oversight

Modernizing the Nuclear Security Enterprise: Observations on the Organization and Management of the National Nuclear Security Administration

Published by the Government Accountability Office on 2012-06-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States Government Accountability Office

GAO                         Testimony
                            Before the Subcommittee on Strategic
                            Forces, Committee on Armed Services,
                            House of Representatives

                            MODERNIZING THE
For Release on Delivery
Expected at 3:30 p.m. EDT
Wednesday, June 27, 2012

                            NUCLEAR SECURITY
                            ENTERPRISE
                            Observations on the
                            Organization and
                            Management of the National
                            Nuclear Security
                            Administration
                            Statement of Gene Aloise, Director
                            Natural Resources and Environment




GAO-12-867T
                                               July 27, 2012

                                               MODERNIZING THE NUCLEAR SECURITY
                                               ENTERPRISE
                                               Observations on the Organization and Management
Highlights of GAO-12-867T, a testimony
                                               of the National Nuclear Security Administration
before the Subcommittee on Strategic Forces,
Committee on Armed Services, House of
Representatives



Why GAO Did This Study                         What GAO Found
During the late 1990s, DOE had                 After the enactment of Title 32 of the National Defense Authorization Act for
difficulties with a lack of clear              Fiscal Year 2000 (NNSA Act), the Department of Energy (DOE) and the National
management authority and                       Nuclear Security Administration (NNSA) struggled to determine how NNSA
responsibility that contributed to             should operate as a separately organized agency within the department. A
security problems at the nation’s              number of factors contributed to this. First, DOE and NNSA did not have a useful
nuclear weapons laboratories and               model to follow for establishing a separately organized agency in DOE. Several
management problems with major                 federal agencies were suggested as models, such as the National Oceanic and
projects. In response, Congress                Atmospheric Administration in the Department of Commerce. However, GAO
created NNSA as a separately
                                               reported in January 2007 that agency officials GAO interviewed did not consider
organized agency within DOE under
                                               their agency to be separately organized or believed that their agency’s
the NNSA Act. NNSA is responsible for
managing nuclear weapon- and
                                               operational methods were transferable to NNSA. Second, DOE’s January 2000
nonproliferation-related national              plan to implement the NNSA Act did not define how NNSA would operate as a
security activities in laboratories and        separately organized agency within DOE. Internal DOE opposition to the creation
other facilities, collectively known as        of NNSA led the department to fill virtually every significant statutory position in
the nuclear security enterprise. GAO           NNSA with DOE officials (i.e., having DOE officials contemporaneously serve in
continues to identify problems across          NNSA and DOE positions). As GAO testified in April 2001, this practice of “dual-
the nuclear security enterprise, from          hatting” caused considerable concern about NNSA’s ability to independently
projects’ cost and schedule overruns to        function. Also, lack of formal agreement between DOE and NNSA in a number of
inadequate oversight of safety and             key areas such as, among others, budgeting and procurement, led to
security at NNSA’s sites. With NNSA            organizational conflicts that inhibited effective operations. Even where formal
proposing to spend tens of billions of         procedures were developed, interpersonal disagreements hindered effective
dollars to modernize its facilities, it is     cooperation. For example, a January 2007 GAO report described the conflict
important to ensure scarce resources           between NNSA and DOE counterintelligence offices, which led to Congress
are spent in an effective and efficient        subsequently amending the NNSA Act to consolidate the counterintelligence
manner.                                        programs of DOE and NNSA under DOE.
This testimony addresses (1) NNSA’s            NNSA has made considerable progress resolving some of its long-standing
early experiences organizing and               management deficiencies, but significant improvement is still needed especially
operating as a separately organized
                                               in NNSA’s management of its major projects and contracts. GAO reported in
agency within DOE and (2) NNSA’s
                                               June 2004 that NNSA has better delineated lines of authority and has improved
efforts to correct long-standing
management deficiencies. It is based           communication between its headquarters and site offices. In addition, NNSA’s
on prior GAO reports issued from               establishment of an effective headquarters security organization has made
January 1995 to March 2012.                    significant progress resolving many of the security weaknesses GAO has
                                               identified. Nevertheless, NNSA continues to experience major cost and schedule
DOE and NNSA continue to act on the            overruns on its projects, such as research and production facilities and nuclear
numerous recommendations GAO has               weapons refurbishments, principally because of ineffective oversight and poor
made to improve NNSA’s                         contractor management. In some areas, NNSA can be viewed as a success.
management. GAO will continue to               Importantly, NNSA has continued to ensure that the nuclear weapons stockpile
monitor DOE’s and NNSA’s
                                               remains safe and reliable in the absence of underground nuclear testing. At the
implementation of these
                                               same time, NNSA’s struggles in defining itself as a separately organized agency
recommendations.
                                               within DOE, and the considerable management problems that remain have led to
                                               calls in Congress and other organizations to increase NNSA’s independence
                                               from DOE. However, senior DOE and NNSA officials have committed to
                                               continuing reform, and DOE’s and NNSA’s efforts have led to some management
                                               improvements. As a result, GAO continues to believe, as it concluded in its
View GAO-12-867T. For more information,        January 2007 report, that drastic organizational change to increase
contact Gene Aloise at (202) 512-3841 or       independence is unnecessary and questions whether such change would solve
aloiseg@gao.gov.
                                               the agency’s remaining management problems.
                                                                                        United States Government Accountability Office
Chairman Turner, Ranking Member Sanchez, and Members of the
Subcommittee:

