic planning. These leading practices include (1) defining the missions and goals of a program or initiative, (2) defining strategies and identifying resources needed to achieve goals, (3) ensuring leadership involvement, and (4) involving stakeholders in planning. However, NNSA's plan does not fully incorporate any of these leading practices. For example, beyond the high-level cost estimate provided, NNSA's plan does not include a description of the specific resources needed to meet specific elements of the plan or define strategies that address management challenges, including the implementation concerns identified in the plan's feasibility assessment. In addition, NNSA did not involve key stakeholders in developing its plan. Because NNSA's plan does not incorporate leading strategic planning practices, it has not provided a useful road map for guiding NNSA's effort. NNSA officials told GAO that the plan they submitted to Congress was never intended to provide a road map to guide their efforts. Instead, they said the purpose of the plan was to identify general principles and a strategic vision for achieving financial integration. The NNSA official responsible for overseeing the plan's execution told GAO, he has begun to develop a more comprehensive and actionable plan to guide NNSA's effort. However, it is unclear when the new plan will be finalized or the extent to which it will incorporate leading practices. Until a plan is in place that incorporates leading strategic planning practices, NNSA cannot be assured that its efforts will result in a cost collection tool that produces reliable enterprise-wide information that satisfies the needs of Congress and program managers. Such information would better position NNSA to address long-standing contract and project management challenges. Without proper planning, NNSA could waste valuable resources, time, and effort on its financial integration effort.

What GAO Recommends

To provide a road map to guide NNSA's financial management improvement effort, GAO recommends that the NNSA Administrator direct the Program Director of Financial Integration to develop a plan for producing cost information that fully incorporates leading planning practices. NNSA agreed to update its plan and address the items GAO identified.