National Nuclear Security Administration: Actions Needed to Improve Usefulness of Common Financial Data
Fast Facts
The contractors who work at weapons labs, plants, and sites for the National Nuclear Security Administration track and report costs in different ways. However, Congress needs comparable information to provide oversight and to make budget decisions across these sites. Legislation for FY 2017 required NNSA to implement a common financial reporting system. This report assesses NNSA's actions since our Jan. 2020 review.
NNSA has made significant progress in implementing common financial reporting. However, additional improvements could be made that would make program costs more transparent. Our 4 recommendations address these issues.
Nuclear Security Enterprise Laboratories, Production Plants, and Testing Sites
Highlights
What GAO Found
The National Nuclear Security Administration (NNSA)—a separately organized agency within the Department of Energy (DOE)—has taken additional steps to implement common financial reporting since GAO's January 2020 report. NNSA has fully implemented four steps and made progress on three steps, as shown in the table, and some additional work remains. For example, NNSA has not collected standardized cost data from all contractors that manage the contracts to which it obligates funds. Specifically, some management and operating (M&O) contractors that are overseen by another DOE office, DOE's Office of Science, are not reporting complete data to NNSA because the two offices have not agreed on the standardized cost elements for reporting this information. This is, in part, because Office of Science officials believed that the data were not comparable across programs or useful for their own program management. DOE's Office of the Chief Financial Officer is responsible for cost reporting at the departmental level and is positioned to facilitate an agreement on the data to be reported by the Office of Science to ensure that NNSA can collect standardized data for all of the funds it obligates.
GAO's Assessment of NNSA's Progress toward Implementing Common Financial Reporting
|
Steps |
Progress as of February 2022 |
|---|---|
|
Identify an approach and develop a tool |
Completed |
|
Develop a policy |
Completed |
|
Establish common cost elements and definitions |
Completed |
|
Identify and report costs for programs of record and base capabilities |
Identified programs and multiple sets of capabilities, but costs not reported in this way |
|
Implement a common work breakdown structure |
Completed |
|
Collect financial data from contractors |
Collected data, but not all contractors submit standardized data |
|
Publish and analyze data |
Analyzed data, and continuing to improve reporting |
Source: GAO analysis of National Nuclear Security Administration (NNSA) information. | GAO-22-104810
NNSA has made common financial reporting data available to offices, and the data support some management purposes for some offices. For example, some offices use the data for budget analysis, and other offices use the data for project management, such as monitoring spending trends. However, offices have used the data inconsistently because NNSA has not established agency-wide goals or expectations for using the data or communicated how the data will help NNSA achieve its objectives. According to the program director for financial integration, NNSA did not want to limit offices' potential uses for the data. By establishing goals or expectations for using the data, officials would better understand how data can be used—as well as options for how the data could be used—and could better achieve the benefits of common financial reporting.
Why GAO Did This Study
NNSA has long faced challenges in identifying the total costs of its programs, which are principally performed by M&O contractors. Congress needs this information to provide oversight and make budgetary decisions. The National Defense Authorization Act for Fiscal Year 2017 required NNSA to implement a common financial reporting system, to the extent practicable. NNSA's efforts began in 2016.
The Senate report accompanying a bill for the National Defense Authorization Act for Fiscal Year 2018 includes a provision for GAO to periodically review NNSA's implementation of common financial reporting. This is GAO's third report on this issue. This report examines (1) the steps NNSA has taken since GAO's January 2020 report, and (2) the extent to which NNSA offices use common financial data to support management purposes.
GAO reviewed NNSA documents about implementing common financial reporting, examined cost data submitted to NNSA, and interviewed NNSA and DOE officials and M&O contractor representatives.
Recommendations
GAO is making four recommendations, including for DOE to facilitate an agreement on collecting standardized cost data, and for NNSA to establish goals and expectations for using the common financial data. NNSA agrees with the four recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Energy | DOE's Chief Financial Officer should facilitate NNSA and the Office of Science—and other stakeholders, as appropriate—in coming to an agreement on the indirect cost elements the Office of Science should report to achieve NNSA's common cost reporting objectives. (Recommendation 1) |
DOE concurred with this recommendation. As of March 2023, officials from DOE's Office of the Chief Financial Officer have met with officials from NNSA's financial integration team and DOE's Office of Science. However, the entities involved have not yet agreed on the indirect cost elements that Office of Science M&O contractors will use when reporting financial data for NNSA-funded work. As of October 2023, DOE officials were planning outreach to relevant congressional committees regarding some elements of the FY2024 National Defense Authorization Act, which included language regarding this issue.
|
| National Nuclear Security Administration | NNSA's Deputy Associate Administrator for Management and Budget, as chair of NNSA's Financial Integration Executive Committee, should define and communicate goals and expectations for using the common financial reporting data. (Recommendation 2) |
NNSA concurred with this recommendation. As of March 2023, the Deputy Associate Administrator for Budget has communicated some information on using common financial reporting data through budget performance reviews for M&O contractors and NNSA program offices. NNSA plans to include information on goals and expectations for using common financial reporting data in the planned update to its financial integration policy that, as of October 2023 , has not been issued. Additionally, as of October 2023, NNSA officials plan to further communicate requirements for using the common financial reporting data when it meets with each of the program offices and NNSA Management and Operating Contractors in fiscal year 2024.
|
| National Nuclear Security Administration | NNSA's Program Director for Financial Integration should coordinate with program offices to develop an approach, such as through changes to the work breakdown structure or analytical tools, to ensure that all program elements, including crosscutting and multi-programmatic costs, are included in total program costs. (Recommendation 3) |
As of October 2023, NNSA considers this recommendation closed based on updates and revisions to the work breakdown structure. We requested additional information from NNSA on these changes to determine whether the changes will allow NNSA to calculate total program costs.
|
| National Nuclear Security Administration | NNSA's Program Director for Financial Integration should proactively provide information to offices and work with officials to ensure they understand how to customize lower levels of the work breakdown structure to reflect the level of detail needed to oversee programs. (Recommendation 4) |
NNSA concurred with this recommendation. NNSA's financial integration team provided information on customization of the work breakdown structure to program offices. In September 2022, program offices participating in common financial reporting said that they have the information needed to customize their work breakdown structure or have already done so.
|