With a $10.5 billion budget in fiscal year  2011—nearly 40 percent of DOE’s total budget—NNSA is responsible for  providing the United States with safe, secure, and reliable nuclear  weapons in the absence of underground nuclear testing and maintaining  core competencies in nuclear weapons science, technology, and  engineering. NNSA Does Not Have Reliable Enterprise- Wide Management Information on Program Budgets and Costs

As we have reported since 1999, NNSA has not had reliable enterprise- wide budget and cost data, which potentially increases risk to NNSA’s  programs. In June 2010, we reported that NNSA could not identify the total costs  to operate and maintain essential weapons activities’ facilities and  infrastructure. We reported in February 2011 that NNSA lacked complete data on (1)  the condition and value of its existing infrastructure, (2) cost estimates  and completion dates for planned capital improvement projects, (3)  shared-use facilities within the nuclear security enterprise, and (4)  critical human capital skills in its M&O contractor workforce that are  needed to maintain the Stockpile Stewardship Program. As a result,  NNSA does not have a sound basis for making decisions on how to  most effectively manage its portfolio of projects and other programs  and will lack information that could help justify future budget requests  or target cost savings opportunities. NNSA Needs to Make Further Improvements to Its Management of Major Projects and Contracts

A basic tenet of effective management is the ability to complete projects  on time and within budget. However, for more than a decade and in  numerous reports, we have found that NNSA has continued to experience  significant cost and schedule overruns on its major projects, principally  because of ineffective oversight and poor contractor management. Specifically:  In August 2000, we found that poor management and oversight of the  National Ignition Facility construction project at Lawrence Livermore  National Laboratory had increased the facility’s cost by $1 billion and  delayed its scheduled completion date by 6 years. We have issued several reports on the technical issues, cost  increases, and schedule delays associated with NNSA’s efforts to  extend, through refurbishment, the operational lives of nuclear  weapons in the stockpile. In the  case of the W76 nuclear warhead, NNSA experienced a 1-year delay  and an unexpected cost increase of nearly $70 million as a result of  its ineffective management of one the highest risks of the program— the manufacture of a key material known as Fogbank, which NNSA  did not have the knowledge, expertise, or facilities to manufacture. NNSA’s Oversight of Safety and Security in the Nuclear Security Enterprise Has Been Questioned

Another underlying reason for the creation of NNSA was a series of  security issues at the national laboratories. Work carried out at NNSA’s  sites may involve plutonium and highly enriched uranium, which are  extremely hazardous. Accidents and nuclear safety  violations also contributed to the temporary shutdown of facilities at  both Los Alamos and Livermore in 2004 and 2005. Nevertheless, our  prior work has shown that ineffective NNSA oversight of its contractors  has contributed to many of the safety and security problems across the  nuclear security enterprise and that NNSA faces challenges in sustaining  improvements to safety and security performance. Over  the past decade, we have made numerous recommendations to DOE and  NNSA to improve their management and oversight practices. DOE and  NNSA have acted on many of these recommendations, and we will  continue to monitor progress being made in these areas. NNSA is now proposing to  spend decades and tens of billions of dollars to modernize the nuclear  security enterprise, largely by replacing or refurbishing aging and  decaying facilities at its sites across the United States. Given NNSA’s  record of weak management of its major projects, we believe that careful  federal oversight will be critical to ensure this time and money are spent  in as an effective and efficient manner as possible. With regard to the concerns that DOE’s and NNSA’s oversight of the  laboratories’ activities have been excessive and that safety and security  requirements are overly prescriptive and burdensome, we agree that  excessive oversight and micromanagement of contractors’ activities is not  an efficient use of scarce federal resources. Nevertheless, in our view,  the problems we continue to identify in the nuclear security enterprise are  not caused by excessive oversight, but instead result from ineffective  oversight. Given the critical nature of the work the nuclear security  enterprise performs and the high-hazard operations it conducts—often  involving extremely hazardous materials, such as plutonium and highly  enriched uranium, that must be stored under high security to protect them  from theft—careful oversight and stringent safety and security  requirements will always be required at these sites  It is also important in an era of scarce resources that DOE and NNSA  ensure that the work conducted by the nuclear security enterprise is  primarily focused on its principal mission—ensuring the safety and  reliability of the nuclear weapons stockpile.
Why GAO Did This Study

