In June 2012, the  Deputy Secretary of Energy approved an updated cost estimate range for  the UPF of from $4.2 billion to $6.5 billion. The agency generally agreed with these recommendations and has  initiated various actions intended to implement them, including revising  certain DOE orders, but it has not completed all actions needed to fully  address the recommendations. NNSA Has Made Progress in Developing a Revised Scope of Work, Cost Estimate, and Schedule for the New UPF

NNSA documents we reviewed and program officials we interviewed  indicate that NNSA has made progress in developing a revised scope of  work, cost estimate, and schedule for the new UPF, potentially stabilizing  escalating project costs and technical risks experienced under the  previous strategy. According to NNSA’s 2014 high-level strategic plan for  the uranium program, NNSA changed its strategy for managing the  overall uranium program, including the UPF, that year, which resulted in  the need to develop a new scope of work. As of May 2017, NNSA had developed and approved a revised formal  scope of work, cost, and schedule baseline estimates for four of the  seven subprojects. NNSA expects to approve such baseline estimates for  the all of the remaining subprojects—including the two largest  subprojects—by the second quarter of fiscal year 2018. NNSA also plans  to validate the estimates through an independent cost estimate at that  time. NNSA Has Not Developed a Complete Scope of Work, Life-Cycle Cost Estimate, and Integrated Master Schedule for Its Overall Uranium Program

NNSA has not developed a complete scope of work, life-cycle cost  estimate, or integrated master schedule for its overall uranium program,  and it has no time frame for doing so. In particular, it has not developed a  complete scope of work for repairs and upgrades to existing facilities, nor  has it done so for other key uranium program elements. Scope of Work for Repairs and Upgrades to Existing Facilities of the Overall Uranium Program Is Not Complete

NNSA has not developed a complete scope of work to repair and upgrade  existing facilities for the overall uranium program, even though these  activities could be among the most expensive and complicated non- construction portions of the uranium program. NNSA Has Not Developed Life-Cycle Costs or an Integrated Master Schedule for the Uranium Program

Because NNSA has not developed a complete scope of work for the  overall uranium program, it does not have the basis to develop a life-cycle  cost estimate or an integrated master schedule for the program. As noted  previously, NNSA has made progress in developing a cost estimate for  the new UPF, and this estimate will be an essential component of a life- cycle cost estimate for the overall program. For other program elements,  discussed below, NNSA either has rough or no estimates of the total  costs. Repairs and upgrades to existing facilities: NNSA’s contractor’s  implementation plan includes a rough-order-of-magnitude cost  estimate of $400 million over the next 20 years—roughly $20 million  per year—for repairs and upgrades to existing facilities. Our cost estimating guide states that a credible cost estimate reflects all  costs associated with a system (program)—i.e., it must be based on a  complete scope of work—and that the estimate should be updated to  reflect changes in requirements (which affect the scope of work). Under federal standards for internal control, management should use  quality information to achieve the entity’s objectives, and, among other  characteristics, quality information is provided on a timely basis. Without  NNSA setting a time frame for when it will (1) develop the complete scope  of work for the overall uranium program, to the extent practicable, and (2)  prepare a life-cycle cost estimate and integrated master schedule, NNSA  does not have reasonable assurance that decision makers will have  timely access to essential program management information—risking  unforeseen cost escalation and delays in NNSA’s efforts to meet the  nation’s uranium needs. Conclusions

NNSA is making efforts to modernize uranium processing capabilities that  are crucial to our nation’s ability to maintain its nuclear weapons stockpile  and fuel its nuclear-powered naval vessels. Without NNSA setting a time frame for when it will (1)  develop a complete scope of work for the overall uranium program, to the  extent practicable, and (2) prepare a life-cycle cost estimate and an  integrated master schedule for the program, NNSA does not have  reasonable assurance that decision makers will have timely access to  essential program management information for this costly and important  long-term program. Appendix I: Objectives, Scope, and Methodology

