Nuclear Weapons
National Nuclear Security Administration's Plans for Its Uranium Processing Facility Should Better Reflect Funding Estimates and Technology Readiness Gao ID: GAO-11-103 November 19, 2010In Process
The UPF project costs have increased since NNSA's initial estimates in 2004 and construction may be delayed due to funding shortfalls. NNSA's current estimate prepared in 2007 indicates that the UPF will cost between $1.4 and $3.5 billion to construct--more than double NNSA's 2004 estimate of between $600 million and $1.1 billion. In addition, costs for project engineering and design, which are less than halfway completed, have increased by about 42 percent--from $297 to $421 million--due in part to changes in engineering and design pricing rates. With regard to the project's schedule, NNSA currently estimates that UPF construction will be completed as early as 2018 and as late as 2022. However, because of a funding shortfall of nearly $200 million in fiscal year 2011, NNSA officials expect that the UPF will not be completed before 2020, which could also result in additional costs. NNSA is developing 10 new technologies for use in the UPF and is using a systematic approach--Technology Readiness Levels (TRL)--to gauge the extent to which technologies have been demonstrated to work as intended. Industry best practices and Department of Energy (DOE) guidance recommend achieving specific TRLs at critical project decision points--such as establishing a cost and schedule performance baseline or beginning construction--to give optimal assurance that technologies are sufficiently ready. However, NNSA does not expect all 10 new technologies to achieve the level of maturity called for by best practices before making critical decisions. For example, NNSA is developing a technology that combines multiple machining operations into a single, automated process--known as agile machining--but does not expect it to reach an optimal TRL until 18 months after one of UPF's critical decisions--approval of a formal cost and schedule performance baseline--is made. In addition, DOE's guidance for establishing optimal TRLs prior to beginning construction is not consistent with best practices or with our previous recommendations. As a result, 6 of 10 technologies NNSA is developing are not expected to reach optimum TRLs consistent with best practices by the time UPF construction begins. If critical technologies fail to work as intended, NNSA may need to revert to existing or alternate technologies, possibly resulting in changes to design plans and space requirements that could delay the project and increase costs. Changes in the composition and size of the nuclear weapons stockpile could occur as a result of changes in the nation's nuclear strategy, but NNSA officials and a key study said that the impact of these changes on the project should be minor. For example, the New Strategic Arms Reduction Treaty signed in April 2010 by the leaders of the United States and Russia would, if ratified, reduce the number of deployed strategic warheads from about 2,200 to 1,550. According to NNSA officials, NNSA and DOD have cooperated closely and incorporated key nuclear weapons stockpile changes into UPF's design. Also, an independent study found that most of the UPF's planned space and equipment is dedicated to establishing basic uranium processing capabilities that are not likely to change, while only a minimal amount--about 10 percent--is for meeting current stockpile size requirements. GAO is making five recommendations for, among other things, improving the UPF's cost and funding plans, ensuring that new UPF technologies reach optimal levels of maturity prior to critical project decisions, and for improving DOE guidance. NNSA generally agreed with the recommendations.
RecommendationsOur 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.
Director: Eugene E. Aloise Team: Government Accountability Office: Natural Resources and Environment Phone: (202) 512-6870GAO-11-103, Nuclear Weapons: National Nuclear Security Administration's Plans for Its Uranium Processing Facility Should Better Reflect Funding Estimates and Technology Readiness
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United States Government Accountability Office:
GAO:
Report to the Subcommittee on Energy and Water Development, Committee
on Appropriations, U.S. Senate:
November 2010:
Nuclear Weapons:
National Nuclear Security Administration's Plans for Its Uranium
Processing Facility Should Better Reflect Funding Estimates and
Technology Readiness:
GAO-11-103:
GAO Highlights:
Highlights of GAO-11-103, a report to the Subcommittee on Energy and
Water Development, Committee on Appropriations, U.S. Senate.
Why GAO Did This Study:
Built in the 1940s and 1950s, the Y-12 National Security Complex,
located in Oak Ridge, Tennessee, is the National Nuclear Security
Administration‘s (NNSA) primary site for enriched uranium activities.
Because Y-12 facilities are outdated and deteriorating, NNSA is
building a more modern facility”known as the Uranium Processing
Facility (UPF). NNSA estimates that the UPF will cost up to $3.5
billion and save over $200 million annually in operations, security,
and maintenance costs. NNSA also plans to include more advanced
technologies in the UPF to make uranium processing and component
production safer.
GAO was asked to (1) assess NNSA‘s estimated cost and schedule for
constructing the UPF; (2) determine the extent to which UPF will use
new, experimental technologies, and identify resultant risks, if any;
and (3) determine the extent to which emerging changes in the nuclear
weapons stockpile could affect the UPF project. To conduct this work,
GAO reviewed NNSA technology development and planning documents and
met with officials from NNSA and the Y-12 plant.
What GAO Found:
The UPF project costs have increased since NNSA‘s initial estimates in
2004 and construction may be delayed due to funding shortfalls. NNSA‘s
current estimate prepared in 2007 indicates that the UPF will cost
between $1.4 and $3.5 billion to construct––more than double NNSA‘s
2004 estimate of between $600 million and $1.1 billion. In addition,
costs for project engineering and design, which are less than halfway
completed, have increased by about 42 percent”from $297 to $421
million”due in part to changes in engineering and design pricing
rates. With regard to the project‘s schedule, NNSA currently estimates
that UPF construction will be completed as early as 2018 and as late
as 2022. However, because of a funding shortfall of nearly $200
million in fiscal year 2011, NNSA officials expect that the UPF will
not be completed before 2020, which could also result in additional
costs.
NNSA is developing 10 new technologies for use in the UPF and is using
a systematic approach”Technology Readiness Levels (TRL)”to gauge the
extent to which technologies have been demonstrated to work as
intended. Industry best practices and Department of Energy (DOE)
guidance recommend achieving specific TRLs at critical project
decision points”such as establishing a cost and schedule performance
baseline or beginning construction”to give optimal assurance that
technologies are sufficiently ready. However, NNSA does not expect all
10 new technologies to achieve the level of maturity called for by
best practices before making critical decisions. For example, NNSA is
developing a technology that combines multiple machining operations
into a single, automated process––known as agile machining––but does
not expect it to reach an optimal TRL until 18 months after one of UPF‘
s critical decisions”approval of a formal cost and schedule
performance baseline”is made. In addition, DOE‘s guidance for
establishing optimal TRLs prior to beginning construction is not
consistent with best practices or with our previous recommendations.
As a result, 6 of 10 technologies NNSA is developing are not expected
to reach optimum TRLs consistent with best practices by the time UPF
construction begins. If critical technologies fail to work as
intended, NNSA may need to revert to existing or alternate
technologies, possibly resulting in changes to design plans and space
requirements that could delay the project and increase costs.
Changes in the composition and size of the nuclear weapons stockpile
could occur as a result of changes in the nation‘s nuclear strategy,
but NNSA officials and a key study said that the impact of these
changes on the project should be minor. For example, the New Strategic
Arms Reduction Treaty signed in April 2010 by the leaders of the
United States and Russia would, if ratified, reduce the number of
deployed strategic warheads from about 2,200 to 1,550. According to
NNSA officials, NNSA and DOD have cooperated closely and incorporated
key nuclear weapons stockpile changes into UPF‘s design. Also, an
independent study found that most of the UPF‘s planned space and
equipment is dedicated to establishing basic uranium processing
capabilities that are not likely to change, while only a minimal
amount”about 10 percent”is for meeting current stockpile size
requirements.
What GAO Recommends:
GAO is making five recommendations for, among other things, improving
the UPF‘s cost and funding plans, ensuring that new UPF technologies
reach optimal levels of maturity prior to critical project decisions,
and for improving DOE guidance. NNSA generally agreed with the
recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-103[ or key
components. For more information, contact Gene Aloise at (202) 512-
3841 or aloisee@gao.gov.
[End of section]
Contents:
Letter:
Background:
UPF Project Costs Have Increased Since Initial Estimate and
Construction May Be Delayed:
NNSA Is Developing Several New Technologies for the UPF and Is
Assessing Their Maturity but Cannot Be Certain That All Technologies
Will Work as Intended:
Emerging Changes in the Composition and Size of the Nuclear Weapons
Stockpile May Only Have a Minor Effect on the UPF:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Definitions of Technology Readiness Levels:
Appendix III: Comments from the National Nuclear Security
Administration:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: New Technologies NNSA Is Developing for the UPF:
Table 2: TRL Definitions:
Table 3: TRLs for 10 Technologies NNSA Is Developing for the UPF:
Abbreviations:
DOD: Department of Defense:
DOE: Department of Energy:
NASA: National Aeronautics and Space Administration:
NNSA: National Nuclear Security Administration:
START: Strategic Arms Reduction Treaty:
TRL: Technology Readiness Level:
UPF: Uranium Processing Facility:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
November 19, 2010:
The Honorable Byron L. Dorgan:
Chairman:
The Honorable Robert F. Bennett:
Ranking Member:
Subcommittee on Energy and Water Development:
Committee on Appropriations:
United States Senate:
The Y-12 National Security Complex (Y-12 plant), located in Oak Ridge,
Tennessee, is the National Nuclear Security Administration's (NNSA)
site for conducting enriched uranium activities, producing uranium-
related components for nuclear warheads and bombs, and processing
nuclear fuel for the Navy.[Footnote 1] Built in the 1940s and 1950s,
the uranium processing operations at the Y-12 plant are outdated and
deteriorating. According to NNSA officials, upgrading the Y-12 plant
and maintaining it over the long term would require costly
investments. In addition, the nation's nuclear weapons stockpile is
shrinking, which has reduced the need for high-capacity enriched
uranium activities and nuclear weapons component production.
