1.) Contractors, NNSA, DOE, and other organizations manage and oversee  operations through a multitiered approach. This includes on-site  monitoring and evaluating contractor work activities. Clear contractor goals and meaningful incentives. NNSA and KCP Identified Key Factors As Helping Reform Implementation

Reviews of the reforms, as well as NNSA and KCP Field Office and  contractor officials, cited several important factors that assisted with  implementation of the reforms at the site. Key factors included having (1)  high-level support from leadership for reforms, (2) site specific conditions  and operations, and (3) a cooperative federal-contractor partnership. High-level support from NNSA and field office leadership and key  stakeholders. According to a 2008 KCP Field Office review of  lessons learned from implementing the reforms, gaining and  maintaining the support of the NNSA Administrator and buy-in from  some of the KCP federal staff for changes was critical to their  implementation. Unique site conditions and operations. In selecting KCP to  implement the reforms in 2006, the NNSA Administrator noted that, in  comparison to NNSA’s other sites, unique conditions existed at the  site that enabled implementation of the proposed reforms. These  conditions included (1) KCP operations, which are largely  manufacturing, were comparable to those of commercial industry,  most notably the aerospace industry; (2) activities at the site were  largely lower-risk, nonnuclear, and generally did not involve or  potentially affect nuclear safety and security; and (3) the site  contractor was owned by a single corporate parent—Honeywell—that  has, according to a Field Office official, well-developed corporate  management systems and a commitment to quality. The KCP Field  Office noted in its April 2008 review of lessons learned from  implementing the reforms that development of the reforms was  enabled because of a cooperative relationship between the field office  and the contractor. NNSA Has Implemented Some KCP-Like Reforms at Its Other Sites, but Applicability and Future Plans Are Still Being Determined

Since the 2007 implementation of reforms at KCP, NNSA has taken steps  to extend some elements of the site’s reforms at other NNSA sites and to  integrate the reforms into subsequent agency-wide initiatives to improve  contractor performance and accountability. However, NNSA is revisiting  the reforms following a July 2012 security breach at one of its sites, and  NNSA’s future plans to continue extending KCP-like reforms at its other  sites are currently uncertain. These two sites were to, among other  things, (1) streamline operating requirements by identifying opportunities  to eliminate some agency requirements and make greater use of industry  standards; (2) refocus federal oversight by, among other things, making  greater use of the contractor’s management system; and (3) set clear  contractor goals and meaningful incentives following the KCP approach. This new policy—called  “transformational governance”—directed, for example, site oversight staff  to focus greater efforts on assessing contractor performance in higher- risk activities, such as security, and for lower-risk activities, rely more  heavily on monitoring contractor assurance systems. Specifically, in March  2010, the Deputy Secretary of Energy announced an initiative to revise  DOE’s safety and security directives by streamlining or eliminating  duplicative requirements, revising federal oversight and encouraging  greater use of industry standards. Although some opportunities may exist for implementing KCP-like reforms  at other NNSA sites, since the Y-12 security breach, NNSA officials and  studies we reviewed noted that key factors enabling implementation of  the reforms at KCP may not be present across the nuclear security  enterprise. Diminished trust between NNSA and its sites was  also highlighted in a recently issued report by a congressional advisory  panel, which described the relationship as “dysfunctional.”
During the course of our work, in December 2013, the National Defense  Authorization Act for Fiscal Year 2014 was enacted. act required the NNSA Administrator to develop a feasibility study and  plan for implementing the principles of the KCP pilot to additional facilities  in the national security enterprise by June 2014. We agree that further  study of the applicability, costs, and benefits of the KCP reforms is  warranted, and, in light of the congressional direction to NNSA, we are  not making recommendations at this time. Agency Comments

We provided a draft of this report to NNSA for its review and comment.
Why GAO Did This Study

NNSA, a separately organized agency within DOE, has had long-standing problems managing its contracts and projects, which GAO has identified as being at high risk for fraud, waste, abuse, and mismanagement. Both DOE and, specifically, NNSA, undertook initiatives in 2002 and 2003 to improve contractor performance through revised federal oversight and greater contractor accountability. In 2006, concerned that efforts were moving too slowly, the NNSA Administrator tasked its KCP Field Office and contractor with implementing reforms at that site.
House Report 113-102, accompanying H.R. 1960, an early version of the National Defense Authorization Act for Fiscal Year 2014 mandated GAO to review the KCP reforms and issues with extending them to other NNSA sites. This report, among other things, (1) identifies key reforms implemented at KCP and reported benefits; (2) describes key factors NNSA and others identified as helping the site implement reforms; and (3) provides information on how NNSA has implemented and plans to implement similar reforms at other sites. GAO reviewed relevant documents prepared by NNSA, DOE, contractors, and others; visited KCP; and discussed the reforms with cognizant federal officials and contractor staff.
During GAO's review, Congress required NNSA to develop a study and plan for implementing the principles of the Kansas City reforms at its other sites. In light of the congressional requirement, GAO is not making additional recommendations at this time. NNSA generally agreed with the findings of this report.

What GAO Found

Key reforms at the National Nuclear Security Administration's (NNSA) Kansas City Plant (KCP)—a site in Missouri that manufactures electronic and other nonnuclear components of nuclear weapons—included (1) streamlining operating requirements by replacing Department of Energy (DOE) requirements with industry standards, where appropriate; (2) refocusing federal oversight to rely on contractor performance data for lower-risk activities; and (3) establishing clear contractor goals and incentives. A 2008 review of the reforms reported nearly $14 million in cost reductions were achieved at the site by implementing these reforms.
NNSA and KCP federal and contractor staff identified key factors that facilitated implementation of reforms at KCP, including the following:
High-level support from NNSA and field office leadership . Gaining and maintaining the support of the NNSA Administrator and buy-in of some KCP Field Office staff for changes from the reforms was critical.
Unique site conditions and operations . Conditions at KCP enabled implementation of the proposed reforms, including (1) the comparability of the site's activities and operations to those of commercial industry; (2) the site's relatively low-risk, nonnuclear activities generally did not involve or potentially affect nuclear safety and security; and (3) the site was managed by a contractor owned by a single corporate parent with a reputation for quality.
A cooperative federal-contractor partnership . A cooperative relationship between the KCP Field Office and the contractor facilitated implementation of the reforms.
NNSA has extended to other sites some elements of the reforms, including (1) encouraging greater use of industry standards, where appropriate; (2) directing field office oversight staff to rely more on contractor self-assessment of performance for lower-risk activities; and (3) setting clearer contractor goals by revising how the agency evaluates annual contractor performance. However, NNSA and DOE are re-evaluating implementation of some of these reforms after a July 2012 security breach at an NNSA site, where overreliance on contractor self-assessments was identified by reviews of the event as a contributing factor. Moreover, NNSA officials and other studies noted that key factors enabling implementation of reforms at KCP may not exist at NNSA's other sites. For example, most NNSA sites conduct high-hazard activities, which may involve nuclear materials and require higher safety and security standards than KCP. NNSA is evaluating further implementation of such reforms and expects to report to Congress its findings later in 2014.