NNSA and University’s Actions Taken to Address Mission Support Problems Identified in 2001 Have Not Been Fully Implemented

NNSA and the University have taken a number of steps to address the  major mission support problems that were known when NNSA extended  the University’s contracts in 2001, but all actions will not be complete until  mid-2005. When NNSA decided to extend the contracts for the two  laboratories, concerns had emerged in three areas: project management,  facilities management, and nuclear safety. This revised rule strengthened NNSA’s ability to hold  contractors accountable for the safety of nuclear facilities In addition to incorporating new agencywide requirements into the two  contracts, NNSA established new contract mechanisms and performance  measures to help ensure that the laboratories put in place management  improvements for mission support activities. New problems in business operations, such as controls over  purchase cards and property, emerged at the Los Alamos laboratory in  2002, while developing an emergency management program that complied  with NNSA requirements continued to be a problem at the Lawrence  Livermore laboratory. The laboratory plans on having these additional measures  in place by the end of 2005. Although the  laboratory submitted the first draft of the plan on time early in the fiscal  year, the quality of the plan did not meet NNSA expectations, and the  laboratory received a marginal rating on this measure for fiscal year 2002. NNSA  now estimates that the laboratory will have an emergency management  program that is in substantial compliance with DOE orders by the end of  fiscal year 2004. Challenges Remain for Sustaining Mission Support Improvements at the Laboratories

NNSA and the University face three main challenges to sustaining  improvements over the long term in mission support activities at the two  laboratories. Ensuring that actions taken to address mission support problems translate  into effective performance of mission support requires establishing and  maintaining an effective system of management control. The University’s  Vice President for Laboratory Management said that outside partners with  strong management and business experience could strengthen its  performance in the areas of business operations and other mission support  areas. The laboratories will also need to ensure that improvement efforts are  sustained and effective. In the past, however, oversight of the laboratories’ mission  support activities has been inadequate. Neither the University nor NNSA was influential in ensuring that  the laboratory followed best practices in managing the business system  improvement initiative, even after the department had issued guidance on  managing improvement initiatives. Recommendations for Executive Action

We recommend that the Secretary of Energy direct the Administrator of  NNSA to  ensure through contract and other management mechanisms that the  University of California and any future contractor managing Los Alamos  and Lawrence Livermore National Laboratories provide leadership,  resources, and oversight to ensure effective mission support activities,  including evaluating the impact of improvement actions on  performance;  ensure that NNSA performance assessments at the laboratories include  evaluations of the adequacy of leadership, resources, and internal  controls associated with mission support activities;  ensure that as NNSA implements its proposed oversight and contractor  assurance policy at Los Alamos and Lawrence Livermore National  Laboratories, NNSA retains sufficient independent federal oversight of  mission support activities to fulfill its responsibilities associated with  protecting public resources and safety; and  include in its contract with the University of California and any future  contractor at Los Alamos and Lawrence Livermore National  Laboratories a requirement that major improvement initiatives be  managed consistent with the best practices of high-performing  organizations, as defined in DOE Notice 125.1.
Why GAO Did This Study

The University of California (University) operates the Los Alamos and Lawrence Livermore National Laboratories for the Department of Energy's National Nuclear Security Administration (NNSA). The two research laboratories, with a combined fiscal year 2003 budget of $2.3 billion, have had problems in such mission support areas as managing projects, conducting business operations, and ensuring safe nuclear operations. GAO was asked to describe the actions taken to address mission support problems identified in 2001, as well as problems that have since emerged, and to assess the main challenges to sustaining mission support improvements.

What GAO Found

For the three mission support areas with problems as of 2001--managing construction and other major projects, maintaining and managing existing facilities, and ensuring safe operations of nuclear facilities--actions are basically complete in the first two areas but not in the third. For all three areas, NNSA incorporated new requirements into the contracts, developed new performance measures, and increased its oversight. The University of California has strengthened oversight of the laboratories by, among other things, establishing a new position of vice president for laboratory management. The laboratories will not fully comply with new requirements for providing a safety analysis of each nuclear facility until mid-2005. The actions taken by NNSA and the University to correct problems in project, facilities, and nuclear safety management were not systemic enough to keep problems from developing in other mission support areas after 2001. At the Los Alamos laboratory, emerging problems centered on business operations, including inadequate controls over procurement, purchase cards, and property management. The laboratory now has extensive corrective actions underway and expects to have most of the new measures in place by the end of 2005. At the Lawrence Livermore laboratory, the problems centered on emergency planning and preparedness, in that the laboratory had made little progress in developing an emergency management program that complied with NNSA requirements. The laboratory has taken steps over the past 2 years to improve in this area, and NNSA now estimates that the laboratory will have an approved emergency management program by the end of fiscal year 2004. NNSA and the University face three main challenges to sustaining improvements in mission support performance over the long term. The first challenge is for the laboratories to ensure that actions taken to address mission support problems translate into effective performance of mission support activities. A past lack of emphasis on mission support activities was a major factor when problems surfaced, particularly at the Los Alamos laboratory. Ensuring that mission support activities are effective will require sustained leadership, resources, and effective internal controls. The second challenge is ensuring appropriate and effective oversight of mission support activities, which has been inadequate in the past. In particular, a draft NNSA policy that calls for relying primarily on contractors' management controls raises concerns about the future adequacy of NNSA oversight. The third challenge is ensuring that the laboratories follow best practices in developing any future improvement initiatives. In its efforts to improve business systems, the Los Alamos laboratory did not follow best business practices for managing such improvements. Not doing so lessens the laboratory's ability to ensure that the efforts will achieve the desired results.