Therefore, in 2004, NNSA decided to construct a more modern facility--
known as the Uranium Processing Facility (UPF)--that will consolidate
uranium activities at the Y-12 plant from about 800,000 to 350,000
square feet. NNSA estimates the new facility will cost as much as $3.5
billion but that it will save over $200 million annually in
operations, security, and maintenance costs.
As NNSA consolidates its facilities, it plans to develop more advanced
technologies to make uranium processing and component production
safer, more effective, and more efficient. Uranium processing uses
chemicals and other means to recover enriched uranium from
disassembled components and other scrap or salvaged materials in
NNSA's inventory for use as fuel for naval and research reactors and
re-use in new or refurbished nuclear weapons components. Component
production includes enriched uranium metalworking and other processes
to assemble new or refurbished nuclear weapons components. Uranium
processing and component production also involve hazardous processes
that could expose workers to radiation or other dangers. NNSA is
developing new, more advanced uranium processing and component
production technologies that it hopes will reduce these potential
hazards, according to NNSA officials. However, the risks inherent in
relying on new, experimental technologies could affect NNSA's ability
to construct the UPF within established cost and schedule estimates.
NNSA's plans for the UPF have also been affected by changes in the
composition and size of the U.S. nuclear weapons stockpile. Existing
uranium processing and component production capabilities at the Y-12
plant were designed to meet the large-scale demand that existed during
the Cold War. The end of the Cold War has led to large reductions in
the number of nuclear weapons in the stockpile, reducing the demand
for uranium processing and component production.
In this context, you asked us to review the UPF. Our objectives were
to (1) assess NNSA's estimated cost and schedule for constructing the
UPF; (2) determine the extent to which the UPF will use new,
experimental technologies and any risks to the project's cost and
schedule of replacing the existing, proven technologies; and (3)
determine the extent to which emerging changes in the nuclear weapons
stockpile could affect the UPF.
To assess NNSA's estimated cost and schedule for constructing the UPF,
we reviewed NNSA and contractor documents describing the project's
cost and schedule estimates and recent design-related cost and
schedule performance as well as documents showing cost and schedule
implications for the future. We also interviewed officials at NNSA's Y-
12 Site Office and NNSA's contractor for the Y-12 plant--Babcock &
Wilcox Technical Services Y-12, LLC. To determine the extent to which
the UPF will use new, experimental technologies and how NNSA plans to
mitigate any resultant risks, we reviewed agency and contractor
documents, including NNSA technology readiness reports and an
independent study examining technology-related project risks. In
addition, to understand NNSA's technology development goals, progress,
and obstacles, we interviewed key NNSA and Y-12 plant officials
responsible for maturing critical UPF technologies. We also visited
the existing uranium processing and component production facilities
that will be replaced by the UPF and observed demonstrations of
several of the new technologies being developed. To determine the
extent to which emerging changes in the nuclear weapons stockpile
could affect the UPF project, we reviewed agency and contractor
documents describing the key factors NNSA considered in developing UPF
design plans that meet stockpile requirements. To obtain an
independent perspective on the UPF design plans and approach, we also
talked with officials at the Los Alamos and Lawrence Livermore
National Laboratories who design the enriched uranium components that
are to be produced at the UPF. We also reviewed a key independent
study and discussed report findings with the study's principal author
on how NNSA's UPF design plans are integrated with nuclear weapon
stockpile requirements and how emerging changes in the stockpile could
affect the UPF project.
We performed our work between December 2009 and November 2010, in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives. Appendix I
contains a detailed description of our scope and methodology.
Background:
Construction of the Y-12 plant in Oak Ridge, Tennessee, began in 1943
as part of the World War II Manhattan Project. The plant's early
mission included the processing of enriched uranium necessary for
building nuclear weapons. Today, the Y-12 plant continues its mission
as NNSA's primary facility in the nuclear weapons complex for
producing enriched uranium components necessary for maintaining the
U.S. nuclear weapons stockpile. In addition, the Y-12 plant is used
for dismantling weapons components, storing and managing nuclear
material suitable for nuclear weapons, and processing fuel for Naval
and research reactors, among other things.
Currently, the Y-12 plant consists of a patchwork of facilities and
equipment that are not always efficiently connected, requiring the
transport of materials during processing and component production
operations. According to NNSA documents, the workflow is inefficient
and requires a significant number of security personnel to patrol a
relatively large protected area. Moreover, because of age and facility
deterioration, operations and maintenance costs are continually rising
with frequent outages and interruption in work schedules. According to
NNSA officials, the existing facilities also do not meet a number of
significant regulatory and design standards that are either in place
or projected to be in the near future. For example, these facilities
do not meet current standards for protection against natural
occurrences or fire. Furthermore, existing Y-12 plant facilities do
not provide optimal worker safety and protection from exposure to
radioactive materials, including uranium, and other hazardous
materials. Although these facilities have had periodic upgrades, the
equipment, buildings, and support utilities need to be modernized for
the Y-12 plant to continue to meet its mission, according to NNSA
officials.
NNSA plans to transfer much of the ongoing uranium processing work and
uranium component production that is performed at existing facilities
at the Y-12 plant to the UPF in order to continue to support the
nation's nuclear weapons stockpile and provide uranium fuel to the
U.S. Navy, among other things. The proposed UPF is to consist of a
single, consolidated uranium processing and component production
facility to encompass less than half the size of the existing Y-12
plant facilities. NNSA officials expect that a combination of modern
processing equipment and consolidated operations at the UPF will
significantly reduce both the size and cost of enriched uranium
processing at the Y-12 plant. Specifically, the officials said that
the more-efficient layout of the new facility and more-modern
equipment will significantly reduce processing and production costs,
including costs associated with facility and equipment maintenance and
maintaining worker and environmental health and safety.
DOE Order 413.3A establishes a process for managing the department's
major projects--including contractor-run projects that build large
complexes that often house unique equipment and technologies. The
order covers activities from identification of need through project
completion.[Footnote 2] Specifically, the order establishes five major
milestones--or critical decision points--that span the life of a
project. These critical decision points are:
* Critical Decision 0: Approve mission need.
* Critical Decision 1: Approve alternative selection and cost range.
* Critical Decision 2: Approve performance baseline.
* Critical Decision 3: Approve start of construction.
* Critical Decision 4: Approve start of operations or project
completion.
Order 413.3A specifies the requirements that must be met, along with
the documentation necessary, to move a project past each milestone. In
addition, the order requires that DOE senior management review the
supporting documentation and approve the project at each milestone.
DOE also provides suggested approaches for meeting the requirements
contained in Order 413.3A through additional guidance.
For years, DOE and NNSA have had difficulty managing their contractor-
run projects. Despite repeated recommendations from us and others to
improve project management, DOE and NNSA continue to struggle to keep
their projects within their cost, scope, and schedule estimates.
Because of DOE's history of inadequate management and oversight of its
contractors, we have included contract and project management in NNSA
and DOE's Office of Environmental Management on our list of government
programs at high risk for fraud, waste, abuse, and mismanagement since
1990.[Footnote 3]
In response to its continued presence on our high-risk list, DOE
analyzed the root causes of its contract and project management
problems in 2007 and identified several major findings.[Footnote 4]
Specifically, DOE found that the department:
* often does not complete front-end planning to an appropriate level
before establishing project performance baselines;
* does not objectively identify, assess, communicate, and manage risks
through all phases of project planning and execution;
* fails to request and obtain full project funding;
* does not ensure that its project management requirements are
consistently followed; and:
* often awards contracts for projects prior to the development of an
adequate independent government cost estimate.
To address these issues and improve its project and contract
management, DOE has prepared a corrective action plan with various
corrective measures to track its progress.[Footnote 5] The measures
DOE is implementing include making greater use of third-party reviews
prior to project approval, establishing objective and uniform methods
of managing project risks, better aligning cost estimates with
anticipated budgets, and establishing a federal independent government
cost-estimating capability.
UPF Project Costs Have Increased Since Initial Estimate and
Construction May Be Delayed:
NNSA's current cost estimates for constructing the UPF are already
more than double its initial estimate. Moreover, the $200 million
estimated annual savings in operations, maintenance, and security
costs may not begin to be realized until the transition between
existing uranium processing facilities at the Y-12 plant and the new
UPF is complete. Although NNSA's current estimate prepared in 2007
indicates that the UPF construction will be completed between 2018 and
2022, NNSA officials expect the UPF will not be completed before 2020
due to funding shortfalls.
