NNSA provided the  Congress with supplementary information in its fiscal year 2003 budget  request that attempted to capture the budget for the Stockpile Life  Extension Program; however, this information was not comprehensive  because it did not include the budget for activities necessary to  successfully complete the life extension efforts. NNSA Does Not Have a System for Tracking Refurbishment Costs by Weapon System

Once a budget is established, having reliable information on the cost of  federal programs is crucial to the effective management of government  operations. As a  result, even if NNSA required contractors to report the full cost of  individual refurbishments, some differences in the data, which reflects the  contractor’s different organizations and operations, would still exist. As a result, NNSA has repeatedly attempted to  improve program and project management. However, NNSA  has not taken a consistent position on prioritizing the life extensions. Specifically, NNSA has not (1) defined the life extensions as  projects and managed them accordingly, (2) clearly defined the roles and  responsibilities of those officials associated with the Stockpile Life  Extension Program, (3) provided program managers with sufficient  authority to carry out the refurbishments, or (4) given program and deputy  program managers proper project/program management training. For instance, one  program manager said he has neither the control nor the authority  associated with his refurbishment. With respect to the  Stockpile Life Extension Program, NNSA does not have an adequate  process for reporting life extension changes and progress, despite the fact  that cost growth and schedule slippage are occurring. In addition, the refurbishment was within cost and  within scope, but behind schedule. These officials recognized that certain  cost growth and schedule changes had occurred for each of the  refurbishments. As a result, NNSA was rebaselining the W-80  refurbishment. Unfortunately,  NNSA has not developed performance measures with sufficient specificity  to determine the progress of the three refurbishments that we reviewed. It will demand a  budget of hundreds of millions of dollars annually for the next decade. Likewise, all parties involved in the oversight of the Stockpile  Life Extension Program must be able to determine the true cost to  complete the life extensions throughout the refurbishment process,  identify cost overruns as they develop, and decide when intervention in  those cost overruns is necessary. This cannot occur without sound cost  accounting. To improve the management of the Stockpile Life Extension Program, we  recommend that the Secretary of Energy direct the NNSA Administrator to:  finalize the Office of Defense Programs’ integrated program plan and,  within that plan, rank the Stockpile Life Extension Program against  all other defense program priorities, establish the relative priority  among the individual life extension refurbishments, and disseminate  the ranking across the nuclear weapons complex so that those within  that complex know the priority of the refurbishment work;  develop a formalized process for identifying resource and schedule  conflicts between the individual life extension efforts and resolve  those conflicts in a timely and systematic manner; and  finalize individual refurbishment project plans.
Why GAO Did This Study

As a separately organized agency within the Department of Energy (DOE), the National Nuclear Security Administration (NNSA) administers the Stockpile Life Extension Program, whose purpose is to extend, through refurbishment, the operational lives of the weapons in the nuclear stockpile. NNSA encountered significant management problems with its first refurbishment. NNSA has begun three additional life extensions. This study was undertaken to determine the extent to which budgetary, cost accounting, and other management issues that contributed to problems with the first refurbishment have been adequately addressed.

What GAO Found

GAO found that NNSA's budget for the Stockpile Life Extension Program has not been comprehensive or reliable. For instance, the fiscal year 2003 budget for this program was not comprehensive because it did not include all activities necessary to successfully complete each of the refurbishments. As a result, neither NNSA nor the Congress was in a position to properly evaluate the budgetary tradeoffs among the refurbishments in the program. NNSA does not have a system for tracking the full costs associated with the individual refurbishments. Instead, NNSA has several mechanisms that track a portion of the refurbishment costs, but these mechanisms are used for different purposes, include different types of costs, and cannot be reconciled with one another. As a result, NNSA lacks information regarding the full cost of the refurbishment work that can help identify cost problems as they develop or when management intervention in those cost problems may be necessary. Finally, NNSA does not have an adequate planning, organization, and cost and schedule oversight process. With respect to planning, NNSA has not, for instance, consistently developed a formalized list of resource and schedule conflicts between the individual refurbishments in order to systematically resolve those conflicts. Regarding organization, NNSA has not, for example, clearly defined the roles and responsibilities of those officials associated with the refurbishments or given the refurbishments' managers proper project/program management training required by DOE standards. Finally, NNSA has not developed an adequate process for reporting cost and schedule changes or developed performance measures with sufficient specificity to determine the progress of the three refurbishments that GAO reviewed. As a result, NNSA lacks the means to help ensure that the refurbishments will not experience cost overruns potentially amounting to hundreds of millions of dollars or encounter significant schedule delays.