Nuclear Weapons
Actions Needed to Identify Total Costs of Weapons Complex Infrastructure and Research and Production Capabilities Gao ID: GAO-10-582 June 21, 2010The National Nuclear Security Administration (NNSA) manages and secures the nation's nuclear weapons stockpile, with annual appropriations of about $6.4 billion. NNSA oversees eight contractor-operated sites that execute its programs. Two programs make up almost one-third of this budget: Readiness in Technical Base and Facilities (RTBF) Operations of Facilities, which operates and maintains weapons facilities and infrastructure, and Stockpile Services, which provides research and development (R&D) and production capabilities. Consistent with cost accounting standards, each site has established practices to account for these activities. The Administration has recently committed to stockpile reductions. GAO was asked to determine the extent to which NNSA's budget justifications for (1) RTBF Operations of Facilities and (2) Stockpile Services are based on the total costs of providing these capabilities. GAO was also asked to discuss the implications, if any, of a smaller stockpile on these costs. To carry out its work, GAO analyzed NNSA's and its contractors' data using a data collection instrument; reviewed policies, plans, and budgets; and interviewed officials.
NNSA cannot accurately identify the total costs to operate and maintain weapons facilities and infrastructure because of differences in sites' cost accounting practices. These differences are allowable under current NNSA guidance as long as sites comply with cost accounting standards and disclose their practices to NNSA. The differences among cost accounting practices include the facilities and activities sites support with RTBF Operations of Facilities funds and how sites use other funding sources to support weapons facilities and infrastructure. GAO's analysis of sites' responses to a data collection instrument showed that the total cost to operate and maintain weapons facilities and infrastructure likely significantly exceeds the budget request for the RTBF Operations of Facilities program submitted to Congress for fiscal year 2009. NNSA has an effort under way that, if fully implemented, would provide more detail on the total costs to operate and maintain weapons facilities and infrastructure. NNSA does not fully identify or estimate the total costs of the products and capabilities supported through Stockpile Services R&D and production activities. Instead, NNSA primarily identifies the functional activities--such as engineering operations, quality control, and program management--and their costs supported through Stockpile Services and bases its future-year budget requests on the extent to which prior-year budgets were sufficient to execute these functions. In 2009, GAO issued a cost guide that identified using a product-oriented management tool, rather than a functionally oriented one, as a best practice for cost estimating. Using cost guide criteria, GAO's analysis found tracking costs by functions provides little information on the costs of the individual capabilities supported through Stockpile Services. NNSA has an effort under way that, if fully implemented, would provide more detail on the total costs of the products and capabilities supported through Stockpile Services. Reducing stockpile size is unlikely to significantly affect NNSA's RTBF Operations of Facilities and Stockpile Services costs because a sizable portion of these costs is fixed to maintain base nuclear weapons capabilities. The Administration has planned to increase budget requests for NNSA's nuclear weapons program by $4.25 billion between fiscal years 2011 and 2015. This planned increase is intended, in part, to invest in and modernize facilities and infrastructure and to ensure that base capabilities are supported such that a smaller nuclear deterrent continues to be safe, secure, and reliable. While base capability costs appear to be relatively insensitive to reductions in the stockpile, without complete and reliable information about these costs, NNSA lacks information that could help justify planned budget increases or target cost savings opportunities.
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-10-582, Nuclear Weapons: Actions Needed to Identify Total Costs of Weapons Complex Infrastructure and Research and Production Capabilities
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Report to the Subcommittee on Strategic Forces, Committee on Armed
Services, House of Representatives:
United States Government Accountability Office:
GAO:
June 2010:
Nuclear Weapons:
Actions Needed to Identify Total Costs of Weapons Complex
Infrastructure and Research and Production Capabilities:
GAO-10-582:
GAO Highlights:
Highlights of GAO-10-582, a report to the Subcommittee on Strategic
Forces, Committee on Armed Services, House of Representatives.
Why GAO Did This Study:
The National Nuclear Security Administration (NNSA) manages and
secures the nation‘s nuclear weapons stockpile, with annual
appropriations of about $6.4 billion. NNSA oversees eight contractor-
operated sites that execute its programs. Two programs make up almost
one-third of this budget: Readiness in Technical Base and Facilities
(RTBF) Operations of Facilities, which operates and maintains weapons
facilities and infrastructure, and Stockpile Services, which provides
research and development (R&D) and production capabilities. Consistent
with cost accounting standards, each site has established practices to
account for these activities. The Administration has recently
committed to stockpile reductions. GAO was asked to determine the
extent to which NNSA‘s budget justifications for (1) RTBF Operations
of Facilities and (2) Stockpile Services are based on the total costs
of providing these capabilities. GAO was also asked to discuss the
implications, if any, of a smaller stockpile on these costs. To carry
out its work, GAO analyzed NNSA‘s and its contractors‘ data using a
data collection instrument; reviewed policies, plans, and budgets; and
interviewed officials.
What GAO Found:
NNSA cannot accurately identify the total costs to operate and
maintain weapons facilities and infrastructure because of differences
in sites‘ cost accounting practices. These differences are allowable
under current NNSA guidance as long as sites comply with cost
accounting standards and disclose their practices to NNSA. The
differences among cost accounting practices include the facilities and
activities sites support with RTBF Operations of Facilities funds and
how sites use other funding sources to support weapons facilities and
infrastructure. GAO‘s analysis of sites‘ responses to a data
collection instrument showed that the total cost to operate and
maintain weapons facilities and infrastructure likely significantly
exceeds the budget request for the RTBF Operations of Facilities
program submitted to Congress for fiscal year 2009. NNSA has an effort
under way that, if fully implemented, would provide more detail on the
total costs to operate and maintain weapons facilities and
infrastructure.
NNSA does not fully identify or estimate the total costs of the
products and capabilities supported through Stockpile Services R&D and
production activities. Instead, NNSA primarily identifies the
functional activities”-such as engineering operations, quality
control, and program management”-and their costs supported through
Stockpile Services and bases its future-year budget requests on the
extent to which prior-year budgets were sufficient to execute these
functions. In 2009, GAO issued a cost guide that identified using a
product-oriented management tool, rather than a functionally oriented
one, as a best practice for cost estimating. Using cost guide
criteria, GAO‘s analysis found tracking costs by functions provides
little information on the costs of the individual capabilities
supported through Stockpile Services. NNSA has an effort under way
that, if fully implemented, would provide more detail on the total
costs of the products and capabilities supported through Stockpile
Services.
Reducing stockpile size is unlikely to significantly affect NNSA‘s
RTBF Operations of Facilities and Stockpile Services costs because a
sizable portion of these costs is fixed to maintain base nuclear
weapons capabilities. The Administration has planned to increase
budget requests for NNSA‘s nuclear weapons program by $4.25 billion
between fiscal years 2011 and 2015. This planned increase is intended,
in part, to invest in and modernize facilities and infrastructure and
to ensure that base capabilities are supported such that a smaller
nuclear deterrent continues to be safe, secure, and reliable. While
base capability costs appear to be relatively insensitive to
reductions in the stockpile, without complete and reliable information
about these costs, NNSA lacks information that could help justify
planned budget increases or target cost savings opportunities.
What GAO Recommends:
Among other things, GAO recommends that NNSA develop guidance for
consistent collection of total cost information and use this
information for budget formulation and program planning. NNSA agreed
with the report‘s findings and recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-10-582] or key
components. For more information, contact Gene Aloise at (202) 512-
3841 or aloisee@gao.gov.
[End of section]
Contents:
Letter:
Background:
NNSA Cannot Accurately Identify the Total Costs to Operate and
Maintain Weapons Activities Facilities and Infrastructure, and These
Costs Likely Significantly Exceed the Budget Justified to Congress for
the RTBF Operations of Facilities Program:
NNSA Does Not Fully Identify or Estimate the Total Costs of the
Products and Capabilities Supported through Stockpile Services R&D and
Production Activities:
RTBF Operations of Facilities and Stockpile Services Costs Are
Unlikely to Be Significantly Affected by Reductions in Stockpile Size,
and NNSA Lacks Cost Information to Help Justify Planned Budget
Increases:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Readiness in Technical Base and Facilities Operations of
Facilities:
Appendix III: Stockpile Services:
Appendix IV: Comments from the National Nuclear Security
Administration:
Appendix V: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: NNSA's Breakdown of its Fiscal Year 2009 Appropriation for
Weapons Activities:
Table 2: Congressional Spending Directives by Site for RTBF Operations
of Facilities, Fiscal Year 2009:
Table 3: NNSA's National Work Breakdown Structure for RTBF Operations
of Facilities, Fiscal Year 2009:
Table 4: Number and Percentage of Weapons Activities Facilities
Supported Directly with RTBF Operations of Facilities Funds, by
Category, Fiscal Year 2009:
Table 5: NNSA's National Work Breakdown Structure for Stockpile
Services, Fiscal Year 2009:
Figures:
Figure 1: Primary Responsibilities of Sites within the Nuclear
Security Enterprise:
Figure 2: NNSA's Stockpile Services Obligations to Sites, Fiscal Year
2009:
Abbreviations:
CAS: Cost Accounting Standards:
DOE: Department of Energy:
ESH&Q: Environment, Safety, Health, and Quality:
FIRP: Facilities Infrastructure Recapitalization Program:
HEAF: High Explosives Applications Facility:
KCP: Kansas City Plant:
LANL: Los Alamos National Laboratory:
LLNL: Lawrence Livermore National Laboratory:
M&O: management and operating:
MTP: Management, Technology, and Production:
NNSA: National Nuclear Security Administration:
NTS: Nevada Test Site:
PF: plutonium facility:
R&D: research and development:
RTBF: Readiness in Technical Base and Facilities:
SFFAS: Statement of Federal Financial Accounting Standards:
SNL: Sandia National Laboratories:
SPEC: Scientific/Process Equipment and Capabilities:
SRS: Savannah River Site:
ST&E: science, technology, and engineering:
Y-12: Y-12 National Security Complex:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
June 21, 2010:
The Honorable James R. Langevin:
Chairman:
The Honorable Michael R. Turner:
Ranking Member:
Subcommittee on Strategic Forces:
Committee on Armed Services:
House of Representatives:
Nuclear weapons have been and continue to be an essential part of the
nation's defense strategy. The end of the Cold War resulted in a
dramatic shift in how the nation maintains such weapons. Instead of
designing, testing, and producing new nuclear weapons, the strategy
has shifted to maintaining the existing nuclear weapons stockpile
indefinitely and extending the operational lives of these weapons
through refurbishment, without nuclear testing.[Footnote 1] The
Department of Energy's (DOE) National Nuclear Security Administration
(NNSA) is responsible for the management and security of the nation's
nuclear weapons programs. NNSA's annual appropriation for nuclear
weapons has totaled approximately $6.4 billion in recent years. To
execute the activities to maintain and refurbish the nation's existing
nuclear weapons stockpile, NNSA oversees eight separate sites--
collectively known as the nuclear security enterprise--that are
managed and operated by private contractors. Among other things, these
contractors operate and maintain the government-owned facilities and
infrastructure deemed necessary to support the nuclear weapons
stockpile and to support the capabilities to conduct scientific,
technical, engineering, and production activities that ensure the
continued safety and reliability of the stockpile.
In October 2008, NNSA put forward a plan to modernize the nuclear
security enterprise infrastructure--with the intent to make it smaller
and more responsive, efficient, and secure--while continuing to meet
national security requirements.[Footnote 2] NNSA's plan, if fully
implemented, would consolidate certain operations within the nuclear
security enterprise and replace its aging infrastructure with new
nuclear and nonnuclear facilities sized to support a smaller
stockpile. The size of this smaller stockpile is the outcome of
recently completed negotiations between Russia and the United States
on a New Strategic Arms Reduction Treaty, which was signed on April 8,
2010, and, if ratified, will commit the two countries to significant
and verifiable arms reductions. The President's fiscal year 2011
budget request (1) supports increased funding to replace key nuclear
security enterprise facilities and to invest in infrastructure and (2)
anticipates requesting an additional $4.25 billion between fiscal
years 2011 and 2015 over the fiscal year 2010 enacted level. This
policy framework--to enable arms reductions by ensuring that the
remaining stockpile and the infrastructure on which it depends are
safe, secure, and reliable--is also underscored in the newly released
Nuclear Posture Review.[Footnote 3]
The current nuclear weapons stockpile consists of seven different
warhead and bomb types delivered by four types of weapon systems,
[Footnote 4] including the following:
* B61 and B83 gravity bombs delivered by dual-capable aircraft and
long-range bombers;
* W80 warheads for cruise missiles deliverable by long-range bombers;
* W76 and W88 warheads for submarine-launched ballistic missiles; and:
* W78 and W87 warheads for intercontinental ballistic missiles.
In recent years, NNSA has taken steps to create system-based budgets
associated with each of these seven warhead and bomb types. These
system-based budgets represent the planned work activities NNSA
identifies as specific to each warhead or bomb type. In fiscal year
2009, the seven system-based budgets totaled $542.8 million, or 8.5
percent of NNSA's overall nuclear weapons budget. However, the vast
majority of the nuclear weapons budget is not system-based but rather
represents funding to support all other activities needed to operate
and maintain the nuclear security enterprise, including the
intellectual and technical capabilities of the nuclear workforce.
