Modernizing the Nuclear Security Enterprise: NNSA Is Taking Action to Manage Increased Workload at Kansas City National Security Campus

Modernization of the nation's nuclear stockpile depends on timely procurement and production of nonnuclear parts and components. Such parts and components make up over 80 percent of the items in a nuclear weapon. The Kansas City site procures or produces most of these parts, under NNSA oversight. In fiscal year 2012, the site completed construction of a modern production facility. The new facility was expected to accommodate rising future workload demands, based on the forecasts that were current in 2012, according to Kansas City site contractor representatives.

The Senate committee report accompanying a bill for the National Defense Authorization Act for Fiscal Year 2018 included a provision for GAO to review the Kansas City site's staffing plans and capabilities to meet national security requirements. This report examines (1) workload forecasts for the site since 2012, and (2) management challenges the site has identified for achieving the forecasted workload, and actions the site has taken to mitigate these challenges.

GAO reviewed NNSA and contractor documents from 2012 through 2018 relevant to workload changes, and associated workload capacity, including information on infrastructure, equipment, and business processes—as well as personnel data. GAO also interviewed NNSA program and field officials and contractor representatives.

Workload forecasts have significantly changed at the National Nuclear Security Administration's (NNSA) primary site for procuring or producing nonnuclear parts and components of nuclear weapons since the site's modern production facility was built in 2012. Specifically, workload projections made by the contractor operating the site, known as the Kansas City National Security Campus (Kansas City site), has increased significantly from forecasts used in planning the site's new production facility. More recent forecasts show that to meet workload requirements, production and administrative staff will need to almost double by 2020 compared to 2014 levels. For example, workload to modernize the B61-12 and W88 weapons systems will double during fiscal years 2020 through 2022.

According to NNSA officials and contractor staff, the site has identified and begun to mitigate management challenges to meeting future workload, including:

Ensuring sufficient production and office space. Because the current space is not sufficient for the increase in projected workload, the site is leasing additional space until long-term solutions, currently in planning, can be implemented.

Updating production equipment. To update aging production equipment, the site is developing a 10-year equipment strategy, among other things.

Retaining and recruiting a sufficient workforce. The site has offered rewards and benefits to retain existing staff, about a third of whom are eligible to retire. It is also recruiting skilled new staff in tight labor markets and seeking to expedite security clearances for them.

Ensuring adequate external supplier capacity. The site procures about 65 percent of its nonnuclear components from external suppliers. The site is assessing capacity and risk of existing suppliers and developing new ones.

Current mitigation efforts should help the site meet currently planned increased workload and capacity demands, according to contractor and NNSA analyses. However, the February 2018 Nuclear Posture Review—conducted by the Department of Defense under the direction of the President to determine the role of nuclear weapons in the nation's security strategy—may change requirements and add to the site's workload in ways not yet fully known because studies and plans in response to the review are not fully complete.

Modernization of our nation’s nuclear stockpile depends on the timely  procurement and production of nonnuclear parts and components, which  make up over 80 percent of the parts and components that compose a  typical nuclear weapon. Delays in or disruption to procurement or  production of these parts and components could jeopardize the nation’s  ability to accomplish nuclear weapons modernization goals in a timely  manner. Most of these parts and components are procured or produced  by the contractor operating the Kansas City National Security Campus  (Kansas City site). This site operates under the direction and oversight of  the National Nuclear Security Administration (NNSA)—a separately  organized agency within the Department of Energy (DOE). Honeywell  Federal Management and Technologies, LLC, has managed and  operated the site since 2000. The most recent management and  operating contract for this site began in July 2015. Nonnuclear parts and  components that the site provides—through procurement or  production—for NNSA include fasteners, electrical interconnects,  machined parts, electronic microcircuits, polymers, plastics, foams, and  other engineered materials. The Kansas City site is also responsible for  quality assurance for all the parts and components it provides.

In November 2012, the site completed construction of a more modern,  leased production facility. The new facility was expected to accommodate  increasing future workload demands, based on the forecasts that were  current in 2012, according to Kansas City site contractor representatives  and NNSA documents. According to these representatives, the workload  of the Kansas City site has increased and is currently at the highest level  since the end of the Cold War. According to NNSA reports and officials,  NNSA will continue to modernize most of the nuclear weapons systems in  the U.S. stockpile in the coming years, and some refurbishment efforts  currently planned were not reflected in 2012 workload demand forecasts.  In addition, the February 2018 Nuclear Posture Review contains policy  direction that could further increase the Kansas City site’s workload if  eventually implemented.

We and others have made recommendations to NNSA aimed at  improving modernization planning in light of increasing workload. For  example, in 2017 we found that the next decade is particularly  challenging for NNSA’s nuclear modernization efforts because the agency  needs to ensure sufficient production capacity to execute life extension  programs (LEP), along with major construction projects and programs to  modernize its uranium and plutonium capabilities. We further found that  NNSA’s modernization budget estimates for fiscal years 2022 through  2026 may exceed the funding levels programmed for modernization in  future budgets, raising affordability concerns, and we recommended that  NNSA include an assessment of the affordability of its modernization  programs in future versions of its annual plan on stockpile stewardship.  Although NNSA did not explicitly agree or disagree with the  recommendation, we continue to believe it is valid and are monitoring any  actions NNSA takes that may the address the recommendation. In addition, a congressional advisory panel examining the governance of the  nuclear security enterprise recommended that NNSA take action to  stabilize long-term workload across NNSA’s nuclear security enterprise  sites, including its Kansas City site, to better support its weapons  modernization efforts.

The Senate committee report accompanying a bill for the National  Defense Authorization Act for Fiscal Year 2018 included a provision for us  to review the Kansas City site’s staffing plans and capabilities to meet  national security requirements. This report examines (1) workload  forecasts for the Kansas City site since 2012, and (2) management  challenges the Kansas City site has identified for achieving the forecasted  workload and actions the site has taken to mitigate these challenges.

