[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]

[H.A.S.C. No. 114-136]

DEFERRED MAINTENANCE IN THE

NUCLEAR SECURITY ENTERPRISE: SAFETY AND MISSION RISKS

__________

HEARING

BEFORE THE

SUBCOMMITTEE ON STRATEGIC FORCES

OF THE

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

SECOND SESSION

__________

HEARING HELD

SEPTEMBER 7, 2016

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SUBCOMMITTEE ON STRATEGIC FORCES

MIKE ROGERS, Alabama, Chairman

TRENT FRANKS, Arizona JIM COOPER, Tennessee
DOUG LAMBORN, Colorado, Vice Chair LORETTA SANCHEZ, California
MIKE COFFMAN, Colorado RICK LARSEN, Washington
MO BROOKS, Alabama JOHN GARAMENDI, California
JIM BRIDENSTINE, Oklahoma BRAD ASHFORD, Nebraska
J. RANDY FORBES, Virginia PETE AGUILAR, California
ROB BISHOP, Utah (Vacancy)
MICHAEL R. TURNER, Ohio
JOHN FLEMING, Louisiana
Drew Walter, Professional Staff Member
Leonor Tomero, Counsel
Mike Gancio, Clerk

C O N T E N T S

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Page

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Cooper, Hon. Jim, a Representative from Tennessee, Ranking
Member, Subcommittee on Strategic Forces....................... 3
Rogers, Hon. Mike, a Representative from Alabama, Chairman,
Subcommittee on Strategic Forces............................... 1

WITNESSES

Klotz, Lt Gen Frank G., USAF (Ret.), Administrator, National
Nuclear Security Administration, accompanied by James
McConnell, Associate Administrator for Safety, Infrastructure,
and Operations, National Nuclear Security Administration....... 16
McMillan, Dr. Charles F., Laboratory Director, Los Alamos
National Laboratory............................................ 5
Ricciardelli, John, President, Honeywell Federal Manufacturing &
Technologies, LLC.............................................. 6
Smith, Morgan, President and Chief Executive Officer,
Consolidated Nuclear Security, LLC............................. 4

APPENDIX

Prepared Statements:

Cooper, Hon. Jim............................................. 36
Klotz, Lt Gen Frank G........................................ 67
McMillan, Dr. Charles F...................................... 48
Ricciardelli, John........................................... 59
Rogers, Hon. Mike............................................ 33
Smith, Morgan................................................ 37

Documents Submitted for the Record:

NNSA slide displayed by Mr. Rogers........................... 79
Secretary of Energy letter to the Director of the Office of
Management and Budget...................................... 80

Witness Responses to Questions Asked During the Hearing:

Mr. Cooper................................................... 87
Mr. Garamendi................................................ 87

Questions Submitted by Members Post Hearing:

Mr. Cooper................................................... 104
Mr. Larsen................................................... 106
Mr. Rogers................................................... 91

.
DEFERRED MAINTENANCE IN THE NUCLEAR SECURITY ENTERPRISE: SAFETY AND
MISSION RISKS

----------

House of Representatives,
Committee on Armed Services,
Subcommittee on Strategic Forces,
Washington, DC, Wednesday, September 7, 2016.
The subcommittee met, pursuant to call, at 3:29 p.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. I will call this hearing of the Strategic
Forces Subcommittee of the House Armed Services Committee to
order. And welcome all of our witnesses on this hearing titled
``Deferred Maintenance in the Nuclear Security Enterprise:
Safety and Mission Risks.''
To kick off the hearing, I want to display a slide provided
by NNSA [National Nuclear Security Administration] that
encapsulates the challenges that we are dealing with here
today.
[The slide referred to can be found in the Appendix on page
79.]
Mr. Rogers. The enterprise has a $3.7 billion backlog of
deferred maintenance it has accumulated over decades, and this
backlog is now actively threatening both NNSA's mission and the
safety of its workers. As this slide puts it so well, quote,
``Infrastructure risks become safety and program risks,'' close
quote.
This slide also shows some very real impacts that
infrastructure failures are having. Ranking Member Cooper and I
have seen much of this firsthand during our oversight visits to
these facilities. Just a small list of the challenges that we
have seen include tarps hung over sensitive diagnostic
equipment to prevent a leaking roof from destroying equipment
worth tens of millions of dollars, chunks of concrete falling
from ceilings into operational workspaces, tape and plastic
sheeting around pipes carrying radioactive fluids, major
hydraulic oil leaks, grass growing through floors.
As this slide describes, many of these failures result
directly in program delays and safety risks. Our witnesses
highlight this in their written statements. For example, here
in General Klotz's statement, quote: ``Our infrastructure is
extensive, complex, and in many critical areas, several decades
old. More than half of NNSA's approximately 6,000 real property
assets are over 40 years old, and nearly 30 percent date back
to the Manhattan Project era. Many of the enterprise's critical
utility, safety, and support systems are failing at an
increasing and unpredictable rate, which poses both
programmatic and safety risk,'' close quote.
And here is Mr. Smith, quote: ``Many key facilities at both
[Pantex and Y-12] were constructed in the 1940s and were
intended to operate for as little as one decade. Many
facilities and their supporting infrastructure have exceeded or
far exceeded their expected life, and major systems within the
facilities are beginning to fail,'' close quote.
And finally, Dr. McMillan, quote: ``One of the things that
keeps me up at night is the realization that essential
capabilities are held at risk by the possibility of such
failures; in many cases, our enterprise has a single point of
failure,'' close quote.
Of course, these infrastructure challenges directly impact
NNSA's readiness to respond to new direction and military
requirements. Broader defense readiness challenges have been a
focus this year of the HASC [House Armed Services Committee],
and readiness and responsiveness within NNSA has been a focus
of this subcommittee for years. We must ensure not only that
people and tools within the NNSA are ready to respond, but also
infrastructure.
On the readiness of people and tools front, this committee
has continued to advocate the stockpile readiness program
mandated by last year's NDAA [National Defense Authorization
Act]. On the infrastructure front, we continue to authorize
substantial increases to NNSA's infrastructure accounts. But I
believe more must be done. We need to be looking to do more,
including both tried and true solutions that have worked in the
past as well as new innovative solutions.
For instance, the Facilities and Infrastructure
Recapitalization Program, or FIRP, was a 10-year, $2 billion
effort that started in 2002 and was successful in addressing
many of the deferred maintenance challenges. But in the end, it
accompanied only a portion of the work that ultimately needs to
be done. I think we should be looking for a new FIRP-like
program for the future.
We should also recognize the success of recent public-
private partnerships in addressing these challenges in
innovative ways. The result out at Kansas City, in particular,
is indicative of what we can do if we work together and use
these kinds of creative approaches.
I want to thank our witnesses for being here. You represent
and lead many of the workers within our Nation's nuclear
enterprise. We know how hard they work and are grateful to all
of you for your service to our country.
Our first panel includes Dr. Charlie McMillan, laboratory
director at Los Alamos National Lab; Mr. John Ricciardelli,
president, Honeywell Federal Manufacturing & Technologies; Mr.
Morgan Smith, president and CEO [chief executive officer] of
Consolidated Nuclear Security.
Following these gentlemen in our second panel of witnesses
we will also have the Honorable Frank Klotz, Administrator of
the NNSA, Mr. Jim McConnell, Associate Administrator for
Safety, Infrastructure, and Operations, NNSA.
My sources tell me that today it is General Klotz's
birthday, so happy birthday to General Klotz. I would sing to
him, but that is pretty bad punishment, so I won't do that.
Finally, I want to highlight the important work being done
by the witnesses from both our panels. Under the leadership and
direction of Secretary Moniz and General Klotz, you all have
put a halt to the growth of deferred maintenance, and that is
to be commended.
You recognize that these challenges have a direct impact on
your workers' morale, performance, and safety, and I know you
are working hard to deliver for all of them. The subcommittee
stands by to assist and support you because we recognize how
much more needs to be done.
I now turn it over to my friend and colleague from
Tennessee, the ranking member, for any opening statement he may
have. Roll Tide.
[The prepared statement of Mr. Rogers can be found in the
Appendix on page 33.]

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

Mr. Cooper. I was hoping you would dispense without any
football references, but there at the end you completely blew
it.
I too would like to welcome the witnesses, and I would like
to ask unanimous consent that my statement be inserted for the
record.
Mr. Rogers. Without objection.
Mr. Cooper. I think the chairman has stated it very well,
so I will not belabor the point. We need to get adequate
maintenance to all these facilities. It is my impression that
Naval Reactors on the whole has done a better job than NNSA. I
am not faulting Admiral Klotz because I think he and Secretary
Moniz are part of the solution, not part of the problem, but it
is going to take many years of sustained effort to solve this
problem.
I thank the witnesses. I look forward to your testimony.
[The prepared statement of Mr. Cooper can be found in the
Appendix on page 36.]
Mr. Rogers. I thank the gentleman.
Also, we are going to be interrupted for votes during this
hearing. So what I would ask is that--your entire statement is
going to be submitted for the record--if you could just take 3
minutes instead of 5 to summarize, so we could try to get both
panels done without delaying everybody. But we will, without
objection, accept all of your full statements into the record.
I also want to point out that during your testimony when
you are making your summary, we are going to be putting up
slides to kind of complement what you are talking about, slides
that you all have provided about your testimony. You don't have
to feel the need to narrate the slides. It is just something we
are going to be doing concurrent with your comments.
[The slides referred to are retained in the subcommittee
files and can be viewed upon request.]
Mr. Rogers. And with that, we will go to the first
panelist. Mr. Smith, you are recognized for 3 minutes.

STATEMENT OF MORGAN SMITH, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CONSOLIDATED NUCLEAR SECURITY, LLC

Mr. Smith. Chairman Rogers, Ranking Member Cooper, members
of the subcommittee, thank you for the opportunity to talk with
you today about the deferred maintenance challenge facing both
the National Nuclear Security Administration and, more
importantly in my case, the plants that I represent, the Pantex
Plant and Y-12.
I appreciate the support of the committee and the support
of Congress over the years of our sites and really appreciate
the attention you are bringing to this very, very important
matter. The quiet but important work that we do at our sites is
essential to our Nation and our allies. For me, it is a
privilege to work alongside the Federal and contractor patriots
that do this work in support of our important mission. However,
our facilities have not been immune from the progress of time
and the effects of that time, similar to other infrastructure
in the country.
Sustaining the facilities while continuing to achieve our
mission is a considerable challenge. Attracting and retaining a
world-class workforce is also a challenge. The Nation
ultimately would benefit from a better long-term approach.
Between Pantex and Y-12, we have approximately $800 million
in deferred maintenance currently in our books. Approximately
$175 million of that is associated with critical facilities. At
today's level of funding, we will not be able to make a
substantial reduction in that backlog of deferred maintenance,
and the pictures that we are seeing are but the tip of the
iceberg relative to what we face.
One of the pictures you see is a ceiling deterioration that
occurred from operations above it. It caused concrete to fall.
Obviously, in that situation, it leads to both operational and
personnel concerns. We have been able to repair the condition
relative to the ceiling itself; however, we remain very limited
and restricted in our operation of that equipment above that
ceiling.
While we will not compromise on safety and security, the
backlog and deterioration that we are seeing does require us to
deal almost daily with potential disruptions to our mission
delivery.
However, we do not sit idly by allowing obsolescence to
occur with our systems. Along with eliminating excess and
deteriorating facilities, we are embarking on the largest set
of capital construction projects that we have had for both
sites in decades. We also use public-private partnerships as we
have opportunities such as recently occurred with the
administrative support complex of Pantex. And then finally, we
are our preserving our currently operated facilities through
innovative approaches and new technologies.
In conclusion, I believe our overall future approach must
continue to, number one, provide for a robust recapitalization
program; number two, pursue aggressive disposition of our
excess facilities; and number three, reduce deferred
maintenance issues through additional funding approaches. Each
are essential to preserve the mission work that occurs at both
sites; they are essential to ensure the safety of our
workforce; and they are essential to help keep Pantex and Y-12
on track to provide a safe, secure, and effective nuclear
deterrent for the Nation.
Again, thank you for the opportunity to speak with you
today.
[The prepared statement of Mr. Smith can be found in the
Appendix on page 37.]
Mr. Rogers. Thank you, Mr. Smith.
Dr. McMillan is recognized for 3 minutes.

STATEMENT OF DR. CHARLES F. McMILLAN, LABORATORY DIRECTOR, LOS
ALAMOS NATIONAL LABORATORY

Dr. McMillan. Chairman Rogers, Ranking Member Cooper,
members of the committee, thank you for the invitation. I am
Dr. Charlie McMillan. I am the director of the Los Alamos
National Laboratory.
We have recently marked the 20th anniversary of the
Stockpile Stewardship Program. This program has allowed the
National Nuclear Security Administration's laboratories to
certify this Nation's nuclear deterrent that it is safe,
secure, and effective.
Our stewardship efforts would not have been possible
without the strong support for significant investments in
infrastructure from this subcommittee, Congress, and many
administrations. Stockpile stewardship required the
construction of new supercomputers, new experimental
facilities, and these have helped the United States assure our
allies and deter our adversaries.
However, key elements of today's nuclear weapons
infrastructure were designed and constructed during the Cold
War. Because it is more difficult today to bring new facilities
online, we must continue to operate existing facilities longer
than we had anticipated when they were originally built. And we
have to do that and ensure that we do not place our workers,
the public, or our mission at unacceptable risks.
Just last week, I was discussing these issues with my
colleagues at Sandia and at Livermore, and we all shared the
concern that some of our critical facilities are being run to
failure. Because infrastructure funding is a finite resource, I
believe that upgrades for replacement activities have to be
taken with a very sharp focus on the economics.
To this end, staff at Los Alamos, working with our NNSA
partners, have developed a modular strategy for bringing new
infrastructure online. We believe that this will help both with
the economics as well as with timely delivery when facilities
are needed.
These types of facilities, together with those associated
with things like high-performance computing, our uranium
facilities, and experimental facilities are all facilities that
warrant and merit the greatest congressional focus.
In your invitation, Mr. Chairman, you ask about things we
might do to improve infrastructure. There are three things I
would like to highlight for you.
First of all, there is a category referred to as general
plant projects. These allow us to use relatively small amounts
of money focused locally to be able to address issues.
I would highlight for you that at Los Alamos today we have
trailers that were put into service 30 years ago. And in some
of those trailers we have problems with ceilings, water damage,
falling in, we have problems with rodents in them. They need to
be replaced.
Over the last 10 years, we have been able to cut the number
in half. We still have a long way to go. General plant projects
let us do this. And I would recommend to you considering to
index that money. It was last changed in 2009.
Second, third-party financing. You mentioned that in your
opening remarks. This is particularly important for my
colleagues at Livermore and Sandia.
Finally, innovative public-private partnerships. Today at
Los Alamos we are working closely with our NNSA field office to
be able to bring some of these projects online. We would like
to be able to do that.
Thank you for the invitation to speak today.
[The prepared statement of Dr. McMillan can be found in the
Appendix on page 48.]
Mr. Rogers. Thank you, Dr. McMillan.
We have been called for votes. We have 7 minutes to get
across the street. So we are going to suspend the hearing while
we go and vote. We should be back in almost exactly 60 minutes.
So I apologize for the inconvenience, but they don't ask me
when to call us for votes.
With that, we will recess briefly.
[Recess.]
Mr. Rogers. I call this hearing back to order.
Mr. Ricciardelli, I know you have been anxiously
anticipating this. The floor is yours.