We are pleased to be here today to discuss the creation and
implementation of the National Nuclear Security Administration (NNSA)—
a separately organized agency within the Department of Energy (DOE).
As you know, NNSA is responsible for the management and security of
the nation’s nuclear weapons, nuclear nonproliferation, and naval reactor
programs at research and development laboratories, production plants,
and other facilities known collectively as the nuclear security enterprise. 1

During the late 1990s, DOE experienced management difficulties with its
nuclear weapons program that contributed to security problems at the
nation’s nuclear weapons laboratories and significant cost overruns on
major projects. According to a June 1999 report by the President’s
Foreign Intelligence Advisory Board, DOE’s management of the nuclear
weapons laboratories, while representing “science at its best,” also
embodied “security at its worst” because of “organizational disarray,
managerial neglect, and…a culture of arrogance.” The board urged
Congress to create a new organization that, whether established as an
independent agency or a semiautonomous agency within DOE, would
have a clear mission, streamlined bureaucracy, and drastically simplified
lines of authority and accountability. Responding to the board’s
recommendations, Congress created NNSA under Title 32 of the National
Defense Authorization Act for Fiscal Year 2000—the NNSA Act. 2

The NNSA Act established NNSA as a “separately organized agency”
within DOE. The act established the position of DOE Under Secretary for
Nuclear Security, who was also designated as the Administrator of NNSA.
The Secretary of Energy and the Deputy Secretary of Energy were
allowed to establish policy for NNSA and to give direction to NNSA
through the Administrator; however, other DOE employees were



1
 Specifically, NNSA manages three national nuclear weapon design laboratories—
Lawrence Livermore National Laboratory in California, Los Alamos National Laboratory in
New Mexico, and Sandia National Laboratories in New Mexico and California. It also
manages four nuclear weapons production plants—the Pantex Plant in Texas, the Y-12
National Security Complex in Tennessee, the Kansas City Plant in Missouri, and the
Tritium Extraction Facility at DOE’s Savannah River Site in South Carolina. NNSA also
manages the Nevada National Security Site, formerly known as the Nevada Test Site.
2
    Pub. L. No. 106-65, 113 Stat. 512, 953 (1999).




Page 1                                                                     GAO-12-867T
prohibited from directing the activities of individual NNSA employees. In
addition, the NNSA Act required that, among other things, NNSA develop
a planning, programming, and budgeting process to ensure that NNSA
operated under sound financial management principles. Using this
planning, programming, and budgeting process, NNSA is also required to
annually submit to Congress a Future Years Nuclear Security Program
(FYNSP) plan that details NNSA’s planned expenditures for the next 5
years.

