[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]

[H.A.S.C. No. 113-94]

INTERIM REPORT OF THE ADVISORY

PANEL ON THE GOVERNANCE OF

THE NUCLEAR SECURITY ENTERPRISE

__________

HEARING

BEFORE THE

SUBCOMMITTEE ON STRATEGIC FORCES

OF THE

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

SECOND SESSION

__________

HEARING HELD

MARCH 26, 2014

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

______

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SUBCOMMITTEE ON STRATEGIC FORCES

MIKE ROGERS, Alabama, Chairman

TRENT FRANKS, Arizona JIM COOPER, Tennessee
DOUG LAMBORN, Colorado LORETTA SANCHEZ, California
MIKE COFFMAN, Colorado JAMES R. LANGEVIN, Rhode Island
MO BROOKS, Alabama RICK LARSEN, Washington
JOE WILSON, South Carolina JOHN GARAMENDI, California
MICHAEL R. TURNER, Ohio HENRY C. ``HANK'' JOHNSON, Jr.,
JOHN FLEMING, Louisiana Georgia
RICHARD B. NUGENT, Florida ANDREE CARSON, Indiana
JIM BRIDENSTINE, Oklahoma MARC A. VEASEY, Texas
Drew Walter, Professional Staff Member
Leonor Tomero, Counsel
Eric Smith, Clerk

C O N T E N T S

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CHRONOLOGICAL LIST OF HEARINGS
2014

Page

Hearing:

Wednesday, March 26, 2014, Interim Report of the Advisory Panel
on the Governance of the Nuclear Security Enterprise........... 1

Appendix:

Wednesday, March 26, 2014........................................ 27
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WEDNESDAY, MARCH 26, 2014
INTERIM REPORT OF THE ADVISORY PANEL ON THE GOVERNANCE OF THE NUCLEAR
SECURITY ENTERPRISE
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Cooper, Hon. Jim, a Representative from Tennessee, Ranking
Member, Subcommittee on Strategic Forces....................... 2
Rogers, Hon. Mike, a Representative from Alabama, Chairman,
Subcommittee on Strategic Forces............................... 1

WITNESSES

Augustine, Norman, Cochairman, Advisory Panel on the Governance
of the Nuclear Security Enterprise............................. 2
Mies, ADM Richard W., USN (Ret.), Cochairman, Advisory Panel on
the Governance of the Nuclear Security Enterprise.............. 5

APPENDIX

Prepared Statements:

Augustine, Norman, joint with ADM Richard W. Mies............ 33
Rogers, Hon. Mike............................................ 31

Documents Submitted for the Record:

Background material submitted by Mr. Cooper.................. 51

Witness Responses to Questions Asked During the Hearing:

Ms. Sanchez.................................................. 81

Questions Submitted by Members Post Hearing:

Mr. Cooper................................................... 93
Mr. Rogers................................................... 85
Ms. Sanchez.................................................. 98
.
INTERIM REPORT OF THE ADVISORY PANEL ON THE GOVERNANCE OF THE NUCLEAR
SECURITY ENTERPRISE

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House of Representatives,
Committee on Armed Services,
Subcommittee on Strategic Forces,
Washington, DC, Wednesday, March 26, 2014.
The subcommittee met, pursuant to call, at 10:04 a.m., in
room 2118, Rayburn House Office Building, Hon. Mike Rogers
(chairman of the subcommittee) presiding.

OPENING STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE FROM
ALABAMA, CHAIRMAN, SUBCOMMITTEE ON STRATEGIC FORCES

Mr. Rogers. This hearing of the Strategic Forces
Subcommittee of the House Armed Services Committee will come to
order.
I want to thank everybody for being here and say hello to
our witnesses. Appreciate you being here and taking the time to
prepare for this hearing. I know this takes a lot of time, but
it matters to us, it makes a big difference, and we appreciate
you.
Today's topic--well, our hearing is a topic that is very
familiar to those who have followed the subcommittee's work
over the past several years: governance and management problems
at the Department of Energy [DOE] and specifically the National
Nuclear Security Administration [NNSA]. Today we will hear
about the ongoing work of the Advisory Panel on the Governance
of the Nuclear Security Enterprise. This advisory panel was
created by the fiscal year 2013 National Defense Authorization
Act [NDAA] to take a look at the long-standing problems within
our nuclear system--nuclear security enterprise's system of
management and oversight.
Our witnesses today are the distinguished cochairs of that
panel, Admiral Richard Mies, U.S. Navy (retired), and Mr.
Norman Augustine, former chairman and CEO of Lockheed Martin. I
want to thank you both for your service and for being here. I
understand that your testimony will focus on the panel's fact-
finding efforts to date and provide us with a comprehensive
illustration of the challenges we are facing.
This subcommittee has been looking into these problems for
quite a long time, but I believe you will help us clarify and
assess the problems and why efforts to remedy them have failed.
In creating this advisory panel, Congress highlighted that,
quote, ``There is a widespread recognition that the current
system for governance, management, and oversight of the nuclear
security enterprise is broken,'' close quote. As the fiscal
year 2013 NDAA conferees stated, Congress believes, quote,
``the status quo is not working and must not be continued,''
close quote, and that changes on the margins are not a
solution.
Recognizing that the nuclear security enterprise is broken
and that previous efforts for the reform have failed, Congress
looks to your panel's final report for innovative solutions to
these long-standing problems. Importantly, such solutions must
not be dependent upon personalities or individuals to be
successful and must not repeat the mistakes of the past.
For this hearing, let's ensure we all leave here with a
full, clear understanding of the magnitude and complexity of
the issues facing the enterprise as well as the national
security imperative of getting this right.
Thank you again to the witnesses, I look forward to your
discussion.
[The prepared statement of Mr. Rogers can be found in the
Appendix on page 31.]
Mr. Rogers. And with that, I would like to turn over the
microphone to the ranking member, my friend from Tennessee, Mr.
Cooper.

STATEMENT OF HON. JIM COOPER, A REPRESENTATIVE FROM TENNESSEE,
RANKING MEMBER, SUBCOMMITTEE ON STRATEGIC FORCES

Mr. Cooper. Thank you so much, Mr. Chairman. I too would
like to welcome our distinguished witnesses today. I appreciate
their long service to our Nation and in particular their
chairing of this very important commission to figure out how to
improve the work of the NNSA.
I have no opening statement, Mr. Chairman, but I would like
to ask unanimous consent that I insert some background material
for the hearing record.
Mr. Rogers. Without objection, so ordered.
[The information referred to can be found in the Appendix
beginning on page 51.]
Mr. Cooper. Thank you, appreciate it. Thank you, Mr.
Chairman.
Mr. Rogers. I would now ask each of our witnesses to make
an opening statement. We will start with Admiral Mies. Oh, with
Mr. Augustine. The microphone is yours, sir.

STATEMENT OF NORMAN AUGUSTINE, COCHAIRMAN, ADVISORY PANEL ON
THE GOVERNANCE OF THE NUCLEAR SECURITY ENTERPRISE

Mr. Augustine. Thank you, Mr. Chairman. I have an opening
statement that runs about 8 or 9 minutes. If the 5-minute rule
is in place, I can shorten it.
Mr. Rogers. Go ahead, deliver the whole thing if you would
like to.
Mr. Augustine. Thank you very much, Mr. Chairman and
ranking member.
Mr. Rogers. Your microphone is not on.
Mr. Augustine. I never was good at engineering.
Thank you very much for the opportunity to present the
findings to date of the Congressional Advisory Committee on the
Governance of the Nuclear Security Enterprise. And, as you
know, Admiral Rich Mies and I have served as the cochairmen.
And Congress tasked our panel, to broadly examine the
performance of the nuclear security enterprise and to consider
alternatives.
Let us state at the outset that the current viability of
our nuclear deterrent is not in question. At the same time, the
existing governance structures and practices are most certainly
inefficient and in some instances ineffective, putting the
entire enterprise at risk over the longer term.
During the past 5 months the panel has focused attention on
the National Nuclear Security Administration, or NNSA as we
know it, both in the headquarters and the field, including the
laboratories and production plants and the Nevada National
Security Site. We have also examined the current situation from
the perspective of the national leadership in the legislative
and executive branches and from the perspective of customers
such as the NNSA, the DOD [Department of Defense], State,
Intelligence Community, Department of Homeland Security. We
have benchmarked NNSA against proven management approaches used
by high-performing, high-technology organizations, both in the
private sector and in government.
The panel's work has relied on our 12 members' decades of
experience of a broad scope, dealing with nuclear enterprise
issues. We have reviewed thousands of pages of previous
studies, we have conducted on-site visits to numerous
installations, and we have benefited from the testimony of
dozens of expert witnesses, and we particularly appreciate the
engagement of our colleagues on the panel as well as the candor
of those that we have interviewed.
Today we will summarize our panel's findings on the current
health of the NNSA and the root cause of the challenges we will
cite. We are only now beginning to formulate our
recommendations that we will provide in our final report.
Unfortunately, the unmistakable conclusion of our fact-finding
is that, as implemented, the NNSA experiment involving creation
of a semi-autonomous organization has failed. The current DOE-
NNSA structure has not established the effective operational
system that Congress appears to have intended. This needs to be
fixed as a matter of priority, and these fixes will not be
simple or quick, and they need to recognize the systemic nature
of the problem.
Despite the flaws that we have found, there are numerous
examples of successes in NNSA's endeavors. To date Science-
Based Stockpile Stewardship has succeeded in sustaining
confidence in our nuclear deterrent. Unmatched technological
innovation on the part of NNSA's scientists and engineers has
produced a dramatically increased understanding of our aging
nuclear weapons stockpile. The labs and plants are providing
solid support to nonproliferation efforts and unique expertise
to the Intelligence Community. NNSA's Naval Reactors
organization continues to provide world-class performance in
the development and the support of the most capable naval
nuclear propulsion systems to be found in the world.
But, NNSA as a whole continues to struggle to meet
fundamental commitments. To the point, it has lost credibility
and the trust of the national leadership and customers in DOD
that it can deliver weapons and critical nuclear facilities on
schedule and on budget. Simply stated, there is no plan for
success with available resources. NNSA is on a trajectory
towards crisis unless strong leadership arrests the current
course and reorients its governance to better focus on mission
priorities and deliverables.
At the root of the challenges are complacency and a loss of
focus of the nuclear mission by the Nation and its leadership
following the end of the Cold War, and although the national
leadership has provided strong policy statements and
substantial sums of money to the enterprise, it is evident that
follow-through has been insufficient. The Congress' current
focus on the issue is a welcome development.
Over the decades this changed situation has translated into
the absence of a widely accepted understanding of and
appreciation for, the role of nuclear weapons and nuclear
technology in the 21st century, with the resultant well-
documented and atrophied conditions of plants and plans for our
strategic deterrent future. That is it with DOD as well as in
DOE. Within the nuclear enterprise, this has been reflected as
a lack of urgency and a respect for the compelling mission that
it faces.
As earlier reviews have concluded and this panel endorses,
this is no time for complacency about the nuclear deterrent.
America's deterrent forces remain of the utmost importance.
They provide the ultimate guarantee against major war and
coercion. Further, our allies depend on these forces and
capabilities for extended deterrence and could well pursue
their own nuclear capabilities if they perceive that the U.S.
commitment or competency is waning.
Other countries carefully measure U.S. resolve and
technological might, in making their own decisions about
proliferation and nuclear force sizing. U.S. leadership in
nuclear science is something we cannot afford to lose. We,
along with our allies, are in a complex nuclear age, with
several nuclear powers modernizing their arsenals, new nuclear
technologies emerging, the potential new actors as well as
regional challenges raising significant concerns. This would be
a dangerous time to stumble.
Furthermore, reform will be required to shape an enterprise
that meets all of the Nation's needs and rebuilds the essential
infrastructure that is required. But while the technical work
is rocket science, the management and cultural issues are not.
In the case of the latter, however, the situation is not easily
rectified. What is needed, is to issue clear plans and provide
sufficient resources for success, assign and align
responsibility along with the necessary authority and
consequences and provide strong, accountable leadership and
management at all levels focused on the mission. The panel
believes such reform is possible, but it will demand determined
and sustained high-level leadership.
The changes we will recommend undoubtedly will be difficult
to implement, regardless of where the enterprise is located
within the government structure, since the fundamental problems
are cultural more than organizational. Organizational change,
while not unimportant, is only a small portion, the easy
portion of the revisions that must be made. Previous efforts to
reform and previous studies calling for action have largely
failed due to the lack of leadership follow-through, the lack
of accountability for enacting change and, we might add, the
lack of effective sustained top-level demand for change from
the national leadership.
The Department of Energy by itself would be challenged to
oversee the radical steps that will be needed. Success is
imaginable only with a strong and active engagement of a
knowledgeable Secretary, supported by the White House and the
Congress and a structure that removes impediments and that
aligns to mission priority. The panel believes that the
enterprise today benefits immensely from the political
leadership of an engaged Secretary of Energy and the strong
science and engineering of the national laboratory system.
Each successive administration since that of President
Eisenhower has reaffirmed the need to maintain a credible
nuclear deterrent that is safe, secure, and reliable, but
sustained national commitment and focus on the entirety of the
mission of the enterprise charged with its execution has been
lacking since the end of the Cold War, as evidenced by the
condition in which the enterprise finds itself today.
DOE and the NNSA have failed to act with a sense of urgency
at obvious signs of decline in key areas. Five systemic
disorders have taken root that we found to be at the heart of
the program--problem.
And with your permission, Mr. Chairman and members of the
committee, Admiral Mies will briefly outline these issues.
[The joint prepared statement of Mr. Augustine and Admiral
Mies can be found in the Appendix on page 33.]
Mr. Rogers. Thank you, Mr. Augustine.
Admiral Mies, you are recognized.

STATEMENT OF ADM RICHARD W. MIES, USN (RET.), COCHAIRMAN,
ADVISORY PANEL ON THE GOVERNANCE OF THE NUCLEAR SECURITY
ENTERPRISE

