Program areas increased by as much as 13.2 percent or  decreased by as much as 18.1 percent. Overall Budget Estimates for Modernization Increased Slightly from Those in 2015 Plans but with Some Significant Realignments and Changes within Program Areas

According to the Fiscal Year 2016 Stockpile Stewardship and  Management Plan, NNSA’s estimates for the next 25 years total $297.6  billion for modernization activities—an increase of approximately $4.2  billion, or 1.4 percent (in nominal, or current dollar, values), from the  $293.4 billion NNSA reported in the 2015 plan. These budget estimates,  which are for activities in the Weapons Activities area, are provided in the  four areas discussed above: stockpile; infrastructure; research,  development, testing, and evaluation; and other weapons activities. The  overall increase was moderated by the shift of two counterterrorism  programs from the Weapons Activities budget into NNSA’s separate  Defense Nuclear Nonproliferation budget. In addition, budget estimates changed significantly for certain program  areas and individual programs. Specifically, regarding the weapons refurbishment  efforts—which are captured within the stockpile category in the budget— the 2016 budget materials indicate that during the next 25 years, $49.8  billion will be needed to support LEPs and other weapons alteration  activities, which is an increase of $8.2 billion, or 19.6 percent, compared  with the prior year’s estimate of $41.7 billion. This increase resulted  partly from the change in the scope and schedule for some programs, as  discussed below. Major Modernization Efforts Beyond the Future- Years Nuclear Security Program May Cost More Than Budget Estimates Reflect

The Fiscal Year 2016 Stockpile Stewardship and Management Plan’s  estimates for Weapons Activities are $4.4 billion higher than the out-year  projections for funding levels in the President’s budget provided in the  DOD-DOE joint report. However, these  budget estimates exceed a set of out-year projections for nuclear  modernization and sustainment activities over the same time period. NNSA notes this issue  in the Fiscal Year 2016 Stockpile Stewardship and Management Plan and  states that it will need to be addressed as part of fiscal year 2017  programming. Estimates for Some Major Modernization Efforts in NNSA’s Budget Materials Were Lower Than Its Program-Specific Estimates

On the basis of our analysis of NNSA’s internally developed cost ranges  for certain major weapon modernization efforts, we found that the low end  of these ranges sometimes exceeded the estimates that NNSA included  for those programs in its budget materials. However, in  some years, NNSA’s budget estimates for some refurbishment efforts  may not align with modernization plans. The budget materials report that the program’s  budget estimate that year is $218 million; however, the low point of  the cost range is $247 million. NNSA officials also stated that the total  estimates for this program are above the total of the midpoint cost  estimates for 2016 through 2020 and that funding for 2016 to 2019 is  fungible and could be carried over to cover any potential shortfall in  2020. NNSA officials said  that by shifting funding projected for 2021 to 2020, the IW-1 budget  estimates would still be within the cost ranges. NNSA agreed with our recommendation from that report to  provide more transparency with regard to shortfalls in its budget  materials. Some Costs Are Not Included in Modernization Budget Estimates, and Dependency on Other Programs Could Lead to Increases in Estimates

We identified instances where certain modernization costs were not  included in budget estimates or may be underestimated. In addition to some costs not being included in budget estimates, the  estimates for some NNSA modernization efforts could increase in the  future because of their dependency on successful execution of other  NNSA programs. An NNSA official also stated that the IW-1 LEP budget estimates in the  2016 budget materials are predicated on NNSA successfully modernizing  its plutonium pit production capacity. NNSA also provided technical comments separately, which we  incorporated as appropriate. Appendix I: Objectives, Scope, and Methodology

Our objectives were to assess (1) the extent to which the National  Nuclear Security Administration’s (NNSA) budget estimates and plans for  modernization activities reflected in its fiscal year 2016 nuclear security  budget materials differ, if at all, from those in its fiscal year 2015 budget  materials and (2) the extent to which the fiscal year 2016 nuclear security  budget materials align with modernization plans as presented in the  Stockpile Stewardship and Management Plan. NNSA’s nuclear security budget  materials are composed of two key policy documents that are issued  annually: the agency’s budget justification, which contains estimates for  the 5-year Future-Years Nuclear Security Program, and the Stockpile  Stewardship and Management Plan, which provides budget estimates  over the next 25 years. We also  reviewed a third, integrated document on plans for the nuclear deterrent  that includes information on the Department of Defense (DOD) and  Department of Energy’s (DOE) modernization budget estimates.
Why GAO Did This Study

