[Senate Hearing 113-]
[From the U.S. Government Publishing Office]



 
    ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------                              


                       WEDNESDAY, APRIL 24, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:32 p.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Dianne Feinstein (chairman) 
presiding.
    Present: Senators Feinstein, Udall, Alexander, and Graham.

                          DEPARTMENT OF ENERGY

                National Nuclear Security Administration

STATEMENT OF NEILE L. MILLER, ACTING UNDER SECRETARY, 
            NUCLEAR SECURITY, AND ACTING ADMINISTRATOR
ACCOMPANIED BY:
        DR. DONALD L. COOK, DEPUTY ADMINISTRATOR, DEFENSE PROGRAMS
         ADMIRAL JOHN M. RICHARDSON, DEPUTY ADMINISTRATOR, OFFICE OF 
            NAVAL REACTORS
        ANNE HARRINGTON, DEPUTY ADMINISTRATOR, DEFENSE NUCLEAR 
            NONPROLIFERATION


             opening statement of senator dianne feinstein


    Senator Feinstein. Good afternoon, everyone, and welcome to 
the Energy and Water Subcommittee's hearing on the National 
Nuclear Security Administration's (NNSA) fiscal year 2014 
budget request. NNSA has requested $11.653 billion for fiscal 
year 2014. That's an increase of $186 million, or 1.6 percent, 
from fiscal year 2013. Factoring in sequestration, NNSA would 
see an increase of about $1.035 billion, or 10 percent. If the 
budget request were enacted, NNSA would see an increase of $1.8 
billion, or 17 percent, in just 4 years.
    If the budget request was enacted, NNSA would make up 41 
percent of the energy part of our bill in fiscal year 2014, 
compared to 36 percent in the year 2010. The biggest increase 
to NNSA's budget is for nuclear weapons activities, and it's 
taken from nonproliferation. That's the huge tradeoff here. The 
budget request shows an increase of $311 million, or 4 percent. 
However, when you factor in a shift of funding for nuclear 
counterterrorism missions out of nuclear weapons into the 
nonproliferation account, the nuclear weapons budget sees an 
actual increase of $567 million, or 7 percent.
    The fiscal year 2014 funding level would be the same as 
what the United States spent in 1985, based on 2013 dollars, 
when the United States had 25,000 nuclear weapons, was 
conducting underground nuclear tests, and was designing new 
weapons. None of that is true today.
    Despite these significant increases, I am very concerned 
that the scope of work proposed in the budget is unsustainable 
and unrealistic. Given sequestration, shrinking budgets, and 
NNSA's long history of cost overruns and schedule delays, I 
don't see how it can successfully execute its mission.
    For example, the budget shows five out of seven weapons 
systems, or 70 percent of its stockpile, would be undergoing a 
life extension program or major repair. Each one of these life 
extension programs costs billions of dollars. In the case of 
the B61 life extension program, it may be as much as $10 
billion. Work on life extension programs may crowd out all 
other investments needed to access the safety, security, and 
reliability of the current stockpile and address aging 
infrastructure.
    In addition, I am concerned that NNSA did not properly 
assess cheaper alternatives that can meet national security 
requirements. For example, NNSA dismissed a much cheaper option 
priced at $1.5 billion to refurbish the B61 that would have 
replaced the major components reaching the end of their lives. 
That program, instead of $1.5 billion, is now $10 billion. I 
don't understand why the lower-cost option cannot be done.
    I also have serious doubts about NNSA's ability to properly 
manage projects and provide necessary oversight of the 
contractors operating at national labs and sites. The vice 
chairman and I have been, I think, very active in this area 
