Nuclear Weapons:

Actions Needed to Identify Total Costs of Weapons Complex Infrastructure and Research and Production Capabilities

GAO-10-582: Published: Jun 21, 2010. Publicly Released: Jun 21, 2010.

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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.

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.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: NNSA has developed its Integrated Facilities and Infrastructure (IFI) Budget Crosscut tool to collect consistent information from M&O contractors about the total costs to operate and maintain weapons activities facilities and infrastructure. The tool, which must be completed annually, has embedded guidance to M&O contractors for determining whether a cost should be included in the tool, and the tool covers both direct and indirect infrastructure costs. The utilization of this tool and its associated guidance meets the intent of GAO's recommendation to NNSA. We support NNSA's plans to further develop this tool by integrating it with other systems that support future years' program and budget planning to better ensure that future years' budget submissions are informed by prior years' actual costs.

    Recommendation: 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, the Administrator of NNSA should develop guidance for management and operating (M&O) contractors for the consistent collection of information on the total costs to operate and maintain weapons activities facilities and infrastructure.

    Agency Affected: Department of Energy: National Nuclear Security Administration

  2. Status: Closed - Implemented

    Comments: NNSA has developed its Integrated Facilities and Infrastructure (IFI) Budget Crosscut tool to collect consistent information from M&O contractors about the total costs to operate and maintain weapons activities facilities and infrastructure. The tool, which must be completed annually, has embedded guidance to M&O contractors for determining whether a cost should be included in the tool, and the tool covers both direct and indirect infrastructure costs. While GAO has not validated the data in the IFI, the development of this tool and its associated guidance meets the intent of GAO's recommendation to NNSA. We support NNSA's plans to further develop this tool by integrating it with other systems that support future years' program and budget planning to better ensure that future years' budget submissions are informed by prior years' actual costs.

    Recommendation: 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, the Administrator of NNSA should 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.

    Agency Affected: Department of Energy: National Nuclear Security Administration

  3. Status: Closed - Implemented

    Comments: In March and April 2014, senior NNSA officials issued guidance with respect to the process for programming and planning the agency's fiscal year 2016 budget submission. This guidance includes instructions for developing (1) a requirements based budget estimate consistent with the level of funding needed to successfully operate and maintain infrastructure in the long term, and (2) a budget estimate at a target level that is affordable in the context of the overall weapons program. The difference between these two estimates represents the "requirements over target," and allows NNSA to evaluate whether its planned budget request will support base capabilities and accept risk as necessary if it does not. This action meets the intent of GAO's recommendation. Further, in response to congressional direction, NNSA established a separate budgetary control for infrastructure recapitalization, and the process for planning and programming this recapitalization budget is following the fiscal year 2016 guidance.

    Recommendation: 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, the Administrator of NNSA should 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.

    Agency Affected: Department of Energy: National Nuclear Security Administration

  4. Status: Open

    Comments: In process: NNSA has significantly improved its work breakdown structure for Stockpile Services. The work breakdown structure now reflects a product or capability basis to a much greater extent. NNSA is continuing to work to develop cost estimates for these products and capabilities to adequately justify the congressional budget request for Stockpile Services. In 2014, the Senate Appropriations Committee's Energy and Water Development Subcommittee suggested changes to NNSA's budget structure to align it more closely with products and capabilities beginning with fiscal year 2016 appropriations. GAO will continue to monitor whether NNSA develops cost estimates for Stockpile Services products and capabilities that inform future years' budget requests and justifications.

    Recommendation: 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, the Administrator of NNSA should, 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.

    Agency Affected: Department of Energy: National Nuclear Security Administration

  5. Status: Closed - Implemented

    Comments: NNSA has improved its congressional budget justifications to include specific identification of the amount by which the budget request has increased or decreased in comparison to the prior year (either requested or enacted depending on the timing of appropriations) by program. For each proposed increase or decrease identified, NNSA includes information in the budget justification to explain the general reason(s) for the change with respect to program scope. In addition, NNSA has begun to include, by program, descriptions of key achievements during the prior fiscal year, particularly in areas where funding was increased. These actions meet the intent of GAO's recommendation.

    Recommendation: In light of significant proposed increases to NNSA's nuclear weapons program budget in fiscal year 2011 and beyond, the Administrator of NNSA should 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 Affected: Department of Energy: National Nuclear Security Administration

 

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