National Nuclear Security Administration
Key Management Structure and Workforce Planning Issues Remain As NNSA Conducts Downsizing
Gao ID: GAO-04-545 June 25, 2004
The National Nuclear Security Administration (NNSA), a separately organized agency within the Department of Energy (DOE), is responsible for the management and security of the nation's nuclear weapons, nonproliferation, and naval reactor programs. NNSA oversees contractors that operate its facilities to ensure that activities are effective and in line with departmental policy. In December 2002, NNSA began implementing a major reorganization aimed at solving important long-standing organizational issues. GAO reviewed NNSA's overall reorganization efforts to assess (1) the extent to which it is addressing in practice the past problems concerning the unclear delineation of authority and responsibility, (2) workforce planning, and (3) its impact on federal oversight of contractor activities.
NNSA's reorganization has addressed some past problems by better delineating lines of authority and improving communication; however, NNSA has not formalized a program management structure that identifies program managers or details their responsibilities and qualifications as they relate to the direction and oversight of contractor activity under the new organization. Without first resolving such key management issues, NNSA cannot, among other things, ensure the improved discipline and accountability it seeks in managing its programs. NNSA's reorganization is not likely to ensure that the agency has sufficient staff with the right skills in the right places because NNSA downsized its federal workforce without first determining the critical skills and capabilities needed to meet its mission and program goals. Consequently, NNSA will not know the composition of its workforce until it completes the 17 percent workforce reduction on September 30, 2004--the deadline specified in the reorganization plan--and then determines the knowledge, skills, and capabilities of its remaining employees. Without a functional long-term workforce plan, NNSA runs the risk of facing further, more serious staff shortages or skill imbalances, thereby diminishing its ability to adequately oversee its contractors. NNSA's implementation of a proposed risk-based approach to rely more on contractors' assurances and self-assessments and less on NNSA's direct oversight may be premature because it has not yet established a program management structure or long-term workforce plan for ensuring sufficient staff with the right skills in the right places. Under this proposal, contractors will develop comprehensive assurance systems, or systems of management controls, and NNSA will primarily rely upon these contractor systems and controls to ensure that contractors properly execute their work. Although the overall concept of a risk-based approach to federal oversight has merit, NNSA's proposed transition to conduct less direct federal oversight could be compromised by outstanding reorganization issues.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
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GAO-04-545, National Nuclear Security Administration: Key Management Structure and Workforce Planning Issues Remain As NNSA Conducts Downsizing
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Report to the Chairman, Subcommittee on Strategic Forces, Committee on
Armed Services, U.S. Senate:
United States General Accounting Office:
GAO:
June 2004:
National Nuclear Security Administration:
Key Management Structure and Workforce Planning Issues Remain As NNSA
Conducts Downsizing:
GAO-04-545:
GAO Highlights:
Highlights of GAO-04-545, a report to the Chairman, Subcommittee on
Strategic Forces, Committee on Armed Services, U.S. Senate:
Why GAO Did This Study:
The National Nuclear Security Administration (NNSA), a separately
organized agency within the Department of Energy (DOE), is responsible
for the management and security of the nation‘s nuclear weapons,
nonproliferation, and naval reactor programs. NNSA oversees contractors
that operate its facilities to ensure that activities are effective and
in line with departmental policy. In December 2002, NNSA began
implementing a major reorganization aimed at solving important long-
standing organizational issues. GAO reviewed NNSA‘s overall
reorganization efforts to assess (1) the extent to which it is
addressing in practice the past problems concerning the unclear
delineation of authority and responsibility, (2) workforce planning,
and (3) its impact on federal oversight of contractor activities.
What GAO Found:
NNSA‘s reorganization has addressed some past problems by better
delineating lines of authority and improving communication; however,
NNSA has not formalized a program management structure that identifies
program managers or details their responsibilities and qualifications
as they relate to the direction and oversight of contractor activity
under the new organization. Without first resolving such key management
issues, NNSA cannot, among other things, ensure the improved discipline
and accountability it seeks in managing its programs.
NNSA‘s reorganization is not likely to ensure that the agency has
sufficient staff with the right skills in the right places because NNSA
downsized its federal workforce without first determining the critical
skills and capabilities needed to meet its mission and program goals.
Consequently, NNSA will not know the composition of its workforce until
it completes the 17 percent workforce reduction on September 30, 2004”
the deadline specified in the reorganization plan”and then determines
the knowledge, skills, and capabilities of its remaining employees.
Without a functional long-term workforce plan, NNSA runs the risk of
facing further, more serious staff shortages or skill imbalances,
thereby diminishing its ability to adequately oversee its contractors.
NNSA‘s implementation of a proposed risk-based approach to rely more
on contractors‘ assurances and self-assessments and less on NNSA‘s
direct oversight may be premature because it has not yet established a
program management structure or long-term workforce plan for ensuring
sufficient staff with the right skills in the right places. Under this
proposal, contractors will develop comprehensive assurance systems, or
systems of management controls, and NNSA will primarily rely upon these
contractor systems and controls to ensure that contractors properly
execute their work. Although the overall concept of a risk-based
approach to federal oversight has merit, NNSA‘s proposed transition to
conduct less direct federal oversight could be compromised by
outstanding reorganization issues.
NNSA Workforce Downsizing Progress:
[See PDF for image]
Note: This graph reflects NNSA‘s adjustments, as of March 6, 2004. It
excludes certain offices not significantly affected by downsizing.
[End of figure]
What GAO Recommends:
GAO is making recommendations to the Secretary of Energy and the
Administrator of NNSA to increase the likelihood that NNSA‘s
reorganization will achieve NNSA‘s goals of increased management
discipline and contractor oversight. In its comments, NNSA agreed in
principle with GAO‘s recommendations, but felt its ongoing efforts
were not sufficiently recognized. We have recognized NNSA‘s efforts,
but believe more needs to be done to ensure effective program
management and contractor oversight.
www.gao.gov/cgi-bin/getrpt?GAO-04-545.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Robin Nazzaro at (202)
512-3841 or nazzaror@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
NNSA's Reorganization Has Delineated Lines of Authority, but More
Clarification Is Needed for Specific Program Management and Oversight
Functions:
NNSA's Reorganization Will Not Ensure Sufficient Staff with the Right
Skills in the Right Places to Meet the Agency's Mission and Program
Goals:
NNSA's Proposed Transition to Less Direct Federal Oversight Could Be
Compromised by Outstanding Reorganization Issues:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Comments from the National Nuclear Security Administration:
Appendix II: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Figures:
Figure 1: NNSA's Organization Prior to December 2002:
Figure 2: NNSA's New Organization:
United States General Accounting Office:
Washington, DC 20548:
June 25, 2004:
The Honorable Wayne Allard:
Chairman, Subcommittee on Strategic Forces,
Committee on Armed Services:
United States Senate:
Dear Mr. Chairman:
For years, the Department of Energy (DOE) has experienced long-standing
management problems with its nuclear weapons programs, including
unclear delineation of management authorities and responsibilities that
have contributed to significant cost overruns on major projects and
security problems at the national laboratories.[Footnote 1] In 1999,
the Congress created the National Nuclear Security Administration
(NNSA) under Title 32 of the National Defense Authorization Act for
Fiscal Year 2000 to correct the problems that plagued DOE. NNSA, a
separately organized agency within DOE, is responsible for the
management and security of the nation's nuclear weapons,
nonproliferation, and naval reactor programs. Since its inception,
however, NNSA has experienced its own management and security
problems.[Footnote 2]
NNSA conducts nuclear weapon and nonproliferation-related national
security activities in research and development laboratories,
production plants, and other facilities.[Footnote 3] Specifically, NNSA
operates three national nuclear weapon design laboratories--Lawrence
Livermore National Laboratory, California; Los Alamos National
Laboratory, New Mexico; and the Sandia National Laboratories, New
Mexico and California--and four nuclear weapons production sites--the
Pantex Plant, Texas; theY-12 Plant, Tennessee; the Kansas City Plant,
Missouri; and the Savannah River Site, South Carolina, as well as the
Nevada Test Site. To implement its programs, NNSA relies on site
contractors to manage the day-to-day site operations and to adhere to
DOE policies when operating the laboratory, production, or other
facilities within the complex. Because many NNSA sites handle special
nuclear material, including nuclear weapons, plutonium, and highly
enriched uranium, effective federal oversight is critical to ensuring
that national security, human health and safety, and the environment
are not adversely affected.