after seeing a number of cost overruns. We have asked that one 
person be responsible for each project and that that person 
come and consult with us on a regular basis so that we don't go 
through a year and then find out that initial cost estimates 
are so far off the mark and the project has had problems and 
those problems have not been addressed in a timely way.
    Let me just give a few examples, because this has caused us 
to have really serious doubts about NNSA's ability to manage 
projects and provide necessary oversight of the contractors 
operating the national labs and sites: A $41 million, or 20 
percent, cost overrun on a security project at Los Alamos 
National Lab, because of inadequate management of 
subcontractors, that's the Nuclear Materials Safeguards and 
Security Upgrades Project (NMSSUP), which as I understand it, 
was simply a new fence around some plutonium activities.
    An additional $500 million spent at the Uranium Processing 
Facility (UPF) to raise the roof 13 feet because of design 
problems. According to the Government Accountability Office 
(GAO), the Uranium Processing Facility contractor did not 
adequately manage the design work of subcontractors. NNSA also 
did not have the skills or expertise to evaluate the work.
    The Department of Energy (DOE) Inspector General (IG) found 
that the Federal oversight of security at the Y-12 site was 
inadequate and site office staff failed to recognize security-
related problems that eventually allowed, as we all know, three 
protesters to cut through four security fences to gain access 
to a supposedly impregnable facility storing highly enriched 
uranium.
    Now, the vice chairman and I did a hearing on this. I think 
we're intimately familiar with it. We know that changes have 
been made, and we're appreciative for those changes.
    NNSA must do more to overcome these management and 
oversight deficiencies to restore confidence that it can 
deliver projects on time and on budget and can safeguard 
taxpayer dollars.
    Let me speak for a moment about nonproliferation. My 
biggest concern with the NNSA budget is the unwarranted and 
drastic cut to the nonproliferation budget. The core 
nonproliferation budget would be $1.884 billion, which is a cut 
of 18 percent, or $417 million, from fiscal year 2013 levels. 
This drastic budget cut undermines the hard work the 
nonproliferation office has been doing, and it doesn't reflect 
the prevention of nuclear terrorism as the highest national 
security priority.
    I think some very good things have been accomplished in 
nonproliferation, not the least of which is the removal of 35 
kilograms of highly enriched uranium in 23 countries; the 
conversion of shutdown of 88 reactors, small, medical, and 
other civilian-used reactors to prevent them from being 
misused; security upgrades on 221 buildings in Russia under the 
Cooperative Threat Reduction program. These are all sites that 
store warheads: 450 locations with radiation detectors and 
material being prevented from moving from Russia to Georgia, as 
well as 10,000 radiological sources that have been secured.
    I happen to think this is important work, and it's sure 
being shortchanged here. This drastic budget cut undermines 
this hard work. And it doesn't reflect the prevention of 
nuclear terrorism as our highest priority. I voiced my concern 
last year that modernizing the nuclear weapons stockpile should 
not come at the expense of nonproliferation activities. But 
this budget does just that.
    These two graphs show that the nonproliferation program has 
become the pear for the nuclear weapons program. As you see 
from the top graph, from 2010, which is $6.2 million, weapons 
activities are now up close to $8 million, and the 
nonproliferation funding in just 1 year, from 2013 to 2014, has 
dropped way down with this $417 million cut in 1 year.
    [The graphics follows:]
    
