Nuclear Weapons:

National Nuclear Security Administration's Plans for Its Uranium Processing Facility Should Better Reflect Funding Estimates and Technology Readiness

GAO-11-103: Published: Nov 19, 2010. Publicly Released: Nov 19, 2010.

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Built in the 1940s and 1950s, the Y-12 National Security Complex, located in Oak Ridge, Tennessee, is the National Nuclear Security Administration's (NNSA) primary site for enriched uranium activities. Because Y-12 facilities are outdated and deteriorating, NNSA is building a more modern facility--known as the Uranium Processing Facility (UPF). NNSA estimates that the UPF will cost up to $3.5 billion and save over $200 million annually in operations, security, and maintenance costs. NNSA also plans to include more advanced technologies in the UPF to make uranium processing and component production safer. GAO was asked to (1) assess NNSA's estimated cost and schedule for constructing the UPF; (2) determine the extent to which UPF will use new, experimental technologies, and identify resultant risks, if any; and (3) determine the extent to which emerging changes in the nuclear weapons stockpile could affect the UPF project. To conduct this work, GAO reviewed NNSA technology development and planning documents and met with officials from NNSA and the Y-12 plant.

The UPF project costs have increased since NNSA's initial estimates in 2004 and construction may be delayed due to funding shortfalls. NNSA's current estimate prepared in 2007 indicates that the UPF will cost between $1.4 and $3.5 billion to construct--more than double NNSA's 2004 estimate of between $600 million and $1.1 billion. In addition, costs for project engineering and design, which are less than halfway completed, have increased by about 42 percent--from $297 to $421 million--due in part to changes in engineering and design pricing rates. With regard to the project's schedule, NNSA currently estimates that UPF construction will be completed as early as 2018 and as late as 2022. However, because of a funding shortfall of nearly $200 million in fiscal year 2011, NNSA officials expect that the UPF will not be completed before 2020, which could also result in additional costs. NNSA is developing 10 new technologies for use in the UPF and is using a systematic approach--Technology Readiness Levels (TRL)--to gauge the extent to which technologies have been demonstrated to work as intended. Industry best practices and Department of Energy (DOE) guidance recommend achieving specific TRLs at critical project decision points--such as establishing a cost and schedule performance baseline or beginning construction--to give optimal assurance that technologies are sufficiently ready. However, NNSA does not expect all 10 new technologies to achieve the level of maturity called for by best practices before making critical decisions. For example, NNSA is developing a technology that combines multiple machining operations into a single, automated process--known as agile machining--but does not expect it to reach an optimal TRL until 18 months after one of UPF's critical decisions--approval of a formal cost and schedule performance baseline--is made. In addition, DOE's guidance for establishing optimal TRLs prior to beginning construction is not consistent with best practices or with our previous recommendations. As a result, 6 of 10 technologies NNSA is developing are not expected to reach optimum TRLs consistent with best practices by the time UPF construction begins. If critical technologies fail to work as intended, NNSA may need to revert to existing or alternate technologies, possibly resulting in changes to design plans and space requirements that could delay the project and increase costs. Changes in the composition and size of the nuclear weapons stockpile could occur as a result of changes in the nation's nuclear strategy, but NNSA officials and a key study said that the impact of these changes on the project should be minor. For example, the New Strategic Arms Reduction Treaty signed in April 2010 by the leaders of the United States and Russia would, if ratified, reduce the number of deployed strategic warheads from about 2,200 to 1,550. According to NNSA officials, NNSA and DOD have cooperated closely and incorporated key nuclear weapons stockpile changes into UPF's design. Also, an independent study found that most of the UPF's planned space and equipment is dedicated to establishing basic uranium processing capabilities that are not likely to change, while only a minimal amount--about 10 percent--is for meeting current stockpile size requirements. GAO is making five recommendations for, among other things, improving the UPF's cost and funding plans, ensuring that new UPF technologies reach optimal levels of maturity prior to critical project decisions, and for improving DOE guidance. NNSA generally agreed with the recommendations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In a memo "Project Management Policies and Principles" (6/8/2015), DOE Secretary Moniz directed DOE to require certain project management practices recommended by GAO or by DOE. Regarding cost estimates, the Secretary directed that cost estimates be developed consistent with best practices detailed in GAO-09-3SP, Cost Estimating and Assessment Guide. GAO-09-3SP recommends as a best practice that program cost estimates be reconciled with the independent cost estimates so that others can understand areas of risk. In GAO-13-686R, Nuclear Weapons: Factors Leading to Cost Increases with the Uranium Processing Facility, we documented NNSA reconciling UPF costs based on a series of cost estimates. In GAO 15-126, Nuclear Weapons: Some Actions Have Been Taken to Address Challenges with the Uranium Processing Facility Design, following a cost estimate conducted by the Department of Defense, we noted that NNSA was in the process of examining alternatives to the single large UPF facility, a process that continues today. Because of the Secretary's direction and observations on NNSA's use of cost estimating practices for UPF, we believe that this recommendation has been implemented. We will, however, continue to monitor DOE programs and projects to ensure this practice is followed in the future.