For the last several years, we have monitored NNSA's efforts to
implement Title 32. In April 2001, we testified that NNSA's efforts to
establish a new organization looked promising.[Footnote 4] However,
among other things, we highlighted the need for NNSA to clearly define
the roles and responsibilities of headquarters and field staff, and to
establish clear lines of authority between NNSA and its contractors. In
May 2001, in response to a series of external and internal studies
detailing persistent management problems, NNSA announced plans to
reorganize its headquarters operations. In December 2001, we noted that
NNSA had set several important goals for its overall reorganization
efforts, including establishing clear and direct lines of
communication, clarifying the roles and responsibilities of NNSA's
headquarters and field offices, and integrating and balancing
priorities across NNSA's missions and infrastructure.[Footnote 5]
However, we found that NNSA's headquarters reorganization did not
contain a clear definition of the roles and responsibilities of the
headquarters organizational units.
In addition to reorganizing its headquarters, in February 2002, NNSA
proposed a reorganization of its entire operation aimed at solving
important long-standing organizational issues. Specifically, NNSA
proposed a new organizational structure that would (1) remove a layer
of management by making existing operations offices into support
offices, (2) locate NNSA operational oversight close to laboratories
and plants by strengthening its site offices, and (3) streamline
federal staff and hold federal staff and contractors more accountable.
In February 2002, we testified that with the proposed new
organizational structure, resolution of NNSA's long-standing
organizational issues appeared to be within NNSA's grasp.[Footnote 6]
However, we noted that NNSA's lack of a long-term strategic approach to
ensure a well-managed workforce precluded it from identifying its
current and future human capital needs, including the size of the
workforce, its deployment across the organization, and the knowledge,
skills, and capabilities needed to fulfill its mission. Finally, in
December 2002, the Administrator of NNSA directed the implementation of
the overall reorganization proposed in February 2002. Specifically,
NNSA began implementing a new organizational structure that would (1)
remove a layer of management by abolishing its three Operations
Offices; (2) locate NNSA operational oversight close to laboratories
and plants by strengthening its site offices; (3) consolidate business
and technical support functions, such as procurement and contracting,
in a single service center organization located in Albuquerque, New
Mexico; and (4) adopt a challenging staff reduction target of about 17
percent to be achieved by the end of fiscal year 2004.
You asked us to review NNSA's overall reorganization efforts to assess
(1) the extent to which NNSA's reorganization is addressing in practice
the past problems concerning the unclear delineation of authority and
responsibility, (2) the likelihood that NNSA's reorganization will
result in sufficient staff with the right skills in the right places to
meet its mission and program goals, and (3) how NNSA's reorganization
will impact its proposed plan for federal oversight of contractor
activities.
To assess the extent to which NNSA's reorganization addressed past
problems concerning the unclear delineation of authority and
responsibility, we visited NNSA headquarters, the new Albuquerque
Service Center, and four of the eight NNSA site offices and interviewed
officials and reviewed pertinent documents on the effect of the
reorganization on NNSA's delineation of authority and responsibility.
We developed a general list of interview questions--i.e., a semi-
structured interview guide--to assist with our interviews of each NNSA
site office manager.[Footnote 7] To assess NNSA's efforts to ensure
that NNSA had sufficient staff with the right skills in the right
places to meet its mission and program goals, we reviewed NNSA
workforce planning documents and interviewed NNSA officials, including
using the interview guide for site office manager interviews, to
determine if its plans had sufficient information to address NNSA's
future staffing needs and to identify emerging skill gaps. In addition,
we reviewed our reports on human capital management and workforce
planning.[Footnote 8] To assess NNSA's proposed plan for federal
oversight of contractor activities under the new reorganization, we
interviewed NNSA headquarters officials, site office managers (using
the interview guide), and contractor officials, and reviewed documents
pertaining to the ongoing implementation of this proposed oversight
approach at Sandia National Laboratories. We focused our review on
NNSA's Office of Defense Programs because, according to NNSA officials,
it was most affected by the December 2002 reorganization, and because
the Office of Defense Programs, which manages weapons activity
programs, accounts for about 73 percent of NNSA's Fiscal Year 2005
budget request.
We conducted our review from June 2003 through April 2004 in accordance
with generally accepted government auditing standards.
Results in Brief:
NNSA's reorganization has resulted in some progress in delineating
lines of authority and improving communication between NNSA
headquarters and its field offices, thus addressing some past problems;
however, at the working level, NNSA has yet to determine who will give
specific program direction to its contractors and how the actions of
these program managers will be coordinated. Specifically, NNSA
officials report that the new structure has improved communication
between headquarters and the field by eliminating a layer of
management--the three operations offices--and consolidating
administrative support functions into a new service center located in
Albuquerque, New Mexico. In addition, the reorganization has
strengthened the hand of local NNSA site office managers by granting
them additional authority to manage contractors, specifically holding
the site office managers accountable for the day-to-day security and
safety of site operations. Important issues remain to be resolved.
Specifically, NNSA has yet to formalize a program management structure
that identifies its program managers, what their responsibilities and
qualifications should be, and what their specific role will be in
directing and overseeing contractor activity under the new
organization. Moreover, NNSA has not determined how program managers,
who are responsible for ensuring that program goals and requirements
are met, will interact with contracting officers and their designated
representatives, who are responsible for carrying out specific
technical functions, such as monitoring and inspection.
NNSA's reorganization is not likely to ensure that it has sufficient
staff with the right skills in the right places because NNSA chose to
downsize its federal workforce without determining what critical skills
and capabilities it needed to meet its mission and program goals. In
December 2001, we reported that NNSA did not have the coherent human
capital and workforce planning strategies it needed to develop and
maintain a well-managed workforce over the long run. Consequently, we
recommended that NNSA develop a thorough human capital and workforce
planning strategy. Instead of developing a workforce plan, according to
a senior NNSA official, NNSA managers relied on their judgment about
how much to reduce the federal staff and where those reductions should
occur in carrying out its December 2002 reorganization. Consequently,
NNSA will not know the composition of its workforce until it completes
the 17 percent workforce reduction on September 30, 2004--the deadline
specified in the reorganization plan--and then determines the
knowledge, skills, and capabilities of its remaining employees. While
NNSA did develop a workforce plan in December 2003, which attempted to
establish a framework for long-term workforce planning, this plan is of
limited use without current statistics on workforce, positions, and
organizational structures. We have found that when downsizings take
place in such an unstructured environment agencies experienced
significant challenges to deploying people with the right skills, in
the right places, at the right time and performing its missions
economically, efficiently, and effectively. In NNSA's case, early
indications are that the lack of planning is already contributing to
skill imbalances. For example, NNSA site offices are 39 staff short of
their targets and some site offices, namely Pantex, Y-12, and Los
Alamos, are having some difficulty filling critical skills in safety
and security. At the Albuquerque Service Center, significant skill gaps
exist for contract specialists--it has only 26 of 54 contract
specialist positions filled. Without a functional long-term workforce
plan, NNSA runs the risk of facing further, more serious staff
shortages or skill imbalances, thereby affecting its ability to
adequately oversee its contractors and ensure the safety and security
of its various facilities in the future.
NNSA's implementation of its proposed approach to rely more on
contractors' assurances and self-assessments and less on NNSA's direct
oversight may be premature because NNSA's reorganization has not yet
generated or established a program management structure for directing
and overseeing contractor activity or a long-term workforce plan for
ensuring that it has sufficient staff with the right skills in the
right places. According to the draft proposal, contractors will develop
a comprehensive contractor assurance system, or system of management
controls, and NNSA will primarily rely upon these systems and controls
to ensure that the contractors' missions and activities are properly
executed in an effective, efficient, and safe manner. Under this
proposal, NNSA will use a risk-based, graded approach to its oversight
and tailor the extent of federal oversight to the quality and
completeness of the contractors' assurance systems and to evidence of
acceptable contractor analysis of contractor performance. If
implemented, NNSA's oversight functions will include review and
analysis of contractor performance data, direct observations of
contractor work activities in nuclear and other facilities, annual
assessments of overall performance under the contract, and
certifications by the contract or independent reviewers that the major
elements of risk associated with the work performed are being
adequately controlled. NNSA has already begun taking steps to
accommodate implementation of the new contractor oversight approach in
parallel with its reorganization. Although the overall concept of a
risk-based approach to federal oversight has merit, the unresolved
issues stemming from NNSA's major ongoing reorganization may affect its
ability to effectively carry out this approach while successfully
meeting its responsibility for safe and secure operations.