DOE’s and NNSA’s management of the nuclear security enterprise has
been the subject of much criticism. The department’s problems are long-
standing. For example, we first designated DOE’s management of its
contracts as an area at high risk of fraud, waste, abuse, and
mismanagement in 1990 because of the department’s record of
inadequate management and oversight of its contractors. In January
1995, we reported that DOE’s laboratories did not have clearly defined
missions that focus their considerable resources on accomplishing the
department’s changing objectives and national priorities. 3 Noting that the
laboratories have made vital contributions to the nation’s defense and
civilian science and technology efforts, we reported that DOE had not
coordinated these laboratories’ efforts to solve national problems but had
instead managed each laboratory on a program-by-program basis. The
establishment of NNSA as a semiautonomous agency within DOE in
2000 was intended to correct these long-standing and widely recognized
DOE management problems, which had been underscored by significant
cost overruns on major projects and security problems at the national
laboratories.

NNSA’s creation, however, has not yet had the desired effect of fully
resolving these management problems. Progress has been made, but
NNSA and DOE’s Office of Environmental Management remain on our
high-risk list. 4 Furthermore, we continue to identify problems across the
nuclear security enterprise, ranging from significant cost and schedule
overruns on major projects to ineffective federal oversight of safety and




3
  GAO, Department of Energy: National Laboratories Need Clearer Missions and Better
Management, GAO/RCED-95-10 (Washington, D.C.: Jan. 27, 1995).
4
    GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011).




Page 2                                                                    GAO-12-867T
security at NNSA’s sites. 5 Concerns have also been raised by national
laboratory and other officials that DOE’s and NNSA’s oversight of the
laboratories’ activities has been excessive and that the safety and
security requirements the laboratories’ are subject to are overly
prescriptive and burdensome, which has resulted in a negative effect on
the quality of science performed at these laboratories.

In January 2007, we testified before this Subcommittee on the extent to
which NNSA has taken steps to improve security at its facilities, improve
its management practices, and revise its organizational structure. 6
Similarly, in February 2012, we testified before this Subcommittee on
NNSA’s management of the nuclear security enterprise. 7 My testimony
today, which is based on these and other reports and testimonies we
have issued since NNSA’s creation, discusses (1) NNSA’s early
experiences organizing and operating as a separately organized agency
within DOE and (2) NNSA’s efforts to correct long-standing management
deficiencies. Detailed information about scope and methodology can be
found in our issued reports. We conducted the performance audit work
that supports this statement in accordance with generally accepted
government auditing standards. Those standards require that we plan
and perform audits 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.




5
  GAO, Department of Energy: Views on the Progress of the National Nuclear Security
Administration in Implementing Title 32, GAO-01-602T (Washington, D.C.: Apr. 4, 2001);
GAO, NNSA Management: Progress in the Implementation of Title 32, GAO-02-93R
(Washington, D.C.: Dec. 12, 2001); and GAO, Department of Energy: NNSA Restructuring
and Progress in Implementing Title 32, GAO-02-451T (Washington, D.C.: Feb. 26, 2002).
6
  GAO, National Nuclear Security Administration: Security and Management
Improvements Can Enhance Implementation of the NNSA Act, GAO-07-428T
(Washington, D.C.: Jan. 31, 2007).
7
  GAO, National Nuclear Security Administration: Observations on NNSA’s Management
and Oversight of the Nuclear Security Enterprise, GAO-12-473T (Washington, D.C.: Feb.
16, 2012).