STATEMENT OF JOHN RICCIARDELLI, PRESIDENT, HONEYWELL FEDERAL
MANUFACTURING & TECHNOLOGIES, LLC

Mr. Ricciardelli. Thank you, Chairman Rogers, Ranking
Member Cooper, and members of the subcommittee, for inviting me
to testify before you today. I am John Ricciardelli, and I am
the president of Honeywell's Federal Manufacturing &
Technologies, which has a proud history of serving as the prime
contractor to the Department of Energy's Kansas City National
Security Campus [KCNSC] for nearly 70 years.
The KCNSC is a 1.5 million square foot multimission
engineering and manufacturing facility that supports the NNSA's
national security mission. Our primary focus is modernization
of the Nation's nuclear stockpile using the latest technologies
to deliver a safe, secure, and reliable nuclear deterrent.
It is an exciting and challenging time in the nuclear
security enterprise with several life extension programs being
addressed through their development phases simultaneously. Our
facility is witnessing growth this year to support these
important objectives.
And while it is an exciting time at the KCNSC, we have had
similar challenges to my colleagues next to me. About 10 years
ago, we were faced with increasing pressure on defense budgets
and growing deferred maintenance costs at Kansas City's aging
facility. Honeywell was challenged to help the Federal
Government continue its mission in the most cost-effective way
possible.
The aging infrastructure at the Bannister location made
installation of modern equipment difficult, expensive, and
hazardous to the mission as well as the personnel. Further,
significant time and money was being spent on emergency repairs
and facility upgrades for the emerging programs.
Honeywell implemented a responsive infrastructure strategy
to address these challenges. As a result, we now have a newly
constructed state-of-the-art facility that features a flexible
manufacturing design and 50 percent lower energy consumption,
and we are also delivering over $150 million of savings to the
taxpayers annually.
Today, we are more agile in adapting to changing mission
requirements. We are better positioned to recruit and retain
the next generation of scientists and engineers. Safety hazards
have been greatly reduced at the new facility as well, as
evidenced by our safety performance. And, in fact, we just
celebrated 3 million hours without a lost-time injury.
The new campus utilized a third-party lease agreement for
several reasons. The annual lease costs of the new facility
were much more economical than the annual maintenance costs of
the old building. A private developer was used and was able to
build it more efficiently, assemble tax credits and financing.
And finally, the campus can be used for other purpose if the
government no longer needs it or if the government can buy it
at any point for fair market value.
While Honeywell used commercial best practices to deliver
on the responsive infrastructure strategy, I would also like to
elaborate on the importance of contractor oversight reform and
how that has played an important role in the successful
operation.
Today, Honeywell and NNSA created the Kansas City
Governance Model, a revolutionary reform of government
oversight that reorients how Americans see performance in the
government. The shift overall reduces costs without sacrificing
public trust and utilizes a simpler governance model that
capitalizes on private sector enterprise.
To apply this model at other sites, the NNSA's operating
partners must do what Honeywell does daily: focus on getting
results in a sustainable way while eliminating costs. We are
committed to assisting the transformation through ongoing
collaboration and best-practice sharing with our NNSA site
partners.
However, our work is not done yet. NNSA continues its
effort to ensure that the old Bannister property be redeveloped
in an efficient, safe, and environmentally responsible manner
and not be left as a blight on the community. By funding the
transfer of the Bannister facility in fiscal year 2017, the
government will eliminate most of the future environmental
liabilities through third-party demolition and remediation and
could save approximately $650 million.
So once again, thank you, Mr. Chairman, for allowing me to
address this committee. We are all connected through a shared
goal of keeping our great Nation safe and secure.
[The prepared statement of Mr. Ricciardelli can be found in
the Appendix on page 59.]
Mr. Rogers. Thank you. And I thank all the witnesses for
their opening statements. I know it takes a lot of time to
prepare for this, and I appreciate that.
I will start off by recognizing myself for questions.
You all heard my opening statement and some of the things,
the infrastructure challenges that I described throughout your
facilities. Ranking Member Cooper and I, as you know, have
visited several of these facilities and seen some pretty
shocking examples of the problems that you face in these very
highly secure facilities.
But I would like for each of you, if you could, to take a
moment and describe for me in detail some of the infrastructure
failures that you have seen and the consequences they have for
your facility.
We will start with you, Mr. Smith.
Mr. Smith. One of the pictures that you had up that I noted
in my opening remarks was the ceiling failure that occurred as
a result of Kathene leakage from Kathabars above, which the
impact of that is the Kathene eats away the reinforcing bars,
which greatly weakens the floor.
At this point, we can only allow two people into that area
where you have tons and tons of equipment at a time to do any
work, and it is just a systematic failure. But when that
equipment goes down, we have no ability then to go process the
materials in that particular facility because that facility
requires a very, very dry environment to safely and
appropriately process the materials.
So that is one example. Another example on the same site, I
was at work not more than about a month ago on a Sunday
morning, and I had just left to go to church with the intent to
come back when I received a page that one of my utility
workers, doing a rather routine task over a pit--and this pit
was basically grating over top of it with end supports on each
end and a center beam in the middle, and as she was doing that
work, the structural steel holding up the grating on one end
failed. And as you can imagine, you are on the wrong end of the
seesaw at that point and you go down.
In that case, fortunately, she sustained only a very minor
injury, which I think was a grace-of-God moment in that case,
but a very real facility issue with a person just doing a
routine job.
I had another one of those a couple months before that
where a forklift drove onto what looked to be a pad. It was
actually an extension of a basement. The structural steel in
that area due to environmental attack over the years, salt and
so forth that you use for the weather conditions, had led to
that structural steel failing to the point where we had a
collapse and a buckling of the concrete or a depression in the
concrete and a failure of the structure, but not something that
led to an injury as well.
At Pantex, we deal with fire lead-ins to our bays and
cells. We are on a major replacement program that will take
another 10 years. But when they fail, and they fail without
warning, you can lose bays or cells. We recently had one where
we lost a number of bays and cells and the ability to use it
until we can go in and do the repair. And that just leads to an
inherent unreliable condition and set of services.
And I can probably go on, but that is probably sufficient.
Give others time to comment.
Mr. Rogers. Yes.
Dr. McMillan.
Dr. McMillan. Mr. Chairman, let me just give you an example
from last weekend. We had the air conditioning system in one of
our vaults for one of our classified computers fail, and when
that went down it took down the computing equipment that is
needed to support our experimental work. That is a recent
example.
Let me say a few things about things we are acting on, but
they illustrate the problem. Both we and our colleagues at
Lawrence Livermore Laboratory are replacing major parts of our
electrical infrastructure. Same kind of problem. If we have
electrical failures, our computers go down, the work that we do
to support the stockpile we can't do. Our accelerators go down
if we don't have power.
Third area, again, that we are taking action on, but it is
overdue: The steam plant for the laboratory is finally on the
verge of replacement, good public-private partnership on that
one. But if we lose our heating systems in the wintertime, it
is cold in Los Alamos. And sensitive scientific equipment does
not do well when it freezes, nor do our buildings.
And so those are the kinds of things that they are very
fundamental infrastructure issues, they don't have high
profile, but if we don't take care of those kinds of really
basic things, we are not going to be able to serve the mission.
And it affects, as my colleague said, not only the mission but
also the safety of the people.
I would offer as a final comment, when I talk to my craft
people, the folks who have their hands on things like our
electrical and our plumbing systems, one of the problems that
they are dealing with day in and day out is how old these
systems are. So if they were working on a modern strip mall,
things would be uniform. When they go into one of my switch
gears, they are dealing with stuff that was built in 1960, and
they have to figure out how to make it work. And not only is
that a maintenance problem, it is a safety problem.
Thank you.
Mr. Rogers. Mr. Ricciardelli.
Mr. Ricciardelli. We are lucky because in the new facility,
obviously, we don't have the same issues as my colleagues. But
as you saw from the pictures, the Bannister facility, which we
are still maintaining, even to this day, has about 45 people
there that are just maintaining the HVAC [heating, ventilation,
and air conditioning] system, the electrical systems, all of
the infrastructure that still has to be kept up.
And you can imagine back many years ago with that kind of
aging system, with 6,000 people working that facility, how
hazardous it was at that point.
So with the new facility, we actually have 10 percent of
our lease goes into maintaining the facility, and that will
ensure that deferred maintenance will never be a problem. But,
again, once we get the funding we can get rid of the Bannister
and take care of a lot of that issue that we are still dealing
with even to this day.
Mr. Rogers. Okay. You all heard me make reference to the
fact that there is across the NNSA $3.7 billion in deferred
maintenance. Let me ask this question. At the pace that you
have been addressing deferred maintenance--and this will be
really for Mr. Smith and Dr. McMillan--at the pace you have
been addressing deferred maintenance over the last 5 years,
when will you ever or will you ever be able to catch up and
have completed the deferred maintenance obligation that you
have before you?
Mr. Smith.
Mr. Smith. Mr. Chairman, we have had success in reducing it
over time. I believe that there are several points that need to
be taken into consideration when you answer that question. One
is we have to continue to retire the old facilities and tear
them down. That is one of the ways that we reduce the deferred
maintenance. The next is continue to find innovative ways to do
it, use tools like BUILDER.
But in the end I would say, absent additional funding and
given the trajectory we are on, we will never reduce it to
zero, as you would envision it, because some of these systems
just have to be replaced in the end.
Mr. Rogers. Dr. McMillan.
Dr. McMillan. Mr. Chairman, as I look at the list that we
have at Los Alamos, there are a couple of things I would note.
One, we have been working very closely with the NNSA to better
estimate what the numbers are. And I think within a year or so
we will be in a better position to give you updated numbers.
And I look forward to what Frank Klotz has to say on that,
because I know he is very aware of the work we are doing.
As I look at the list at Los Alamos, there are several big
items that when we are able to actually take them off the list,
as my colleague said, they will make substantial reductions. A
good example of that is the chemistry and material research
facility. When we are finally able to retire that system and
then take the building completely down, that will take down a
big chunk. Similarly, I mentioned earlier our steam plant,
another big chunk when we can get that done.
And for most of the work that we have, we have plans in
place and we are off working on those plans. My estimate is
that it is roughly a decade of work to work that off, assuming,
of course, we continue to get stable funding and we are able to
spend it. So it is on the order of a decade.
Mr. Rogers. At the clip that you have been addressing this
issue you think in a decade you will have addressed all the
issues that are on your current list. What about the issues
that are arising over the next decade?
Dr. McMillan. That depends again on funding, Mr. Chairman.
Mr. Rogers. That is the whole point. My argument is this:
You are never going to resolve these deferred maintenance
issues at the pace we have been addressing them. That is how we
got this $3.7 billion backlog. It is not going to happen. You
are being overly optimistic if you think that we are going to
be able to address this.
I understand it is your job to be optimistic. It is my job
to be realistic. And I am very frustrated. And this is the
Congress' fault, not yours, that the Congress has not more
aggressively tried to get ahead of these maintenance issues.
Dr. McMillan. Well, and if I could look backwards,
something that has helped over the last decade was the Facility
and Infrastructure Recapitalization Program, what is called
FIRP, and you mentioned that in your opening remarks. The big
deal with that was that it put new dollars on the table.
Mr. Rogers. Right.
Dr. McMillan. It was new dollars coming into the
laboratories and across the whole system. And as those dollars
came in, we were able to prioritize them, we worked at a
national level to do those priorities, and that made a
difference. When the FIRP dollars went up, the deferred
maintenance came down.
Mr. Rogers. So those are gone?
Dr. McMillan. Yeah, they are gone, but there is no magic in
this. It is dollars.
Mr. Rogers. I completely agree.
With that, I yield to the ranking member for any questions
he may have.
Mr. Cooper. Thank you, Mr. Chairman.
Mr. Smith, did I hear in your testimony the word
``caffeine'' when you talked about the collapsed roof?
Mr. Smith. Yes, sir.
Mr. Cooper. So caffeine from above dripped down and
weakened the structural steel and the concrete?
Mr. Smith. Yes, sir.
Mr. Cooper. Whence did this caffeine come?
Mr. Smith. It comes out of the Kathabar system. It is a
dehumidification system that is used to treat and control the
atmosphere in that particular facility. And over the years,
leakage occurred, various conditions set that up. This goes
back quite a period of time ago.
Mr. Cooper. So this isn't caffeine like coffee?
Mr. Smith. No, sir. It is a specific fluid used for
purposes of dehumidification.
---------------------------------------------------------------------------
The specific fluid is Kathene, not caffeine.
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Mr. Cooper. Presumably, massive amounts of caffeine?
Mr. Smith. Yes, there are big units.
Mr. Cooper. Was this leak of industrial caffeine not
detected?
Mr. Smith. I honestly could not tell you exactly what
happened years and years ago when it occurred. I really don't
have that history. I just know the consequence of what
happened.
Mr. Cooper. Second type of question, and it may be for Mr.
Ricciardelli more than for anyone else. You mentioned in the
lease agreement a 10 percent set-aside for future maintenance.
I am almost wondering if it is budgeting malpractice in
Congress if for any new project we do not set aside funding for
future maintenance, because everything has to be maintained.
And if we have funding for capital projects without that future
maintenance, then we are blinding ourselves to the obvious.
Mr. Ricciardelli. It is one of the benefits of the private-
public agreement that we have in there. Not only did we reduce
the cost of operation from $120 million a year down to $60
million a year, we got rid of $238 million worth of deferred
maintenance that was left at the Bannister plant. And, in fact,
all the maintenance is now done by the developer, and they set
aside 10 percent of our lease payment to make sure that over
the 20 years that they continue to maintain the facility at the
current conditions.
Mr. Cooper. I know that is specific to your lease
agreement, but in any budget, you could set aside money. I
think sometimes it is called a sinking fund or amortization.
There are various ways of describing it. But when we just
appropriate money for a project and think that is it, we are
generally leery of cost overruns and construction of the
project, but we have given little thought to the maintenance
needs that are likely to happen, in fact, inevitably going to
happen in the future.
Right now, we are repairing the Capitol dome for the third
or fourth time in American history, and we will probably need
to do that again in the next 30 or 40 years. It is just one of
those inevitable things.
Mr. Ricciardelli. And I think if you use good project
management, planning the move from the old facility to the new
facility will demonstrate that you could actually do it ahead
of schedule and under cost. We did it for about $18 million
less than we thought we would spend. And, again, that could be
used for some of that deferment or for the maintenance in the
future as well.
Mr. Cooper. Mr. Smith and I were just in Oak Ridge for the
uranium processing facility, one of the early steps there, a $6
billion facility. So have we set aside money for the
maintenance of that?
Mr. Smith. At this point, I am unaware that we have, sir.
But I need to take that as a takeaway and go do some reflection
on that.
[The information referred to can be found in the Appendix
on page 87.]
Mr. Cooper. Might be a good idea, at least for your
successor's successor's successors.
Mr. Smith. Yes, sir.
Mr. Cooper. Thank you, Mr. Chairman.
Mr. Rogers. I thank the gentleman. Don't you find it
interesting that in the public-private partnerships we require
them to set aside money for deferred maintenance but yet we
don't do it in our own budgeted project items? You are right,
it is malfeasance.
Mr. Cooper. Hello----
Mr. Rogers. The gentleman from California, Mr. Garamendi,
is recognized for 5 minutes.
Mr. Garamendi. Thank you. I am trying to catch up. My
apologies for not being here earlier today. I am missing some
of the opening statements, so I will try to play catch-up here.
It appears as though we are looking at specific facilities
on these campuses. And I am curious what the overall program is
for the totality of the campus. I noticed that there are
certain buildings that have been replaced, the Kansas City
facility, for example, some public-private partnerships at Y-
12, all of which seem to work good. I am familiar with some of
the things that have gone on at Livermore.
Do we have an overall plan on what needs to be done in the
various facilities? The chemistry building at Los Alamos,
obviously, in play here, but there is also the plutonium
facility and the like. Yes, we know there is a problem. We can
look at pictures as well as anybody else. But what is the
overall program. Let's just take Los Alamos, since you happen
to be here, Dr. McMillan, and share with me and the rest of us
what needs to be done in the various facilities and then the
associated cost.
Dr. McMillan. So, yes, we have a 10-year site plan that we
look across all of the facilities on the site, not just
individual ones, as you have rightly recognized, Congressman.
Let me talk a little bit about some of the things that emerged
from that plan that I think can help address your question.
As I mentioned in my testimony, we are hiring approximately
a third of our 10,000-person workforce over the next 5 years. A
consequence of that is that we need space for uncleared
employees first. And then as they get their clearances, which
is a time-consuming process right now, we need space to be able
to convert that space into cleared space so that they can do
classified work in that space.
So in our 5-year site plan, we have taken that kind of
progression into account to ensure that we will be able to have
the people that the Nation needs, and that as they are cleared,
they have spaces to work in.
As we look at our oldest facilities, we are using our
overhead money to retire some of the oldest facilities. And
then what we are often doing is taking shells--so the concrete
is still in pretty good shape for many of our buildings--and
then we are putting in new air conditioning systems, new
plumbing systems, new air handling systems for being able to do
light lab space.
So we are trying to do things as efficiently as we can to
provide the space for our workers. But we have a 10-year site
plan and then we work down that plan.
Mr. Garamendi. I assume you have made that information
available to this committee?
Dr. McMillan. We have made it available to NNSA. We can
certainly make it available to the committee if you would like
to see it, yes.
Mr. Garamendi. Yeah. I, for one, would like to see the
overall plan that you have.
[The information referred to can be found in the Appendix
on page 87.]
Mr. Garamendi. You did raise an interesting question--I
assume there is a very good answer to it--and that is the--
actually, you seem to be having to double the space as new
people come in and then clearance?
Dr. McMillan. No.
Mr. Garamendi. Did I misunderstand you?
Dr. McMillan. No, we aren't doubling the space. We need
space that is initially available for people without
clearances.
Mr. Garamendi. So that is separate from the----
Dr. McMillan. From the cleared space, but that we can then
convert into cleared space so that we will be able to have
them--we are not doubling the space, absolutely not. We can't
afford to.
Mr. Garamendi. That caught my attention.
Dr. McMillan. Yeah, no, we can't afford to.
Mr. Garamendi. So you recycle it and use it as secured
space later.
Dr. McMillan. Absolutely. And then we can convert it into
secured space. Because, no, we can't afford to double space.
There is no way.
Mr. Garamendi. That is, I am sure, true.
You know that I have got problems with this, the size of
the plutonium facility, and that is another question. I know
that there was some question about whether it really needs to
be rebuilt or not, whether you can repurpose it, as you just
described, with those other facilities that have good concrete.
And so I would like to see more detail about that.
The other question, and this goes to Mr. Ricciardelli. You
talked about the reduction in operating cost. Could you
describe why that happened?
Mr. Ricciardelli. So our operating cost in an old facility
at Bannister, just keeping ahead of operations, was about $120
million a year. Through the private-public relationship with
the developer, we basically built a $653 million facility, and
we agreed to a lease rate of $60 million a year for 20 years.
Mr. Garamendi. And they are responsible for the maintenance
and upkeep during that 20-year period?
Mr. Ricciardelli. They are responsible for all of the
maintenance. The only thing that we maintain in the building is
the capital equipment. But all the facilities, all the
infrastructure, the parking lots, the landscaping, everything
is done by the developer.
Mr. Garamendi. That is another question--I have got 10
seconds. No, I have no seconds.
I yield back. Thank you.
Mr. Rogers. I wanted to follow up with Mr. Ricciardelli and
Mr. Smith.
At both your sites you have had successful public-private
partnerships to deal with some of your infrastructure
challenges. Can you tell us a little bit about why those were
successful and just describe what else you think we could use
that model to address?
I will start with you, Mr. Smith.
Mr. Smith. I believe they have been successful because it
is an opportunity to essentially gain access to a significantly
sized facility that enables us to house our workers and
accomplish the mission in space that, again, will be maintained
through that lease arrangement so it does not deplete your
resources on the site and it enables you to get out of much
older facilities that have legacy-deferred maintenance issues
on it. And thus far, we have been able to find developers who
are very interested in doing it. They like working with our
sites, and they give us very favorable rates for those leases.
Mr. Rogers. Is there another infrastructure challenge that
you face that you think that would be a good model for us to
use to address it?
Mr. Smith. There are a number of areas that we need to look
at. One of the alternatives being looked at for a new lithium
facility would be a public-private partnership. That would
impact Y-12. You need to find facilities that you could
repurpose as the lessor someday to other use. Engineering
development could be an aspect of that. Warehousing can be an
aspect of that. There may be a number of things. It somewhat
depends on where you need be relative to the security fence as
well.
Mr. Rogers. Okay.
Mr. Ricciardelli.
Mr. Ricciardelli. Yes, sir. I think the private developer
has the ability to bring in the funds that the government
doesn't have access to. So in our case, they went through
private bond financing, they got local tax incentives from the
municipal areas as well. And they were able to get money to
fund these programs. And again over 20 years it will be a
profitable program for them and they were willing to invest in
that.
I think in order to replicate it, to your point, we are
going to probably have to look at some of the rules that limits
the amount of private building on public lands, because in
order to recapitalize it, in our case it is on public land,
private land, and they can take it over if we decide to vacate
it and turn it into an engineering or a manufacturing source.
So I think in order to replicate it at some of the sites
that are owned by the government, we may have to look at some
of the rules that limit the ability to bring in private
developers.
Mr. Rogers. Lastly, Dr. McMillan, I know you have talked
about the--not today, but previously--your challenges in
replacing your workforce, and it has been a monumental effort
as baby boomers start to retire. Talk a little bit about the
impact of these infrastructure challenges on the people you are
trying to recruit into your workforce and the kind of people
you are having to compete with, briefly.
Dr. McMillan. Yeah. Thank you, Mr. Chairman.
As I mentioned in my oral testimony, we are hiring
approximately a third of the laboratory.
Mr. Rogers. Which is how many people?
Dr. McMillan. It will be about 3,000 people. The total
laboratory today there are about 10,000 people at work today.
And we are having to put many of those people into what is
unquestionably substandard space. I mentioned problems with
ceilings. We have had ceilings fall in in some of our trailers.
Fortunately, no safety problems. We take care of that.
Mr. Rogers. What kind of candidates are we talking about?
Dr. McMillan. We are talking about Ph.D.s, Mr. Chairman.
Ph.D.s, master's students.
Mr. Rogers. Engineering?
Dr. McMillan. These are people in physics, engineering,
chemistry, hard sciences.
Mr. Rogers. What is the reaction you get when you bring
those people in and show them where they will be working?
Dr. McMillan. I have had some of them to my house for
dinner, and they are appalled. When their comparison is what is
happening in Silicon Valley, we aren't even in the same league.
Now, maybe we shouldn't be in the same league with Silicon
Valley, but at least it ought to be a safe and--let me say it
this way: We are hiring the next generation of the stewards of
the stockpile today. That is what we are doing. We need space
that is worthy of their service to the country.
Mr. Rogers. Well, and we need them to be able to come and
work for us. That is my concern, is that if you bring in these
people who have a lot of options, they are well educated and in
high-demand careers, I think it demonstrates we don't value
them, their work, if we are going to put them in a building
that has got grass growing through the cement floor.
Dr. McMillan. That is right. It needs to be worthy of their
service to the country.
Mr. Rogers. Yeah.
With that, I yield to the ranking member for any additional
questions he may have.
Mr. Cooper. I have no more questions, Mr. Chairman.
Mr. Rogers. The gentleman from California.
Mr. Garamendi. Once we get those documents about your
overall plan, there won't be any questions.
Mr. Rogers. With that, I will tell the panelists, we thank
you for your testimony, your presence here today, and we will
adjourn this panel and bring in the second panel.
Mr. Ricciardelli. Thank you.
Dr. McMillan. Thank you.
Mr. Rogers. All right. We will call the second panel to
order and recognize our witnesses, General Frank Klotz,
Administrator of NNSA.
Happy birthday.
General Klotz. Thank you, sir.
Mr. Rogers. And Mr. Jim McConnell, Associate Administrator
for Safety, Infrastructure, and Operations at NNSA.
And I understand that only General Klotz has an opening
statement for the record. So you are recognized to summarize
your statement.