Two of the largest non-system-based components of NNSA's nuclear
weapons budget are: (1) Readiness in Technical Base and Facilities
(RTBF) Operations of Facilities, the goal of which is to operate and
maintain facilities and infrastructure in a safe, secure, and reliable
condition such that they are operationally ready to execute nuclear
weapons work, and (2) Stockpile Services, the goal of which is to
provide a foundation for operations, which includes the research,
development, and production support capabilities for multiple nuclear
weapon programs. In fiscal year 2009, Congress appropriated $6.41
billion for NNSA's weapons activities,[Footnote 5] which an
explanatory statement accompanying the annual appropriations act
reported as including $1.163 billion for RTBF Operations of Facilities
and $866.4 million for Stockpile Services.[Footnote 6] Together, these
two components total over $2 billion, or almost one-third of NNSA's
total nuclear weapons activities appropriation for that year.
Consistent with Federal Accounting Standards Advisory Board guidance
on identifying the full (total) cost of federal programs and
activities, your subcommittee has emphasized that NNSA should
establish budgets that reflect total program costs and that these
budgets should be more transparent to congressional oversight,
particularly as efforts proceed to modernize the nuclear security
enterprise.[Footnote 7] In this context you asked us to (1) determine
the extent to which NNSA's RTBF Operations of Facilities congressional
budget justification that supplements the Budget of the United States
Government (the President's Budget) for fiscal year 2009 is based on
the total cost of operating and maintaining weapons facilities and
infrastructure; (2) determine the extent to which NNSA's fiscal year
2009 congressional budget justification for Stockpile Services
identifies the total costs of providing foundational research and
production support capabilities; and (3) discuss the implications, if
any, of a smaller stockpile on RTBF Operations of Facilities and
Stockpile Services costs.
To address these objectives, we analyzed NNSA's congressional budget
justifications for fiscal years 2009, 2010, and 2011, as well as
accounting records related to NNSA's execution of its RTBF Operations
of Facilities and Stockpile Services programs for fiscal year 2009. We
also analyzed documentation on NNSA's programs and activities,
including national work breakdown structures--management tools NNSA
uses to identify the work activities that completely define a project
or program--for RTBF Operations of Facilities and Stockpile Services.
We compared NNSA's work breakdown structures with our best practices
for work breakdown structures as published in the GAO Cost Estimating
and Assessment Guide: Best Practices for Developing and Managing
Capital Program Costs.[Footnote 8] Further, we analyzed budget, cost,
and program documentation from all eight NNSA sites. We also collected
data from NNSA's sites on their nuclear weapons facilities and the
sources of funding sites use to fully support operations and
maintenance of these facilities. These data were collected using a
data collection instrument that was pretested with NNSA and several of
its sites. We performed a reliability assessment of these data and
determined they were sufficiently reliable for the purposes of this
report. In addition, we analyzed NNSA's nuclear security enterprise
modernization plans and associated cost estimates. Finally, we
conducted interviews with DOE, NNSA, and site officials and toured
facilities at six of NNSA's eight sites. More details on our scope and
methodology can be found in appendix I.
We conducted this performance audit from April 2009 to June 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.
Background:
Established by Congress in 2000 as a separately organized agency
within DOE, NNSA has the primary mission of providing the United
States with safe, secure, and reliable nuclear weapons and maintaining
core competencies in nuclear weapons science, technology, and
engineering. To support this highly technical mission, NNSA relies on
capabilities in several thousand facilities located at eight nuclear
security enterprise sites that support weapons activities. These sites
are owned by the government but managed and operated by private
contractors, and each has specific research and development (R&D)
and/or production responsibilities within the nuclear security
enterprise. (See figure 1.)
Figure 1: Primary Responsibilities of Sites within the Nuclear
Security Enterprise:
[Refer to PDF for image: illustrated U.S. map]
The map depicts the sites, along with the following descriptive
statements:
Kansas City Plant (KCP) (Kansas City, MO): Manufactures and procures
nonnuclear components for nuclear weapons, including electrical,
electronic, mechanical, and plastic components.
Lawrence Livermore National Laboratory (LLNL) (Livermore, CA):
Research and development laboratory responsible for ensuring the
performance, safety, and reliability of nuclear weapons, particularly
their nuclear components; supporting surveillance, assessment, and
refurbishment of weapons in the stockpile; and providing unique
capabilities in high-energy density physics, high explosives research
and development and assessment, and environmental containment of high-
hazard experiments.
Los Alamos National Laboratory (LANL) (Los Alamos, NM): Research and
development laboratory responsible for ensuring the performance,
safety, and reliability of nuclear weapons, particularly their nuclear
components; supporting surveillance, assessment, and refurbishment of
weapons in the stockpile; and providing unique capabilities in neutron
scattering, radiography, and actinide sciences. LANL also manufactures
plutonium components and weapons detonators.
Nevada Test Site (NTS) (Mercury, NV): Conducts high-hazard operations,
testing, and training in support of NNSA, Department of Defense, and
other federal agencies; maintains the capability to resume underground
nuclear testing should the President deem it necessary.
Pantex Plant (Pantex) (Amarillo, TX): Assembles nuclear and nonnuclear
components into nuclear weapons; conducts disassembly, testing,
quality assurance, repair, refurbishment, retirement, and final
disposition of nuclear weapon assemblies, components, and materials;
fabricates chemical high explosives for nuclear weapons applications.
Sandia National Laboratories (SNL) (Albuquerque, NM; Livermore, CA):
Research and development laboratories responsible for ensuring the
performance, safety, and reliability of nuclear weapons, particularly
their nonnuclear components; supporting surveillance, assessment, and
refurbishment of weapons in the stockpile; conducting environmental
testing of nuclear weapons systems; responsible for the engineering of
nonnuclear components and for some nonnuclear component production.
Savannah River Site (SRS)-Tritium Operations (Aiken, SC): Extracts
tritium, a key isotope in nuclear weapons design; performs loading,
unloading, and surveillance on tritium reservoirs.
Y-12 National Security Complex (Y-12) (Oak Ridge, TN): Manufactures
components for nuclear weapons, including uranium components;
evaluates, tests, assembles, and disassembles these components;
supplies highly enriched uranium for use in naval reactors.
Sources: NNSA; Map Resources (map).
[End of figure]
In addition to implementing NNSA's nuclear weapons programs, some
sites also support additional missions such as U.S. Navy nuclear
propulsion, nuclear nonproliferation activities, and work for other
federal agencies such as the Departments of Defense and Homeland
Security. NNSA's Office of Defense Programs is responsible for NNSA's
weapons activities and oversees the sites' management and operating
(M&O) contractors to execute R&D and production work.[Footnote 9] NNSA
reimburses its M&O contractors under cost-reimbursement-type contracts
for the costs incurred in carrying out the department's missions, and
M&O contractors have the opportunity to periodically earn additional
award fees and contract extensions based on annual performance
assessments.
Congress funds NNSA's nuclear weapons mission through an appropriation
titled Weapons Activities. Weapons Activities is organized by NNSA
into 14 operating programs with more than 40 budget lines across four
activity areas. In fiscal year 2009, Congress appropriated
approximately $6.4 billion for Weapons Activities, broken down by NNSA
into the four areas described in table 1.
Table 1: NNSA's Breakdown of its Fiscal Year 2009 Appropriation for
Weapons Activities (Dollars in thousands):
Weapons Activities area: Stockpile Support;
Description: Stockpile Support provides nuclear warheads and bombs for
NNSA to the Department of Defense in accordance with the President's
Nuclear Weapons Stockpile Plan, which directs the number and type of
weapons for the Department of Defense to maintain. Operating programs
also support dismantlement and disposition of retired weapons as well
as selection and maturation of production technologies critical to
manufacturing to meet presidential requirements;
Fiscal year 2009 congressional spending directives by operating
program: Directed Stockpile Work = $1,590,152;
Readiness Campaign = $160,620;
Subtotal: $1,750,772.
Weapons Activities area: Science, Technology, and Engineering (ST&E);
Description: ST&E funds support operating programs that develop
improved capabilities and experimental infrastructure to assess the
safety, security, reliability, and performance of nuclear weapons
without reliance on further underground nuclear testing. Operating
programs focus on science, engineering, high-energy density physics
and fusion, and advanced computing;
Fiscal year 2009 congressional spending directives by operating
program: Science Campaign = $316,690;
Engineering Campaign = $150,000;
Inertial Confinement Fusion and High Yield Campaign = $436,915;
Advanced Simulation and Computing Campaign = $556,125;
Science, Technology and Engineering Capability = $30,000;
Subtotal: $1,489,730.
Weapons Activities area: Infrastructure;
Description: Infrastructure consists of three programs that together
provide the base support to operate and maintain the nuclear weapons
complex. These programs operate and maintain NNSA program facilities
in a safe, secure, efficient, reliable, and compliant condition and
support specific construction projects. In addition, Infrastructure
funds support restoration and revitalization of sites' physical
infrastructure, and facilitate sites' efforts to modernize and
consolidate while ensuring compliance with environmental regulations;
Fiscal year 2009 congressional spending directives by operating
program: Readiness in Technical Base and Facilities = $1,674,406;
Facilities and Infrastructure Recapitalization Program = $147,449;
Environmental Projects and Operations[A] = $38,596;
Subtotal: $1,860,451.
Weapons Activities area: Security and Nuclear Counterterrorism;
Description: Security and Nuclear Counterterrorism funds support
NNSA's efforts to provide physical protection for NNSA personnel,
facilities, nuclear weapons, and special nuclear material through the
use of protective guard forces, physical protection systems, and
secure transportation, as well as NNSA's cyber security program. In
addition, funds support nuclear emergency response assets in support
of homeland security and collaborative efforts in countering nuclear
terrorism in support of national security;
Fiscal year 2009 congressional spending directives by operating
program: Secure Transportation Asset = $214,439;
Nuclear Counterterrorism Incident Response = $215,278;
Defense Nuclear Security = $735,208;
Cyber Security = $121,286;
Subtotal: $1,286,211.
Weapons Activities area: Total;
Fiscal year 2009 congressional spending directives by operating
program: $6,387,164.
Source: NNSA and Joint Explanatory Statement, Regarding H.R. 1105,
Omnibus Appropriations Act, 2009, 155 Cong. Rec. H1653, H1962-63 (Feb.
23, 2009).
Note: Total does not include appropriations for congressionally
directed projects.
[A] In fiscal year 2010, the Environmental Projects and Operations
program was integrated into a new, broader program--Site Stewardship--
that additionally focuses on special nuclear material consolidation.
[End of table]
RTBF is the single largest program within NNSA's Weapons Activities
appropriation, with nearly $1.7 billion for fiscal year 2009, and
encompasses 90 percent of NNSA's funds designated in congressional
spending directives for the Infrastructure area.[Footnote 10] A
significant RTBF mission, executed through its Operations of
Facilities subprogram, is to operate and maintain NNSA-owned
programmatic capabilities in a state of readiness, ensuring that each
capability--defined to include facilities, infrastructure, and
supporting workforce--is operationally ready to execute programmatic
tasks identified in ST&E and Stockpile Support. Congressional spending
directives designated nearly $1.2 billion of the RTBF program funds in
the Weapons Activities account, or about 70 percent, for RTBF
Operations of Facilities at NNSA's eight sites.[Footnote 11] (See app.
II for additional discussion.)
In 2006, NNSA and its sites sought to improve linkages between
programmatic tasks and the facilities and infrastructure that support
the nuclear weapons program. To do so, NNSA established three
categories for its facilities and infrastructure that indicate the
extent to which they are critical to the achievement of Stockpile
Support and ST&E milestones:
* Mission Critical facilities and infrastructure--such as for nuclear
weapons production, R&D, and storage--are used to perform activities
to meet highest-level Stockpile Support and/or ST&E milestones, and
without these facilities and infrastructure, operations would be
disrupted or placed at risk.
* Mission Dependent, Not Critical facilities and infrastructure--such
as for waste management, nonnuclear storage, and machine shops--play a
supporting role in meeting Stockpile Support and/or ST&E milestones,
and loss of these facilities and infrastructure would only disrupt
operations so long as operations could not resume within 5 business
days.
* Not Mission Dependent facilities and infrastructure--such as
cafeterias, parking structures, and excess facilities--do not have
direct linkage to Stockpile Support or ST&E milestones but support
secondary missions or quality-of-workplace initiatives.
Together, Mission Critical and Mission Dependent, Not Critical
facilities and infrastructure are deemed "mission essential." In
fiscal year 2009, NNSA categorized its over 4,500 facilities and
infrastructure in these three categories.[Footnote 12] Across the
entire nuclear security enterprise, over 200 facilities and
infrastructure were deemed Mission Critical and over 1,400 were deemed
Mission Dependent, Not Critical.
Directed Stockpile Work is the second largest program within NNSA's
Weapons Activities appropriation, with nearly $1.6 billion in fiscal
year 2009. The Directed Stockpile Work program is executed through
four subprograms:
* Stockpile Services, the largest of these subprograms, with $866.4
million in fiscal year 2009, builds on weapons activities facilities
and infrastructure to provide the foundational capabilities to conduct
R&D and production work applicable to multiple warhead and bomb types.
According to NNSA, the capabilities supported with Stockpile Services
funds enable the achievement of other Directed Stockpile Work missions.
* Weapons Dismantlement and Disposition, with $190.2 million in fiscal
year 2009, supports efforts to reduce the inventory of retired nuclear
weapons and their components.[Footnote 13]
* The Life Extension Program, with $205 million in fiscal year 2009,
represents one of NNSA's two subprograms focused on specific warhead
and bomb types. The Life Extension Program funds efforts to refurbish
and extend the expected stockpile lifetime of legacy warheads and
bombs for 20 to 30 years.