Admiral Mies. Chairman Rogers and Ranking Member Cooper,
let me add my thanks as well for being here today.
My remarks are intended to provide some specifics on the
panel's findings within the context of my cochair's overall
characterization of the health surrounding the enterprise.
Our panel has identified five systemic disorders which
result from the fundamental causes outlined in Norm's preceding
testimony. The causes and the disorders are inseparable. Most,
if not all, of these disorders can be traced back to national
complacency, the lack of a compelling national narrative and a
widely accepted understanding regarding the role of our nuclear
deterrent in this century.
Today I would like to offer a synopsis of our panel's key
findings, specifically focusing on the five systemic disorders
we have identified.
First, a loss of sustained national leadership focus. Since
the end of the Cold War we have experienced significant erosion
in our abilities to sustain our nuclear deterrent capabilities
for the long term. The atrophy of our capabilities has been
well documented in numerous reports over the past decade. The
fundamental underlying cause of this erosion has been a lack of
attention to nuclear weapon issues by senior leadership, both
civilian and military, across both past and present
administrations and Congresses.
This lack of attention has resulted in public confusion,
congressional distrust, and a serious erosion of advocacy,
expertise, and proficiency, in the sustainment of these
capabilities. Absent strong national leadership, NNSA as well
as the whole national security enterprise has been allowed to
muddle through. First and foremost, we must consolidate and
focus national level support.
Second, a flawed DOE-NNSA governance model. The current
NNSA governance model of semi-autonomy is fundamentally flawed.
NNSA has not established effective leadership, policy, culture,
or integrated decisionmaking. Indeed, the design and
implementation of NNSA governance has led to numerous
redundancies, confused authorities, and weakened
accountability.
Third, a lack of sound management principles. NNSA and the
associated policy-setting and oversight organizations within
DOE reflect few of the characteristics of successful
organizations. An entrenched risk-averse bureaucracy lacks a
shared vision for and unified commitment to mission
accomplishment, and hence they don't act as a team. Both DOE
and NNSA lack clearly defined and disciplined exercise of
roles, responsibilities, authorities, and accountability
aligned to NNSA's mission deliverables.
Too many people can stop mission essential work for a host
of reasons, and those who are responsible for getting the work
done often find their decisions ignored or overturned. Chains
of command are not well defined, and resources are
micromanaged. Personnel management and development programs,
issue resolution processes, and deliverable aligned budgets are
deficient. Shortfalls in project management and cost estimating
are well documented and acute.
Fourth, there is a dysfunctional relationship between NNSA,
the Federal workforce, and their management and operations
[M&O] partners. The trusted partnership that historically
existed between the laboratories and DOE-NNSA headquarters has
eroded over the past two decades to an arm's length customer-
to-contractor adversarial relationship leading to a significant
loss in the benefits of the federally funded research and
development centers, the FFRDC model. The trust factor
essential to this model and underscored by a recent National
Academies study results from unclear accountability for risk, a
fee structure and contract approach that invites detailed
transactional compliance-based oversight rather than a more
strategic approach with performance-based standards.
Additionally, atomized budget and reporting lines also
confound effective and efficient programmatic management and
further erode any sense of trust, and additionally there is no
enterprise-wide approach. While there are examples where the
relationship has improved, such as the Kansas City Plant,
overall, this government-to-M&O ``partnership'' remains highly
inefficient and in many cases, severely fractured.
Fifth and finally, there is uneven collaboration with NNSA
customers. NNSA's relationship--this issue deals primarily with
issues we have identified mainly with the DOD weapons
customers. There is no affordable, executable joint DOD-DOE
vision, plan, or program for the future of nuclear weapons
capabilities.
This is at once a cultural and communications divide, but
there is also a fundamental lack of mechanisms to ensure that
requisite collaboration and consensus to address core mission
requirements. Other customers appear to be satisfied, but here
too a more strategic approach could strengthen capabilities and
the services that NNSA provides.
In conclusion, lasting reform requires aggressive action
and sustained implementation in all five of these areas, but
national leadership engagement is really the common theme.
Improvement is possible, but it will demand strong leadership
and proactive implementation of the panel's recommendations by
the President, the Congress, and an engaged Department of
Energy Secretary.
Thank you for your time, and we look forward to your
questions.
[The joint prepared statement of Admiral Mies and Mr.
Augustine can be found in the Appendix on page 33.]
Mr. Rogers. Thank you both for those remarks.
Admiral, did you and your staff get the impression when
they were interacting with folks at the various levels, that
they have a morale problem? I get the impression that they
have, they are cognizant that they have got problems, but has
it affected morale in, in a serious way?
Admiral Mies. Well, I think across the complex you see a
number of morale problems, and that is reflected not just
within NNSA and the M&O contractors, but you also see it on the
DOD side in many cases. You are witnessing a, a number of
investigations associated with morale problems within the ICBM
[intercontinental ballistic missile] force.
That clearly was not part of our charter, but, yes, I think
certainly there are morale issues. We did receive a copy of a
recent cultural study that was done within DOE and NNSA, and
again that identified a number of morale and cultural issues
that I think affect performance of the organization.
Mr. Rogers. Mr. Augustine, you were the CEO of a very large
corporation. If you were to give some advice to or if you were
to take the reins of NNSA, what sort of initial actions should
that new administrator employ, to demonstrate the seriousness
of his or her approach to this new endeavor, that would send
the message up and down the food chain within an organization
that you are serious about changing the culture, which is what
I am hearing from you all is it is really a cultural problem
there. So give us an organizational lesson.
Mr. Augustine. Well, Mr. Chairman, having spent 10 years in
the government, let me say that it is much, much more difficult
to manage in the government than it is the private sector, and
nonetheless the same basic principles of management in my
experience apply.
People also watch the people at the top and how they
behave. It is terribly important that the people at the top set
an example of what is expected, they walk the talk. I think the
first thing that needs to be done is to gather people and say,
times have changed, things are different, and there will be
some people who will view that as an opportunity, an exciting
challenge, there will be those that say that we can live with
that, and there will be those who will resist it, and somehow
those people who resist it either have to find new work that
they can deal with or be put aside so they don't interfere.
And so I think that there need to be examples set very
quickly that accountability is expected, and that were I to
start out, I would have a conversation like that with the
organization. I would travel the field for a few weeks. I would
then make clear what our goals were, what our expectations
were. I would do my very best to have our resources match those
expectations. If there were people who weren't up to the job,
they need to find something new to do.
Mr. Rogers. Let me ask this, speaking about that, because I
think you are exactly right: Do you think that whoever takes
the reins at NNSA, assuming the Senate will soon confirm
somebody, has the latitude to make those corrective changes in
leadership personnel? For example, I was listening to Admiral
Mies' five points, and he made the observation that the
bureaucracy was risk averse, and a lot of the folks in middle
management either don't want to make decisions or if they do,
they are overruled by somebody.
I am wondering how difficult it is to take a middle
management person and replace them with somebody who is not
risk averse. Did you even look at that or do you know?
Mr. Augustine. We have looked at it. We have both
experienced it, and many of the members of our group have
served in government. And as you know very well, the civil
service was set up to protect employees from political
pressures. In so doing I think it in my view has leaned too far
to make it difficult to remove people who are not up to their
job.
And I worked with many very, very capable people in
government, particularly people in uniform. At the same time, I
have encountered situations where people directly reporting to
me were really not suited for the job they were in, and it is
very, very difficult to do anything about that.
Mr. Rogers. In the government sector?
Mr. Augustine. In government, yes; I should have been
clearer but----
Mr. Rogers. Well, we just saw that in Y-12, you know, we
have had that incident up there, and to my knowledge to this
day nobody has been terminated.
Mr. Augustine. Well, as you are aware--well, I know you are
aware--I was one of three people the Secretary asked to do an
investigation of Y-12, an independent investigation, and it is
very hard to find out what actually happened to the government
employees after that. We have tried very hard. But what is
clear is that the three intruders went to jail.
Mr. Rogers. Yeah.
Mr. Augustine. The people working for the contractors--the
contractor was fired, the contractor employees, some were
fired, some were transferred, apparently laterally, and as best
as I know, the people in government service were transferred
laterally or no action was taken, and I qualify that with
saying as best as we have been able to find out.
Mr. Rogers. Yeah well, the head of their security did not
get any--did not shoulder any responsibility for that, that is
the thing I find most amazing.
I do want to ask you all both, we heard your five
systematic disorders. Would you both please provide some
specific examples, if you can, of where we have seen the
erosion of senior leadership attention to nuclear weapons
issues and what impact that has had. Just if you can think of
one or two specifics. If you can't, that is fine.
Admiral Mies. Well, I would say at the height of the Cold
War we had a very robust infrastructure that was capable of
producing nuclear weapons in significant volumes, significant
quantities. Today we are dealing with a very obsolescent
footprint within the NNSA complex, 54 percent or somewhere
around there of the infrastructure is over 40 years old. Much
of it is a legacy of the Cold War, and there is a need to
streamline it and modernize it. We are struggling right now
with the lack of any significant pit production capability
because we don't have two major facilities, a Chemical and
Metallurgy Research Replacement [CMRR] Facility and a Uranium
Processing Facility [UPF], which have been troubled, as you
well know, by poor project management and deficient cost
estimating. So, again, that is one significant example of an
erosion of our infrastructure capabilities.
Mr. Augustine. I will cite two quick examples. There are
many. One is when the Nuclear Weapons Council met to approve
what is known as the ``3+2'' plan, within a month of the time
that was approved and widely agreed upon at a very high level,
the NNSA came back and said we can't carry that out, and the
system basically stopped at that point in terms of proceeding
as planned at the higher levels.
The second example is the facilities have been allowed to
age. Even though the people working in them are well aware of
that at the highest levels, there has been no action in many
cases. Today, over 50 percent of the facilities within the NNSA
are over 40 years old, over 25 percent are over 60 years old,
and not only does some of that raise a safety issue, it
certainly impacts morale that you asked about.
Mr. Rogers. Thank you very much.
The chair now recognizes the ranking member for any
questions he may have.
Mr. Cooper. I thank my good friend, the chairman of the
subcommittee, and I most of all thank the witnesses for being
here, for their long period of government and public sector
service, and also for their expertise in leading this very
important panel.
I want to compliment members of the subcommittee here, not
only on my side but across the aisle. It is great to have a
senior member like Mr. Thornberry here who is even willing to
sit below the salt in the subcommittee hearing to find out
about the governance of the nuclear security enterprise, and
this is, we should point out, probably one of the few hearings
in which actually the attendance of the subcommittee compares
very favorably with the attendance in the audience because the
public has not tuned in to these issues as they should, and
Congress, as you gentlemen point out, has not focused on these
issues as we should, so hopefully this is the process that
starts the correction.
I know that this is just a preliminary report on your
findings on the governance of the national security enterprise.
Are you on track to deliver the final report sometime this
summer?
Admiral Mies. I believe we are, and we look forward to
delivering a full and comprehensive report.
Mr. Cooper. When I went through your testimony, I was
struck because you can view things usually as a glass half full
or glass half empty, and I would like for each of you to look
at your testimony and for Mr. Augustine, for example, he starts
off by saying the current viability of our nuclear deterrent is
not in question, glass half full, and of course points out some
qualifying things, we can improve existing governance
structures because they are inefficient or ineffective, you
know. We are not going to die from that. But later on in the
testimony it is sharper. It says, quote, ``The NNSA experiment
has failed.'' It needs to be fixed as a matter of priority,
presumably national priority.
And I thought Admiral Mies' testimony had a similar glass
half full or glass half empty look at things. Admiral Mies
starts off by saying there has been a significant erosion in
our capabilities to sustain our nuclear deterrent capabilities,
a lack of attention to weapons issues by senior leadership,
both civilian and military.
Again, we are not going to die from that. But later in your
testimony I thought if there were to be a headline for this
hearing, it would be this, a single sentence: Quote, ``there is
no affordable, executable joint DOD-DOE vision, plan, or
program for the future of nuclear weapons capabilities.'' Wow.
That is a big sentence. That is a devastating sentence. So that
would be in the glass half empty category.
Now, I know you are just at the preliminary level, you have
done fact-finding, the commission hasn't been able to formulate
recommendations, but as we go through our hearings and we learn
that just, you know, to sustain current capabilities is
probably $355 billion, and that is assuming no further cost
overruns or delays or erosion of scientific talent or bad
relationships with contractors, whatever, and we are in an
environment of sequestration. Like how are we going to do all
this?
So, this is a central challenge not only for Congress but
for the Nation. Nuclear issues are not necessarily in fashion.
It is easy to just dismiss them, or--but I hope that, as I say,
this is the beginning of a process where we can focus in a
mature way on sustaining and possibly even enhancing our
capability because as the only great Nation on this Earth, that
is our obligation.
I also think it is important to put this in historical
perspective because there has never been, you know, a perfect
period for managing all this. If you read the history of the
nuclear enterprise, there always are controversies and
problems, and so the path has never been smooth. There is not
one glory age, one Camelot, but hopefully we can do better than
the NNSA has been doing because I agree with Mr. Augustine, the
NNSA experiment has failed, and I look forward to your panel's
recommendations on the fixes.
Thank you, Mr. Chairman.
Mr. Rogers. I thank the ranking member.
The chair now recognizes my friend and colleague from
Texas, Mac Thornberry, for any questions he may have.
Mr. Thornberry. Well, thank you, Mr. Chairman, and thank
you for letting me sit in.
There is some advantage to having been involved in this
issue for 20 years because one does see a progression of
reports that largely reach the same conclusion you all do.
There wasn't anything that you said this morning, I don't
believe, that is new, and we have been grappling with it
literally for 20 years. But I have got to say at the same time,
I recently, as soon as Secretary Moniz was confirmed, I sent
him a letter that said I have never been more concerned about
the nuclear complex than I am now.
And part of it is the morale, part of it is the lack of
leadership at the top, part of it is the continued aging and
deterioration of our weapons which we are not addressing, just
a host of things. So I guess all that is a long way of saying I
appreciate the efforts that you all are putting into this.
I guess one question that keeps coming up in my mind is to
what extent any recommendations are going to affect the culture
and the basic leadership issues that you all identify. When we
created the NNSA basically we took a report from some very
distinguished people and the President's Foreign Intelligence
Advisory Board and took the more conservative option. We didn't
create an autonomous agency like the Nuclear Regulatory
Commission. We tried to do the semi-autonomous. But even if you
had an autonomous agency, if you don't have attention from the
President, from the Secretary of Defense, I don't know, would
it matter? How do you legislate cultural leadership focus, the
number one issue that Admiral Mies identified?
Mr. Augustine. Do you want to start on that one?
Admiral Mies. I don't know where to start.
Well, first, to the minority Member's concern about half
full or half empty, I certainly think at the present time the
glass is half full, but I think as we look to the longer term
in the future, if dramatic action is not taken, then the
concern is more a half empty view.
I think you have to appreciate that there have been
numerous studies, as you well know, that have done, that have
preceded our panel. We have inherited about 50 past studies
focused on the Department of Energy and to some degree NNSA,
and all of those studies have reached similar findings
regarding the cultural, personnel, organizational, policy, and
procedural challenges that those organizations face right now,
that exists within DOE and NNSA, and so many of our panel's
findings I don't think are going to be necessarily new or
original. But I think you have to appreciate that many of these
problems existed before NNSA was created, and NNSA was created
out of recognition that some of these problems existed and,
frankly, the semi-autonomous model has not succeeded, and in a
sense we view it as a failed experiment.
From that standpoint I guess the change, the creation of
NNSA was basically an organizational change, but organizational
changes, as Norm indicated, are not the solution, the main
solution to the problem. The main solution is cultural, not
organizational, and you have to approach it from a DOE-wide
basis, not just an NNSA basis, and I think we are very
fortunate to have Secretary Moniz, who is very engaged, who has
a passion and an understanding of the mission and clearly is
committed to making some cultural changes. The challenge that I
think he will face and we will all face is can you
institutionalize those changes so that they endure long beyond
his tenure.
Mr. Augustine. Mr. Chairman, might I comment on Mr.
Thornberry's question?
First of all, I would strongly agree, you can't legislate
culture, and even in a corporation you can't dictate changes by
putting out memos. I think that what is required is to set an
example of what the new culture is and to be totally intolerant
of deviations from that. The firm I happened to work for, we've
combined 17 different firms in 7 years--5 years to make it, to
build it, and we had 17, sometimes I thought we had 18
different cultures, and it came together very well because we
were very intolerant of individuals who just couldn't deal with
the new way of doing business.
And I think as the Admiral says, we are fortunate today to
have a Secretary of Energy that understands this. The chairman,
Mr. Chairman, you mentioned at the outset that we need
solutions that aren't personnel, human dependent, but we have
got to have Secretaries of Energy who understand something
about the nuclear enterprise, about management, and I think
that is where it starts.
Mr. Thornberry. Thank you, Mr. Chairman.
Mr. Rogers. I thank the gentleman.
The chair now recognizes the gentlelady from California,
Ms. Sanchez. Is she still here?
Mr. Cooper. She stepped out.
Mr. Rogers. The gentleman from Georgia, Mr. Johnson, is
recognized.
Mr. Johnson. Thank you.
I am just sitting here thinking. I am listening to you all,
and I was preparing what I was going to ask and say, and let me
first say that I appreciate the study that you all have
conducted, and it is indeed sobering to think of all of that
nuclear power that is in a dangerous state of maintenance and
management.
And so our nuclear enterprise has been eroded from years