STATEMENT OF LT GEN FRANK G. KLOTZ, USAF (RET.), ADMINISTRATOR,
NATIONAL NUCLEAR SECURITY ADMINISTRATION, ACCOMPANIED BY JAMES
McCONNELL, ASSOCIATE ADMINISTRATOR FOR SAFETY, INFRASTRUCTURE,
AND OPERATIONS, NATIONAL NUCLEAR SECURITY ADMINISTRATION

General Klotz. Okay. Thank you, Mr. Chairman. And I hope
because it is my birthday you will indulge me. I take great
pride in starting on time and ending on time, but I may take an
extra minute or two in the opening statement.
Mr. Rogers. If you want extra time, go ahead.
General Klotz. Thank you, sir.
Chairman Rogers, Ranking Member Cooper, members of the
subcommittee, thank you for the opportunity to discuss the
challenges and the steps taken by the Department of Energy's
National Nuclear Security Administration to address deferred
maintenance and the risks associated with aging infrastructure.
I am pleased today to be joined, as you said, by Jim
McConnell, who is NNSA's Associate Administrator for Safety,
Infrastructure, and Operations, a new position, by the way,
that we have created in the past 2 years specifically to focus
like a laser beam on these issues.
Let me emphasize at the outset that the success of the
Nation's nuclear security enterprise and its workforce depends
upon safe, reliable, and modern infrastructure at our
laboratories and at our production plants.
Although the role of nuclear weapons in our national
security strategy is widely understood and enjoys broad
bipartisan support, the link between nuclear deterrence and the
infrastructure that supports it is less well appreciated.
While much has been accomplished over the past two decades
to construct the new experimental facilities and high-
performance computing capabilities required to certify annually
the nuclear weapons stockpile without nuclear explosive
testing, investment in infrastructure has generally not kept
pace with the growing need to replace Cold War-era facilities.
I can think of no greater risk to NNSA's multiple and vital
missions than the current state of our aging infrastructure. We
are long overdue to build a modern, safe complex that will meet
military requirements, keep the deterrent safe, secure, and
effective, and enhance worker and public safety.
At the end of fiscal year 2015, as you have already pointed
out, Mr. Chairman, the backlog of deferred maintenance at NNSA
sites totaled approximately $3.7 billion. As one of his major
management initiatives, Secretary of Energy Moniz directed that
the infrastructure investment across all of the Department of
Energy, including the NNSA, be requested at levels sufficient
to halt the growth of deferred maintenance starting in fiscal
year 2016.
Accordingly, NNSA's fiscal year 2016 budget request,
subsequently supported by this Congress, will halt the growth
of deferred maintenance in the current fiscal year, and NNSA's
fiscal year 2017 budget request, plus this committee's mark, if
similarly supported by the full Congress, will actually begin
to decrease the backlog in NNSA's deferred maintenance in the
coming fiscal year.
I would like to highlight a few of the steps NNSA is
currently taking to reduce deferred maintenance. Now, these are
described in greater detail in our written statement.
But in sum, first, we are increasing funds for
recapitalization and maintenance efforts. Second, we are also
deploying innovative, best-in-government project management
tools to make risk-informed investment decisions to reduce
deferred maintenance. Third, we are prioritizing
recapitalization projects with deferred maintenance reduction
as a key criterion. Fourth, we are increasing buying power by
expanding efforts to strategically procure common building
systems across the enterprise, such as roofs and HVAC systems.
Fifth, in close consultation with this subcommittee, we are
completing a site condition review of the physical security
systems at all NNSA facilities to develop a security refresh
strategy over a 10-year period. And six, we continue to make
progress in disposing of excess facilities.
On that front, the administration's fiscal year 2017 budget
request includes $200 million to dispose of the 3 million
square foot Bannister Federal Complex in Kansas City that you
have already discussed in the previous panel. The plan for this
project, which involves transferring the property to a private
redeveloper, will save the taxpayer as much as $500 million
when compared to the government's cost to complete the
decommissioning if we were to do it directly. Congress has
supported this effort, and it is vitally important that the
full funding be available in early 2017 to execute this project
as planned.
Finally, NNSA is recapitalizing its infrastructure using
traditional line item capital construction projects as well as
a number of innovative approaches. You have already heard about
one of those. Again, the Kansas City National Security Campus,
which we dedicated in 2014.
This magnificent facility allowed us to move out of the
antiquated Bannister Federal Complex, cut our footprint in
Kansas City in half from 3 million square feet to 1.5 million
square feet, enhance the productivity and morale of our
workforce, and reduce operating and maintenance costs, as you
heard, by $100 million per year. Significantly, the new
facility was constructed by a private developer using third-
party financing made available to the NNSA through a GSA
[General Services Administration] lease.
And just last month, NNSA broke ground on the
administrative support complex at Pantex, which also uses an
alternative financing approach. This project will allow roughly
1,000 employees to move out of 1950s-era buildings into a
modern, energy-efficient workspace. It will also eliminate
approximately $20 million in deferred maintenance at Pantex.
We strongly believe the greater use of such approaches to
recapitalizing our aging infrastructure should continue to be
explored.
Although we have made important progress in tackling
deferred maintenance and recapitalizing our infrastructure at
all of our sites, a great deal of work, in my opinion, still
remains to be done. The strategy, the plans, the processes, and
many of the tools for arresting the growth of deferred
maintenance, disposing of unneeded facilities, and improving
infrastructure management are in place.
At the end of the day, however, it ultimately comes down to
the level of resources made available, and I would submit now
is the time to invest in them and for the years to come.
With that, I look forward to answering any questions you
and the subcommittee may have.
[The prepared statement of General Klotz can be found in
the Appendix on page 67.]
Mr. Rogers. Thank you for that. I think that we can't help
but take note of--you said a lot of important things, but one
particular statement, and that is that there is no greater risk
to our nuclear enterprise than this deferred maintenance. To
ignore that, I think, would constitute congressional
malfeasance. And I appreciate your candor in making that
statement.
One question I asked the panelists before you was, at the
pace that we have been taking deferred maintenance dollars and
putting them against this challenge, do you believe that we
will ever be able to get ahead of the maintenance issues that
face the NNSA?
General Klotz. Let me be perfectly honest about this. I
spent a number of years, as you know, in the military, and
every year you operate under a set, relatively constrained
budget. That budget may go up a few percentage points as a
result of inflation or new missions, but for the most part, it
is a fairly stable amount of funding that you get unless you
are in a crisis or some other emergency.
Right now, the NNSA has a lot of very, very important
missions, whether it is life extension programs, stockpile
stewardship, or our programs to reduce nuclear dangers around
the world, Naval Reactors. So within that particular set of
missions that we have to do, there is not a lot of additional
funding to spend on deferred maintenance.
The experience I had in the military was the first dollar
always goes to the mission, to the pointy end of the spear; the
next dollar goes to the people who have to employ that spear;
and then, if there is money left over, then it goes into
infrastructure and deferred maintenance.
And every year commanders would make the decision: I have
to pay for mission, I have to pay for people, I will take risk
this year on deferred maintenance or recapitalization and hope
that I get additional money next year. And then 1 year becomes
2 years, becomes 5 years, becomes 10 years.
So I think absent some dedicated resources for dealing with
the deferred maintenance process, we are going to be able to do
some of the things that we have done under Secretary Moniz's
leadership to sort of halt the growth, but to really turn it
around and make a huge dent in it is going to require
investment over a long period of time specifically devoted to
this.
Mr. Rogers. So at the pace we have been meeting that
challenge, will we ever accomplish it without additional money?
General Klotz. In my opinion, sir, no.
Mr. Rogers. General Klotz, we have discussed the topic of
this hearing many times in the past, and I want to thank you
and Secretary Moniz for your engagement and personal leadership
on this issue. I think we are getting traction now, but we both
know we need a lot more to do.
To that end, how can we all ensure that regardless of who
the next President is, the attention, focus, and funding needed
for NNSA's infrastructure and deferred maintenance challenges
continue into the next administration?
General Klotz. Well, thank you. That is, I think, an
extraordinarily important question. I think there is a general
consensus within the Department of Energy [DOE], including the
professional civil service, who will continue to work through
any transition in NNSA, and as you heard, from our M&O
[management and operating] partners at the laboratories and the
production plants, as well as in Congress and in this
committee, that NNSA's infrastructure presents a risk to our
strategic deterrent and has to be addressed with some urgency
and with resources and with focus.
Now, as I mentioned in introducing or alluding to the fact
that Jim McConnell was also here, we created a position within
or an organization within NNSA specifically to deal with that--
we call it the Office of Safety, Infrastructure, and
Operations--back in January 2015 to make sure that we had the
focus on this issue. We have also, and Jim can talk about this
in greater detail, set up a number of processes and tools
within the NNSA to help us understand, analyze, and keep focus
on this.
And then at the broader DOE level, under Secretary Moniz'
leadership, we have established key groups, again,
predominantly senior career service professionals, to sustain
the effort, such as the Laboratory Operations Board, the
Infrastructure Executive Committee, and others. And Jim, by the
way, who is a career senior executive in the civil service, is
a member of all of those groups.
So I think we have put in place the foundation to continue
that work as we transition to a new administration and a new
Congress. And, oh, by the way, one of the first things I will
tell the transition teams when they come in after the election
is the importance of keeping a focus on this.
Mr. Rogers. I appreciate that. I am concerned that as
Secretary Moniz has outlined in a letter to OMB [Office of
Management and Budget] last December, which I will introduce
for the record, NNSA's outyear funding levels are, quote,
``still only half of the $2.8 billion needed to address
infrastructure in the future,'' close quote.
[The letter referred to can be found in the Appendix on
page 80.]
Mr. Rogers. How do we ensure that this new administration
recognizes this shortfall and requests appropriate funding from
the Congress?
General Klotz. Well, again, Mr. Chairman, we have laid out,
both in our internal documents as well as reports that we have
sent up to the Congress on our infrastructure needs, our
recapitalization plans, our use of, our ideas on using third-
party financing. I think we have built a good series of
documents and a case which will be clearly one of those things
that we pass on to the transition teams as they come in.
Also, one of the things we do, we also, as you know, every
year put out the Stockpile Stewardship Management Plan, and we
have our other plan on countering and preventing and responding
to nuclear dangers across the world, which also lay out the
infrastructure that is required to underpin those critical
missions, and our Naval Reactors folks as well send forward
similar reports.
Mr. Rogers. Mr. McConnell, does NNSA have a plan for how to
tackle this backlog of deferred maintenance, and how much will
that plan cost us in the near term to make a significant dent
in this problem?
Mr. McConnell. Yes, sir, we do. You heard from the first
panel that on a site-by-site basis we construct something
called a 10-year site plan, which is an integrated assessment
of what each site needs to support its part of the mission. As
you know, there are eight sites that have to come together in
an integrated whole to satisfy our mission. They go out 10
years, is about as far as the planning horizon starts to get
too fuzzy.
What we have done very recently is create a master asset
plan, which is five-eighths of the way through development,
that takes those individual site plans and then brings them up
and connects them one level higher as an enterprise level to
make sure that we can balance risk and investment needs not
only to 10 years, but out to hopefully 25 years at an
enterprise level so that we can connect the infrastructure
conditions to its risk posed to the mission and then be able to
make prioritized investments across the entire enterprise to
optimize our success and to minimize our risk.
Now, that gives us an integrated list of what to do when.
The question of how long it will take gets back to the
resources applied to it. So as you indicated, and as the
Administrator indicated, we didn't get into this problem in a
short amount of time. It will take us time to get out of it.
But with the concerted resources that the Secretary and the
Administrator have requested and that thankfully were actually
exceeded in the last two cycles of appropriations, we will
start to turn that curve and actually reduce deferred
maintenance. It will take a long time, two decades, unless
there is a very significant increase in investment.
Mr. Rogers. What do you consider a very significant
increase in investment that would get that clip down to a
decade earlier?
Mr. McConnell. The history that we have that we can rely on
is the 10 years where the Facilities and Infrastructure
Reinvestment Program, FIRP, was in place. FIRP had at its
higher points was between $200 million and $300 million a year,
and that had a noticeable effect.
Mr. Rogers. Okay. With that, I will recognize the ranking
member for any questions he may have.
Mr. Cooper. Thank you, Mr. Chairman.
First, General Klotz, I apologize for your having to spend
your birthday this way. If you check, it may be a violation of
the Geneva Conventions for this to happen.
I couldn't help but notice in your testimony and in your
statement the remarkable statement that if Congress comes
through and provides $200 million this year to close down
Bannister, that could save the government $500 million. Whoa.
That is pretty amazing. We should do stuff like this all day
long.
But I would ask you, and it may be more appropriate for the
record, and maybe Mr. McConnell can pitch in here, I think the
public would be very interested in knowing what causes a $300
million delta like that. Is the government that inefficient, or
are these facilities so prehistoric or government regulations
so cumbersome that just by turning it over to the private
sector we can save this fantastic amount of money? That is
significant.
[The information referred to can be found in the Appendix
on page 87.]
Mr. Cooper. It would also be important to see if we could
do this elsewhere as well, because this is what is sometimes
called low-hanging fruit. Why not pluck this from the branches
while it is available?
Mr. McConnell. Sir, I would be happy to. The unique
situation of the Bannister Federal Complex just inside the
Kansas City beltway, it is very valuable from a redevelopment
perspective. So when we can sell it to this private
redeveloper, they can develop it purposefully for the next use,
an industrial use. If we as the Federal Government have to D&D,
deactivate and decommission the facility, we have to take it to
standards that would be acceptable for any use, which is a
cleaner, more intense level of remediation. And so that
accounts for the significant price difference. The government's
constraints are a little bit more rigid than the private sector
would have.
