Nuke Agency Needs Budget Accountability

Just like the Pentagon, the agency responsible for our nuclear weapons complex should have to justify additional funding after large cost overruns.

Piles of money in front of a nuclear sign
(Photos: Shutterstock; Illustration by POGO)

Included in the $1.3 trillion omnibus spending bill passed by Congress last month is a significant funding increase for the agency in charge of building and maintaining our country’s nuclear weapons. The National Nuclear Security Administration’s (NNSA) Weapons Activities account saw a 15 percent increase to over $10.5 billion this year. But with a problematic history of massive cost overruns and a full schedule of projects on deck with no room for mistakes, we’re concerned about how that money will be spent.

Five recent projects by NNSA show that costs are significantly increasing—sometimes by nearly 8 times more than the initial estimates. These five programs have a combined total of $28 billion in cost overruns over the last 20 years. Cost overruns at the Department of Defense prompted Congress to institute cost reporting measures, but NNSA’s even more significant overruns haven’t met with the same response: Congress has failed to use or create the kinds of tools necessary to review these multi-billion dollar programs.

A History of Critical Cost Breaches

The NNSA, a semiautonomous agency within the Department of Energy, is in charge of eight facilities across the country that build, maintain, and study the U.S. nuclear weapons arsenal. It’s the largest civilian contracting agency in the federal government, but a hands-off approach to contractor management has led to countless problems and wasted tax dollars.

Unsurprisingly NNSA contract management has been on the Government Accountability Office’s (GAO) list of high-risk program areas for issues stemming from mismanagement since 1990, when the list was created. Today the agency continues to struggle to stay within cost and schedule estimates for its biggest projects.

Chart comparing the original NNSA estimate for the MOX facility ($2,306,849,462) and its final projected cost ($3,500,000,000).

National Ignition Facility—51% Over Baseline Budget

NNSA’s recent history of budget-busting major construction projects begins with the National Ignition Facility (NIF) at the Lawrence Livermore National Laboratory. Sold to Congress in 1995 as a critical element in maintaining a safe and reliable nuclear stockpile without nuclear testing, NIF was designed to recreate the conditions of a thermonuclear explosion in a laboratory setting.

Almost immediately costs began to increase on the technically difficult project. Originally expected to cost $2.1 billion when construction began in 1997, poor management and oversight led to a final price tag in 2009 of $3.5 billion to design and construct the facility. The GAO found that the laboratory in charge of overseeing the project failed to plan for how complicated it would be to assemble and install NIF’s 192 lasers, and didn’t effectively use independent review committees to correct issues before they led to increased costs.

NIF’s purpose, to sustain a nuclear fusion reaction in a laboratory, was supposed to be achieved by 2012. But the NNSA now admits that the facility may never accomplish its goal. Over 23 years since the project first began the then-Administrator of the NNSA stated that it was “too early to say whether or not ignition can be achieved at the NIF.”

Uranium Processing Facility—355% Over Baseline Budget

The Uranium Processing Facility (UPF) at the Y-12 National Security Complex is another example of NNSA’s history of underestimating and overspending. Y-12 houses the U.S. stockpile of highly enriched uranium and was supposedly the “Fort Knox of Uranium”—a myth that was shattered when an 83-year-old nun and her compatriots broke into the facility in 2012.

Chart comparing the original NNSA estimate for the Uranium Processing Facility ($1,426,049,689) and its final projected cost ($6,500,000,000).

The new UPF was meant to replace several of the buildings that house operations to build and maintain the uranium portions of nuclear warheads. It was originally expected to cost $1 billion when it was sold to Congress in 2004, an estimate that almost immediately jumped to $6.5 billion. Then in 2012 it was revealed to the public that poor contractor management led to a $540 million design flaw that burned through 45 percent of contingency funds built into the budget. Furthermore, an official use only report found that early reviews of the project showed the need for a higher cost range but were disregarded in order to gain approval to proceed.

After the design mistake became public, Congress took a more active oversight role. Significant Congressional pressure and a legislative mandate for regular reviews by the GAO have contributed to ensuring the project does not go over budget again. And the NNSA maintains they can complete a significantly scaled down version of the project that will still meet mission needs within the $6.5 billion budget. However, the GAO’s review of the project last year found that there are still problems with the project that are likely to lead to cost overruns.

“NNSA has not developed a complete scope of work, life-cycle cost estimate (i.e., a structured accounting of all cost elements for a program), or integrated master schedule (i.e., encompassing individual project schedules) for the overall uranium program, and it has no time frame for doing so,” the report stated.

Essentially what this means is that the NNSA does not know how much it will truly cost to develop, produce, deploy, and sustain the program. Nor do they know how long that will take. Uncertainties like this are one of the leading causes for cost increases and delays that could ultimately harm national security.