To address these objectives, we visited the site and obtained and  reviewed workload planning documents, such as NNSA contractor  planning charts and graphs showing workload forecast information for  future years through 2036. We also interviewed officials from NNSA’s  headquarters offices and its Kansas City field office—co-located with the  management and operating contractor—as well as contractor  representatives at the site. To examine workload forecasts for the Kansas  City site since 2012—the year construction was completed for the modern  production facility—we obtained information on the Kansas City site  workload as full production commences for upcoming modernization  efforts, especially the B61-12 gravity bomb LEP and W88 submarine  launched ballistic missile Alteration (Alt) 370 work. We also examined  steps the Kansas City site has taken to forecast workload demand from  2012 through 2018.

To examine management challenges the Kansas City site had identified  at the time of our review in 2018 for achieving the forecasted workload,  and any actions the site has taken to mitigate these challenges, we interviewed NNSA officials and contractor representatives. We then  reviewed relevant documentation and data, available at the time of our  review in 2018, on the nature of the challenges and any mitigation steps  to determine if the Kansas City site is addressing previously identified  challenges. Among other things, we reviewed Kansas City site capacity  analyses; personnel data regarding worker attrition, aging, retention, and  hiring; information on worker clearances; analyses of information on the  capacity of external suppliers; and lessons learned from recently  completed work on the LEP for the W76-1 submarine-launched ballistic  missile warhead. We obtained information on actions the Kansas City site  has taken over the past several years, particularly from 2012—when the  new modern production facility was built—through 2018, regarding  infrastructure, business processes, staffing, and other areas to manage  current workload demands. To corroborate information provided by the  Kansas City site on management challenges and associated mitigation  action(s), we interviewed additional NNSA headquarters officials;  reviewed alternative documentation or analyses; and obtained examples  of the specific action(s) being taken, when available. See appendix I for  more details regarding our objectives, scope, and methodology and for  specific examples of steps we took to corroborate the information  obtained from the Kansas City site.

We conducted this performance audit from November 2017 to April 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

This section describes the (1) Kansas City site’s role in providing  nonnuclear parts and components, and (2) current and planned nuclear  weapons stockpile life extension and alteration efforts that drive workload.

Kansas City Site’s Role in Providing Nonnuclear Parts and Components

The Kansas City site is NNSA’s primary site for procuring or producing  nonnuclear parts and components, providing over 80 percent of the parts  and components that compose a typical nuclear weapon. The Kansas  City site interacts with a number of other NNSA sites that comprise the  nuclear security enterprise to support the nuclear weapons stockpile. For  example, NNSA’s design laboratories develop precise parts or  component specifications or requirements to which production sites, such  as the Kansas City site, must conform in procuring or producing these  items for use in the nation’s nuclear weapon stockpile. Figure 1 depicts  how sites in the nuclear security enterprise interact with each other to  design, produce, procure, and assemble nonnuclear components.

Components procured or produced by the Kansas City site range from  simple items such as nuts and bolts to more complex components such  as radars, arming and firing mechanisms, and critical nuclear safety  devices meant to prevent accidental detonation. The site delivers  approximately 100,000 parts annually, according to our previous report.  According to Kansas City site contractor documents, the primary mission  of the site is keeping the nation’s nuclear stockpile safe, secure, and  reliable by delivering mission-critical mechanical, electrical, and  engineered material components and services.

NNSA and the Department of Defense (DOD) jointly manage LEPs and  Alts under a multi-step process known as the phase 6.X process (see fig.  2). Phase 6.4 of this process, or the production engineering phase,  involves activities to adapt designs for production and prepare production  facilities, including the Kansas City site. For example, according to a  senior NNSA official, activities to adapt designs could include updating  product specifications to make parts easier to produce, changing or  refining tester limits, and substituting among commercial off-the-shelf  parts. The B61-12 LEP and W88 Alt 370 are currently in phase 6.4  (production engineering) of this process and are approaching production.  Other LEP efforts are in earlier phases.

Current and Planned Nuclear Weapons Stockpile Life Extension and Alteration Efforts

NNSA describes its plans to meet nuclear weapons stockpile life  extension and alteration goals in two key documents that also describe  NNSA’s operations and budget estimates for implementing these plans.  These documents, which NNSA updates annually, constitute NNSA’s  nuclear security budget materials. First, the Stockpile Stewardship and  Management Plan is NNSA’s formal means of communicating to  Congress information on modernization and operations plans and budget  estimates over the following 25 years. Second, NNSA’s annual  justification of the President’s budget provides program information and  budget estimates for the following 5 years. This 5-year plan is called the  Future-Years Nuclear Security Program (FYNSP), and the budget  estimates in this plan reflect amounts approved by the Office of  Management and Budget. These estimates align with those presented for the first 5 years included in the Stockpile Stewardship and  Management Plan.

According to the Fiscal Year 2018 Stockpile Stewardship and  Management Plan, NNSA and its nuclear security enterprise are  conducting a substantial level of activity to ensure the continued credibility  of the nation’s nuclear weapons stockpile. Specifically, in fiscal year 2018  NNSA was executing three nuclear weapons LEPs and one major Alt,  which are described in table 1.

In addition, the 2018 Nuclear Posture Review calls for NNSA to resume a  program to replace the W78 warhead in fiscal year 2019; produce a low- yield submarine launched ballistic missile warhead, known as the W76-2;  and consider options for providing a nuclear warhead for a potential sea- launched cruise missile. According to NNSA officials and contractor  representatives, NNSA developed an early production planning roadmap  for implementing the Nuclear Posture Review in late 2018. The  conference report accompanying DOE’s fiscal year 2019 appropriations  act directed the agency to spend a specified amount on the W78 warhead  replacement and W76-2 efforts.

Projected Workload for the Kansas City Site Has Increased Significantly from 2012 Forecasts

Projected workload for the Kansas City site has increased significantly,  based on NNSA’s stockpile plan changes from 2012—when the new  modern facility was built—to the 2018 stockpile plan update. A  comparison between the 2012 and 2018 plans shows that the start of full  production for the B61-12 LEP and the W88 Alt were delayed by  approximately 2 years, and their completions were delayed by 3 years  from initial schedule estimates in 2012. The 2018 plan also accelerates  production of the W80-4 LEP by approximately 5 years. Figure 3 below  shows the change in the full production timelines for key weapons  systems.