Page 3                                                                     GAO-12-867T
             DOE is responsible for a diverse set of missions, including nuclear
Background   security, energy research, and environmental cleanup. These missions
             are managed by various organizations within DOE and largely carried out
             by contractors at DOE sites. According to federal budget data, NNSA is
             the largest organization in DOE, overseeing nuclear weapons, nuclear
             nonproliferation, and naval reactors missions at its sites. With a $10.5
             billion budget in fiscal year 2011—nearly 40 percent of DOE’s total
             budget—NNSA is responsible for, among other things, providing the
             United States with safe, secure, and reliable nuclear weapons in the
             absence of underground nuclear testing and maintaining core
             competencies in nuclear weapons science, technology, and engineering.
             Ensuring that the nuclear weapons stockpile remains safe and reliable in
             the absence of underground nuclear testing is extraordinarily complicated
             and requires state-of-the-art experimental and computing facilities, as well
             as the skills of top scientists in the field. Over the past decade, the United
             States has invested billions of dollars in sustaining the cold war-era
             stockpile and upgrading the laboratories and, in 2011, the administration
             announced plans to request $88 billion from Congress over the next
             decade to operate and modernize the nuclear security enterprise and
             ensure that base scientific, technical, and engineering capabilities are
             sufficiently supported, and the nuclear deterrent in the United States can
             continue to be safe, secure, and reliable.

             Under DOE’s long-standing model of having unique management and
             operating (M&O) contractors at each site, management of its sites has
             historically been decentralized and, thus, fragmented. Since the
             Manhattan Project produced the first atomic bomb during World War II,
             NNSA, DOE, and their predecessor agencies have depended on the
             expertise of private firms, universities, and others to carry out research
             and development work and efficiently operate the facilities necessary for
             the nation’s nuclear defense. DOE’s relationship with these entities has
             been formalized over the years through its M&O contracts—agreements
             that give DOE’s contractors unique responsibility to carry out major
             portions of DOE’s missions and apply their scientific, technical, and
             management expertise. 8



             8
              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 of the major programs of the contracting federal agency. Federal Acquisition
             Regulation, 48 C.F.R. § 17.601.




             Page 4                                                                       GAO-12-867T
                      Currently, DOE spends 90 percent of its annual budget on M&O
                      contracts, making it the largest non-Department of Defense contracting
                      agency in the government. The M&O contractors at DOE’s NNSA sites
                      have operated under DOE’s direction and oversight but largely
                      independently of one another. Various headquarters and field-based
                      organizations within DOE and NNSA develop policies, and NNSA site
                      offices, collocated with NNSA’s sites, conduct day-to-day oversight of the
                      M&O contractors and evaluate the contractors’ performance in carrying
                      out the sites’ missions.


                      NNSA focused considerable attention on reorganizing its internal
DOE and NNSA          operations; however, it and DOE have struggled with establishing how
Struggled to          NNSA should operate as a separately organized agency within the
                      department. Several factors contributed to this situation. First, DOE and
Determine How         NNSA did not have a useful model to follow for establishing a separately
NNSA Should Operate   organized agency in DOE. The President’s Foreign Intelligence Advisory
as a Separately       Board’s June 1999 report suggested several federal agencies, such as
                      the National Oceanic and Atmospheric Administration in the Department
Organized Agency      of Commerce, which could be used as a model for NNSA. However, as
                      we reported in January 2007, none of the agency officials we interviewed
                      considered their agency to be separately organized or believed that their
                      agency’s operational methods were transferable to NNSA. 9 Second,
                      DOE’s January 2000 implementation plan, which was required by the
                      NNSA Act, did not define how NNSA would operate as a separately
                      organized agency within DOE. Instead, reflecting the opposition of the
                      then DOE senior leadership to the creation of NNSA, the implementation
                      plan “dual-hatted” virtually every significant statutory position in NNSA
                      with DOE officials (i.e., having DOE officials contemporaneously serve in
                      NNSA and DOE positions), including the Director of NNSA’s Office of
                      Defense Nuclear Counterintelligence and General Counsel. As we
                      testified in April 2001, this practice caused considerable concern about
                      NNSA’s ability to function with the independence envisioned in the NNSA




                      9
                       GAO, National Nuclear Security Administration: Additional Actions Needed to Improve
                      Management of the Nation’s Nuclear Programs, GAO-07-36 (Washington, D.C.: Jan. 19,
                      2007). We interviewed agency officials from the Department of Commerce’s National
                      Oceanic and Atmospheric Administration, the Defense Advanced Research Projects
                      Agency, the Defense Threat Reduction Agency, and the Department of Transportation’s
                      Federal Aviation Administration.




