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United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittee on Oversight and Investigations, Committee on 
Energy and Commerce, House of Representatives: 

For Release on Delivery 
Expected at 10 a.m. EDT: 
Wednesday, July 24, 2013: 

Department of Energy: 

Observations on DOE's Management Challenges and Steps Taken to Address 
Them: 

Statement of David C. Trimble, Director: 
Natural Resources and Environment: 

GAO-13-767T: 

GAO Highlights: 

Highlights of GAO-13-767T, a testimony before the Subcommittee on 
Oversight and Investigations, Committee on Energy and Commerce, House 
of Representatives. 

Why GAO Did This Study: 

DOE missions encompass energy resources, scientific and technological 
development, environmental cleanup, and nuclear security. Management 
of major projects and contracts within EM and NNSA, a separately 
organized agency within DOE, remain on GAO’s list of areas at high 
risk of waste, fraud, abuse, and mismanagement, where they have been 
listed since 1990. Progress has been made, but GAO continues to 
identify management problems related to cost and schedule overruns on 
major environmental cleanup and nuclear projects and safety problems 
at DOE sites that have not been fully addressed. 

This testimony discusses DOE’s management challenges in (1) managing 
major projects and programs, (2) managing security and safety at DOE 
sites, and (3) producing reliable enterprise-wide information, 
including budget and cost data. 

Over the past decade, GAO has made numerous recommendations in its 
reports to address challenges such as those identified in this 
testimony. DOE agreed with most of them and is taking steps toward 
implementing them. GAO’s work has also recognized some of the steps 
that DOE has taken to address these challenges. For example, in the 
most recent update of GAO’s high-risk series, GAO narrowed the focus 
of the high-risk designation of DOE’s contract management to EM’s and 
NNSA’s major contracts and projects (i.e., those costing $750 million 
or more). GAO will continue to monitor DOE’s implementation of actions 
to resolve long-standing management challenges, including actions 
taken in response to GAO’s recommendations. 

What GAO Found: 

As GAO has reported over the last decade, the Department of Energy’s 
(DOE) management of major projects and programs, security and safety 
at DOE sites, and reliable enterprise-wide management information, 
including budget and cost data, are among the most persistent 
management challenges the department faces. 

* Challenges managing major projects and programs. The Office of 
Environmental Management (EM) and the National Nuclear Security 
Administration (NNSA) continue to face challenges managing major 
projects and programs, which have incurred significant cost increases 
and schedule delays. For example, GAO reported in July 2013 that the 
cost estimate range for a project to construct a modern Uranium 
Processing Facility (UPF) at DOE’s Y-12 National Security Complex in 
Oak Ridge, Tennessee, had increased five- to seven-fold to up to $6.5 
billion since the project’s inception in 2004. Furthermore, the most 
recent cost estimate range may no longer be valid after the contractor 
reported in August 2012 that the UPF’s roof would have to be raised 13 
feet. GAO is currently assessing DOE cost estimating policies and 
practices and plans to issue a report based on this work later this 
year. DOE's actions to improve project management appear promising, 
but their impact on meeting cost and schedule targets may not be 
clear. Because all ongoing major projects have been in construction 
for several years, neither EM nor NNSA has a major project that can 
yet demonstrate the impact of DOE's recent reforms. 

* Challenges managing security and safety. Reports about the July 2012 
security breach at the Y-12 National Security Complex identified 
numerous, long-standing and systemic security issues across the 
nuclear security enterprise and significant safety problems at DOE 
sites that have not been fully addressed. A NNSA Security Task Force 
and an independent panel convened at the request of the Secretary of 
Energy also found systemic security issues across the nuclear security 
enterprise, and found deficiencies in DOE’s security culture and 
oversight, which closely matched issues GAO identified a decade 
earlier. GAO has ongoing work assessing DOE security reforms and plans 
to issue a report based on this work later this year. GAO has also 
found that DOE management weaknesses have contributed to persistent 
safety problems at NNSA sites. 

* Challenges in producing reliable enterprise-wide management 
information. GAO has reported that DOE does not have reliable 
enterprise-wide management data needed to, among other things, prepare 
its budget requests, identify the costs of its activities, and ensure 
the validity of its cost estimates. For example, in June 2013, GAO 
reported that while different approaches are allowed by Cost 
Accounting Standards, NNSA’s management and operations contractors 
differ in how they classify and allocate indirect costs at NNSA 
laboratories, which limits NNSA’s ability to assess cost data and 
meaningfully compare cost management performance across laboratories. 
In addition, GAO reported in June 2010 that NNSA could not accurately 
identify the total costs to operate and maintain weapons facilities 
and infrastructure because of differences among contractors’ 
accounting practices. GAO is currently monitoring DOE’s ongoing 
efforts to improve its capability to produce reliable enterprise-wide 
information. 

View [hyperlink, http://www.gao.gov/products/GAO-13-767T]. For more 
information, contact David Trimble at (202) 512-3841 or 
trimbled@gao.gov. 