and years of lack of focus and a lack of sustained leadership
is what you have said from both civilian and military sources,
and it has taken place over quite a period of time, since the
end of the Cold War, and I think that the erosion of this
nuclear enterprise is illustrative of the morass that Congress
finds itself in. We are still doing business the same way that
we have done for centuries, and right now this body is not
functioning, this body needs a study that would provide us with
some guidance in terms of where we are and what we need to do
to move forward. I would submit that this Congress, while it is
great that we are looking at our deficiencies right now, I also
think that we need to be looking at what our future direction
should be. It is not to be assumed that we should go back and
correct everything to sustain what we had.
I think the discussion should be what do we need as we move
forward. So in my mind the President having--and this
President, like previous Presidents having worked on nuclear
disarmament treaties and such, we would be, this Congress would
be well advised, I think, to I don't want to say follow, but we
should explore this disarmament issue.
Of course, we can't unilaterally disarm, but the goal
should be to have a world without nuclear weapons, and so if we
start out from that premise and then work from that, I think we
would do ourselves a whole lot of justice. $355 billion to get
us back to where we need to be is unrealistic. I don't think
that is going to happen, and so how much will it take for us to
get where we need to be in order to continue our efforts to
eradicate nuclear weapons from the face of the globe? I think
that should be our, that should be something that Congress,
through its committees and subcommittees, should be about, and
we need to be about it quickly because we can't afford the
status quo both from a security standpoint, especially from a
security standpoint.
So as we make sure that we don't allow other nations to
acquire nuclear weapons, we need to be about this kind of
study, but Admiral Mies, you in your statement, you said that
several nuclear powers are modernizing their arsenals. Which
ones are those? And what is--how much money are they spending
to do that?
Admiral Mies. Well, let me say that very clearly both
Russia and China are modernizing their nuclear arsenals, and we
have good indications of that. They are developing new
capabilities. I do want to go back and reassure you, though,
that despite our testimony and our comments about erosion in
the enterprise, I want to reassure the subcommittee that
because of the strength of the Stockpile Stewardship Program
and the great science that is going on in our national
laboratories, we still have a safe, secure, and reliable
stockpile.
That is not an issue today. It might be an issue for the
future if we don't continue to invest and pay attention to
those issues, but I think for the foreseeable future we have a
safe, secure, and reliable stockpile, and I don't want to
create the impression that that is a concern.
Mr. Rogers. The gentleman's time has expired.
The chair now recognizes the gentleman from Florida, Mr.
Nugent.
Mr. Nugent. Thank you, Mr. Chairman, and I appreciate this
panel and what you are saying.
It is a sobering thought because, you know, deterrence is
about our ability to project force, and our adversaries, while
I know in a perfect world we would love that we didn't have
any, and that, you know, everybody loved each other and there
would be no need for deterrence, but that is not the real
world. We live in a place that is becoming actually more
dangerous, not less dangerous.
We see the actions of China and Russia, and particularly
what we have just seen with Russia's incursion into the
Ukraine, much less what they did in Georgia, and they are still
there. So while it would be great to live in this fantasy
world, what bothers me the most is the fact that one of the
last sentences in your testimony was lasting reform requires
aggressive action, sustained implementation of all five of
these areas that were mentioned in the report, but national
leadership engagement is the common theme.
``Improvement is possible, but it will demand strong
leadership and proactive implementation of the panel's
recommendations by the President, the Congress, and engaged DOE
Secretary.'' I think that you have--at least from the Congress'
standpoint, we have shown leadership, and we are trying to give
direction, but everything that we have talked about here is
about interpersonal skills, about the ability for management to
make sure that people stay on task, and that starts at the
highest level, you know.
Evidently, you know, this has been going on for years. I
have been here for 3 years, and it disturbs me the fact that we
can't get administrators to actually do their job, and they are
not held accountable, because in reading through all your
testimony it is about accountability, and Mr. Augustine, you
know, I was a sheriff and we had 500 employees, and I will tell
you that we held people accountable. We had civil service, and
there were ways to deal with those within the civil service
system, but you had to hold people accountable, and you had to
let people know what your mission was and what you would not
tolerate.
And in this particular endeavor, nuclear deterrence and the
safety of the nuclear force that we have and the modernization
really falls to those folks. You know, there is a whole bunch
of other things going on, but that is their only mission. Their
mission is very central.
You mentioned that that takes rocket scientists to do this,
but it takes managers and people to actually manage the
systems. I don't have to know much about how to construct a
nuclear weapon, but I do have to know about how do I construct
a management team to get us across the goal line. I guess I am
just 3 years up here, I am still baffled by the fact that we
can have studies and commissions, and we do all the stuff, and
it doesn't seem to get better.
What does it really take? Does it take the President saying
to you that, you know, DOE Secretary, you know, this is
unacceptable, you have got to get this done? I mean, does it
start there or where does it start?
Mr. Augustine. I think you have said it exactly right. The
President obviously is the principal person to provide
leadership in this regard, the administration. Strong support
from the Congress is required, and probably the most important
individual is the, under today's organization is the Secretary
of Energy, who in many cases in the past did not have a
background at all within this arena.
As you spoke, I was thinking that I had tried to figure out
how I would summarize in one sentence what at least I think I
have learned, and my sentence would be that with regard to the
NNSA or the nuclear enterprise that the whole is less than the
sum of the parts. There is some very, very capable people, some
capable organizations, but the leadership to bring them
together, to set goals, and you referred to the focus should be
very clear what their job is.
We went to one national, one of the laboratories within the
nuclear enterprise where the contractor that runs the facility,
they have an award fee; 80 percent of the award fee had nothing
to do with the primary mission. It had to do with peripheral
issues. Very important peripheral issues, I would emphasize
that, but 20 percent had to do with producing nuclear weapons
and maintaining the stockpile and so on.
Mr. Nugent. As a citizen of the United States, people
should be concerned. I think the message is that we expect our
leaders to actually lead, not just hope things get better and
hope that processes improve. We can have all the commissions
that we want, but until there is actual leadership to force the
issue, I don't see how this, Mr. Chairman, ever gets better.
And I yield back.
Thank you so very much.
Mr. Rogers. I thank the gentleman, and I understand his
concern, and I hope he is wrong.
The lady from California, Ms. Sanchez, is now recognized
for 5 minutes.
Ms. Sanchez. Thank you, Mr. Chairman, and thank you
gentlemen for--I really enjoyed reading your testimony, and as
Mr. Cooper said, some real pearls of wisdom in there and also
some real arrows at some very difficult problems that we need
to solve.
Of the 18 years that I have been here on this--in this
Congress and in this full committee, 16 of those years have
been spent on this committee, this subcommittee here, and I
have seen a lot of interest and I have seen a lot of waning
interest, not just, quite frankly, by people in the
administration with respect to this issue, but also by members
on this subcommittee over time, and so first of all I am really
thrilled that so many have shown up today.
Gentlemen, during the markup and conference of the fiscal
year 2013 and fiscal year 2014 NDAA, the House bill, we
considered several legislative provisions related to NNSA and
its related authorities and oversights, and some of these
provisions included significantly limiting the authority of the
Secretary of Energy, changing health and safety oversight by
the NNSA, and the independent Defense Nuclear Safety Board even
as the Department of Labor paid over $10 billion in
compensation to workers or to their families because they were
either killed or injured by exposure to radiation or toxic
materials by when they were working at the Department of Energy
at their nuclear sites.
These legislative provisions led to significant concern
about weakening oversight at a time when the NNSA is overseeing
an ambitious nuclear weapons modernization and sustainment plan
and also building, of course, some of our facilities, one-of-a-
kind new facilities to handle plutonium and uranium operations.
Considering that backdrop, do you see a role for independent
oversight of safety and security and where would this come
from? Who would we look to for that? And when the NNSA talks
about priority missions, does this include--in your opinion
does this include a serious commitment to safety and security?
Mr. Augustine. Why don't you start and I will follow up.
Admiral Mies. Let me try and answer your question in a
number of ways.
First of all, with respect to oversight, I don't think
anybody on the panel wants to reduce the effectiveness of
oversight, but I would say that in our review of the
performance of the oversight function within NNSA and DOE,
despite a large number of people at each of the field offices,
we have really evolved over time into a transactional,
compliance checklist-based kind of culture which, frankly, is
both inefficient and not very effective, and so the issue is
not more oversight or less oversight in terms of bodies as much
as it is better oversight, and are there better ways to do
oversight, and really----
Ms. Sanchez. I guess that would be my question----
Admiral Mies. And really----
Ms. Sanchez. How would we go about really getting to the
oversight that we need?
Admiral Mies. Well, to some degree I think if you look at
the current performance elements today, a lot of the
laboratories and the sites are graded on nonmission-related
functions.
Norm previously mentioned that one organization had 80
percent of their award fee associated with nonmission-related
issues. Again, there has to be a greater, stronger focus on
mission. I would just give you one example to illustrate the
point, Y-12. We have approximately 100 people at Y-12 doing
oversight, and yet for whatever reason despite that large
number of people doing oversight, the problem with the high
level of frequency of false and nuisance alarms at the
facility, the complacency that ultimately set in with the guard
force over a long period of time, which ultimately contributed
to the lack of a very effective and efficient response when the
nun and her accomplices actually tripped some alarms.
To me you have to ask yourself, with that many people doing
oversight, why wasn't there a recognition that this culture of
complacency had kind of set in because of the large number of
false and nuisance alarms and why wasn't there attention given
to fix it and address it? And, again, preceding the Y-12
incident, Y-12 had received an inspection with respect to their
safety and security, and they were held up as----
Ms. Sanchez. An example.
Admiral Mies [continuing]. An exemplar of good security, so
you have to ask yourself is the current type of oversight that
we are doing really successful in achieving what you really
want from a mission standpoint.
Now, there is, has been one prototype test within the
Department of Energy, within NNSA, the Kansas City model, where
Kansas City transitioned to really exemption from a large
number of DOE orders and regulations, and they were allowed to
move toward industrial standards, accepted industrial
standards, and ISO certifications, and that enabled Kansas City
to reduce the number of Federal overseers, and at the same time
significantly reduce the cost, but improve performance as well.
Now, Kansas City is unique in that it doesn't have a lot of
nuclear functions, and so you can't just transplant that model
to some of the other elements of the site, but I certainly
think it is a good example that we ought to look hard at,
particularly for nonnuclear functions that are performed across
the complex to see if there are opportunities where you can
move to independent oversight or change the oversight model in
a way that provides much more effective oversight.
Mr. Rogers. The lady's time has expired.
Ms. Sanchez. Thank you, Mr. Chairman.
I have some other questions that I would like to submit for
the record, and if Mr. Augustine has any comments, I would like
to have them submitted from him also. I think this is an
incredibly important topic that we have been struggling with.
Thank you.
[The information referred to can be found in the Appendix
on page 81.]
Mr. Rogers. I agree.
The chair now recognizes the gentleman from Arizona, Mr.
Franks, for any questions he may have.
Mr. Franks. Thank you, Mr. Chairman.
Thank you gentlemen both for being here.
Mr. Augustine, for your commitment to the administration.
And Admiral Mies, I want you to know I was impressed by the
candor of your opening statement, and I think you are a credit
for your uniform, or the one you used to wear, and am grateful
to people like you that make it possible for all of us to sit
here and have a peaceful conversation.
I am convinced that our nuclear deterrent, our nuclear
capabilities, are one of our most important elements of our
entire arsenal of freedom. And yet it is important to remember
that that deterrent is--essentially has its substance in two
things, and that is the capacity that we are really here
talking about today is our ability to know that we have a
reliable capability, that capacity, and also intent.
Now, I apologize for--ask you for diplomatic immunity. I
don't know of anybody but God that could figure out the intent
of this administration. Okay? But the capacity here is what we
are talking about today, and I am beginning to be concerned
that there is some questions about that. And I think that is
extremely dangerous in the kind of world that we live in if an
enemy somehow feels like maybe our capacity or our intent is
not up to par that it may potentially drag us into something
that would be very scary.
So with that, Mr. Augustine, I will turn and ask you the
tough question, if I can do that. And you are--I'm still under
diplomatic immunity here, if you don't mind.
Plutonium facility in New Mexico, around a billion dollars
spent. Nothing built with no intention to ever to build it. The
uranium facility in Tennessee, over $1.2 billion spent, with
nothing built. NNSA is studying alternatives and is unlikely to
build the design that has cost them $1.2 billion so far.
The mixed oxide facility in South Carolina, over $3 billion
spent. The concrete structure complete, but the NNSA has
announced that with their fiscal year 2015 budget request that
it is putting the project in, quote, ``cold standby.'' The W76
LEP [life extension program] is delayed 2 years. The B61 LEP
delayed 3 years. The IW-1 LEP is delayed 5 years. And, you
know, I will try to cut this short here. But it is not a really
a positive situation.
And the testimony here about the loss of sustained national
leadership focus I think is spot-on, and I could not agree with
you more, and find the administration's lack of leadership and
care for this nuclear deterrent that we have been talking
about, I would call it shameful, but it is more terrifying than
that. And I think those delays highlight that.
This committee has been pulling in its--is pulling its
collective hair out, really, trying to get the White House and
the Office of Management and Budget to put attention on the
nuclear security enterprise. And I know you folks would like to
see that as well without, you know, putting any of my own
commentary in your mouth. We passed packages of reforms out of
the House the last 2 years in the NDAA, only to see the
administration, quote, ``strongly object'' or even threaten to
veto them. But the administration has offered no real reforms
of its own. Nothing, no answer to these problems.
And so I guess I have to ask you, and I will make it to
both of you. Mr. Augustine, I will let you go first, if you
don't mind. Has the White House engaged with your advisory
panel and do you think--I shouldn't say that. Does it
understand the major problems that exist in the nuclear
security enterprise? And do you think the President understands
it, the gravity of it?
Mr. Augustine. That is a difficult question----
Mr. Franks. It sure is.
Mr. Augustine [continuing]. Mr. Franks, for us to answer.
Clearly, as a nation, not just this administration, but over a
period of years we have gradually let our nuclear capability
degrade. I would come back to your initial remarks that
deterrence is in the eye of beholder, as you know, and when
other nations come to the conclusion whether our deterrent is
not what we say it is, then we are in great danger. And one of
the worst things we could do of course, is to state we have
plans that we don't provide the resources and the management
capability to carry them out. If we can't afford more, then we
need to change the plan. But to have plans that don't match the
resources is probably the worst of all worlds.
Once again, as we--we have visited in great detail the
programs you have cited. There are a lot of examples of poor
management. It has less to do with in this case the capability
of the people in the system; most of the people we talk to are
very capable, and very dedicated, and I might add, very
frustrated. They know the problems. Probably better than we do.
It comes down to leadership at all levels. I'm trying to be as
candid as I can.
Mr. Franks. I couldn't agree with you more, Mr. Augustine.
I don't want to cut you short, but I am out of time and I
wonder if we could give Admiral Mies--but I certainly
appreciate your candor and your response.
Admiral Mies. Separate from the White House and Congress
and national-level leadership, I think there is a lot that the
Department of Energy can do within itself. You spoke about
several projects that have--we have already expended a
significant amount of national treasure on, and we have yet to
see a facility. A lot of that stems from a number of cultural
issues and technical competence within the Department of Energy
itself. There is a need for stronger cost-estimating
capability, a much more rigorous analysis of alternatives up-
front before you commit to a certain program, and also real
strong, robust program management expertise.
And I think those three elements to a certain degree are
lacking within NNSA, have historically been lacking within
NNSA. You don't need the White House or Congress to fix those
things. I think the Secretary has the ability to take on some
cultural reforms to really make the organization more efficient
to better utilize the resources that have already been given to
the organization.
Mr. Rogers. Gentleman's time has expired.
I do want to thank the Admiral for his comment. But I would
say that Secretary Moniz, who I agree is a good man and
prepared for that job, has his hands tied, to an extent, that
we, going back to Thornberry's question, we could legislate
loosening up his hands a little.
Jim. I got my thought process going over there. Mr.
Langevin is recognized for 5 minutes.
Mr. Langevin. Thank you, Mr. Chairman. I would thank our
witnesses for being here today. I have a couple specific
questions I would like to ask, but first of all let me start
off more broadly.
Is the NNSA and the nuclear security enterprise under the
current construct fixable or do we need to move in a totally
new direction? If it is fixable, where would you start? If it
is not, what would you do?
Mr. Augustine. Well, under the current structure, at least
as it is being carried out, it is clear that it doesn't work,
and is probably going to be very difficult to fix.
What new structure one needs as a starting point is
something that the committee is very much involved in trying to
decide. The list of options is not great.
You want to add anything to that, Admiral?
Admiral Mies. Again I think organizational change is
needed, but it is the lesser fix in the sense that cultural
reform is, is far, far the greater priority. And you can move
the organizational boxes around all you want, but if you don't
fix the cultural problem, those organizational shifts will be
meaningless. So you really have to address some of these
cultural issues, and that is the Secretary's challenge.
Mr. Langevin. Well, I concur that changing an
organizational culture is very difficult to do and in many ways
is very--it is two specific things: A, you either have to
incentivize and get buy-in from the people there to change the
culture and have them be a part of the solution, or you just
got to start all over, and that is a very daunting prospect if
that is what it comes to.
Let me just turn to a couple of specific questions.
President Obama made clear in his Prague 2009 speech and the
Nuclear Posture Review identified, the priority of