UPF Project Design Costs Have Already Increased:
NNSA's current estimate, which was prepared in 2007 at critical
decision 1, indicates that the UPF will cost between $1.4 and $3.5
billion to construct. This is more than double NNSA's initial 2004
estimate that was prepared at critical decision 0 of between $600
million and $1.1 billion. Cost estimates for project engineering and
design, which are less than halfway completed, have already increased
by about 42 percent--from $297 to $421 million. According to UPF
project officials, these increases are the result of, among other
things, changes in engineering and design pricing rates.
In January 2010, we reported that NNSA's current cost estimate for the
UPF that was prepared in 2007 at critical decision 1 did not meet all
cost estimating best practices because it did not exemplify the
characteristics of a high-quality cost estimate.[Footnote 6] As
identified by the professional cost-estimating community in our Cost
Estimating and Assessment Guide, a high-quality cost estimate is
credible, well documented, accurate, and comprehensive.[Footnote 7]
However, our January 2010 report found that the UPF's current cost
estimate prepared in 2007 only partially or somewhat met these four
characteristics. For example, we found the UPF cost estimate only
somewhat credible because an independent cost estimate had not been
conducted. Instead, the project received an independent cost review as
part of an independent technical review. An independent cost review is
less rigorous than an independent cost estimate because it only
addresses the cost estimate's high-value, high-risk, and high-interest
aspects without evaluating the remainder of the estimate. Moreover, we
found the UPF cost estimate was only somewhat accurate because it was
not based on a reliable assessment of costs most likely to be
incurred. The UPF cost estimate used an estimating methodology that
was not appropriate for a project whose design was not stable and that
was still anticipated to change. NNSA's technical independent review
of the UPF stated that the project's cost-estimate range was
unsupported in part because it was prepared with significant detail--
for example, the estimate provided a count of pipings and fittings for
the facility--despite the fact that there had been no design of
technical systems or of the building on which to base these details.
Our January 2010 report recommended, among other things, that DOE
follow best practices and conduct an independent cost estimate for all
major projects.
In response to our recommendation and recent congressional committee
direction, DOE's Office of Cost Analysis is conducting an independent
cost estimate on the UPF project before critical decision 2--approval
of a formal cost and schedule performance baseline. This independent
cost estimate is expected to be completed by the end of 2010. While
this independent cost estimate may be used by NNSA headquarters
officials as part of its process for approving the project's
performance baseline, it is uncertain the extent to which Y-12
officials will accept the independent cost estimate results as
reliable. Specifically, NNSA Y-12 project officials told us that the
independent cost estimate will be based, in large part, on a
subjective assessment of the independent cost estimating team's past
experiences on similar construction projects. This is in contrast to
the cost estimate prepared by the UPF project that is based on a
detailed breakdown of the estimated prices of labor and materials
specific to the UPF. Project officials noted that DOE's Office of Cost
Analysis currently has no formal process for reconciling the two
estimates given their different approaches. However, officials from
DOE's Office of Cost Analysis told us that the independent cost
estimate will be compared to the scheduled work and construction
requirements specific to the UPF to understand what assumptions and
cost elements are causing differences, if any, between the two
estimates. According to these officials, this comparison will enable
them and NNSA Y-12 project officials to understand cost risks for the
project and determine how to address these issues. In addition, DOE is
in the process of developing draft policy that is expected to help
establish requirements and responsibilities for developing cost
estimates for programs and performing independent estimates for
program and project cost estimates. However, the current version of
the draft policy does not specifically address how differing cost
estimates should be reconciled.
Estimated Savings from the New Facility May Not Begin to Be Realized
until Several Years after the UPF Is Built:
According to NNSA officials, efficiency gains resulting from
consolidating facilities at the Y-12 plant are likely to result in a
savings of about $200 million annually in operations, maintenance,
security, and other costs. For example, NNSA estimates it will save
$54 million annually from the large reduction in the UPF's security
perimeter when compared to the security perimeter around existing
uranium processing facilities at the Y-12 plant. NNSA estimates cost
savings will also result from the smaller amount of hazardous and
radioactive waste the UPF will generate as compared to the existing
facilities.
However, these savings may not begin to be realized until the
transition between existing uranium processing facilities at the Y-12
plant and the new UPF is complete because both may need to operate
simultaneously for an indeterminate period until the old facilities
are decontaminated and decommissioned. For example, the Y-12 plant may
need to continue to maintain some security in and around the old
uranium processing facilities for some time after the UPF is built and
operating because significant quantities of enriched uranium could
still be present in the old facilities' piping and processing
equipment during decontamination and decommissioning. According to
NNSA officials, security measures in the old facilities can be
significantly reduced once enriched uranium inventories are
transferred to the UPF. In addition, unknown quantities of hazardous
and radioactive waste will continue to be generated during the cleanup
of the old facilities--prior to demolishing them--that will need to be
treated and disposed, and potentially secured.
Although NNSA Currently Estimates UPF Construction Will Be Completed
between 2018 and 2022, Funding Shortfalls Could Result in Delays:
NNSA's current estimate prepared in 2007 at critical decision 1
indicates that the UPF construction will be completed as early as 2018
and as late as 2022. However, NNSA officials currently expect the UPF
will not be completed before 2020 due to funding shortfalls. We have
previously reported on DOE's use of unrealistic funding estimates
while establishing cost and schedule baselines--a risk that also
applies to NNSA major construction projects.[Footnote 8] In addition,
as discussed earlier, DOE's own root cause analysis of its contract
and project management problems found that the department, among other
things, fails to request and obtain full project funding. Consistent
with our prior work and DOE's analysis, a 2007 technical independent
review on the UPF project found a large disconnect between the funding
available in NNSA's annual spending plan and the assumed annual
funding levels in the UPF cost estimate.[Footnote 9] Specifically, the
review found that planned funding levels for fiscal years 2006 through
2008 did not meet the funding needs for the amount of work planned for
those years. Despite this early warning of funding risks, NNSA
officials approved the initial project cost range a few months after
this technical review.
Moreover, with the submission of the President's budget for fiscal
year 2010, NNSA officials anticipate a funding shortfall of nearly
$200 million in fiscal year 2011 between what NNSA estimated the UPF
project needed and what NNSA included in its budget request to
Congress. NNSA officials said that this shortfall will likely delay
project milestones and ultimately delay the UPF's estimated project
completion from as early as 2018 to at least 2020 or later. This delay
could, in turn, increase project costs. Potential funding shortfalls
in subsequent years have also been identified as an ongoing high risk
by project officials, which could result in additional unknown project
delays and cost increases.
To address this concern about funding shortfalls, NNSA requested an
internal review in February 2010 to ensure that UPF project funding
expectations from fiscal years 2012 through 2016 are reasonable.
According to NNSA's briefing on the results of the review, NNSA's
funding analyses appears to have addressed only whether the project
would likely be able to spend the funds it requests in fiscal years
2012 and 2013. Importantly, the analysis appears to be incomplete
because it (1) covers only 2 years and (2) does not address whether
NNSA can realistically provide needed UPF funding given other NNSA
priorities, such as other construction projects that will compete for
funds in the same years. For example, according to NNSA's Future Years
Nuclear Security Program accompanying the DOE's fiscal year 2011
congressional budget request, NNSA expects to request about $305
million in fiscal year 2012 to fund the Chemistry and Metallurgy
Research Facility Replacement project at the Los Alamos National
Laboratory, while requesting about one-third that amount--about $105
million--for the UPF.[Footnote 10] Without assurance that NNSA mission
priorities and its funding plans have been closely aligned with the
UPF project's assumed annual funding levels, the UPF's cost and
schedule estimates may not be credible.
NNSA Is Developing Several New Technologies for the UPF and Is
Assessing Their Maturity but Cannot Be Certain That All Technologies
Will Work as Intended:
NNSA is developing 10 new technologies to install in the UPF and is
using a systematic approach to gauge their maturity; however, NNSA may
lack assurance that all technologies will work as intended before
making key project decisions in accordance with best practices and our
prior recommendations. If critical technologies do not work as
intended, project officials may have to revert to existing or
alternate technologies, which may result in higher costs and schedule
delays.
NNSA Is Developing 10 New Technologies for the UPF and Is Using a
Systematic Approach to Gauge Their Maturity:
NNSA is developing 10 advanced uranium processing and nuclear weapons
component production technologies for the UPF that, according to NNSA
officials, will be more effective and efficient than existing
technologies and that will reduce the hazards workers face at the Y-12
plant. (See table 1.) NNSA uses both chemical and metalworking
processes and technologies to perform its work in the existing aging
facilities at the Y-12 plant. For example, NNSA uses chemicals and
other means to recover enriched uranium from disassembled components
and other scrap or salvaged materials in NNSA's inventory. Once the
uranium is recovered, it can be transformed into other forms,
including powder-like enriched uranium oxide or uranium metal suitable
for storage. In addition, NNSA uses enriched uranium metalworking
processes to, among other things, prepare new or refurbished nuclear
weapons components. For example, metalworking processes can include
heating the uranium into liquid form so it can be poured into casts to
create a variety of needed components. Metalworking processes also
include machining operations where the uranium metal is cut on special
tools at high speeds to create needed enriched uranium shapes.