* Stockpile Systems funding supports ongoing sustainment activities
for the active nuclear weapons stockpile, such as the exchange of
components with limited lives and weapon-specific assessments. In
fiscal year 2009, Congress directed $328.5 million for these
activities, which NNSA prioritized among specific weapon and bomb
types.
NNSA reimburses its M&O contractors for the costs incurred in carrying
out NNSA's missions. These include costs that can be directly
identified with a specific NNSA program (known as direct costs)--for
example, the costs for dismantling a retired weapon--and costs of
activities that indirectly support a program (known as indirect
costs), such as administrative activities. To ensure that NNSA
programs are appropriately charged for incurred costs, M&O
contractors' accounting systems assign the direct costs associated
with each program and collect similar types of indirect costs into
pools and allocate them among the programs. Consistent with Cost
Accounting Standards (CAS), M&O contractors must classify their costs
as either direct or indirect, and once costs are classified, must
consistently charge their costs.[Footnote 14] M&O contractors are
required to disclose their cost accounting practices in formal
disclosure statements, which are updated annually and approved by NNSA
officials. M&O contractors' cost accounting practices cannot be
readily compared with one another because contractors' methods for
accumulating and allocating indirect costs vary--that is, a cost
classified as an indirect cost at one site may be classified as a
direct cost at another.[Footnote 15]
NNSA has developed national work breakdown structures for RTBF
Operations of Facilities and for Stockpile Services, management tools
that define the scope of work associated with the two subprograms.
[Footnote 16] (See app. II and app. III for these fiscal year 2009
work breakdown structures.) In March 2009, we issued a cost estimating
guide, a compilation of cost estimating best practices from across
industry and government.[Footnote 17] Among other things, these best
practices discuss establishing product-oriented work breakdown
structures, where a product is defined as an output and 100 percent of
the work associated with achieving that output.[Footnote 18] Product-
oriented work breakdown structures allow a program to track cost and
schedule by defined deliverables, promote accountability by
identifying work products that are independent of one another, and
provide a basis for identifying resources and tasks for developing a
program cost estimate. The ability to generate reliable cost estimates
is a critical function, and a program's cost estimate is often used to
establish budgets.
While individual M&O contractors account for the activities included
in NNSA's work breakdown structures according to their own accounting
practices and these practices vary, NNSA is required to provide
reliable and timely information on the full cost of its programs
because this information is crucial for effective management of
government operations and for oversight.[Footnote 19] Full costs
include direct and indirect costs that contribute to programs,
regardless of funding sources. To meet this requirement, NNSA needs
complete and reliable information from its M&O contractors so that it
can determine the full (or total) costs of its programs. We have
previously reported on NNSA's lack of managerial cost accounting
systems for its programs, particularly with respect to stockpile life
extension programs.[Footnote 20]
NNSA Cannot Accurately Identify the Total Costs to Operate and
Maintain Weapons Activities Facilities and Infrastructure, and These
Costs Likely Significantly Exceed the Budget Justified to Congress for
the RTBF Operations of Facilities Program:
NNSA cannot accurately identify the total costs to operate and
maintain weapons activities facilities and infrastructure because of
differences in sites' cost accounting practices. NNSA does not require
sites to report the total cost to execute their RTBF Operations of
Facilities work scope, but the results of our analysis of sites'
responses to our data collection instrument showed that the total cost
to execute the RTBF Operations of Facilities work scope likely
significantly exceeds the budget for the RTBF Operations of Facilities
program justified to Congress. Efforts are under way to revise NNSA's
work breakdown structure that includes RTBF Operations of Facilities.
According to NNSA officials, once the revised work breakdown structure
is fully implemented it will capture these total costs, but NNSA will
not begin collecting this information until 2011.
NNSA Cannot Accurately Identify the Total Costs to Operate and
Maintain Weapons Activities Facilities and Infrastructure:
Each of the eight sites in the nuclear security enterprise has
established its own practices for how to account for the activities
necessary to operate and maintain weapons activities facilities and
infrastructure. While individual M&O contractors are required to be
CAS compliant,[Footnote 21] differences in their cost accounting
practices preclude NNSA from being able to identify the total costs to
operate and maintain the facilities and infrastructure essential to
achieving Stockpile Support and ST&E program missions. These
differences include determining (1) which weapons activities
facilities and infrastructure individual sites support with RTBF
Operations of Facilities funds, (2) which activities included in the
RTBF Operations of Facilities work breakdown structure each site
supports directly or indirectly, and (3) the additional funding
sources sites use to support certain activities included in the RTBF
Operations of Facilities work breakdown structure. (For a detailed
discussion of the differences in M&O contractors' cost accounting
practices, see appendix II.) For example,
* While NNSA has identified the Mission Critical facilities and
infrastructure at each of its sites, NNSA does not require M&O
contractors to pay for them with RTBF Operations of Facilities funds.
In fiscal year 2009, Pantex fully funded the RTBF Operations of
Facilities work scope at all of its Mission Critical facilities with
RTBF Operations of Facilities funds. In contrast, LANL partially
funded the RTBF Operations of Facilities work scope at the majority,
but not all, of its Mission Critical facilities with RTBF Operations
of Facilities funds.
* Six of the eight sites in the nuclear security enterprise reported
to us that in fiscal year 2009 they allocated the costs of certain
activities included in the RTBF Operations of Facilities work scope
into indirect cost pools, including the costs of activities such as
utilities purchasing and real property maintenance. These indirect
cost pools are often funded through multiple funding sources.
* All sites used funding in addition to RTBF Operations of Facilities
funds to pay for activities included in the RTBF Operations of
Facilities work scope in fiscal year 2009. In response to our data
collection instrument, site officials identified 11 sources of funding
congressionally directed for other Weapons Activities programs and
subprograms that they expended, in part, on activities they considered
to be included in NNSA's RTBF Operations of Facilities work breakdown
structure. In addition, some sites have developed user fee or cost
recovery models for multiprogram facilities. These models are
generally based on charges to programmatic users based on rates
applied to, for example, the square footage of a facility users occupy
or the volume of waste they produce. User fees or cost recovery may be
charged as direct costs to Weapons Activities programs as well as to
other programs and projects, or they may be charged through an
indirect cost pool.
As a result of these differences, NNSA cannot reliably identify the
total costs to operate and maintain these facilities and
infrastructure across the nuclear security enterprise. Rather, NNSA
officials can only accurately identify the direct costs to the RTBF
Operations of Facilities program, and in some instances, the direct
costs to other Weapons Activities programs. Senior NNSA officials in
the RTBF Program Office acknowledged that NNSA does not know the
sites' baseline costs to fully execute RTBF Operations of Facilities
work scope, and NNSA does not require M&O contractors to track their
sites' total operations and maintenance costs for weapons activities
facilities and infrastructure. Instead, NNSA officials told us they
rely on individual contractors to know this information for their
sites as a basis for formulating budget requests; however, some
contractors did not identify a total cost for their sites' weapons
activities facilities and infrastructure. For example, when we asked,
M&O contractors from two sites--Y-12 and LANL--did not provide the
total cost to operate and maintain weapons activities facilities and
infrastructure at their sites. LANL did not provide this information
because site officials could not determine the extent to which costs
charged against indirect cost pools were associated with activities
included in the RTBF Operations of Facilities work scope. Y-12 did not
provide this information because, according to officials, while their
management system is capable of identifying this information, it
cannot do so readily with accuracy.[Footnote 22]
Total Costs to Operate and Maintain Weapons Activities Facilities and
Infrastructure Likely Significantly Exceed the RTBF Operations of
Facilities Budget NNSA Justified to Congress:
The total costs to operate and maintain weapons activities facilities
and infrastructure likely significantly exceed the amount NNSA
justified to Congress in the President's Weapons Activities budget
request for RTBF Operations of Facilities and that Congress directed
to NNSA's sites in fiscal year 2009. While NNSA requires M&O
contractors to report information on their direct costs to the RTBF
Operations of Facilities program, NNSA does not require M&O
contractors to report on the total sitewide operation and maintenance
costs for their weapons activities facilities and
infrastructure.[Footnote 23] NNSA officials acknowledged that a more
accurate figure for total costs to support the enterprisewide work
scope for RTBF Operations of Facilities would include these other
funding sources M&O contractors use to operate and maintain weapons
activities facilities and infrastructure.
As reported above, when we asked, not all M&O contractors determined
the total cost to operate and maintain weapons activities facilities
and infrastructure at their sites. However, for the six contractors
that did so, the cost to fully operate and maintain weapons activities
facilities and infrastructure greatly exceeded the amount of funding
for RTBF Operations of Facilities in fiscal year 2009. Congressionally
directed RTBF Operations of Facilities funding for these six sites in
fiscal year 2009 totaled approximately $558.6 million, but their
estimated fiscal 2009 expenditures for this work scope drawn from all
funding sources totaled approximately $1.1 billion.[Footnote 24]
Officials from the two M&O contractors that did not provide the total
costs to operate and maintain weapons activities facilities and
infrastructure at their sites also told us that their expenditures for
this purpose in fiscal year 2009 exceeded their congressionally
directed RTBF Operations of Facilities funds, as funding from other
programs also contributed. NNSA's congressional budget justification
for RTBF Operations of Facilities is not based on total cost
information, and it does not fully support the scope of work it
describes.
NNSA Is Revising Its Work Breakdown Structure to Capture the Total
Costs to Operate and Maintain Weapons Activities Facilities and
Infrastructure:
NNSA officials and M&O contractors told us that RTBF program
representatives from all of the sites are working closely together and
with NNSA to develop an updated national RTBF work breakdown structure
that will be integrated into a larger national work breakdown
structure for all of the activities overseen by the Office of Defense
Programs. The revised Defense Programs work breakdown structure, once
implemented, is to more closely align activities, including RTBF
activities, at the sites with the nuclear weapons R&D and production
capabilities they support. Moreover, according to NNSA officials, NNSA
envisions the sites using the revised work breakdown structure for
budget formulation, budget execution, and cost collection, unlike the
current RTBF work breakdown structure, which is used only for program
management during a single fiscal year. NNSA has asked that the sites
begin submitting their RTBF program budget requests using the revised
Defense Programs work breakdown structure format. NNSA and site
officials agreed that the revised work breakdown structure should help
better explain how RTBF supports the core missions of the weapons
complex and the base capabilities needed to support those missions.
NNSA officials expect the first phase of revisions to the Defense
Programs work breakdown structure to be completed around the end of
2010. Starting in 2011, NNSA officials said they plan to begin efforts
to further enhance the revised work breakdown structure by including
total cost information for operating and maintaining weapons
activities facilities and infrastructure to support future budget
formulation activities. While this total cost information will not be
wholly captured within the portion of the revised Defense Programs
work breakdown structure associated with RTBF Operations of
Facilities, according to NNSA officials total cost information will be
captured in the revised work breakdown structure as a whole.
Differences in how sites pay for RTBF Operations of Facilities
activities--and weapons activities facilities and infrastructure--will
persist under the revised work breakdown structure. However, NNSA
officials said once the revised Defense Programs work breakdown
structure is fully implemented, NNSA will have a tool to collect
consistent cost information from contractors' disparate cost
accounting systems.
NNSA Does Not Fully Identify or Estimate the Total Costs of the
Products and Capabilities Supported through Stockpile Services R&D and
Production Activities:
While in total NNSA's Stockpile Services work breakdown structure for
fiscal year 2009 reflects $866.4 million in work scope as justified to
Congress, the work breakdown structure does not fully identify or
provide the estimated costs of the products or capabilities supported
through the Stockpile Services program. Rather, the work breakdown
structure is organized largely around work functions and only
partially by specific products or capabilities. (See app. III for a
more detailed Stockpile Services work breakdown structure.) NNSA
officials told us that the largely functionally oriented work
breakdown structure for Stockpile Services in total captures all the
work activities associated with providing foundational programmatic
capabilities for R&D and production capacity across the nuclear
security enterprise. In addition, they said the work breakdown
structure for Stockpile Services is a useful management tool for
executing work functions across products and deliverables. However,
the organization of much of the work breakdown structure precludes the
ready identification of base capabilities and their costs. For
example, the activities included in the Stockpile Services work scope
range widely--from basic infrastructure support to the manufacturing
of actual weapons components--often without specifically identifying
the products or capabilities they are supporting. The exception is
Plutonium Sustainment, the one group that is product-based and that
better aligns work activities with the product or capability it is
ultimately supporting. The five work activity groups in the Stockpile
Services work breakdown structure are as follows (see app. III for
more detailed descriptions of these activities):
* Production Support ($293.1 million in fiscal year 2009) includes non-
weapon-type specific or multi-weapon-type activities that a site
performs to support its own production mission, whatever that mission
might be. Examples of these activities include engineering and
manufacturing operations; quality supervision and control; and tool,
gauge, and equipment services.
* Management, Technology, and Production (MTP) ($195.3 million in
fiscal year 2009) includes activities that (1) sustain and improve
stockpile management, (2) develop and deliver weapon use control
technologies, and (3) result in production of weapons components for
use in multiple warhead and bomb types.[Footnote 25] In contrast to
Production Support activities that are focused on individual sites'
production missions, MTP includes those activities that benefit the
nuclear security enterprise as a whole.