In order to increase the likelihood that NNSA's reorganization will
achieve NNSA's goal of increased management discipline and
accountability in program management and contractor oversight, we are
recommending that NNSA establish a structure for its program
management, complete and implement a data-driven workforce plan for the
longer term, and postpone any decrease in the level of NNSA's direct
federal oversight of contractors until it has a program management
structure in place and has completed its workforce plan.
In commenting on our draft report, NNSA agreed in principle with our
recommendations; however, it felt that it already had efforts underway
to address them. Specifically, with respect to our recommendation about
program management, NNSA stated that it has established a formal
process for using appropriately designated officials to direct
contractor activity and that its formal program management policy was
nearly established. We recognize in our report NNSA's effort to develop
processes and formalize its program management policy; however, we
believe that NNSA needs not only a policy, but also a structure and
implementation guidance so that the managers providing direction to
NNSA's contractors are clearly identified and can be held accountable.
With respect to our recommendation on workforce planning, NNSA agreed
with our recommendation, but it disagreed that its current plan was
based on short-term or arbitrary management judgments. In this respect,
our conclusions were based on discussions with knowledgeable senior
agency officials at NNSA headquarters and site offices as well as a
review of NNSA management council minutes. More importantly, we
continue to believe in, and NNSA does not dispute, the need for a long-
term data driven workforce plan that will ensure that NNSA meets its
long-term goals. Finally, regarding our last recommendation on federal
oversight of contractors, NNSA stated that it had no intention of
further decreasing direct oversight of contractors, was hiring staff to
fill vacant positions at site offices, and that its proposed contractor
assurance systems would only be implemented after a site manager/
contracting officer was convinced that the contractor's system would be
at least as effective as the current system. While we are pleased that
NNSA has stated that it will not decrease its direct oversight, our
recommendation is intended to ensure that NNSA has the critical systems
it needs in place to perform its function--effective, direct federal
oversight.
Background:
NNSA, a separately organized agency within DOE, is responsible for the
management and security of the nation's nuclear weapons,
nonproliferation, and naval reactor programs. To conduct these
activities, NNSA's fiscal year 2005 request is about $9 billion, with
about $6.6 billion targeted for nuclear weapons programs managed by
NNSA's Office of Defense Programs. For many years, various external
studies have found problems with the organization of NNSA's principal
activity--the Office of Defense Programs. For example, one such study
found a dysfunctional management structure with convoluted, confusing,
and often contradictory reporting channels, [Footnote 9] while another
study cited ambiguities and overlaps in the roles of headquarters and
the Albuquerque Operations Office as a primary source of inefficiencies
and conflict within the program. [Footnote 10] In December 2000, we
reported organizational problems at three levels--within the Office of
Defense Program's headquarters functions, between headquarters and the
field offices, and between contractor-operated sites and their federal
overseers.[Footnote 11] These problems resulted in overlapping roles
and responsibilities for the federal workforce overseeing the nuclear
weapons program and confusion and duplication of effort for the
contractors implementing the program at sites within the nuclear
weapons complex.
In December 2002, NNSA formally announced the beginning of an overall
reorganization and workforce reduction intended to enhance its
operational efficiency and programmatic effectiveness. Prior to its
December 2002 reorganization, NNSA's organization consisted of multiple
layers. In particular, under the Office of Defense Programs--NNSA's
largest program--seven area offices reported to three operations
offices that in turn reported to the Deputy Administrator for Defense
Programs. The Deputy Administrator then reported to the Administrator.
Figure 1 shows NNSA's prior organization.
Figure 1: NNSA's Organization Prior to December 2002:
[See PDF for image]
[End of figure]
To remove a layer of management, NNSA closed the Albuquerque, Oakland,
and Nevada operations offices. The new organization consists of eight
site offices located at each of NNSA's major contractors, one service
center located in Albuquerque, New Mexico, and headquarters program
offices that all report directly to the Administrator. NNSA
headquarters sets requirements, defines policies, and provides high-
level guidance. Site office managers are the designated contracting
officers responsible for delivering federal direction to the contractor
at each site and for ensuring the site's safe and secure operation. The
site office managers also manage each NNSA site office. Under the
realignment, a single service center has been established in
Albuquerque, New Mexico, to provide business and technical support
services to the eight site offices and headquarters programs. Prior to
the reorganization, about 200 staff provided these services in the
Oakland and Nevada operations offices and in offices in Germantown,
Maryland, and Washington, D.C. These services are now being
consolidated in the new service center, resulting in the reassignment
of the 200 staff to the Albuquerque service center. Figure 2 shows
NNSA's new organization structure. NNSA plans to staff the service
center with 475 employees, down from 678 in December 2002.
Figure 2: NNSA's New Organization:
[See PDF for image]
[End of figure]
As part of its reorganization, NNSA decided to reduce the size of its
federal staff. Originally, NNSA set an overall staff reduction target
of 20 percent. However, in August 2003, NNSA reduced the target to 17
percent. The current target includes a 26 percent reduction at
headquarters and a 30 percent reduction at the service center. Three
site offices--Kansas City, Nevada, and Savannah River--are experiencing
reductions, although overall staff size at all eight site offices will
increase by 16 employees. NNSA is relying on a combination of buyouts,
directed reassignments, and attrition to achieve these targets by its
September 30, 2004, deadline.
Standards that we have developed require federal agencies to establish
and maintain an effective system of internal controls over their
operations.[Footnote 12] Such a system is a first line of defense in
safeguarding assets and preventing and detecting errors. Under our
standards, managers should, among other things, ensure that their
staffs have the required skills to meet organizational objectives, that
the organizational structure clearly defines key areas of authority and
responsibility, that progress be effectively measured, and that
operations be effectively monitored.
In addition to these internal control standards, in January 2001, and
again in January 2003, we identified strategic human capital management
as a governmentwide, high-risk area after finding that the lack of
attention to strategic human capital planning had created a risk to the
federal government's ability to perform its missions economically,
efficiently, and effectively.[Footnote 13] In that context, we have
stated that strategic workforce planning is needed to address two
critical needs: (1) aligning an organization's human capital program
with its current and emerging mission and programmatic goals and (2)
developing long-term strategies for acquiring, developing, and
retaining staff to achieve programmatic goals.[Footnote 14] There are
five key principles that strategic workforce planning should address
irrespective of the context in which the planning is done. It should:
* involve top management, employees, and other stakeholders in
developing, communicating, and implementing the strategic workforce
plan;
* determine the critical skills and competencies that will be needed to
achieve current and future programmatic results;
* develop strategies that are tailored to address gaps in number,
deployment, and alignment of human capital approaches for enabling and
sustaining the contributions of all critical skills and competencies;
* build the capability needed to address administrative, educational,
and other requirements important to support workforce planning
strategies; and:
* monitor and evaluate the agency's progress toward its human capital
goals and the contribution that human capital results have made toward
achieving programmatic results.
In light of shortcomings in strategic human capital management reported
by us, the President's Management Agenda identified strategic
management of human capital as a governmentwide initiative. Established
in August 2001, the President's Management Agenda identified a strategy
for improving the management and performance of the federal government.
The agenda included five governmentwide initiatives: the strategic
management of human capital, competitive sourcing, improved financial
performance, expanded electronic government, and budget and performance
integration.
Regarding strategic management of human capital, two principals are
considered central to its success. One, people are assets whose value
can be enhanced through investment. As with any investment, the goal is
to maximize value while managing risk. Two, an organization's human
capital approach should be designed, implemented, and assessed by the
standards of how well they help the organization achieve results and
pursue its mission. Effective strategic workforce planning is
considered an essential element of strategic human capital management.