[End of section] 

Chairman Murphy, Ranking Member DeGette, and Members of the 
Subcommittee: 

Thank you for the opportunity to discuss our recent work on some of 
the pressing management challenges that the Department of Energy (DOE) 
faces. DOE is responsible for executing some of the nation's most 
complex and technologically advanced missions, working to ensure the 
energy future of the United States, providing scientific and 
technological leadership, overseeing the nation's nuclear security 
enterprise, and resolving the environmental legacy of the Cold War. 
DOE carries out these activities through mission-based program offices 
including the Office of Environmental Management (EM) and the 
separately organized National Nuclear Security Administration (NNSA). 
[Footnote 1] Collectively, these and other DOE offices operate dozens 
of government-owned, contractor-operated facilities throughout the 
United States. 

Our prior testimonies before this Subcommittee in September 
2012[Footnote 2] and March 2013,[Footnote 3] as well as reports we 
have issued over the past decade, have highlighted various challenges 
that DOE components--principally EM and NNSA--face in carrying out 
their responsibilities.[Footnote 4] These testimonies and reports have 
highlighted management challenges concerning (1) EM and NNSA projects 
and programs; (2) security and safety at DOE sites; and (3) reliable 
enterprise-wide management information, including budget and cost 
data. Regarding project and program management, EM's and NNSA's 
management of major projects and contracts remains on our list of 
areas at high risk of waste, fraud, abuse, and mismanagement, where 
they have been listed since 1990.[Footnote 5] Regarding security and 
safety management, we have frequently reported on security issues and 
safety incidents at DOE facilities--as when we testified before this 
Subcommittee in March 2013 on the temporary shutdown of facilities at 
Los Alamos National Laboratory in 2004 and, more recently, the 
security breach at the Y-12 National Security Complex in July 2012. 
[Footnote 6] Regarding reliable enterprise-wide management 
information, we have reported on matters such as the steps that DOE 
has taken to improve its budgeting and cost-estimating practices and 
the weaknesses that persist in these areas. 

In addition to these issues, NNSA's relationship with DOE has come 
under renewed scrutiny. Notably, the Fiscal Year 2013 National Defense 
Authorization Act created the Congressional Advisory Panel on the 
Governance of the Nuclear Security Enterprise to examine options and 
make recommendations for revising the governance structure, mission, 
and management of the nuclear security enterprise. As the new 
Secretary of Energy has alluded to in recent testimony, addressing the 
management challenges that we and other organizations have identified, 
as well as clarifying departmental roles and responsibilities, will be 
among his top priorities. 

In this context, my testimony today discusses three of DOE's most 
persistent management challenges: (1) management of projects and 
programs, (2) management of security and safety at DOE sites, and (3) 
reliable enterprise-wide management information, including budget and 
cost data. It focuses on our reports issued from January 2007 to June 
2013. Detailed information about the scope and methodology used to 
conduct this work can be found in each of our issued reports. We 
conducted the performance audit work that supports this statement in 
accordance with generally accepted government auditing standards. 

Background: 

DOE's missions encompass energy resources, scientific and 
technological development, environmental cleanup, and nuclear 
security. DOE established EM in 1989 to carry out the mission to clean 
up radioactive wastes, spent nuclear fuel, excess plutonium and 
uranium, contaminated facilities, and contaminated soil and 
groundwater that resulted from nuclear weapons production and 
government-sponsored nuclear energy research. NNSA, a separately 
organized agency within DOE, has primary responsibility for ensuring 
the safety, security, and reliability of the nation's nuclear weapons 
stockpile, including life extension programs for multiple weapon types 
in the U.S. stockpile,[Footnote 7] for promoting nuclear 
nonproliferation, and for naval reactor programs. In fiscal year 2013, 
EM and NNSA received about $17 billion to support these programs and 
related activities, which is approximately 60 percent of DOE's total 
budget. Figure 1 shows the fiscal year 2013 funding for EM, NNSA, and 
other DOE programs and activities. 

Figure 1: Funding of DOE Programs and Activities, Fiscal Year 2013: 

[Refer to PDF for image: pie-chart] 

National Nuclear Security Administration: $1.5 billion; 
Environmental and other defense activities: $5.9 billion; 
Other programs and activities: $9.7 billion. 

Source: DOE, Department of Energy Fiscal Year 2014 Congressional 
Budget Request, DOE/CF-0084, April 2013. 

Note: Funding numbers represent the annualized amount programs are 
authorized to obligate, prior to any adjustment for sequestration. 

[End of figure] 

Contractors operate DOE sites and often conduct their work under 
management and operating (M&O) contracts.[Footnote 8] These contracts 
provide the contractor with discretion in carrying out the mission of 
the particular contract. Currently, DOE spends 90 percent of its 
annual budget on contracts, making it the largest non-Department of 
Defense contracting agency in the government. 