Chart comparing the original NNSA estimate for the CMRR nuclear facility ($1,181,861,751) and its final projected cost ($7,000,000,000).

Chemistry and Metallurgy Research Replacement Facility—492% Over Baseline Budget

In addition to overhauling uranium processing capabilities, NNSA determined that it also needed to replace several of the facilities that manage the highly radioactive plutonium used in nuclear warheads. The agency initially planned to build the Chemistry and Metallurgy Research Replacement – Nuclear Facility to address plutonium production capacity issues but the project faced such significant cost increases that it was scrapped before construction began.

Originally expected to cost just under $1 billion, the estimate to finish design and construction of CMRR-NF soon ballooned to $7 billion. Ultimately, the NNSA spent $450 million on designing the project before Congress canceled it in 2014.

Both the new UPF and plutonium production facilities are just the most recent examples where the NNSA claimed it needed “big box” buildings for maximum capacity. But poor management of contractors and a failure to adhere to best practices (like reaching 90 percent design completion before moving forward with the project) led to skyrocketing costs and unacceptable delays.

As costs began to rise for the design of CMRR-NF, the NNSA admitted that existing infrastructure could be modified to carry out some of the project’s planned missions at less cost. Furthermore, it wasn’t until several years into the design of the project that an Environmental Impact Statement revealed that the risk of an earthquake at the proposed location for the new facility was much higher than initially thought.

Although Congress canceled the project, the NNSA maintained they needed more capacity to support plutonium capabilities. So the agency pivoted and split the original program into two different parts. Instead of replacing all of the aging infrastructure with one building, the new plan will modify some existing facilities and create one new, smaller building.

Chart comparing the original NNSA estimate for the Revised Plutonium Capabilities Project ($1,500,000,000) and its final projected cost ($3,000,000,000).

Revised Plutonium Capabilities Project—100% Over Baseline Budget

The revised plutonium capabilities project is already over budget. The first part of the plan, where the NNSA will adapt an existing facility and install new plutonium analysis equipment, was originally expected to cost $1.5 billion but is now estimated to be $2.9 billion. The second part of the plan, to build a new facility to produce plutonium cores for nuclear weapons, remains early in the design phase, the GAO currently estimates it will cost $1.3 billion to $3 billion.

A 2016 GAO review of the revised plutonium capabilities project found that NNSA’s new design proposal did not meet the agency’s plutonium analyses needs and that overall schedule and cost estimates for the project did not meet best practices.

In short, the proposal was filled with unknowns and left the GAO essentially asking the NNSA to define exactly what this proposed project would even do. An updated review from 2017 stated that the NNSA has begun putting together a program plan and mission strategy for the project but still does not have an integrated schedule and has not met all program management requirements.

Although this plan and both of its parts are new and remain in the early stages of development, they’ve both already seen uncertainties lead to potential higher costs.

Chart comparing the original NNSA estimate for the MOX facility ($1,922,845,528) and its final projected cost ($17,000,000,000).

Mixed Oxide Fuel Fabrication Facility—753% Over Baseline Budget

By far the most egregious example of NNSA’s failure to control its major construction projects is the Mixed Oxide Fuel Fabrication Facility (MOX). A project that’s been in the works for almost twenty years, Congress approved an initial proposed construction budget of $1.4 billion in 2000. It began with the germ of a good idea—disposing of weapons grade plutonium by turning it into fuel for commercial nuclear reactors as part of a non-proliferation deal with Russia—but the project quickly went off the rails.

Today construction remains incomplete, despite $5 billion already spent, and it will cost an additional $17 billion just to finish the construction. Worse, there are no potential customers for the MOX fuel the facility is supposed to produce, the technology the facility is based on is decades old, and most recently Russia pulled out of the agreement on which the entire project was based.

The NNSA has identified a cheaper and faster alternative for disposing on the plutonium, but an incredibly successful lobbying effort by the contractors in charge of the project and advocates in Congress have kept the project on life support for far too long.

The amount of money wasted on MOX is astounding. The NNSA yet again took a hands-off approach to oversight of the contractors in charge of the project, which led to construction errors, poor communication, and ultimately unacceptable cost increases and delays.

Only now has Congress finally given NNSA approval to explore alternatives to this massively wasteful project.

Modernization Already Mismanaged

NNSA’s project management problems will only be compounded by an aggressive plan to upgrade existing nuclear warheads and infrastructure and to develop new nuclear weapons. The whole effort will cost taxpayers at least $1.2 trillion over the next 30 years according to the Congressional Budget Office (CBO). Other estimates put the final price closer to $1.5 trillion.

This plan has a strict schedule that the agency must juggle in addition to the day-to-day activities of stockpile stewardship. In order to meet the requirements of the plan, NNSA will be simultaneously creating new weapons and new facilities—the UPF and the CMRR replacement projects —to build and review those weapons.