Also called human capital planning, it focuses on developing long-term
strategies for acquiring, developing, and retaining an organization's
total workforce (including full-and part-time federal staff and
contractors) to meet the needs of the future.
NNSA's Reorganization Has Delineated Lines of Authority, but More
Clarification Is Needed for Specific Program Management and Oversight
Functions:
NNSA's reorganization has resulted in some progress in delineating
lines of authority between NNSA headquarters and its field offices,
thus addressing some past problems; however, at the working level, NNSA
has not formalized a program management structure that identifies its
program managers or what their responsibilities and qualifications
should be, particularly regarding their role in directing and
overseeing contractor activity under its new organization. Furthermore,
the reorganization has created gaps in the responsibility for important
safety oversight that need to be addressed. Without first clarifying
such key management issues, NNSA cannot, among other things, ensure the
improved discipline and accountability it seeks in managing its
programs.
By delineating lines of authority between NNSA headquarters and its
field offices, NNSA's reorganization has addressed past problems, such
as communications problems resulting from overlapping roles and
responsibilities of the federal workforce overseeing the nuclear
weapons program. For example, according to NNSA site office managers,
the streamlined structure has improved vertical communication because
communication channels between headquarters and the field are more
direct and do not involve an extra layer of management in the
operations offices. Site office managers also state that by now
reporting directly to the NNSA Administrator's office, the time
required to make decisions has been reduced. In addition, the
realignment provides NNSA site office managers with additional
authority to manage contractors and assigns them responsibility for the
day-to-day security and safety of contractor operations. As a result,
it has strengthened the hand of local NNSA site office managers who now
have the authority to shut down operations at the sites, if necessary,
due to security or safety concerns.
Despite this progress NNSA's reorganization still suffers from two
shortcomings. First, the reorganization plan does not yet fully
delineate the authority and responsibility of program managers, who are
responsible for ensuring that program goals and requirements are met,
or reconcile these responsibilities with the mutual responsibilities of
contracting officers and their designated representatives who manage
the contract. Specifically, under the new reorganization, the
contracting officer is responsible for appointing contracting officer
representatives to carry out specific functions, such as monitoring,
inspection, and other functions of a technical nature not involving a
change in the scope, cost, or terms and conditions of the contract.
These contracting officer representatives then assist in directing and
overseeing the contractor for the programs that they represent. NNSA is
attempting to improve program management accountability and discipline
by requiring program managers to direct all work to the contractors
through a contracting officer or a designated contracting officer
representative instead of through the now defunct operations offices or
by bypassing the formal contract administrators and informally
directing the contractor, as was done in the past.
NNSA's policy on program management, however, is still being developed.
NNSA's Assistant Deputy Administrator for the Office of Program
Integration told us that the exact number of program managers within
the Office of Defense Programs has yet to be determined because
disagreement exists within the program about who currently is or is not
a program manager. Furthermore, NNSA has not yet articulated its
qualification standards for program managers. These standards are
important to program success. As we noted in our report on NNSA's
Stockpile Life Extension Program, problems with the W-87 refurbishment
were caused, in part, because the assigned program manager was not
qualified to perform all required tasks and was not enrolled in DOE's
project management qualification program.[Footnote 15] Senior NNSA
officials in headquarters expect NNSA's policy to be issued by May
2004, and implementation plans for this policy to be developed by
summer 2004. NNSA officials told us that even after the policy is
issued, its implementation is expected to take some time because it
will likely require a change in the behavior and culture of program
managers and the manner in which they operate.
NNSA's delay in issuing program management policy and appointing
program managers is currently creating confusion. According to NNSA's
existing policy concerning the appointment of contracting officer
representatives, headquarters-based program officials must first be
designated as program managers before they can be designated as
contracting officer representatives for a site.[Footnote 16] As a
result, any uncertainty surrounding the number of program managers and
their responsibilities has the potential to disrupt the appointment of
contracting officer representatives. However, despite the present
uncertainty surrounding the designation of program managers, site
offices are appointing contracting officer representatives. For
example, the Sandia Site Office appointed 25 of its 36 contracting
officer representatives using available NNSA headquarters staff, as of
June 2003. However, NNSA provided us with a list of its designated
program managers as of December 2003 (the latest date for which data
were available) that did not officially recognize 21 of the 25
headquarters-based contracting officer representatives that had been
formally appointed by the Sandia Site Office. Until NNSA fully
implements its policies to delineate program management authority and
responsibility, it remains unclear under the new reorganization and
management structure how program management authorities and
responsibilities will be exercised in the day-to-day management of
contractors and site operations and NNSA cannot ensure that the full
discipline and accountability it seeks through its reorganization is
fully achieved or that its long-standing organizational structure
problems are corrected.
The second outstanding problem with NNSA's reorganization is that it
has created gaps in the responsibility for safety oversight that need
to be addressed. For example, managers at NNSA's Pantex Site Office,
which oversees the contractor operating the Pantex Plant--an assembly/
disassembly plant for nuclear weapons in Amarillo, Texas--stated that
authority and responsibility for certain safety-related oversight is
unclear. Specifically, according to the Pantex Site Office manager,
when the realignment abolished the Albuquerque Operations Office, it
left a void regarding who would take over certain nuclear explosive
safety oversight activities previously performed by that office. Among
other things, nuclear explosives safety oversight includes activities
such as evaluating the adequacy of controls associated with tooling,
testers, and operational processes to prevent and/or minimize the
consequences of an accident involving nuclear explosives. While NNSA's
Assistant Deputy Administrator for Military Application and Stockpile
Operations--an NNSA program--assumed overall responsibility for
nuclear explosive safety, NNSA has not resolved exactly who is to
provide the day-to-day oversight previously conducted by the
Albuquerque Operations Office. In this regard, the Pantex Site Office
manager stated that there is no clear procedure for conducting
oversight to ensure the prevention of deliberate, unauthorized use of a
nuclear weapon--an important goal of NNSA. The Pantex Site Office
manager--the risk acceptance official for the site--stated that he
would therefore not authorize the continuation of certain work related
to one current weapon system requiring use of a particular safety
process. Furthermore, in October 2003, NNSA issued its safety-oriented
"Functions, Responsibilities, and Authorities Manual" intended to
clarify issues concerning delineation of authority. However, according
to the Assistant Manager for Nuclear Engineering at the Pantex Site
Office, the manual still does not clarify the authority and
responsibility of nuclear explosives safety oversight. Senior NNSA
headquarters officials stated that they are aware of problems
concerning nuclear explosive safety oversight and that corrective
action plans have been recently developed and are scheduled to be
implemented through 2006.
The Defense Nuclear Facilities Safety Board recently expressed broader
concerns in a December 8, 2003, letter to NNSA's Administrator that
many orders, directives, standards, supplemental directives, and site
office procedures, which had been issued to help ensure the safe
operation of NNSA's defense nuclear facilities, have not been modified
to reflect current roles and responsibilities within NNSA. The board
further stated that in some cases, particularly those involving
supplemental directives that the now-defunct Albuquerque Operations
Office had issued, the documents may no longer have a clear owner
within the NNSA organization, and deviations from the processes that
these directives prescribed are now becoming more frequent within NNSA.
NNSA's Reorganization Will Not Ensure Sufficient Staff with the Right
Skills in the Right Places to Meet the Agency's Mission and Program
Goals:
NNSA's reorganization is not likely to ensure that it has sufficient
staff with the right skills in the right places because NNSA chose to
downsize its federal workforce without first determining what critical
skills and capabilities it needed to meet its mission and program
goals. Consequently, NNSA will not know the composition of its
workforce until it completes the 17 percent workforce reduction on
September 30, 2004--the deadline specified in the reorganization plan-
-and then determines the knowledge, skills, and capabilities of its
remaining employees. Without a functional long-term workforce plan,
NNSA runs the risk of facing further, more serious staff shortages or
skill imbalances, thereby affecting its ability to adequately oversee
its contractors.