However, existing technologies at the Y-12 plant have become outdated,
resulting in lesser levels of efficiency than would be possible with
newer technologies. Existing technologies also expose workers to
greater hazards because, for example, current machining operations are
largely exposed and not automated, placing operators in greater
contact with hazardous and radioactive materials.
Table 1: New Technologies NNSA Is Developing for the UPF:
Technology: Microwave casting;
Description: A process that uses microwave energy to heat and cast
uranium metal into various shapes.
Technology: Infrared heating;
Description: A process to preheat and soften uranium metal prior to
other processing activities.
Technology: Alternate processing of pins;
Description: A process to form uranium metal into custom shapes.
Technology: Bulk metal oxidation;
Description: A process that converts bulk uranium metal to oxide.
Technology: UNH calcination;
Description: A process that converts impure solutions into a stable,
storable condition.
Technology: Saltless direct oxide reduction;
Description: A process that converts uranium dioxide into metal.
Technology: Recovery extraction centrifugal contactors;
Description: A process that uses solvent to extract uranium for
purposes of purification.
Technology: Agile machining;
Description: A system that combines multiple machining operations--for
fabricating metal into various shapes--into a single process.
Technology: Chip management;
Description: An automated process that reduces operator interactions
with machining process and improves worker safety by minimizing
exposure to radioactive metal chips. It is one of the multiple
operations to be performed through agile machining.
Technology: Special casting;
Description: A custom process for casting uranium metal into various
shapes.
Source: NNSA.
[End of table]
Among the new technologies NNSA is developing are new chemical
processing technologies for the UPF to address problems associated
with current chemical processing technologies. For example:
* Bulk metal oxidation. This new technology for converting bulk
uranium metal into a powder-like oxide will eliminate some
intermediate processing steps in use at the Y-12 plant. The technology
is expected to reduce the size of facilities needed for chemical
processing and lessen workers' exposure to radiation and other
hazards, among other things.
* Saltless direct oxide reduction. This new technology is expected to
convert uranium dioxide into uranium metal, which would eliminate the
use of some materials and processes that NNSA considers potentially
hazardous to workers.
NNSA also plans to develop new metalworking technologies to produce
uranium-related components at the UPF, including:
* Microwave casting. This technology uses microwave energy to heat
uranium metal so that it can be poured into molds to produce various
forms. It will replace an existing heating and casting process and is
expected to be more effective, cost less to operate, and reduce the
operator's exposure to uranium, according to NNSA officials.
* Agile machining. This technology consists of a system that combines
multiple machining operations into a single, automated process. This
new process is expected to improve worker safety by minimizing
exposure to radioactive metal particles because all of the work will
be performed within a sealed enclosure called a glovebox.
* Chip management. Among one of four subsystems of agile machining,
NNSA is developing this technology as another means to achieve
improved worker safety. For example, the new technology will replace
manual operator tasks with a process that automatically collects
uranium shavings, or chips. NNSA hopes this technology will help to
minimize operator exposure to uranium.
Over the past several years, we have stressed the importance of
assessing technology readiness to complete projects successfully,
while avoiding cost increases and schedule delays.[Footnote 11]
Specifically, in 1999 and 2001, we reported that organizations using
best practices recognize that delaying the resolution of technology
problems until construction can result in at least a 10-fold cost
increase. We also reported that an assessment of technology readiness
is even more crucial at critical decision points in the project, such
as approving a formal cost and schedule performance baseline, so that
resources can be committed toward technology procurement and facility
construction. Proceeding through these critical decision points
without a credible and complete technology readiness assessment can
lead to problems later in the project because the early warning of
potential upcoming technology difficulties it provides would not be
available to project managers.
To ensure that the UPF's new technologies are sufficiently mature in
time to be used successfully, NNSA is using a systematic approach--
Technology Readiness Levels (TRL)--for measuring the technologies'
technical maturity. TRLs were pioneered by the National Aeronautics
and Space Administration (NASA) and have been used by the Department
of Defense (DOD) and other agencies in their research and development
efforts for several years. DOE and NNSA adopted the use of TRLs
agencywide in response to our March 2007 report that recommended that
DOE develop a consistent approach to assessing technology readiness.
[Footnote 12] As shown in table 2, TRLs are assigned to each critical
technology on a scale from a TRL 1, which is the least mature, through
TRL 9--the highest maturity level where the technology as a total
system is fully developed, integrated, and functioning successfully in
project operations. Appendix II provides additional detailed
information on TRLs.
Table 2: TRL Definitions:
TRL: TRL 1;
Definition: Basic principles observed.
TRL: TRL 2;
Definition: Concept/applications formulated.
TRL: TRL 3;
Definition: Proof of concept.
TRL: TRL 4;
Definition: Validated in a lab environment.
TRL: TRL 5;
Definition: Validated in a relevant environment.
TRL: TRL 6;
Definition: Subsystem demonstrated in a relevant environment.
TRL: TRL 7;
Definition: Subsystem demonstrated in an operational environment.
TRL: TRL 8;
Definition: Total system tested and demonstrated.
TRL: TRL 9;
Definition: Total system used successfully in project operations.
Source: GAO analysis of DOD, NASA, and DOE data.
[End of table]
According to best practices we identified in our 2007 report, TRLs are
useful because they:
* provide project managers with a method for measuring and
communicating technology maturity levels from a project's design to
its construction;
* provide a common language for project stakeholders, revealing any
gaps between a technology's current and needed readiness;
* assist in decision-making and ongoing project management;
* increase the transparency of risk acceptance to identify
technologies that most need resources and time; and:
* reduce the risk of investing in technologies that are too immature.
NNSA Will Not Have Optimal Assurance That All Technologies Will Work
as Intended before Reaching Key Project Dates:
NNSA has made progress using TRLs to gauge the maturity of critical
new UPF technologies; however, based on discussions with NNSA and
contractor officials and our analysis of NNSA documents, NNSA does not
expect to have optimal assurance as defined by best practices that 6
of the 10 new technologies being developed for UPF will work as
intended before key project decisions are made. According to best
practices we identified in our 2007 report, achieving an optimal level
of assurance--reaching specific TRL levels to provide assurance that
the technologies will work as intended--prior to making critical
decisions can mitigate the risk that new or experimental technologies
will not perform as intended, which can result in costly design
changes and construction delays.[Footnote 13]
DOE's guidance on the use of TRLs recommends that new technologies
achieve a TRL 6--the level where a prototype is demonstrated in a
relevant or simulated environment and partially integrated into the
system--by the time of critical decision 2--approval of a formal cost
and schedule baseline for the project.[Footnote 14] This is consistent
with practices of other federal agencies such as the Department of
Defense (DOD).[Footnote 15] Most of the technologies NNSA is
developing are expected to reach TRL 6 or higher by the time NNSA
approves a formal cost and schedule performance baseline for
installing this equipment in the UPF in July 2012.[Footnote 16] For
example, the new microwave casting technology is already at TRL 7.
According to NNSA officials, NNSA has recently installed microwave
casting technology in existing facilities at the Y-12 plant to
demonstrate that it will heat enriched uranium as designed in an
actual operational environment. As a result, NNSA will have high
assurance that this technology will work as intended prior to
approving the UPF's formal cost and schedule performance baseline.
However, NNSA does not expect to achieve the required levels of
readiness for another key technology. Specifically, based on
discussions with NNSA and contractor officials and our analysis of
NNSA documents, NNSA does not expect one critical technology it is
developing--agile machining--to reach TRL 6 until 18 months after
approval of the project's cost and schedule performance baseline.
Nevertheless, NNSA plans to approve its performance baseline with less
than optimal assurance that this technology will work as intended.
NNSA officials told us they have developed plans to address risks
resulting from this technology readiness gap. Specifically, NNSA
developed a technology maturation plan in early 2010 to track
technology development and engineering activities needed to bring the
agile machining technology to TRL 6.
DOE's guidance on the use of TRLs is inconsistent with best practices
used by DOD and with our previous recommendations with regard to
technology readiness at another critical decision--start of
construction. Specifically, DOD recommends that technologies reach TRL
7--the level where a prototype is demonstrated in an operational
environment--prior to beginning its production and deployment phase,
or the equivalent of beginning construction on a DOE project.
Similarly, in 2007, we recommended that DOE construction projects
demonstrate TRL 7 or higher before construction. Reaching this level
indicates that the technology prototype has been demonstrated in an
operating environment, has been integrated with other key supporting
subsystems, and is expected to have only minor design changes.
Nevertheless, DOE's guidance does not require technologies to advance
from TRL 6 to TRL 7 between the approval of a formal cost and schedule
baseline and the beginning of construction. Six of the 10 technologies
NNSA is developing are not expected to reach TRL 7 before UPF
construction begins. In the case of agile machining technology, NNSA
expects that the technology will have only achieved a TRL 6 by
December 2014 by the time of its expected procurement--1 full year
after construction of the UPF is expected to begin in December 2013.