Originally the construction of the UPF and CMRR, located at two different sites across the country from one another, was to be staggered to avoid budget constraints. But poor project management led to such significant delays and cost increases that they are now running concurrently. Both are without robust, systematic oversight and reporting requirements to ensure there won’t be any more costly mistakes

Reporting Requirements Could Improve Accountability

Despite its long and well-documented record of budget-busting projects, the NNSA is not subject to the same kind of cost reporting requirements as the Department of Defense. One such law, known as Nunn-McCurdy after the Members of Congress who created it, was passed in 1982 and requires the Defense Department to notify Congress anytime a major defense acquisition project significantly increases in cost.

If the project’s cost goes over 30 percent above the original baseline price, the program manager must notify Congress with an official report including the cause of cost increase, names of the military and civilian personnel responsible for the program’s management, and proposed actions to control the cost growth.

If a project goes over 50 percent above the original cost it’s considered a critical breach and the Director of the Pentagon’s Cost Assessment and Program Evaluation office works with the Secretary of Defense to assess the program. This assessment includes a cost analysis of alternatives and the extent to which other Defense programs would have to be cut to cover the cost growth.

Congress requires the Department to assume any project that experiences a critical breach will be terminated unless the Secretary of Defense certifies that the program is essential to national security, that management structure is sufficient to control any further cost growth, and that changes will be made to address the root causes.

While it is far from a perfect tool the Nunn-McCurdy process has been a useful tool for oversight and has in some cases led to cancellation of unaffordable programs. The Congressional Research Service found there was a decline in Defense Department programs going astronomically over budget since the law was passed. But Nunn-McCurdy is not intended to be a program management tool; rather, it’s a reporting mechanism.

“[Some] have argued that while Nunn-McCurdy is a good reporting mechanism, it is not set up to be an effective program management tool. While recent data appear to indicate that cost growth in [Major Defense Acquisition Programs] have decreased in recent years, few analysts attribute the trend to the Nunn-McCurdy Act itself,” the Congressional Research Service found in a 2016 report.

Still the law’s strict requirements have meant that Congress and the Department itself have a great deal of additional information when making decisions about what projects are worth millions—or even billions--of dollars in investments. And it requires the Department to justify that spending publicly.

“To the extent that Nunn-McCurdy increases visibility into—and an understanding of what causes—cost growth, the act can help efforts to improve weapon system acquisitions,” the report concluded.

The NNSA is not bound by the same requirements despite such a long history of cost overruns, poor project management, and difficulty implementing lessons learned. These problems may have been avoided, or at least mitigated, by a Nunn-McCurdy type law.

If these requirements had been in place while NIF was being constructed, it’s possible that the program’s technical issues could’ve been addressed earlier, preventing some of the cost growth. Under Nunn-McCurdy, program managers are required to file a report anytime they have reason to believe there might be a problem that would cause cost growth. Many of NIF’s technical problems, which caused the majority of the project’s cost increases, were raised by an early review committee. In 2000, the GAO again flagged these technical problems as uncertainties that could drive up costs.

Similarly, the contractors in charge of the UPF project disregarded early flags that a design flaw would create a space issue necessitating a complete re-design. It wasn’t until the contractor produced a root-cause report on the problem three years after it was discovered that the issue became publicly known and Congress stepped in to take a strong oversight role. That one mistake cost taxpayers $540 million.

While the contractors in charge of these projects, or even the agency itself, are not always inclined to provide the kind of oversight these big projects need, there are Members of Congress who will step up to fight against wasteful spending when they have been presented with all the facts. The transparency and accountability afforded by Nunn-McCurdy’s reporting requirements can help Members of Congress get those facts, and to make better-informed funding decisions that may prevent future astronomical cost increases.

Nunn-McCurdy-type laws have been applied to agencies other than the Defense Department previously. In 2010, Congress passed a law requiring reporting on major technological acquisitions by the Intelligence Community, and in 2015 Nunn-McCurdy type standards were applied to Department of Homeland Security acquisitions.

Part of the reason Congress hasn’t applied similar standards to the NNSA could be that the agency and its contractors have successfully captured Congressional attention, and appropriations. In 2016, a Project On Government Oversight (POGO) investigation into Congressional fellowships found that the nuclear laboratories, and the contractors running them, had been placing Fellows in key Committees and offices for decades. It’s the kind of access most industry professionals can only dream about.

It will take strong Congressional backbone to implement Nunn-McCurdy type standards. But NNSA has demonstrated time and time again that they cannot control these projects on their own. It’s long past time for Congress to step up and perform their oversight role to ensure our tax dollars won’t be wasted on yet another entirely preventable mistake.

lydia dennett

By: Lydia Dennett, Investigator

Lydia Dennett is an investigator for the Project On Government Oversight. Lydia works on safety and security of nuclear weapons and power facilities, foreign lobbying and influence, and works with Department of Veterans Affairs whistleblowers.