strengthening nonproliferation, making progress on nuclear arms
control, and sustaining a strong deterrent. Is there adequate
national leadership below the President and above the NSA--NNSA
level, to focus political support on these priorities?
Mr. Augustine. In my mind, the part of the government you
pointed at is the head of the Department of Energy. And I think
today that is true, there is that capability. But the
capability will need strong backing because there is always
resistance to change. If one gets into various management
levels within the Department of Energy, I think there are some
cases that one would question whether we have got people in the
job that are up to it. On the other hand, there are a lot of
people there that are very good. This is a case-by-case issue.
Mr. Langevin. Admiral.
Admiral Mies. I would only add that you can't really
separate the nonproliferation mission entirely from the nuclear
weapons stockpile surveillance and maintenance mission. The two
are inextricably linked in that a large volume of our expertise
in our weapons program is what contributes to our understanding
and knowledge of what other countries are doing and how they
are developing, and all that plays into our nonproliferation
initiative. So I think they are inextricably tied together and
both very critical.
Mr. Langevin. Thank you, Admiral.
Let me move to this. After the disastrous Y-12 security
incident, the Department of Energy Inspector General and the
Government Accountability Office have stated that NNSA had an
eyes-on, hands-off approach to oversight. It appears that NNSA
officials did not have or use the authority to second-guess the
contractor practices on security. Has this major deficiency
been addressed within NNSA? And, more generally, does NNSA have
the necessary expertise to evaluate performance and proposals
from the M&O contractors?
Mr. Augustine. Yeah, I think with regard to the first part
of your question, the answer is, no, the capability doesn't
exist today.
One of the things that has happened is that the
responsibility for carrying out a mission, the mission within
NNSA, has been separated from many other important supportive
functions. The person in charge of producing a weapon should
also have as part of their job, produce the weapon, but do it
safely, do it environmentally responsibly, and so on. Securely.
But today the staff functions have taken over those latter
issues. And that should be embraced by the person who has the
line-management responsibility and the authority. So today you
have a separately--a separation of responsibilities, and that
leads to great bureaucracy, delay, and ineffectiveness.
Admiral Mies. I would only add that although we haven't
seen significant changes in the way oversight is done in that
it is still pretty much a transactional compliance base, there
is a major initiative underway to reduce the number of
performance element factors that the fees are awarded upon and
focus more on mission elements rather than nonmission-related
elements. I think it is too early to say how successful that
initiative will be. But clearly there is initiative to change
the performance elements standards.
Mr. Rogers. Gentleman's time has expired.
Mr. Langevin. Thank you, Mr. Chairman.
I thank our witnesses for their testimony. We obviously
have a daunting task ahead of us, and I appreciate your work
and look forward to continuing to work with you.
Thank you. I yield back, Mr. Chairman.
Mr. Rogers. I thank the gentleman.
Chair now recognizes Mr. Wilson from South Carolina for 5
minutes.
Mr. Wilson. Thank you, Mr. Chairman, and thank you for
having this hearing, and thank you for your commitment to our
country. And I look forward to reading the report and any way
that we can be helpful.
And, in fact, the issues that we are dealing with, even
going back 14 years ago, there was a report by the House Armed
Services Committee Special Oversight Panel in regard to the
Department of Energy reorganization, and it was ably chaired by
soon-to-be chairman Mac Thornberry. And in this report, he said
that the central purpose of the new organization, the National
Nuclear Security Administration, NNSA, is to correct the
confused lines of authority and responsibility within the DOE
nuclear weapons complex that contributed to the mismanagement
and security problems at the Department and to provide a clear
mission focus and accountability for DOE personnel involved in
the nuclear weapons program.
It also said there was the intended effect is to provide a
substantial degree of independence but not total independence
from the Department of Energy.
And, Admiral, you have already touched on this. But with
the 2012 break-in at the Y-12 facility, do we still have
confused levels of authority? And, additionally, for each of
you, that would be one question. The other: Do you think that
your recommendations would resolve the confused lines of
authority?
Admiral Mies. Well, separate from the Y-12 incident, I
think just the fact that you have a semi-autonomous NNSA has
created the growth of a number of redundant organizations
within DOE and NNSA which have duplicative functions and hence
there are conflicting and confused lines of authority. I think
in many ways the creation of a semi-autonomous organization may
have worsened the problem, not helped it.
So that is why I think we think it is a--we consider at
this point a failed experiment.
Norm, do you want to----
Mr. Augustine. I would just add that, as implemented, the
semi-autonomous approach has clearly not worked. One of the
things that leads to that, you touched on it, is the line
management has been balkanized such that responsibility for
many important functions, such as safety, security, health,
environmental responsibility, and so on, is separate. It has
major power of the organization such that at the lower levels
of management decisions take forever to get up to the top
between the staff and the line management. Somebody has to be
put in charge and held responsible, and that just hasn't
happened.
Admiral Mies. I would only add that this goes back to what
we said earlier about basic successful management organizations
that clearly define roles, responsibilities, authority, and
accountability in many cases are lacking. And because of that,
you find instances where too many people appear to be--believe
they are authorized to say no and prevent actions from going
forward.
And to some degree a lot of that decisionmaking is not
embedded in line management, who should be in the best position
to make a risk-informed decision. Again to accomplish the
mission safely, securely, and environmentally safe.
Mr. Wilson. Well both of you have such experience. So I--we
appreciate your insight.
The mixed oxide fuel fabrication facility, the MOX facility
in South Carolina, this is in accordance with the nuclear
nonproliferation agreement that we have with the Russian
Federation to process high-level weapons-grade plutonium,
convert it to be used in nuclear reactors, and the cost
overruns or cost growth has been gruesome. But it is 61 percent
completed.
And, Mr. Augustine, as you were talking about capable and
dedicated personnel, they are right there and making every
effort to complete this facility. But it is being put on cold
standby. It concerns me, obviously, having weapons-grade
plutonium in our State. Is there any alternative to the
existent to this?
Mr. Augustine. I think there is no alternative to producing
a facility that can do what we have committed to do. Whether
there is an alternative to specific design or not, I am not in
a position to say.
Mr. Wilson. Thank you very much.
Thank both of you.
Mr. Rogers. I thank the gentleman.
Mr. Augustine, earlier you made a reference to the fact
that you were in an organization where you took 17 smaller
organizations and had to put them together and get them to act
like one. And that one of the reasons you were successful is
that you were very intolerant of folks who weren't on the team.
And, obviously, in the private sector, you had the ability
to help somebody get on the road to finding something else to
do if they didn't want to be on the team.
And I know, Admiral Mies, when he was in service, if he had
a senior officer, even a junior officer that wasn't on the
team, he could help them find something else to do.
I am not sure Secretary Moniz has that. And my question is
if we were--could we go back to Mr. Thornberry's comment about
could we legislate. The only thing I think we could legislate
that would help Secretary Moniz would be, give him termination
authority, at least within NNSA. Maybe not throughout the
Department of Energy. But at least within NNSA. So that if he
does have some people in his organizational effort, or the new
administrator, that need to either get on the team or move on,
do you think that would be a significant piece of legislative
authority that we could implement? Or would it really not be
critical?
Mr. Augustine. As a preface, I should say that what you
alluded to in industry, I didn't do alone; I had a terrific
leadership team, and that, that is essential.
I think what you suggested to give the Secretary
termination authority would be a very useful step. I think it
would also be very useful to give him greater authority in
terms of hiring. It would be useful to give him the opportunity
to have people who stay for a specific number of years, to put
people in a job long enough to be responsible.
I can remember years ago testifying beside Dave Packard at
the Defense Department about this very topic, and people come
and go so fast that really nobody is accountable. So I think
those would be very useful steps. Obviously, they would be very
difficult steps.
Mr. Rogers. Let me ask you, it has been 16 months, we have
had a series of acting administrators, as you know, General
Klotz has been waiting for months now for action by the Senate.
How important--and so in your review so far--is it that we get
somebody confirmed by the Senate in the position as a permanent
administrator?
Mr. Augustine. In my opinion, it is very important.
Admiral Mies. Mine as well. I think one of the concerns we
have seen, and it's not just with the director, but it's a lack
of leadership stability and continuity at the senior leadership
levels within NNSA. It is vitally important if you want to make
cultural changes and move on.
I would just like to go back to your question. I think it
is important, as Norm I think said, that you can't legislate
cultural reform, which I think is the biggest issue. And if you
are going to legislate certain initiatives, I would just
encourage you work very, very closely with the Secretary to
ensure there is close alignment there.
One of the issues that we are looking at, and we haven't
reached any conclusion on it, is, is the issue of exempted
service positions within NNSA, whether there might be value in
that or not. And we haven't come to any conclusion. But again,
how do you develop that technical competence, people with
professional qualifications and certifications to really
effectively manage the enterprise?
Mr. Rogers. Well, to that point, Mr. Cooper and I have been
meeting with Secretary Moniz and asking him specifically what
we could do to be helpful. We have got to get our colleagues to
help us, outside of just me and Mr. Cooper.
Lastly, you all made very various thought-provoking
comments. But another one you made a little while ago was
talking about how Secretary Moniz is the right guy, right now,
because he has experience in the subject matter and there have
been historically a lot of people in that position who didn't.
What do we do--Secretary Moniz is a good guy and he has got
the right background, but nothing is to say that the person
that follows him is going to have competence in the subject
matter area.
What would you all recommend--and you all may want to put
it in your report, I don't know but--that Congress do to try to
make sure that we at least urge a certain type of person be
viewed for that position? Or do you think that is even
necessary for Congress to address?
Mr. Augustine. We are acutely aware of that issue and spent
a good deal of time discussing it and don't really have a
recommendation. We have a few, a few thoughts. But I think one
thing, Congress does confirm people to Secretarial positions,
and the Congress has a great deal of authority in seeing what
kind of qualifications an individual has.
And, this is particularly difficult job because it goes all
the way from windmills to photocells on the one hand, to
nuclear deterrence on the other. But there are people who have
that mantle. Secretary Moniz happens to be one.
I think one of the most important thing Congress could do
is to be sure successive leaders, whatever organization one
happens to choose, are qualified to deal with this issue.
Mr. Rogers. Okay. Thank you very much.
Chair now recognizes Mr. Cooper for any comments he wants
to make.
Mr. Cooper Thank you, Mr. Chairman. Thank the witnesses
again for an excellent hearing.
Anybody in Congress should hesitate about giving anyone
else management advice, because Lord knows this institution is
not run properly.
But it worries me, two things that have come out in this
hearing. One is the universal tendency of anybody in Congress
to blame the administration, and Congress has been blaming the
administration ever since George Washington was President. And
last I checked, you don't get a magic wand or halo any time you
are elected to office, in either to the executive or the
legislative branch. So it is important to realize that--and I
think you have it in your testimony, it is not highlighted as
perhaps it should be.
There is something remarkable going on even within the NNSA
today. In fact, there are several remarkable things. One of
those is the Naval Reactors program, which has been largely
exempt from any publicity or scrutiny because they do a darn
good job. So you don't have to blame the administration about
that. And they have been able to survive different kinds of
administrations.
And another common thing has been, well, you can't
legislate culture, and that is probably true. But you can
legislate an environment in which it is easier to create a good
culture.
And somehow Naval Reactors [NR] has been able to do that.
Their ability, for example, to actually have contracting
officers who know what they are talking about. You know,
imagine that. Their scrutiny of expenditures, anything over $10
million, as opposed to the usual $100 million threshold. They
know what is going on. Wouldn't that be nice?
So, to me, when we are looking for bright spots here, and
we need to find some bright spots, extending that culture would
be a very valuable thing. And, but part of it is avoiding the
limelight, avoiding the publicity, avoiding the political back
and forth so they can do their jobs.
So, I worry that this institution has a tendency to do the
usual thing, press conferences, publicities, express outrage.
We have got to do better than that. And, so as you look at new
models, there is a pretty good one right there at your
fingertips, and I know the admiral is extremely familiar with
this already.
But thank you for your service. Thank you. We look forward
to this report, and look forward to even more than that, to
progress.
Admiral Mies. I would just comment that we certainly have
formed a benchmarking team to go out and look at what we
thought were very successful examples of high performance
organizations, and NR was clearly one of those. And we have
certainly looked at a lot of the attributes that Naval Reactors
has to try and see if those can be adopted by NNSA.
Mr. Rogers. Thank the gentleman.
Chair now recognizes the gentleman from Texas, Mr.
Thornberry.
Mr. Thornberry. Thank you, Mr. Chairman, and I again
appreciate you and Mr. Cooper allowing me to sit in.
The only thought I would offer on Naval Reactors is they
have had their own problems here recently with some cheating
on--down in their school, and somewhat similar to what we see
with the ICBM force. And maybe it is an isolated incident,
maybe it is not a bigger problem. But you do worry that the
problems that we have been talking about here are, are
extending.
The other thought is, for Naval Reactors, in a way, they
report both to DOE and DOD. It is a unique sort of institution,
started by an admiral who had a very strong culture, that has
been able to be continued over the years, and has been able to
maintain largely that culture over time.
I am not sure what that tells us. It was exactly, as the
gentleman suggested, one of the things we looked at in creating
NNSA is to look at Naval Reactors and why they are successful
and what we can, we can duplicate. I think there are still more
lessons there. I agree. But there are some worrisome signs.
Admiral Mies, the only other thought is, as you were
talking, talking about duplicative organizations within DOE and
NNSA. Partly, that is by design. Because what happened before
was everybody in DOE wanted a piece of NNSA. I don't know if--I
can't remember the number.
What percentage of DOE's budget is NNSA right now? Do you
know off the top of your head? Isn't it about 40 percent.
Mr. Rogers. 40 percent.
Mr. Augustine. 40 percent is about right.
Mr. Thornberry. So you have got 40 percent of the budget.
That means everybody at DOE wants a piece of it. And that goes
back to what you were talking about earlier, the people
responsible for getting the weapons out, were second-guessed by
all these folks who wanted to justify their existence in DOE by
getting a piece of it. So the idea was, you do separate,
insulate NNSA from all those other people except the Secretary.
He can do whatever he wants to.
And, the last thought is, if the Secretary is the answer,
and setting aside the increased authorities that the chairman
was talking about, but if he is the answer, why hasn't he been
doing it? I had the exact same high hopes that everybody else
had. But there hasn't been much happening now. He is waiting on
a confirmee from the Senate, I realize.
I guess that is just a long way of saying, we have got to
remember the problems that this was intended to create--to fix.
I completely agree. It has not fixed them. But I don't want to
go backwards to those days either. Because it was a, quote,
``dysfunctional bureaucracy, incapable of reforming itself.'' I
am not sure it is much better, but I don't want to go back and
be worse.
So, any comments, I would welcome. But I appreciate you all
letting me harangue.
Mr. Augustine. I would be very brief. I think that future
Secretaries of Energy, or whomever this organization reports
to, have got to be qualified at the subject at hand, and have
got to be strongly committed. And without that, I don't think
anything we propose is going to matter.
Admiral Mies. Beyond duplicative functions, I do think the
semi-autonomy has created a bureaucratic seam between NNSA and
other elements of the Department of Energy, particularly the
Office of Science and the other DOE science labs, and when you
look at those laboratories, there really is a need for close
collaboration between the NNSA labs and the Office of Science
labs because many of them work on nonproliferation issues, and
have nuclear expertise and nuclear forensics in other areas.
So, so again to some degree the semi-autonomy has created
an impediment to hinder closer collaboration than you maybe
would desire, and so, it just isn't the duplicative functions,
but it is also the issue associated with collaboration.
I would only add too that we have had several meetings with
the Secretary, and he has moved out and is making a number of
DOE-wide organizational changes to address what I perceive are
some of the cultural issues that he recognizes.
Mr. Rogers. I thank the gentleman.
Mr. Garamendi, did you have anything you wanted to ask
before we close it up?
Mr. Garamendi. First of all, my apologies, we have a Coast
Guard hearing, and being a ranking member, I was tied up there.
I want to thank the witnesses and the commission for their
work.
I will catch most of the testimony and from the staff.
I understand that one issue that was not covered--perhaps
this is correct, from the 30-second briefing--is the issue of
the Savannah River MOX facility. Did the commission look at
this issue at all? And, if so, what did you determine?
Admiral Mies. We haven't looked at it in great detail. It
clearly falls in the same example as the UPF facility in
Tennessee and the CMRR, the plutonium facility in New Mexico.
And in our analysis, in general, of those facilities and some
of the other major projects within NNSA and the Department of
Energy, is that they suffered from three elements that I talked
earlier about: A lack of robust, real strong program
management; a lack of a real rigorous analysis of alternatives
up front, before you decide to embark on a path; and a lack of
a, again a robust cost-estimating capability to really
understand how much resources will be required to complete some
of these major projects. And I think those three elements have
contributed to the situation we find ourselves in today.
Mr. Garamendi. I really want to apologize to the committee
and the witnesses for not being here. Those issues are of great
interest to me, and I really want to get into it, but it is not
really appropriate now. I will circle back around at some
point. I want to take this up in the NDAA, particularly with
the Savannah River, and try to meet some of the issues there.
Mr. Rogers. Very important. Thank you, sir.
And I want to thank the witnesses. I very much want to
remind you, and I know you are cognizant of it, when your
advisory panel was established the specific report request was
that, quote, ``conferrees believe changes at the margins are
not a solution,'' close quote, and I know you all realize that.
So be bold.
We appreciate you. We look forward to getting your report
this summer and hopefully having you come back this fall with
some final thoughts. With that, we are adjourned.
[Whereupon, at 11:35 a.m., the subcommittee was adjourned.]
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A P P E N D I X