                      Page 5                                                                   GAO-12-867T
Act. 10 Dual-hatting was subsequently forbidden by an amendment to the
NNSA Act. 11

A lack of formal agreement between DOE and NNSA in a number of key
areas—budgeting, procurement, information technology, management
and administration, and safeguards and security—resulted in
organizational conflicts that inhibited effective operations. Even where
formal procedures were developed, interpersonal disagreements
hindered effective cooperation. For example, our January 2007 report
described the conflict between NNSA and DOE counterintelligence
offices. 12 Specifically, NNSA and DOE counterintelligence officials
disagreed over (1) the scope and direction of the counterintelligence
program, (2) their ability to jointly direct staff in the headquarters
counterintelligence program offices, (3) the allocation of
counterintelligence resources, (4) counterintelligence policy making and
(5) their roles and responsibilities in handling specific counterintelligence
matters. Subsequently, Congress amended the NNSA Act to consolidate
the counterintelligence programs of DOE and NNSA under the
Department of Energy. 13

These persistent challenges defining NNSA’s role as a separately
organized agency have led to calls in Congress and other organizations
to enhance NNSA’s ability to operate independently of DOE. For
example, the Defense Science Board proposed in 2006 that a completely
independent nuclear weapons agency be created. 14 DOE’s Office of
Inspector General has also recently questioned the relationship between
DOE and NNSA. Specifically, in November 2011, DOE’s Office of
Inspector General reported that NNSA, as a result of its separately


10
     GAO-01-602T
11
     Pub. L. 106-398, § 3157 (2000) (codified at 50 U.S.C. § 2410).
12
     GAO-07-36.
13
  Section 3117 of the John Warner National Defense Authorization Act for Fiscal Year
2007 contained provisions to temporarily consolidate the counterintelligence programs of
DOE and NNSA under the Department of Energy. Pub. L. No. 109-364, § 3117 (2006). In
2009, Congress made this consolidation permanent. Pub. L. No. 111-84, § 3121 (2009).
14
   The Defense Science Board provides the Department of Defense with independent
advice and recommendations on matters relating to the department’s scientific and
technical enterprise See Defense Science Board Task Force, Nuclear Capabilities
(Washington, D.C.: December 2006).




Page 6                                                                      GAO-12-867T
                        organized status, maintains a costly set of distinctly separate overhead
                        and indirect cost operations that often duplicate existing DOE functions. 15
                        For example, NNSA retains separate functions in areas such as, among
                        others, congressional affairs, general counsel, human resources,
                        procurement and acquisition, and public affairs. According to this
                        November 2011 report, these redundant operations are costly and can
                        complicate communications and program execution. There have been
                        continuing calls for removing NNSA from DOE and establishing it as a
                        separate agency. We reported in January 2007 that former senior DOE
                        and NNSA officials with whom we spoke generally did not favor removing
                        NNSA from DOE; we concluded that such drastic change was
                        unnecessary to produce an effective organization. 16


                        Since its creation, NNSA has made considerable progress resolving
NNSA Has Made           some of its long-standing management deficiencies. For example, we
Considerable            reported in June 2004 that NNSA had better delineated lines of authority
                        and improved communication between NNSA headquarters and its site
Improvements, but       offices. 17 Furthermore, our January 2007 report contained 21
Deficiencies Persist,   recommendations to the Secretary of Energy and the Administrator of
Especially in           NNSA that were intended to correct deficiencies in five areas—
                        organization, security, project management, program management, and
Management of Major     financial management. DOE and NNSA have taken important steps to
Projects and            address most of these recommendations. For example, to improve
                        security, we recommended that the Administrator of NNSA, among other
Contracts               things, implement a professional development program for security staff
                        to ensure the completion of needed training, develop a framework to
                        evaluate results from security reviews and guide security improvements,
                        and establish formal mechanisms for sharing and implementing lessons
                        learned across the weapons complex. NNSA’s establishment of an
                        effective headquarters security organization has made significant
                        progress implementing these recommendations by performing security




                        15
                          DOE Office of Inspector General, Special Report: Management Challenges at the
                        Department of Energy, DOE/IG-0858 (Washington, D.C.: November 2011).
                        16
                             GAO-07-36
                        17
                           GAO, National Nuclear Security Administration: Key Management Structure and
                        Workforce Planning Issues Remain as NNSA Conducts Downsizing, GAO-04-545
                        (Washington, D.C.: June 25, 2004).