* R&D Certification and Safety ($187.6 million in fiscal year 2009)
provides the underlying capabilities to mature basic research
conducted in ST&E programs and serves as a technology development
bridge between research and weaponized technologies. Activities
support design work to develop certain multisystem limited life weapon
components; the specialized facilities, equipment, and personnel to
maintain a base capability to perform hydrodynamic tests and
subcritical experiments; and the preparation of various types of
studies.[Footnote 26]
* R&D Support ($35.1 million in fiscal year 2009) consists largely of
administrative and infrastructure support activities for sites' R&D
missions. These activities include program management for and
coordination of Stockpile Services' many different outputs, R&D
quality control, computing hardware for personnel, and financial
database maintenance.
* Plutonium Sustainment ($155.3 million in fiscal year 2009) captures
work activities associated with pit manufacturing and related R&D, as
well as associated indirect and overhead costs.[Footnote 27] These
funds not only support the base capabilities for pit manufacturing,
but also contribute to the operation and maintenance of the facilities
and infrastructure necessary to conduct these activities and the
actual manufacturing of a limited number of pits each year.
[Side bar:
Neutron Generators:
Neutron generators are designed by SNL and manufactured at SNL in
Albuquerque, New Mexico. According to an SNL official associated with
neutron generator production, it is not easy to identify all of the
activities associated with neutron generators in NNSA‘s functionally
oriented work breakdown structure. To identify the more than $36
million in Stockpile Services costs to support activities associated
with neutron generators in fiscal year 2009 at SNL, NNSA program
officials provided the following information from different activity
groups in the Stockpile Services work breakdown structure:
R&D Certification and Safety:
* Weapon Component Development costs: $7.2 million;
* Packaging Technologies: $0.1 million.
Production Support:
* Engineering Operations: $8.3 million;
* Manufacturing Operations: $9.5 million;
* Quality Supervision and Control: $3.8 million;
* Tool, Gage, and Equipment Services: $0.8 million;
* Purchasing, Shipping, and Materials: $0.8 million;
* Electronic Product Flow Information Systems: $5.7 million.
According to an SNL official, between $2.7 million and $12.2 million
in fiscal year 2009 Production Support funds paid for activities that
could be considered RTBF Operations of Facilities work scope related
to operating and maintaining SNL‘s neutron generator facilities and
infrastructure.
[Photograph of Neutron Generator; Source: NNSA.]
End of side bar]
According to NNSA officials, the fiscal year 2009 Stockpile Services
work breakdown structure was used to estimate costs and formulate
future budget requests based on the sufficiency of prior-year budgets
to execute the program and adjusted to reflect planned changes in
program execution. NNSA's process for validating the methodology used
to formulate the Stockpile Services fiscal year 2009 budget request
was based on a site-by-site review of prior-year spending for ongoing
activities, rather than a bottom-up approach to integrate product or
capability costs across the nuclear security enterprise.[Footnote 28]
Our cost guide states the risks of using a functionally oriented work
breakdown structure--rather than a product-oriented work breakdown
structure--to develop cost estimates, including difficulty in
identifying work products that are independent from one another, and
difficulty in evaluating and accounting for the level of effort
associated with products (see appendix III for additional discussion
of our cost guide). This methodology provides little information that
would help NNSA identify capability costs or better explain the
effects of proposed funding increases or decreases on Stockpile
Services activities. For example,
* A key nuclear weapon component known as a neutron generator is
designed and manufactured at SNL. Activities associated with neutron
generator R&D and production are distributed across several parts of
the Stockpile Services work breakdown structure and are not combined
by NNSA either to provide a total accounting of the activities
necessary to sustain the neutron generator capability or to determine
the total costs of these activities. Furthermore, common support
costs--such as program management--are not allocated to the neutron
generator capability. Our cost guide states that common support costs
should be included in the work breakdown structures of their
associated products or capabilities.
* When we asked, NNSA identified $45.9 million in MTP production costs
for weapon surveillance testing support in fiscal year 2009. Weapon
surveillance testing is used to assess the condition of systems,
subsystems, and components in the stockpile. According to an NNSA
official, surveillance costs in Stockpile Services for fiscal year
2009 could be as high as $100 million to $130 million, depending on
the extent to which costs are included for activities that support
both surveillance and other capabilities. For example, certain tools
may be used for surveillance and for other production missions. The
$45.9 million identified as the costs for surveillance do not include
the costs to maintain or upgrade those tools. Rather, NNSA tracks the
costs for tooling as a function across all products and capabilities.
In its fiscal year 2011 congressional budget justification for both
R&D Certification and Safety and MTP, NNSA discusses funding to
support the surveillance testing capabilities. The budget
justification provides no explanation for why funding in both activity
groups is requested and does not identify the total amount requested
for Stockpile Services surveillance activities.
[Side bar:
Surveillance to Ensure Weapons Safety and Reliability:
In fiscal year 2009, NNSA and its M&O contractors spent $45.9 million
in MTP production funds to provide the capabilities, testers,
engineering resources, and data management tools to facilitate
enterprisewide interpretation of data and information regarding the
condition of systems, subsystems, and components in the stockpile.
This work supports assessments of warhead reliability, as well as
ongoing laboratory safety, security, and use control evaluations.
Surveillance capabilities include simulating and testing the effects
of vibration, shock, acceleration, temperature, and radiation
environments on weapons and their components. The illustration below
shows a shaker table, used for testing the effects of vibration on
weapons components.
[Photograph: Source: NNSA.]
End of side bar]
NNSA's ongoing effort to revise the Defense Programs work breakdown
structure includes revising the portion associated with Stockpile
Services. Its primary purpose is to provide better evidence to support
assertions made in congressional budget justifications. Our analysis
shows the revised work breakdown structure, once fully implemented,
will better identify products and capabilities supported through
Stockpile Services and provide improved total cost information. NNSA
is planning to "tag" individual activities in the revised Defense
Programs work breakdown structure, including Stockpile Services
activities, to identify the products and capabilities with which those
activities are associated, where possible. This will allow officials
to aggregate activities (and their costs) by product or capability as
necessary within the Defense Programs work breakdown structure. NNSA
officials also said that current plans include tagging indirect or
overhead costs. According to NNSA officials, fully realizing the
revised Defense Programs work breakdown structure will give federal
program managers a tool to collect consistent cost information from
disparate contractor cost accounting systems on the products supported
through Stockpile Services.
RTBF Operations of Facilities and Stockpile Services Costs Are
Unlikely to Be Significantly Affected by Reductions in Stockpile Size,
and NNSA Lacks Cost Information to Help Justify Planned Budget
Increases:
Reducing the stockpile size, as has recently been negotiated in the
New Strategic Arms Reduction Treaty, if ratified, and reinforced by
the 2010 Nuclear Posture Review, is unlikely to significantly affect
NNSA's RTBF Operations of Facilities and Stockpile Services costs,
which represent about one-third of NNSA's total nuclear weapons
program budget. A sizable portion of these costs are fixed and
represent the costs of maintaining the base capabilities necessary to
ensure that the nuclear weapons stockpile continues to be safe,
secure, and reliable without underground nuclear testing. NNSA and its
sites are working to reduce fixed costs and to bring these costs into
line with base capabilities by modernizing and downsizing facilities
and infrastructure and by eliminating excess production and
experimental capacity. However, NNSA lacks information on the costs of
these base capabilities that could adequately justify planned budget
increases, particularly with respect to infrastructure investment.
Base Capability Costs Are Unlikely to Be Significantly Affected by
Reductions in Stockpile Size:
NNSA and site officials identify the scope of work captured in the
RTBF Operations of Facilities and Stockpile Services work breakdown
structures as providing the base capabilities necessary to conduct the
ST&E and system-specific work that ensures the continued safety,
security, and reliability of the nuclear weapons stockpile without
underground nuclear testing. According to NNSA and site officials,
most of the base capabilities these programs provide would be
necessary to maintain even if the size of the stockpile were
significantly reduced. Furthermore, NNSA and site officials identify
the majority of the costs associated with these base capabilities as
fixed and thus relatively insensitive to stockpile size. NNSA recently
analyzed its fiscal year 2008 costs to determine the extent to which
these costs represented the fixed or variable costs of sustaining the
nuclear security enterprise. NNSA's resulting analysis showed that 100
percent of RTBF cost is fixed for certain capabilities, including high
explosives and weapons assembly/disassembly facilities and
infrastructure. In addition, the analysis showed that between 85 and
90 percent of cost was fixed for nonnuclear components and plutonium
and uranium work. Many of these costs are included in the RTBF
Operations of Facilities and Stockpile Services work scopes.
While we were unable to independently verify NNSA's analysis, during
the course of our review we did observe the relatively fixed nature of
the infrastructure and activities necessary to maintain base
capabilities. For example, an NNSA official estimated that the base
capability cost for pit manufacturing is about $120 million in
Stockpile Services funds annually, in comparison with overall
Plutonium Sustainment funding for fiscal year 2009 of $155.3 million.
[Footnote 29] Plutonium Sustainment funding also included production-
related R&D costs, as well as incremental costs for actual component
manufacturing. In addition, officials from several sites highlighted
equipment that may be operated for only a limited portion of each year
but that still must be maintained and operated when needed. Officials
at Y-12 noted that the fixed costs to maintain certain of these
capabilities currently exceed the value of their output; however, to
ensure that Stockpile Support and ST&E missions are achieved, these
capabilities must be maintained.
While base capability costs for the nuclear security enterprise are
unlikely to significantly decline as a result of stockpile reductions,
a primary purpose of NNSA's effort to modernize the nuclear security
enterprise is to reduce the overall level of fixed costs at and among
sites by consolidating infrastructure and reducing capacity to base
levels without compromising national security. According to an NNSA
official, 10 years from now one-third of NNSA's total existing
facilities and infrastructure will be in excess of programmatic need.
Furthermore, NNSA's modernization plans call for consolidating
experimental capabilities among sites within the complex and for
reducing excess production capacity. We previously reported on efforts
at several sites, including LANL and LLNL, to reduce or eliminate
storage of significant quantities of weapons-grade special nuclear
material in site facilities.[Footnote 30] We also recently reported on
progress to replace KCP infrastructure with a new, modern facility
that NNSA expects to result in significantly reduced operations and
maintenance costs for that site.[Footnote 31] Other efforts include
construction of the new Highly Enriched Uranium Materials Facility at
Y-12, which will enable closure of several older storage facilities at
the Y-12 site. In addition, facility disposition at multiple sites,
including LANL, LLNL, NTS, Pantex, and Y-12, will reduce both ongoing
maintenance costs and deferred maintenance backlogs. Consolidation of
equipment at NTS will reduce maintenance.
NNSA Lacks Information on Program Costs That Could Help Justify
Planned Budget Increases:
While base capability costs appear to be relatively insensitive to
changes in the stockpile, complete and reliable information about the
costs of these capabilities is necessary for sound program management
and to help inform future planning. This is particularly important in
the current political and budgetary environment, in which stockpile
reductions are anticipated, and the Administration has planned to
increase budget requests for Weapons Activities by $4.25 billion over
the fiscal year 2010 enacted level between fiscal years 2011 and
2015.[Footnote 32] This planned budget increase is envisioned in part
to ensure adequate support to maintain and improve base capabilities,
including infrastructure recapitalization and replacement. In such an
environment, NNSA is likely to face increased scrutiny of its
planning, programming, and budget execution to determine the effect of
funding increases on the overall health of base capabilities.
In the past, Congress, we, and NNSA have examined different ways of
generating information on the costs of the nuclear weapons program
that would be useful to NNSA management and congressional decision
makers for planning purposes. In 2000 we recommended that NNSA develop
a method to relate its program structure to DOE's cost accounting
considerations so that fixed and variable costs of the program's
activities could be determined and made available when the program
makes its annual budget submission.[Footnote 33] In fiscal year 2005,
NNSA reorganized its budget structure in response to congressional
appropriations committees, which instructed NNSA to begin budgeting by
warhead and bomb type--another way to understand program costs.
[Footnote 34] The current budget structure does identify some type-
specific information. However, NNSA and site officials have continued
to caution against allocating RTBF and Stockpile Services costs to
specific warhead or bomb types, stating that allocating fixed costs
does not really provide any additional information than is already
available and could prove to be misleading; in the event of stockpile
reductions, fixed costs would simply be reallocated across remaining
warhead and bomb types and fail to produce the significant cost
savings that might be anticipated.
Statement of Federal Financial Accounting Standards (SFFAS) No. 4,
Managerial Cost Accounting Standards, states a general standard for
federal agencies to provide reliable and timely information on the
full cost of federal programs. The principal purpose of SFFAS No. 4 is
to determine the cost of delivering a program or output to allow an
organization to assess the reasonableness of this cost or to establish
a baseline for comparison. Congressional appropriations committees
sought to define individual warhead and bomb types as NNSA's programs;
however, since 2005 NNSA has defined its programs as a mix of
individual warhead and bomb types, production and R&D functions that
support multiple warhead and bomb types, facilities and infrastructure
support, and other supporting programs such as security. In part, NNSA
has done so because DOE's accounting guidance does not require NNSA to
allocate basic R&D costs and certain infrastructure capacity costs.
Also, by identifying RTBF and Stockpile Services as programs, NNSA has
identified in its budget structure costs it has determined are fixed.
Going forward, NNSA appears to be moving toward a budget structure
aimed at ensuring sufficient funding to sustain base capabilities and
to identify additional funding that may be necessary to modernize
capabilities or to achieve a level of research or production capacity
above the base level. NNSA currently lacks the total cost information
about its existing programs to ensure it can accurately identify the
costs of its base capabilities for future budget justifications.