March 26, 2014

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PREPARED STATEMENTS SUBMITTED FOR THE RECORD

March 26, 2014

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DOCUMENTS SUBMITTED FOR THE RECORD

March 26, 2014

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WITNESS RESPONSES TO QUESTIONS ASKED DURING

THE HEARING

March 26, 2014

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RESPONSE TO QUESTION SUBMITTED BY MS. SANCHEZ

Mr. Augustine. Lasting reform will require aggressive action and
sustained implementation across the federal government. The changes
needed undoubtedly will be difficult to implement regardless of where
the enterprise is located within the government's structure, since the
fundamental problems are cultural more than organizational.
Organizational change, while not unimportant, is only a small portion--
the easy portion--of the revisions that must be made to facilitate
success. Previous efforts to reform and previous studies calling for
action have largely failed due to lack of leadership follow-through, a
lack of accountability for enacting change, and the lack of effective,
sustained top-level demand for change from national leadership. The
Department of Energy by itself would be challenged to oversee the
radical steps that will be needed. Success is imaginable only with the
strong and active engagement of a knowledgeable Secretary, supported by
the White House and Congress, and a structure that removes impediments
and that aligns to mission priorities.
Previous efforts to reform and previous studies calling for action
have largely failed due to lack of leadership follow-through, a lack of
accountability for enacting change, and the lack of effective,
sustained top-level demand for change from national leadership. [See
page 17.]
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QUESTIONS SUBMITTED BY MEMBERS POST HEARING

March 26, 2014

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QUESTIONS SUBMITTED BY MR. ROGERS

Mr. Rogers. Mr. Augustine and Admiral Mies, from your testimony and
the dozens of reports over the past decades on problems at DOE and NNSA
it is obvious that the problems facing the nuclear security enterprise
are as complex as they are numerous. Many of them are cultural, and we
all know that cultures don't change easily. And I think you've hit the
nail on the head when you call the problems ``systemic.'' Leadership
will be key to fixing these problems, and leadership is always about
individuals and personalities. But I'm concerned about relying too much
upon individual personalities, because the term of any senior leader in
government is, inherently, limited. To provide the sustained leadership
and effectively see-through cultural and other difficult reforms, don't
we need buy-in across multiple administrations, multiple leadership
teams? How do we address this?
Mr. Augustine and Admiral Mies. Lasting reform will require
aggressive action and sustained implementation across the federal
government. The changes needed undoubtedly will be difficult to
implement regardless of where the enterprise is located within the
government's structure, since the fundamental problems are cultural
more than organizational. Organizational change, while not unimportant,
is only a small portion--the easy portion--of the revisions that must
be made to facilitate success. Previous efforts to reform and previous
studies calling for action have largely failed due to lack of
leadership follow-through, a lack of accountability for enacting
change, and the lack of effective, sustained top-level demand for
change from national leadership. The Department of Energy by itself
would be challenged to oversee the radical steps that will be needed.
Success is imaginable only with the strong and active engagement of a
knowledgeable Secretary, supported by the White House and Congress, and
a structure that removes impediments and that aligns to mission
priorities. [Question #1, for cross-reference.]
Mr. Rogers. Admiral Mies and Mr. Augustine, in 2009 the bipartisan
Strategic Posture Commission devoted a chapter of its final report to
the challenges within the nuclear security enterprise system. In your
opinion, why did this report, and the dozens of others like it, have no
effect? Why have we seen little or no action to fix these longstanding
problems?
Mr. Augustine and Admiral Mies. Previous efforts to reform and
previous studies calling for action have largely failed due to lack of
leadership follow-through, a lack of accountability for enacting
change, and the lack of effective, sustained top-level demand for
change from national leadership.
In addition, robust, formal mechanisms to evaluate findings, assess
underlying root causes, analyze alternative courses of action,
formulate appropriate corrective action, gain approval, and effectively
implement and institutionalize change are weak to non-existent within
DOE/NNSA.
Mr. Rogers. Admiral Mies and Mr. Augustine, ultimately, the 2009
Strategic Posture Commission recommended creating an independent agency
to take on NNSA's responsibilities and mission. I won't ask whether you
or the panel agree with this or any other recommendation because your
panel hasn't gotten there yet, but I'd like you to comment on some of
the findings. These include: ``The NNSA was formed to improve
management of the weapons program and to shelter that program from what
was perceived as a welter of confusing and contradictory DOE
directives, policies, and procedures. Despite some success, the NNSA
has failed to meet the hopes of its founders. Indeed, it may have
become part of the problem, adopting the same micromanagement and
unnecessary and obtrusive oversight that it was created to eliminate.''
Do you agree? Why or why not?
a. Another finding from the Strategic Posture Commission: ``NNSA's
problems will not vanish simply by implementing a new reporting
structure. A major driver of micromanagement and excessive regulation
is the attitude of the Federal workforce reflected in both unreasonable
regulations and excessive oversight in implementing them.'' Do you
agree? Why or why not?
Mr. Augustine and Admiral Mies. As implemented, the NNSA Act has
actually been counter-productive. The problems fall into three main
areas.
Overlapping DOE Headquarters and NNSA Staff
Responsibilities
The parallel DOE headquarters and NNSA staff structures increase
bureaucracy, cloud decision-making authority, and add to the number of
people without clear authority and accountability who can stop or delay
decisions. As one field representative put it, ``We suffer in a
regulatory framework where there are no clear lines of appeal or
decision-making and no integrated place for the cost-benefit analysis
to be done. For example, regarding facility safety and operational
infrastructure, I get direction from the Office of Acquisition and
Project Management, the Defense Programs leadership, the leadership for
infrastructure management, DOE headquarters, and the Defense Nuclear
Facilities Safety Board. How am I to do my job when getting direction
from five different organizations?''
A Deepened Divide between Line Management and Mission-
Support Responsibilities
Under the existing parallel staff structure, DOE headquarters
staffs continue to exercise their mission-support oversight of NNSA,
but they do not have the countervailing pressures to accomplish the
mission. This structure skews incentives at the DOE headquarters level.
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. Because many officials in
the DOE headquarters have lacked a compelling interest in mission
execution (as many outside observers have noted), the staff
conservatism is not challenged by the department's leadership.
Ineffective and Inefficient DOE Orders, Directives, and
Rulemaking Processes
Because of the diversity of DOE operations, orders are often
written broadly to apply to both non-nuclear and nuclear activities
even though the latter may demand special considerations. Consequently,
DOE orders for ES&H and security often lack the precision, consistency,
and clear implementing guidance necessary to translate the order's
intent into practice. Not all sites have the same version of DOE orders
for ES&H and security policy reflected in their contract. Indeed, there
are sites that have both NNSA and DOE orders in their contract covering
the exact same ES&H topic; although these orders may be similar, they
can contain subtle, but crucial, differences.
a. As noted in the second bullet above:
Under the existing parallel staff structure, DOE headquarters
staffs continue to exercise their mission-support oversight of NNSA,
but they do not have the countervailing pressures to accomplish the
mission. This structure skews incentives at the DOE headquarters level.
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. Because many officials in
the DOE headquarters have lacked a compelling interest in mission
execution (as many outside observers have noted), the staff
conservatism is not challenged by the department's leadership.
[Question #3, for cross-reference.]
Mr. Rogers. Admiral Mies and Mr. Augustine, is the mission of the
nuclear security enterprise likely to succeed in the long-term under
the current governance structure?
Mr. Augustine and Admiral Mies. The current viability of the U.S.
nuclear deterrent is not in question. The panel finds, however, that
the existing governance structures and practices are most certainly
inefficient, and in some instances ineffective, putting the entire
enterprise at risk over the long term.
Mr. Rogers. Admiral Mies and Mr. Augustine, with hindsight, what
are the strengths and weaknesses of the NNSA Act?
a. Was the intent of the ``separately organized'' and ``semi-
autonomous'' nature of NNSA clear?
b. Do you believe there was agreement from all stakeholders--
particularly within DOE and NNSA--regarding what these terms should
mean and how they should be implemented?
c. The 2009 Strategic Posture Commission stated that ``NNSA was
formed to improve management of the weapons program and to shelter that
program from what was perceived as a welter of confusing and
contradictory DOE directives, policies, and procedures.'' Do you
believe this intent was achieved?
d. Do you believe the letter and spirit of the NNSA Act has
actually been implemented?
Mr. Augustine and Admiral Mies. One unmistakable conclusion of the
panel's fact finding is that, as implemented, the ``NNSA experiment''
in governance reform has failed. The current DOE/NNSA structure of
``semi-autonomy'' within DOE has not established the effective
operational system that Congress intended.
Despite the intent of the NNSA Act to create a separately organized
NNSA within DOE, the NNSA has not established autonomous leadership
authorities, a policy framework, distinct culture, or integrated
decision-making mechanisms.
Except for Naval Reactors, the NNSA Act does not provide a blanket
exemption of NNSA from DOE orders and directives. NNSA decisions and
initiatives remain subject to DOE headquarters staffing processes prior
to consideration for Secretarial approval. For instance, the
department's directive program (DOE O 251.1C) requires policies,
orders, notices, guides, and technical standards to be reviewed by a
Directives Review Board chaired by the Director of the Office of
Management.\1\ Senior representatives from the three Under Secretarial
offices, the Office of General Counsel, and the Office of Health,
Safety and Security all serve as members whose concurrence is needed
before final issuance. Should the review board be unable to reach
consensus, the Deputy Secretary decides whether to overturn the
position of the directive's originating office.
---------------------------------------------------------------------------
\1\ U.S. Department of Energy, Departmental Directives Program, DOE
O 251.1C (Washington, DC: Office of Management, January 15, 2009).
---------------------------------------------------------------------------
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.
Parallel staffs exist in areas such as General Counsel, Human Capital
Office, Public Affairs, Legislative Liaison, Chief Financial Officer,
Environmental, Safety and Health (ES&H), Security, and Chief
Information Office. Members of both the DOE headquarters and NNSA
staffs point to the inefficiencies this creates. [Question #5, for
cross-reference.]
Mr. Rogers. The 1999 Rudman Report, which in many ways Congress
used as a guide for the NNSA Act, recommended that Congress create
either: (1) a new, completely independent agency with sole
responsibility for the nuclear weapons program; or (2) what it termed a
``semi-autonomous'' agency within DOE in which the bureaucratic
interactions between the new agency and broader DOE would be minimized.
The Rudman Report explained that this term, ``semi-autonomous,'' would
mean that the agency would be ``strictly segregated from the rest of
the department''--which would be ``accomplished by having the agency
director report only to the Secretary.'' The Rudman Report said that
DOE was ``a dysfunctional bureaucracy incapable of reforming itself.''
Has this definition of the term ``semi-autonomous'', as described by
the Rudman Report, been put into practice at DOE/NNSA? Could a
``separately organized'' and ``semi-autonomous'' NNSA, if implemented
well, be effective and efficient?
Mr. Augustine and Admiral Mies. As noted in the answer to question
5:
Despite the intent of the NNSA Act to create a separately organized
NNSA within DOE, the NNSA has not established autonomous leadership
authorities, a policy framework, distinct culture, or integrated
decision-making mechanisms. (page 11)
Except for Naval Reactors, the NNSA Act does not provide a blanket
exemption of NNSA from DOE orders and directives. NNSA decisions and
initiatives remain subject to DOE headquarters staffing processes prior
to consideration for Secretarial approval. For instance, the
department's directive program (DOE O 251.1C) requires policies,
orders, notices, guides, and technical standards to be reviewed by a
Directives Review Board chaired by the Director of the Office of
Management.\2\ Senior representatives from the three Under Secretarial
offices, the Office of General Counsel, and the Office of Health,
Safety and Security all serve as members whose concurrence is needed
before final issuance. Should the review board be unable to reach
consensus, the Deputy Secretary decides whether to overturn the
position of the directive's originating office.
---------------------------------------------------------------------------
\2\ U.S. Department of Energy, Departmental Directives Program, DOE
O 251.1C (Washington, DC: Office of Management, January 15, 2009).
---------------------------------------------------------------------------
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.
Parallel staffs exist in areas such as General Counsel, Human Capital
Office, Public Affairs, Legislative Liaison, Chief Financial Officer,
Environmental, Safety and Health (ES&H), Security, and Chief
Information Office. Members of both the DOE headquarters and NNSA
staffs point to the inefficiencies this creates.
Could a ``separately organized'' and ``semi-autonomous'' NNSA, if
implemented well, be effective and efficient?
The panel's interim report is critical of the ``separately
organized'' structure as implemented:
Despite the intent of the NNSA Act to create a separately organized
NNSA within DOE, the NNSA has not established autonomous leadership
authorities, a policy framework, distinct culture, or integrated
decision-making mechanisms.\3\ The panel concludes that the
relationships among NNSA, the Secretary of Energy, and the DOE
headquarters staffs are fundamentally broken and must change.
---------------------------------------------------------------------------
\3\ ``. . . NNSA and DOE have not fully agreed on how NNSA should
function within the department as a separately organized agency. This
lack of agreement has resulted in organizational conflicts that have
inhibited effective operations.'' Government Accountability Office
(GAO), National Nuclear Security Administration: Additional Actions
Needed to Improve Management of the Nation's Nuclear Programs
(Washington DC: GAO, 2007).
---------------------------------------------------------------------------
The panel's interim report does not provide a judgment on the
relative efficacy of the organizational alternatives, including whether
a well implemented structure within DOE could work well. The report's
observations on this subject are provided in the conclusion:
The panel's interim findings indicate that fundamental reform will
be required to reshape an enterprise that is capable of meeting all of
the nation's needs. The changes will be difficult regardless of where
the enterprise is located within the government, since the fundamental
problems are cultural more than organizational. Organizational change,
while not unimportant, is only a small portion of the changes that must
be made. The panel believes lasting improvements are possible, but they
will demand strong and sustained leadership and proactive support from
Congress, the White House, and engaged Departmental Secretaries.
Mr. Rogers. Admiral Mies and Mr. Augustine, several reports have
noted that semi-autonomous agencies in other cabinet departments have
met with considerable success. For instance, the FBI in the Justice
Department, and the NRO in the DOD. The Rudman Panel suggested the NRO
is a small, agile, ``semi-autonomous'' organization that has had
significant (but not unblemished) success in managing very large
contracts to build and operate surveillance satellites. What, if
anything, can we learn from this and other semi-autonomous agencies
that might apply to NNSA?
Mr. Augustine and Admiral Mies. The panel's benchmarking activities
identified a number of proven management characteristics common to
successful high-risk, high technology operations. (See Table 2.)
Prominent among these are a shared vision and mission priorities to
chart the path ahead; the clear definition and disciplined exercise of
roles, responsibilities, authorities, and accountability aligned to
mission priorities; a technically competent workforce with the right
skill mix and capabilities; clear plans with careful analysis of the
resources needed to succeed; structured decision-making processes, with
an emphasis on timely resolution of issues; and a structure and budget
aligned to focus on customer deliverables.