Using an enterprise risk management approach, the Kansas City site  determined that this change in production schedule represented a  significant challenge that needed to be better understood and regularly  monitored. NNSA contractor representatives at the Kansas City site  developed a strategy for analyzing workload to better understand the  enterprise risk and ensure the site’s ability to provide an adequate supply  of nonnuclear components under variable requirements scenarios.  Specifically, in 2015, the Kansas City site increased the frequency of  using its “what-if” approach that models standard production work and  allows for an in-depth review of labor, equipment, and material capacity  information, according to contractor representatives at the Kansas City  site. This analytic capability is intended to help ensure that the site  contractor can accurately predict future workload demand across multiple  scenarios representing different production requirements. Contractor  representatives update the model every quarter to reflect the current  hardware schedules; testing requirements; and nuclear weapon scope,  production quantities, and schedules. These representatives use the  model to develop hourly staffing, equipment, and other capacity-related  forecasts and plans. For example, contractor representatives evaluate  capital equipment capacity quarterly for multiple programs, with a primary  focus on equipment that is at or above a two-shift capacity. However,  according to these representatives, this approach has not been in place  long enough to allow comparison of historical data with forecasts from the  model to assess their accuracy.

According to site contractor documents and representatives, forecasting  data from the what-if models project that, under the 2018 plans, the full- time equivalent workload for production of nonnuclear parts and  components will continue to increase annually through 2020.

Specifically, the number of production and administrative staff at the time  of the relocation to the new facility in 2014 was almost 2,500, based on  needs at that time. However, the fiscal year 2018 updates, based on  “what-if” capacity analyses, now show that the headcount will need to  almost double, growing to more than 4,900 administrative and production  staff by 2020. For example, according to 2018 “what-if” capacity analyses  prepared by site contractor representatives, personnel dedicated  exclusively to two efforts—the B61-12 LEP and W88 Alt 370—will double  from 251 full-time equivalents needed in fiscal year 2018 to over 500  during fiscal years 2020 through 2022, as shown in figure 4.

Full-time equivalent reflects the total number of regular straight-time  hours (i.e., excluding overtime or holiday hours) worked by employees  divided by the number of compensable hours applicable to each fiscal  year. Annual leave, sick leave, and compensatory time off and other  approved leave categories are considered to be “hours worked” for  purposes of defining full-time equivalent employment. In this figure, the  full-time equivalents reflect workload forecasts for hourly production staff  only for the B61-12 LEP and W88 Alt 370.

Kansas City Site Has Identified and Begun to Mitigate Several Management Challenges Related to Forecasted Workload, Which May Further Increase

NNSA officials and contractor representatives at the Kansas City site  have identified and begun to mitigate several management challenges to  meeting the forecasted workload for known future production  requirements, but they face uncertainties about future workload demands.  Specifically, current mitigation efforts should help the site meet currently  forecasted increased workload and capacity demands, according to  NNSA analysis and consistent with the program plan included in the  Fiscal Year 2018 Stockpile Stewardship and Management Plan.  However, the February 2018 Nuclear Posture Review, the results of  which were not fully reflected in the Fiscal Year 2018 Stockpile  Stewardship and Management Plan, may change requirements and add  to the site’s workload because it calls for additional weapons efforts.

Current Efforts to Mitigate Identified Challenges Should Support Meeting Forecasted Future Workload Increases at the Kansas City Site

Kansas City site contractor representatives have identified management  challenges that could affect the site’s ability to meet forecasted future  workload increases based on 2018 analyses and its Enterprise Risk  Management process, and NNSA officials agreed with the challenges the  contractor representatives identified. These management challenges  include ensuring that the site has (1) sufficient production and  administrative office space, (2) up-to-date production equipment, (3) a  sufficient workforce with necessary security clearances, (4) capable and  reliable external suppliers, and (5) complete weapons designs early  enough in development to minimize production changes and delays. The  Kansas City site has identified strategies to mitigate the effects of each of  these management challenges and has begun taking steps to implement  these strategies.

NNSA’s Enterprise Modeling and Analysis  Consortium   NNSA’s Enterprise Modeling and Analysis  Consortium is composed of NNSA site  representatives and program representatives  from NNSA’s Defense Programs offices and  is a principal source for NNSA model- informed analytics for decisions about  stockpile stewardship program management,  policy, and implementation. The consortium  conducts modeling based on common data  sets and assumptions of current and planned  stockpile plans, design alternatives,  commodity requirements, and nuclear  security enterprise capacity. One of the  consortium’s projects includes analyzing the  nuclear security enterprise’s capacity to  execute the nuclear weapon production  program of record to identify any important  issues or bottlenecks within or between sites.

NNSA analysis concludes that current mitigation efforts initiated at the  Kansas City site should support currently planned increased workload  and an increased capacity to achieve the 2018 workload forecast.  Specifically, according to analyses conducted by NNSA’s Enterprise  Modeling and Analysis Consortium, the Kansas City site’s operations will  be stressed above current capacity for multiple consecutive years in the  future, and current mitigation efforts should reduce risk associated with  the elevated workload. In addition, NNSA Kansas City Field Office and  headquarters officials said that they have high confidence in the ability of  the Kansas City site to forecast and manage infrastructure and staffing  needs at the site to support currently planned nuclear weapon stockpile  life extension needs over the coming decades. In particular, NNSA’s  recent annual performance evaluation reports—which document the  contractor’s overall performance for a fiscal year—show that the Kansas  City site contractor has delivered the vast majority of hardware on time,  within budget, and in a safe and secure environment.

Production and Administrative Office Space

Kansas City site officials indicated that ensuring adequate production and  administrative office space at the site is a management challenge  because the current facility is too small to accommodate future workload.  Specifically, forecasted workload demand has grown significantly since  the modern facility was built in 2012. The new facility, which  accommodates both production and administrative staff, replaced a  deteriorating World War II-era facility that was much larger and had  significant maintenance and operations costs, according to site contractor  representatives. For example, according to NNSA documents, the move  reduced the footprint of the site’s production activities from about 3 million  square feet to 1 million square feet. According to site contractor  representatives, the modern facility was designed to be more flexible in  accommodating changes in the production line. For example, equipment  can more easily be removed or installed at any location in the facility, to  accommodate increased workload, because there is ready access to  electrical, ventilation, or other necessary hookups and connections.  Figure 5 shows a photo of the new facility.