To describe the status of the National Nuclear Security Administration’s  (NNSA) efforts to develop a revised scope of work, cost estimate, and  schedule for the new Uranium Processing Facility (UPF) project, we  reviewed NNSA program planning documents, and any updates,  concerning cost and budget and interviewed agency officials to determine  the effect of uranium program strategy revisions on the UPF project’s  scope of work, cost, and schedule.
Why GAO Did This Study

Uranium is crucial to our nation's ability to maintain its nuclear weapons stockpile. NNSA processes uranium to meet this need. In 2004, NNSA began plans to build a new UPF that would consolidate capabilities currently housed in deteriorating buildings; by 2012, the project had a preliminary cost of $4.2 billion to $6.5 billion. To control rising costs, NNSA changed its approach in 2014 to reduce the scope of the new UPF and move uranium processing capabilities once intended for the UPF into existing buildings. The broader uranium program also includes the needed repairs and upgrades to these existing buildings.
The National Defense Authorization Act for Fiscal Year 2013 as amended includes a provision for GAO to periodically assess the UPF. This is the fifth report and (1) describes the status of NNSA's efforts to develop a revised scope of work, cost estimate, and schedule for the UPF project, and (2) examines the extent to which NNSA has developed a complete scope of work, life-cycle cost estimate, and integrated master schedule for the overall uranium program. GAO reviewed program documents on planning, strategy, cost, and implementation and interviewed program officials to examine the program's scope, cost and schedule.

What GAO Found

The National Nuclear Security Administration (NNSA) has made progress in developing a revised scope of work, cost estimate, and schedule for its project to construct a new Uranium Processing Facility (UPF), according to NNSA documents and program officials. As of May 2017, NNSA had developed and approved a revised formal scope of work, cost, and schedule baseline estimates for four of the seven subprojects into which the project is divided. NNSA expects to approve such baseline estimates for the other three—including the two largest subprojects—by the second quarter of fiscal year 2018. NNSA also plans to validate the estimates by then through an independent cost estimate.
NNSA, however, has not developed a complete scope of work, life-cycle cost estimate (i.e., a structured accounting of all cost elements for a program), or integrated master schedule (i.e., encompassing individual project schedules) for the overall uranium program, and it has no time frame for doing so. In particular, it has not developed a complete scope of work for repairs and upgrades to existing buildings in which NNSA intends to house some uranium processing capabilities and has not done so for other key program elements. For example:
The scope of work for a portion of the upgrades and repairs will not be determined until after fiscal year 2018, when NNSA expects to conduct seismic and structural assessments to determine what work is needed to address safety issues in existing buildings.
NNSA has developed an initial implementation plan that roughly estimates a cost of $400 million over the next 20 years for the repairs and upgrades, but a detailed scope of work to support this estimate is not expected to be fully developed except on an annual basis in the year(s) that immediately precedes the work.
Because NNSA has not developed a complete scope of work for the overall uranium program, it does not have the basis to develop a life-cycle cost estimate or an integrated master schedule. Successful program management depends in part on developing a complete scope of work, life-cycle cost estimate, and an integrated master schedule, as GAO has stated in its cost estimating and schedule guides. In previous work reviewing other NNSA programs, GAO has found that when NNSA did not have a life-cycle cost estimate based on a complete scope of work, the agency could not ensure its life-cycle cost estimate captured all relevant costs, which could result in cost overruns. The revised cost estimate that NNSA is developing for the new UPF will be an essential component of a life-cycle cost estimate for the overall program. However, for other program elements, NNSA has either rough or no estimates of the total costs and has not set a time frame for developing these costs. Federal internal control standards call for management to use quality information to achieve an entity's objectives, and among other characteristics, such information is provided on a timely basis. Without setting a time frame to complete the scope of work and prepare a life-cycle cost estimate and integrated master schedule for the program, NNSA does not have reasonable assurance that decision makers will have timely access to essential program management information—risking unforeseen cost escalation and delays.

What GAO Recommends

GAO recommends that NNSA set a time frame for completing the scope of work, life-cycle cost estimate, and integrated master schedule for the overall uranium program. NNSA generally agreed with the recommendation and has ongoing efforts to complete these actions.