DOE Faces Challenges Managing Its Major Projects and Programs: 

As we have reported in the past decade, DOE continues to face 
challenges managing its major projects and programs, which have 
incurred significant cost increases and schedule delays in several 
instances. Some recent examples include: 

* As we reported earlier this month, NNSA estimates that the project 
to build the Uranium Processing Facility (UPF) at the Y-12 National 
Security Complex in Oak Ridge, Tennessee, will cost between five and 
seven times more than previously thought and will be completed over a 
decade behind schedule.[Footnote 9] NNSA estimated in 2004 that the 
UPF would cost from $600 million to $1.1 billion to construct and 
would start operating in 2012. As of June 2012, estimates were revised 
to a cost range from $4.2 billion to $6.5 billion and a 2023 date for 
the start of operations. In June 2012, the Deputy Secretary of Energy 
approved the latter cost range and schedule and deferred significant 
portions of the original project scope. Two months later, the UPF 
contractor concluded that UPF's roof would have to be raised 13 feet 
and that the start of construction would be further delayed, resulting 
in approximately $540 million in additional costs. As we reported, 
these problems occurred because the contractor did not adequately 
manage and integrate the design work subcontracted to four other 
contractors. Given these additional costs and DOE's stated plan to pay 
for these additional costs from its contingency fund, it is unclear if 
the cost range estimate approved in June 2012 remains valid. 

* In March 2013, we reported preliminary observations from our ongoing 
review of NNSA's Plutonium Disposition Program that highlight the need 
for continued efforts by DOE to improve contract and project 
management.[Footnote 10] We reported DOE is currently forecasting an 
increase in the total project cost for the MOX Fuel Fabrication 
Facility at the Savannah River Site in South Carolina from $4.9 
billion to $7.7 billion and a delay in the start of operations from 
October 2016 to November 2019.[Footnote 11] According to NNSA 
officials and the contractor for the MOX facility, inadequately 
designed critical system components, such as the gloveboxes to be used 
for handling plutonium and the infrastructure needed to support these 
gloveboxes, are among the primary reasons for the proposed cost 
increase and schedule delay. The performance baseline for the MOX 
facility was set several years before NNSA issued guidance in 2012 to 
set cost and schedule baselines only after design work is 90 percent 
complete.[Footnote 12] As part of our ongoing review of NNSA's 
Plutonium Disposition Program, we are evaluating whether such guidance 
would have been useful for NNSA to apply to the MOX facility, as well 
as the potential impact this guidance might have had on mitigating 
cost increases and schedule delays. 

* In December 2012, we reported that the estimated cost to construct 
the Waste Treatment and Immobilization Plant in Hanford, Washington, 
had tripled to $12.3 billion since its inception in 2000 and that the 
scheduled completion date had slipped by nearly a decade to 2019. 
[Footnote 13] We reported that DOE's incentives and management 
controls were inadequate for ensuring effective project management, 
and DOE had in some instances prematurely rewarded the contractor for 
resolving technical issues and completing work. DOE generally agreed 
with the several recommendations we made to improve Waste Treatment 
and Immobilization Plant projects and contract management. In May 
2013, we reported that significant technical challenges at the Waste 
Treatment Plant remained unresolved, contributing to uncertainty as to 
whether the project will operate safely and effectively.[Footnote 14] 

* We also reported in December 2012 on progress by EM and NNSA in 
managing nonmajor projects (i.e., those costing less than $750 
million).[Footnote 15] We found that of the 71 nonmajor projects that 
EM and NNSA completed or had under way from fiscal years 2008 to 2012, 
21 met or are expected to meet their performance targets for scope, 
cost, and completion date. However, 23 projects did not meet or were 
not expected to meet one or more of those three performance targets. 
We also noted that, for 27 projects, many had insufficiently 
documented performance targets for scope, cost, or completion date, 
which prevented us from determining whether they met their performance 
targets. As a result, we recommended, among other things, that EM and 
NNSA clearly define, document, and track the scope, cost, and 
completion date targets for each of their nonmajor projects. EM and 
NNSA agreed with our recommendations. As we noted in our February 2013 
high-risk update,[Footnote 16] we have shifted our focus to major 
contracts and projects, but we will continue to monitor the 
performance of nonmajor projects. 

* In April 2010, we reported that weak management by DOE and NNSA had 
allowed the cost, schedule, and scope of ignition-related activities 
at the National Ignition Facility to increase substantially.[Footnote 
17] We reported that, since 2005, ignition-related costs have 
increased by around 25 percent--from $1.6 billion in 2005 to over $2 
billion in 2010--and that the planned completion date for these 
activities had slipped from the end of fiscal year 2011 to the end of 
fiscal year 2012 or beyond. We made several recommendations to address 
program management weaknesses--which NNSA agreed with--and we are 
currently monitoring their implementation. Ten years earlier, in 
August 2000, we had reported that poor management and oversight of the 
National Ignition Facility construction project at Lawrence Livermore 
National Laboratory had increased the facility's cost by $1 billion 
and delayed its scheduled completion date by 6 years.[Footnote 18] 

* In March 2009, we reported that NNSA and the Department of Defense 
had not effectively managed cost, schedule, and technical risks for 
the B61 nuclear bomb and the W76 nuclear warhead refurbishments. 
[Footnote 19] For the B61 life extension program, NNSA was only able 
to stay on schedule by significantly reducing the number of weapons 
undergoing refurbishment and abandoning some refurbishment objectives. 
We made a number of recommendations to improve the management of the 
nuclear weapons refurbishment process. NNSA agreed with these 
recommendations, and we are monitoring their implementation. 