The Kansas City site has identified that it needs an additional 250,000  square feet of production space in 2019 and ultimately a total of an  additional 400,000 square feet to support the forecasted workload and  associated staff increase. To mitigate the challenge of insufficient  production and administrative space to support the forecasted increase in  production staff, Kansas City site officials told us they are pursuing  multiple short- and long-term strategies.

With respect to production space, under the short-term plan the  Kansas City site is pursuing a temporary lease of commercial space  to allow for the offsite storage of unclassified materials that are  currently at the production facility. According to site contractor  representatives, this new lease would free up production space at the  main site. Further, the site submitted a request to NNSA for leasing an  additional 250,000 feet of production space—an increase of almost 30  percent over current production space in the modern facility. Kansas  City site contractor representatives stated that the cost of this lease  will be based on competitive offers, and they expect the lease to be  awarded by summer 2019.

With respect to administrative office space, the site has leased more  than 150,000 square feet of space since 2014 for the short term at a  cost of more than $3.5 million per year.

Under the long-term plan, expected to take a minimum of 5 years to  implement, the site will complete an analysis of alternatives and  submit a combined office and production space expansion project  plan to NNSA, which will determine final costs and timelines.  Currently, the mission need statement for the project indicates the  need for over 400,000 square feet of additional production and  administrative space to accommodate the planned increased  workload for known production and supporting administrative  requirements—an increase of roughly 50 percent over current  leased production space. According to Kansas City site contractor  representatives, at this early stage, costs would be based on the  current Kansas City site lease of $43 per square foot, or roughly $17  million per year. This long-term plan would include space for  approximately 1,200 administrative personnel. Kansas City site  contractor representatives told us in September 2018 that, depending  on the selected long-term solution, the short-term leases for  administrative space could either be terminated or modified into long- term arrangements.

In 2017, we reported in our high risk list update that federal agencies  have not demonstrated that they have the capacity to reduce their  reliance on costly leases, particularly high-value leases—defined as  $2.85 million and above per year in lease costs—where owning  properties would be less costly in the long run. In particular, we reported  that the General Services Administration had not implemented our 2013  recommendation to develop a strategy to increase ownership of  investments for a prioritized list of high-value leases where ownership  would be less expensive in the long run. The Kansas City site’s plans  for significantly expanding its production and office space underscores  the challenges that exist in meeting these space needs while at the same  time limiting overall reliance on costly leases.

NNSA and its contractor at the Kansas City site have identified  challenges in ensuring that the plant has up-to-date production  equipment. Recapitalizing equipment was not a significant part of the  move to the new modern production facility, according to site contractor  representatives. Information from NNSA’s Master Asset Plan 2017, for  example, states that most of the equipment used for producing  nonnuclear parts and components at the Kansas City site is nearing or  past the end of its useable life—defined as 15 years. Specifically, as  shown in figure 6 below, 39 percent of the equipment at the Kansas City  site is from 6 to 15 years old, and 27 percent is 16 years old or more,  according to the plan. Much of the oldest equipment is located in  functional areas used for machining, refurbishment, and dismantlement  operations, or for production functions using rubber and plastics. The  oldest piece of equipment still maintained is more than 60 years old.

In addition to age-related challenges, officials at the Kansas City site  identified equipment challenges regarding capacity, based on an  equipment workload forecast analysis performed in 2015. For example,  according to this forecast, starting late in calendar year 2019, demand for  vibration- and shaker-test equipment will become consistently greater  than existing capacity, requiring additional equipment.

To address these challenges, Kansas City site contractor representatives  stated that they evaluate equipment needs across the facility at least  annually, based on production and maintenance schedules. The  representatives then develop a master list of equipment requests— weighted for risk, age and condition of existing equipment, and whether  an external supplier can provide the functional need, among other  factors—and ranked according to current and future business needs,  according to these officials and contractor representatives. NNSA officials  at the Kansas City site and senior contractor representatives then review  the master list to determine priorities for equipment purchases. Site  contractor representatives are developing a 10-year equipment strategy,  expected to be completed in December 2019, to sharpen focus on the  future needs of the production facility to support capacity and capability,  according to NNSA officials at the Kansas City site.

Budgets for equipment procurements at the Kansas City site vary from  year to year and are subject to change. According to Kansas City site  contractor representatives, the site is regularly adjusting and  communicating its equipment needs to reflect the results of equipment  evaluations to ensure that the funding NNSA will request for equipment  procurement is adequate. For example, according to Kansas City site  contractor representatives, the site originally received $4.5 million in fiscal  year 2018 to fund planned equipment procurements and received an  additional $13.4 million from NNSA in April 2018 to move fiscal year 2019  work scope into fiscal year 2018. The remaining funding available is  $11.6 million, which covers the remaining fiscal year 2019 work scope.  Site plans for fiscal year 2018 specifically included capital equipment  replacement and upgrades needed for parts assembly, electronics and  fabrication, and non-destructive testing of nonnuclear parts and  components.

For fiscal year 2019, planned procurements include equipment for testing  of parts and components, rubber- and plastics-related production,  precision milling, machining and welding, paint and heat treatment,  fabrication, and chemical processing. NNSA officials at the Kansas City  site stated that planned budgets for fiscal years 2019 through 2023— which currently include $8 million in equipment procurements and $2  million for area modifications for each of the 5 years—are subject to  adjustment based on ongoing evaluation of site equipment needs. These  estimates could change, depending on the outcome of the 10-year  equipment strategy, according to NNSA Kansas City site officials and  contractor representatives.

In addition to new equipment procurements, the Kansas City site has  developed other mitigation plans also focused on equipment capacity  risks. For example, these plans include options such as better allocating  equal workload amongst similar equipment, and additional batching of  material, according to Kansas City site officials. The batching of material  processed by a certain set of equipment increases efficiencies because it  consolidates material into larger portions, which minimizes inefficiencies  associated with starting and stopping the equipment multiple times,  according to NNSA contractor representatives.