[Footnote 17]
Table 3 provides details on the current TRL for the 10 technologies,
the TRL expected by the approval of a formal cost and schedule
baseline in July 2012, the TRL expected by the start of construction
in December 2013, and whether the expected TRLs meet best practices.
Table 3: TRLs for 10 Technologies NNSA Is Developing for the UPF:
UPF technology: Microwave casting;
TRL--as of October 2010: 7;
TRL expected prior to formal approval of performance baseline: 7;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 9;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? Yes.
UPF technology: Infrared heating;
TRL--as of October 2010: 7;
TRL expected prior to formal approval of performance baseline: 7;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 7;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? Yes.
UPF technology: Alternate processing of pins;
TRL--as of October 2010: 7;
TRL expected prior to formal approval of performance baseline: 7;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 7;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? Yes.
UPF technology: Bulk metal oxidation;
TRL--as of October 2010: 7;
TRL expected prior to formal approval of performance baseline: 7;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 7;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? Yes.
UPF technology: UNH calcination;
TRL--as of October 2010: 5;
TRL expected prior to formal approval of performance baseline: 6;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 6;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? No.
UPF technology: Saltless direct oxide reduction;
TRL--as of October 2010: 6;
TRL expected prior to formal approval of performance baseline: 6;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 6;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? No.
UPF technology: Recovery extraction centrifugal contactors;
TRL--as of October 2010: 5;
TRL expected prior to formal approval of performance baseline: 6;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 6;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? No.
UPF technology: Agile machining;
TRL--as of October 2010: 5;
TRL expected prior to formal approval of performance baseline: 5;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? No;
TRL expected prior to construction start: 6;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? No.
UPF technology: Chip management;
TRL--as of October 2010: 5;
TRL expected prior to formal approval of performance baseline: 6;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 6;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? No.
UPF technology: Special casting;
TRL--as of October 2010: 3;
TRL expected prior to formal approval of performance baseline: 6;
Does TRL expected at baseline approval meet TRL 6 as recommended by
best practices? Yes;
TRL expected prior to construction start: 6;
Does TRL expected at start of construction meet TRL 7 as recommended
by best practices? No.
Source: GAO analysis of NNSA data.
[End of table]
Because all of the technologies being developed for the UPF will not
achieve optimal levels of readiness prior to project critical
decisions, NNSA may lack assurance that all technologies will work as
intended. This could force the project to revert to existing or
alternate technologies, which could result in design changes, higher
costs, and schedule delays. In addition, other problems have occurred.
For example, NNSA recently downgraded special casting technology from
TRL 4 to TRL 3 because, according to UPF officials, unexpected
technical issues occurred that required additional research and
testing to resolve. Although officials expect this technology to be at
TRL 6 by the time a formal cost and schedule baseline is approved in
July 2012, it is not expected to reach TRL 7 before construction
begins in December 2013.
A June 2010 NNSA management review of the UPF also noted that
continued demonstration and testing of UPF technologies is still
necessary.[Footnote 18] The review stated that, because current
operations in the Y-12 plant are expected to continue for over a
decade longer, there appears to be a significant opportunity to
demonstrate and test new technologies in an integrated fashion in the
existing facility prior to installing them in the new facility. The
review also noted that, if some technologies do not work as intended,
it is not clear whether the current UPF design can accommodate the
only identified alternative--to revert back to existing technologies.
Furthermore, it noted that even with significant additional UPF
investment, modifying the UPF's design could further delay the
project. In such an event, the review concluded that continued
operation of existing facilities at the Y-12 plant is NNSA's only
strategy for addressing such delays.
Emerging Changes in the Composition and Size of the Nuclear Weapons
Stockpile May Only Have a Minor Effect on the UPF:
According to NNSA officials and an independent study commissioned by
NNSA, emerging changes in the composition and size of the nuclear
weapons stockpile as a result of changes in the nation's nuclear
strategy or a proposed arms treaty with Russia should have relatively
minor effects on the UPF project. The UPF's design is based on
ensuring the facility has (1) sufficient capability--the space and
equipment necessary to process enriched uranium and to produce the
specific components for each type of weapon in the stockpile; and (2)
sufficient capacity--the space and equipment necessary to produce the
required quantities of components for the stockpile. As such, the
elimination of a particular weapon type from the stockpile could
eliminate some capability requirements in the UPF's design. Similarly,
a reduction in the total number of weapons in the stockpile could
reduce some capacity requirements in the UPF's design.
Changes in the composition and size of the stockpile could occur as a
result of changes in the nation's nuclear strategy. Specifically, the
April 2010 Nuclear Posture Review--the third comprehensive assessment
of U.S. nuclear policy and strategy conducted since the end of the
Cold War and conducted by the Secretary of Defense in consultation
with the Secretaries of State and Energy--provides a roadmap for
implementing the President's agenda for reducing nuclear risks and
describes how the United States will reduce the role and numbers of
nuclear weapons in the nation's nuclear security strategy, among other
things.[Footnote 19] For example, the review recommended studying the
feasibility of using W-78 warheads that are currently used on
intercontinental ballistic missiles on submarine-launched ballistic
missiles. If this occurs, existing warheads used on submarine-launched
ballistic missiles could be eliminated from the stockpile. According
to the review, implementing the steps outlined in the report to reduce
the role and numbers of nuclear weapons will take years and, in some
cases, decades to complete.
In addition, the New Strategic Arms Reduction Treaty (New START)
signed in April 2010 by the leaders of the United States and Russia
would, if ratified, reduce the number of deployed strategic warheads
from about 2,200 to 1,550. This treaty would replace the now-expired
1991 START I treaty and supercede the 2002 Strategic Offensive
Reductions Treaty--also known as the Moscow Treaty--which expires in
2012. Further decreases in the size of the stockpile beyond those
resulting from the New START treaty may also be possible. For example,
the Nuclear Posture Review recommended a follow-on analysis to set
goals for further warhead reductions.
NNSA officials told us that changes in the composition and size of the
nuclear weapons stockpile should have relatively minor effects on the
UPF project. Specifically, NNSA officials told us that they cooperated
closely with DOD during the development of the Nuclear Posture Review
and that several changes resulting from the review have already been
incorporated into the UPF design. In particular, NNSA recently revised
its primary project requirements document to accommodate expected
changes in the composition and size of the nuclear weapons stockpile
resulting from the Nuclear Posture Review and has already begun work
to modify the UPF design to incorporate these changes. NNSA officials
told us that changes made as a result of the close collaboration with
DOD have helped to mitigate negative impact on the UPF project.
In addition, while NNSA has not formally studied the potential impact
on the UPF if specific nuclear weapon types were eliminated, NNSA
officials told us that such changes would likely not eliminate the
need for capabilities currently designed into the UPF. Specifically,
they said that if a warhead type were eliminated from the stockpile,
the UPF's capabilities to produce a particular component for that
specific warhead could potentially be eliminated from the project
design. According to NNSA officials, because many of the UPF's
capabilities will be used for common uranium chemical processing and
component production operations, they therefore, are not limited to
producing components for only one type of warhead. As a result,
eliminating one type of warhead from the nuclear stockpile would not
necessarily result in the elimination of a specific capability from
the UPF's design because that capability could be needed for producing
a wide range of other warhead types. For example, NNSA officials
stated that replacing existing submarine-launched ballistic missile
warheads with the W-78 intercontinental ballistic missile warhead
would not significantly impact the UPF's design because this action
would be unlikely to eliminate the need for equipment that is already
planned to be installed in the UPF.
Moreover, an independent study commissioned by NNSA examining the
UPF's space and major equipment needs concluded that changes in the
size of the stockpile would result in relatively little change to the
UPF's space and equipment design plans.[Footnote 20] The study stated
that establishing sufficient capability to meet minimum stockpile
composition requirements--the ability to process enriched uranium and
produce components for at least one of each weapon type in the
stockpile--accounts for about 90 percent of the project's planned
space and major equipment. Specifically, establishing minimum
capabilities to, among other things, recover and process enriched
uranium; produce, assemble, and dismantle nuclear weapons components;
and produce fuel for naval nuclear reactors accounts for 91 percent of
the facility's space and 89 percent of the UPF's major equipment. Only
9 percent of the UPF's space and 11 percent of the facility's major
equipment are needed to ensure sufficient capacity to produce the
necessary quantities of components to meet the requirements of the
nuclear weapons stockpile. In other words, once the minimum capability
is established, the overall impact on the project of modifying
capacity to respond to changes in the size of the stockpile should be
relatively minor. NNSA officials told us that adding or subtracting
capacity can be addressed to a large degree by simply adding or
subtracting work shifts on existing equipment.
Conclusions:
When completed, the UPF will play an important role in ensuring the
continued safety and reliability of the U.S. nuclear weapons
stockpile. By replacing old, deteriorating, and high-maintenance
facilities at the Y-12 plant, the UPF offers NNSA an opportunity to
improve efficiency, save costs, and reduce hazards faced by workers at
the plant. Because of its importance and given the size, scope, and
expense of the project, it is critical that NNSA and Congress have
accurate estimates of the project's costs and schedules. However, cost
increases and potential schedule delays raise concerns about NNSA's
ability to construct the facility within its cost and schedule goals.
