NNSA Cannot Accurately Identify the Total Costs to Operate and Maintain Weapons Activities Facilities and Infrastructure, and These Costs Likely Significantly Exceed the Budget Justified to Congress for the RTBF Operations of Facilities Program

NNSA cannot accurately identify the total costs to operate and maintain  weapons activities facilities and infrastructure because of differences in  sites’ cost accounting practices. These indirect cost pools are often funded through  multiple funding sources. NNSA Does Not Fully Identify or Estimate the Total Costs of the Products and Capabilities Supported through Stockpile Services R&D and Production Activities

While in total NNSA’s Stockpile Services work breakdown structure for  fiscal year 2009 reflects $866.4 million in work scope as justified to  Congress, the work breakdown structure does not fully identify or provide  the estimated costs of the products or capabilities supported through the  Stockpile Services program. Rather, NNSA tracks the costs for  tooling as a function across all products and capabilities. RTBF Operations of Facilities and Stockpile Services Costs Are Unlikely to Be Significantly Affected by Reductions in Stockpile Size, and NNSA Lacks Cost Information to Help Justify Planned Budget Increases

Reducing the stockpile size, as has recently been negotiated in the New  Strategic Arms Reduction Treaty, if ratified, and reinforced by the 2010  Nuclear Posture Review, is unlikely to significantly affect NNSA’s RTBF  Operations of Facilities and Stockpile Services costs, which represent  about one-third of NNSA’s total nuclear weapons program budget. NNSA Lacks Information on Program Costs That Could Help Justify Planned Budget Increases

While base capability costs appear to be relatively insensitive to changes  in the stockpile, complete and reliable information about the costs of  these capabilities is necessary for sound program management and to help  inform future planning. This is particularly important in the current  political and budgetary environment, in which stockpile reductions are  anticipated, and the Administration has planned to increase budget  requests for Weapons Activities by $4.25 billion over the fiscal year 2010  enacted level between fiscal years 2011 and 2015. To  enable this arms reduction agenda, the Administration is requesting from  Congress billions of dollars in increased investment in the nuclear security  enterprise to ensure that base scientific, technical, and engineering  capabilities are sufficiently supported such that a smaller nuclear deterrent  continues to be safe, secure, and reliable. To allow Congress to better oversee management of the nuclear security  enterprise and to improve NNSA’s management information with respect  to the base capabilities necessary to ensure nuclear weapons are safe,  secure, and reliable:  (1) develop guidance for M&O contractors for the consistent collection of  information on the total costs to operate and maintain weapons activities  facilities and infrastructure;  (2) require M&O contractors to report to NNSA annually on the total costs  to operate and maintain weapons activities facilities and infrastructure at  their sites;  (3) evaluate the total costs of operating and maintaining existing weapons  activities facilities and infrastructure as part of program planning  processes and budget formulation, especially in relation to recapitalization  and modernization of the nuclear security enterprise; and  (4) once the Stockpile Services work breakdown structure reflects a  product or capability basis, use this work breakdown structure to develop  product/capability cost estimates that adequately justify the congressional  budget request for Stockpile Services. Appendix I: Objectives, Scope, and Methodology

At the request of the Chairman and Ranking Member, Subcommittee on  Strategic Forces, Committee on Armed Services, House of  Representatives, we were asked to (1) determine the extent to which the  National Nuclear Security Administration’s (NNSA) Readiness in  Technical Base and Facilities (RTBF) Operations of Facilities  congressional budget justification that supplements the Budget of the  United States Government (i.e., the President’s Budget) for fiscal year  2009 is based on the total cost of operating and maintaining weapons  facilities and infrastructure; (2) determine the extent to which NNSA’s  fiscal year 2009 congressional budget justification for Stockpile Services  identifies the total costs of providing foundational research and  production support capabilities; and (3) discuss the implications, if any, of  a smaller stockpile on RTBF Operations of Facilities and Stockpile  Services costs. Cost Accounting Standards Board. R&D Support.
Why GAO Did This Study

The National Nuclear Security Administration (NNSA) manages and secures the nation's nuclear weapons stockpile, with annual appropriations of about $6.4 billion. NNSA oversees eight contractor-operated sites that execute its programs. Two programs make up almost one-third of this budget: Readiness in Technical Base and Facilities (RTBF) Operations of Facilities, which operates and maintains weapons facilities and infrastructure, and Stockpile Services, which provides research and development (R&D) and production capabilities. Consistent with cost accounting standards, each site has established practices to account for these activities. The Administration has recently committed to stockpile reductions. GAO was asked to determine the extent to which NNSA's budget justifications for (1) RTBF Operations of Facilities and (2) Stockpile Services are based on the total costs of providing these capabilities. GAO was also asked to discuss the implications, if any, of a smaller stockpile on these costs. To carry out its work, GAO analyzed NNSA's and its contractors' data using a data collection instrument; reviewed policies, plans, and budgets; and interviewed officials.

What GAO Found

NNSA cannot accurately identify the total costs to operate and maintain weapons facilities and infrastructure because of differences in sites' cost accounting practices. These differences are allowable under current NNSA guidance as long as sites comply with cost accounting standards and disclose their practices to NNSA. The differences among cost accounting practices include the facilities and activities sites support with RTBF Operations of Facilities funds and how sites use other funding sources to support weapons facilities and infrastructure. GAO's analysis of sites' responses to a data collection instrument showed that the total cost to operate and maintain weapons facilities and infrastructure likely significantly exceeds the budget request for the RTBF Operations of Facilities program submitted to Congress for fiscal year 2009. NNSA has an effort under way that, if fully implemented, would provide more detail on the total costs to operate and maintain weapons facilities and infrastructure. NNSA does not fully identify or estimate the total costs of the products and capabilities supported through Stockpile Services R&D and production activities. Instead, NNSA primarily identifies the functional activities--such as engineering operations, quality control, and program management--and their costs supported through Stockpile Services and bases its future-year budget requests on the extent to which prior-year budgets were sufficient to execute these functions. In 2009, GAO issued a cost guide that identified using a product-oriented management tool, rather than a functionally oriented one, as a best practice for cost estimating. Using cost guide criteria, GAO's analysis found tracking costs by functions provides little information on the costs of the individual capabilities supported through Stockpile Services. NNSA has an effort under way that, if fully implemented, would provide more detail on the total costs of the products and capabilities supported through Stockpile Services. Reducing stockpile size is unlikely to significantly affect NNSA's RTBF Operations of Facilities and Stockpile Services costs because a sizable portion of these costs is fixed to maintain base nuclear weapons capabilities. The Administration has planned to increase budget requests for NNSA's nuclear weapons program by $4.25 billion between fiscal years 2011 and 2015. This planned increase is intended, in part, to invest in and modernize facilities and infrastructure and to ensure that base capabilities are supported such that a smaller nuclear deterrent continues to be safe, secure, and reliable. While base capability costs appear to be relatively insensitive to reductions in the stockpile, without complete and reliable information about these costs, NNSA lacks information that could help justify planned budget increases or target cost savings opportunities.