In December 2001, in addressing NNSA's use of its excepted service
authority, we reported that NNSA did not have the coherent human
capital and workforce planning strategies it needed to develop and
maintain a well-managed workforce over the long run.[Footnote 17] As a
result, we recommended that NNSA not allocate any additional excepted
service positions until it developed comprehensive human capital and
workforce planning strategies. Subsequently, in February 2002, we
testified that NNSA's lack of a long-term strategic approach to ensure
a well-managed workforce precluded it from identifying its current and
future human capital needs, including the size of the workforce, its
deployment across the organization, and the knowledge, skills, and
abilities needed to fulfill its mission.[Footnote 18]
Despite these earlier recommendations to develop thorough human capital
and workforce planning strategies, NNSA embarked on a major initiative,
expected to span nearly 2 years, not only to reorganize, but also to
reduce the size of its workforce. NNSA's December 2002 reorganization
plan called for a reduction in its federal workforce from 1,695 to
1,356 staff, or a reduction of about 20 percent, by September 30, 2004.
The planned 20 percent reduction involved a 29 percent reduction in
headquarters staff, a 26 percent reduction in administrative support
staff through the closure of the three operations offices and the
consolidation of administrative support staff in a new Service Center,
and a 6 percent reduction in Site Office staff. A senior NNSA official
stated that "getting things done" was a primary factor in deciding to
quickly implement the reorganization and workforce reduction. As such,
NNSA officials stated that the staff reduction targets were based more
on judgment than a rigorous workload analysis. A senior NNSA official
explained that NNSA managers knew that there was work overlap and
redundancy in the organization, but were concerned that a more formal,
rigorous analysis of requirements or workload could hamper what they
believed was an urgent need to achieve organizational realignment and
workforce reduction results. The official also said that NNSA
management had decided that if and when staffing changes became
necessary, such adjustments would then be made.
The NNSA Administrator implemented what it termed a managed staffing
process soon after the workforce reduction target was announced in an
effort to focus on its short-term staff reduction targets and deadline.
He asked NNSA headquarters, service center, and site office managers to
report their organization's existing functions and staff in 2003, their
anticipated changes to functions and associated staff requirements by
the end of fiscal year 2004, and any staff surplus or deficit. Based on
regular updates of this information, the NNSA Administrator has
adjusted the total staff reduction target twice since December 2002,
once in April 2003 and a second time in August 2003, to its current 17
percent target--primarily to accommodate an increase of 38 positions.
This new target is to be accomplished by an increase of 23 positions in
headquarters and 40 positions in the site offices, respectively, and a
decrease of 25 positions at the Albuquerque Service Center. A February
2004 status report stated that NNSA created and staffed the 38 new
positions to perform functions not previously identified, or for which
original staffing targets were not adequate for mission accomplishment.
NNSA is progressing towards its staff reduction targets and deadline
primarily through buyouts, directed reassignments, and attrition
combined with a freeze on hiring and promotions, although exceptions
can be allowed to fill critical positions. A total of 174 staff have
thus far taken the buyout, which could be as high as $25,000 per person
depending on such factors as length of federal service and grade level.
NNSA human capital managers report that 99 of the 200 administrative
support staff in Oakland, Las Vegas, Germantown, and Washington, D.C.,
offices have formally stated that they would relocate to the
Albuquerque Service Center. However, officials are not sure how many
staff will actually relocate because, for example, they believe that
some staff do not really want to relocate and are seeking alternative
employment. As of March 6, 2004, NNSA is 13 staff short of achieving
its 17 percent staffing reduction target.
NNSA has also begun a number of specific workload reduction initiatives
intended to accomplish its mission with fewer federal personnel.
However, the outcome of these initiatives may not be known for some
time so their affect on NNSA's workforce capabilities both in the
short-term and long-term cannot be predicted. For example, in the area
of safety, NNSA reduced the number of Site Office Facility
Representatives from 68 in December 2002 to 53 in December 2003. Site
Office Facility Representatives are typically responsible for day-to-
day oversight of contractor operations to ensure that the contractor's
work practices and performance are being completed in a safe and
environmentally responsible manner. NNSA is pursuing changes to the
Facilities Representative Program, among other things, to allow for
greater coverage in areas of higher risk to the public, such as nuclear
safety, and reduced coverage of standard industrial hazard facilities.
NNSA is also considering shifting federal responsibility for employee
safety to the contractor.
While continuing to pursue its short-term workforce reduction goals,
NNSA began to develop a framework to determine its long-term human
capital needs. In December 2003, NNSA issued a workforce plan designed
to comprehensively meet the requirements of DOE's Human Capital
Management Improvement Program and the strategic workforce planning
aspect of the President's Management Agenda. The framework specifically
identified strategic workforce planning as a means to mitigate the
impact of losing a large percentage of the NNSA workforce and as the
process for ensuring that the right people with the right skills are in
the right place at the right time. The workforce planning model for the
longer term--Workforce Plan 2004--called for the analysis of present
workforce competencies, the identification of competencies needed in
the future, a comparison of future needs with the present workforce in
order to identify competency gaps and surpluses, the preparation of
plans for building the workforce needed in the future, and an
evaluation process to ensure that the workforce planning model remains
valid and that mission objectives are being met.
Despite this effort, NNSA's workforce plan is of limited usefulness
because it depends on workforce data that are either already obsolete
or not yet available. For example, the number, skill, position, and
location of employees are a moving target and subject to continuous
change until the downsizing effort is completed in September 2004.
Furthermore, several NNSA site office managers acknowledged that their
workforce focus has been on their short-term downsizing objective. A
senior NNSA official agreed that the agency's workforce planning needed
to be more long-term, but added that under the circumstances of NNSA's
organizational downsizing, management primarily focused on meeting
short-term needs. NNSA human capital officials also told us that NNSA's
decreased reliance on DOE for practically all human capital management,
resulting from NNSA's creation as a separately organized agency under
DOE in 2000, required the building of a human resource structure,
staff, and operation, which has taken some time to get up and running.
NNSA plans to update information in its workforce plan, including its
workforce composition and skills, as well as determine workforce needs
for the long-term. With this information, NNSA can then conduct a skill
gap analysis that is necessary to target recruitment, hiring, and
training programs long-term.
As we have found in other government agencies, by carrying out
downsizing without sufficient consideration of the strategic
consequences, NNSA runs the risk of not having the right skills in the
right place at the right time, thereby affecting its ability to
adequately oversee its contractors and ensure the safety and security
of its various facilities in the future. The situation may be further
exacerbated by the fact that, according to NNSA estimates, 35 percent
of NNSA employees will be eligible to retire in the next 5 years. The
lack of adequate strategic and workforce planning in the course of
downsizing efforts can negatively affect the agency's ability to
provide quality service and lead to such negative effects as the loss
of institutional memory and an increase in work backlogs. The impact of
gaps in the numbers and skills of staff used to carry out its
contractor oversight mission is already becoming apparent. For example,
NNSA site offices are 39 staff short of their targets and some site
offices, namely Pantex, Y-12, and Los Alamos, are having some
difficulty filling critical skills in safety and security. At the
Albuquerque Service Center, significant skill gaps exist for
accountants and contract specialists. For example, the service center
has only 26 of 54 contract specialist positions filled. NNSA's
preoccupation with more short-term downsizing objectives and staffing
strategy without the benefit of a strategic human capital plan may have
contributed to the workforce imbalances it now is experiencing.
NNSA's Proposed Transition to Less Direct Federal Oversight Could Be
Compromised by Outstanding Reorganization Issues:
NNSA's implementation of its proposed risk-based approach to rely more
on contractors' assurances and self-assessments and less on NNSA's
direct oversight may be premature because NNSA's reorganization has not
yet established a program management structure or long-term workforce
plan for ensuring that it has sufficient staff with the right skills in
the right places. Others and we have reported on a number of problems
over the years related to NNSA's performance of effective federal
oversight of its contractors. Against this backdrop, NNSA has begun
taking steps to accommodate implementation of the new contractor
oversight approach in parallel with its reorganization. Under this new
approach, contractors will develop comprehensive contractor assurance
systems, or systems of management controls, and NNSA will primarily
rely upon these systems and controls to ensure that contractors
properly execute their missions and activities. Although the overall
concept of a risk-based approach to federal oversight has merit, the
unresolved issues stemming from NNSA's major ongoing reorganization may
compromise its ability to effectively carry out this approach while
successfully meeting its responsibility for safe and secure operations.