Mr. Cooper. So we would have to make it, say, playground
safe for children so they could eat the dirt if they wanted to?
Mr. McConnell. Yes.
Mr. Cooper. And you are allowing it to be dirtier for an
industrial use. So we save $300 million by letting it be more
polluted.
Mr. McConnell. Well, to getting it to a point where it
still meets standards. It will still meet all the standards for
its purpose. But since the developer will have a specific
purpose and the government doesn't have any specific purpose
when it is getting ready to clean it, it is a different
standard. If we were to repurpose it for our own use, we would
clean it up to the same standard as this private developer, but
that is if we were planning to reuse it for an industrial
activity.
Mr. Cooper. So government regulations require it to be
retrofitted for any purpose, including the most stringent, the
cleanest, and a private developer can just find a use for it
that could be a landfill or something. It doesn't have to be
that clean.
General Klotz. In our discussions with the developer, their
actual use for it has not come up. That is part of their
business model.
Mr. Cooper. I think it is interesting for people to
understand what causes this incredible arbitrage, you could
call it, between two types of developers.
Mr. McConnell. That is the primary difference. There are
probably others as well.
Mr. Cooper. Others, yes.
Anecdotally at least, I have come to the conclusion that
Naval Reactors has done a better job of maintaining its
facilities than the others. I don't want to pass final judgment
on that, but it has led me to the thought that with the
traditional non-naval military rotation, 2, 3 years in a job,
move on, that makes it very tempting to leave maintenance
problems to your successor. It is kind of built in the job
because as you put it, first is the mission, the pointy end of
the spear, then the personnel, and then if there is money left
over, we maintain things.
But Naval Reactors and the whole Rickover tradition was you
were there for the long haul, whether it is an 8-year tour now,
it can be longer. That gives you a much different perspective
than 2 or 3 years in, 2 or 3 years out sort of point of view.
So I am also wondering if in addition to the failure for
Congress to appropriate money for maintenance in some sort of
sinking fund or amortization or depreciation, that we have a
structural issue in our military where you are not going to get
anything else but ignoring maintenance when you are only there
for 2 or 3 years. It is almost like the old joke about the
envelope in the drawer for your successor. Why don't we figure
out a plan at least for these ultrasensitive facilities that
takes a longer-term perspective.
General Klotz.
General Klotz. Thank you very much for that comment. You
raise a very interesting point. First of all, I am glad to hear
you say that in your opinion Naval Reactors is doing well in
this regard because, as you know, we have some responsibility
for Naval Reactors. The director of Naval Reactors essentially
wears two hats, one with the Navy and one with the Department
of Energy, NNSA.
And they do have their challenges. I have visited most of
their major facilities, their laboratories, and there are some
buildings there which, quite frankly, date back to the early
days of the Cold War, back to the early Rickover era, and are
in need of replacement. In particular the spent fuel handling
facility at Idaho where they have a large pool where they bring
spent naval reactor fuel from aircraft carriers and submarines
is starting to show some real signs of age and needs to be
recapitalized, and with the support of Congress we are on the
track to do that.
But you raise a good question. In the military and among
the political appointees, there is a turnover, and I think that
speaks to the importance of making sure that--or what we have
tried to do in NNSA and DOE over the last couple years is to
make sure that we have clearly articulated, defined, and
written down the roles, responsibilities, authorities, and
accountability of the various activities that take place within
the Department of Energy and within the NNSA and then to put in
place career senior executives who are experienced and experts
in this particular field so that as transitions take place they
know what they need to do and they have the authorities and the
game plan to actually carry those things out.
So we have worked very, very hard to make sure that is in
place. It may not be as satisfactory as an 8-year term for the
head of Naval Reactors or the head of the Navy's Strategic
Systems Program who also has a longer fixed term, but it is how
we have tried to address that particular issue.
Mr. McConnell. If I may add one other aspect. One of the
challenges that I have seen that has been faced is how to
balance risk decisions between short-term programmatic needs
and longer-term infrastructure risk. And one of the things that
we have done recently in NNSA, over the course of the last 2 or
3 years, that has been very beneficial both in terms of that
decision and how to carry this forward, is created a system
that more objectively analyzes and communicates the risk that
infrastructure poses to the mission, so that decisionmakers
like Administrator Klotz and the Secretary have a better
understanding now than perhaps their predecessors had of what
the risk tradeoff actually is between the present and the
future.
The future was always a little fuzzy, and so the decisions
tended to favor shorter-term risk at the expense of
infrastructure. We now have a better way of explaining to the
Administrator what might happen if we either do or don't invest
in infrastructure, and that allows for a better risk-informed
decision which produces a slightly different balance. And I
think that has resulted in some hard decisions that have
actually gone to increase investment in infrastructure.
Mr. Cooper. To put this in a more understandable context
for average citizens, we had a Treasury Secretary once who said
that nobody in the history of the world has ever washed a
rental car, because if you don't think like an owner, you don't
care, you're not going to keep it clean. And anybody that has
ever rented an apartment knows that if you don't keep it clean,
you are going to lose your security deposit. And the landlord
requires that security deposit because they want a Sword of
Damocles hanging over your head as an incentive to turn it over
clean.
So I wonder in the promotion boards if we are paying
adequate attention to the state of the facilities that were
under a command when the commander goes up for a promotion. If
they leave it in worse shape than they found it, if it is a
dump, if they didn't push through the Pentagon bureaucracy for
more money to keep it up, then maybe that should be a black
mark on their career. Because otherwise it is just too easy, in
and out 3 years, punch your ticket. Move on.
Thank you, Mr. Chairman. I think my time has expired.
Mr. Rogers. I thank the gentleman.
The Chair now recognizes the gentleman from California, Mr.
Garamendi, for 5 minutes.
Mr. Garamendi. First, Mr. Chairman and Ranking Member,
thank you for this really important hearing, which we probably
don't spend enough time on overall in Congress on these kinds
of things. And it really comes down to, and I am really pleased
that you brought up this issue of succession and the like. When
I was over at the Department of Interior some decades ago now,
there were what we knew as the Weebees. I see Mr. McMillan
knows what I am talking about. It is the ``we be here when you
are gone.'' And indeed that is part of the discussion we are
having here.
I think that we also are responsible for making choices
here, and in some respects we have not required the information
that we need to make the choices, in part because we really
have two different operations here. We have got the Department
of Energy, and then we have got the rest of the military with
the nuclear enterprises on the other side, and the budgets are
split, the committees are split, and the responsibility is
also.
But when taken in totality, the entire nuclear enterprise
is really dependent upon what goes on here and in NNSA. But you
don't have the fancy missiles or the stealth bombers and other
kinds of things that are part of our responsibility. And so I
think it is important for us to be fully aware of this
particular issue of not deferred maintenance, but the ability
of these facilities to function for the purpose of national
defense. In other words, in this case the bombs themselves.
And so I need more information, and I would suspect that
perhaps my colleagues do too. And if you could provide some of
the information that apparently has been made available from
the laboratories to NNSA, I would like to see at least a
synopsis of that in the overall context and really how each of
these facilities meet the essential, I want to emphasize that,
the essential role of the totality of the nuclear security
system.
General Klotz. Yes, sir, we would be more than happy to
provide that.
[The information referred to can be found in the Appendix
on page 87.]
Mr. Garamendi. That is a long conversation, and it is,
frankly, a lot of hard work on at least my part to understand
how all this fits together, and I will take the time to do
that. Because one-off, okay, we need a new pit facility. Fine.
How does that fit into the overall picture of this whole
maintenance?
And I think that my colleague here is quite correct about
the incentives in the system, and we be, we all be gone, or we
won't. So I think that fits it.
I am going to let it go at that and look forward to
additional information.
Okay. Thank you.
General Klotz. If I could, sir, I would like to publicly
thank you for coming over to the Department of Energy and NNSA
a few weeks ago. A visit of a Member of Congress, as both
Congressman Rogers and Congressman Cooper know, goes through an
organization like wildfire, and it is really a boost to the
morale of the people who do this work and don't often get a lot
of recognition and appreciation and care for what they do. So
thank you, sir, for that.
Mr. Garamendi. The visit was most informative, and I will
come back whenever there is another opportunity to learn along
the way. Thank you.
Mr. Rogers. I thank the gentleman.
The Chair now recognizes the gentleman from Colorado for 5
minutes.
Mr. Lamborn. Thank you, Mr. Chairman. Thanks for having
this hearing. I want to thank the witnesses for being here.
I don't have any specific question, but I just want to say
that I have been to Los Alamos, and I have seen some of the
buildings right on the fault line. And I have been to Pantex,
and I have seen some of the decrepit conditions there. And I
agree with you, some of the deferred maintenance really needs
to be addressed. And I want to be supportive, working in a
responsible and effective way, efficient way, to overcome these
problems. So thanks for highlighting those and for being here
today.
And, Mr. Chairman, that is all I have, and I yield back.
Mr. Rogers. I thank the gentleman.
Mr. McConnell, can you describe for us some of the various
approaches you have employed to deal with some of these
infrastructure challenges? And in particular I am thinking
about line item construction, public-private partnerships,
FIRP-like programs, other approaches. Give us some idea about
what is working, what is not working, and what you would like
to do.
Mr. McConnell. Thank you very much.
First and foremost, as I described a second ago, we start
with a more objective analytical basis for identifying on an
asset-by-asset, individual facility basis what each facility's
contribution or a system's contribution to our mission is.
Combining that with an appreciation of the condition of that
facility, how likely it is to fail, we have the ability to
assess risk on a facility-by-facility basis that gives us a
rationale for prioritization of what infrastructure investments
are required.
At a relatively high level then, we make a decision about
the totality of the infrastructure investment that is
appropriate at any given time. And then we get down to the
nuts-and-bolts level of what is the specific system or facility
or component that needs to be fixed and decide whether it is a
maintenance-type activity or a replacement activity or if it is
a major construction activity. And that is how we then bin into
the various tools that we have at hand.
When it comes to major construction, when we have a large
item that needs to be replaced, tens, hundreds of millions of
dollars, there is a very rigorous process, as I am sure you are
well aware, and one of the first steps in that is to do an
analysis of alternatives. We figure out what all the ways we
could satisfy the need are and then do an analysis of each
alternative to figure out which one makes the best sense and
the best value for the government.
We go into that, again, very objectively, data driven,
without the preconceived notions, and then identify which
alternative works best.
Two classic recent examples. In Amarillo, for the Pantex
administrative support complex, we went through that analysis
and determined that the public-private partnership route was
the best option and the best value. We have for the Federal
staff a need for a new facility in Albuquerque, New Mexico. We
went through the same process. That time the answer that came
back was normal traditional line item capital construction.
So we are driven by the data, we are driven by the results
to pick the option that is best, and it is good to have all of
those tools in our toolbox because then we can get pretty
specific on how to optimize our resources and apply them to the
best way.
Mr. Rogers. Well, we have heard some examples today from
Mr. Ricciardelli and Mr. Smith about successful public-private
partnerships, and it is no secret I am a big proponent of
public-private partnerships. And you all just had a real
success, or you started a real success at Amarillo by taking on
a portion of the deferred maintenance challenge at the Pantex
complex with a public-private partnership.
Where else, is there another challenge on deferred
maintenance that comes to mind where you think a public-private
partnership would be the right approach?
Mr. McConnell. As I said, in every time that we need to
deal with acquiring a new capital asset, we look at all the
aspects, and public-private partnership, third-party financing
is always, unless there is some very unique situation, one of
the alternatives that we----
Mr. Rogers. But there hasn't been a project that you are
facing where you have already done that analysis and you have
decided if we had the money a public-private partnership would
be the solution?
General Klotz. There are other areas that we are currently
working through. I think when we came up and briefed you or had
a hearing on third-party financing and public-private
partnerships we mentioned Livermore, two facilities out there.
There are two laboratories at Livermore, Lawrence Livermore
Laboratory and Sandia Livermore. They both have projects which
are designed not so much to deal with deferred maintenance,
although it will, but they are designed to get at another
objective that the Congress has and that the DOE and NNSA has,
and that is to create the opportunity for these labs, which are
essentially engines of scientific technology and engineering
innovation, to be able to work better with local industry and
local universities and colleges in a collaborative space.
So at Livermore, again at both labs, we are pursuing
buildings which would allow the scientists from the national
laboratories there to mix with people from the outside to
advance innovations in high-performance computing, for example.
So to us that looks like a good candidate for a public-private
partnership.
We have been working very, very closely between the
headquarters and the two laboratories on this. They have been
taking very, very careful notes from our experience in getting
the Pantex deal closed.
So we are still working the numbers to make sure that we
can satisfy the requirements of the various OMB circulars, as
well as the rules that have been put in place by the Congress
and will be adjudicated by the Congressional Budget Office when
it comes to scoring.
Mr. Rogers. Thank you. I appreciate what you have been
doing, and I want to pledge to you that I am going to do all I
can to work with the ranking member to help convince our
colleagues that we need to meet this challenge more
aggressively because the risk to our nuclear enterprise is
completely unacceptable at present.
With that, I will yield to the ranking member. Any closing
remarks? Has none.
Gentleman from Colorado?
With that, I thank you very much for your service to our
country, and this hearing is adjourned.
[Whereupon, at 5:47 p.m., the subcommittee was adjourned.]