    

    
    

    This cut is surprising, in spite of the fact of securing 
these nuclear weapons over 4 years. Since the 2009 Prague 
speech, when the President announced the 4-year goal, 10 more 
countries are free of all highly enriched uranium, for a total 
of 23 countries.
    Now, so much more needs to be done. More than 1,000 
kilograms of highly enriched uranium are sitting in a handful 
of countries. Large quantities of plutonium are still at risk. 
Over 100 reactors still need to be converted to low-enriched 
uranium. Further, thousands of unused radiological sources here 
at home are insecure and can be used for dirty bombs. There are 
still international borders vulnerable to nuclear and 
radiological smuggling.
    So I would ask that you provide an explanation today on the 
budget tradeoffs that you have made. Joining us here are Neile 
Miller, the acting Administrator of the National Nuclear 
Security Administration--I don't envy you; Dr. Donald Cook, the 
Deputy Administrator for Defense Programs; Ms. Anne Harrington, 
the Deputy Administrator for Defense Nuclear Nonproliferation; 
Admiral John Richardson, Deputy Administrator for the Office of 
Naval Reactors.
    I thank you for taking your time to be here, and I'd like 
to turn to the distinguished vice chairman, Senator Alexander.


                  statement of senator lamar alexander


    Senator Alexander. Thanks, Madam Chairman. And it's, as 
usual, a delight to work with the chairman. We work well 
together, see eye-to-eye on many things. And when we don't, we 
work those things out.
    We welcome our witnesses. I think the chairman has 
summarized very well the range of activities in the budget. And 
I'll save most of my remarks for questions.
    I would underscore one thing. And if there were only one 
thing in my opening statement, it would be this: If the NNSA 
does not find a more effective way to deal with design of these 
large multibillion-dollar facilities that NNSA builds, it's 
going to lose congressional support for those facilities. I 
mean, we're dealing with--whether it's plutonium enrichment or 
uranium processing or other facilities--we're dealing with 
billions and billions of dollars at a time when the Government 
is in debt. And every dollar especially counts. It always 
counts, but it especially does now.
    Senator Feinstein was just talking about her concern about 
the reductions in nuclear proliferation. If we do a better, 
more effective job in building the uranium facility or in our 
plutonium supply, that might create money that's available for 
that purpose. So that's my main concern.
    And that is why she and I have started doing a very simple 
thing with the uranium facility at Oak Ridge, which is having 
regular meetings with someone who's in charge of it so that we 
can monitor the progress of a large construction project as 
it's being designed, so that if we are part of the problem in 
terms of an efficient and effective management of the project, 
that we can try to correct it and so that we can make sure that 
we have at least a good, solid 90-percent design estimate 
before we start.
    In other words, we don't start building the house and then 
have to tear the roof off because we hadn't properly designed 
it, which was the case exactly in the uranium facility, costing 
hundreds of millions of dollars. So that's a waste of money. 
And we have to do a better job of that. So that's my 
overwhelming message today to NNSA.
    I will be interested to hear what the Department's strategy 
for plutonium supplies will be since we've deferred moving 
ahead with that project. So if we're using reused pits, then 
exactly how many--exactly what are we able to do?
    I want to renew my commitment to work with Senator 
Feinstein on monitoring the uranium processing facility 
construction design and then its building. I'd like to hear 
more about exascale computing, the ability of our country to 
deal with big supplies of data. Every part of our country's 
research and technology system depends upon that. And I know 
the Office of Science has much of that budget, but there's a 
zero for that big-scale computing in this budget. I'd like to 
understand that.
    Then I already have heard why the nuclear navy needs an 
increase this year, but we'll be looking forward to that 
testimony, too. So I look forward to the hearing, and I look 
forward to working with NNSA to get a handle on these big-scale 
construction projects so that we don't waste taxpayers' 
dollars. Thank you, Madam Chairman.
    Senator Feinstein. I thank you very much and very much 
appreciate working with you, Senator Alexander. I think we've 
done some good things. In a way, right now is the real point of 
decision. We have all these projects that are estimated at one 
amount, and they just grow like Topsy. I think, ladies and 
gentlemen, we have to get to the bottom of it and we have to 
stop it. And we've got to figure a way to do these things with 
good management.
    But in any event, we want to hear from you. So, Ms. Miller, 
why don't you begin? Welcome to the gristmill.