Table 2. Criteria for Success in High Reliability, High Tech Organizations
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
General Universally understood and accepted purpose
Effective culture developed over many years by transformative leadership and
maintained by indoctrinating carefully selected personnel
Adequate visibility with external stakeholders
----------------------------------------------------------------------------------------------------------------
Structure Clearly established, codified, and reinforced lines of authority,
responsibility, and accountability
Formal, inclusive, decisive, prompt, and documented decision-making processes
Deliberative body, such as a Board of Directors or Management Council, which
obliges the organization to collectively engage in risk-based resource allocation
decisions to accomplish mission
Separation of program/mission functions from institutional/support functions
----------------------------------------------------------------------------------------------------------------
Personnel Long-tenured director and/or senior leadership with extensive experience
Technically proficient and accomplished staff
Exceptional candidates recruited early to instill and sustain culture
Professional development programs emphasizing problem identification/solving,
continuous learning, leadership, and the socialization of best practices
----------------------------------------------------------------------------------------------------------------
Communications Mission priorities aligned with purpose and frequently communicated by senior
leadership
Information flows freely and quickly up and down the organization, and
decisions are made at the appropriate levels
Few if any obstacles (people or processes) prevent bad news from moving up the
chain of command
Mechanisms exist for field oversight offices and site managers to communicate
regularly and directly with the head of the organization
----------------------------------------------------------------------------------------------------------------
Planning and Single strategic planning reference document guides all decisions
Budget Unwavering adherence to a disciplined planning and budget process, which is
comprehensive and detailed
----------------------------------------------------------------------------------------------------------------
Program Management In a government operation, government program managers oversee efforts, but
contractors execute the work within established policies
Lean and authoritative site offices have sufficient technical and operational
expertise to effectively oversee the work
Stakeholders are included early in project life cycle and strive to understand
all requirements and regulations upfront
Technical and financial elements of programs are scrutinized in order to
validate efforts and control costs
The more hazardous the operation, the more safety is considered part and parcel
of mission performance
Specialized ES&H and security standards are used only when more generally
accepted standards (e.g., industrial standards, OSHA standards) are shown to be
inadequate or unclear
----------------------------------------------------------------------------------------------------------------
Contracts Contracts focused and evaluated on costs and mission performance, not award
fees related to aspects other than meeting the mission
Contracts consolidated where appropriate to achieve economies of scale
Contracts competed Cost Plus Fixed Fee (very low) with no incentive/bonus
awards or Fixed Price Incentive (based on mission performance), depending on the work
being done
----------------------------------------------------------------------------------------------------------------

Mr. Rogers. Admiral Mies and Mr. Augustine, in a 2007 report, GAO
said ``management problems continue, in part, because NNSA and DOE have
not fully agreed on how NNSA should function within the department as a
separately organized agency. This lack of agreement has resulted in
organizational conflicts that have inhibited effective operations.''
What were some of the organizational conflicts? How did they inhibit
effective and efficient operations? Do you believe this problem has
been resolved?
Mr. Augustine and Admiral Mies. The panel's observations are
consistent with those of the GAO study, and in fact, that study is
cited in the panel's interim report:
Despite the intent of the NNSA Act to create a separately organized
NNSA within DOE, the NNSA has not established autonomous leadership
authorities, a policy framework, distinct culture, or integrated
decision-making mechanisms.\4\
---------------------------------------------------------------------------
\4\ ``. . . NNSA and DOE have not fully agreed on how NNSA should
function within the department as a separately organized agency. This
lack of agreement has resulted in organizational conflicts that have
inhibited effective operations.'' Government Accountability Office
(GAO), National Nuclear Security Administration: Additional Actions
Needed to Improve Management of the Nation's Nuclear Programs
(Washington DC: GAO, 2007).
---------------------------------------------------------------------------
The answer to question 3 describes three major factors that inhibit
effective and efficient operations. In summary these factors are:
Overlapping DOE Headquarters and NNSA Staff
Responsibilities
A Deepened Divide between Line Management and Mission-
Support Responsibilities
Ineffective and Inefficient DOE Orders, Directives, and
Rulemaking Processes
Mr. Rogers. Admiral Mies and Mr. Augustine, many studies and
reports over the past ten years, including the 2009 Strategic Posture
Commission, recommend eliminating duplicative NNSA and DOE regulation
of any lab functions that are already regulated by external bodies--
such as health and occupational safety by the Occupational Health and
Safety Administration (OSHA)--and letting these external bodies
regulate and oversee those regulations. Do you agree? What cost savings
might be realized by such a move?
Mr. Augustine and Admiral Mies. Beginning in 2005, DOE exempted the
Kansas City Plant from DOE orders in areas where there were relevant
commercial or industrial standards. The reforms moved the Kansas City
Plant under industrial best practice standards (e.g., International
Organization for Standardization (ISO) standards) with validation from
external expert bodies. Kansas City Plant officials estimate that this
initiative reduced the DOE-specific regulatory requirements on the
facility by about 55 percent. These changes, coupled with internal
business process improvements, have generated steady increases in
workplace performance along with reduced mission-support costs. The
plant reports that its safety record has improved under the reformed
regulatory regime, and is about six times better than U.S. industry
averages.\5\ A 2008 independent audit following the reforms estimated
an overall personnel savings of about 12 percent.\6\ In parallel, the
NNSA site office was able to reduce its staff by 20 percent, from fifty
to forty staff.
---------------------------------------------------------------------------
\5\ In 2012, the total reportable cases of workplace injuries for
the Kansas City Plant were .4, for the weapons complex .9, and for U.S.
industry 2.4. (Total reportable case rate = cases per 100 full-time
employee work years (200,000 work hours)).
\6\ J.W. Bibler and Associates, ``Kansas City Site Office Oversight
Plan: Assessment of Implementation Cost Savings'' (January 2008). More
recently, the plant management reported to the panel that the headcount
of ES&H specialists in the M&O was reduced by 81 percent (between 1995
and 2012).
---------------------------------------------------------------------------
An internal NNSA Enterprise Re-Engineering Team concluded that the
``Kansas City model'' of relying on applicable industrial standards
could be much more widely applied for non-nuclear functions within the
enterprise, and targeted an initial expansion for Sandia and the Nevada
National Security Site. However, initiatives to adopt elements of the
``Kansas City model'' at these sites have thus far been denied by DOE/
NNSA headquarters staff. Nonetheless, this remains a significant
governance reform opportunity. [Question #9, for cross-reference.]
Mr. Rogers. Admiral Mies and Mr. Augustine, many agencies with
national security functions operate outside the bounds of the general
civil service system. All Federal positions in these agencies are
``excepted service''. Has the advisory panel explored this concept?
What benefits might result from applying it to this problem? Would this
be a way to ensure NNSA Federal employees have the appropriate skills
and quality needed to govern and oversee the nuclear security
enterprise?
Mr. Augustine and Admiral Mies. The NNSA has not taken the steps
necessary to build a cohesive culture that instills accountability for
customer deliverables, nor has it instituted the personnel programs
needed to build a workforce with the necessary technical and managerial
skills for operations. The purposeful development of leaders, managers,
and staffs is essential to any governance system. The effective
organizations benchmarked for this study focus on personnel management
to create a reinforcing virtuous cycle: proven leaders emerge from
careful selection and decades of experience involving careful
development and screening. Such leaders make a system work well. They
also attract and inspire other high-caliber people to join and stay in
their organizations.\7\ As one example, the current Director of Navy
Strategic Systems Programs (SSP) started his career within that
organization as a junior officer, and almost all of his subsequent
assignments have been in the command. In addition to deep familiarity
resulting from a long career with the same organization, long command
tours provide needed continuity and allow the Director to promulgate
and sustain the desired culture. Recently, the tenure of the SSP's
Director was extended from about four years to eight years to
strengthen this benefit.
---------------------------------------------------------------------------
\7\ At benchmark organizations, the new entrants are carefully
screened and selected, in part based on suitability for long-term
careers within the organization. Employees tend to spend long careers
within the organization. Promotion to the most senior levels (other
than a political appointee) is usually from within, and these
organizations favor those with broad-based career experience within the
organization.
---------------------------------------------------------------------------
A key staffing issue for the NNSA is the lack of operational
experience in headquarters. In the peak years of the nuclear weapons
program, the operational core of the nuclear enterprise was located in
the Albuquerque Operations Office. Albuquerque synchronized the cycle
of design-test-build throughout the Cold War, until 1992, when the
production of new weapons was suspended. Albuquerque was officially
disbanded ten years later, in 2002. NNSA headquarters assumed
Albuquerque's operating functions (which were greatly diminished by
then since the U.S. had ceased producing warheads), and decades of
operational experience, knowledge, and technical expertise within the
Albuquerque staff was lost in the reorganization.
Now, as the United States embarks on an intensive series of warhead
life extension programs covering the entire stockpile, a leadership
team with deep experience and continuity (such as the team in the
Albuquerque Operations Office) would be an enormously valuable asset
for governing the enterprise. Creating and sustaining a personnel
management system to build the needed culture, skills, and experience
is a vital component of governance reform.
The panel has also noted that greater use of excepted service
positions is a potential tool for building a more technically and
professionally competent workforce. [Question #10, for cross-
reference.]
Mr. Rogers. Admiral Mies and Mr. Augustine, the NNSA labs are
operated as federally funded research and development corporations
(FFRDCs). The FFRDC construct was created to allow the Federal
Government to broadly determine ``what'' work needed to be done while
the FFRDC determines ``how'' to accomplish the work. Do you believe
NNSA's current management and governance model for the labs operates in
the spirit and intent of the FFRDC model? Why or why not?
a. Is it appropriate, under the Federal Acquisition Rules governing
FFRDCs, for NNSA to have a long-term relationship and contract with an
entity managing and operating one of its labs? Under what circumstances
should NNSA seek to recompete such a contract?
Mr. Augustine and Admiral Mies. The FFRDC model for the NNSA labs
has been [seriously impaired]. Historically, the Federally Funded
Research and Development Centers the laboratories have played a key
strategic role as trusted advisors in informing the government
regarding effective execution of the mission. The historic,
statutorily-defined relationship between the FFRDC and its sponsor
includes \8\
---------------------------------------------------------------------------
\8\ Source: Defense Acquisition University.
---------------------------------------------------------------------------
Comprehensive knowledge of sponsor needs--the mission,
culture, expertise, and institutional memory regarding issues of
enduring concern to the sponsor
Adaptability--the ability to respond to emerging needs of
their sponsors and anticipate future critical issues
Objectivity--the ability to produce thorough, independent
analyses to address complex technical and analytical problems
Freedom from conflicts of interest and dedication to the
public interest--independence from commercial, shareholder, political,
or other associations
Long-term continuity--uninterrupted, consistent support
based on a continuing relationship
Broad access to sensitive government and commercial
proprietary information--absence of institutional interests that could
lead to misuse of information or cause contractor reluctance to provide
such information
Quick response capability--the ability to offer short-
term assistance to help sponsors meet urgent and high-priority
requirements
[Misguided contract requirements] reinforce the transactional
nature of the relationship and undermine the FFRDC partnership with the
NNSA laboratories. Significant award fees combined with mission-
support-oriented performance evaluation criteria are troublesome in
that they reinforce DOE/NNSA's emphasis both at headquarters and in the
field on functional compliance and not mission performance.
. . . performance evaluation criteria that focus incentives on
compliance do little to encourage building a strong M&O leadership
team. 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.
The benefit of the FFRDC relationship is that an FFRDC can function
as an independent, long term trusted advisor and honest broker. Any
decision to re-compete an FFRDC contract should be based upon
contractor performance and weighed against the value of continuity and
a long standing relationship.
Mr. Rogers. Admiral Mies and Mr. Augustine, NNSA conducted a pilot
program at its Kansas City Plant to determine if near-total elimination
of normal NNSA and DOE oversight policies and practices could be
replaced with higher level contractor assurance systems--while still
ensuring mission effectiveness. The pilot study was assessed by an
outside consultant and found it lead to major cost savings, and the
Strategic Posture Commission recommended it be expanded across the full
nuclear security enterprise. Has the advisory panel examined this
study? Do you believe it was successful? What should we learn from this
pilot program?
Mr. Augustine and Admiral Mies. The panel has reviewed the Bibler
study, and cites the findings of that external review in the panel's
interim report, as described in the answer to question 9. As noted in
that answer, the panel's interim report finds that
. . . this [the KC Plant model] remains a significant governance
reform opportunity.
Mr. Rogers. Admiral Mies and Mr. Augustine, has DOD's closer-
engagement with NNSA and its budget and programs in the past few years
been beneficial for ensuring NNSA focuses on and executes the parts of
its mission that are critical to the military?
Mr. Augustine and Admiral Mies. Although there is currently some
agreement between DOD and DOE/NNSA on the long-term [``3 plus 2
concept''] for modernizing the stockpile, they have not converged on a
long-term resource plan, nor have they converged on near-term mission
and budget priorities. There remain fundamental differences in views on
the appropriate composition of the weapon life extension program and
the timing of deliverables. Additionally, coordination suffers from the
departments' differing resource management systems, the lack of joint
program reviews, and the lack of coordination in the timing of their
budget submissions. Lastly, their coordination mechanism the Nuclear
Weapons Council lacks enforcement authority for the agreements reached
within its deliberations. There are also significant process issues
that need to be addressed. The Nuclear Weapons Council process has been
unable to achieve the integrated teamwork and staffing required before
decisions are prepared for Council meetings, despite many attempts at
establishing disciplined staff processes and follow up. Representatives
of customer organizations designated to facilitate communication with
the NNSA testify that they often are unable to obtain consistent
answers from their NNSA counterparts, prior to briefings at the Nuclear
Weapons Council.
Mr. Rogers. Admiral Mies and Mr. Augustine, in the course of many
hearings and briefings over the past three years, this subcommittee has
discussed the dozens of reports from the 1980s and 1990s that led to
creation of NNSA. They all offer clear descriptions of the problems at
DOE, including recurring security problems and gross mismanagement.
Senior DOE leadership even embarked on several reform initiatives in
the 1990s--but none were effective. Why was senior DOE leadership
unable to reform the organization? Why did it require Congress to step
in and try to fix a problem (by creating NNSA) that was so widely
recognized?
Mr. Augustine and Admiral Mies. The panel's interim report notes
that successful reform will require a government-wide effort. As noted
in the answer to question 1:
Lasting reform will require aggressive action and sustained
implementation across the federal government. The changes needed
undoubtedly will be difficult to implement regardless of where the
enterprise is located within the government's structure, since the
fundamental problems are cultural more than organizational.
Organizational change, while not unimportant, is only a small portion--
the easy portion--of the revisions that must be made to facilitate
success. Previous efforts to reform and previous studies calling for
action have largely failed due to lack of leadership follow-through, a
lack of accountability for enacting change, and the lack of effective,
sustained top-level demand for change from national leadership. The
Department of Energy by itself would be challenged to oversee the
radical steps that will be needed. Success is imaginable only with the
strong and active engagement of a knowledgeable Secretary, supported by
the White House and Congress, and a structure that removes impediments
and that aligns to mission priorities.
Mr. Rogers. Admiral Mies and Mr. Augustine, I sincerely hope that
the final report and recommendations of this panel are not left on a
shelf and ignored, as so many previous reports on this topic. Can you
assure the subcommittee that you and your fellow panel members will
take the time and effort to advocate for changes to both Congress and
the administration, after your final report is released? We need your
knowledge and advocacy to move our government to finally address these
critical problems.
Mr. Augustine and Admiral Mies. As noted in the panel's interim
report, reform will not be easy. As the co-chairmen, we are committed
to providing recommendations that are actionable and following through
to ensure our recommendations are known to and understood by the
responsible parties. As noted in the interim report, the real focus of
the reform effort must be within the federal government:
The panel believes lasting improvements are possible, but they will
demand strong and sustained leadership and proactive support from
Congress, the White House, and engaged Departmental Secretaries.
Mr. Rogers. Admiral Mies and Mr. Augustine, do you believe
contractor assurance systems, if appropriately implemented and
overseen, can be used effectively in the governance of the nuclear
security enterprise?
Mr. Augustine and Admiral Mies. Contractor assurance systems were
not specifically addressed in the panel's interim report. But based on
our professional experience, yes, if appropriately designed and
implemented. Relevant to the purpose and design of contractor assurance
systems, the panel's interim report notes that the focus of the
relationship should be on the safe, secure execution of the mission,
not on detailed compliance checklists or data. The panel found that:
Contract incentives reinforce the transactional nature of the
relationship and undermine the FFRDC partnership with the NNSA
laboratories. Significant award fees combined with mission-support-
oriented performance evaluation criteria are troublesome in that they
reinforce DOE/NNSA's emphasis both at headquarters and in the field on
functional compliance and not mission performance.
Witnesses note that the focus on compliance checklists can actually
divert attention from the substance of safe and secure mission
performance.
Excessive and uncoordinated inspections, audits and data calls fuel
inefficiencies and generate little value added; in fact, they may
detract from the desired safety or security outcome
Mr. Rogers. Admiral Mies and Mr. Augustine, how do we strike the
correct balance between appropriate oversight without micromanaging the
management and operating contractors of the NNSA labs and plants?
Mr. Augustine and Admiral Mies. The interim report does not provide
recommended solutions. The situation, as observed in the panel's
interim report, identifies the issues in the relationship that need to
be addressed.
In effective organizations, the government sponsor decides what is
needed and the M&O partner, in particular the Federally Funded Research
and Development Center, decides how to meet that need. . . . Put in the
simplest terms, the government should identify the work to be done;
identify the best performer to do the work; provide adequate resources;
and hold the performer accountable. Under this construct, a competent
M&O partner is relied upon to provide the expertise, corporate culture
and leadership sufficient to execute the work, and meet the
government's operating standards.
Over the decades, the changes in mission priorities from design and
production to stewardship, and heightened regulatory oversight,
overturned accepted priorities within the nuclear weapons program and
radically altered the well-understood relationships between line
managers and mission-support functions within the government as well as
between the government and the M&O contractors.
The resulting tension in defining the roles of the M&O contractors
and the Federal mission-support officials has created significant
friction in the government-M&O relationships, especially at the
laboratories. DOE/NNSA has increasingly moved toward detailed direction
and regulation of the M&Os. . . . A 2012 National Resource Council of
the National Academies study concluded there is little trust in the
relationship between the laboratories and NNSA. NNSA has lost
confidence in the ability of the laboratories to ``maintain operation
goals such as safety, security, environmental responsibility and fiscal
integrity.'' \9\ The panel finds that this lack of trust is manifested
in three ways: NNSA's use of increasingly inflexible budgets and
milestones to control work at the operating sites, the continued
reliance on transactional regulation and oversight to enforce behavior,
and the exclusion of M&O executives from NNSA headquarters
deliberations in setting strategic direction. This management approach
is costly, unwieldy, and counterproductive as further discussed in sub-
section D. It 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.
---------------------------------------------------------------------------
\9\ National Research Council, Managing for High-Quality Science
and Engineering at the NNSA National Security Laboratories, 5.
---------------------------------------------------------------------------
______

