DOE and NNSA Struggled to Determine How NNSA Should Operate as a Separately Organized Agency

NNSA focused considerable attention on reorganizing its internal  operations; however, it and DOE have struggled with establishing how  NNSA should operate as a separately organized agency within the  department. Several factors contributed to this situation. First, DOE and  NNSA did not have a useful model to follow for establishing a separately  organized agency in DOE. The President’s Foreign Intelligence Advisory  Board’s June 1999 report suggested several federal agencies, such as  the National Oceanic and Atmospheric Administration in the Department  of Commerce, which could be used as a model for NNSA. However, as  we reported in January 2007, none of the agency officials we interviewed  considered their agency to be separately organized or believed that their  agency’s operational methods were transferable to NNSA. Second,  DOE’s January 2000 implementation plan, which was required by the  NNSA Act, did not define how NNSA would operate as a separately  organized agency within DOE. Instead, reflecting the opposition of the  then DOE senior leadership to the creation of NNSA, the implementation  plan “dual-hatted” virtually every significant statutory position in NNSA  with DOE officials (i.e., having DOE officials contemporaneously serve in  NNSA and DOE positions), including the Director of NNSA’s Office of  Defense Nuclear Counterintelligence and General Counsel. As we  testified in April 2001, this practice caused considerable concern about  NNSA’s ability to function with the independence envisioned in the NNSA  Act. A lack of formal agreement between DOE and NNSA in a number of key  areas—budgeting, procurement, information technology, management  and administration, and safeguards and security—resulted in  organizational conflicts that inhibited effective operations. Even where  formal procedures were developed, interpersonal disagreements  hindered effective cooperation. For example, our January 2007 report  described the conflict between NNSA and DOE counterintelligence  offices. Subsequently, Congress amended the NNSA Act to consolidate  the counterintelligence programs of DOE and NNSA under the  Department of Energy. NNSA Has Made Considerable Improvements, but Deficiencies Persist, Especially in Management of Major Projects and Contracts

Since its creation, NNSA has made considerable progress resolving  some of its long-standing management deficiencies. For example, we  reported in June 2004 that NNSA had better delineated lines of authority  and improved communication between NNSA headquarters and its site  offices. NNSA’s establishment of an  effective headquarters security organization has made significant  progress implementing these recommendations by performing security  reviews, developing security performance measures, and instituting a  security lessons-learned center. Nevertheless, NNSA continues to experience significant deficiencies,  particularly in its management of major projects and contracts. However, for  more than a decade, NNSA has continued to experience significant cost  and schedule overruns on its major projects, principally because of  ineffective oversight and poor contractor management. In some areas, NNSA can be viewed as a  success. In particular, NNSA has successfully ensured that the nuclear  weapons stockpile remains safe and reliable in the absence of  underground nuclear testing, accomplishing this complicated task by  using state-of-the-art facilities, as well as the skills of top scientists. Careful federal  oversight over the tens of billions of dollars NNSA proposes to spend to  modernize nuclear facilities will be necessary to ensure these funds are  spent in as an effective and efficient manner as possible, especially given  NNSA’s record of weak management of its major projects. DOE and NNSA have acted on many of these recommendations and  have made considerable progress. Nevertheless, enough significant  management problems remain that prompt some to call for removing  NNSA from DOE and either moving it to another department or  establishing it as a separate agency. As we concluded in January 2007,  however, we do not believe that such drastic changes are necessary, and  we continue to hold this view today. Importantly, we are uncertain  whether such significant organizational changes to increase NNSA’s  independence would produce the desired effect of creating a modern,  responsive, effective, and efficient nuclear security enterprise. In light of  the substantial leadership commitment to reform made by senior DOE  and NNSA officials, and the significant improvements that have already  been made, we believe that NNSA remains capable of delivering the  management improvements necessary to be an effective organization,  and we will continue to monitor NNSA’s progress making these  improvements.
Why GAO Did This Study

During the late 1990s, DOE had difficulties with a lack of clear management authority and responsibility that contributed to security problems at the nations nuclear weapons laboratories and management problems with major projects. In response, Congress created NNSA as a separately organized agency within DOE under the NNSA Act. NNSA is responsible for managing nuclear weapon- and nonproliferation-related national security activities in laboratories and other facilities, collectively known as the nuclear security enterprise. GAO continues to identify problems across the nuclear security enterprise, from projects cost and schedule overruns to inadequate oversight of safety and security at NNSAs sites. With NNSA proposing to spend tens of billions of dollars to modernize its facilities, it is important to ensure scarce resources are spent in an effective and efficient manner.
This testimony addresses (1) NNSAs early experiences organizing and operating as a separately organized agency within DOE and (2) NNSAs efforts to correct long-standing management deficiencies. It is based on prior GAO reports issued from January 1995 to March 2012.
DOE and NNSA continue to act on the numerous recommendations GAO has made to improve NNSAs management. GAO will continue to monitor DOEs and NNSAs implementation of these recommendations.

What GAO Found

After the enactment of Title 32 of the National Defense Authorization Act for Fiscal Year 2000 (NNSA Act), the Department of Energy (DOE) and the National Nuclear Security Administration (NNSA) struggled to determine how NNSA should operate as a separately organized agency within the department. A number of factors contributed to this. First, DOE and NNSA did not have a useful model to follow for establishing a separately organized agency in DOE. Several federal agencies were suggested as models, such as the National Oceanic and Atmospheric Administration in the Department of Commerce. However, GAO reported in January 2007 that agency officials GAO interviewed did not consider their agency to be separately organized or believed that their agencys operational methods were transferable to NNSA. Second, DOEs January 2000 plan to implement the NNSA Act did not define how NNSA would operate as a separately organized agency within DOE. Internal DOE opposition to the creation of NNSA led the department to fill virtually every significant statutory position in NNSA with DOE officials (i.e., having DOE officials contemporaneously serve in NNSA and DOE positions). As GAO testified in April 2001, this practice of dual-hatting caused considerable concern about NNSAs ability to independently function. Also, lack of formal agreement between DOE and NNSA in a number of key areas such as, among others, budgeting and procurement, led to organizational conflicts that inhibited effective operations. Even where formal procedures were developed, interpersonal disagreements hindered effective cooperation. For example, a January 2007 GAO report described the conflict between NNSA and DOE counterintelligence offices, which led to Congress subsequently amending the NNSA Act to consolidate the counterintelligence programs of DOE and NNSA under DOE.
NNSA has made considerable progress resolving some of its long-standing management deficiencies, but significant improvement is still needed especially in NNSAs management of its major projects and contracts. GAO reported in June 2004 that NNSA has better delineated lines of authority and has improved communication between its headquarters and site offices. In addition, NNSAs establishment of an effective headquarters security organization has made significant progress resolving many of the security weaknesses GAO has identified. Nevertheless, NNSA continues to experience major cost and schedule overruns on its projects, such as research and production facilities and nuclear weapons refurbishments, principally because of ineffective oversight and poor contractor management. In some areas, NNSA can be viewed as a success. Importantly, NNSA has continued to ensure that the nuclear weapons stockpile remains safe and reliable in the absence of underground nuclear testing. At the same time, NNSAs struggles in defining itself as a separately organized agency within DOE, and the considerable management problems that remain have led to calls in Congress and other organizations to increase NNSAs independence from DOE. However, senior DOE and NNSA officials have committed to continuing reform, and DOEs and NNSAs efforts have led to some management improvements. As a result, GAO continues to believe, as it concluded in its January 2007 report, that drastic organizational change to increase independence is unnecessary and questions whether such change would solve the agencys remaining management problems.