Through its ongoing effort to revise its Defense Programs work
breakdown structure, which includes portions associated with RTBF
Operations of Facilities and Stockpile Services, NNSA has the
opportunity to capture this information. More specifically,
* NNSA's preliminary revisions to its national work breakdown
structure for RTBF Operations of Facilities reorients the work
breakdown structure around capabilities and products; highlights
Mission Critical facilities that support these capabilities; and
identifies three types of costs to support these capabilities: (1)
operations, which represents the current program; (2) risk reduction,
which includes costs above base capability to support facility and
equipment upgrades; and (3) transformation, which includes costs to
replace facilities and infrastructure or otherwise significantly
invest in their modernization. These revisions are positive
developments that we believe will enable NNSA to improve its
understanding of facilities and infrastructure costs paid for with
congressionally directed RTBF Operations of Facilities funds and to
improve the transparency of its RTBF Operations of Facilities budget
justification. According to NNSA officials, once the revised work
breakdown structure for all of Defense Programs has been fully
implemented, it should allow NNSA to capture information on the total
costs to operate and maintain weapons activities facilities and
infrastructure, not just those costs paid for with congressionally
directed funds for RTBF Operations of Facilities. In the absence of
total cost information, according to a senior NNSA official, NNSA is
challenged to balance operations and maintenance costs with
recapitalization projects and with large facility replacement projects.
* According to NNSA officials, the portion of the revised Defense
Programs work breakdown structure for Stockpile Services will include
a reorientation around capabilities and products, where possible.
While several NNSA officials said that improving cost estimating is
not a primary impetus for revising the Stockpile Services work
breakdown structure because all Stockpile Services costs are fixed,
officials responsible for revising the Defense Programs work breakdown
structure told us that doing so will help achieve transparent cost
reporting from disparate contractor cost accounting systems,
regardless of the fixed nature of these costs. Without identifying the
total costs of Stockpile Services-supported products and capabilities,
NNSA will be challenged to explain the effects of funding changes or
justify the necessity for increased investment to support or enhance
base capabilities. It is important to recognize that having a product-
or capability-oriented work breakdown structure for Stockpile Services
that includes associated support costs should not reduce NNSA's or its
M&O contractors' flexibility to manage Stockpile Services activities
by function.
Conclusions:
Within the global community, the Administration, and Congress, a
bargain is being struck on nuclear weapons policy. Internationally, if
the treaty is ratified, significant stockpile reductions have been
negotiated between the United States and Russia. Domestically, a new
Nuclear Posture Review has provided an updated policy framework for
the nation's nuclear deterrent. To enable this arms reduction agenda,
the Administration is requesting from Congress billions of dollars in
increased investment in the nuclear security enterprise to ensure that
base scientific, technical, and engineering capabilities are
sufficiently supported such that a smaller nuclear deterrent continues
to be safe, secure, and reliable. For its part, NNSA must accurately
identify these base capabilities and determine their costs in order to
adequately justify future presidential budget requests and show the
effects on its programs of potential budget increases. As it now
stands, NNSA may not be accurately identifying the costs of base
capabilities because (1) without guidance to M&O contractors for
consistent reporting, NNSA cannot identify the total costs to operate
and maintain essential weapons activities facilities and
infrastructure, and (2) NNSA analyzes the reported costs of R&D and
production functions without fully identifying these functions with
the specific capabilities supported through Stockpile Services.
Without taking action to identify these costs, NNSA risks being unable
to identify the return on investment of planned budget increases on
the health of its base capabilities or to identify opportunities for
cost saving. NNSA has the opportunity to mitigate these risks by
addressing them through the ongoing revision of work breakdown
structures and through identifying means of collecting the total costs
of its base capabilities from M&O contractors, which will not
necessitate any changes to the way that Weapons Activities programs
are budgeted or how funds are expended. Without taking these actions,
NNSA will not have the management information it needs to better
justify future budget requests by making its justifications more
transparent. Additionally, the availability of this information will
assist Congress with its oversight function.
Recommendations for Executive Action:
We recommend that the Administrator of NNSA take the following five
actions.
To allow Congress to better oversee management of the nuclear security
enterprise and to improve NNSA's management information with respect
to the base capabilities necessary to ensure nuclear weapons are safe,
secure, and reliable:
(1) develop guidance for M&O contractors for the consistent collection
of information on the total costs to operate and maintain weapons
activities facilities and infrastructure;
(2) require M&O contractors to report to NNSA annually on the total
costs to operate and maintain weapons activities facilities and
infrastructure at their sites;
(3) evaluate the total costs of operating and maintaining existing
weapons activities facilities and infrastructure as part of program
planning processes and budget formulation, especially in relation to
recapitalization and modernization of the nuclear security enterprise;
and:
(4) once the Stockpile Services work breakdown structure reflects a
product or capability basis, use this work breakdown structure to
develop product/capability cost estimates that adequately justify the
congressional budget request for Stockpile Services.
In light of significant proposed increases to NNSA's nuclear weapons
program budget in fiscal year 2011 and beyond, we also recommend that
the Administrator of NNSA:
(5) include in future years' congressional budget justifications (a)
detailed justifications for how these proposed funding increases will
affect program execution and (b) information about how the funding
increases affected programs.
Agency Comments and Our Evaluation:
We provided a draft of this report to NNSA for its review and comment.
NNSA agreed with the report and its recommendations. NNSA's comments
on our draft report are presented in appendix IV. NNSA and several of
its sites also provided technical comments, which we incorporated into
the report as appropriate. In particular, we worked with NNSA
officials to ensure the technical accuracy of the discussion of NNSA's
efforts to revise the Defense Programs national work breakdown
structure. Because this effort is ongoing, we and NNSA wanted to
ensure that information included in this report is as current and
complete as possible.
We are sending copies of this report to the appropriate congressional
committees, Secretary of Energy, Administrator of NNSA, 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 V.
Signed by:
Gene Aloise, Director,
Natural Resources and Environment:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
At the request of the Chairman and Ranking Member, Subcommittee on
Strategic Forces, Committee on Armed Services, House of
Representatives, we were asked to (1) determine the extent to which
the National Nuclear Security Administration's (NNSA) Readiness in
Technical Base and Facilities (RTBF) Operations of Facilities
congressional budget justification that supplements the Budget of the
United States Government (i.e., the President's Budget) for fiscal
year 2009 is based on the total cost of operating and maintaining
weapons facilities and infrastructure; (2) determine the extent to
which NNSA's fiscal year 2009 congressional budget justification for
Stockpile Services identifies the total costs of providing
foundational research and production support capabilities; and (3)
discuss the implications, if any, of a smaller stockpile on RTBF
Operations of Facilities and Stockpile Services costs.
In conducting our review and to accomplish all of these objectives, we
reviewed and analyzed relevant documents concerning NNSA's weapons
programs and activities, such as NNSA's congressional budget
justifications for fiscal years 2009, 2010, and 2011 and the fiscal
year 2009 national work breakdown structures for RTBF Operations of
Facilities and Stockpile Services (see apps. II and III). We analyzed
NNSA's work breakdown structures and compared them with GAO's best
practices, as published in the GAO Cost Estimating and Assessment
Guide: Best Practices for Developing and Managing Capital Program
Costs.[Footnote 35] To help assess the merits and requirements of
indirect cost allocations to warhead and bomb types, we examined the
Statement of Federal Financial Accounting Standards No. 4, promulgated
by the Federal Accounting Standards Advisory Board, and Cost
Accounting Standards, promulgated by the U.S. Cost Accounting
Standards Board. In addition, we interviewed key officials from the
Department of Energy's Office of the Chief Financial Officer and
Office of Engineering and Construction Management, and NNSA's Office
of Defense Programs, Office of Management and Administration, Office
of Field Financial Management, and site offices. Furthermore, we
collected and analyzed budget, cost, and program documents and
interviewed key officials from all eight NNSA sites. We visited six of
the eight sites, including Lawrence Livermore (LLNL), Los Alamos
(LANL), and Sandia National Laboratories (SNL); Nevada Test Site
(NTS); Pantex Plant (Pantex); and Y-12 National Security Complex (Y-
12), where in total we toured more than 30 weapons activities
facilities. All of these facilities were Mission Critical--directly
employed to meet highest-level NNSA weapons program milestones. We
selected these facilities based upon the following criteria: (1) their
uniqueness within the nuclear security enterprise, (2) the importance
of the capabilities provided by the facilities, and (3) the complexity
of their operations. We went to these sites to understand their roles
in weapons program activities and the nuclear weapons budget, and to
see the facilities, equipment, and infrastructure within the nuclear
security enterprise.
To determine the extent to which NNSA's RTBF Operations of Facilities
congressional budget justification for fiscal year 2009 is based on
the total cost of operating and maintaining weapons facilities and
infrastructure, we also collected data from NNSA's eight sites on
their facilities and the sources of funding they use to fully support
the operations and maintenance of weapons activities facilities and
infrastructure. These data were collected through the use of a data
collection instrument we developed and transmitted electronically to
officials identified at all eight sites in the form of a Word
Electronic Questionnaire. The data collection instrument was used to
obtain RTBF program information and fiscal year 2009 expenditure data.
The practical difficulties of employing any data collection instrument
may introduce unwanted discrepancies. For example, differences in how
a particular question is interpreted, the sources of information
available to respondents, or the individual characteristics of the
people who respond can introduce unwanted variability into the
results. We included steps in both the data collection and data
analysis stages to minimize such discrepancies. For example, we took
the following steps:
* In developing this data collection instrument, we consulted with
stakeholders within GAO and with NNSA officials to properly phrase our
questions and to format the instrument; we also pretested the
instrument with NNSA officials in the Office of Defense Programs and
the NNSA Service Center, and with NTS, Pantex, and SNL management and
operating (M&O) contractors, on a line-by-line basis to ensure the
questions were clear, complete, and accurate, and made appropriate
modifications and clarifications to increase data validity and
reliability.
* Upon receiving responses from the sites to the data collection
instrument, we analyzed data on costs, budget, work scope, direct
funding sources, and indirect cost pools on a consistent basis for all
sites; we followed up with sites as needed to ensure their responses
were accurate and complete; and finally, we performed a reliability
assessment of these data and determined they were sufficiently
reliable for the purposes of our report.
In addition, we reviewed NNSA documents such as the RTBF Operations of
Facilities national work breakdown structure, the RTBF Mission
Dependency Guidance, and sites' documents such as their RTBF Site
Execution Plans and RTBF Quarterly Reports, and interviewed NNSA and
site officials. We also requested general information and general
fiscal year 2009 funding information from sites on several specific
weapons activities facilities to use as examples in this report. We
worked with GAO methodologists to develop criteria for selecting the
facility examples such as facilities at sites we visited, facilities
at both laboratories and plants, facilities with diverse funding
expenditures, and facilities conducting both R&D and production
missions.
To determine the extent to which NNSA's fiscal year 2009 congressional
budget justification for Stockpile Services identifies the total costs
of providing foundational research and production support
capabilities, we also examined and analyzed NNSA's Stockpile Services
national work breakdown and NNSA's expenditure data for fiscal year
2009, observed neutron generator and plutonium pit manufacturing
facilities supported with Stockpile Services funds, and interviewed
NNSA and site officials. In addition, we requested information from
NNSA on specific Stockpile Services activities to use as examples in
our report. We selected activities based on their financial
significance in the Stockpile Services work breakdown structure.
To discuss the implications, if any, of a smaller stockpile on RTBF
Operations of Facilities and Stockpile Services costs, we also
reviewed documents such as NNSA's Final Complex Transformation
Supplemental Programmatic Environmental Impact Statement and NNSA's
Infrastructure and Modernization Report to obtain estimates of the
nuclear security enterprise's fixed costs. In addition, we interviewed
NNSA and site officials.
We conducted the work between April 2009 and June 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: Readiness in Technical Base and Facilities Operations of
Facilities:
RTBF Operations of Facilities Funding and Work Breakdown Structure:
Congressional spending directives designate funds within NNSA's
Weapons Activities appropriation for the RTBF Operations of Facilities
subprogram at each of NNSA's eight sites. In addition, a small amount
is also directed for Institutional Site Support, which is at NNSA's
discretion to prioritize for expenditure (see table 2).
Table 2: Congressional Spending Directives by Site for RTBF Operations
of Facilities, Fiscal Year 2009 (Dollars in thousands):
Site: Kansas City Plant (KCP);
Spending directives: $89,871.
Site: LLNL;
Spending directives: $82,605.
Site: LANL;
Spending directives: $289,169.
Site: NTS;
Spending directives: $92,203.
Site: Pantex;
Spending directives: $101,230.
Site: SNL[A];
Spending directives: $123,992.
Site: Savannah River Site (SRS);
Spending directives: $92,762.
Site: Y-12;
Spending directives: $235,397.
Site: Institutional Site Support[B];
Spending directives: $56,102.
Site: Total;
Spending directives: $1,163,331.
Source: NNSA's Fiscal Year 2010 Congressional Budget Justification.
[A] SNL includes the New Mexico and California sites.
[B] NNSA defines Institutional Site Support as supporting corporate
activities across the nuclear security enterprise, including planning,
program management and performance monitoring, independent and
internal technical reviews and assessments, and contractor support.
Institutional Site Support also provides funding for specific projects
across the complex to meet changing programmatic requirements.
Institutional Site Support funds are directed by Congress to NNSA,
which obligates funds to sites based on priority need.
[End of table]
Table 3 provides NNSA's RTBF work breakdown structure applicable to
all sites for fiscal year 2009 and showing three levels of detail.