                        Page 7                                                                   GAO-12-867T
reviews, developing security performance measures, and instituting a
security lessons-learned center.

Nevertheless, NNSA continues to experience significant deficiencies,
particularly in its management of major projects and contracts. As we
testified in February 2012, a basic tenet of effective management is the
ability to complete projects on time and within budget. 18 However, for
more than a decade, NNSA has continued to experience significant cost
and schedule overruns on its major projects, principally because of
ineffective oversight and poor contractor management. We have reported
that NNSA’s efforts to extend the operational lives of nuclear weapons in
the stockpile have experienced cost increases and schedule delays, such
as a $300 million cost increase and 2-year delay in the refurbishment of
the W87 nuclear warhead and a $70 million cost increase and 1-year
delay in the refurbishment of the W76 nuclear warhead. 19 Furthermore,
we reported that the estimated cost to construct a modern Uranium
Processing Facility at NNSA’s Y-12 National Security Complex
experienced a nearly sevenfold cost increase from between $600 million
and $1.1 billion in 2004 to between $4.2 billion and $6.5 billion in 2011. 20
We also reported in March 2012 that NNSA’s project to construct a new
plutonium research facility at Los Alamos National Laboratory—the
Chemistry and Metallurgy Research Replacement Nuclear Facility—
would cost between $3.7 billion and $5.8 billion—nearly a sixfold increase
from NNSA’s original estimate. 21 NNSA’s February 2012 decision to defer
construction of this facility for at least 5 years will result in a total delay of
between 8 and 12 years from its original plans.

NNSA’s planning, programming, and budgeting process has also
experienced a setback, which raises questions about the process’s


18
     GAO-12-473T.
19
   GAO, Nuclear Weapons: Improved Management Needed to Implement Stockpile
Stewardship Program Effectively, GAO-01-48 (Washington, D.C.: Dec. 14, 2000) and
GAO, Nuclear Weapons: NNSA and DOD Need to More Effectively Manage the Stockpile
Life Extension Program, GAO-09-385 (Washington, D.C.: Mar. 2, 2009).
20
  GAO, Nuclear Weapons: National Nuclear Security Administration’s Plans for Its
Uranium Processing Facility Should Better Reflect Funding Estimates and Technology
Readiness, GAO-11-103 (Washington, D.C.: Nov. 19, 2010).
21
  GAO, Modernizing the Nuclear Security Enterprise: New Plutonium Research Facility at
Los Alamos May Not Meet All Mission Needs, GAO-12-337 (Washington, D.C.: Mar. 26,
2012).




Page 8                                                                    GAO-12-867T
capability and flexibility. Specifically, NNSA’s modernization and
operations plans are detailed and annually updated in the agency’s
Stockpile Stewardship and Management Plan (SSMP), which provides
details of nuclear security enterprise modernization and operations plans
over the next two decades. In addition, as discussed above, the NNSA
Act requires NNSA to annually submit to Congress an FYNSP—a budget
document approved by the Office of Management and Budget that details
NNSA’s planned expenditures for the next 5 years. Furthermore, Section
1043 of the National Defense Authorization Act for Fiscal Year 2012
requires the Department of Defense and NNSA to jointly produce an
annual report that, among other things, provides a detailed 10-year
estimate of modernization budget requirements. NNSA neither submitted
an FYNSP based on “programmatic requirements” 22 nor the Section 1043
annual report with its fiscal year 2013 budget submission. In addition,
NNSA has yet to release an updated SSMP. According to the Secretary
of Energy, the August 2011 Budget Control Act created “new fiscal
realities” that have caused the agency to revise its long-range
modernization and operations plans and budget. 23 An NNSA official told
us that the revised plans, which will include the FYNSP, Section 1043
annual report, and updated SSMP should be completed in July 2012. We
are currently reviewing NNSA’s planning, programming, and budgeting
process in response to a request from the Subcommittee on Energy and
Water Development, Senate Committee on Appropriations, and we
expect to issue a report on this work in the next few months.