Kansas City site officials and contractor representatives have identified  three management challenges in ensuring the site can achieve a  sufficient contractor workforce to meet forecasted future workload: (1)  retention of existing staff, (2) recruiting skilled staff in a competitive job  market, and (3) obtaining security clearances for new staff in a timely  manner. To address these challenges, the site has been taking actions to  retain existing staff, hiring and recruiting hundreds of new staff, and  working to speed the security clearance process, according to site  contractor representatives.

Kansas City site contractor representatives said that retaining existing  staff is challenging because the majority of the workforce falls into either  of two categories: (1) recent, younger hires who have a high attrition  rate, or (2) staff eligible to retire. More than half (53 percent) of all staff  have 5 years or less of service working at the site (see fig. 7).

In addition, approximately 32 percent of the Kansas City site’s contractor  staff are eligible to retire. Figure 8 shows the distribution of staff by age  at the Kansas City site, with the highest number in their late 50s and the  next highest number in their late 20s.

According to Kansas City contractor representatives and NNSA  documents, site strategies for retaining newly hired and retirement-eligible  staff include improvements in rewards and recognition programs, along  with an emphasis on pay for performance. Contractor representatives  also noted that the site offers telecommuting from a home office for those  approved, flexible work hours—such as working 9-hour days to allow for a  day off every 2 weeks—and flexible work options, including part-time  employment.

To better retain retirement-eligible staff the site has also created talking  points to better prepare managers to discuss retirement and delayed  retirement, covering topics such as the potential for reduced hours or  returning to work after retirement, consistent with certain restrictions and  policies. Because of these steps, according to Kansas City contractor  representatives, many retirement-eligible staff are electing to continue to  work; projected retirements are less than 20 percent of those eligible for  retirement, based on actual retirement data for years 2013 to 2017. For  example, although an employee may be eligible to retire at age 55 with at  least 25 years of service, contractor representatives we interviewed noted  that most retirements on average are at age 62 with 30 years of service.

Kansas City site contractor representatives we interviewed have identified  a management challenge in recruitment because of a gap between the  critical technical skills needed at the site and those available in the local  labor market. In particular, they cited high demand for skilled labor in the  Kansas City area and low unemployment in the labor market at 4 percent,  which can make it difficult to fill positions. Contractors at the site said that  filling skilled positions can take an average of 58 days and that certain  positions, such as electrical engineers and toolmakers, are particularly  difficult to fill.

Kansas City site contractors noted that they have taken actions to  mitigate this challenge. These actions, which contractor site  representatives have characterized as largely successful, include  participation in and development of university relations programs,  involvement in research and development partnerships and consortiums,  recruitment from area trade schools and technical schools, and  expanding the market area in which the site searches for recruits. For  example, contractors noted the site’s participation in a service academy  career conference in San Diego, California, in August 2018. They also  said they are considering ways to recruit skilled positions that are in high  demand, such as toolmakers, by offering to cover relocation expenses for  newly hired workers. They further noted that the site maintains an  internship program and has plans to double the number of interns, from  35 in 2018 to 71 in 2019, as a strategy to increase talent in critical areas.

According to Kansas City site contractor representatives, the site  increased the total number of contractor staff by about 65 percent in a 4- year period, from 2,492 in August 2014 to 4,134 in August 2018, and is  expected to continue to increase to nearly 5,000 staff by August 2019.  Figure 9 shows the change in number of Kansas City site staff during the  last fiscal year for which data are complete, and the reasons for the  changes, as reported to us by site contractor representatives. To meet  forecasted workload increases, the site plans to continue to increase staff  in each year through 2020, with the numbers of planned annual hires  ranging from 800 to more than 1,000 staff, according to site contractor  representatives.

Obtaining Timely Security Clearances for New Staff  Kansas City site officials identified a challenge in obtaining appropriate,  high-level security clearances for new staff on a timely basis. Contractor  representatives we interviewed noted that 100 percent of staff who  directly contribute to the design, disposition, fabrication, inspection,  scheduling, and protection of products and services related to nuclear  weapons require a Q clearance. They further noted that the large  majority of support functions also require a Q clearance. As we reported  in March 2018,  the National Background Investigation Bureau had a  backlog of more than 700,000 investigations as of February 2018. As  we reported, this backlog was caused in part by two 2015 breaches of  Office of Personnel Management personnel records. We designated the  government-wide personnel security clearance process as a high-risk  area in January 2018.

Of this national backlog, 3,609 were investigations of Q applicants. As of  April 2018, over 790 Kansas City site personnel were awaiting Q  clearances, according to Kansas City site contractor representatives.  According to these representatives, historically, the Bureau took 80 days,  on average, to investigate most Q applicants prior to the 2015 breaches;  however, as of February 2018, the Bureau took 316 days, on average, to  do so. According to Kansas City site contractor representatives, the  Bureau is not projecting normal operations until late 2019 or early 2020.  From fiscal year 2017 through March 2018, 778 Q clearances were  granted for the Kansas City site, with an average of 335 days at the  Bureau and another 27 days at NNSA to make a final determination.  According to site contractor representatives, these long wait times may  contribute to less than full employee utilization at the site. For example,  they noted that fully cleared staff are able to perform roughly 38 percent  more productive work than uncleared staff, and that difference amounts to  approximately 695 direct labor hours of productive work per person in a  year.

The Kansas City site is taking steps to mitigate the challenges associated  with the Bureau’s backlog. For example, the site is hiring hourly  production factory staff well in advance of the full production schedule for  the B61-12 and W88 Alt 370 weapons systems in fiscal year 2019, in part  to ensure these staff will be cleared in time to meet workload demands,  according to site contractor representatives. Site contractor  representatives told us that they have also worked to expedite the  issuance of clearances by working with local Office of Personnel  Management officials on interviews for clearance cases. In addition, the  site has worked to ensure that new staff can be trained and productive  while awaiting clearances. Specifically, according to contractor  representatives, the site has established segregated training space for uncleared workers;  created security plans and escorting practices that allow uncleared  staff supervised access into secure areas to perform unclassified  work, where possible; and  temporarily converted some production space into areas where  uncleared staff can perform unclassified hand assembly work.