Sites may create further levels of detail for their own management,
budgeting, or cost collection. Alternatively, sites may use their own
work breakdown structures that they ultimately cross-walk to NNSA's
work breakdown structure to report to NNSA program managers on how
congressionally directed funds were expended.
Table 3: NNSA's National Work Breakdown Structure for RTBF Operations
of Facilities, Fiscal Year 2009:
RTBF: Operations of Facilities (by site):
Facilities Management and Support:
* Facility Management and Administration.
* Facility Operations.
* Facility Engineering.
* Facility Planning and Analysis.
* Facility Training.
* Rental/Lease of Land/Building.
* Other Facility Support Activities.
Real Property Maintenance:
* Management, Planning, and Engineering.
* Corrective Maintenance.
* Preventive Maintenance.
* Predictive Maintenance.
Scientific/Process Equipment and Capabilities (SPEC):
* SPEC Management and Administration.
* SPEC Operations.
* SPEC Engineering.
* SPEC Planning and Analysis.
* SPEC Training.
* SPEC Maintenance.
* SPEC Upgrades.
* Other SPEC Activities.
Utilities and General Services:
* Utilities and General Services Management and Planning.
* Purchased Utilities.
* Site Utilities.
* General Site Services.
Environment, Safety, Health, and Quality (ESH&Q).
* ESH&Q Management and Planning.
* Environmental.
* Nuclear Safety.
* Industrial Safety and Health.
* Quality Assurance.
* ESH&Q Document Control and Records Management.
* Waste Management.
Excess Facilities Management and Disposition:
* Management and Disposition.
* Deactivation.
* Surveillance and Maintenance.
* Decontamination.
* Demolition.
* Other Excess Facilities Management and Disposition.
Capital Equipment:
* SPEC Equipment.
* Facility Equipment.
Other Project Costs (associated with RTBF line item construction
projects): General Plant Projects:
* Real Property General Plant Projects.
* Scientific/Process Capability General Plant Projects.
* Utilities General Plant Projects.
* Compliance General Plant Projects.
* Other Construction General Plant Projects.
Other Project Costs (associated with RTBF line item construction
projects): Expense Funded Projects:
* Real Property Expense Funded Projects.
* Scientific/Process Capability Expense Funded Projects.
* Utilities Expense Funded Projects.
* Compliance Expense Funded Projects.
* Other Construction Expense Funded Projects.
Institutional Site Support:
Congressional Directed Activities:
Source: NNSA.
[End of table]
Differences in Sites' Cost Accounting Practices for RTBF Operations of
Facilities:
Each of the eight sites in the nuclear security enterprise has
established its own cost accounting practices for how to account for
the activities necessary to operate and maintain weapons activities
facilities and infrastructure. While individual M&O contractors may be
Cost Accounting Standards (CAS) compliant,[Footnote 36] differences in
their cost accounting practices preclude NNSA from being able to
identify the total costs to operate and maintain the facilities and
infrastructure essential to achieving Stockpile Support and science,
technology, and engineering (ST&E) program missions. These differences
include determining (1) which weapons activities facilities and
infrastructure individual sites support with RTBF Operations of
Facilities funds, (2) which activities included in the RTBF Operations
of Facilities work breakdown structure each site supports directly or
indirectly, and (3) the additional funding sources sites use to
support certain activities included in the RTBF Operations of
Facilities work breakdown structure.
Facilities and Infrastructure Supported with RTBF Operations of
Facilities Funds:
Consistent with congressional funding direction, each site has
discretion to determine which of its facilities and infrastructure
will be supported with RTBF Operations of Facilities funds.[Footnote
37] While NNSA has identified the mission essential facilities and
infrastructure at each of its sites, NNSA does not require M&O
contractors to pay for essential facilities and infrastructure with
RTBF Operations of Facilities funds. For example, LLNL officials told
us their top priority for RTBF Operations of Facilities funds is fully
supporting safe and secure nuclear facilities operations. In fiscal
year 2009, only KCP fully funded all of its essential weapons
activities facilities with RTBF Operations of Facilities funds. Table
4 shows the extent to which weapons activities facilities and
infrastructure were fully, partially, or not supported with RTBF
Operations of Facilities funds in fiscal year 2009 across the nuclear
security enterprise.
Table 4: Number and Percentage of Weapons Activities Facilities
Supported Directly with RTBF Operations of Facilities Funds, by
Category, Fiscal Year 2009:
Facilities: Fully supported with RTBF Operations of Facilities;
Mission Critical facilities: Number: 97;
Mission Critical facilities: Percent: 44;
Mission Dependent, Not Critical facilities: Number: 84;
Mission Dependent, Not Critical facilities: Percent: 5.
Facilities: Partially supported with RTBF Operations of Facilities;
Mission Critical facilities: Number: 72;
Mission Critical facilities: Percent: 32;
Mission Dependent, Not Critical facilities: Number: 937;
Mission Dependent, Not Critical facilities: Percent: 61.
Facilities: Not supported with RTBF Operations of Facilities;
Mission Critical facilities: Number: 54;
Mission Critical facilities: Percent: 24;
Mission Dependent, Not Critical facilities: Number: 529;
Mission Dependent, Not Critical facilities: Percent: 34.
Source: GAO analysis of responses provided by site officials to data
collection instrument.
[End of table]
Activities Included in the RTBF Operations of Facilities Work
Breakdown Structure Supported Directly or Indirectly:
While NNSA can identify the activities its contractors classify as
direct to the RTBF Operations of Facilities program, NNSA cannot
easily identify those activities its contractors classify as indirect
but that also are included in the RTBF Operations of Facilities work
breakdown structure. Six of the eight sites in the nuclear security
enterprise reported to us that in fiscal year 2009 they allocated
certain activities included in the RTBF Operations of Facilities work
scope into indirect cost pools. These indirect cost pools are often
funded through multiple funding sources.[Footnote 38] For example,
* NNSA includes utilities and general services, such as electric power
and steam supplied to weapons activities facilities, as an activity in
its RTBF Operations of Facilities work breakdown structure, but two
sites--LLNL and SNL--did not consider utilities costs to be direct to
the RTBF Operations of Facilities program in fiscal year 2009.
* The RTBF Operations of Facilities work breakdown structure includes
real property maintenance--maintenance for facilities, facility
equipment, and programmatic equipment--when that real property
supports multiple, not individual, weapon programs. SNL officials told
us that their direct costs to the RTBF Operations of Facilities
program for real property maintenance include only the programmatic
equipment that provides mission capabilities inside weapons activities
facilities. Real property maintenance costs for facilities or facility
equipment are indirect. In contrast, LLNL officials told us that real
property maintenance costs for programmatic equipment, facility
equipment, and facilities themselves may be direct costs to the RTBF
Operations of Facilities program, depending on the facility and the
nature of the equipment.
* NNSA includes SPEC, such as running and maintaining programmatic
equipment and training staff to operate this equipment, in its RTBF
Operations of Facilities work breakdown structure,[Footnote 39] but
there were significant differences across the nuclear security
enterprise in how SPEC costs were actually funded during fiscal year
2009. Three sites--KCP, Pantex, and NTS--funded all SPEC costs
directly with RTBF Operations of Facilities funds. Another three
sites--LLNL, LANL, and SNL--classified SPEC costs as direct and
partially paid for these costs with RTBF Operations of Facilities
funds. Y-12 did not fund SPEC with RTBF Operations of Facilities funds
at all, while SRS reported that it did not spend any money on SPEC
activities in fiscal year 2009.
[Side bar:
Nevada Test Site‘s U1a Complex:
Year facility began operations: 1988.
Facility dimensions: The 14 million-square foot complex is a
laboratory approximately 960 feet underground and consisting of
several mined horizontal tunnels.
NNSA Defense Programs missions supported: U1a supports LANL‘s
subcritical experiments, which use explosives to assess the properties
of plutonium under high-pressures that stop short of a nuclear
detonation.
Other federal government missions supported: None.
Key weapons capabilities and systems supported: U1a is used by the
nuclear security enterprise to conduct shock physics experiments with
plutonium and provides support to the entire enduring nuclear weapon
stockpile.
Total cost to execute the Operations of Facilities work scope in
fiscal year 2009: $15,965,957.
RTBF Operations of Facilities expenditures in fiscal year 2009:
$15,965,957.
[Photograph of site: Source: National Security Technologies (NSTec),
LLC.]
End of sidebar]
Additional Funding Sources Used to Support Activities Included in the
RTBF Operations of Facilities Work Breakdown Structure:
Finally, all sites used funding in addition to RTBF Operations of
Facilities funds to pay for activities included in the RTBF Operations
of Facilities work scope in fiscal year 2009. Consistent with CAS, M&O
contractors are allowed to use these additional funding sources as
long as their cost accounting practices are disclosed; their costing
practices for supporting facilities and infrastructure are
consistently applied; the programs supporting facilities and
infrastructure benefit from their use; and their practices otherwise
comply with applicable cost principles, CAS, and the M&O contract.
These additional sources of funding included (1) other Weapons
Activities programs that in some instances are congressionally
mandated, and (2) programs outside of Weapons Activities, including
Defense Nuclear Nonproliferation, Department of Energy (DOE), and
other federal agencies.[Footnote 40] NNSA officials cannot easily
identify all of the costs associated with RTBF Operations of
Facilities work scope paid for through these other funding sources. In
response to our data collection instrument, site officials identified
11 sources of funding congressionally directed for other Weapons
Activities programs and subprograms that they expended, in part, on
activities they considered to be included in NNSA's RTBF Operations of
Facilities work breakdown structure. For example,
* As congressionally directed, LLNL expended funds designated for the
Inertial Confinement Fusion and High Yield and the Advanced Simulation
and Computing Campaigns to support RTBF Operations of Facilities
activities for facilities and infrastructure associated with these
programs.
* LANL expended congressionally directed funds for the Directed
Stockpile Work program to support activities included in the RTBF
Operations of Facilities work breakdown structure--including some
facilities management and support, real property maintenance, and SPEC
costs.
* SRS expended funds congressionally directed for the Tritium
Readiness Campaign to support all the activities included in the RTBF
Operations of Facilities work breakdown structure at its Tritium
Extraction Facility.
* Y-12 expended funds congressionally directed for the Facilities
Infrastructure Recapitalization Program (FIRP) to support RTBF
Operations of Facilities activities covering real property
maintenance, excess facilities management and disposition, and
construction projects.[Footnote 41]
* NNSA includes capital equipment procurement for both SPEC and
facility equipment in its RTBF Operations of Facilities work breakdown
structure.[Footnote 42] However, most M&O sites only partially paid
for capital equipment costs in their weapons activities facilities
with RTBF Operations of Facilities funds in fiscal year 2009.[Footnote
43] Officials from multiple sites, including Pantex and SNL, told us
that some capital equipment costs that could be paid for with RTBF
Operations of Facilities funds can also be paid for with funds
directed for other Weapons Activities programs, such as Stockpile
Services, that use the equipment.
[Side bar:
LLNL‘s High Explosives Applications Facility (HEAF):
Year facility began operations: 1989.
Facility dimensions: approximately 121,028 square feet.
NNSA Defense Programs missions supported: High explosives research,
development, and testing for the Science and Engineering Campaigns,
Advanced Simulation and Computing (computer modeling), and Directed
Stockpile Work (detonator surveillance).
Other federal government missions supported: Department of Defense‘s
advanced conventional weapon technologies and Department of Homeland
Security‘s threat assessments on conventional and improvised
explosives.
Key weapons capabilities supported: HEAF is used to conduct high
explosives R&D shock research and as a laboratory for the design,
development, and testing of detonators.
Total cost to execute the Operations of Facilities work scope in
fiscal year 2009: Approximately $8.4 million.
RTBF Operations of Facilities expenditures in fiscal year 2009: $3.8
million.
Other expenditures to execute the Operations of Facilities work scope
in fiscal year 2009: FIRP and costs allocated to indirect cost pools.
[Photograph of site: Source: Lawrence Livermore National Laboratory.]
End of side bar]
In addition, some sites with essential facilities that are used by
multiple programs have developed user fee or cost recovery models for
those facilities. These models are generally based on charges to
programmatic users based on rates applied to, for example, the square
footage of a facility users occupy or the volume of waste they
produce. User fees may be charged as direct costs to Weapons
Activities programs as well as to other NNSA, DOE, and non-DOE
programs and work for others projects, or they may be charged through
an indirect cost pool. These charges may be in addition to a base
amount of support provided through RTBF Operations of Facilities. Some
sites, such as SNL, NTS, and Y-12 apply cost recovery models to all of
their facilities. In contrast, LANL applies user fees to those certain
facilities that are multiprogram in nature and particularly expensive
to operate and maintain. For example, LANL officials explained that in
fiscal year 2009 it charged approximately $34.8 million in user fees
to Weapons Activities programs--such as the pit manufacturing program,
and the Science and Engineering Campaigns--as well as to other work
sponsors that used space inside the laboratory's plutonium facility.
[Side bar:
LANL‘s Plutonium Facility (PF-4):
Year facility began operations: 1974.
Facility Dimensions: approximately 232,753 gross square feet.
NNSA Defense Programs missions supported: Directed Stockpile Work
(plutonium infrastructure sustainment and life extension programs),
ST&E missions associated with plutonium R&D, Advanced Simulation and
Computing Campaign (computer modeling), and recovery and recycling of
plutonium.