                  summary statement of neile l. miller


    Ms. Miller. Thank you, I think.
    Chairman Feinstein, Ranking Member Alexander, distinguished 
members of the subcommittee, thank you very much for having me 
here to discuss the President's fiscal year 2014 budget request 
for the Department of Energy's National Nuclear Security 
Administration. Your ongoing support of the men and women of 
the NNSA and the work they do and your bipartisan leadership on 
some of the most challenging national security issues of our 
time have helped keep the American people safe, helped protect 
our allies, and enhanced global security.
    The President's $11.7 billion fiscal year 2014 budget for 
NNSA allows us to continue to implement his national security 
agenda. As you know, we are also deeply engaged in efforts to 
realize President Obama's vision for a world without nuclear 
weapons, free from the threat of nuclear terrorism, and united 
in our approach toward shared nuclear security goals.
    Most recently, in his 2013 State of the Union Address, the 
President continued to highlight the importance of his nuclear 
strategy and pledged to ``. . . engage Russia to seek further 
reductions in our nuclear arsenals and continue leading the 
global effort to secure nuclear materials that could fall into 
the wrong hands, because our ability to influence others 
depends on our willingness to lead and meet our obligations.''
    His budget for fiscal year 2014 reaffirms the President's 
strong support for our nuclear security missions and provides 
us with the resources we need to further this work.
    I want to assure you that NNSA is being thoughtful, 
pragmatic, and efficient in how we achieve the Nation's nuclear 
security objectives and shape the future of nuclear security. 
As someone with many years of Federal Government experience at 
the nexus of programs and budget, I can tell you that while we 
are challenged to be successful in a time of fiscal austerity 
and budget uncertainty, we are also dedicating ourselves to 
driving efficiencies into our programs so that we can make the 
best use of the taxpayer dollars with which we are entrusted.
    Above all, we are challenging ourselves to reject ways of 
doing business that are holding us back from this, but which 
have survived long into the post-cold war era simply because 
they are the way we've always done it. The need to 
strategically modernize our facilities, infrastructure, and 
weapons systems is urgent. But so is the need to modernize how 
we do what we do.
    We must, and we are, evaluating our programs and 
challenging the assumptions for all of our programs and 
projects to rethink their underlying premises and ensure that 
we are charting a path to the future that is well-reasoned, 
responsible, and reflects the best way of doing business today.
    I want to assure you that NNSA is being thoughtful, 
pragmatic, and efficient in how we achieve the Nation's nuclear 
security objectives and shape the future of nuclear security.
    As the President has committed, the NNSA is working to make 
sure that we have the infrastructure, weapons systems, and the 
supporting science to certify the Nation's nuclear weapons 
stockpile through strategic modernization investments. We are 
working to implement the most ambitious nuclear 
nonproliferation agenda in the world. Whether or not we were 
facing this moment's budget uncertainties and fiscal 
constraints, we have a responsibility to prioritize what we do 
and to do it in a way that makes sense not only to us, but to 
you, to our partners at the Department of Defense (DOD), our 
international partners, and above all to the American taxpayer.
    To that end, we are working very hard to guarantee our 
ability to deliver the mission, something my colleagues 
throughout the nuclear security enterprise and consistently 
over the past 60-plus years have always done for this Nation. 
If we all want to see the nuclear security agenda move forward, 
and it's my responsibility to ensure that it does, then we need 
to make certain we are able to maintain essential enabling 
capabilities, including for plutonium and uranium, 
infrastructure to support the nuclear Navy, and strong national 
laboratories that are the backbone of the nuclear security 
enterprise. And we must continue to chart the path of nuclear 
security together.
    I have personally witnessed the evolution of these programs 
for many years from my positions both within the NNSA as well 
as from other perspectives within the U.S. Government. The 
enduring partnerships between NNSA and DOD, between Congress 
and the administration, and between our own sites and 
headquarters is vital to getting the mission accomplished and 
maintaining the security of the Nation. NNSA cannot survive 
without it, and the United States nuclear deterrent will 
deteriorate without it.
    NNSA, dating back decades to the Manhattan Project, has 
operated as a confederation of independent sites and missions, 
all somewhat coordinated on a path toward a clear goal. I have 
often said that nuclear weapons are not part of a growth 
industry. We have to be smarter, more unified, and more diverse 
both within NNSA, but also more broadly within the larger 
deterrence and nuclear security community.
    Regardless of our organizational chart or where NNSA is 
organizationally aligned within the U.S. Government, we can't 
do anything without the right people in the right places. We 
are continuously seeking new solutions to improve the way we 
conduct business. We have reinforced our project management 
organization and performance through the hiring of Bob Raines, 
who with 25 years of experience at DOD's Naval Facilities 
organization, has brought a new clarity and accountability to 
the way we approach acquisition and project management across 
NNSA.
    We have aggressively sought physical security program 
improvements through the hiring, first and foremost, of Steve 
Asher to act as our new Chief of Defense Nuclear Security. 
Steve is a retired Air Force colonel with 33 years of on-the-
ground nuclear security experience with the United States Air 
Force.
    But perhaps most significantly, we have realigned the 
Federal oversight of roles, responsibilities, and reporting of 
all of our sites and unified them in partnership under one 
person, my deputy, Michael Lempke. We are ensuring that we have 
the right people using the right processes in the right ways 
across NNSA. Mission and mission support teams are equal, 
supporting each other's needs on everything from regulatory 
issues to contracting. You saw it with our future-sharing 
nuclear production office, which covers Pantex and Y-12 without 
regard to geography. You can see it in our strong, 
unprecedented response to security lapses. And you can see it 
in our plutonium strategy, where creative thinking across our 
enterprise has given us a path forward in a time of tight 
budgets.