QUESTIONS SUBMITTED BY MR. COOPER
Mr. Cooper. Do you believe that NNSA has been successful in setting
clear requirements?
Mr. Augustine and Admiral Mies. One form in which requirements may
be set is by establishing a clear long-term plan for the enterprise. As
noted in the panel's interim report:
Lacking strong leadership that unifies priorities, there has been
no mechanism for the NNSA, its customers, and the national leadership
to converge on a credible resource-loaded plan to chart the path ahead.
The President's annual Nuclear Weapons Stockpile Memorandum and the
Nuclear Weapons Council evolving ``baseline'' plan, for instance,
provide important direction, but they do not provide programmatic
guidance. As discussed in Section 5 on NNSA's collaboration with its
customers, the Nuclear Weapons Council and the Mission Executive
Council for interagency customer coordination continue to struggle in
setting priorities, defining the enterprise's needs, and identifying
resources to support those needs. And, of course, planning efforts have
been seriously undermined by the turbulent national budget environment
as well as by NNSA's inability to accurately estimate costs.
At the level of the government-industry relationship, the panel's
interim report observes:
In effective organizations, the government sponsor decides what is
needed and the M&O partner, in particular the Federally Funded Research
and Development Center, decides how to meet that need. . . . Put in the
simplest terms, the government should identify the work to be done;
identify the best performer to do the work; provide adequate resources;
and hold the performer accountable. Under this construct, a competent
M&O partner is relied upon to provide the expertise, corporate culture
and leadership sufficient to execute the work, and meet the
government's operating standards.
Over the decades, the changes in mission priorities from design and
production to stewardship, and heightened regulatory oversight,
overturned accepted priorities within the nuclear weapons program and
radically altered the well-understood relationships between line
managers and mission-support functions within the government as well as
between the government and the M&O contractors.
The resulting tension in defining the roles of the M&O contractors
and the Federal mission-support officials has created significant
friction in the government-M&O relationships, especially at the
laboratories. DOE/NNSA has increasingly moved toward detailed direction
and regulation of the M&Os. . . . A 2012 National Resource Council of
the National Academies study concluded there is little trust in the
relationship between the laboratories and NNSA. NNSA has lost
confidence in the ability of the laboratories to ``maintain operation
goals such as safety, security, environmental responsibility and fiscal
integrity.'' \10\ The panel finds that this lack of trust is manifested
in three ways: NNSA's use of increasingly inflexible budgets and
milestones to control work at the operating sites, the continued
reliance on transactional regulation and oversight to enforce behavior,
and the exclusion of M&O executives from NNSA headquarters
deliberations in setting strategic direction. This management approach
is costly, unwieldy, and counterproductive as further discussed in sub-
section D. It 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.
---------------------------------------------------------------------------
\10\ National Research Council, Managing for High-Quality Science
and Engineering at the NNSA National Security Laboratories, 5.
---------------------------------------------------------------------------
Mr. Cooper. Does NNSA have the necessary expertise to evaluate
performance and proposals from the M&O contractors?
Mr. Augustine and Admiral Mies. The NNSA has not taken the steps
necessary to build a cohesive culture that instills accountability for
customer deliverables, nor has it instituted the personnel programs
needed to build a workforce with the necessary technical and managerial
skills for operations. The purposeful development of leaders, managers,
and staffs is essential to any governance system. The effective
organizations benchmarked for this study focus on personnel management
to create a reinforcing virtuous cycle: proven leaders emerge from
careful selection and decades of experience involving careful
development and screening. Such leaders make a system work well. They
also attract and inspire other high-caliber people to join and stay in
their organizations.\11\ As one example, the current Director of Navy
Strategic Systems Programs (SSP) started his career within that
organization as a junior officer, and almost all of his subsequent
assignments have been in the command. In addition to deep familiarity
resulting from a long career with the same organization, long command
tours provide needed continuity and allow the Director to promulgate
and sustain the desired culture. Recently, the tenure of the SSP's
Director was extended from about four years to eight years to
strengthen this benefit.
---------------------------------------------------------------------------
\11\ At benchmark organizations, the new entrants are carefully
screened and selected, in part based on suitability for long-term
careers within the organization. Employees tend to spend long careers
within the organization. Promotion to the most senior levels (other
than a political appointee) is usually from within, and these
organizations favor those with broad-based career experience within the
organization.
---------------------------------------------------------------------------
A key staffing issue for the NNSA is the lack of operational
experience in headquarters. In the peak years of the nuclear weapons
program, the operational core of the nuclear enterprise was located in
the Albuquerque Operations Office. Albuquerque synchronized the cycle
of design-test-build throughout the Cold War, until 1992, when the
production of new weapons was suspended. Albuquerque was officially
disbanded ten years later, in 2002. NNSA headquarters assumed
Albuquerque's operating functions (which were greatly diminished by
then since the U.S. had ceased producing warheads), and decades of
operational experience, knowledge, and technical expertise within the
Albuquerque staff was lost in the reorganization.
Now, as the United States embarks on an intensive series of warhead
life extension programs covering the entire stockpile, a leadership
team with deep experience and continuity (such as the team in the
Albuquerque Operations Office) would be an enormously valuable asset
for governing the enterprise. Creating and sustaining a personnel
management system to build the needed culture, skills, and experience
is a vital component of governance reform.
Mr. Cooper. Have the customers of NNSA services and products been
satisfied with the FY15 budget request for nuclear weapons sustainment
and non-proliferation programs?
Mr. Augustine and Admiral Mies. The panel's interim report did not
specifically evaluate the FY15 budget proposal, nor did the panel
solicit the customers' views on the proposal. However, there are two
relevant observations from the panel's interim report:
A rough estimate, based on assessments by DOD's Cost Assessment and
Program Evaluation Office and the Congressional Budget Office, is that
the aggregate NNSA program, as was structured in its 2014 Stockpile
Stewardship and Management Plan, was at least $10 billion under-funded
over the coming decade.\12\ The recently released 2015 Stockpile
Stewardship and Management Plan reduces projected funding over the next
decade and proposes significant delays in the delivery of several major
life extension programs and nuclear facilities.\13\ Without commitment
to an executable plan, NNSA has reacted and adjusted to funding as it
is doled out year-to-year, or month-to-month. Large construction
projects, Life Extension Programs (LEP), and infrastructure
modernization investments are managed with incremental funding. This
creates significant inefficiency. In each area the enterprise routinely
incurs program slips, delivery delays, program suspensions, and
accumulations of deferred maintenance--all leading to increased long-
term costs.
---------------------------------------------------------------------------
\12\ OSD Office of Cost Assessment and Program Evaluation, ``NNSA
Governance Discussions: Briefing to the Advisory Panel'' (Washington,
DC: DOD, December, 2013); Congressional Budget Office (CBO), Projected
Cost of U.S. Nuclear Forces, 2014 to 2023 (Washington, DC: CBO,
December 2013).
\13\ U.S. Department of Energy (DOE), FY2015 Stockpile Stewardship
and Management Plan (Washington, DC: DOE, April 2014).
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In addition, some specific observations touch on the DOD-DOE
relationship: First, a general finding:
There is a lack of effective joint planning and budget coordination
because of a fundamental lack of mechanisms to ensure requisite
collaboration and consensus to address core mission requirements. As a
consequence, DOD customers lack trust in NNSA's ability to modernize
facilities and execute warhead life extension programs.
Second, a finding on recent working relationships:
NNSA and DOD staffs spent much of 2012 working to achieve a common
resource plan for the enterprise that would be geared to meeting DOD's
needs. This effort led to a tentative agreement in early 2013 on an
NNSA program and budget that would be in line with the ``3+2 Concept,''
and DOD agreed to contribute additional funding to execute the program
in FY14. In total, DOD has agreed to transfers of nearly $12 billion
over multiple years in budget authority to DOE.
During this period, a series of NNSA budget shortfalls were
reported. These resulted most significantly from significant cost
growth in the DOE programs. Other contributing factors included
reductions in the overall NNSA budget due to Continuing Resolutions,
congressional marks, the Budget Control Act, and the effects of
sequestration.
DOD has been frustrated by these continuing shortfalls, delays in
agreed-upon programs, and requests for additional funding. DOD
officials also have been frustrated by the limited budget and cost
information provided by DOE/NNSA, and they have pressed for information
on budgeting and program management processes in order to track the
execution of the transferred funds. A satisfactory degree of visibility
has not been achieved. Although these transfers were included in the
President's Budget, visibility of the funds was lost during the
Congressional appropriations process. It appears the net effect of the
transfer is that DOE budgets have increased by less than the amount by
which DOD budgets have decreased.
The cycle of DOD-NNSA engagement continues through the Nuclear
Weapons Council, with additional attempts to reach convergence on
realistic program and infrastructure plans that can guide NNSA budgets.
There remain significant procedural issues that will need to be
resolved to repair this relationship. Considerable work remains to be
done: the Nuclear Weapons Council has a central role to play in
creating an executable plan for the future stockpile agreed on by the
two departments. This responsibility will require an orderly process
for the Nuclear Weapons Council's working groups to serve its
principals and greater transparency between the two departments.
Mr. Cooper. When NNSA talks about priority mission, does this
include a serious commitment to safety and security?
Mr. Augustine and Admiral Mies. The panel's main focus has been on
the efficacy of the governance mechanisms for achieving safe, secure
operations. The interim report's findings focus on how an improved
governance system might achieve equal or better safety with practices
that have proven effective in successful organizations. As implemented
in NNSA, transactional oversight has proven to be expensive and
counterproductive. More oversight does not necessarily equate to better
oversight--or improved performance. Some specific observations include:
Transactional oversight is expensive and counterproductive.
Excessive and uncoordinated inspections, audits and data calls fuel
inefficiencies and generate little value added; in fact, they may
detract from the desired safety or security outcome.
Witnesses note that the focus on compliance checklists can actually
divert attention from the substance of safe and secure mission
performance.
Mr. Cooper. Has the NNSA Stockpile Stewardship and Management Plan
been helpful to NNSA's planning process and setting requirements?
Mr. Augustine and Admiral Mies. Although there is currently some
agreement between DOD and DOE/NNSA on the long-term concept for
modernizing the stockpile, they have not converged on a long-term
resource plan, nor have they converged on near-term mission and budget
priorities. There remain fundamental differences in views on the
appropriate composition of the weapon life extension program and the
timing of deliverables.
. . . Lacking strong leadership that unifies priorities, there has
been no mechanism for the NNSA, its customers, and the national
leadership to converge on a credible resource-loaded plan to chart the
path ahead. The President's annual Nuclear Weapons Stockpile Memorandum
and the Nuclear Weapons Council evolving ``baseline'' plan, for
instance, provide important direction, but they do not provide
programmatic guidance. As discussed in Section 5 on NNSA's
collaboration with its customers, the Nuclear Weapons Council and the
Mission Executive Council for interagency customer coordination
continue to struggle in setting priorities, defining the enterprise's
needs, and identifying resources to support those needs. And, of
course, planning efforts have been seriously undermined by the
turbulent national budget environment as well as by NNSA's inability to
accurately estimate costs.
Mr. Cooper. In FY14 NNSA achieved $80 million of efficiencies, $240
million short of its $320M goal. NNSA has not identified any
efficiencies goals in FY15. Do you believe NNSA adequately taking a
close look at efficiencies?
Mr. Augustine and Admiral Mies. The panel's interim report does not
address the specific NNSA efficiency initiatives. However, the panel's
discussion of the inefficiencies of transactional oversight described
in the answer to question 38, and the discussion of the potential
benefits of adopting the Kansas City model for employing industrial
standards, where feasible, suggests areas where potential improvements
are evident.
In addition, the panel notes that substantial improvements in the
execution of programs for customer deliverables, and major construction
projects are needed. These, too, may represent important targets for
efficiency improvements. Some relevant observations from the interim
report include:
Program and project management is not supported at the staffing and
funding levels that the private sector and other agencies have
demonstrated are necessary to assure success, especially in the field,
for the duration of major projects. Funding levels for reserves and
contingencies are not even close to levels that have been demonstrated
as necessary for major projects, especially recognizing the unique
technical nature of many of the NNSA's projects. When projects or
programs proceed from design stages to production stages, there is not
adequate configuration control of designs and too many unnecessary
subsequent changes are allowed.
The management practices for infrastructure upgrades and major
facilities construction are also problematic. DOE's guidance for such
projects is contained in DOE Order 413, which aligns with the
management practices prescribed in OMB Circular A-11 for Capital
Acquisition projects.\14\ However, Order 413 is offered and viewed as
guidance and not as required practice, so adherence and enforcement are
weak. For instance, rigorous planning processes at the front end of a
project, such as Analyses of Alternatives, are lacking. Circular A-11
covers everything from roles and functions to legal framework to the
actual transmission of White House policy in the budgeting process. OMB
requires agencies to establish a disciplined capital programming
process that addresses project prioritization between new assets and
maintenance of existing assets; risk management and cost estimating to
improve the accuracy of cost, schedule and performance provided to
management; and the other difficult challenges posed by asset
management and acquisition. In establishing its Acquisition and Project
Management Office, NNSA is trying to bring such discipline to NNSA
project management.
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\14\ Office of Management and Budget (OMB), Preparation,
Submission, and Execution of the Budget, Circular A-11 (Washington, DC:
Executive Office of the President, July 2013).
---------------------------------------------------------------------------
Mr. Cooper. GAO has issued reports overseeing NNSA management and
programs since 1995. In a February 2012, providing another independent
perspective, GAO stated that: ``Laboratory and other officials have
raised concerns that federal oversight of the laboratories' activities
has been excessive. With NNSA proposing to spend tens of billions of
dollars to modernize the nuclear security enterprise, it is important
to ensure scarce resources are spent in an effective and efficient
manner'' and that ``In many cases, NNSA has made improvements to
resolve these safety and security concerns, but better oversight is
needed to ensure that improvements are fully implemented and sustained.
GAO agrees that excessive oversight and micromanagement of contractors'
activities are not an efficient use of scarce federal resources, but
that NNSA's problems are not caused by excessive oversight but instead
result from ineffective departmental oversight.''
In a 2013 testimony before the Strategic Forces Subcommittee of the
House Armed Services Committee, GAO stated that:
``NNSA continues to experience major cost and schedule overruns on
its projects, such as research and production facilities and nuclear
weapons refurbishments, principally because of ineffective oversight
and poor contractor management (. . .) GAO continues to believe, as it
concluded in its January 2007 report, that drastic organizational
change to increase independence is unnecessary and questions whether
such change would solve the agency's remaining management problems.''
Do you agree?
Mr. Augustine and Admiral Mies. A capability for independent cost
estimates for major acquisition programs, coupled with a disciplined
cost reporting system, is essential to effective program scoping and
initiation, resource planning, source selection, and contract oversight
and management. NNSA lacks expertise, data, and tools for independent
costing, requirements evaluation, and program planning. Initial cost
estimates for major NNSA programs have been found to be off not by 20-
30 percent but by factors of nearly two to six:
B61 LEP: An initial estimate (2010) assumed that the cost
would be comparable to that of the W76 LEP in the range of $4 billion.
However, lab experts, when engaged by NNSA, concluded that the B61 LEP
would be much more complex than the W76. When the final B61 LEP cost
report was completed, the estimate rose to $8 billion.
Los Alamos CMRR facility (the Chemistry and Metallurgy
Research Replacement): An initial estimate (2005) placed the ceiling at
$975 million; by 2010 this ceiling had risen to $5.8 billion, with a
three to seven year delay. Now, the project is being deferred five
years, and the design is being reconsidered.
Y-12 highly enriched uranium processing facility (UPF):
An initial estimate (2004) placed the maximum at $1.1 billion; this was
raised to $3.5 billion (2007), and then to $6.5 billion (2010). An
independent review by the Army Corps of Engineers placed the maximum
cost at $7.5 billion (2011). Recently discovered design flaws (the
ceiling is too low) add an additional $0.5 billion. Now, the project is
being delayed and the design is being reconsidered.
Savannah River plutonium disposition facility (the Mixed-
Oxide Fuel Fabrication Facility, or MOX): DOE approved a cost estimate
of $4.8 billion (2007) and start of operations in September 2016.
Although construction began in August 2007, NNSA subsequently increased
the estimate to $7.7 billion (2012) with the start of operations
delayed to November 2019. Now the project is in a strategic pause as
DOE evaluates other options for plutonium disposition.
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. 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.
Mr. Cooper. What would you recommend to improve contractor
accountability?
Mr. Augustine and Admiral Mies. The panel's interim report has
focused primarily on diagnosing the current situation. Our
recommendations will come in the final report. The interim report
observes that current contracting arrangements place too little
emphasis on mission performance, and too much emphasis on complying
with administrative requirements. The major findings in the interim
report are as follows:
A. Misguided Contract [Requirements]
[Misguided contract requirements] reinforce the transactional
nature of the relationship and undermine the FFRDC partnership with the
NNSA laboratories. Significant award fees combined with mission-
support-oriented performance evaluation criteria are troublesome in
that they reinforce DOE/NNSA's emphasis both at headquarters and in the
field on functional compliance and not mission performance.
Contractual arrangements also can limit the contributions of the
M&O contractor parent organizations. At some sites, the parent
organization is exerting a strong influence: the Kansas City Plant
offers an example in which the parent company is aggressively driving a
proven corporate culture into the workplace. However, several issues
that have hindered the broader realization of these objectives need to
be considered in clarifying future roles....
Last, and most important, performance evaluation criteria that
focus incentives on compliance do little to encourage building a strong
M&O leadership team. 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.
Mr. Cooper. Have you found the Department of Energy needs new or
additional hiring or firing authorities, or authority to influence
contractor employee hiring or firing?
Mr. Augustine and Admiral Mies. The panel's interim report does not
provide recommendations, but the panel will address this question in
its final report. The panel's findings suggest significant action is
needed to address skill needs. The panel's findings (as also noted in
the answer to question 10) are as follows:
The NNSA has not taken the steps necessary to build a cohesive
culture that instills accountability for customer deliverables, nor has
it instituted the personnel programs needed to build a workforce with
the necessary technical and managerial skills for operations. The
purposeful development of leaders, managers, and staffs is essential to
any governance system. The effective organizations benchmarked for this
study focus on personnel management to create a reinforcing virtuous
cycle: proven leaders emerge from careful selection and decades of
experience involving careful development and screening. Such leaders
make a system work well. They also attract and inspire other high-
caliber people to join and stay in their organizations.\15\ As one
example, the current Director of Navy Strategic Systems Programs (SSP)
started his career within that organization as a junior officer, and
almost all of his subsequent assignments have been in the command. In
addition to deep familiarity resulting from a long career with the same
organization, long command tours provide needed continuity and allow
the Director to promulgate and sustain the desired culture. Recently,
the tenure of the SSP's Director was extended from about four years to
eight years to strengthen this benefit.
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\15\ At benchmark organizations, the new entrants are carefully
screened and selected, in part based on suitability for long-term
careers within the organization. Employees tend to spend long careers
within the organization. Promotion to the most senior levels (other
than a political appointee) is usually from within, and these
organizations favor those with broad-based career experience within the
organization.
---------------------------------------------------------------------------
A key staffing issue for the NNSA is the lack of operational
experience in headquarters. In the peak years of the nuclear weapons
program, the operational core of the nuclear enterprise was located in
the Albuquerque Operations Office. Albuquerque synchronized the cycle
of design-test-build throughout the Cold War, until 1992, when the
production of new weapons was suspended. Albuquerque was officially
disbanded ten years later, in 2002. NNSA headquarters assumed
Albuquerque's operating functions (which were greatly diminished by
then since the U.S. had ceased producing warheads), and decades of
operational experience, knowledge, and technical expertise within the
Albuquerque staff was lost in the reorganization.
Now, as the United States embarks on an intensive series of warhead
life extension programs covering the entire stockpile, a leadership
team with deep experience and continuity (such as the team in the
Albuquerque Operations Office) would be an enormously valuable asset
for governing the enterprise. Creating and sustaining a personnel
management system to build the needed culture, skills, and experience
is a vital component of governance reform.
______