Other federal government missions supported: NNSA‘s Defense Nuclear
Nonproliferation; DOE‘s Office of Nuclear Energy; and DOE‘s Material,
Identification, and Surveillance Program.
Key weapons capabilities and systems supported: PF-4 capabilities
include plutonium stabilization for storing and manufacturing
plutonium components; surveillance and disassembly of plutonium
weapons components; plutonium processing R&D; R&D testing on power
sources; and storage, shipping, and receiving of special nuclear
material.
Total cost to execute the Operations of Facilities work scope in
fiscal year 2009: LANL was unable to determine the total cost to
execute Operations of Facilities work scope at PF-4.
RTBF Operations of Facilities expenditures in fiscal year 2009: $53.6
million.
Other expenditures to execute the Operations of Facilities work scope
in fiscal year 2009: $34.8 million in cost recovery collected from
Stockpile Services; Science Campaign; NNSA‘s Defense Nuclear
Nonproliferation; DOE‘s Office of Nuclear Energy; and DOE‘s Material,
Identification, and Surveillance program; additional costs allocated
to indirect cost pools.
End of side bar]
[End of section]
Appendix III: Stockpile Services:
Congressional spending directives designate funds within NNSA's
Weapons Activities appropriation for the Stockpile Services
subprogram. Within the subprogram, NNSA obligates funds to its eight
sites for expenditure. In fiscal year 2009, NNSA obligated $866.4
million to its sites to execute Stockpile Services work scope (see
figure 2).
Figure 2: NNSA's Stockpile Services Obligations to Sites, Fiscal Year
2009:
[Refer to PDF for image: pie-chart]
LANL: $239.1 million;
SNL: $207.2 million;
KCP: $102.8 million;
Y-12: $93.2 million;
Pantex: $80.0 million;
LLNL: $71.8 million;
NTS: $42.6 million;
SRS: $15.3 million;
NNSA[A]: $8.4 million;
Total: $860.4[B] million.
Source: NNSA.
[A] Includes small amounts for sites outside the nuclear security
enterprise.
[B] The $6 million difference between the total shown here and the
total of the five Stockpile Services work groups discussed on page 17
represents funds obligated to support M&O contractors from across the
nuclear security enterprise who are temporarily assigned to duties at
NNSA.
[End of figure]
According to our cost guide, a work breakdown structure is the
cornerstone of every program because it defines in detail the work
necessary to accomplish a program's objectives and promotes
accountability by identifying work products that are independent of
one another.[Footnote 44] This provides a basis for identifying
resources and tasks for developing a program cost estimate. The
ability to generate reliable cost estimates is a critical function,
and a program's cost estimate is often used to establish budgets.
NNSA's sites may create further levels of detail within the work
breakdown structure for their own management, budgeting, or cost
collection. Our cost guide is a compilation of cost estimating best
practices from across industry and government. Among other things,
these best practices discuss establishing a product-oriented work
breakdown structure, which allows a program to track cost and schedule
by defined deliverables. This allows a program manager to more
precisely identify which components are causing cost or schedule
overruns and to more effectively mitigate the root causes of overruns.
For NNSA, a product may best be thought of more broadly as a
capability, since a significant portion of NNSA's mission is research
and development (R&D). Thus, a product-oriented work breakdown
structure for NNSA could be focused on the capability to execute a
class of experiments, to produce a weapon component, or to conduct
specified R&D. Our cost guide emphasizes that a product-oriented work
breakdown structure should contain program management and other
overhead activities to make sure all work activities are included. In
contrast, a functionally based work breakdown structure--for example,
one based on manufacturing, engineering, or quality control--would not
have the detailed information to reflect cost, schedule, and technical
performance on specific deliverables. Table 5 provides NNSA's work
breakdown structure applicable to all sites for fiscal year 2009 and
showing four levels of detail.
Table 5: NNSA's National Work Breakdown Structure for Stockpile
Services, Fiscal Year 2009:
Directed Stockpile Work:
Stockpile Services:
Research and Development Certification and Safety:
* Weapon Component Development.
* Base Hydrodynamic Experiments and Subcritical Tests.
* Department of Defense/Department of Energy Munitions Memorandum of
Understanding.
* Research and Development Studies.
Management, Technology, and Production:
* Management: Product Realization Integrated Digital Enterprise.
* Management: Weapons Training and Military Liaison.
* Management: Studies and Initiatives.
* Management: General Management Support.
* Technology: Assessments and Studies.
* Production: Surveillance.
* Production: Support for External Production Missions.
* Production: Production of new non-weapon-specific base spares,
test/handling gear, containers, and weapon components.
* Production: Maintenance of existing non-weapon-specific base spares,
test/handling gear, containers, and weapon components.
Production Support:
* Engineering Operations.
* Manufacturing Operations.
* Quality Supervision and Control.
* Tool, Gage, and Equipment Services.
* Purchasing, Shipping, and Materials Management.
* Electronic Product Flow Information Systems.
Research and Development Support:
* Research and Development Infrastructure Support.
* Program Management and Integration for Research and Development
Activities.
* Laboratory Research and Development Support to the Production
Agencies.
* Nuclear Component Surveillance Activities.
* Quality Control for Research and Development Activities.
Plutonium Sustainment:
* Pit Manufacturing: Facility Services and Support.
* Pit Manufacturing: Manufacturing Operations.
* Pit Manufacturing: Infrastructure and Program/Project Management.
* Pit Manufacturing: Equipment Engineering and Installation.
* Pit Manufacturing: Pit Component Characterization.
* Pit Capability: Infrastructure and Program Management.
* Pit Manufacturing: Technology Design and Development.
Source: NNSA.
[End of table]
As table 5 shows, NNSA's Stockpile Services work breakdown structure
is organized around five work activity groups, four of which are
primarily functionally oriented. Descriptions of these work activity
groups follow:
* Production Support. Production Support is the largest activity group
within Stockpile Services. According to NNSA's fiscal year 2009
congressional budget justification and as confirmed by NNSA officials,
Production Support includes those non-weapon-type-specific or multi-
weapon-type activities that a site performs to support its internal
site production mission, whatever that mission may be. More
specifically, these support activities--such as engineering and
manufacturing operations; quality supervision and control; tool, gage,
and equipment services (tooling); purchasing, shipping, and materials
management; and electronic information systems--enable the production
of weapons components and weapon assembly/disassembly, and help
support surveillance testing. To this end, NNSA officials
characterized Production Support as paying directly for the indirect
activities at individual sites that (1) are associated with providing
manufacturing support for production processes and (2) support more
than one warhead or bomb type.
[Side bar:
Tooling in Support of Manufacturing:
In fiscal year 2009, $59.6 million in Production Support funds was
spent to provide tooling and tooling services at sites where
production work occurs. Tooling provides production facilities with
the tools, parts and accessories, machinery, equipment, and labor
needed for production and to maintain production equipment. This work
also involves preparation of specifications and designs for tooling
and test equipment. The illustration below shows a vacuum calibration
system”a piece of specialized equipment used to calibrate/certify
vacuum gages”for which tooling funds support corrective and preventive
maintenance.
[Photograph: Source: NNSA.]
End of side bar]
* Management, Technology, and Production (MTP). MTP is the second
largest activity group within Stockpile Services. According to NNSA,
MTP includes activities that (1) sustain and improve stockpile
management, (2) develop and deliver weapon use control technologies,
[Footnote 45] and (3) result in production of weapons components for
use in multiple warhead and bomb types. In contrast to Production
Support activities that are focused on individual sites' production
missions, MTP includes those activities that benefit the nuclear
security enterprise as a whole. NNSA officials characterized MTP as
supporting a mix of direct and indirect activities. More specifically,
among other things, MTP management funds support weapons test data
archiving and other shared data systems; MTP technology funds support
studies and assessments relating to the safety and security of nuclear
weapons; and MTP production funds support the interpretation of the
results from surveillance tests, which are used to monitor and
evaluate the condition, safety, and reliability of weapons in the
stockpile.[Footnote 46] In addition, certain activities are captured
within MTP that would be classified by NNSA if associated with a
specific warhead or bomb type.[Footnote 47] According to NNSA
officials, costs for these activities represent a relatively small
amount of MTP, which one official estimated at approximately 10
percent of surveillance costs, or about $4.6 million in fiscal year
2009.
[Side bar:
Hydrodynamic and Subcritical Tests:
In fiscal year 2009, NNSA and its M&O contractors spent $93.3 million
in R&D Certification and Safety funds supporting the base capability
to conduct hydrodynamic and subcritical tests. These experiments
improve understanding of weapons materials. Hydrodynamic tests assess
the performance and reliability of a weapon by using high explosives
to detonate mock weapons that contain surrogate rather than fissile
materials, to analyze the response of the adjacent materials in the
weapon. Subcritical tests use explosives to assess the properties of
plutonium under high pressures that stop short of a nuclear
detonation. The illustration below shows the Cygnus dual-beam
radiographic facility, which provides X-ray imaging of subcritical
tests. Cygnus is located in the NTS‘s U1a Tunnel Complex,
approximately 1,000 feet underground.
[Photograph: Source: NNSA.]
End of side bar]
* R&D Certification and Safety. R&D Certification and Safety provides
the underlying capabilities to mature basic research conducted in ST&E
programs. In this sense, R&D Certification and Safety serves as a
technology development bridge between research and weaponized
technologies. Among other things, R&D Certification and Safety funds
support three major activities. First, funds are used to support
design work to develop certain limited life weapon components that are
used in multiple warhead and bomb types and that must be exchanged on
a regular basis because they expire. Second, funds support the
specialized facilities, equipment, and personnel to maintain a base
capability to perform hydrodynamic tests, which examine the
performance of nuclear weapons pits using surrogate materials to
replace fissionable materials, and subcritical experiments, which
examine the material properties of plutonium. Finally, funds support
the preparation of various types of studies, including those produced
annually to report to the President of the United States on the
safety, security, and reliability of the stockpile.
* R&D Support. R&D Support is the smallest of the functional work
activity groups in Stockpile Services. R&D Support consists largely of
indirect activities that provide administrative and infrastructure
support for sites' R&D missions. These activities include program
management for and coordination of Stockpile Services' many different
outputs, R&D quality control, computing hardware for personnel, and
financial database maintenance.
* Plutonium Sustainment. Plutonium Sustainment is the only fully
product-oriented activity group in Stockpile Services. While
incorporated as an activity group within Stockpile Services, Plutonium
Sustainment has its own work breakdown structure that is independent
from the other four Stockpile Services activity groups. The Plutonium
Sustainment work breakdown structure includes production support, R&D
support, and program management activities. According to an NNSA
official, this work breakdown structure, which captures work
activities associated with pit manufacturing and related R&D--as well
as associated indirect and overhead costs--is largely a legacy from
when Plutonium Sustainment was an ST&E program instead of part of
Stockpile Services.[Footnote 48] This is markedly different from the
other four groups, where production or R&D activities are organized
separately from their supporting overhead activities. The same NNSA
officials said that nearly all Plutonium Sustainment funds are spent
at LANL, which is home to the nation's pit manufacturing capability.
These funds not only support the base capabilities for plutonium R&D
and pit manufacturing, but also contribute to the operation and
maintenance of the facilities and infrastructure necessary to conduct
these activities as well as the actual manufacturing of a limited
number of pits each year.
[End of section]
Appendix IV: Comments from the National Nuclear Security
Administration:
Department of Energy:
National Nuclear Security Administration:
Washington, DC 20585:
June 11, 2010:
Mr. Gene Aloise:
Director, National Resources:
and Environment:
U.S. Government Accountability Office:
Washington, D.C. 20458:
Dear Mr. Aloise:
The National Nuclear Security Administration (NNSA) appreciates the
opportunity to review the Government Accountability Office (GAO) draft
report, Nuclear Weapons: Actions Needed to Identify Total Costs of
Weapons Complex Infrastructure and Research and Production
Capabilities, GAO-10-582. I understand, that at the request of the
Strategic Forces Subcommittee of the House Armed Services Committee,
GAO was asked to determine (1) the extent to which NNSA's Readiness in
Technical Base and Facilities (RTBF) Operations of Facilities
congressional budget justification that supplements the Budget of the
United States for FY 2009 is based on the total cost of operating and
maintaining weapons facilities and infrastructure; (2) the extent to
which NNSA's FY 2009 congressional budget justification for Stockpile
Services identifies the total costs of providing foundational research
and production support capabilities; and (3) discuss the implications,
if any, of a smaller stockpile on RTBF Operations of Facilities and
Stockpile Services costs. The review provided NNSA with
recommendations focused on strengthening contractor cost reporting and
improving cost evaluation, cost structure and data collection
capabilities.
NNSA has recognized the need for improvements in these areas for some
time and has been working diligently to enhance the integration of our
budget information in a way that builds on past improvements. NNSA
shares the GAO opinion that these improvements, when implemented, will
address the noted concerns and will result in much better capability
to present integrated budget information about the investments needed
to deliver the Defense Programs mission.
In many cases, NNSA's current capabilities rely on the expert
knowledge of our program managers to define the necessary capabilities
and linkages in an integrated fashion. NNSA is well on its way to
implementing a portfolio management system for Defense Programs that
incorporates a National Work Breakdown Structure that accounts for all
work required to execute the mission and documents the cost of mission
products and capabilities. We are making progress in several cost
management initiatives including a uniform cost structure.
NNSA appreciates the GAO's efforts in identifying opportunities for
ongoing improvement and is confident in our ability to achieve these
improvements in the coming year. We are committed to being effective
stewards of the taxpayer's money, and take that responsibility very
seriously. We would like to acknowledge and thank the efforts of the
GAO auditors in working with us in ensuring the technical accuracy of
this draft report.