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A P P E N D I X

September 7, 2016

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PREPARED STATEMENTS SUBMITTED FOR THE RECORD

September 7, 2016

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[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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DOCUMENTS SUBMITTED FOR THE RECORD

September 7, 2016

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[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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WITNESS RESPONSES TO QUESTIONS ASKED DURING

THE HEARING

September 7, 2016

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RESPONSES TO QUESTIONS SUBMITTED BY MR. COOPER

Mr. Smith. Any time a project has an extremely long execution phase
there must be a comprehensive plan for the maintenance of equipment and
systems prior to the point at which these items are turned over to the
end users for testing and then production. As part of the UPF project,
we will budget for and implement plans to perform this execution phase
maintenance. Once the facility is turned over to Y-12 operations,
maintenance of UPF will become part of the site's overall maintenance
program and be covered by other budgeting mechanisms (as the project
will have completed at that point). To that end, the UPF-generated
Concept of Operations plan provides guidance and expected staffing
needs and the UPF-generated maintenance analyses outlines preventative
maintenance programs and anticipated corrective maintenance needs.
Those will be combined into anticipated maintenance staffing needs for
operation that are outside the Future Years Nuclear Security Plan (nine
years away), but they are being identified for future budgeting that
will come from the facility's operating funds. However, without
intentional focus and budgeting, the situation can occur where budget
tradeoff decisions will lead to less than optimal maintenance of the
new facility as new facilities do not have a commensurate long-term
maintenance funding profile in the same manner as they have for new
construction. [See page 12.]
General Klotz and Mr. McConnell. The Fiscal Year (FY) 2017
President's Budget Request includes $200 million for NNSA to transfer
the Kansas City Bannister Federal Complex to a private developer for
demolition, remediation, and redevelopment. The private developer has a
significant advantage over NNSA in that it can assume responsibility of
the property and remediate to a specific, industrial end-use. If NNSA
were to maintain ownership of the property, NNSA would be required to
return the property to a much higher level of remediation suitable for
any future use, due to a lack of intended end-use of the property.
Estimates suggest it would take NNSA more than a decade to achieve this
more intensive level of remediation and would cost roughly $1 billion.
Therefore, the estimated savings to the government in transferring the
property on-time could be as much as $700 million. [See page 21.]
______

RESPONSES TO QUESTIONS SUBMITTED BY MR. GARAMENDI
Dr. McMillan. Yes, I would be happy to brief you and your staff on
our comprehensive infrastructure plans. NNSA has a new process and
system for development of the Future Years Nuclear Security Plan
(FYNSP) and that new process should produce a product in the beginning
of the next calendar year. I would be happy to provide that information
to you once it has been finalized. [See page 13.]
General Klotz. As requested, NNSA is providing copies of the most
recent Ten-Year Site Plans (TYSP) that were completed in Fiscal Year
(FY) 2015 by each of NNSA's eight sites. The TYSPs are created by the
M&O contractor at each of NNSA's eight sites to convey the site's
current and future infrastructure needs. Starting in FY 2017, the TYSPs
will be replaced by a new, enterprise-wide, integrated, strategic
infrastructure planning document called the Master Asset Plan (MAP).
During Calendar Year 2016, NNSA is conducting Infrastructure Deep Dives
at each NNSA site. The MAP and Deep Dives identify program
requirements, infrastructure gaps and risks to meeting those needs, and
proposed solutions to accomplish the long-term infrastructure vision.
As of September 30, 2016, six of eight Deep Dives have been completed.
The final two will be completed by early November. The first MAP is
scheduled for release in March of 2017 in conjunction with the FY 2018
President's Budget Request. [See page 24.]

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QUESTIONS SUBMITTED BY MEMBERS POST HEARING

September 7, 2016

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QUESTIONS SUBMITTED BY MR. ROGERS

Mr. Rogers. Please provide the committee unclassified pictures of
the most significant infrastructure challenges and degradations at your
sites.
Mr. Smith. [No answer was available at the time of printing.]
Mr. Rogers. Please describe the impacts of your sites'
infrastructure challenges on your ability to attract, retain, and
motivate workers? What are the impacts to morale?
Mr. Smith. There's no doubt that attracting and retaining the next
generation of great workers becomes more challenging in facilities that
are in a deteriorated state. Our workers experience the infrastructure
challenges every day and are vigilant in their efforts to perform to
the highest standards while often working in facilities that are less
than ideal and are the subject of frequent repairs and outages.
Furthermore, many of our workers have had life-long careers at the
sites and for them, keeping the sites going is truly a service to the
nation with a knowledge of the past difference these sites have made.
Projects like the Jack Case Center and New Hope Center at Y-12, the
Highly Enriched Uranium Materials Facility at Y-12, and the
Administrative Support Complex and the High Explosives Pressing
Facility at Pantex go a long way toward addressing morale issues, but
it is no doubt a challenge to recruit top talent while competing
against industries that can provide better facilities with modern
safety, security, and work environment amenities. Still, the excitement
at the groundbreaking for the Pantex Administrative Support Complex in
August was palpable, and it's very apparent that employees are excited
to work in a state-of-the-art facility that is commensurate with the
importance of their jobs to national security.
Mr. Rogers. If provided increased top-line funding to support it,
would you favor a new FIRP-like program aimed specifically at dealing
with deferred maintenance and infrastructure challenges? How would you
suggest such a program set priorities?
Mr. Smith. Significant reductions in deferred maintenance will not
be realized without continued investment strategies. We are actively
establishing priorities and addressing deferred maintenance to continue
mission work, but that is not enough. The Facilities and Infrastructure
Recapitalization Program had a lot of success reducing deferred
maintenance at Pantex and Y-12, and similar to the FIRP Program, a
significant additional annual investment above current funding levels
is required to reduce deferred maintenance at both sites. Until this is
done, there will be periodic disruptions to mission accomplishment
while unplanned emergent items are dealt with and impacts on production
are subsequently addressed through recovery schedules and worker
overtime whenever possible. Current funding levels presently allow us
in many areas only to treat the symptoms of age rather than address the
fundamental degradation. Such a program could set priorities using
guidelines that are already used at both sites: How essential is a
given capability for the site. Because of limited funding, we are
already forced to make very difficult decisions every single day about
where to devote funding, and examining how essential a given capability
is helps to prioritize where to spend money. While all capabilities are
important, certain capabilities are more inextricably linked to mission
requirements and should be prioritized over other functions, with those
considered mission critical at the top of the list. Fortunately, along
with Lawrence Livermore National Laboratory, Pantex and Y-12 have
piloted a software program for the NNSA designed to better track and
manage building infrastructure maintenance that will help us make
better prioritization decisions. The sites were designated as BUILDER
Centers of Excellence in 2013 by NNSA and are in the process of
implementing the U.S. Army Corps of Engineers' BUILDER Sustainment
Management System. The program will work with existing management tools
like G2 and is designed to let managers proactively respond to
infrastructure maintenance needs, and when complete, Pantex's 620
facilities and Y-12's 345 buildings will be integrated in the program.
Mr. Rogers. Please provide the committee unclassified pictures of
the most significant infrastructure challenges and degradations at your
lab.
Dr. McMillan. [The photos are retained in the subcommittee files.]
Mr. Rogers. Do you believe we currently have a ``responsive
infrastructure'' in our nuclear security enterprise? How would you
define this term? If given direction and resources by the President and
Congress, do you believe that NNSA's enterprise produce and deploy to
the military a nuclear weapon in 5 years? In 10 years?
Dr. McMillan. Some elements of the current Nuclear Security
Enterprise (NSE) infrastructure are responsive, but there are others
that are not. I define responsive infrastructure as how well the
infrastructure we have can respond to new scope/mission deliverables.
For this definition, responsiveness is measured in terms of the time
required to respond. Responding to new scope/mission deliverables would
involve execution across three essential elements: facilities,
technical/scientific tools, and people. Facilities: NNSA has
significant efforts underway to invest in critical infrastructure for
the future of the Enterprise, in particular with efforts for the
Uranium Processing Facility (UPF) at Y-12 and the Plutonium Strategy at
Los Alamos. To create a truly responsive infrastructure, it will be
essential for Congress and the Administration to continue support for
these and other critical capabilities over the next decade. Technical/
scientific tools: For the Enterprise to succeed, it will require
significant investments to build upon the success of the first 20 years
of Stockpile Stewardship. As a nation, we need to build upon our
earlier success to establish the next generation of both experimental
and computing tools so that we can continue to certify the stockpile.
People: The infrastructure and tools are irrelevant without the right
people with the right experience; their expertise and state of
readiness to perform certain types of work is dependent on the degree
to which their skills have been exercised in critical and necessary
areas. It takes more than a decade to ``grow'' design expertise and
this expertise must be exercised and challenged constantly to retain
competency. NNSA and the labs are exercising these people today through
the Life Extension Programs and other efforts such as the Foreign
Nuclear Weapons Intelligence program. Despite this body of work, gaps
do remain and we will need to continue to work to exercise the full set
of skill sets across the Enterprise. To your question of being able to
produce and deploy a weapon, I believe that given today's Enterprise,
with military requirements and focused application of NNSA resources,
it would be technically possible for the NNSA Enterprise to produce the
first production unit of a nuclear weapon that is essentially
equivalent to those in the existing stockpile within 10 years. It is
important to note, however, that this statement is true today only
because the Enterprise has had nearly 15 years of ongoing exercise
through the Life Extension Programs. This state of responsiveness was
not the case in the mid-to late-1990s when significant atrophy of
capability had occurred. The W88 Alt. 370, although limited in scope,
is an example of the Enterprise's ability to respond relatively quickly
to a stockpile interest. Again, this was made possible by the fact that
the Enterprise was able to build upon capabilities and expertise
developed and honed through the execution of the W76 and now the B61-12
LEPs. With the Alt. 370, Los Alamos and the Enterprise had to quickly
respond to a new set of expanded requirements in a compressed
timeframe. On the one hand, the Alt. 370 shows we can be responsive,
but it also suggests that the Enterprise would be very challenged to
produce weapons in significant quantities (the question asks about
producing one), or weapons that are different from those in the
stockpile. Additionally, it is unknown how the Enterprise would respond
if this new requirement was simply overlaid on top of the work that is
already in progress since several areas of the Enterprise are fully
committed to the program of record. Additionally, I would highlight for
the Committee the unique challenges of nuclear components where
response time to bring new infrastructure online is routinely measured
in decades.
Mr. Rogers. Please describe the impacts of your lab's
infrastructure challenges on your ability to attract, retain, and
motivate workers? What are the impacts to morale?
Dr. McMillan. The Laboratory works hard to attract and retain the
best and brightest workforce, and we are mindful that we are recruiting
in a very challenging environment, competing against other laboratories
and tech giants in Silicon Valley and elsewhere. We typically succeed
when we can demonstrate how recruits will be able to work on complex
scientific and technical challenges, and have access to state-of-the-
art experimental and supercomputing tools. Workers can become
demotivated quickly, however, as a consequence of residing in spaces
that are in poor condition, buildings with systems that break down
frequently, and areas in which repairs are protracted or take a long
time to commence. When I testified before the Committee, I talked about
the challenges of recruiting new postdocs and scientific staff to
subpar space--just recently a postdoc relayed his frustration about the
air conditioning in his office not working in the heat of the summer.
Even some of our most distinguished scientists work in subpar
environments every day. In the weeks following the hearing, I was
visiting one of our senior scientists in his laboratory space. The
researcher had just been named the winner of the prestigious American
Physical Society (APS) Herman Feshbach prize, a significant and highly
prestigious recognition from the international scientific community. I
was troubled to see when I sat in his conference room that the ceiling
tiles were stained from water leaks and as I took a phone call in his
administrator's office, I saw rodent traps deployed. Staff morale is
also impacted by the pace at which infrastructure upgrades can be made.
Los Alamos works to efficiently invest funds from NNSA and our internal
site support budgets to address infrastructure issues. At the same
time, the scale of the Laboratory, and the age of our facilities makes
it impossible to get to everything at the pace that we would like to.
Mr. Rogers. If provided increased top-line funding to support it,
would you favor a new FIRP-like program aimed specifically at dealing
with deferred maintenance and infrastructure challenges? How would you
suggest such a program set priorities?
Dr. McMillan. Yes, if new top-line funding were made available to
support a new FIRPlike program, we would agree that it would be a good
thing for the Enterprise. Priorities should be set following the NNSA
approach: elimination of unneeded facilities; and improved maintenance
for facilities that support all mission sets at the national security
laboratories, plants, and the Nevada National Security Site.
Mr. Rogers. Have you noticed any impact on your ability to attract,
retain, and motivate workers since the move to your new facility? To
morale? Do you have any concrete data on this that you can provide to
the committee?
Mr. Ricciardelli. One of the most exciting, and most visible,
aspects of our transformation was our new state-of-the-art LEED Gold-
rated manufacturing and engineering facility. The Kansas City National
Security Campus's (KCNSC) unique design features give this building a
high-tech look with an environmentally-friendly presence. The award
winning design establishes a workplace that inspires and encourages
collaboration, while celebrating our manufacturing and engineering
culture.
A comprehensive Culture and Motivation communications plan was
deployed to ensure employees were informed and engaged throughout the
move. Engagement survey results showed 71% felt change was important to
our success. Following the move, a survey was conducted and 97% of
respondents agreed that overall, they were satisfied with their move
experience. Employee engagement survey scores increased 13% from 2012
to 2014 (there was no survey conducted in 2015). Honeywell also
conducts positive employee relations surveys annually, and the Kansas
City location scores have increased on 19 of 20 questions since 2013
with some of the biggest increases in pride (up 6%) and job security
(up 11%).
Significant time and effort has been invested in our talent
pipeline and recruiting the critical skills needed to accomplish the
NNSA mission. We are confident the new facility creates an atmosphere
in which people feel valued and inspired. Although the attrition rate
at KCNSC has remained fairly constant overall, we have been
experiencing lower professional/managerial turnover since moving into
the building than we did in the year leading up to it.
Mr. Rogers. Please describe the process that your company and NNSA
went through to build the new Kansas City National Security Campus.
This was a pretty unique project for NNSA in that it was both a public-
private partnership and it totally replaced an NNSA site, moving it to
a new building and an entirely new location. What lessons were learned
during this process? How are you helping NNSA share and apply these
lessons across the enterprise?
Mr. Ricciardelli. The process used was a combination of the DOE O
413.3B process for the acquisition of capital assets and the GSA
government lease process using third-party financing as shown below.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