We are currently assessing DOE cost estimating policies and practices 
and plan to issue a report based on this work later this year. DOE's 
actions to improve project management appear promising, but their 
impact on meeting cost and schedule targets may not be clear. Because 
all ongoing major projects have been in construction for several 
years, neither EM nor NNSA has a major project that can yet 
demonstrate the impact of DOE's recent reforms. 

DOE Faces Challenges Managing Security and Safety: 

As we testified before this Subcommittee in March 2013,[Footnote 20] 
reviews of the July 2012 security breach at the Y-12 National Security 
Complex identified numerous, long-standing, and systemic security 
issues across the nuclear security enterprise, and significant safety 
problems remain at DOE sites that have not been fully addressed. Some 
examples from our recent work include: 

* With regard to security, as we testified in March 2013,[Footnote 21] 
investigations of the security breach at the Y-12 National Security 
Complex performed by NNSA, the DOE Office of Inspector General, and 
the DOE Office of Independent Oversight found problems with NNSA's and 
its contractors' performance, including problems with the complex's 
physical security systems, such as alarms, and the training and 
response of the heavily armed guards supplied by NNSA's protective 
force contractor. In addition, both a NNSA Security Task Force and an 
independent panel convened at the request of the Secretary of Energy 
and composed of three former executives from federal agencies and the 
private sector found systemic security issues across the nuclear 
security enterprise. Both the Secretary's panel and the NNSA Security 
Task Force's leader found deficiencies in DOE's security culture and 
oversight, with some of these being closely matched to issues we 
identified a decade earlier. DOE took a number of actions in response 
to the security breach and the findings of the panel and task force. 
These actions included, among other things, immediate actions to 
repair security equipment, as well as longer-term actions that aim to 
improve NNSA and DOE oversight of security. As we testified in March 
2013, in assessing DOE's actions regarding security and NNSA's new 
security oversight process, a central question will be whether they 
lead to sustained improvements in security at the Y-12 National 
Security Complex and across the nuclear security enterprise. We have 
ongoing work assessing DOE security reforms and plan to issue a report 
based on this work later this year. 

* With regard to safety, in September 2012 we testified before this 
Subcommittee about NNSA management weaknesses that have contributed to 
persistent safety problems at NNSA sites, including lax attitudes 
toward safety procedures, inadequacies in identifying and addressing 
safety programs with appropriate corrective actions, and inadequate 
oversight by NNSA site offices.[Footnote 22] We stated in our 
testimony that in March 2010, in an effort to address safety problems 
across the nuclear security enterprise, the Secretary of Energy 
announced a reform effort aimed at modifying DOE's oversight approach 
in order to "provide contractors with the flexibility to tailor and 
implement safety and security programs without excessive federal 
oversight or overly prescriptive departmental requirements." As we 
noted in the testimony, DOE's safety reforms did not fully address 
continuing safety concerns and, in fact, may have actually weakened 
independent oversight. We noted, for example, that DOE's Office of 
Independent Oversight staff must coordinate its assessment activities 
with NNSA site office management to maximize the use of resources, 
raising concerns about whether Office of Independent Oversight staff 
would be sufficiently independent from site office management. 
[Footnote 23] In our April 2012 report, we recommended that DOE 
analyze the costs and benefits of its safety reform effort and 
identify how the effort will help address safety concerns. DOE agreed 
with our recommendations. 

Moreover, since our September 2012 testimony, DOE's Office of 
Independent Oversight has raised concerns about ongoing safety issues, 
including reluctance by workers at NNSA's Pantex Plant to raise safety 
problems for fear of retaliation and a perception that cost took 
priority over safety, as well as inadequate controls to protect 
workers or the public in the case of earthquake, fires, or radiation 
exposures at the Y-12 National Security Complex. In addition, a March 
2013 independent evaluation of safety culture at DOE's Office of 
Health, Safety, and Security (HSS)--which generally provides policy 
direction and independent oversight of safety and security at DOE 
sites--found that HSS staff raised concerns that the shift in recent 
years toward a more collaborative oversight relationship with site 
management had weakened HSS's effectiveness in providing independent 
oversight and enforcement.[Footnote 24] 

DOE Has Not Produced Reliable Enterprise-Wide Management Data: 

For more than a decade, we have reported that DOE has not produced 
reliable enterprise-wide management data needed to, among other 
things, prepare its budget requests, identify the costs of its 
activities and ensure the validity of its cost estimates. Some recent 
examples include: 

* In June 2013, we reported that NNSA's M&O contractors differ in how 
they classify and allocate indirect costs at NNSA laboratories. 
[Footnote 25] Although different approaches are allowed by Cost 
Accounting Standards, these differences limit NNSA's ability to assess 
cost data and meaningfully compare cost management performance across 
laboratories, potentially impeding NNSA's efforts to oversee M&O 
contractors' costs. This work built on the report we issued in June 
2010,[Footnote 26] in which we found that NNSA could not accurately 
identify the total costs to operate and maintain weapons facilities 
and infrastructure because of differences among contractors' 
accounting practices. We concluded that, without the ability to 
consistently identify program costs, NNSA did not have the ability to 
adequately justify future presidential budget requests and risked 
being unable to identify both the return on investment of planned 
budget increases and opportunities for cost savings. As a result, we 
recommended that NNSA require M&O contractors report to NNSA annually 
on the total costs (i.e., both direct and indirect costs) to operate 
and maintain weapons facilities and infrastructure. 