If you have any questions concerning this response, please contact
JoAnne Parker, Director, Office of Internal Controls, at 202-586-1913.
Sincerely,
Signed by:
Gerald Talbot,
Associate Administrator for Management and Administration:
Enclosure:
cc: Principal Assistant Deputy Administration for Military Application:
[End of section]
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contact:
Gene Aloise, (202) 512-3841, or aloisee@gao.gov:
Acknowledgments:
In addition to the contact named above, the following staff members
made key contributions to this report: Jonathan Gill, Assistant
Director; John Bauckman; Allison Bawden; Muriel Brown; Abe Dymond;
Eugene Gray; Carol Henn; Alison O'Neill; Timothy Persons; Cheryl
Peterson; Rebecca Shea; Vasiliki Theodoropoulos; Jack Warner; and
Franklyn Yao.
[End of section]
Footnotes:
[1] In 1992, the United States began a moratorium on testing nuclear
weapons. Subsequently, the President extended this moratorium in 1993,
and Congress, in the National Defense Authorization Act of 1994,
directed the Department of Energy to establish a science-based
stockpile stewardship program to maintain the nuclear weapons
stockpile without nuclear testing. Pub. L. No. 103-160, § 3138 (1994).
[2] Department of Energy, NNSA, Final Complex Transformation
Supplemental Programmatic Environmental Impact Statement Summary, DOE/
EIS-0236-S4 (Washington, D.C.: Oct. 2008), and associated Records of
Decision published in the Federal Register at 73 Fed. Reg. 77644 (Dec.
19, 2008) and 73 Fed. Reg. 77656 (Dec. 19, 2008).
[3] Department of Defense, Nuclear Posture Review Report, (Washington,
D.C.: April 2010). The Nuclear Posture Review is a legislatively
mandated review that establishes U.S. nuclear policy, strategies,
capabilities, and force posture for the next 5 to 10 years. Pub. L.
No. 110-181, div. A, title X, §1070, 122 stat. 3, 327 (Jan. 28, 2008).
[4] Although there are seven different warhead and bomb types, several
of these have multiple variants.
[5] Omnibus Appropriations Act, 2009, Pub. L. No. 111-8 (Mar. 11,
2009) and Supplemental Appropriations Act, 2009, Pub. L. No. 111-32
(Jun. 24, 2009).
[6] Joint Explanatory Statement, Regarding H.R. 1105, Omnibus
Appropriations Act, 2009, 155 Cong. Rec. H1653, H1962-63 (Feb. 23,
2009). Although the amounts designated in committee reports for each
of the NNSA weapons activity budget line items are not legally binding
and may be reprogrammed within the Weapons Activities appropriation
account, the appropriations committees impose limitations on NNSA's
ability to reprogram funds from one line item, such as Stockpile
Services, to another over the course of a year.
[7] According to the Federal Accounting Standards Advisory Board,
established in 1990 to promulgate accounting standards and principles
for the U.S. government, the full costs of government programs include
evaluating direct and indirect costs. Direct costs are costs that can
be specifically identified with an output, including salaries and
benefits for employees working directly on the output, materials,
supplies, and costs for facilities and equipment used exclusively to
produce the output. Indirect costs are costs that are jointly or
commonly used to produce two or more types of outputs but are not
specifically identifiable with any output. These may include costs for
general administration, research and technical support, and operations
and maintenance for buildings and equipment.
[8] GAO, 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).
[9] M&O contracts are agreements under which the government contracts
for the operation, maintenance, or support, on its behalf, of a
government-owned or -controlled research, development, special
production, or testing establishment wholly or principally devoted to
one or more major programs of the contracting federal agency. Federal
Acquisition Regulation, 48 C.F.R. § 17.601.
[10] In this report, we refer to funding instructions contained in the
legislative history of NNSA's appropriations acts as congressional
spending directives. Committee reports contain congressional spending
directives that instruct NNSA to make specific amounts of funding
available to each of its operating programs from within the Weapons
Activities appropriation. For more information, see GAO, Congressional
Directives: Selected Agencies' Processes for Responding to Funding
Instruction, GAO-08-209 (Washington, D.C.: Jan. 31, 2008).
[11] Beginning in fiscal year 2008, congressional spending directives
designated specific amounts of RTBF Operations of Facilities funds for
each NNSA site. In prior years, the total amount of RTBF Operations of
Facilities funds had been directed to NNSA, which made decisions about
the amounts to obligate to each site.
[12] A single building may actually comprise multiple facilities. For
example, in Pantex's Building 12-44--which is used for assembling and
disassembling nuclear weapons--each assembly cell is counted as a
separate Mission Critical facility.
[13] Fiscal year 2009 funds for Weapons Dismantlement and Disposition
included almost $70 million in operating funds associated with
construction projects that are no longer funded through this
subprogram.
[14] CAS is a set of 19 standards promulgated by the U.S. Cost
Accounting Standards Board, an independent and statutorily established
board (41 U.S.C. §422) that is administratively part of the Office of
Management and Budget's Office of Federal Procurement Policy. For
current applicability of CAS, see chapter 99 of Title 48, U.S. Code of
Federal Regulations.
[15] GAO examined trends in indirect cost rates at five DOE
laboratories, three of which are NNSA laboratories, in 2005. See GAO,
Department of Energy: Additional Opportunities Exist for Reducing
Laboratory Contractors' Support Costs, [hyperlink,
http://www.gao.gov/products/GAO-05-897] (Washington, D.C.: Sept. 9,
2005).
[16] In this report, when we refer to the RTBF Operations of
Facilities or the Stockpile Services work scopes, we are referring to
the complete set of activities that may be paid for with
congressionally directed funds for these programs as defined by their
work breakdown structures. Consistent with sites' cost accounting
practices, activities included in these work scopes may in fact be
paid for with other funding sources.
[17] [hyperlink, http://www.gao.gov/products/GAO-09-3SP].
[18] Throughout this report, we consider work breakdown structures
that are oriented around production or R&D capabilities within the
definition of a product oriented work breakdown structure where the
maintenance of a production or R&D capability is the output. However,
when following the product-oriented best practice, there should not be
work breakdown structure elements for various functional activities
like design, engineering, tooling, risk, or quality, because these
efforts should be embedded in each activity.
[19] Federal Accounting Standards Advisory Board, Statement of Federal
Financial Accounting Standards No. 4, Managerial Cost Accounting
Standards and Concepts, (Washington, D.C.: June 2008).
[20] GAO, Nuclear Weapons: Opportunities Exist to Improve the
Budgeting, Cost Accounting, and Management Associated with the
Stockpile Life Extension Program, [hyperlink,
http://www.gao.gov/products/GAO-03-583] (Washington, D.C.: July 28,
2003).
[21] Our review did not address the extent to which individual M&O
contractors' cost accounting practices are CAS compliant. Rather, our
review focused on the extent to which CAS allows contractors' cost
accounting practices to differ from another to expend the same funds.
[22] Officials from Y-12 and LANL told us they are able to identify
the total amounts of funding they accumulate in their indirect cost
pools to pay for sitewide costs.
[23] NNSA does require sitewide reporting on different categories of
support costs, including several categories that are included in the
RTBF Operations of Facilities work scope, such as facilities
management, maintenance, and utilities. According to an NNSA official,
these costs include support costs associated with weapons activities
facilities and infrastructure, but these costs cannot be separated
from sitewide support costs.
[24] In providing these estimates, officials from these sites
cautioned that because of how indirect cost pools are accumulated, the
multiple funding sources that support RTBF Operations of Facilities
work scope are not completely independent from one another. Thus,
under current practices, there is the potential for error when
calculating this total.
[25] Weapon use control technologies are solutions that can be
engineered into nuclear weapons to help ensure denial of unauthorized
use.
[26] Hydrodynamic tests examine the performance of certain nuclear
weapons components, known as pits, using surrogate materials to
replace fissile materials. Subcritical experiments examine the
material properties of plutonium through shock physics experiments.
[27] Plutonium Sustainment became part of the Stockpile Services work
breakdown structure in fiscal year 2009 once its primary goal, to
reestablish the nation's capability to manufacture plutonium weapons
components, known as pits, was achieved. The capability to manufacture
and certify pits is critical to maintaining the reliability of the
stockpile. The nation's capability to manufacture pits was lost when
DOE's Rocky Flats Plant near Denver, Colorado, was closed in 1989.
Beginning in 2002, a Pit Manufacturing Campaign was established as an
ST&E program to reconstitute this capability. The campaign ended when
this effort was determined to be successful, and funds to maintain the
capability and continue R&D work on plutonium were transferred to
Stockpile Services in fiscal year 2009.
[28] In contrast, during fiscal year 2009, NNSA undertook a zero-based
review of costs associated with its physical security program, the
goals of which included elimination of unnecessary costs and
improvement of the consistency and clarity of security requirements.
As a result, NNSA's fiscal year 2011 congressional budget
justification attributes a $38.8 million reduction in the President's
request for physical security funding to the results of this zero-
based review.
[29] In providing technical comments on a draft of this report, LANL
officials said the base budget for pit manufacturing is about $140
million.
[30] GAO, Los Alamos National Laboratory: Long-Term Strategies Needed
to Improve Security Management and Oversight, [hyperlink,
http://www.gao.gov/products/GAO-08-694] (Washington, D.C.: June 13,
2008), and Nuclear Security: Better Oversight Needed to Ensure That
Security Improvements at Lawrence Livermore National Laboratory Are
Fully Implemented and Sustained, [hyperlink,
http://www.gao.gov/products/GAO-09-321] (Washington, D.C.: Mar. 16,
2009).
[31] GAO, Nuclear Weapons: National Nuclear Security Administration
Needs to Better Manage Risks Associated with Modernization of Its
Kansas City Plant, [hyperlink, http://www.gao.gov/products/GAO-10-115]
(Washington, D.C.: Oct. 23, 2009).
[32] Planned increases to the fiscal years 2012 through 2015 budget
requests for Weapons Activities were included in NNSA's congressional
budget justification for fiscal year 2011.
[33] GAO, Nuclear Weapons: Improved Management Needed to Implement
Stockpile Stewardship Program Effectively, [hyperlink,
http://www.gao.gov/products/GAO-01-48] (Washington, D.C.: Dec. 14,
2000).
[34] H.R. Rep. 107-258.
[35] GAO, 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).
[36] Our review did not address the extent to which individual M&O
contractors' cost accounting practices are CAS compliant. Rather, our
review focused on the extent to which CAS allows contractors' cost
accounting practices to differ from one another to expend the same
funds.
[37] In some instances, Congress directed that other programs, such as
the Advanced Simulation and Computing Campaign, would pay for the
operations and maintenance of specific Mission Critical weapons
activities facilities and infrastructure associated with that program.
[38] Consistent with CAS, when indirect cost pools were used to
support these activities, the costs were paid indirectly sitewide,
including for weapons activities facilities and infrastructure, not
simply in lieu of using congressionally directed RTBF Operations of
Facilities funds.
[39] NNSA defines SPEC as including costs associated with maintaining,
repairing, and upgrading the scientific and/or process equipment that
provides Stockpile Support and ST&E programs with the capabilities
needed to accomplish their missions.
[40] NNSA's sites often undertake "work for others," which DOE Order
481.1C defines as the performance of work for non-DOE entities by DOE/
NNSA personnel and their respective contractor personnel or the use of
DOE/NNSA facilities for work that is not directly funded by DOE/NNSA
appropriations.
[41] FIRP was authorized by Congress to eliminate a backlog of
deferred maintenance in weapons activities facilities and
infrastructure by fiscal year 2013. NNSA obligates funding for this
program to sites on an individual project basis for work to address
maintenance deferred prior to fiscal year 2005. While NNSA separates
FIRP projects from RTBF Operations of Facilities work scope, we found
that several sites view FIRP funds as integral to their overall
maintenance funding.
[42] NNSA defines capital equipment as including costs for purchasing
equipment that is not otherwise purchased as part of a line item
construction project or is not attributed to a single Stockpile
Support or ST&E programmatic use.
[43] The exception is KCP, which fully funded its capital equipment
costs in fiscal year 2009 with RTBF Operations of Facilities funds.
[44] [hyperlink, http://www.gao.gov/products/GAO-09-3SP].
[45] Weapon use control technologies are solutions that can be
engineered into nuclear weapons to help ensure denial of unauthorized
use.
[46] According to NNSA officials, while the interpretation of
surveillance results is supported with funds from MTP, actual
surveillance testing is paid for through a different Directed
Stockpile Work subprogram, Stockpile Systems, through which NNSA
obligates funds to support specific warhead and bomb types.
[47] NNSA officials told us the agency classifies information that is
specific to nuclear weapons design.
[48] Plutonium Sustainment became part of the Stockpile Services work
breakdown structure in fiscal year 2009 once its primary goal, to
reestablish the nation's capability to manufacture plutonium weapons
components, was achieved. The capability to manufacture and certify
pits is critical to maintaining the reliability of the stockpile. The
nation's capability to manufacture pits was lost when DOE's Rocky
Flats Plant, near Denver, Colorado, was closed in 1989. Beginning in
2002, a Pit Manufacturing Campaign was established as an ST&E program
to reconstitute this capability. The campaign ended when this effort
was determined successful, and funds to maintain the capability and
continue R&D work on plutonium were transferred to Stockpile Services
in fiscal year 2009.
[End of section]
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