In particular, NNSA's lack of a high-quality cost estimate for the
project and its inability to consistently request and obtain
sufficient project funding is consistent with the problems we
discussed in our prior reports on DOE's difficulties in contract and
project management, as well as the findings of DOE's own root cause
analysis of this issue. NNSA is taking steps to provide independent
assurance of the accuracy of its cost estimates for the UPF project.
However, although DOE is developing draft cost estimating policy, NNSA
lacks guidance for reconciling differences between the results of
independent cost estimates and other project cost estimates. Moreover,
NNSA's decision to approve an initial project cost range immediately
after a 2007 technical review warned of a disconnect between the UPF
project's funding requirements and NNSA's future years' spending plan,
and then requesting $200 million less in fiscal year 2011 than the UPF
project estimated it needed, raises concerns that NNSA is not placing
sufficient high-level management focus on ensuring that UPF's cost and
schedule estimates, and the associated funding plans these estimates
are based upon, are consistent with NNSA's broader plans for funding
the nation's nuclear weapons complex.
Managing a construction project of this type--particularly one that
relies on several new or experimental technologies--is inherently
challenging, and it is encouraging that NNSA is taking steps to manage
the development of these technologies. For example, NNSA's early use
of TRLs has already proven to be helpful in its efforts to mature
these technologies. However, we are concerned because NNSA does not
expect to achieve optimal assurance as defined by best practices that
all 10 of these technologies will work as intended before key project
decisions are made. Furthermore, because DOE's guidance for using TRLs
is inconsistent with our prior recommendations as well as best
practices followed by other federal agencies, DOE may be making
critical decisions with less confidence that new technologies will
work as intended than other agencies in similar circumstances. As a
result, NNSA may be forced to modify or replace some technologies,
which could result in costly and time-consuming redesign work.
Moreover, Congress may not be aware that NNSA may be making critical
decisions to proceed with construction projects without first ensuring
that new technologies reach the level of maturity called for by best
practices.
Recommendations for Executive Action:
GAO is making five recommendations to improve NNSA's management of
project funding and technology associated with the UPF project.
To improve DOE's guidance for estimating project costs and developing
new technologies, we recommend that the Secretary of Energy take the
following two actions:
* Include in the cost estimating policy currently being developed by
DOE specific guidance for reconciling differences, if any, between the
results of independent cost estimates and other project cost estimates.
* Evaluate where DOE's guidance for gauging the maturity of new
technologies is inconsistent with best practices and, as appropriate,
revise the guidance to ensure consistency or ensure the guidance
contains justification why such differences are necessary or
appropriate.
To improve NNSA's management of the UPF project, we recommend that the
Secretary of Energy take the following three actions:
* Direct the Administrator of NNSA to ensure that UPF's cost and
schedule estimates, and the associated funding plans these estimates
are based upon, are consistent with NNSA's future years' budget and
spending plan prior to approval of the UPF's performance baseline at
critical decision 2.
* Direct the Administrator of NNSA to ensure new technologies being
developed for the UPF project reach the level of maturity called for
by best practices prior to critical decisions being made on the
project.
* In the event technologies being developed for the UPF project do not
reach levels of maturity called for by best practices, inform the
appropriate committees and Members of Congress of any NNSA decision to
approve a cost and schedule performance baseline or to begin
construction of UPF without first having ensured that project
technologies are sufficiently mature.
Agency Comments and Our Evaluation:
We provided a draft of this report to NNSA for its review and comment.
In its written comments, NNSA generally agreed with the report and our
recommendations. NNSA stated that the UPF project is vitally important
to the continued viability of NNSA's nuclear missions and is a top
priority in its strategic planning efforts to transform outdated
nuclear weapons infrastructure into a smaller, more modern nuclear
security enterprise.
NNSA stated in its comments that its contractor has prepared an
updated cost estimate that will be reflected in the President's fiscal
year 2012 budget request and that independent cost estimates are being
prepared in support of upcoming critical decisions for the UPF
project. In addition, NNSA stated that it will work with DOE's Office
of Engineering and Construction Management to ensure guidance on the
reconciliation of cost estimates is incorporated in a new DOE cost
estimating guide. Consistent with our recommendation, NNSA recognized
in its comments the importance of having specific guidance on
reconciling differences between the results of independent cost
estimates and other project cost estimates.
Regarding its development of new technologies for the UPF, NNSA stated
in its comments that our report does not discuss the risk management
process used for the UPF project to manage technology risks and the
many other risks for a project of this complexity and duration. NNSA
is incorrect on this point. Our draft report discussed a number of
steps NNSA is taking to mitigate technology risks. For example, our
draft report noted that NNSA developed a technology maturation plan in
early 2010 to track technology development and engineering activities
needed to bring the agile machining technology to TRL 6.
NNSA also noted that TRL 6, as used by the UPF project in accordance
with DOE guidance, has been judged to be an appropriate level of
assurance that the technologies will work as intended when the final
design of the project is complete and construction is ready to begin.
Nevertheless, as our draft report noted, DOE's guidance on the use of
TRLs is inconsistent with best practices used by DOD and with our
previous recommendations with regard to technology readiness at the
start of facility construction. Specifically, DOD recommends that
technologies reach TRL 7--the level where a prototype is demonstrated
in an operational environment--prior to beginning its production and
deployment phase, or the equivalent of beginning construction on a DOE
project. Similarly, we have previously recommended that DOE
construction projects demonstrate TRL 7 or higher before construction.
Reaching this level indicates that the technology prototype has been
demonstrated in an operating environment, has been integrated with
other key supporting subsystems, and is expected to have only minor
design changes. However, DOE's guidance does not require technologies
to advance from TRL 6 to TRL 7 between the approval of a formal cost
and schedule baseline and the beginning of construction. Our
recommendation that DOE evaluate its guidance to ensure conformance
with best practices is intended to address these inconsistencies.
NNSA also provided technical comments that we incorporated in the
report as appropriate. NNSA's written comments are presented in
appendix III.
We are sending copies of this report to the appropriate congressional
committees; Secretary of Energy; Administrator of NNSA; Director,
Office of Management and Budget; and other interested parties. In
addition, the report will be available at no charge on the GAO Web
site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-3841 or aloisee@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major
contributions to this report are listed in appendix IV.
Signed by:
Gene Aloise:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Our objectives were to (1) assess the National Nuclear Security
Administration's (NNSA) estimated cost and schedule for constructing
the Uranium Processing Facility (UPF) at the Y-12 National Security
Complex in Oak Ridge, Tennessee; (2) determine the extent to which the
UPF will use new, experimental technologies and any risks to the
project's cost and schedule of replacing the existing, proven
technologies; and (3) determine the extent to which emerging changes
in the stockpile could affect the UPF project.
To assess NNSA's estimated cost and schedule for constructing the UPF,
we visited the Y-12 plant and toured existing facilities as well as
the proposed location of UPF. We also reviewed NNSA and contractor
documents describing the project's cost and schedule estimates, budget
documents, recent design-related cost and schedule performance, and
documents potentially showing cost and schedule implications for the
future. We also interviewed officials at NNSA's Y-12 Site Office and
NNSA's contractor for the Y-12 plant--Babcock & Wilcox Technical
Services Y-12, LLC.
To determine whether cost increases have occurred to date, we compared
initial estimates for key activities, such as project engineering and
design, with current estimates. We also obtained and reviewed NNSA
documents describing the events that contributed to the cost
increases, a Department of Energy (DOE) order on project management,
[Footnote 21] and a draft DOE order on cost estimating. We also used
our January 2010 report that evaluated the UPF's cost estimates for
compliance with industry cost estimating best practices.[Footnote 22]
We also obtained information on the independent cost estimate DOE's
Office of Cost Analysis is conducting on the UPF project. Because
NNSA's design of the UPF is less than halfway completed and because it
has not yet established a formal cost and schedule performance
baseline, current cost estimates are still considered to be
preliminary and subject to change. Given this limitation, however, our
analysis is meant to provide context for the condition of the current,
pre-baselined cost and schedule estimate and to describe actions
underway and planned to ensure the credibility of the formal cost and
schedule performance baseline currently being developed.
To determine the extent to which UPF will use new, experimental
technologies and any risks to the project's cost and schedule of
replacing the existing, proven technologies, we determined which
critical technologies NNSA plans to use in UPF that are new or
experimental. We visited the Y-12 plant to observe research and
development activities associated with the technologies and reviewed
agency and contractor documents, including NNSA technology readiness
reports and an independent study examining technology-related project
risks. In addition, we interviewed key NNSA and Y-12 plant officials
responsible for developing UPF technologies.