    Recommendation: To improve DOE's guidance for estimating project costs and developing new technologies, the Secretary of Energy should include in the cost estimating policy currently being developed by DOE specific guidance for reconciling differences, if any, between the results of independent cost estimates and other project cost estimates.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: In a memo "Project Management Policies and Principles" (6/8/2015), DOE Secretary Moniz directed DOE to comply with technology readiness level (TRL) best practices. This requires achieving TRL-4 by Critical Decision 1 (CD-1) and TRL-7 by CD-2. If these levels cannot be achieved by the specified deadlines, justification is required as is Deputy Secretary notification. This policy change is now in effect and will be formally incorporated into DOE Order 413.3B. This change is consistent with our recommendation, and we will monitor its implementation in ongoing and future work.

    Recommendation: To improve DOE's guidance for estimating project costs and developing new technologies, the Secretary of Energy should evaluate where DOE's guidance for gauging the maturity of new technologies is inconsistent with best practices and, as appropriate, revise the guidance to ensure consistency or ensure the guidance contains justification why such differences are necessary or appropriate.

    Agency Affected: Department of Energy

  3. Status: Open

    Comments: NNSA has not yet taken actions sufficient to close this recommendation. In GAO-14-45 NNSA's Budget Estimates Do Not Fully Align with Plans, we noted that NNSA did not include in its budget estimates billions of dollars in planned major construction projects, to include UPF, because officials said these infrastructure plans were too preliminary. We concluded that providing Congress with budget estimates that reflect long-term plans and the expected funding needed to execute these plans, even if preliminary, helps in prioritizing projects and funding and aids in congressional decision making. In GAO 15-126, Nuclear Weapons: Some Actions Have Been Taken to Address Challenges with the Uranium Processing Facility Design, we noted that NNSA in January 2014 was in the process of examining alternatives to the single large UPF facility because of large cost increases. The development of alternatives continues today. As such, NNSA has delayed the Critical Decision-2 (CD-2) milestone from 2014 to 2016 and total UPF and related costs are, according to NNSA's FY 2016 Budget request, TBD. We will continue to monitor this issue.

    Recommendation: To improve NNSA's management of the UPF project, the Secretary of Energy should direct the Administrator of NNSA to ensure that UPF's cost and schedule estimates, and the associated funding plans these estimates are based upon, are consistent with NNSA's future years' budget and spending plan prior to approval of the UPF's performance baseline at critical decision 2.

    Agency Affected: Department of Energy

  4. Status: Closed - Implemented

    Comments: In a memo "Project Management Policies and Principles" (6/8/2015), DOE Secretary Moniz directed DOE to comply with technology readiness level (TRL) best practices. This requires achieving TRL-4 by Critical Decision 1 (CD-1) and TRL-7 by CD-2. If these levels cannot be achieved by the specified deadlines, justification is required as is Deputy Secretary notification. This policy change is now in effect and will be formally incorporated into DOE Order 413.3B. This change is consistent with our recommendation, and we will monitor its implementation in ongoing and future work.

    Recommendation: To improve NNSA's management of the UPF project, the Secretary of Energy should direct the Administrator of NNSA to ensure new technologies being developed for the UPF project reach the level of maturity called for by best practices prior to critical decisions being made on the project.

    Agency Affected: Department of Energy

  5. Status: Closed - Implemented

    Comments: In a memo "Project Management Policies and Principles" (6/8/2015), DOE Secretary Moniz directed DOE to comply with technology readiness level (TRL) best practices. This requires achieving TRL-4 by Critical Decision 1 (CD-1) and TRL-7 by CD-2. If these levels cannot be achieved by the specified deadlines, justification is required as is Deputy Secretary notification. This policy change is now in effect and will be formally incorporated into DOE Order 413.3B. While this policy does not require Congressional notification, provisions, if fully implemented, for justification and notification within DOE create sufficient accountability. As such, this change is consistent with our recommendation, and we will monitor its implementation in ongoing and future work.

    Recommendation: To improve NNSA's management of the UPF project, the Secretary of Energy, in the event technologies being developed for the UPF project do not reach levels of maturity called for by best practices, should inform the appropriate committees and Members of Congress of any NNSA decision to approve a cost and schedule performance baseline or to begin construction of UPF without first having ensured that project technologies are sufficiently mature.

    Agency Affected: Department of Energy

 

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