Nuclear weapons are an integral part of the nation's defense strategy. Since 1992, the United States has shifted from producing new nuclear weapons to maintaining the stockpile through refurbishment. The 2010 Nuclear Posture Review —which outlines U.S. nuclear policy, strategy, capabilities, and force posture—identified long-term stockpile modernization goals for NNSA that include sustaining a safe, secure, and effective nuclear arsenal and investing in a modern infrastructure.
The National Defense Authorization Act for Fiscal Year 2011 included a provision for GAO to report annually on NNSA's nuclear security budget materials. These materials are composed of NNSA's budget request justification and its Stockpile Stewardship and Management Plan , which describes modernization plans and budget estimates for the next 25 years. This report assesses (1) changes in the estimates in the 2016 budget materials from the prior year's materials and (2) the extent to which NNSA's 2016 budget materials align with plans for major modernization efforts.
GAO analyzed NNSA's fiscal year 2015 and 2016 nuclear security budget materials, which describe modernization plans and budget estimates for the next 25 years. GAO also interviewed NNSA officials.

What GAO Found

In the National Nuclear Security Administration's (NNSA) fiscal year 2016 budget materials, the estimates for efforts related to modernizing the nuclear weapons stockpile total $297.6 billion for the next 25 years—an increase of $4.2 billion (1.4 percent) in nominal dollar values (as opposed to constant dollar values) compared with the prior year's budget materials. However, for certain program areas and individual programs, budget estimates changed more significantly than the overall estimates. NNSA's modernization efforts occur in four areas under the Weapons Activities appropriation account: stockpile; infrastructure; research, development, testing, and evaluation; and other weapons activities. For the stockpile area, budget estimates over 25 years increased by 13.2 percent over the nominal values in the Fiscal Year 2015 Stockpile Stewardship and Management Plan . Within the stockpile area, the estimates for life extension programs (LEP), which refurbish nuclear weapons, increased by 19.6 percent compared with the prior year's estimate, in part because of changes in the scope and schedule for some programs. In contrast, estimates for the other weapon activities area decreased by 18.1 percent, mainly because NNSA shifted two counterterrorism programs out of the Weapons Activities budget and into NNSA's separate Defense Nuclear Nonproliferation budget.
The estimates in NNSA's 2016 nuclear security budget materials may not align with all elements of modernization plans for several reasons. First, the Fiscal Year 2016 Stockpile Stewardship and Management Plan includes estimates for 2021 through 2025 that are $4.4 billion higher than the same time period in a set of out-year projections for funding levels that were included in a joint report by the Department of Defense and Department of Energy. NNSA noted this issue in the 2016 plan and stated that it will need to be addressed as part of fiscal year 2017 programming. In addition, in some years, NNSA's budget estimates for certain weapons refurbishment efforts are below the low point of the programs' internally developed cost ranges. For example, the W88 Alteration 370 budget estimate of $218 million for 2020 was below the low end of the internal program cost range of $247 million. NNSA officials stated that the total estimates for this program are above the total of the midpoint cost estimates for 2016 through 2020 and that funding for 2016 to 2019 is fungible and could be carried over to cover any potential shortfall in 2020. GAO also identified instances where certain modernization costs were not included in the estimates or may be underestimated, or where budget estimates for some efforts could increase due to their dependency on successful execution of other NNSA programs. For example, an NNSA official said that budget estimates for the IW-1 LEP—which is NNSA's first interoperable ballistic missile warhead LEP—are predicated on NNSA successfully modernizing its plutonium pit production capacity. This official stated that if there are delays in modernizing this capacity, the IW-1 LEP could bear greater costs than currently estimated. In August 2015, GAO recommended that NNSA provide more transparency with regard to shortfalls in its budget materials. NNSA agreed and said that it plans to implement this recommendation starting in its 2017 budget supporting documents.

What GAO Recommends

GAO is not making any new recommendations in this report. In response to GAO's draft report, NNSA provided technical comments, which were incorporated as appropriate.