.epsKey in this process was cooperation between NNSA and GSA where
project approval was granted by NNSA through Critical Decision-1 (CD-1)
of the DOE O 413 process in combination with OMB and Congressional
approval through the GSA prospectus process. The requirements for the
site were assembled by NNSA in the Program of Requirements document and
those requirements were bid by private developers through the GSA
Solicitation for Offer. Not shown in the diagram above is the National
Environmental Policy Act process requirements that were followed in
parallel. This process currently cannot be used on federally owned real
estate due to federal statutes. Because the project assets are
privately owned, the new site produces property tax revenues and
therefore local tax incentives were sought and applied.
The construction and occupancy projects were largely separated.
Although occupancy wasn't technically a capital acquisition project,
DOE O 413 provided the process framework and was used to provide
program controls to execute the entire occupancy project which had
little direct GSA involvement. Tenant improvements at the site were
also separated with some being provided as part of the lease according
to GSA standards, while tenant improvements unique to NNSA's mission
were funded directly by NNSA outside of the lease.
The project team captured nearly 300 lessons learned from the eight
year project and continues to share these lessons with other major
projects within NNSA including the Uranium Process Facility at Y-12 and
the Administrative Office Building at Pantex that are currently in
work. Perhaps the most significant lesson learned is that NNSA can use
its own real estate and third party financing authority to accomplish
similar projects without complex integration that is needed to partner
with GSA.
Mr. Rogers. Do you believe we currently have a ``responsive
infrastructure'' in our nuclear security enterprise? How would you
define this term? If give direction and resources by the President and
Congress, could NNSA's enterprise produce and deploy to the military a
nuclear weapon in 5 years? In 10 years?
General Klotz. A responsive nuclear infrastructure is one that
reflects the resilience of the nuclear enterprise to unanticipated
challenges or emerging threats, and the ability to anticipate
innovations by an adversary and to counter them before our deterrent is
degraded--all while continuing to carry out the day-to-day activities
in support of the stockpile. Elements of a responsive infrastructure
include the people, the science and technology base, and the facilities
and equipment needed to support a right-sized nuclear weapons
enterprise designed to maintain a safe, secure, and effective nuclear
weapons stockpile. The 2010 Nuclear Posture Review identified key
capabilities required of a responsive nuclear infrastructure. NNSA's
Uranium Strategy and Plutonium Strategy were developed to address
several of these key capabilities, including plans to address
infrastructure issues. A number of critical investments, including the
Uranium Processing Facility (UPF) and the Chemistry and Metallurgy
Research Replacement (CMRR) Project, are currently underway to support
the continued execution of these key capabilities. Both projects will
move operations from degraded facilities into newer buildings,
increasing the responsiveness of the enterprise. Additionally,
investments in other capability areas such as tritium, lithium, and
microelectronics production are either planned or budgeted. Alongside
these production capabilities, NNSA also invests in nuclear weapon
research, development, testing, and evaluation (RDT&E). Initiatives
like Exascale computing will advance predictive modeling of weapon
systems, aiding in qualification and experimental design. These
capabilities support continuing stockpile certification and support
responsiveness by enabling certification of changes to the stockpile.
Much of NNSA's infrastructure is old and brittle and we are making key
investments to ensure the complex is able to be responsible to its
national security missions. More than 50 percent of NNSA's facilities
are over 40 years old, nearly 30 percent date to the Manhattan Project
era, and failures are increasing in frequency, severity, and
unpredictability. These failures require funding for correct
maintenance that could otherwise be invested in infrastructure
modernization activities to further improve the responsiveness of
NNSA's infrastructure. There are, however, a number of investments that
are underway to address key infrastructure requirements. Current and
future support to readiness and responsiveness is provided through NNSA
investment in vital general purpose infrastructure projects such as the
TA-3 Substation Replacement project at Los Alamos National Laboratory.
The project, which began in FY 2016, will replace a degraded and
increasingly unreliable system with a modern, reliable, and more robust
system that is easier and more cost effective to maintain and operate.
The new substation will reduce deferred and emergency maintenance,
improve safety, and upgrade and increase power import capacity to
support new programs. By 2025, NNSA will have developed and deployed to
the military three life-extended warhead systems (W76-1, B61-12, and
W88 Alt 370.) The average time from NWC authorization of Phase 6.2/6.2A
(Feasibility Study and Option Down-Select/Design Definition and Cost)
to First Production Unit (FPU) has been between 9-11 years for these
programs, with design complexity, funding, administrative regulations,
and technical challenges driving the time range. The actual time to
complete a program depends on the complexity of the work, the quantity
to be produced, and the amount of funding appropriated. Although each
of these programs has experienced delays due to funding and scope
alterations, the enterprise has shown an improving trend in execution.
Continued investment in infrastructure and equipment is needed to
increase this trend. The 2010 Nuclear Posture Review states: ``The
United States will not develop new nuclear warheads. Life Extension
Programs will use only nuclear components based on previously tested
designs, and will not support new military missions or provide for new
military capabilities.'' However, should a scenario arise where a new
mission or capability was required, coupled with National will,
Executive backing, and Congressional funding, the time to produce a
weapon would likely be significantly reduced. Without continued and
predictable modernization investment, NNSA's ability to meet the
challenges of unanticipated world events will be reduced.
Mr. Rogers. How does the state of NNSA's infrastructure impact its
readiness and responsiveness to react to changes in programs and
mission needs?
General Klotz. A responsive nuclear infrastructure is one that
reflects the resilience of the nuclear enterprise to unanticipated
challenges or emerging threats, and the ability to anticipate
innovations by an adversary and to counter them before our deterrent is
degraded--all while continuing to carry out the day-to-day activities
in support of the stockpile. Elements of a responsive infrastructure
include the people, the science and technology base, and the facilities
and equipment needed to support a right-sized nuclear weapons
enterprise designed to maintain a safe, secure and effective nuclear
weapons stockpile. As stressed in the 2010 Nuclear Posture Review,
NNSA's infrastructure must be able to not only support the work we
currently have planned, but respond to technical challenges and
geopolitical surprises. Following Congressional direction provided in
the National Defense Authorization Act for Fiscal Year 2016, NNSA is
carrying out a Stockpile Responsiveness Program in order to identify,
sustain, enhance, integrate, and continually exercise all capabilities
required to conceptualize, study, design, develop, engineer, certify,
produce, and deploy nuclear weapons. This program looks for potential
future gaps in the deterrent in conjunction with the DOD and exercises
everything from design to testing in a substantially compressed
timescale. NNSA continues to maintain a safe, secure, and effective
nuclear weapons stockpile while being responsive to the nation's
current nuclear security needs. That said, more than 50 percent of
NNSA's nuclear infrastructure includes facilities that are over 40
years old, and almost 30 percent date to the Manhattan Project. Life
Extension Programs and weapons dismantlement, coupled with the normal
stockpile stewardship activities, have increased the demand placed upon
this infrastructure. Without significant, sustained, and predictable
modernization investment, the risk to NNSA's ability to meet the
challenges of unanticipated world events while maintaining the nuclear
weapons stockpile safe, secure, and effective will increase. Further,
in order to sustain the nuclear deterrent over the long-term, NNSA
requires reliable and modern programmatic, security, and general
purpose infrastructure that not only provides for today's capabilities,
but allows for the opportunity to expand future capacities.
Mr. Rogers. What is your view of the impact of sites'
infrastructure challenges on NNSA's ability to attract, retain, and
motivate highly-skilled workers? What are the impacts to morale?
General Klotz. To attract and retain a workforce capable of
performing NNSA's missions to the highest standards, NNSA must compete
with companies and universities that have state-of-the-art facilities,
the latest technologies, and modern work environments. Recruitment is a
challenge with degraded, and in certain places obsolete infrastructure
and equipment. NNSA facilities continue to experience infrastructure
related failures (e.g., power outages, inadequate heating/cooling, and
deficient IT/communication services). This results in workforce
disruptions and personnel moves to perform infrastructure upgrades or
repairs to restore the basic necessities. NNSA workers often work
through infrastructure and equipment deficiencies in order to meet
today's mission deliverables. However, if infrastructure improvements
are not demonstrated across the NSE to attract and retain highly-
skilled workers and improve working conditions and efficiencies, then
NNSA is at risk of being unable to meet national security requirements
in the future. NNSA has implemented a project prioritization
methodology that identifies the most pressing infrastructure
investments that reduce the highest risks including workforce ability
to deliver mission.
Mr. Rogers. What projects not currently underway is NNSA
considering that could leverage public-private partnerships?
General Klotz. As part of our improved project management
initiatives, NNSA implements a comprehensive Analysis of Alternatives
(AOA) process to identify the most cost- effective approach for each
mission need. NNSA uses public-private partnerships when an AOA
determines it appropriate. Currently, Los Alamos National Laboratory,
Lawrence Livermore National Laboratory and Sandia National Laboratories
are seeking new facilities including high-performance computing
facilities and experimental facilities.
Mr. Rogers. If provided increased top-line funding to support it,
would you favor a new FIRP-like program aimed specifically at dealing
with deferred maintenance and infrastructure challenges? How would you
suggest such a program set priorities?
General Klotz. The establishment of the Office of Safety,
Infrastructure, and Operations in January 2015 along with our current
budget structure--approved by Congress for Fiscal Year (FY) 2016--
provides NNSA with flexibility necessary to respond to emergent needs.
Within the Office of Safety, Infrastructure, and Operations, NNSA has
two FIRP-like programs that address deferred maintenance:
Maintenance and Repair of Facilities; and
Recapitalization: Infrastructure and Safety.
Sustained, predictable, and increased investments in these two
programs are needed to improve the condition of NNSA infrastructure and
reduce deferred maintenance. NNSA has a project prioritization
methodology that prioritizes annual investments by evaluating key
criteria. Criteria evaluated include deferred maintenance reduction,
program requirements, safety and programmatic risk reduction, and
increases in operational efficiency and/or productivity.
Mr. Rogers. How does NNSA measure its backlog of deferred
maintenance? What metrics are used and how is the term defined? Does
NNSA have a rigorous and well-documented means of measuring this?
Mr. McConnell. NNSA determines deferred maintenance based on
condition assessment surveys. Deferred maintenance is defined by the
Federal Accounting Standards Advisory Board (FASAB) as: Maintenance and
repairs that were not performed when they should have been or were
scheduled to be and which are put off or delayed for a future period.
The determination of acceptable condition may vary both between
entities and among sites within the same entity. Management shall
determine what level of condition is acceptable. NNSA has worked with
representatives from NNSA sites to amplify guidance to standardize
reporting of deferred maintenance across all NNSA sites. The
implementation guidelines are documented and released annually in the
Office of Safety, Infrastructure, and Operations' Program Management
Plan (PMP). NNSA continuously seeks to improve its information on
deferred maintenance to ensure accuracy and consistency across NNSA's
enterprise. In 2016, NNSA is using this standardized approach to
revalidate information on the condition of infrastructure and the
assessment of deferred maintenance and repair needs to ensure accuracy
and consistency across NNSA's enterprise. The results will not be
available until after the fiscal year ends, but NNSA expects that this
will result in some amount of deferred maintenance being reclassified
as other repair needs, so there will be a one-time administrative
reduction to the current deferred maintenance total.
Mr. Rogers. NNSA's budget request says it will halt the growth of
the $3.7 billion backlog of deferred maintenance across the nation's
nuclear security enterprise, which is an improvement on decades of
increasing backlog. But for the second year in a row it would not
decrease that backlog. What are the risks to safety and to NNSA's
mission of continuing to operate in these facilities?
Mr. McConnell. In Fiscal Year (FY) 2016, NNSA will halt the growth
of deferred maintenance, and the FY 2017 budget request, if fully
supported, will allow NNSA to begin reducing deferred maintenance and
arresting the decline of infrastructure by:
Increasing funds for recapitalization and maintenance
efforts;
Disposing of excess facilities;
Increasing buying power via strategic procurement of
common building systems across the enterprise (e.g., roofs, HVAC); and
Improving project management capabilities to make risk
informed investment decisions.
NNSA's capability to achieve its programmatic goals is dependent
upon safe and reliable infrastructure. However, much of NNSA's
infrastructure is degraded and the condition of nearly two-thirds of
NNSA's infrastructure is less than adequate to meet mission needs. As a
result, infrastructure failures are increasing in frequency, severity,
and unpredictability. This poses an increasing safety and programmatic
risk to NNSA. Facility and equipment failures either impact the mission
directly or impact our ability to ensure safe and secure operations. In
the latter case, NNSA and our M&O contractors take action to put
operations in a safe and secure condition. This usually includes
suspending operations, which results in mission impacts.
Mr. Rogers. Does NNSA have metrics or ways to measure the
inefficiencies or costs that are being borne because of these old
buildings and this large backlog of deferred maintenance? Please
provide a rough order of magnitude estimate.
Mr. McConnell. NNSA is investigating new measures to give greater
insight into the costs and inefficiencies caused by the declining state
of infrastructure.
Mr. Rogers. How does NNSA prioritize between preventative
maintenance and recapitalization? How does it judge when to continue
preventative maintenance versus when a building requires demolition and
a full-rebuild?
Mr. McConnell. NNSA is deploying a number of new management tools
to improve our ability to make data-driven, risk-informed investment
decisions to address infrastructure challenges. One such tool, BUILDER,
is a web-based software developed by the U.S. Army Corps of Engineers
that enables decisions concerning when, where, and how to best
maintain, repair, and recapitalize infrastructure. The tools and
processes serve as a guide and are not intended to replace expert
analysis informed by program integration. A primary consideration of
when a building requires demolition and replacement is when a facility
can no longer house the intended capability or mission need.
Mr. Rogers. Please provide the committee a comprehensive list of
currently unfunded infrastructure and deferred maintenance projects
that NNSA could execute in the next several years, if provided
increased resources.
Mr. McConnell. As requested, NNSA is providing a list of currently
unfunded Recapitalization projects that NNSA could execute in the next
several years should additional resources be available. The list
provided is unconstrained and builds from the project list included in
the NNSA Fiscal Year 2017 President's Budget Request.

National Nuclear Security Administration
Infrastructure and Safety
Over Target FY 2017 Recapitalization Projects-October 2016
----------------------------------------------------------------------------------------------------------------
Total Project
Rank Site Project Name Cost ($K)
----------------------------------------------------------------------------------------------------------------