NNSA's reliance on contractors to operate its facilities and carry out
its missions makes effective oversight of contractor activities
critical to its success. Over the years, we have reported on problems
related to NNSA's performance of effective federal oversight of its
contractors. For example:
* In May 2003, we reported on problems with NNSA's oversight,
particularly regarding assessing contractors' security
activities.[Footnote 19] We noted that, without a stable and effective
management structure and with ongoing confusion about security roles
and responsibilities, inconsistencies had emerged among NNSA sites on
how they assessed contractors' security activities. Consequently, we
stated that NNSA could not be assured that all facilities are subject
to the comprehensive annual assessments that DOE policy requires.
* Weaknesses in NNSA oversight also occurred at the Lawrence Livermore
National Laboratory. Specifically, in our May 2003 report on a new
waste treatment facility at the laboratory,[Footnote 20] we concluded
that a delay in initiating storage and treatment operations at the new
facility occurred because NNSA managers did not carry out their
oversight responsibilities to provide clear requirements and ensure
contractor compliance with these requirements.
* In July 2003, we reported on problems with NNSA's oversight,
particularly with regard to cost and schedule, of the Stockpile Life
Extension Program.[Footnote 21] In particular, we found that Life
Extension Program managers used reports that contained only limited
information on cost growth and schedule changes against established
baselines. We also found that program managers believed that they had
not been given adequate authority to properly carry out the life
extensions.
* In February 2004, we reported on problems with NNSA's oversight with
regard to business operations at the Los Alamos National
Laboratory.[Footnote 22] Beginning in the summer of 2002, a series of
problems with business operations surfaced at the Los Alamos National
Laboratory, raising questions about the effectiveness of controls over
government purchase cards and property. Among the questions raised were
allegations of fraudulent use of government purchase cards and purchase
orders, concerns about the adequacy of property controls over items
such as computers, and disputed rationales for the laboratory's firing
of two investigators. DOE and NNSA identified multiple causes for these
business operations problems, one of which was that NNSA's oversight
was too narrowly focused on specific performance measures in the
contract rather than on overall effectiveness.
In addition to these concerns, DOE 's Office of Inspector General has
raised broader concerns about the adequacy of oversight. For example,
in November 2003, DOE's Office of Inspector General released its annual
report on management challenges, including oversight of contracts and
project management as two of three internal control challenges facing
the department.[Footnote 23]
Against this backdrop and in the midst of a major reorganization and
staff reduction effort, NNSA is proposing to change its contractor
oversight approach. NNSA's August 2003 draft Line Oversight and
Contractors' Assurance System policy would rely more on contractor
self-assessment and reporting, among other methods, and less on NNSA's
direct oversight.[Footnote 24] The proposal would require a
comprehensive contractor assurance system, or system of management
controls, to be in place and would primarily rely upon these systems
and controls to ensure that its missions and activities are properly
executed in an effective, efficient, and safe manner. NNSA would use a
risk-based, graded approach to its oversight and tailor the extent of
federal oversight to the quality and completeness of the contractors'
assurance systems and to evidence of acceptable contractor performance.
NNSA's oversight functions would include review and analysis of
contractor performance data, direct observations of contractor work
activities in nuclear and other facilities, annual assessments of
overall performance under the contract, and certifications by the
contractor or independent reviewers that the major elements of risk
associated with the work performed are being adequately controlled.
NNSA stated in its draft policy and in public meetings before the
Defense Nuclear Facilities Safety Board that the department plans to
phase in this new oversight approach over the next few years.
NNSA has already begun taking steps to accommodate implementation of
the new contractor oversight approach in parallel with its
reorganization. For example, the new contract effective October 1,
2003, between Sandia Corporation and NNSA's Sandia Site Office
describes 10 key attributes for its assurance system, such as having
rigorous, risk-based, and credible self-assessments, feedback, and
improvement activities, and using nationally recognized experts and
other independent reviewers to assess and improve its work process and
to carry out independent risk and vulnerability studies. Sandia's
contractor plans to implement "assurance systems" beginning with its
low-risk activities in fiscal year 2004, and medium-and high-risk
activities in fiscal year 2005. Once satisfied that the contractor's
assurance system is effective and results in an improvement in the
contractor's performance in key functional areas, NNSA will consider
conducting oversight at the assurance systems level rather than at the
level of individual transactions. At the time of our review, NNSA
officials at the Sandia Site Office did not know how they would assess
or validate the contractor assurance system or what level of assurance
they would require before they would shift from "transactional"
oversight to "systems level" oversight.
Although the overall concept of a risk-based approach seems reasonable,
we are concerned about NNSA's ability to effectively carry it out. For
example, considerable effort is needed at the Los Alamos and Lawrence
Livermore National Laboratories to successfully implement a risk-based
approach to laboratory oversight.[Footnote 25] According to the
Associate Director for Operations at the Los Alamos National
Laboratory, the laboratory's ability to manage risk is at a beginning
level of maturity. Other officials at the Los Alamos laboratory,
including officials from the Performance Surety Division and the
Quality Improvement Office, said that the laboratory and NNSA have
different perceptions of risks at the laboratory and how to manage
those risks. In our February 2004 report, we expressed concerns about
NNSA's oversight approach and warned that such autonomy for the
laboratories was inadvisable this soon into the process of recovery
from a string of embarrassing revelations. We recommended that NNSA
needs to maintain sufficient oversight of mission support activities to
fulfill its responsibilities independently until the laboratories have
demonstrated the maturity and effectiveness of contractor assurance
systems and the adequacy of the contractor's oversight have been
validated. NNSA disagreed with our view of its proposal to rely more on
a contractor's system of management controls and less on NNSA's own
independent oversight, but acknowledged that there have been problems
with oversight in the past. NNSA officials remained convinced that the
proposed risk-based approach will be successfully implemented,
resulting in improved contractor oversight.
We continue to be concerned about whether NNSA is ready to move to its
proposed system. For example, during this review, officials from NNSA's
Nevada Site Office expressed concerns about the performance of the
management and operating contractor for the Nevada Test Site, citing
repeated problems with contractor's compliance with basic procedures.
For example, officials from NNSA's Nevada Site Office expressed concern
that there were repeated incidents where the contractor did not follow
lock-out/tag-out procedures, resulting in, for example, the contractor
drilling holes into wires that would cause power systems to shut down.
Furthermore, the Defense Nuclear Facilities Safety Board, in recent
public meetings, has expressed concerns about nuclear safety under the
proposed NNSA contractor assurance policy and said that NNSA should not
delegate responsibility for such an inherently high-risk area of
operations. Finally, because NNSA has not fully determined (1) who will
give program direction to its contractors and (2) through a
comprehensive workforce plan, that it has sufficient staff with the
right skills in the right places, NNSA's proposed approach to rely more
on contractors' assurances and self-assessments and less on NNSA's
direct oversight may be premature.
Conclusions:
NNSA is concurrently making significant and fundamental changes to its
organization, workforce composition, and contractor oversight approach
that require careful management forethought, strategy, and analysis.
Preliminary indications are that some of these changes have had a
positive effect on certain aspects of NNSA, but the final impact of
these changes will not be apparent for several years. Specifically,
NNSA's reorganization has resulted in some progress in delineating
authority and improving communication between headquarters and the
field. However, the reorganization has not resolved confusion regarding
authority over program management. In addition, by downsizing its
federal workforce without first determining what critical skills and
capabilities it needed, NNSA's workforce reduction targets were more
arbitrary than data-driven, contributing to short-term skill imbalances
and making data-driven workforce planning for the longer term more
difficult. Specifically, NNSA cannot begin to conduct a formal,
substantive skill gap analysis to plan for the long term until it
completes the current workforce reduction and collects critical
workforce data on knowledge, skills, and competencies, among other
things. Finally, because important program management and workforce
issues still need to be resolved, NNSA's implementation of its proposal
to rely more on contractors' assurances and self-assessments and less
on NNSA's direct oversight appears to be premature.