In addition, the Kansas City site has requested 339 interim Q clearances,  267 of which had been approved, as of January 2018. DOE’s order that  establishes requirements for processing and granting security clearances  allows for interim security clearances to be issued under exceptional  circumstances and when such action is clearly consistent with agency  and national interests. DOE considers interim clearances to be temporary  measures pending completion of the investigation, which must be in  process when the interim clearance is granted. As of September 2018,  less than 1 percent of interim clearances approved for the Kansas City  site had been cancelled once full investigations were completed,  according to site contractor representatives.

Kansas City site contractor representatives identified challenges  regarding the site’s monitoring and management of external suppliers’  capacity and skills, and other challenges—such as ensuring that suppliers  are willing to establish long-term partnerships with the Kansas City site— that could affect supply chain risk. Since the site procures about 65  percent of its nonnuclear components from external suppliers, these  management challenges are highly important, according to site contractor  representatives. For example, disruption to the established supply chain  due to insufficient capacity, skills, or a supplier’s decision not to do  business with the Kansas City site can result in production delays.  According to Kansas City site contractor representatives, delays in such  instances are possible because site contractor representatives would  need to take additional time to either replace the lost supplier or develop  its own production line to produce the parts in-house at the Kansas City  site.

To help mitigate challenges regarding the site’s overall monitoring and  management of suppliers’ capacity, skills, and other risks, the Kansas  City contractor representatives said that they developed two key analytic  tools. These tools are a Supplier Capacity Analysis Tool, developed in  2018, and a Supplier Overall Risk Tool, which has been evolving since  2015, according to these representatives. According to Kansas City site  officials, contractor representatives use these analytical tools to evaluate  over 230 suppliers on a quarterly basis and to evaluate the top 39  suppliers monthly. The evaluations assess factors such as operational  performance and financial health, whether a supplier is the sole  commodity supplier, and a supplier’s willingness to partner with the site.

To help mitigate supplier capacity risks, the site develops plans, using  information from the supplier evaluations, to ensure sufficient external  supplier capacity, according to Kansas City site contractor  representatives. For example, Kansas City site contractor representatives  used the supplier capacity analysis tool to identify capacity gaps for at- risk commodities, including machine parts, and to develop gap-closure  plans, according to these contractor representatives. As a result of these  plans, contractor representatives certified two new suppliers and entered  into agreements with several other suppliers to provide reserve capacity.  In addition, NNSA’s Enterprise Modeling and Analysis Consortium  conducted alternate analysis on the Kansas City site’s workload capacity  that corroborated the Kansas City site’s conclusion that mitigation steps  being taken at the Kansas City site, including ensuring adequate external  supplier capacity, should address increased workload concerns.

To help mitigate risks regarding suppliers’ skills in working with the  Kansas City site, site contractor representatives also said that the site has  taken steps to help train new suppliers. For example, site contractor  representatives perform multiple on-site training exercises within the first  6 months of new supplier relationships. These exercises educate the  suppliers on purchase order requirements, terms, drawing definitions, and  quality expectations using a documented, comprehensive, nine-step  process, according to site contractor representatives.

To help mitigate risks regarding suppliers’ willingness to establish long- term partnerships with the Kansas City site, site contractor  representatives told us that they have begun taking steps to encourage  and foster long-term partnerships with suppliers. According to these  representatives and a study NNSA conducted of lessons learned from an  essentially complete warhead life extension program, facilitating  effective supply chains for the nuclear enterprise requires enduring  business relationships with suppliers of commercial off-the-shelf  components. Because specifications for weapons components and  materials are exacting and quantities required are frequently low, many  potential suppliers are reluctant to expose themselves to the risk of  production for a niche market, according to Kansas City site officials and  contractor representatives. To mitigate reluctance to partner with the  Kansas City site, contractor representatives stated that the site has  developed points of contact with each supplier. These points of contact  work toward establishing and maintaining a collaborative partnership in  which production forecasts are routinely shared and performance metrics  are discussed to foster continuous improvement when needed.

In addition, Kansas City site contractor representatives stated that the site  is taking steps to develop relationships with other sites to address site- wide challenges regarding supplier evaluations, which can contribute to  risks such as lower efficiency and effectiveness and higher costs. The site  is taking this action in response to a July 2018 DOE Office of Inspector  General (OIG) report that identified the potential duplication of supplier  evaluations among NNSA sites, including the Kansas City site, resulting  in lower efficiency and effectiveness, and higher costs. The OIG report  noted that the need to minimize duplication of efforts will become even  more important when considering the additional demands on production  related to upcoming weapon refurbishment efforts, which are expected to  increase the number of supplier quality auditors needed by the Kansas  City site. The OIG recommended that to maximize efficiencies and  effectiveness, NNSA should work with contractors, including the Kansas  City site, to assess ways to improve the efficiency of supply chain  management activities, among other things.

Steps the Kansas City site has taken in response to this OIG report  include establishing a point of contact with Sandia National Laboratories,  which is leading an overarching effort across the nuclear security  enterprise to address duplication concerns, according to site contractor  representatives. In addition, a December 2018 report to the President by  DOD, in consultation with other agencies, identified supply chain risks in  the government’s manufacturing and defense industrial base, including at  DOE and NNSA sites, and recommended that DOE establish an  Industrial Base Analysis and Sustainment program to address risks within  the energy and nuclear sectors. According to NNSA officials at the  Kansas City site, they are still determining how it will respond to this  recommendation.

With increasing concurrency of production forecasted, Kansas City  contractor representatives have identified challenges regarding their need  to minimize weapons design changes during production, which in the past  contributed to cost increases and schedule delays for the W76-1 life  extension. According to Kansas City contractor representatives and  NNSA officials, at least two general weapons design issues can  contribute to overall schedule pressure at the Kansas City site. For  example, delays due to design changes intended to make parts easier to  produce can exacerbate schedule delays by compressing the overall  weapons refurbishment schedule. In addition, design changes are  undertaken for other reasons, such as in response to weapons testing  results.

First, according to NNSA’s B61-12 program manager, even though both  design laboratories and production site team members advocate for the  design changes that make parts easier to produce, the enterprise-wide  impact of these changes late in the design process may, as site  contractor representatives noted, impact the LEP’s schedule and may  require more resources and plant/vendor capacity to meet the schedule.  According to this official, given the resource demands of simultaneously  occurring major weapons refurbishments, such as the B61-12 and W88  Alt 370, schedule impacts can be magnified and have caused justifiable  concern with leadership at NNSA, the design laboratories, and the  Kansas City site.