1----------LLNL-------Site 300 Electric Utility Display System Upgrade----------------------------$7,000--------
----------------------------------------------------------------------------------------------------------------
2 LANL LANSCE Sector A Tunnel Fire Suppression System Installation $3,000
----------------------------------------------------------------------------------------------------------------
3 LLNL B132N HVAC System Variable Air Control Replacement $5,000
----------------------------------------------------------------------------------------------------------------
4 Y-12 Bldg 9204-2E Wet Pipe Systems 1&2 50 Year Sprinkler Head Replacement $5,500
----------------------------------------------------------------------------------------------------------------
5 Y-12 Bldg 9995 Air Handling Unit (AHU) 2000 Replacement $6,000
----------------------------------------------------------------------------------------------------------------
6 Y-12 Area 5 15 kV Underground Cable Replacement $5,000
----------------------------------------------------------------------------------------------------------------
7 KCP Kirtland Ops NC-135 Site Disposition $4,900
----------------------------------------------------------------------------------------------------------------
8 LLNL Bldg 175 Characterization $1,500
----------------------------------------------------------------------------------------------------------------
9 Y-12 Bldg 9204-2 Ceiling Concrete and Steel Inspection and Replacement $6,000
----------------------------------------------------------------------------------------------------------------
10 PX Bldg 12-84E Generator Replacement $2,000
----------------------------------------------------------------------------------------------------------------
11 KCP Bldg 2 Specialty Welding Applications Capital Equipment Replacement & $1,200
Upgrade
----------------------------------------------------------------------------------------------------------------
12 LANL PF-4 Vault Storage Renovation $7,500
----------------------------------------------------------------------------------------------------------------
13 LLNL Utility Safety Upgrades to Plating Shop, B322 $2,500
----------------------------------------------------------------------------------------------------------------
14 SNL C914 Seismic Upgrades to Achieve Code Compliance $9,720
----------------------------------------------------------------------------------------------------------------
15 LLNL Bldg 292 Characterization $2,000
----------------------------------------------------------------------------------------------------------------
16 LLNL Site 200 and 300 Transition and Disposition of 48 Trailers $2,500
----------------------------------------------------------------------------------------------------------------
17 SNL SNL-Hawaii Mt. Haleakala Disposition of 3 Facilities $934
----------------------------------------------------------------------------------------------------------------
18 LLNL Site-Wide Low Conductivity Water System Station/Cooling Tower Replacement $6,000
----------------------------------------------------------------------------------------------------------------
19 LLNL S200 Failing Underground Utility Valves & Water Distribution Piping $5,000
Replacement
----------------------------------------------------------------------------------------------------------------
20 PX Building 12-84E Generator Replacement $2,000
----------------------------------------------------------------------------------------------------------------
21 SNL C912 Major Building Renovation, Phase 3 $5,000
----------------------------------------------------------------------------------------------------------------
22 LLNL B131 Engineering's Cornerstone Office Building Upgrade $7,500
----------------------------------------------------------------------------------------------------------------
23 KCP Product Testing Area Capital Equipment Replacement $2,490
----------------------------------------------------------------------------------------------------------------
24 SNL Substation 5 Loop Upgrade, Redundant Feeder Installation $5,000
----------------------------------------------------------------------------------------------------------------
25 Y-12 9204-04 Deinventory $8,000
----------------------------------------------------------------------------------------------------------------
26 PX Bldg 12-24E Chiller Replacement $2,000
----------------------------------------------------------------------------------------------------------------
27 LANL Small Improvement Project in 3 Facilities (53-003,22-0005, 03-0039) $1,300
----------------------------------------------------------------------------------------------------------------
28 LLNL B805 Classified Machine Shop Infrastructure Renovation $3,500
----------------------------------------------------------------------------------------------------------------
29 LANL CMR Initial Facility Closure, Wing 2,3,5 and 7 Clean Up $1,500
----------------------------------------------------------------------------------------------------------------
30 LLNL B327 Non-Destructive Evaluation Laboratory Renovation $2,500
----------------------------------------------------------------------------------------------------------------
31 LLNL B391 HVAC Water Temperature Control Upgrade $3,000
----------------------------------------------------------------------------------------------------------------
32 Y-12 Re-line Failing Sections of Sitewide Potable Water Distribution Piping $8,000
----------------------------------------------------------------------------------------------------------------
33 LANL TA-03-0102 Component Manufacturing Virtual Vault Type Room Installation $1,599
----------------------------------------------------------------------------------------------------------------
34 KCP Production Area Renovations for Floor Space Optimization $2,143
----------------------------------------------------------------------------------------------------------------
35 LLNL Disposition of Buildings B326, B221, & B221 Retention Tanks $2,000
----------------------------------------------------------------------------------------------------------------
36 SNL C911 Renovation to Convert Office to Lab Space $5,000
----------------------------------------------------------------------------------------------------------------
37 PX Bldgs 12-85 and 12-96 UPS Replacements $2,250
----------------------------------------------------------------------------------------------------------------
38 PX Bldg 12-44 UPS Replacement & Equipment Room Reconfiguration $3,000
----------------------------------------------------------------------------------------------------------------
39 PX Bldg 11-51 Generator and UPS Replacement $2,250
----------------------------------------------------------------------------------------------------------------
40 PX Bldgs 12-98E1 and E2 UPS and Generator Replacement $3,000
----------------------------------------------------------------------------------------------------------------
41 LANL Weapons Engineering Tritium Facility Glovebox and Systems Renovation $8,250
----------------------------------------------------------------------------------------------------------------
42 Y-12 Bldg 9720-82 (HEUMF) VESDA Installation $5,000
----------------------------------------------------------------------------------------------------------------
43 Y-12 9204-2E Criticality Accident Alarm System (CAAS) $4,500
----------------------------------------------------------------------------------------------------------------
44 LANL D&D of the 100,000 gallon Single Walled Storage Tank (TA-50-90) $2,500
----------------------------------------------------------------------------------------------------------------
45 NNSS Atlas Machine Removal $3,500
----------------------------------------------------------------------------------------------------------------
46 SNL Coyote Test Field, Twin Tanks Piping Replacement $173
----------------------------------------------------------------------------------------------------------------
47 SNL NM High Voltage System, Overhead Switch- SW-390 Replacement $153
----------------------------------------------------------------------------------------------------------------
48 SRS HAOM Tritium Grab Sample Capability move to TEF $1,400
----------------------------------------------------------------------------------------------------------------
49 SNL Natural Gas System, Tech Area I, Piping Replacement $1,194
----------------------------------------------------------------------------------------------------------------
50 LLNL B332 Diesel Generator Replacement Project $1,500
----------------------------------------------------------------------------------------------------------------
51 SNL Bldg 960 Chilled Water System Upgrade $2,950
----------------------------------------------------------------------------------------------------------------
52 LANL PF-4 Fire Wall Upgrades $7,000
----------------------------------------------------------------------------------------------------------------
53 SRS HANM Obsolete Oxygen Monitor Replacement in Loading Line 6 Glovebox (L6- $1,815
O2)
----------------------------------------------------------------------------------------------------------------
54 SRS HANM Obsolete Oxygen Monitor Replacement in Finishing Line 6 (F6-O2) $1,815
Glovebox
----------------------------------------------------------------------------------------------------------------
55 LLNL B806/B810 High Explosives Machining/Assembly--HVAC and Electrical DM $4,773
reduction and recapitalization
----------------------------------------------------------------------------------------------------------------
56 SNL NM Tech Area III/V, 14" Water Main Replacement $4,140
----------------------------------------------------------------------------------------------------------------
57 KCP Bldg 2 Specialty Welding Applications Equipment Replacement and Upgrade $1,136
----------------------------------------------------------------------------------------------------------------
58 NNSS Water/Wastewater Systems--CP Hill Water Line Replacement $7,000
----------------------------------------------------------------------------------------------------------------
59 Y-12 Bldg 9212 50 Year Sprinkler Head Replacement (Wet Pipe System 009) $4,400
----------------------------------------------------------------------------------------------------------------
60 Y-12 Bldg 9204-02E Transformer, Interrupter, Switches & Underground Cable $2,000
Replacement
----------------------------------------------------------------------------------------------------------------
61 SNL Bldg 1012--Battery Test Facility $8,000
----------------------------------------------------------------------------------------------------------------
62 PX Bldg 12-104A Blast Door Interlock Programmable Logic Controller $2,000
Replacement
----------------------------------------------------------------------------------------------------------------
63 Y-12 Bldg 9215 50 Year Sprinkler Head Replacement (Wet Pipe System 004) $1,700
----------------------------------------------------------------------------------------------------------------
64 KCP Bldg 2 Special Application Machining and Welding Area Renovations $2,143
----------------------------------------------------------------------------------------------------------------
65 LANL RLWTF Ground Water Permit Discharge Regulatory Requirements Mitigation $8,000
(Zero Liquid Discharge Liner Replacement & Room 60 Configuration)
----------------------------------------------------------------------------------------------------------------
66 NNSS New Mercury Consolidated Operations Complex Building 1 (23-460) $9,000
----------------------------------------------------------------------------------------------------------------
67 SRS Workplace Improvements $500
----------------------------------------------------------------------------------------------------------------
68 LLNL B321/B322 HVAC & Electrical Replacement $5,725
----------------------------------------------------------------------------------------------------------------
69 Y-12 Bldg 9212 Room 1022A Ventilation System Installation $1,000
----------------------------------------------------------------------------------------------------------------
70 LLNL Site-wide Mechanical Utility Valves and Water Distribution Piping $5,000
Replacement
----------------------------------------------------------------------------------------------------------------
71 Y-12 Bldg. 9212 302 Steam Supply Station and SF-302 Steam Coil Replacement $1,700
----------------------------------------------------------------------------------------------------------------
72 LLNL B132/B321A/B451 Fire Protection Systems Replacement (DM) $4,360
----------------------------------------------------------------------------------------------------------------
73 SNL SNL/CA Sanitary Sewer Replacements $7,000
----------------------------------------------------------------------------------------------------------------
74 NNSS U1a Shaft Wood Lagging Replacement $8,100
----------------------------------------------------------------------------------------------------------------
75 LANL PF-4 Fire Water Loop Component Replacements $7,395
----------------------------------------------------------------------------------------------------------------
76 NNSS U1a Public Address System Replacement $3,000
----------------------------------------------------------------------------------------------------------------
77 KCP Metal Tooling and Production Additive Manufacture Installation $9,000
----------------------------------------------------------------------------------------------------------------
78 SRS HAOM to HANM Reservoir Assessment Relocation $6,200
----------------------------------------------------------------------------------------------------------------
79 Y-12 Bear Creek Road 13.8 kV Electrical Distribution Installation $8,600
----------------------------------------------------------------------------------------------------------------
80 KCP Bldgs 2 & 3 Analytical Testing and Controls Capital Equipment Replacement $2,878
and Upgrade
----------------------------------------------------------------------------------------------------------------
81 Y-12 Bldg 9204-02 Elevator #2 Replacement $3,000
----------------------------------------------------------------------------------------------------------------
82 SNL NM High Voltage Power System, Substation 5 Loop Redundant Feeders Upgrade $3,180
----------------------------------------------------------------------------------------------------------------
83 NNSS DAF Automated Energy Management System (AEMS) Replacement $6,700
----------------------------------------------------------------------------------------------------------------
84 LLNL B222A Nuclear Explosives Package Device Component Engineering Laboratory $9,900
----------------------------------------------------------------------------------------------------------------
85 SNL Bldg 878 (Process Development Lab) Renovation $8,500
----------------------------------------------------------------------------------------------------------------
86 Y-12 Bldg 9204-02 50 Year Sprinkler Head Replacement (Wet Pipe System 005) $3,800
----------------------------------------------------------------------------------------------------------------
87 Y-12 Bldg 9995 Chilled Water and Steam Condensate Piping Replacement $3,000
----------------------------------------------------------------------------------------------------------------
88 Y-12 Bldg 9212 50 Year Sprinkler Head Replacement (Wet Pipe System 007) $5,800
----------------------------------------------------------------------------------------------------------------
89 Y-12 Bldg 9215 Switchgear 253 Replacement $4,000
----------------------------------------------------------------------------------------------------------------
90 LLNL B322 Plating Shop Utility Safety Upgrades $2,500
----------------------------------------------------------------------------------------------------------------
91 LLNL B332 iCAM Alarm System Upgrade $1,000
----------------------------------------------------------------------------------------------------------------
92 Y-12 Bldg 9204-02 Stab-Lok and Fused Electrical Panel Replacement $1,900
----------------------------------------------------------------------------------------------------------------
93 LLNL B131 High Bay HVAC Replacement $4,390
----------------------------------------------------------------------------------------------------------------
94 Y-12 Fire and Potable Water Replacement of 9 Laterals to Nuclear Facilities $3,000
----------------------------------------------------------------------------------------------------------------
95 LANL SM-39 Classified Machine Shop Upgrade $4,000
----------------------------------------------------------------------------------------------------------------
96 Y-12 Demineralized Water Delivery System Replacement $7,500
----------------------------------------------------------------------------------------------------------------
97 Y-12 Bldg 9995 Supply Fan Replacement/Refurbishment $5,000
----------------------------------------------------------------------------------------------------------------
98 LLNL B805 S300 Classified Machine Shop Ventilation & Utility Renovation $3,500
----------------------------------------------------------------------------------------------------------------
99 LANL PF-4 Fire Water Loop Component Replacements (Pumps & Boiler Replacement) $7,105
----------------------------------------------------------------------------------------------------------------
100 SRS Analytical Lab Relocation From 234-H to 264-H $3,000
----------------------------------------------------------------------------------------------------------------
101 LLNL Site 300 Storm Water Safety Improvements & Erosion Control (Elk Ravine) $4,925
----------------------------------------------------------------------------------------------------------------
102 NNSS DAF Domestic Water System Upgrade $4,700
----------------------------------------------------------------------------------------------------------------
103 NNSS U1a Lightning Protection Upgrades $1,900
----------------------------------------------------------------------------------------------------------------
104 LANL TA-16-0303 Renovation for Crystal Lab Relocation $3,000
----------------------------------------------------------------------------------------------------------------
105 PX Bldg 12-31 HVAC and DH Replacement $4,500
----------------------------------------------------------------------------------------------------------------
106 NNSS DAF Electrical Substations Upgrade $5,500
----------------------------------------------------------------------------------------------------------------
107 PX Bldg 12-85 and 12-96 UPS Replacement and Generator Installation $2,000
----------------------------------------------------------------------------------------------------------------
108 PX Bldg 12-126 HVAC Replacement $4,500
----------------------------------------------------------------------------------------------------------------
109 KCP Bldg 2 Assembly, Electrical & Fabrication (AEF) Capital Equipment $2,079
Replacement and Upgrade
----------------------------------------------------------------------------------------------------------------
110 LLNL B151 Renovation of 4 High Level Radiochemistry Laboratories (Anteroom $4,655
renovation)
----------------------------------------------------------------------------------------------------------------
111 KCP Bldgs 2 & 3 Non-destructive Testing Capital Equipment Replacement and $2,490
Upgrades
----------------------------------------------------------------------------------------------------------------
112 KCP Bldg 2 Paint and Heat Treat Capital Equipment Replacement $2,575
----------------------------------------------------------------------------------------------------------------
113 LLNL Sustainable Chilled and Heating Hot Water Systems Modernization $3,000
----------------------------------------------------------------------------------------------------------------
114 PX Lightning Protection System Upgrade for 10 MAA Facilities $8,000
----------------------------------------------------------------------------------------------------------------
115 KCP Bldgs 2 & 3 Special Materials Production and Rubber and Plastics Capital $2,986
Equipment Replacement and Upgrade
----------------------------------------------------------------------------------------------------------------
116 PX Bldg 12-98 UPS Replacement and Generator Installation $3,000
----------------------------------------------------------------------------------------------------------------
117 KCP Bldgs 2 & 3 Environmental Testing and Controls Capital Equipment $2,754
Replacement and Upgrade
----------------------------------------------------------------------------------------------------------------
118 LANL TA-53-0003 (LANSCE) Fire Suppression System in Accelerator Tunnel $5,800
Installation
----------------------------------------------------------------------------------------------------------------
119 LLNL B170 Upgrade Classified Computing and Communications $2,500
----------------------------------------------------------------------------------------------------------------
120 PX Bldg 11-55 UPS & Generator Replacement $2,000
----------------------------------------------------------------------------------------------------------------
121 KCP Bldgs 2 & 3 Paint & Heat Treat and Rubber and Plastics Area Renovations $1,654
----------------------------------------------------------------------------------------------------------------
122 LANL Firing Sites Confinement Vessel Building Construction $8,750
----------------------------------------------------------------------------------------------------------------
123 PX Bldg 12-104A Uninterruptible Power Supply Replacement $1,500
----------------------------------------------------------------------------------------------------------------
124 KCP Bldgs 2 & 3 Assembly, Electrical & Fabrication and Environmental Testing $2,289
Area Renovations
----------------------------------------------------------------------------------------------------------------
125 PX Bldg 12-99 UPS Replacement $1,500
----------------------------------------------------------------------------------------------------------------
126 PX Bldg 12-94 UPS Replacement $1,500
----------------------------------------------------------------------------------------------------------------
127 KCP Bldgs 2 & 3 Process Marking and Printing Applications Capital Equipment $2,785
Replacement and Upgrade
----------------------------------------------------------------------------------------------------------------
128 PX Bldg 12-121 OMI & BDI Controller Replacement $4,000
----------------------------------------------------------------------------------------------------------------
129 PX Bldg 12-104 Blast Door Interlock PLC Replacement $4,000
----------------------------------------------------------------------------------------------------------------
130 PX Bldg 12-86 Uninterruptible Power Supply Replacement $1,500
----------------------------------------------------------------------------------------------------------------
131 PX Bldg 12-130 Generator and UPS Replacement $1,500
----------------------------------------------------------------------------------------------------------------
132 PX Bldg 12-121 UPS Replacement $1,250
----------------------------------------------------------------------------------------------------------------
133 NNSS Mercury Sewer Lines Replacement $8,450
----------------------------------------------------------------------------------------------------------------
134 LLNL Bldg 28XX Complex Disposition of 4 trailers $2,500
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135 Y-12 Bldg 9201-05 Deinventory $20,000
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136 Y-12 Bldg 9202-04 Deinventory $1,000
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137 LANL TA-16-0306 Characterization $2,000
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138 NNSS Mercury Bldgs 23-517 & 23-B, 23-C, 23-D Disposition $2,000
----------------------------------------------------------------------------------------------------------------
139 NNSS Mercury Disposition of 10 facilities $2,400
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140 SRS Bldg 236-H shutdown $2,000
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141 PX Bldg 11-029 Shutdown $2,600
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142 LLNL Bldg 363 Biomedical Laboratory Disposition $1,000
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143 NNSS Area 6 Disposition of 5 facilities $1,000
----------------------------------------------------------------------------------------------------------------

Mr. Rogers. Please provide us a summary of the FIRP program, what
it accomplished, and how much it cost. How did FIRP set priorities? Why
was FIRP terminated?
Mr. McConnell. NNSA successfully completed the Facilities and
Infrastructure Recapitalization Program (FIRP) in 2013. FIRP was
created to reduce a substantial accumulation of backlogged facility
maintenance, repair, and demolition projects across NNSA's eight sites.
Among its achievements, FIRP:
Executed nearly 800 projects throughout the NNSA
enterprise;
Eliminated $900 million of baselined deferred maintenance
and brought the overall condition of the enterprises' essential
facilities up to industry standards;
Managed 625 recapitalization projects ($1.2 billion) that
refurbished laboratory and production facilities, repaired or replaced
electrical and mechanical equipment, utility lines, fire protection,
power and lighting systems, roofs, roads and other vital
infrastructure; and
Oversaw 145 disposition projects which removed 3.5
million square feet of excess footprint, opened many acres of space for
redevelopment, shrank security perimeters and reduced deteriorated
condition.
In total, FIRP was funded over $2 billion to address NNSA
infrastructure needs (averaging about $160 million per year). FIRP was
terminated in 2013 in accordance with its sunset date of the initial
legislation. However, the Office of Safety, Infrastructure & Operations
maintains authorities of FIRP.
Mr. Rogers. Can you quantify for us how much of the $3.7 billion
backlog in deferred maintenance must get fixed directly, and how much
is attached to facilities that will be torn down? How does NNSA
delineate between real, concrete requirements for deferred maintenance
dollars at enduring facilities versus requirements at excess
facilities?
Mr. McConnell. As of the end of Fiscal Year (FY) 2015, NNSA's
deferred maintenance on operating facilities totaled approximately $2.8
billion. The remaining balance is deferred maintenance on excess
facilities and facilities to be excessed within ten years. A breakout
is provided below.