Recommendations for Executive Action:
In order to increase the likelihood that NNSA's reorganization will
achieve NNSA's goal of increased management discipline and
accountability in program management and contractor oversight, we are
making three recommendations to the NNSA Administrator and the
Secretary of Energy:
* establish a formal program management structure, policy, and
implementation guidance for directing the work of its contractors,
especially concerning how program managers will interact with
contracting officers at site offices to help direct and oversee
contractor activity;
* complete and implement data-driven workforce planning for the longer
term that (1) determines the critical skills and competencies that will
be needed to achieve current and future programmatic results, including
contractor oversight; (2) develops strategies tailored to address gaps
in number, skills and competencies, and deployment of the workforce;
and (3) monitors and evaluates the agency's progress toward its human
capital goals and the contribution that human capital results have made
toward achieving programmatic results, and:
* postpone any decrease in the level of NNSA's direct federal oversight
of contractors until NNSA has a program management structure in place
and has completed its long-term workforce plan.
Agency Comments and Our Evaluation:
We provided NNSA with a draft of this report for review and comment.
NNSA agreed in principle with our recommendations; however, it felt
that it already had efforts underway to address them. Specifically,
with respect to our recommendation about program management, NNSA
stated that it has established a formal process for using appropriately
designated officials to direct contractor activity and that its formal
program management policy was nearly established. We recognize in our
report NNSA's effort to develop processes and formalize its program
management policy; however, we believe that NNSA needs not only a
policy, but also a structure and implementation guidance so that the
managers providing direction to NNSA's contractors are clearly
identified and can be held accountable. With respect to our
recommendation on workforce planning, NNSA agreed with our
recommendation, but it disagreed that its current plan was based on
short-term or arbitrary management judgments. In this respect, our
conclusions were based on discussions with knowledgeable senior agency
officials at NNSA headquarters and site offices as well as a review of
NNSA management council minutes. More importantly, we continue to
believe in, and NNSA does not dispute, the need for a long-term data
driven workforce plan that will ensure that NNSA meets its long-term
goals. Finally, regarding our last recommendation on federal oversight
of contractors, NNSA stated that it had no intention of further
decreasing direct oversight of contractors, was hiring staff to fill
vacant positions at site offices, and that its proposed contractor
assurance systems would only be implemented after a site manager/
contracting officer was convinced that the contractor's system would be
at least as effective as the current system. While we are pleased that
NNSA has stated that it will not decrease its direct oversight, our
recommendation is intended to ensure that NNSA has the critical systems
it needs in place to perform its function--effective, direct federal
oversight.
As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after the date of this report. At that time, we will send copies to the
Secretary of Energy and the Administrator of NNSA, the Director of the
Office of Management and Budget, and appropriate congressional
committees. We will make copies available to others on request. In
addition, the report will also be available at no charge on the GAO Web
site at http://www.gao.gov.
If you or your staff have any questions about this report, please call
me at (202) 512-3841. Major contributors to this report are listed in
appendix II.
Sincerely yours,
Signed by:
Robin M. Nazzaro:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Comments from the National Nuclear Security Administration:
Department of Energy:
National Nuclear Security Administration:
Washington, DC 20585:
MAY 25 2004:
Robin Nazzaro:
Director:
Natural Resources and Environment:
General Accounting Office:
Washington, DC 20548-0001:
Dear Ms. Nazzaro:
The National Nuclear Security Administration (NNSA) appreciates the
opportunity to have reviewed the General Accounting Office (GAO) draft
report, GAO-04-545, "National Nuclear Security Administration: Key
Management Structure and Workforce Planning Issues Remain As NNSA
Conducts Downsizing." We understand that this draft report is the
result of GAO's efforts to assess: (1) the extent to which NNSA is
addressing in practice the past problems concerning the unclear
delineation of authority and responsibility; (2) our workforce
planning; and, (3) the impacts our efforts have on federal oversight of
contractor activities.
Based on conclusions described in the report, GAO is subsequently
recommending that NNSA: (1) establish a formal program management
structure for directing the work of our contractors; (2) complete and
implement data-driven workforce planning for the longer term; and, (3)
postpone any decrease in the level of NNSA's direct federal oversight
of contractors until NNSA has this structure and plan in place. Our
comments are focused on the conclusions and recommendations contained
in the draft report.
While NNSA agrees with the desirability of each of GAO's
recommendations, we disagree with the implications that these steps are
not in progress. First, NNSA has established a formal process for
assuring the direction to contractors flows through appropriately-
designated officials and our formal program management policy is nearly
established. Second, NNSA undertook a thorough workforce analysis
before standing-up our new organizational structure and beginning the
process of redeploying employees. GAO's review was undertaken in the
midst of the realignment process. Subsequently to that review, NNSA's
effort to close staffing gaps are well underway. The determination of
the critical skills needed to meet mission and program goals is an
iterative process; the GAO assertion that NNSA will not understand its
requirements until after the re-engineering is complete is wrong.
Finally, NNSA has no intention of further decreasing direct
oversight of contractors. We are hiring staff to fill vacant positions
at our site offices and our contractor assurance systems are only
implemented after a site manager/ contracting officer is convinced that
the system will provide assurance at least as effectively as the
current system.
As the Administrator reported to the Secretary at the end of Fiscal
Year 2003, the standup and subsequent re-engineering of NNSA has been a
complex undertaking. We are operational and are organized to maintain
the nuclear weapon stockpile; prevent the proliferation of weapons of
mass destruction; provide the Navy with effective nuclear propulsion;
ensure the readiness of the nuclear security enterprise; and, to be a
responsive and accountable organization. Our Federal managers continue
to take measures to implement appropriate controls for results-oriented
management; assess the adequacy of management controls in Federal
programs and operations; identify needed improvements; take
corresponding corrective action; and report on these controls. While we
agree with GAO that there is much still to be accomplished, we have
taken national missions that have been in existence through the
inception of the Cold War, molded them into a separate agency,
reorganized, and re-engineered without losing sight of our national
goals. Our organizational structure and processes and procedures for
managing an organization of this size allow us to address those
challenges warranting increased emphasis or appearing to have reached a
heightened level of urgency.
The Administrator's assertions to the Secretary are as important today
as they were in his Fiscal Year 2003 report that NNSA is adopting
management tools and practices to do our job better and more
efficiently. We are using creative personnel practices to ensure the
best talent is recruited, retained, and rewarded, and all employees are
accountable to the Administrator for performance in achieving their
elements of the NNSA's mission. The re-engineering concept that was
developed jointly by managers throughout the organization provides the
basis for moving technical staff to where the work is performed, and
centralizing common business and administrative functions to improve
the quality of oversight and increase efficiency. With our strong
leadership, a committed workforce, modern technical and planning tools,
and the continued support of the Congress and the President's
Administration, NNSA is making a positive difference for America.
In regards to GAO's recommendation on the establishment of a formal
program management structure, it is important to note that the various
business functions utilized within NNSA are not singular in nature.
While NNSA agrees that the Program Management structure needs to be
formalized, we reiterate the fact that we have the Business Operating
Policy document in the final review and comment phase. Additionally,
this formal process is intertwined with NNSA's
comprehensive work authorization system which, in-and-of-itself, is
tightly coupled to the financial and to the contracting mechanisms. The
work authorization process is also captured in a Business Operating
Policy document that codifies the ability of Contracting Officers to
acknowledge and accept the scope of work directed by the Federal
Program Managers and subsequently to modify the operating contracts.
NNSA also wants to point out that the report states, on page 12, that
according to our existing policy concerning the appointment of
Contracting Officer Representatives, Headquarters program officials
must first be designated as program managers before they can be
designated as CORs. This is not completely correct. Within our weapons
program we have CORs that are supervisors of program managers.
Regarding the recommendation related to the postponement of any
decrease in the level of NNSA's direct federal oversight until it has a
program management structure in place and has completed it workforce
plan, NNSA has embarked on an aggressive reorganization schedule.
