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"Buoyed by widespread weapons complex modernization efforts, the National Nuclear Security Administration’s budget is receiving unprecedented scrutiny, but a new report from the Government Accountability Office throws into question the credibility of the agency’s budget planning processes. In a report released this week, “Modernizing the Nuclear Security Enterprise: NNSA’s reviews of Budget Estimates and Decisions on Resource Trade-offs Need Strengthening,” the GAO said budget planning figures are not thoroughly reviewed by NNSA before its annual budget request is submitted to Congress, there is too much reliance on contractors to come up with budget data, and the agency does not have an independent group to review budget decisions after it disbanded its Office of Integration and Assessments in 2010, which had been created in response to recommendations from the GAO and DOE’s Inspector General. “Because of the fiscal constraints in the current budget environment, it is all the more critical that NNSA have the capability to conduct independent cost analyses to enhance its ability to make the most effective and efficient resource decisions on resource trade-offs,” the GAO said, noting that the Department of Energy’s Inspector General and the GAO had pushed the agency to establish an independent analytical capability to evaluation its programs. “Not having this capability could preclude NNSA from making the best decisions about what activities to fund and whether they are affordable,” GAO said.

Cost estimating has become an increasingly large problem in the NNSA as more money, and attention, is directed toward the agency’s weapons program as part of efforts to modernize the nation’s weapons complex and nuclear arsenal. The agency remains on the GAO’s High Risk List, and major projects continue to see drastic increases. The latest example of that is the B61 refurbishment program, which has doubled in cost over the last year to $8 billion, and perhaps as much as $10 billion according to a Department of Defense review. The cost of the program forced the NNSA to defer work on the multi-billion-dollar Chemistry and Metallurgy Research Replacement-Nuclear Facility planned for Los Alamos National Laboratory, but Congressional aides said this week that the GAO report justifies concerns that the NNSA’s budget is disconnected from actual needs. “The Administration was willing to support modernization at a certain cost, but if that cost is not the right one—that’s not been validated—then we won’t be able to meet any of the long-term objectives we set out for the program,” one aide told NW&M Monitor.

Is NNSA Relying Too Much on Contractors?

According to the GAO, the NNSA spends much of its time analyzing the processes used by contractors to come up with budget planning figures rather than validating the budgets themselves, and the GAO said that in Fiscal Year 2012, only about 1.5 percent of the agency’s $11 billion budget was validated. NNSA policy guidance indicates that 20 percent should be validated. “This process is not sufficiently thorough to ensure the credibility and reliability of NNSA’s budget because it is limited to assessing the processes used to develop budget estimates rather than the accuracy of the resulting estimates and is conducted for a small portion of NNSA’s budget,” the GAO said.

The issue manifests itself most notably in NNSA’s noncompliance with a 2003 DOE order requiring a formal review of budget estimates. The GAO said that NNSA didn’t comply with the order because it did not believe it applied to the agency, but the lack of a formal review review process “relies on undocumented, information reviews” of estimates and a formal budget validation review occurs only after the budget is submitted to Congress. The GAO said that the agency also noted that it did not have enough financial or personnel resources to mirror Department of Defense budget reviews, and credited the “inherent trust” between the agency and its M&O contractors with providing confidence about budget estimates. GAO, however, said it was “concerned that NNSA management continues to deny the need for NNSA to improve its processes for developing credible and reliable budget estimates.” The implications are significant, the GAO said. “Without thorough reviews by site and headquarters program offices of budget estimates, NNSA cannot have a high level of confidence in its budget estimates or in its ability to make informed decisions on resource trade-offs and to enhance the credibility and reliability of its budget,” the GAO said.

NNSA Defends Budget Creation

NNSA Associate Administrator for Management and Budget Cynthia Lersten said in a response to a draft of the GAO report that the agency acknowledged there were areas where it could improve its Planning, Programming, Budgeting and Evaluation (PPBE) process, but she took issue with some of the GAO’s conclusions and defended the agency’s budget planning approach, suggesting that the GAO unjustly focused on “procedural areas” while overlooking the “cumulative effectiveness” of the agency’s PPBE process. “NNSA has demonstrated a wide range of review activities including the formal budget validation (which are fully documented), as well as formal reviews by site and Headquarters organizations which are part of successive levels of review that go into validating NNSA’s budget submissions,” Lersten said.
—Todd Jacobson

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