* In July 2012, we reported that NNSA did not comply with DOE's order 
that defines budget formulation because the agency believed the order 
expired in 2003 and no longer applied to NNSA budget activities. 
[Footnote 27] DOE's order on budget formulation outlines the 
requirements for the department's annual budget formulation process, 
including that budget requests shall be based on cost estimates that 
have been thoroughly reviewed and deemed reasonable. However, we found 
that NNSA is guided by its own policy for its planning, programming, 
budgeting, and evaluation (PPBE) process and its associated 
activities, and found significant deficiencies in NNSA's 
implementation of the process. For example, we found that NNSA did not 
have a thorough, documented process for assessing the validity of its 
budget estimates prior to their inclusion in the President's budget 
submission to Congress, thereby limiting the reliability and 
credibility of the budget submission, but rather conducted informal, 
undocumented reviews of contractor-submitted budget estimates. In 
addition, we found that NNSA's annual budget validation review process 
occurred too late in the budget cycle to inform agency or 
congressional budget development or appropriations decisions. As a 
result, we made a number of recommendations to DOE and NNSA to improve 
the budget review process. The agencies agreed with most of these 
recommendations. 

* In January 2012, we reported that costs for contractor-provided 
support functions at NNSA and DOE Office of Science sites--such as 
procuring goods, managing human resources, and maintaining facilities--
were not fully known for fiscal years 2007 through 2011 because DOE 
changed its data collection approach beginning in 2010 to improve its 
data and, as a result, did not have complete and comparable cost data 
for all years.[Footnote 28] We reported that the data for fiscal year 
2011 were more complete but that changes to DOE's definitions for 
support functions made it difficult to compare costs across all years. 
We recommended several actions to streamline contractor-provided 
support functions at NNSA and DOE sites. NNSA and DOE agreed with 
these recommendations. 

In conclusion, while DOE's management challenges are significant, we 
have noted in our recent work areas of progress. We have made numerous 
recommendations in our reports to address challenges such as those 
identified in this testimony, and DOE has agreed with and implemented 
most of them. In addition, our work has recognized steps that DOE has 
taken to address these challenges.[Footnote 29] For example, in the 
most recent update of our high-risk series in February 2013, we 
narrowed the focus of the high-risk designation of DOE's contract 
management to EM's and NNSA's major contracts and projects.[Footnote 
30] We did so to acknowledge progress made in managing EM's and NNSA's 
nonmajor projects, noting that DOE continued to demonstrate strong 
commitment and top leadership support for improving contract and 
project management in EM and NNSA. We also noted that DOE had taken 
steps to enhance oversight, such as requiring peer reviews and 
independent cost estimates for projects with values of more than $100 
million, as well as to improve the accuracy and consistency of data in 
DOE's central repository for project data. 

Over the past several years, management challenges such as those 
discussed here have prompted some to call for removing NNSA from DOE 
and either move it to another department or establish it as an 
independent agency. However, as we have previously stated for the 
record, it is our view that few, if any, of NNSA's management 
challenges stem from the organizational relationship between NNSA and 
DOE.[Footnote 31] As the new Secretary of Energy considers needed 
reforms in these areas, we note that DOE's management of projects and 
programs, security and safety, and enterprise-wide data must improve--
regardless of the department's structure. We will continue to monitor 
DOE's implementation of actions to resolve its long-standing 
management challenges, including actions that we have recommended to 
facilitate the resolution of these challenges. 

Chairman Murphy, Ranking Member DeGette, 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. 

GAO Contact and Staff Acknowledgments: 

If you or your staff have any questions about this testimony, please 
contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for 
our Office of Congressional Relations and Public Affairs may be found 
on the last page of this statement. GAO staff who made key 
contributions to this testimony are Jonathan Gill, Assistant Director, 
and Rob Grace, Nancy Kintner-Meyer, Michelle Munn, Cheryl Peterson, 
Jeff Rueckhaus, Rebecca Shea, and Kiki Theodoropoulos. 

[End of section] 

Selected Recent GAO Products Assessing the Department of Energy's 
Management Efforts: 

The following is a selection of GAO's recent work assessing the 
Department of Energy's management efforts. 

National Nuclear Security Administration: Laboratories' Indirect Cost 
Management Has Improved, but Additional Opportunities Exist, 
[hyperlink, http://www.gao.gov/products/GAO-13-534] (Washington, D.C.: 
June 28, 2013). 

Department of Energy: Observations on Project and Program Cost 
Estimating in NNSA and the Office of Environmental Management, 
[hyperlink, http://www.gao.gov/products/GAO-13-510T] (Washington, 
D.C.: May 8, 2013). 