To determine the extent to which NNSA was using industry best
practices to ensure that new technologies will work as intended, we
used best practices previously identified in our prior work and that
are used by other federal agencies.[Footnote 23] Specifically, best
practices call for using a systematic method--Technology Readiness
Levels (TRL), developed by the National Aeronautics and Space
Administration (NASA) and used by other federal agencies such as the
Department of Defense (DOD)--to determine the extent to which new
technologies are sufficiently mature at key project decisions. TRL's
use a scale to rate relative technology maturity on a scale from 1--
being the least mature--to 9--representing the most mature ranking,
where the technology has been demonstrated to work as intended in an
operational environment. For each critical UPF technology, we obtained
information from NNSA and UPF project officials on the current TRLs
associated with each technology and compared them to optimal TRLs
identified by best practices and DOE guidance on the use of TRLs. For
technologies that are not expected to reach optimal TRL levels as
identified by best practices and/or DOE guidance, we obtained
information on NNSA's risk mitigation plans and its time frames for
continuing research and development of the technologies. We also
discussed with NNSA and UPF project officials the challenges that have
been experienced or that they expect to encounter in the future.
Finally, we compared NNSA's technology risk assessments with
independent studies evaluating the maturity of planned UPF
technologies.
To determine the extent to which emerging changes in the stockpile
could affect the UPF project, we visited the Y-12 plant and reviewed
agency and contractor documents describing the key factors NNSA
considered in developing the UPF's design in order to meet nuclear
weapons stockpile requirements. In addition, we toured enriched
uranium processing and nuclear weapons component facilities. We
obtained the April 2010 Nuclear Posture Review issued by DOD and
reviewed the proposed New Strategic Arms Reduction Treaty (New START)
that was signed by the United States and Russia in April 2010. We also
interviewed key NNSA and contractor officials to understand how
changes in the composition and size of the nuclear weapons stockpile
might affect the UPF's design. To ensure the reliability of the
information we obtained from the UPF project officials, we obtained an
independent perspective on the UPF's design through discussions with
officials at the Los Alamos National Laboratory and Lawrence Livermore
National Laboratory. These two nuclear weapons laboratories design the
enriched uranium components that are currently produced at Y-12 and
will be produced at the UPF. We also reviewed an independent study
commissioned by NNSA examining the UPF's space and major equipment
needs.[Footnote 24] We met with the study's principal author and
discussed the study's findings to determine how UPF's design is
integrated with nuclear weapons stockpile requirements and how
emerging changes in the stockpile could affect the UPF project.
We conducted this performance audit from November 2009 through October
2010 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Definitions of Technology Readiness Levels:
Technology readiness level (TRL): 1. Basic principles observed and
reported;
Level involved: Studies;
Basic objective of TRLs: Research to prove feasibility;
Components: None;
Integration: None;
Tests and environment: Desktop, "back of envelope" environment.
Technology readiness level (TRL): 2. Technology concept and/or
application formulated;
Level involved: Studies;
Basic objective of TRLs: Research to prove feasibility;
Components: None;
Integration: Paper studies indicate components ought to work together;
Tests and environment: Academic environment. The emphasis here is
still on understanding the science but beginning to think about
possible applications of the scientific principles.
Technology readiness level (TRL): 3. Analytical and experimental
critical function and/or characteristic proof of concept;
Level involved: Pieces of components;
Basic objective of TRLs: Research to prove feasibility;
Components: No system components, just basic laboratory research
equipment to verify physical principles;
Integration: No attempt at integration; still trying to see whether
individual parts of the technology work. Lab experiments with
available components show they will work;
Tests and environment: Uses of the observed properties are postulated
and experimentation with potential elements of subsystem begins. Lab
work to validate pieces of technology without trying to integrate.
Emphasis is on validating the predictions made during earlier
analytical studies so that we're certain that the technology has a
firm scientific underpinning.
Technology readiness level (TRL): 4. Component and/or breadboard
validation in lab environment;
Level involved: Low fidelity breadboard;
Basic objective of TRLs: Demonstrate technical feasibility and
functionality;
Components: Ad hoc and available laboratory components are surrogates
for system components that may require special handling, calibration,
or alignment to get them to function. Not fully functional but
representative of technically feasible approach;
Integration: Available components assembled into subsystem breadboard.
Interfaces between components are realistic;
Tests and environment: Tests in controlled laboratory environment. Lab
work at less than full subsystem integration, although starting to see
if components will work together.
Technology readiness level (TRL): 5. Component and/or breadboard
validation in relevant environment;
Level involved: High fidelity bread/brass-board( e.g., nonscale or
form components);
Basic objective of TRLs: Demonstrate technical feasibility and
functionality;
Components: Fidelity of components and interfaces are improved from
TRL 4. Some special purpose components combined with available
laboratory components. Functionally equivalent but not of same
material or size. May include integration of several components with
reasonably realistic support elements to demonstrate functionality;
Integration: Fidelity of subsystem mock up improves (e.g., from
breadboard to brassboard). Integration issues become defined;
Tests and environment: Laboratory environment modified to approximate
operational environment. Increases in accuracy of the controlled
environment in which it is tested.
Technology readiness level (TRL): 6. System/subsystem model or
prototype demonstration in relevant environment;
Level involved: Subsystem closely configured for intended project
application. Demonstrated in relevant environment. (Shows will work in
desired configuration);
Basic objective of TRLs: Demonstrate applicability to intended project
and subsystem integration; (Specific to intended application in
project);
Components: Subsystem is high fidelity functional prototype with (very
near same material and size of operational system). Probably includes
the integration of many new components and realistic supporting
elements/subsystems if needed to demonstrate full functionality.
Partially integrated with existing systems;
Integration: Components are functionally compatible (and very near
same material and size of operational system). Component integration
into system is demonstrated;
Tests and environment: Relevant environment inside or outside the
laboratory, but not the eventual operating environment. The testing
environment does not reach the level of an operational environment,
although moving out of controlled laboratory environment into
something more closely approximating the realities of technology's
intended use.
Technology readiness level (TRL): 7. Subsystem prototype demonstration
in an operational environment;
Level involved: Subsystem configured for intended project application.
Demonstrated in operational environment;
Basic objective of TRLs: Demonstrate applicability to intended project
and subsystem integration; (Specific to intended application in
project);
Components: Prototype improves to preproduction quality. Components
are representative of project components (material, size, and
function) and integrated with other key supporting elements/subsystems
to demonstrate full functionality. Accurate enough representation to
expect only minor design changes;
Integration: Prototype not integrated into intended system but onto
surrogate system;
Tests and environment: Operational environment, but not the eventual
environment. Operational testing of system in representational
environment. Prototype will be exposed to the true operational
environment on a surrogate platform, demonstrator, or test bed.
Technology readiness level (TRL): 8. Total system completed, tested,
and fully demonstrated;
Level involved: Full integration of subsystems to show total system
will meet requirements;
Basic objective of TRLs: Applied/integrated into intended project
application;
Components: Components are right material, size and function
compatible with operational system;
Integration: Subsystem performance meets intended application and is
fully integrated into total system;
Tests and environment: Demonstration, test, and evaluation completed.
Demonstrates system meets procurement specifications. Demonstrated in
eventual environment.
Technology readiness level (TRL): 9. Total system used successfully in
project operations;
Level involved: System meeting intended operational requirements;
Basic objective of TRLs: Applied/integrated into intended project
application;
Components: Components are successfully performing in the actual
environment--proper size, material, and function;
Integration: Subsystem has been installed and successfully deployed in
project systems;
Tests and environment: Operational testing and evaluation completed.
Demonstrates that system is capable of meeting all mission
requirements.
Source: GAO analysis of DOD data.
[End of table]
[End of section]
Appendix III: Comments from the National Nuclear Security
Administration:
Department of Energy:
National Nuclear Security Administration:
Washington, DC 20585:
November 17, 2010:
Mr. Gene Aloise:
Director:
Natural Resources and Environment:
Government Accountability Office:
Washington, DC 20548:
Dear Mr. Aloise:
The National Nuclear Security Administration (NNSA) appreciates the
opportunity to review the Government Accountability Office's (GAO)
draft report, GAO-11-103, NUCLEAR WEAPONS: National Nuclear Security
Administration's Plans For its Uranium Processing Facility Should
Better Reflect Funding Estimates and Technology Readiness. We
understand that the Subcommittee on Energy and Water Development,
Senate Committee on Appropriations requested GAO to examine (1) NNSA's
estimated cost and schedule for constructing Uranium processing
Facility (UPF); (2) NNSA's plans for UPF integrate with nuclear weapon
stockpile requirements; and (3) to what extent will UPF use new,
experimental technologies and how does NNSA plan to mitigate resultant
risks, if any?
The UPF project is vitally important to the continued viability of
NNSA's nuclear missions and directly supports the Nation's deterrent
strategy. The recently published Nuclear Posture Review validated this
major system acquisition is a top priority in our strategic planning
efforts to transform outdated Cold War legacy infrastructure into a
smaller, more modern and efficient 21st century nuclear security
enterprise.