QUESTIONS SUBMITTED BY MS. SANCHEZ
Ms. Sanchez. Independent Safety oversight: Has independent safety
oversight helped maintain safety as a priority across the nuclear
enterprise?
Mr. Augustine and Admiral Mies. The panel's interim report does not
address the independent role of the DNFSB. The report did find:
The internal weaknesses in DOE's regulatory apparatus also have
significantly weakened the DOE/NNSA's ability to engage effectively
with the Defense Nuclear Facilities Safety Board. Congress chartered
the DNFSB to provide independent oversight, by identifying safety
concerns and raising issues with respect to the DOE's implementation of
its own orders. At the same time Congress has recently stated that,
``it is incumbent upon the Secretary to reject or request modifications
to DNFSB recommendations if the costs of implementing the
recommendations are not commensurate with the safety benefits gained.''
\16\ 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.
---------------------------------------------------------------------------
\16\ ``Joint Explanatory Statement to Accompany the National
Defense Authorization Act for Fiscal Year 2014,'' Congressional Record
159: 176 (December 12, 2013), H7968.
---------------------------------------------------------------------------
Ms. Sanchez. Cost estimates: Concern about the effectiveness of
NNSA governance of the nuclear security enterprise has been increasing,
in the context of several failures. These failures include all major
NNSA projects significantly increasing in cost and incurring delays,
including billion dollar increases in the cost estimates for the B61
life extension program, the uranium facility at Y-12 (Tennessee), the
plutonium facility (at Los Alamos), and the MOX facility (at the
Savannah River Site, SC).
Is NNSA equipped with the expertise and processes to provide
accurate cost estimates? Are they taking advantage of DOD CAPE Office
which has significant experience in this area?
Mr. Augustine and Admiral Mies. The Panel met with CAPE officials
as well as the NNSA official responsible for establishing cost
estimating and resource analysis capabilities in NNSA. CAPE was heavily
involved in the joint activities of 2012 cited in the panel's interim
report. It appears this involvement has ceased. The relevant interim
report findings are as follows:
NNSA's unreliable planning and cost estimating, combined with its
lack of openness, has engendered significant distrust within the DOD.
Beginning in 2010, the DOD has worked with DOE/NNSA to transfer funds
from DOD's proposed budget to the NNSA account for weapons activities
essential for sustaining deterrence capabilities--including LEPs,
stockpile surveillance, Chemical and Metallurgy Research Replacement
(CMRR), and UPF.
NNSA and DOD staffs spent much of 2012 working to achieve a common
resource plan for the enterprise that would be geared to meeting DOD's
needs. This effort led to a tentative agreement in early 2013 on an
NNSA program and budget that would be in line with the ``3+2
Strategy,'' and DOD agreed to contribute additional funding to execute
the program in FY14. In total, DOD has agreed to transfers of nearly
$12 billion over multiple years in budget authority to DOE.
During this period, a series of NNSA budget shortfalls were
reported. These resulted most significantly from significant cost
growth in the DOE programs. Other contributing factors included
reductions in the overall NNSA budget due to Continuing Resolutions,
congressional marks, the Budget Control Act, and the effects of
sequestration.
DOD has been frustrated by these continuing shortfalls, delays in
agreed-upon programs, and requests for additional funding. DOD
officials also have been frustrated by the limited budget and cost
information provided by DOE/NNSA, and they have pressed for information
on budgeting and program management processes in order to track the
execution of the transferred funds. A satisfactory degree of visibility
has not been achieved. Although these transfers were included in the
President's Budget, visibility of the funds was lost during the
Congressional appropriations process. It appears the net effect of the
transfer is that DOE budgets have increased by less than the amount by
which DOD budgets have decreased.
The cycle of DOD-NNSA engagement continues through the Nuclear
Weapons Council, with additional attempts to reach convergence on
realistic program and infrastructure plans that can guide NNSA budgets.
There remain significant procedural issues that will need to be
resolved to repair this relationship. Considerable work remains to be
done: the Nuclear Weapons Council has a central role to play in
creating an executable plan for the future stockpile agreed on by the
two departments. This responsibility will require an orderly process
for the Nuclear Weapons Council's working groups to serve its
principals and greater transparency between the two departments.
Ms. Sanchez. Non-proliferation: There is significant pressure on
NNSA to deliver nuclear weapons sustainment programs on time and on
budget. Do you see the same pressure to prioritize nuclear non-
proliferation?
Mr. Augustine and Admiral Mies. The interim report did not address
the priorities for the non-proliferation program. The panel's findings
relating to non-proliferation and other mission areas are as follows:
Given the overall success of the interagency projects, the panel
did not focus deeply on the enterprise's relationships with its
interagency customers. Nevertheless, experts identified several issues
for the panel's consideration. One is the tactical approach taken by
many customers: much of this work for external sponsors is accomplished
using annual task orders with no long-term commitment. There is also a
range of areas where working relationships could be simplified and
improved:
Interagency tasks are typically quite small and each
laboratory manages hundreds of such tasks. (For example, LLNL reported
it manages about 800 interagency tasks, many providing a few tens of
thousands of dollars in support.)
Approval processes are needlessly cumbersome. Tasks are
reviewed and approved individually. Even small, routine contracts
require multiple levels of approval and can take weeks.
Delays are not uncommon in the movement of funds from
sponsors to the labs. In some cases, technical efforts may be put on
hold pending arrival of funds.
Year-to-year uncertainty in funding makes it difficult to
forecast demand and manage professional staffs.
Recapitalization of scientific and other physical capital
is not addressed. While external funding covers the overhead costs
immediately associated with the work being accomplished, it does not
cover the cost of refurbishing and replacing the unique lab capital
equipment and facilities used in some tasks.
Some customers have found ways to resolve some of these challenges
by employing interagency agreements with DOE/NNSA in which the external
funding organization makes a standing commitment to funding support at
a specified level of effort.\17\ While necessarily subject to the
availability of annual appropriations, this eliminates most of the
uncertainty, enabling the nuclear weapon labs to better align and
manage professional staffs and plan and conduct technical work. Capital
investments to develop needed capabilities for interagency customers
are a more difficult challenge, but they too have been overcome in
limited cases. NNSA has had to approach this challenge on a facility-
by-facility basis.
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\17\ Homeland Security Act of 2002, Sec. 309, authorizes DHS use of
DOE national laboratories and sites via joint sponsorship, direct
contract, or ``work for others.'' Labs and sites perform such work on
an equal basis to other missions at the laboratory and not just on a
noninterference basis. DHS does not pay costs of DOE or its contractors
in excess of the amount that the DOE pays. DHS' position is that it
strongly prefers using authorities given it in law to allow it to work
across the DOE complex in response to proposals.
---------------------------------------------------------------------------
Ms. Sanchez. Please provide for the record a list of those who have
testified or made presentations before the full panel, and those that
the panel subcommittees have met with.
Mr. Augustine and Admiral Mies. The attached list, which is an
annex to the interim report, identifies the individuals and
organizations consulted by the panel. The general approach is outlined
in the interim report as follows:
Recognizing that there has already been extensive examination of
the enterprise, the panel reviewed thousands of pages produced by
studies and reviews conducted both before and since the creation of the
NNSA. The members heard from many experts, both inside and outside of
the enterprise.\18\ This included past and present senior leadership in
the Department of Energy (DOE), NNSA, and Department of Defense (DOD),
Field Office managers, Management and Operating (M&O) executives and a
cross-section of personnel at each site, Laboratory Directors, chairmen
of previous studies of the enterprise, Congressional staff,
representatives from the customer communities (DOD, Intelligence
Community, the Federal Bureau of Investigation, Department of State,
Department of Homeland Security), the Defense Nuclear Facilities Safety
Board (DNFSB), the Government Accountability Office, and the British
nuclear weapons program.
---------------------------------------------------------------------------
\18\ A full list of those who provided not-for-attribution
testimony to the panel may be found in Appendix A.
---------------------------------------------------------------------------
The panel divided its field investigative work into four fact-
finding groups as follows:
The National Leadership group focused on the perspectives
of the Executive branch (National Security Council Staff, Office of
Management and Budget (OMB), and Office of Science and Technology
Policy); the Legislative branch (both the Senate and the House of
Representatives, and both the appropriations and authorization
committees); Department of Energy headquarters; and the Nuclear
Regulatory Commission, the DNFSB and other national-level stakeholders
such as the Occupational Safety and Health Administration (OSHA) and
the American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO).
The NNSA group interviewed leadership personnel within
NNSA headquarters and also conducted site visits to the three
laboratories (Los Alamos National Laboratory (LANL), Lawrence Livermore
National Laboratory (LLNL), and Sandia National Laboratory (SNL)), the
four production plants (Kansas City Plant, Pantex, Savannah River Site,
and Y-12 National Security Complex), and the Nevada National Security
Site (NNSS). These visits incorporated discussions with the Field
Offices (including the Albuquerque Complex) and the M&O contractor
leadership as well as tours of some of each site's important
facilities.
The Customer group obtained perspectives of the clients
of the enterprise to include DOD, the Intelligence Community,
Department of State, Department of Homeland Security, the Federal
Bureau of Investigation, and the British nuclear weapons program.
The Benchmarking group examined successful high-risk,
high technology organizations to identify potential processes and
structures that might be adopted by the enterprise. Among these
organizations were Naval Reactors, Navy Strategic Systems Programs,
National Aeronautics and Space Administration (NASA), representatives
from the civil nuclear power industry, DOE's Office of Science, the
Centers for Disease Control, the Federal Aviation Administration, and
the British nuclear weapons program.
Ms. Sanchez. Do the M&O contractors have the correct incentives to
support NNSA's mission and deliver products on time and on budget? The
Sandia National Laboratory contract has been extended at least two
years, after a previous 2-year extension, while other contracts are
going on 10 years. Is there adequate competition? Has the promise of
added competition and cost savings, which was the goal of privatizing
the nuclear enterprise, materialized? Has this model worked?
Mr. Augustine and Admiral Mies. Contract incentives reinforce the
transactional nature of the relationship and undermine the FFRDC
partnership with the NNSA laboratories. Significant award fees combined
with mission-support-oriented performance evaluation criteria are
troublesome in that they reinforce DOE/NNSA's emphasis both at
headquarters and in the field on functional compliance and not mission
performance.
. . . performance evaluation criteria that focus incentives on
compliance do little to encourage building a strong M&O leadership
team. 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.
It is clear that the recent acting NNSA Administrator recognized
the problems with the government-M&O relationships. He has been working
to clarify roles and responsibilities, focusing on the relationships
among the NNSA Administrator, the Field Office Managers, and the M&O
executives. In the field, there is evidence of improved communication
and collaboration between the M&Os and the NNSA Field Offices,
especially at the plants. They have demonstrated a willingness to share
information and otherwise communicate and collaborate, embracing the
concept that they are a team ultimately working toward the same
purpose. Much more attention to clarifying and managing these
relationships will be needed.

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