NNSA Deferred Maintenance (DM) as of FY 2015
(dollars in thousands)
------------------------------------------------------------------------
Total DM $3,667,183
------------------------------------------------------------------------
DM on excess facilities $497,216
------------------------------------------------------------------------
DM on facilities to be excess in 10 years $354,920
------------------------------------------------------------------------

Once a facility becomes excess, the majority of deferred
maintenance is removed because NNSA no longer needs to conduct that
maintenance as the facility is no longer needed for mission work.
However, deferred maintenance will remain and/or accumulate on any
systems required to maintain the facility in a safe, shutdown
condition, such as fire suppression systems.
Mr. Rogers. How does NNSA allocate its general maintenance funding?
Does it choose particular projects, or does it allocate based on a
site's deferred maintenance backlog figure?
Mr. McConnell. To support the annual budget request process, NNSA
conducts a disciplined programming process by integrating budgets
across portfolios to ensure maintenance investments are consistent
with, and support the other programmatic work of the NNSA enterprise.
The majority of NNSA's maintenance work consists of recurring day-to-
day activities to sustain operations and is therefore not projectized.
However, as part of NNSA's annual planning process, M&O contractors are
required to submit requests for maintenance funding, which include: a
description of the work to be accomplished, including major mission
deliverables and programs supported; a description of any key work not
accomplished and any remaining risk; workforce impacts (total FTEs/
year); and annual funding requirements. NNSA evaluates these requests,
adjusts the annual funding requested as determined by subject matter
experts, and develops a proposed maintenance allocation for each site.
The site allocations are subject to change based on decisions made to
balance maintenance investments with programmatic priorities during the
NNSA programming process.
______

QUESTIONS SUBMITTED BY MR. COOPER
Mr. Cooper. What is the cost and safety risk of deferring problems
and maintenance, and what are you doing to incentivize addressing and
funding routine maintenance before small problems become big problems?
Mr. Smith. The primary concern with knowingly deferring maintenance
is that a major, unforeseen failure could occur. Our top non-
negotiables--we call them our imperatives--are safety and security. We
will protect our people, our communities, the materials we are
entrusted with, and the environment in which we and our friends,
neighbors, and communities live. We cannot, and will not, compromise
safety and security. Our nation, however, also relies on us to deliver
our mission with the highest quality products and services. Keeping our
facilities and working conditions safe, secure, and operating properly
requires ever-increasing operations and maintenance funding because the
potential disruption to operations and mission deliverables is a real
concern, as is the likelihood for a substantial increase in costly
repairs. Additionally, as discussed during my testimony, there are
occasional facility conditions that place and individual or a group of
individuals in a higher risk posture than we would like despite our
best efforts to find and correct these conditions.
Mr. Cooper. What is the cost and safety risk of deferring problems
and maintenance, and what are you doing to incentivize addressing and
funding routine maintenance before small problems become big problems?
Dr. McMillan. We manage our infrastructure portfolio centrally at
the Laboratory to prioritize investments that minimize risk while
accomplishing the mission. For example, the safety of our workforce and
the public are prioritized over risks to mission and schedule. Members
of our workforce are strongly committed to the national mission, and
they can become frustrated if their ability to execute their work in
support of Laboratory missions is affected by unfortunate or unforeseen
infrastructure issues. We plan our maintenance work to emphasize
predictive and preventive maintenance in order to limit the need for
corrective maintenance within the budgets that we are provided by NNSA
and our internal site support funds. On average, the Laboratory spends
45-50% of our maintenance budget on preventive maintenance and the
balance on corrective maintenance. The incentive for this approach is
simple. We minimize disruptions to work when we can by carefully
planning maintenance activities, and coordinating outages at the
Laboratory with mission requirements. Corrective maintenance, by
definition, is performed after there are equipment failures that create
disruptions and impacts to the mission. However, when maintenance is
deferred due to lack of funding, it is just a matter of time before
equipment or system failures occur.
Mr. Cooper. What is the cost and safety risk of deferring problems
and maintenance, and what are you doing to incentivize addressing and
funding routine maintenance before small problems become big problems?
Mr. Ricciardelli. At the legacy Bannister facility, between 250 and
300 electricians, millwrights, janitors, and laborers were employed
full time to maintain the 1940s vintage facility. Even with that level
of effort, deferred maintenance remained constant at about $130M.
Because facility maintenance projects are largely ``one-of-a-kind,''
the safety risk is much higher than routine, repeatable production
work. The plant had good safety performance overall, but the majority
of the OSHA-reportable injuries originated from maintenance projects.
Under the new KCNSC lease model, facility maintenance costs are
largely included in the lease payment and an escrow fund is in place to
address big ticket maintenance needs that will emerge as the facility
ages. NNSA provides no labor resources to maintain the facility or
grounds which is solely the responsibility of the landlord. The private
owner is incented to maintain the value of the property and preserve
their overall capital investment independent of our tenancy.
Mr. Cooper. How does NNSA evaluate the cost-benefit of public-
private partnerships over the lifetime of the facility? What lifetime
is assumed?
General Klotz. NNSA evaluates the proposals for compliance with OMB
Circulars A-11 and A-94. The lifetime assumed is based on the
Government's planned use of the building.
Mr. Cooper. The total amount of NNSA's deferred maintenance backlog
includes maintenance that NNSA does not plan to address for a variety
of reasons (i.e., excess facilities). What amount of the deferred
maintenance backlog does NNSA actually plan to address over the next
five years? What factors are used to determine what deferred
maintenance will or will not be addressed?
General Klotz. The Fiscal Year (FY) 2017 President's Budget Request
will enable NNSA to continue to halt the growth of deferred
maintenance. NNSA has a project prioritization methodology that
prioritizes annual investments by evaluating key criteria. Criteria
evaluated include deferred maintenance reduction, program requirements,
safety and programmatic risk reduction, and increases in operational
efficiency and/or productivity.
Mr. Cooper. Is the balance between recapitalization and maintenance
appropriate? How do you balance necessary investments for maintenance
with requirements to focus and invest in programmatic priorities
including life-extension programs?
General Klotz. The balance between maintenance and recapitalization
is currently appropriate. NNSA has improved its infrastructure
investment strategy by using the new budget structure approved by
Congress, and enhancing decision-making through the implementation of
new program management tools. NNSA also began requesting increased
funding for Recapitalization and Maintenance projects starting in FY
2015. These funding increases are essential steps in decreasing
deferred maintenance, arresting the declining state of infrastructure,
increasing enterprise productivity, improving safety, eliminating
costly compensatory measures, and shrinking the NNSA footprint through
the disposition of unneeded facilities. To balance maintenance
investments with programmatic priorities, NNSA conducts a disciplined
programming process integrating budgets across portfolios to ensure
maintenance investments are consistent with, and support, the other
programmatic work of the NNSA enterprise.
Mr. Cooper. Naval Reactors also has a majority of its facilities
dating back to Cold War-era with nearly 60% of its facilities now over
50-70-plus years old, however these facilities are not in such a state
of disrepair as some of the nuclear complex facilities are. To what do
you attribute this difference?
General Klotz. The role of nuclear weapons in our national security
strategy is widely understood. However, the link between our nation's
nuclear deterrence and the NNSA infrastructure that supports it is less
well appreciated. As a result, investment in NNSA's infrastructure has
generally not kept pace with the growing need to replace Cold War era
facilities. Every year, NNSA works to balance the needs of all our
vital missions with the need to maintain and modernize our
infrastructure. Naval Reactors (NR) oversees four government-owned
contractor-operated Department of Energy sites: Knolls Atomic Power
Laboratory; Bettis Atomic Power Laboratory; Kenneth A. Kesselring Site;
and the Naval Reactors Facility. These facilities' sole purpose is to
support the nuclear Navy and NR provides Federal oversight for all
aspects of the sites' operations. The single mission focus helps NR
reconcile priorities and react accordingly when problems emerge due to
the state of facilities and infrastructure. NR weighs facility and
infrastructure resource decisions using the same rigorous process used
for making technical resource decisions. NR reassesses its resource
needs semi-annually and prioritizes these needs so that the sites'
facility and infrastructure provide the necessary foundation on which
technical work can be accomplished to support the nuclear fleet of
today and tomorrow. However, NR is not immune to the effects of
degrading facilities and infrastructure. For example, NR needs to
replace the Expended Core Facility in Idaho, which is over 55 years
old, does not meet current standards, and requires recapitalization.
Over the past 10 years, NR has had to increase management attention and
resource allocation to facilities and infrastructure and the trend is
expected to continue.
Mr. Cooper. What incentives does NNSA provide for its M&Os to
sufficiently invest in maintenance? Are the proper incentives in place
to avoid facilities falling into such disrepair until a new facility is
required?
General Klotz. As part of our Contractor Performance Evaluation
Process (CPEP), NNSA incentivizes Management and Operating (M&O)
contractors' performance via award fee. The CPEP process is a uniform,
corporate process for evaluating NNSA M&O contractors' performance. The
Fee Determining Official's (FDO) award fee determination is a
unilateral decision made solely at the discretion of NNSA. M&O
contractors are evaluated on maintaining, operating, and modernizing
DOE/NNSA facilities, infrastructure, and equipment in an effective,
energy efficient manner as part of the annual CPEP process. Starting in
Fiscal Year (FY) 2016, M&O contractors are also evaluated on their
progress to halt the growth of deferred maintenance and to disposition
of unneeded infrastructure and excess hazardous materials. The same
performance evaluation will continue in FY 2017.
Mr. Cooper. What improvements in management and safety culture are
necessary to avoid some of the problems we are now seeing, with parts
of the ceiling falling down in some facilities? How did we get to this
point? What is the plan to ensure that billions of dollars in new
investment to recapitalize nuclear complex facilities do not suffer the
same fate from lack of maintenance?
General Klotz. NNSA is making improvements in management and safety
culture and focusing attention and investments to sustain
infrastructure by:
Deploying new, risk-informed, data-driven management
tools;
Increasing funding for maintenance and recapitalization;
and
Linking award fees to safety and infrastructure
performance.
There is consensus amongst Department of Energy and NNSA
stakeholders that the current state of NNSA's infrastructure presents a
risk to our strategic deterrent and must be addressed with urgency,
resources, and focus. To that end, NNSA established the Office of
Safety, Infrastructure and Operations in January 2015 to ensure NNSA's
infrastructure needs are adequately represented and necessary
investments are made. At the Departmental level, the Secretary of
Energy has established key groups comprised predominantly of senior
career service professionals to sustain our current efforts. These
groups include:
The Laboratory Operations Board (LOB);
The Infrastructure Executive Committee; and
The Excess Contaminated Facilities Working Group.
______

QUESTIONS SUBMITTED BY MR. LARSEN
Mr. Larsen. DOE's Real Property Asset Management contains
infrastructure investment benchmarks for maintenance and
recapitalization activities. To what extent does NNSA's fiscal year
2017 budget request and associated Future Years Nuclear Security
Program meet these benchmarks? If NNSA's budget request does not meet
these benchmarks, please describe why.
General Klotz. The Fiscal Year (FY) 2017 President's Budget Request
is adequate for funding 2017 infrastructure-related activities.
DOE uses findings from the National Academy of Sciences, Key
Performance Indicators for Federal Facilities Portfolios: Federal
Facilities Council Technical Report Number 147 (Washington, D.C.:
2005). The findings suggest that 2% of Replacement Plant Value (RPV)
should be invested annually for infrastructure in good condition.
However, for infrastructure in poorer condition annual investments
should be closer to 4% of RPV. NNSA's requested increase in Maintenance
and Recapitalization funds for FY 2017 would put NNSA's investment at
3.1% of RPV (up from 2% in FY 2015 and 2.5% in FY 2016). During times
of constrained budgets, NNSA must balance budget limitations and risk
across all its vital programs to optimize mission results. Although
lower than the benchmark, NNSA's FY 2015 and FY 2016 Maintenance and
Recapitalization prioritized infrastructure needs across the NNSA
enterprise and invested in numerous, critical infrastructure
improvements. The year-over-year investment increase from FY 2014
enabled infrastructure investment planning and integration with
operations
The FY 2017 President's Budget Request will allow NNSA to:
Increase investments in recapitalization and maintenance
efforts to reduce safety and programmatic risk
Transfer the Kansas City Bannister Federal Complex to the
private sector for redevelopment (this will eliminate 2.93 million
square feet of excess facilities)
Increase buying power via strategic procurement of common
building systems across the enterprise (e.g., roofs, HVAC)
The FY 2017 President's Budget Request provides a balanced approach
to continued NNSA infrastructure investments, as infrastructure is but
one consideration in a broader portfolio of NNSA programmatic
requirements.
Mr. Larsen. NNSA is currently taking action to improve data needed
to better prioritize infrastructure investment. Please describe the
current implementation status of the BUILDER system NNSA is using to
prioritize infrastructure investments. When fully implemented, please
describe how the BUILDER system will allow NNSA to prioritize and
oversee deferred maintenance investments while also allowing management
and operating contractors the ability to complete needed work in a
timely manner.
General Klotz. NNSA's deployment of BUILDER is a three-year effort,
occurring from FY 2015-FY 2018. It involves data for approximately
6,000 assets which will include more than one million systems,
components and sub-components. Progress to date includes:
Migration of all current inventory and condition data;
A peer review of all migrated data to ensure quality and
consistency; and
Development of an NNSA-specific Functionality Module,
which measures a building's suitability to function as intended and
required for the mission.
By early 2018, NNSA will complete the following activities:
Conduct physical assessments of remaining systems to
populate inventory and condition data gaps;
Perform Functionality Assessments;
Integrate BUILDER into the infrastructure planning
process;
Calculate Deferred Maintenance, Repair Needs, and
Replacement Plant Value using BUILDER and develop business rules;
Develop an online NNSA BUILDER training; and
Initiate the integration of BUILDER with site
computerized maintenance management systems.
Full implementation and sustainment of BUILDER will be achieved by
early 2018. Upon full implementation, NNSA will continue working to
integrate each site's computerized maintenance management system with
BUILDER to achieve long-term sustainment. BUILDER is a web based
software tool to help decide when, where, and how to best maintain,
repair, and recapitalize infrastructure. Developed by the U.S. Army
Corps of Engineers, BUILDER has been recognized by the National Academy
of Sciences as a best-in-class practice for infrastructure management.
BUILDER uses preexisting engineering data to predict facility and
component conditions, prioritize maintenance work, and support analysis
of different spending scenarios. BUILDER is the center of our risk-
informed, data-driven infrastructure investment strategy. Our plan is
to use BUILDER to:
Describe the condition of NNSA's infrastructure, the gaps
in NNSA's infrastructure, and the risk to programs;
Document the resources needed to restore and then sustain
NNSA infrastructure;
Determine the right projects to execute;
Guide site maintenance plans; and
Help to identify AMPs Asset Management Programs (AMP)
like the Roof AMP (RAMP) and the Cooling and Heating AMP (CHAMP).
Mr. Larsen. What does NNSA spend annually on surveillance and
maintenance of excess facilities that will be transferred to EM in the
future for D&D? How are these costs incorporated into NNSA's estimate
of deferred maintenance?
General Klotz. In Fiscal Year (FY) 2016 NNSA invested roughly $30
million on the surveillance and maintenance of excess facilities that
are known or suspected to meet the criteria for transfer to DOE's
Office of Environmental Management (EM). Investments in surveillance
and maintenance are made to address deferred maintenance and prevent
deferred maintenance from accumulating. Once a facility becomes excess,
the majority of deferred maintenance is removed from the backlog
because NNSA no longer needs to conduct that maintenance as the
facility is no longer needed for mission work. However, deferred
maintenance will remain and/or accumulate on any systems required to
maintain the facility in a safe, shutdown condition, such as fire
suppression systems.
Mr. Larsen. How does NNSA decide which excess facilities to
transfer to EM first? Are risks and costs prominently factored into
such decision-making so that annual maintenance costs, as well as
lifecycle cleanup costs, can be minimized?
General Klotz. NNSA has evaluated its excess facilities to
determine those that pose the greatest risk and have identified several
higher risk facilities we believe meet EM's conditions for transfer.
However, EM is currently facing many competing regulatory and other
compliance obligations, and performance challenges in some areas. As a
result, EM is unable to D&D all of the excess facilities already
transferred from other Program Secretarial Offices (PSOs) in a timely
manner or to take in additional excess contaminated facilities from
other PSOs in the foreseeable future. Until EM accepts an excess
contaminated facility into its portfolio, the PSO is responsible for
maintaining the excess facility in a safe condition. The information
gathered by NNSA informed the recent effort by the Excess Contaminated
Facilities Working Group (ECFWG) which is finalizing a report to
Congress on its work, the Plan for Deactivation and Decommissioning of
Nonoperational Defense Nuclear Facilities report to Congress. NNSA's
highest risk facilities are being prepared for transfer, but are not
ready yet. NNSA's primary concern continues to be the risk posed by
these facilities to the public, workers, and the mission. Minimizing
that risk in these facilities requires continual surveillance and
maintenance.
Mr. Larsen. What is the status of DOE's Excess Contaminated
Facilities Working Group, and what are the key findings/recommendations
from the group?
General Klotz. The Excess Contaminated Facilities Working Group
(ECFWG) developed and executed an enterprise-wide data collection
effort to obtain updated cost and risk assessments to deactivate,
decontaminate, decommission, and demolish excess facilities. The
updated data from the working group was used to define the scope of the
challenge and to identify options for how DOE may better prioritize
excess facilities. The ECFWG is developing policies to institutionalize
a corporate approach, and updating and validating data gathered by the
working group's efforts. The group also is finalizing a report to
Congress on its work, the Plan for Deactivation and Decommissioning of
Nonoperational Defense Nuclear Facilities.

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