Todd Jacobson
NS&D Monitor
5/16/2014
The legislation that created the National Nuclear Security Administration as a semi-autonomous agency within the Department of Energy has been “counter-productive” as it has been implemented, the Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise said in an interim report just made public this week. The panel’s broad conclusions have been known for some time—that the NNSA has failed, its governance model is flawed and “fundamental reform” is needed to reshape the weapons complex—but the 62-page report provides details about the panel’s findings that illustrate just how deep the agency’s problems run.
Formal recommendations are due to Congress in July. “DOE’s implementation of the NNSA Act has produced parallel, intertwined NNSA and DOE headquarters staffs in many functional areas, rather than truly separate or independent DOE and NNSA staff offices,” the panel said in the report, recounting an interview with one NNSA field official who described a complex management structure in which the official received direction from NNSA’s Office of Acquisition and Project Management, the Office of Defense Programs, DOE headquarters, leadership for infrastructure management, and the Defense Nuclear Facilities Safety Board. “Outcomes are determined by negotiations among the competing interests, which consume time and energy, and tend to yield ultra-conservative, minimal-risk approaches.”
Oversight, Without Mission Pressure, Highlighted as Issue
Part of the problem, the panel said, is that DOE headquarters staff perform mission-support oversight of the agency without any pressure to accomplish the mission itself. “These factors create strong and counter-productive incentives to eliminate all risks—large and small—rather than seeking to effectively manage the most important ones,” the panel said. Ambiguity in DOE orders also “compounds” efforts to resolve issues among staffs that have unclear roles and authorities and lack the procedures to make decisions and weakens the ability of DOE and NNSA to deal with the DNFSB. “Given the statutory role of the DNFSB as an independent oversight arm for public safety, and the lack of a DOE analytical capability to effectively evaluate options to respond to its recommendations, the DNFSB exerts a dominant influence over DOE’s risk management in nuclear safety policies and programs, which at times leads to actions that do not reflect prudent risk management or safety concerns,” the panel said.
Panel Rips NNSA Management System
The panel also came down hard on the NNSA’s management system, highlighting 10 areas where the agency fell short of other operations. “These shortfalls undermine NNSA’s leadership, impede accountability, and are corrosive to culture,” the panel said, recounting an interview with a senior NNSA official who characterized the management problems facing the agency: “An effective management system is timely, accurate, and simple; our NNSA system is none of these.” The panel said that a “major overhaul will be needed to align the structure, resources, and decision processes with mission priorities,” the panel said.
Chief among the management issues facing the agency is a “lack of a shared NNSA vision, mission priorities, and plans,” the panel said. While the Cold War mission of the agency was clear, producing hundreds of nuclear weapons a year, the agency’s current mission is much more cloudy, resulting in a floundering agency. “Today, there is no agreed-upon national plan for NNSA’s future path with identified resources,” the panel said. “This lack of clear plans with associated resources and mission priorities to focus execution is perhaps the fundamental flaw in NNSA governance. NNSA and its customers have critical roles in developing the needed strategy, guidance and resources.” With the agency embarking on a series of complicated life extension programs, the panel said the agency is also hurt by a lack of experience at headquarters and an operational culture that lacks accountability for meeting deliverables.
Budget Inflexibility Creates Operational Problems
Roles, responsibilities, authority and accountability is also not clearly defined, and the agency lacks the proper mechanisms to make informed decisions, which creates operational problems across the weapons complex, the panel said. Additionally, the panel said an inflexible budget structure with hundreds of reporting lines has “undermined … effectiveness and efficiency.” It noted that at Los Alamos, more than 500 budget reporting lines govern funds provided to the lab, and it said there were about 225 budget reporting lines at Pantex. B61 refurbishment work at Sandia National Laboratories is funded by more than 20 NNSA funding sources, with control of the money spread out between numerous headquarters offices. “The combination of detailed budgeting, diffused responsibility, and poor communications practically guarantees wasteful execution,” the panel said, adding: “If one believes in the adage, ‘the government is what it funds,’ then the NNSA is a collection of weakly integrated projects. The overlay of confused roles and responsibilities, in combination with highly detailed budgets, begets inefficient and ineffective mission execution.”
Life extension program managers also lack the proper authority to make technical decisions, the panel said, and the lack of a “trusted cost and resource analysis” function has sapped credibility as the estimates for major infrastructure projects have soared well above initial price tags. Proven practices for project management have also not been adopted by the agency, further clouding the reliability of NNSA project cost estimates and planning efforts. “NNSA’s poor track record of planning for and estimating the costs of these and other major projects is a major source of dissatisfaction among the national leadership and customers, and further undermines NNSA’s credibility,” the panel said. “Both NNSA and DOE are engaged in initiatives to create needed independent cost estimating capabilities, including the development of the requisite staffs, tools, and data. Success with these initiatives will help repair its damaged credibility, and will be an essential precondition for NNSA to regain trust with its critics.”
Investments in other needed infrastructure upgrades around the weapons complex are also not given the necessary priority, the panel said, noting that the current estimate for deferred maintenance is $3.5 billion. The panel suggested using third-party financing, which helped build the new Kansas City Plant and two office buildings at Y-12, for new facilities as a possible “workaround” to funding problems.
‘Dysfunctional’ NNSA Relationship With Contractors
The panel also suggested that the relationship between the government and its management and operating partners was “dysfunctional,” echoing the findings of previous reports, including a National Academies of Science report that called the relationship “broken.” Laboratory officials have also complained about an overly prescriptive management style and a lack of trust between the agency and its contractors, which the panel said has been “exacerbated” by the transition to for-profit contractors at the laboratories. The panel said the lack of trust shows up in the NNSA control of work through detailed budget control point and milestones, a reliance on transactional oversight, and the exclusion of M&O executives from strategic planning decisions. The approach, the panel said, “is costly, unwieldy, and counterproductive,” and “creates a high degree of management complexity, puts detailed decisions in the hands of headquarters personnel who lack a complete understanding of field operations or technical requirements, undermines accountability, creates incentives to focus attention on administrative matters over program substance, and incurs excessive costs in administering the relationship.”
The panel noted that efforts to broadly implement a program piloted by the Kansas City Plant that relied on industrial standards and less transactional oversight had largely been blocked by headquarters staff, but it said the concept “remains a significant governance reform opportunity.”
Panel Weighs in on Award Fees
The panel also suggested that significant award fees were having a troubling impact on the relationship between the NNSA and its contractors as they “reinforce DOE/NNSA’s emphasis both at headquarters and in the field on functional compliance and not mission performance.” Focusing on incentives does “little to encourage building a strong M&O leadership team,” the panel said. “The recent transition to Strategic Performance Evaluation Plans could help catalyze the shift away from transactional oversight, but this transition will require a sweeping cultural change at NNSA and its Field Offices and a redesign of the weighting of the performance objectives to better capture M&O contributions to mission priorities.”