Modernizing the Nuclear Security Enterprise: Observations on DOE's and 
NNSA's Efforts to Enhance Oversight of Security, Safety, and Project 
and Contract Management, [hyperlink, 
http://www.gao.gov/products/GAO-13-482T] (Washington, D.C.: Mar. 13, 
2013). 

High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-13-283] (Washington, D.C.: February 
2013). 

Recovery Act: Most DOE Cleanup Projects Are Complete, but Project 
Management Guidance Could Be Strengthened, [hyperlink, 
http://www.gao.gov/products/GAO-13-23] (Washington, D.C.: Oct. 15, 
2012). 

Department of Energy: Better Information Needed to Determine If 
Nonmajor Projects Meet Performance Targets, [hyperlink, 
http://www.gao.gov/products/GAO-13-129] (Washington, D.C.: Dec. 19, 
2012). 

Hanford Waste Treatment Plant: DOE Needs to Take Action to Resolve 
Technical and Management Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-13-38] (Washington, D.C.: Dec. 19, 
2012). 

Modernizing the Nuclear Security Enterprise: Observations on the 
National Nuclear Security Administration's Oversight of Safety, 
Security, and Project Management, [hyperlink, 
http://www.gao.gov/products/GAO-12-912T] (Washington, D.C.: Sept. 12, 
2012). 

Modernizing the Nuclear Security Enterprise: Observations on the 
Organization and Management of the National Nuclear Security 
Administration, [hyperlink, http://www.gao.gov/products/GAO-12-867T] 
(Washington, D.C.: June 27, 2012). 

Modernizing the Nuclear Security Enterprise: NNSA's Reviews of Budget 
Estimates and Decisions on Resource Trade-offs Need Strengthening, 
[hyperlink, http://www.gao.gov/products/GAO-12-806] (Washington, D.C.: 
July 31, 2012). 

Spent Nuclear Fuel: Accumulating Quantities at Commercial Reactors 
Present Storage and Other Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-12-797] (Washington, D.C.: Aug. 15, 
2012). 

Nuclear Safety: DOE Needs to Determine the Costs and Benefits of Its 
Safety Reform Effort, [hyperlink, 
http://www.gao.gov/products/GAO-12-347] (Washington, D.C.: Apr. 20, 
2012). 

Modernizing the Nuclear Security Enterprise: New Plutonium Research 
Facility at Los Alamos May Not Meet All Mission Needs, [hyperlink, 
http://www.gao.gov/products/GAO-12-337] (Washington, D.C.: Mar. 26, 
2012). 

Department of Energy: Additional Opportunities Exist to Streamline 
Support Functions at NNSA and Office of Science Sites, [hyperlink, 
http://www.gao.gov/products/GAO-12-255] (Washington, D.C.: Jan. 31, 
2012). 

Nuclear Fuel Cycle Options: DOE Needs to Enhance Planning for 
Technology Assessment and Collaboration with Industry and Other 
Countries, [hyperlink, http://www.gao.gov/products/GAO-12-70] 
(Washington, D.C.: Oct. 17, 2011). 

High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: February 
2011). 

Commercial Nuclear Waste: Effects of a Termination of the Yucca 
Mountain Repository Program and Lessons Learned, [hyperlink, 
http://www.gao.gov/products/GAO-11-229] (Washington, D.C.: Apr. 8, 
2011). 

Nuclear Weapons: National Nuclear Security Administration's Plans for 
Its Uranium Processing Facility Should Better Reflect Funding 
Estimates and Technology Readiness, [hyperlink, 
http://www.gao.gov/products/GAO-11-103] (Washington, D.C.: Nov. 19, 
2010). 

Recovery Act: Most DOE Cleanup Projects Appear to Be Meeting Cost and 
Schedule Targets, but Assessing Impact of Spending Remains a 
Challenge, [hyperlink, http://www.gao.gov/products/GAO-10-784] 
(Washington, D.C.: July 29, 2010). 

Nuclear Weapons: Actions Needed to Identify Total Costs of Weapons 
Complex Infrastructure and Research and Production Capabilities, 
[hyperlink, http://www.gao.gov/products/GAO-10-582] (Washington, D.C.: 
June 21, 2010). 

Department of Energy: Actions Needed to Develop High-Quality Cost 
Estimates for Construction and Environmental Cleanup Projects, 
[hyperlink, http://www.gao.gov/products/GAO-10-199] (Washington, D.C.: 
Jan. 14, 2010). 

Nuclear Weapons: Actions Needed to Identify Total Costs of Weapons 
Complex Infrastructure and Research and Production Capabilities, 
[hyperlink, http://www.gao.gov/products/GAO-10-582] (Washington, D.C.: 
June 21, 2010). 

Nuclear Waste Management: Key Attributes, Challenges, and Costs for 
the Yucca Mountain Repository and Two Potential Alternatives, 
[hyperlink, http://www.gao.gov/products/GAO-10-48] (Washington, D.C.: 
Nov. 4, 2009). 

Information Security: Actions Needed to Better Manage, Protect, and 
Sustain Improvements to Los Alamos National Laboratory's Classified 
Computer Network, [hyperlink, http://www.gao.gov/products/GAO-10-28] 
(Washington, D.C.: Oct. 14, 2009). 