We generally agree with the report and the recommendations. It should
be noted that "current estimate," as used by the GAO throughout the
report, refers to the cost estimate that was prepared in 2007 when
Critical Decision 1 was achieved. Since the development of that
estimate, the contractor has prepared an updated cost range estimate
based on 45% design maturity, which will be reflected in the FY 2012
President's budget request. Consistent with project management best
practices, NNSA will not set cost and schedule baselines until 90%
design maturity.
Independent cost estimates are being prepared in support of the
upcoming External Independent Review of the first Critical Decision
2/3 package; the establishment of the cost and schedule baseline for
the Critical Decision 2/3 site work and Long Lead Engineered
Equipment; and the CFO's Office of Cost Analysis has reviewed the
project and is preparing a report on the overall estimated cost range
of the UPF project. The reconciliation of cost estimates is considered
a project management best practice. As such, NNSA will work with the
Office of Engineering and Construction Management to ensure guidance
on the reconciliation of cost estimates is incorporated and
highlighted in the new DOE G 413.3-21, Cost Estimating Guide. These
cost estimates and continuing reviews of the project will be
considered when developing the final estimates of project costs.
Also, the report states that reaching "an optimal level of assurance,"
which is defined as Technical Readiness Level (TRL) 7 by best
practices identified in a 2007 GAO report, prior to making critical
decisions can mitigate the risk that new or experimental technologies
will not perform as intended. However, the report does not discuss the
Risk Management Process used for the UPF project to manage technology
risks and the many other risks for a project of this complexity and
duration. This is particularly true where the maturity of the Advanced
Integrated Machining System (AIMS) equipment is a risk with a specific
mitigation strategy. This process is being managed in parallel with
the Technology Development and Maturation Plan on the UPF project.
Additionally, TRL 6, as used by the Project in accordance with DOE G
413.3-4, Technology Readiness Assessment Guide, is judged to be an
appropriate level of assurance commensurate with final design phase of
the project and the minimum level where insertion or deployment is
possible depending on technology complexity and risk acceptance by the
stakeholders.
NNSA is committed to closely monitoring and balancing priorities with
available resources to ensure the continued safe operations of the
UPF. Enclosed are technical comments to help clarify and improve the
report in areas that may be confusing or misleading.
If you have any questions related to this response, please contact
JoAnne Parker, Director, Office of Internal Controls, at 202-586-1913.
Sincerely,
Signed by:
Gerald Talbot, Jr.
Associate Administrator for Management and Administration:
Enclosure:
cc: Deputy Administrator for Defense Nuclear Programs:
Manager, YSO Site Office:
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Gene Aloise (202) 512-3841 or aloisee@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Ryan T. Coles, Assistant
Director; John Bauckman; Virginia Chanley; Don Cowan; James D.
Espinoza; Jonathan Kucskar; Alison O'Neill; Christopher Pacheco; and
Tim Persons made key contributions to this report.
[End of section]
Footnotes:
[1] NNSA, a separately organized agency within the Department of
Energy, was created by the National Defense Authorization Act for
Fiscal Year 2000, Pub. L. No. 106-65, sec. 3201 et seq. (1999), with
responsibility for the nation's nuclear weapons, nonproliferation, and
naval reactors programs. NNSA owns the buildings, equipment, and the
components produced at the Y-12 plant, which is operated under
contract to NNSA by Babcock & Wilcox Technical Services Y-12, LLC.
[2] DOE Order 413.3A was approved in 2006 and changed in 2008. This
order canceled DOE Order 413.3, which was issued in 2000.
[3] GAO, High Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January
2009).
[4] DOE, Root Cause Analysis: Contract and Project Management
(Washington, D.C.: April 2008).
[5] DOE, Root Cause Analysis Contract and Project Management
Corrective Action Plan (Washington, D.C.: 2008).
[6] GAO, Actions Needed to Develop High-Quality Cost Estimates for
Construction and Environmental Cleanup Projects, [hyperlink,
http://www.gao.gov/products/GAO-10-199] (Washington, D.C.: Jan. 14,
2010).
[7] GAO, Cost Estimating and Assessment Guide, Best Practices for
Developing and Managing Capital Program Costs, [hyperlink,
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009).
[8] GAO, Department of Energy: Major Construction Projects Need a
Consistent Approach for Assessing Technology Readiness to Help Avoid
Cost Increases and Delays, [hyperlink,
http://www.gao.gov/products/GAO-07-336] (Washington, D.C.: Mar. 27,
2007); Nuclear Waste: Action Needed to Improve Accountability and
Management of DOE's Major Cleanup Projects, [hyperlink,
http://www.gao.gov/products/GAO-08-1081] (Washington, D.C.: Sept. 26,
2008); and Department of Energy: Actions Needed to Develop High-
Quality Cost Estimates for Construction and Environmental Cleanup
Projects, [hyperlink, http://www.gao.gov/products/GAO-10-199]
(Washington, D.C.: Jan. 14, 2010).
[9] NNSA, Technical Independent Project Review of the Uranium
Processing Facility Project at the National Security Complex Y-12, IMA-
PM-801768-A046 (Washington, D.C.: Apr. 24, 2007).
[10] NNSA's Future Years Nuclear Security Program, included with DOE's
annual budget request to Congress, contains NNSA's estimates of the
funding it expects to request for the next 5 fiscal years.
[11] GAO, Best Practices: Better Management of Technology Development
Can Improve Weapon System Outcomes, [hyperlink,
http://www.gao.gov/products/GAO/NSIAD-99-162] (Washington, D.C.: July
30, 1999); Joint Strike Fighter Acquisition: Mature Critical
Technologies Needed to Reduce Risks, [hyperlink,
http://www.gao.gov/products/GAO-02-39] (Washington, D.C.: Oct. 19,
2001); Department of Energy: Major Construction Projects Need a
Consistent Approach for Assessing Technology Readiness to Help Avoid
Cost Increases and Delays, [hyperlink,
http://www.gao.gov/products/GAO-07-336] (Washington, D.C.: Mar. 27,
2007); and Coal Power Plants: Opportunities Exist for DOE to Provide
Better Information on the Maturity of Key Technologies to Reduce
Carbon Dioxide Emissions, [hyperlink, http://www.gao.gov/products/GAO-
10-675] (Washington, D.C.: June 16, 2010).
[12] GAO, Department of Energy: Major Construction Projects Need a
Consistent Approach for Assessing Technology Readiness to Help Avoid
Cost Increases and Delays, [hyperlink,
http://www.gao.gov/products/GAO-07-336] (Washington, D.C.: Mar. 27,
2007).
[13] [hyperlink, http://www.gao.gov/products/GAO-07-336].
[14] DOE, Technology Readiness Assessment Guide, DOE G 413.3-4
(Washington, D.C.: Oct. 12, 2009).
[15] DOD, Technology Readiness Assessment (TRA) Deskbook (Washington,
D.C.: May 2005).
[16] As discussed above, funding shortfalls may result in project
delays. According to UPF project progress reports, NNSA plans to
update the estimated date for approving a cost and schedule
performance baseline after it adjusts UPF project plans to account
for, among other things, estimated shortfalls in fiscal year 2011
funding.
[17] As discussed above, funding shortfalls may result in project
delays. According to UPF project progress reports, NNSA plans to
update the estimated date for beginning UPF construction after it
adjusts UPF project plans to account for, among other things,
estimated shortfalls in fiscal year 2011 funding.
[18] NNSA, Reasonableness Reviews, Chemistry and Metallurgy Research
Replacement (CMRR) Project & Uranium Processing Facility (UPF) Project
(Washington, D.C.: June 3, 2010).
[19] DOD, Nuclear Posture Review Report (Washington, D.C.: Apr. 6,
2010).
[20] TechSource, Inc., Independent Review of the Planned Space Design
for the Uranium Processing Facility, IMA-PM-801768-A082 (Germantown,
Md.: Sept. 22, 2009).
[21] Department of Energy, Program and Project Management for the
Acquisition of Capital Assets, DOE Order 413.3A (Washington, D.C.:
July 28, 2006, and updated Nov. 17, 2008).
[22] GAO, Actions Needed to Develop High-Quality Cost Estimates for
Construction and Environmental Cleanup Projects, [hyperlink,
http://www.gao.gov/products/GAO-10-199] (Washington, D.C.: Jan. 14,
2010).
[23] GAO, Best Practices: Better Management of Technology Development
Can Improve Weapon System Outcomes, [hyperlink,
http://www.gao.gov/products/GAO/NSIAD-99-162] (Washington, D.C.: July
30, 1999); Joint Strike Fighter Acquisition: Mature Critical
Technologies Needed to Reduce Risks, [hyperlink,
http://www.gao.gov/products/GAO-02-39] (Washington, D.C.: Oct. 19,
2001); and Department of Energy: Major Construction Projects Need a
Consistent Approach for Assessing Technology Readiness to Help Avoid
Cost Increases and Delays, [hyperlink,
http://www.gao.gov/products/GAO-07-336] (Washington, D.C.: Mar. 27,
2007).
[24] TechSource, Inc., Independent Review of the Planned Space Design
for the Uranium Processing Facility, IMA-PM-801768-A082 (Washington,
D.C.: Sept. 22, 2009).
[End of section]
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