In conclusion, producing a well-organized and effective agency out of
what was widely considered a dysfunctional enterprise has been a
considerable challenge. In some areas, NNSA can be viewed as a
success. In particular, NNSA has successfully ensured that the nuclear


22
  The NNSA fiscal year 2013 budget submission said that future year funding levels
based on actual programmatic requirements will be produced a later date.
23
   The Budget Control Act of 2011, amending the Balanced Budget and Emergency Deficit
Control Act of 1985, establishes limits on discretionary spending for fiscal years 2012
through 2021. In addition, the act specifies additional limits on discretionary spending and
automatic reductions in direct spending because legislation was not enacted that would
reduce projected deficits by at least $1.2 trillion by the end of fiscal year 2021. Among
other things, the Budget Control Act requires the Office of Management and Budget to
calculate, and the President to order, a sequestration of discretionary and direct spending
on January 2, 2013, to achieve reductions for that fiscal year. See GAO, Agency
Operations: Agencies Must Continue to Comply with Fiscal Laws Despite the Possibility of
Sequestration, GAO-12-675T (Washington, D.C.: Apr. 25, 2012).




Page 9                                                                         GAO-12-867T
                  weapons stockpile remains safe and reliable in the absence of
                  underground nuclear testing, accomplishing this complicated task by
                  using state-of-the-art facilities, as well as the skills of top scientists. As we
                  testified in February 2012, maintaining government-owned facilities that
                  were constructed more than 50 years ago and ensuring M&O contractors
                  are sustaining critical human capital skills that are highly technical in
                  nature and limited in supply are both difficult undertakings. Careful federal
                  oversight over the tens of billions of dollars NNSA proposes to spend to
                  modernize nuclear facilities will be necessary to ensure these funds are
                  spent in as an effective and efficient manner as possible, especially given
                  NNSA’s record of weak management of its major projects.

                  Over the past decade, we have made numerous recommendations to
                  DOE and NNSA to improve their management and oversight practices.
                  DOE and NNSA have acted on many of these recommendations and
                  have made considerable progress. Nevertheless, enough significant
                  management problems remain that prompt some to call for removing
                  NNSA from DOE and either moving it to another department or
                  establishing it as a separate agency. As we concluded in January 2007,
                  however, we do not believe that such drastic changes are necessary, and
                  we continue to hold this view today. Importantly, we are uncertain
                  whether such significant organizational changes to increase NNSA’s
                  independence would produce the desired effect of creating a modern,
                  responsive, effective, and efficient nuclear security enterprise. In light of
                  the substantial leadership commitment to reform made by senior DOE
                  and NNSA officials, and the significant improvements that have already
                  been made, we believe that NNSA remains capable of delivering the
                  management improvements necessary to be an effective organization,
                  and we will continue to monitor NNSA’s progress making these
                  improvements.


                  Chairman Turner, Ranking Member Sanchez, and Members of the
                  Subcommittee, this completes my prepared statement. I would be
                  pleased to respond to any questions you may have at this time.


                  If you or your staff members have any questions about this testimony,
GAO Contact and   please contact me at (202) 512-3841 or aloisee@gao.gov. Contact points
Staff             for our Offices of Congressional Relations and Public Affairs may be
                  found on the last page of this testimony. GAO staff who made key
Acknowledgments   contributions to this testimony are Allison Bawden, Ryan T. Coles,



                  Page 10                                                              GAO-12-867T
           Jonathan Gill, and Kiki Theodoropoulos, Assistant Directors, and Patrick
           Bernard, Senior Analyst.




(361431)
           Page 11                                                        GAO-12-867T
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