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). 

Nuclear Weapons: NNSA and DOD Need to More Effectively Manage the 
Stockpile Life Extension Program, [hyperlink, 
http://www.gao.gov/products/GAO-09-385] (Washington, D.C.: Mar. 2, 
2009). 

Nuclear and Worker Safety: Actions Needed to Determine the 
Effectiveness of Safety Improvement Efforts at NNSA's Weapons 
Laboratories, [hyperlink, http://www.gao.gov/products/GAO-08-73] 
(Washington, D.C.: Oct. 31, 2007). 

Nuclear Safety: Department of Energy Needs to Strengthen Its 
Independent Oversight of Nuclear Facilities and Operations, 
[hyperlink, http://www.gao.gov/products/GAO-09-61] (Washington, D.C.: 
Oct. 23, 2008). 

National Nuclear Security Administration: Additional Actions Needed to 
Improve Management of the Nation's Nuclear Programs, [hyperlink, 
http://www.gao.gov/products/GAO-07-36] (Washington, D.C.: Jan.19, 
2007). 

[End of section] 

Footnotes: 

[1] Specifically, NNSA was created under Title 32 of the National 
Defense Authorization Act for Fiscal Year 2000, Pub. L. No. 106-65, § 
3201 et seq. 

[2] GAO, Modernizing the Nuclear Security Enterprise: Observations on 
the National Nuclear Security Administration's Oversight of Safety, 
Security, and Project Management, [hyperlink, 
http://www.gao.gov/products/GAO-12-912T] (Washington, D.C.: Sept. 12, 
2012). 

[3] GAO, Modernizing the Nuclear Security Enterprise: Observations on 
DOE's and NNSA's Efforts to Enhance Oversight of Security, Safety, and 
Project and Contract Management, [hyperlink, 
http://www.gao.gov/products/GAO-13-482T] (Washington, D.C.: Mar. 13, 
2013). 

[4] A list of recent GAO products assessing DOE's management efforts 
is included at the end of this statement. 

[5] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-13-283] (Washington, D.C.: February 
2013). We have shifted the focus of the high-risk designation of EM's 
and NNSA's contract management to major projects and away from 
nonmajor projects, those costing less than $750 million. As defined in 
the most recent update of our high-risk series, contract management 
includes both contract administration and project management. 

[6] For additional information on the 2004 temporary shutdown of 
facilities at Los Alamos, see GAO, Stand-Down of Los Alamos National 
Laboratory: Total Costs Uncertain; Almost All Mission-Critical 
Programs Were Affected but Have Recovered, [hyperlink, 
http://www.gao.gov/products/GAO-06-83] (Washington, D.C.: Nov. 18, 
2005). During the security breach at the Y-12 National Security 
Complex, three trespassers gained access to the protected security 
area directly adjacent to one of the nation's most critically 
important nuclear weapon-related facilities without being interrupted 
by the security measures in place. According to DOE's Inspector 
General, this security incident was unprecedented and represented 
multiple system failures including failures to maintain critical 
security equipment, respond properly to alarms, and understand 
security protocols. The Inspector General found that contractor 
governance and federal oversight did not identify and correct early 
indications of these multiple system breakdowns. See [hyperlink, 
http://www.gao.gov/products/GAO-13-482T] and DOE, Office of Inspector 
General, Inquiry into the Security Breach at the National Nuclear 
Security Administration's Y-12 National Security Complex, DOE/IG-0868 
(August 2012). 

[7] The end of the Cold War caused a dramatic shift in how the nation 
maintains nuclear weapons. Instead of designing, testing, and 
producing new nuclear weapons, the strategy shifted to maintaining the 
existing nuclear weapons stockpile indefinitely. Life extension 
programs extend, through refurbishment, the operational lives of 
weapons in the nuclear stockpile by 20 to 30 years and certify these 
weapons' military performance requirements without underground nuclear 
testing. GAO, Nuclear Weapons: NNSA and DOD Need to More Effectively 
Manage the Stockpile Life Extension Program, [hyperlink, 
http://www.gao.gov/products/GAO-09-385] (Washington, D.C.: Mar. 2, 
2009). 

[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. 

[9] GAO, Nuclear Weapons: Factors Leading to Cost Increases with the 
Uranium Processing Facility, [hyperlink, 
http://www.gao.gov/products/GAO-13-686R] (Washington, D.C.: July 12, 
2013). 

[10] A key part of the Plutonium Disposition Program includes the 
construction of two nuclear facilities at DOE's Savannah River Site: a 
facility that will produce mixed oxide (MOX) fuel -a mix of plutonium 
and uranium--for nuclear reactors and a Waste Solidification Building 
to dispose of the liquid waste from the MOX facility. 

[11] GAO, Department of Energy: Concerns with Major Construction 
Projects at the Office of Environmental Management and NNSA, 
[hyperlink, http://www.gao.gov/products/GAO-13-484T] (Washington, 
D.C.: Mar. 20, 2013). 

[12] A project's performance baseline consists of the project's cost, 
schedule, and scope (the activities needed to achieve project goals). 