Second, Kansas City site officials expressed concern that some  component design requirements continue to change late in the production  development phase, sometimes because of test results, which creates  tension between improving the design and stabilizing production  requirements and processes in preparation for full-scale production.  Kansas City site officials stated that such design changes pose an  ongoing management challenge. Specifically, time lost because of design  delays in the earlier stages of weapons’ design and development often  needs to be recovered later, during time allotted for production, to meet  established delivery schedules, according to Kansas City site officials.  Such delays have triggered the need for schedule recovery plans at the  Kansas City site in the past.

In response to the concerns, NNSA has led several mitigation steps to  address schedule risk as both the B61-12 and W88 Alt 370 enter the final  stages before full production begins, according to NNSA’s B61-12  program manager. For example, NNSA revised its baseline change  process for the B61-12 and W88 Alt 370 to require all changes, including  production-related changes, to be reviewed, according to NNSA’s B61-12  program manager. Specifically, NNSA implemented a change  management board with several tiers for review and approval of proposed  design changes based on the type of change, and potential impact to  program milestones, cost, and risk. Varying levels of required review and  approval, depending on the change, can include NNSA production and  design agency officials, senior site managers, B61-12 or W88 Alt 370  project officers, or other senior managers at DOD and NNSA. The intent,  according to this official, is to screen all the changes and determine if they  are really needed and when, and if site-wide resources and schedules  can support the changes.

In addition, Kansas City site contractor representatives said that they  have developed management strategies to help mitigate production- related impacts of design changes, such as adding work shifts to increase  production output. For example, an August 2017 analysis by Kansas City  site contractor representatives shows the use of three shifts—both partial  and full shifts—to meet workload demand in multiple functional areas,  including production of cables, high voltage assembly, encapsulation and  welding, arming and firing mechanisms, machining, and environmental  and pressure laboratories. Using additional shifts can help the Kansas  City site recover from schedule delays that might result from late design  changes, according to site contractor representatives. Moreover, lessons  learned from the W76-1 LEP—which will complete production in 2019— are helping to improve coordination between production sites and design  agencies, specifically through increased coordination earlier in the  weapon development process, according to Kansas City site contractor  representatives.

Further Changes to Stockpile Requirements Are Anticipated, Which May Affect Existing Workload Plans at the Kansas City Site

While current efforts to mitigate the challenges Kansas City site  contractor representatives have identified are expected to help address  the site’s anticipated future workload, as discussed previously, this  workload could further increase if certain 2018 Nuclear Posture Review  policy statements, based on nuclear weapons stockpile studies now  underway in response to the review, result in changes to production  requirements. For example, the Nuclear Posture Review called for  modifying existing sea-launched ballistic missile warheads to provide a  low-yield option; advancing a program to replace the W78 Intercontinental  Ballistic Missile warhead by 1 year; the study of a sea-launched,  nuclear-armed cruise missile; and sustaining the B83 strategic nuclear  bomb past its currently planned retirement date. NNSA and DOD are  developing studies and implementation plans for the 2018 Nuclear  Posture Review, but it is too soon to know to what extent these studies  and plans may affect the Kansas City site. One early indication of how  implementing the 2018 Nuclear Posture Review may affect the Kansas  City site is that, according to the Fiscal Year 2019 Stockpile Stewardship  and Management Plan, concurrent production of the W80-4 LEP and  the W78 replacement LEP is now expected to extend into the 2030s. In  addition, the 2019 plan anticipates that alts may be needed to sustain the  B83, if the weapon system remains in the stockpile for long enough.

We concluded in an April 2017 report that the new Nuclear Posture  Review comes during a particularly challenging decade for NNSA’s  nuclear modernization efforts, as the agency plans to simultaneously  execute at least four nuclear LEPs along with major construction projects,  such as efforts to modernize NNSA’s uranium and plutonium  capabilities. We further concluded that NNSA’s modernization budget  estimates for fiscal years 2022 through 2026, which reflected past  program plans, may exceed the funding levels programmed for  modernization in future budgets, raising affordability concerns. Moreover,  we concluded that NNSA had not addressed a projected “bow wave” of  future funding needs—that is, an impending and significant increase in  requirements for additional funds—or the mismatch between potential  funding needs and potential funding available even before the Nuclear  Posture Review was completed. We recommended that NNSA include an  assessment of affordability of NNSA’s portfolio of modernization  programs in future versions of the Stockpile Stewardship and  Management Plan—for example, by presenting options NNSA could  consider to bring its estimates of modernization funding needs into  alignment with potential future budgets. NNSA did not explicitly agree or disagree with our recommendation, but we will continue to monitor any  action NNSA takes in response to the recommendation.

In addition to addressing affordability concerns, NNSA has been advised  to stabilize long-term workload at operating sites. A congressional  advisory panel examining the governance of the nuclear security  enterprise issued a report in November 2014 recommending, among  other things, actions intended to stabilize long-term workload at operating  sites. In particular, it recommended that NNSA, working with DOD,  create a long-term operating plan to support the nation’s warhead  modernization strategy; it further specified that this plan should be  designed to create a relatively stable, long-term workload. The panel’s  report stated that a stable baseline of design, engineering, and production  is needed to make effective use of the available capabilities in the  weapons complex, provide the basis for sizing and modernization of the  weapons complex, and identify potentially conflicting demands on  available capabilities. While NNSA has taken some actions in response to  this recommendation, an expert panel concluded in March 2018 that  NNSA’s overall response had been inadequate and called for NNSA to  develop, among other things, an integrated strategic plan for the entire  nuclear security enterprise. The panel concluded that, given NNSA’s  expected increase in workload across the nuclear weapons complex, and  the new 2018 Nuclear Posture Review uncertainties, NNSA’s ongoing  implementation of this and other recommendations made by the Panel  over the next several years will take on additional importance.

We provided a draft of this report to NNSA for its review and comment.  NNSA provided technical comments, which we incorporated into this  report, as appropriate.