The National Nuclear Security Administration (NNSA), a separately organized agency within the Department of Energy (DOE), is responsible for managing its contractors nuclear weapon- and nonproliferation-related national security activities in laboratories and other facilities, collectively known as the nuclear security enterprise. GAO designated DOEs management of its contracts as an area at high risk of fraud, waste, and abuse. Progress has been made, but 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. Laboratory and other officials have raised concerns that federal oversight of the laboratories activities has been excessive. With NNSA proposing to spend tens of billions of dollars to modernize the nuclear security enterprise, it is important to ensure scarce resources are spent in an effective and efficient manner.
This testimony addresses (1) NNSAs ability to produce budget and cost data necessary to make informed management decisions, (2) improving NNSAs project and contract management, and (3) DOEs and NNSAs safety and security oversight. It is based on prior GAO reports issued from August 2000 to January 2012.
DOE and NNSA continue to act on the numerous recommendations GAO has made in improving budget and cost data, project and contract management, and safety and security oversight. GAO will continue to monitor DOEs and NNSAs implementation of these recommendations.

What GAO Found

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. Nevertheless, NNSA does not have reliable enterprise-wide management information on program budgets and costs, which potentially increases risk to NNSAs programs. For example, in June 2010, GAO reported that NNSA could not identify the total costs to operate and maintain essential weapons activities facilities and infrastructure. In addition, in February 2011, GAO reported that NNSA lacks complete data on, among other things, the condition and value of its existing infrastructure, cost estimates and completion dates for planned capital improvement projects, and critical human capital skills in its contractor workforce that are needed for its programs. As a result, NNSA does not have a sound basis for making decisions on how to most effectively manage its portfolio of projects and other programs and lacks information that could help justify future budget requests or target cost savings opportunities. NNSA recognizes that its ability to make informed decisions is hampered and is taking steps to improve its budget and cost data.
For more than a decade and in numerous reports, GAO found that NNSA has continued to experience significant cost and schedule overruns on its major projects. For example, in 2000 and 2009, respectively, GAO reported that NNSAs efforts to extend the operational lives of nuclear weapons in the stockpile have experienced cost increases and schedule delays, such as a $300 million cost increase and 2-year delay in the refurbishment of one warhead and a nearly $70 million increase and 1-year delay in the refurbishment of another warhead. NNSAs construction projects have also experienced cost overruns. For example, GAO reported that the cost to construct a modern Uranium Processing Facility at NNSAs Y-12 National Security Complex experienced a nearly seven-fold cost increase from between $600 million and $1.1 billion in 2004 to between $4.2 billion and $6.5 billion in 2011. Given NNSAs record of weak management of major projects, GAO believes careful federal oversight of NNSAs modernization of the nuclear security enterprise will be critical to ensure that resources are spent in as an effective and efficient manner as possible.
NNSAs oversight of safety and security in the nuclear security enterprise has also been questioned. As work carried out at NNSAs sites involves dangerous nuclear materials such as plutonium and highly enriched uranium, stringent safety procedures and security requirements must be observed. GAO reported in 2008 on numerous safety and security problems across NNSAs sites, contributing, among other things, to the temporary shutdown of facilities at both Los Alamos and Lawrence Livermore National Laboratories in 2004 and 2005, respectively. Ineffective NNSA oversight of its contractors activities contributed to many of these incidents as well as relatively lax laboratory attitudes toward safety procedures. In many cases, NNSA has made improvements to resolve these safety and security concerns, but better oversight is needed to ensure that improvements are fully implemented and sustained. GAO agrees that excessive oversight and micromanagement of contractors activities are not an efficient use of scarce federal resources, but that NNSAs problems are not caused by excessive oversight but instead result from ineffective departmental oversight.