Restructuring such as NNSA has performed during the last two years is
an intensive effort that has serious impacts on the morale of the
workers. Dragging the process out only continues the ineffective time
period associated with any restructuring. The fact that NNSA has moved
forward in its downsizing should serve as the catalyst to ensure that
both the Federal employees and the Contractors redefine oversight by
prioritizing on the highest risk activities with the resources they
each have. Hiring more resources would not necessarily improve
oversight while increasing cost to the taxpayer. GAO should take into
consideration that the oversight policy associated with the Contractor
Assurance Systems is being phased in within NNSA along with NNSA's
restructure. The Sandia Contract contains a "transition" statement
which states the following: "...The Contractor's Management systems
that exist on October 1, 2003 will continue until the Contractor
addresses the applicable requirements contained in Contract Clauses H-
2 through H-10. For changes that do require NNSA approval, the
Contractor will not implement a change until it is formally approved by
the Contracting Officer." This statement in the contract allows the
NNSA to address the relative risk before accepting changes. Since the
Site Offices are actually increasing in size, a phased approach makes
sense. For sites like Los Alamos or Pantex, who have more difficulty in
staffing their sites because of their locations, a phased approach is
provided for.
While completing and implementing data-driven workforce planning for
the longer term may be an appropriate recommendation, NNSA believes
that GAO reached a conclusion significantly different than one that
NNSA is working from. Although it is true that NNSA's current staff
reduction goals have been relatively short-term in nature, being
targeted to the end of Fiscal Year 2004, they are not based on short-
term or arbitrary management judgements, as the report would
indicate. NNSA has conducted a logical, methodical, fact-based analysis
in designing its long-term Re-engineering and Restructuring
Initiatives. These initiatives are designed to meet the mandates and
expectations of Congress to improve the overall management of the
weapons and nonproliferation programs, while enhancing overall program
and worker performance, minimizing skill gaps, and identifying
heretofore unmet critical hiring needs. Teams of program managers and
staff analysts worked during much of 2002 to establish an
organizational baseline and to benchmark, validate, and align functions
within defined major organizational units as part of NNSA's well-
documented re-engineering initiative, resulting in the Matrix of NNSA
Functions and Activities by Location, which provided the template for
NNSA's major reorganization in December 2002. Since the stand-up of the
NNSA's new management and organization structures, much has continued
to be done to develop and refine NNSA's workforce planning and ongoing
restructuring initiatives. NNSA feels strongly enough about this
subject that we welcome the opportunity to provide documentation in
evidence to support NNSA's conclusions.
I have provided additional comments as an enclosure to support the NNSA
conclusion we have reached regarding the workforce planning and human
capital issues.
Should you have any questions regarding this response, please contact
Richard Speidel, Director, Policy and Internal Controls Management. He
may be contacted at 202-586-5009.
Sincerely yours,
Signed by:
Michael C. Kane:
Associate Administrator for Management and Administration:
Enclosure:
[End of section]
Appendix II: GAO Contact and Staff Acknowledgments:
GAO Contact:
James Noel (202) 512-3591:
Acknowledgments:
In addition to the individual named above, Arturo Holguin, Robert
Kigerl, Jonathan McMurray, Christopher Pacheco, Anthony Padilla, Judy
Pagano, and Ellen Rubin made key contributions to this report.
FOOTNOTES
[1] U.S. General Accounting Office, Nuclear Weapons: Improved
Management Needed to Implement Stockpile Stewardship Program
Effectively, GAO-01-48 (Washington, D.C.: Dec. 14, 2000).
[2] See for example, U.S. General Accounting Office, National Ignition
Facility: Management and Oversight Failures Caused Major Cost Overruns
and Schedule Delays, GAO/RCED-00-271 (Washington, D.C.: Aug. 8, 2000)
and U.S. General Accounting Office, Nuclear Security: NNSA Needs to
Better Manage Its Safeguards and Security Program, GAO-03-471
(Washington, D.C.: May 3, 2003).
[3] The Office of Naval Reactors is managed as a separate entity within
NNSA.
[4] U.S. General Accounting Office, Department of Energy: Views on the
Progress of the National Nuclear Security Administration in
Implementing Title 32, GAO-01-602T (Washington, D.C.: Apr. 4, 2001).
[5] U.S. General Accounting Office, NNSA Management: Progress in the
Implementation of Title 32, GAO-02-93R (Washington, D.C.: Dec. 12,
2001).
[6] U.S. General Accounting Office, Department of Energy: NNSA
Restructuring and Progress in Implementing Title 32, GAO-02-451T
(Washington, D.C.: Feb. 26, 2002).
[7] For the site offices we did not visit, we used the interview guide
to conduct telephone interviews. Also, the practical difficulties of
administering a semi-structured interview guide may introduce errors,
commonly referred to as nonsampling errors. For example, measurement
errors are introduced if difficulties exist in how a particular
question is interpreted or in the sources of information available to
respondents in answering a question. To reduce measurement error, we
conducted two pretests with site office managers to make sure questions
and response categories in our interview guide were interpreted in a
consistent manner. We made relevant changes to the questions based upon
these pretests.
[8] See U.S. General Accounting Office, Human Capital: A Self-
Assessment Checklist for Agency Leaders, GAO/OCG-00-14G (Washington,
D.C.: Sept. 2000); U.S. General Accounting Office, A Model Of Strategic
Human Capital Management, GAO-02-373SP (Washington, D.C.: March 15,
2002); and U.S. General Accounting Office, Human Capital: Key
Principles for Effective Strategic Workforce Planning, GAO-04-39
(Washington, D.C.: Dec. 11, 2003).
[9] President's Foreign Intelligence Advisory Board, Science At Its
Best, Security At Its Worst, (Washington, D.C.: June 1999).
[10] Institute for Defense Analyses, The Organization and Management of
the Nuclear Weapons Program, (Washington, D.C.: March 1997).
[11] GAO-01-48.
[12] U.S. General Accounting Office, Standards for Internal Control in
the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November
1999).
[13] See U.S. General Accounting Office, High-Risk Series: An Update,
GAO-01-263 (Washington, D.C.: January 2001), and U. S. General
Accounting Office, High Risk Series: An Update, GAO-03-119 (Washington,
D.C.: January 2003). Also, see U.S. General Accounting Office,
Performance and Accountability Series--Major Management Challenges and
Program Risks: A Governmentwide Perspective, GAO-01-241 (Washington,
D.C.: January 2001). In addition, see the accompanying 21 reports
(numbered GAO-01-242 through GAO-01-262) on specific agencies.
[14] GAO-04-39.
[15] U.S. General Accounting Office Nuclear Weapons: Opportunities
Exist to Improve the Budgeting, Cost Accounting, and Management
Associated with the Stockpile Life Extension Program, GAO-03-583
(Washington, D.C. July 28, 2003).
[16] In commenting on our report, NNSA stated that for its weapons
programs, it does have contracting officer representatives that are
supervisors of program managers.
[17] GAO-02-93R.
[18] GAO-02-451T.
[19] U.S. General Accounting Office, Nuclear Security: NNSA Needs to
Better Manage Its Safeguards and Security Program, GAO-03-471
(Washington, D.C.: May 30, 2003).
[20] U.S. General Accounting Office, Radioactive Waste: DOE Has Acted
to Address Delay in New Facility at Livermore Laboratory, but
Challenges Remain, GAO-03-558 (Washington, D.C.: May 15, 2003).
[21] U.S. General Accounting Office, Nuclear Weapons: Opportunities
Exist to Improve the Budgeting, Cost Accounting, and Management
Associated with the Stockpile Life Extension Program, GAO-03-583
(Washington, D.C.: July 28, 2003).
[22] U.S. General Accounting Office, Department of Energy: Mission
Support Challenges Remain at Los Alamos and Lawrence Livermore National
Laboratories, GAO-04-370 (Washington, D.C.: Feb. 27, 2004).
[23] Department of Energy, Management Challenges at the Department of
Energy, DOE/IG-0626 (Washington, D.C.: Nov. 12, 2003).
[24] Historically, NNSA has depended upon a combination of contractor
controls and direct federal oversight to help manage the risks
associated with the work conducted at its laboratories. However, there
are diverse views on the proper balance between federal oversight and
reliance on contractors' systems of internal controls. Since 1990,
others and we have criticized NNSA for inadequate federal oversight and
failure to hold contractors accountable. In contrast, a 1995 Secretary
of Energy Advisory Board task force report on alternative futures for
the national laboratories criticized DOE for excessive oversight and
micromanagement of contractors' activities.
[25] U.S. General Accounting Office, Department of Energy: Mission
Support Challenges Remain at Los Alamos and Lawrence Livermore National
Laboratories, GAO-04-370 (Washington, D.C.: Feb. 27, 2004).
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