[13] GAO, Hanford Waste Treatment Plant: DOE Needs to Take Action to 
Resolve Technical and Management Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-13-38] (Washington, D.C.: Dec. 19, 
2012). 

[14] [hyperlink, http://www.gao.gov/products/GAO-13-510T]. 

[15] GAO, Department of Energy: Better Information Needed to Determine 
if Nonmajor Projects Meet Performance Targets, [hyperlink, 
http://www.gao.gov/products/GAO-13-129] (Washington, D.C.: Dec. 19, 
2012). 

[16] [hyperlink, http://www.gao.gov/products/GAO-13-283]. 

[17] Ignition-related activities consist of the efforts separate from 
the facility's construction that have been undertaken to prepare for 
the first attempt at ignition--the extremely intense pressures and 
temperatures that simulate on a small scale the thermonuclear 
conditions created in nuclear explosions. See GAO, Nuclear Weapons: 
Actions Needed to Address Scientific and Technical Challenges and 
Management Weaknesses at the National Ignition Facility, [hyperlink, 
http://www.gao.gov/products/GAO-10-488] (Washington, D.C.: Apr. 8, 
2010). 

[18] GAO, National Ignition Facility: Management and Oversight 
Failures Caused Major Cost Overruns and Schedule Delays, [hyperlink, 
http://www.gao.gov/products/GAO/RCED-00-271] (Washington, D.C.: Aug. 
8, 2000). 

[19] [hyperlink, http://www.gao.gov/products/GAO-09-385]. 

[20] [hyperlink, http://www.gao.gov/products/GAO-13-482T]. 

[21] [hyperlink, http://www.gao.gov/products/GAO-13-482T]. 

[22] [hyperlink, http://www.gao.gov/products/GAO-12-912T]. 

[23] Within DOE's Office of Health, Safety, and Security (HSS), the 
Office of Independent Oversight conducts periodic appraisals of the 
environment, safety, and health programs at DOE's sites to determine 
if DOE officials and contractors are complying with DOE's safety 
regulations and directives. During the review that led to our 
September 2012 report, the Office of Independent Oversight merged with 
the Office of Enforcement, forming the Office of Enforcement and 
Oversight. See GAO, Nuclear Safety: DOE Needs to Determine the Costs 
and Benefits of Its Safety Reform Effort [hyperlink, 
http://www.gao.gov/products/GAO-12-347], (Washington: D.C.: Apr. 20, 
2012). 

[24] DOE HSS reports directly to the Secretary of Energy and is 
independent of DOE program offices and NNSA. See Dr. Sonja B. Haber, 
et al. An Independent Evaluation of Safety Culture at the U.S. 
Department of Energy Office of Health, Safety and Security--
Headquarters (HSS) (Mar. 29, 2013). 

[25] GAO, National Nuclear Security Administration: Laboratories' 
Indirect Cost Management Has Improved, but Additional Opportunities 
Exist, [hyperlink, http://www.gao.gov/products/GAO-13-534] 
(Washington, D.C.: June 28, 2013). M&O contractor costs include both 
direct costs--costs that can be directly identified with specific cost 
objectives such as a program or project--and indirect costs--costs of 
activities that cannot be specifically identified with a specific cost 
objective but which indirectly support a program, such as management, 
administrative, and facility costs. 

[26] GAO, Nuclear Weapons: Actions Needed to Identify Total Costs of 
Weapons Complex Infrastructure and Research and Production 
Capabilities, [hyperlink, http://www.gao.gov/products/GAO-10-582] 
(Washington, D.C.: June 21, 2010). 

[27] GAO, Modernizing the Nuclear Security Enterprise: NNSA's Reviews 
of Budget Estimates and Decisions on Resource Trade-offs Need 
Strengthening, [hyperlink, http://www.gao.gov/products/GAO-12-806] 
(Washington, D.C.: July 31, 2012). 

[28] GAO, Department of Energy: Additional Opportunities Exist to 
Streamline Support Functions at NNSA and Office of Science Sites, 
[hyperlink, http://www.gao.gov/products/GAO-12-255] (Washington, D.C.: 
Jan. 31, 2012). DOE's Office of Science has been the nation's single 
largest funding source for basic research in the physical sciences, 
supporting research in energy sciences, advanced scientific computing, 
and other fields. 

[29] A list of recent GAO products assessing DOE's management efforts 
is included at the end of this statement. 

[30] [hyperlink, http://www.gao.gov/products/GAO-13-283]. In addition, 
an earlier high-risk update removed DOE's Office of Science from the 
scope of our high-risk area to acknowledge progress that office made 
in addressing human capital and resource issues and meeting projects' 
cost and schedule targets. See GAO, High-Risk Series: An Update, 
[hyperlink, http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: 
January 2009). 

[31] As we noted in response to questions for the record, a dramatic 
organizational change, such as making NNSA an independent agency, may 
be disruptive. Currently, DOE provides NNSA with a large number of 
services, such as personnel and headquarters building security, office 
space, payroll, and information technology. An independent NNSA would 
have to devote substantially more effort to create and then maintain 
these overhead functions. 

[End of section] 

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