We are sending copies of this report to the appropriate congressional  committees, the Administrator of the National Nuclear Security  Administration, and other interested parties. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-3841 or bawdena@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix II.

Appendix I: Objectives, Scope, and Methodology

The Senate committee report accompanying a bill for the National  Defense Authorization Act for Fiscal Year 2018 included a provision for us  to review the Kansas City site’s staffing plans and capabilities to meet  national security requirements. Our report examines (1) workload  forecasts for the Kansas City site since 2012, and (2) management  challenges the Kansas City site has identified for achieving the forecasted  workload and actions the site has taken to mitigate these challenges.

To examine workload forecasts for the Kansas City site since 2012, we  visited the site, obtained and reviewed workload documents, and  interviewed officials from the National Nuclear Security Administration’s  (NNSA) Kansas City site office and headquarters offices, and NNSA  contractor representatives at the site. In particular, we obtained  information on the Kansas City site forecasted workload based on fiscal  years 2012 and 2018 Stockpile Stewardship and Management Plans  (SSMP), comparing full production schedules, including upcoming B61-12  Life Extension Program (LEP) and W88 Alteration (Alt) 370 work.  Because the design and capacity of the modern production facility,  completed in 2012, was based largely on the 2012 SSMP and previous  plans, we used this as the baseline plan. We then compared nuclear  weapons systems LEP and Alt schedules in the 2012 SSMP with the  2018 SSMP because Kansas City contractor representatives told us that  plans and associated workload had changed significantly by 2018. In  addition, we reviewed Kansas City contractor information provided by the  “what-if” capacity analyses tool, including graphs and charts depicting  workload for each weapons system undergoing LEPs or Alts. Whenever  possible, we validated or corroborated contractor-forecasted data on  workload and facility capacity by reviewing other sources such as NNSA’s  Enterprise Modeling and Analysis Consortium analysis and conclusions  and SSMP information.

To examine management challenges the Kansas City site has identified  for achieving the forecasted workload, and any actions the site has taken  to mitigate these challenges, we visited the Kansas City site, obtained  and reviewed documentation, and interviewed NNSA and contractor  officials who identified management challenges in five areas: ensuring  that the site has (1) sufficient production and administrative office space,  (2) up-to-date production equipment, (3) a sufficient workforce, (4)  capable and reliable external suppliers, and (5) complete weapons  designs early enough in development to minimize production changes  and delays. We selected these five areas for review based on NNSA  officials’ and contractor representatives’ identification of such challenges  as being the most significant at the Kansas City site.

To corroborate information on management challenges and associated  mitigation action(s) provided by the Kansas City site, we conducted  interviews with additional sources, reviewed alternative documentation or  analyses, and obtained examples of the specific action(s) being taken,  when available. For example, regarding the first management challenge  of ensuring adequate production and administrative office space, we  reviewed Kansas City site information, including information on space in  the modern facility, the mission needs statement for expanding the site’s  space, and NNSA budget justifications for fiscal years 2018 and 2019.  We also obtained information on short- and long-term plans for meeting  forecasted workload demands.

Regarding the second management challenge—ensuring it has up-to- date production equipment—we reviewed Kansas City site information  and information from an alternative source. Specifically, we reviewed  NNSA’s 2017 Master Asset Plan, which provided additional information  and alternate analyses concerning the age of the Kansas City site’s  production equipment. Regarding the third management challenge— ensuring a sufficient, capable, and security-cleared workforce—we  reviewed both site-level information and information from other sources,  including from NNSA and the Department of Energy (DOE). For example,  we reviewed NNSA’s Fiscal Year 2018 Stockpile Stewardship and  Management Plan, which also includes workforce information and  analyses. In addition, we asked the Kansas City site contractor  representatives and NNSA officials for additional clarification and detail  concerning the management challenges and mitigation actions, as well as  specific examples to support their statements. For issues related to the  clearance process, we contacted DOE officials to obtain information on  DOE supplemental guidance for interim clearance mitigation steps. To  confirm the accuracy of staffing-related information provided by Kansas  City site contractor representatives, we obtained information from these  representatives on how the site performed certain calculations, such as  determining the change in number of Kansas City site staff; number of  Kansas City site staff, by years of service; and distribution of Kansas City  staff, by age. We reviewed the various formulas Kansas City contractor  representatives used in preparing its analyses in order to understand the  logic used in making these determinations. Furthermore, we validated  that these calculations were accurate by independently performing the  calculations to see if our results matched the site’s results.

For information concerning the fourth management challenge—ensuring  capable and reliable external suppliers—we interviewed a senior NNSA  headquarters official overseeing NNSA’s Enterprise Modeling and  Analysis Consortium, which conducted alternate analyses on the Kansas  City site’s workload capacity, equipment, and workforce. The Consortium  corroborated the Kansas City site’s conclusion—that mitigation steps  being taken at the Kansas City site should address increased workload  concerns. Regarding the fifth and last management challenge—ensuring  complete weapons designs early in development to ensure that  production changes and delays are kept to a minimum—we reviewed the  W76 lessons learned report, which also describes design completion  issues affecting the Kansas City site. In addition, we interviewed NNSA’s  B61 program manager to obtain additional perspective on design-related  challenges facing upcoming B61-12 refurbishments.

We conducted this performance audit from November 2017 to April 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Appendix II: GAO Contact and Staff Acknowledgments

Allison B. Bawden, (202) 512-3841 or bawdena@gao.gov.

In addition to the individual named above, Jonathan Gill (Assistant  Director), Christopher Pacheco (Analyst in Charge), and Sophia Payind  made significant contributions to this report. Also contributing to this  report were Elizabeth Dretsch, R. Scott Fletcher, Thomas Gilbert, Richard  Johnson, Cynthia Norris, Jeanette Soares, and Sara Sullivan.

In the United States, nuclear weapons contain over 80 percent non-nuclear parts. Most of these parts are procured or produced by the National Nuclear Security Administration's site in Kansas City. This site constructed a new facility in FY 2012.

However, we found that workload projections have increased significantly from forecasts used to plan this facility—for instance, production and administrative staff will need to almost double by 2020 to meet workload demands. NNSA expects to meet future workload demands through actions such as hiring staff and leasing an additional 250,000 square feet of production space in 2019.