                           prepared statement


    We're doing the work the American people need us to do, and 
the President's forthcoming budget will allow us to continue 
doing that work. We at NNSA have worked hard to align ourselves 
for the future, and your continuing support has been a vital 
part of that. I again thank you for having me here today, and I 
look forward to answering your questions.
    [The statement follows:]
                 Prepared Statement of Neile L. Miller
                              introduction
    Chairman Feinstein, Ranking Member Alexander, and distinguished 
members of the subcommittee, thank you for having me here to discuss 
the President's fiscal year 2014 budget request for the Department of 
Energy's National Nuclear Security Administration (NNSA). Your ongoing 
support for the men and women of NNSA and the work they do, and your 
bipartisan leadership on some of the most challenging national security 
issues of our time, has helped keep the American people safe, helped 
protect our allies, and enhanced global security.
    The NNSA supports the President's nuclear security strategy, 
including those identified in the President's new global military 
strategy released in January 2012, the New Strategic Arms Reduction 
Treaty (New START) signed in 2010, and the Nuclear Posture Review 
(NPR). In April 2009 in Prague, President Obama shared his vision for a 
world without nuclear weapons, free from the threat of nuclear 
terrorism, and united in our approach toward shared nuclear security 
goals.
    Most recently, in his 2013 State of the Union Address, the 
President continued to highlight the importance of his nuclear strategy 
and pledged to ``engage Russia to seek further reductions in our 
nuclear arsenals, and continue leading the global effort to secure 
nuclear materials that could fall into the wrong hands--because our 
ability to influence others depends on our willingness to lead and meet 
our obligations.''
    The President's fiscal year 2014 request for NNSA is $11.65 
billion, an increase of $186 million, or 1.6 percent, over the fiscal 
year 2013 continuing resolution level and $650 million, or 5.9 percent, 
over the fiscal year 2012 appropriation at a time of sequestration and 
spending reductions across the government. The request reaffirms the 
commitment of the President to his nuclear security vision, applying 
world-class science that addresses our Nation's greatest nuclear 
security challenges and building NNSA's 21st century nuclear security 
enterprise through key investments in our people, programs, and 
infrastructure.
    I want to assure you that NNSA is being thoughtful, pragmatic, and 
efficient in how we achieve the Nation's nuclear security objectives 
and shape the future of nuclear security. We are looking forward to 
what NNSA will become 5, 10, 20 years into the future and what we are 
doing now to get there.
    Our missions are clear: To enhance global security through nuclear 
deterrence, to reduce global danger from nuclear weapons, 
nonproliferation, naval nuclear propulsion, and national leadership in 
science, technology, and engineering. Based on these critical mission 
and capabilities, the demand on the enterprise is growing. We are 
challenging ourselves to reject old ideas that represent the way things 
have been done in the past. We are moving beyond the cold war, 
strategically modernizing facilities and weapons systems, ensuring that 
the United States has the critical capabilities it needs without 
wasteful spending. Given our budget constraints and ongoing 
uncertainty, we have a responsibility to prioritize how we get things 
done, and we have developed clear strategies to guarantee our ability 
to do so. We must evaluate our programs and challenge the assumptions 
for all of our programs and projects to rethink the underlying premise 
and ensure that we are charting a path to the future that is well-
reasoned and responsible. We are at a particular point in time, unique 
for a lot of reasons, and the context matters. It was with this in mind 
that we made sure this year's Budget request was also the result of an 
unprecedented level of planning and cooperation between the NNSA and 
the Department of Defense (DOD).
    The NNSA has also made a number of organizational changes to help 
us make better, smarter, and more efficient decisions on how we conduct 
our operations and identify the resources needed to meet our nuclear 
strategy.
    One of the major actions NNSA took in fiscal year 2013 was standing 
up the Office of Infrastructure and Operations (NA-00) to serve as the 
fulcrum of the NNSA. The office encompasses our field operations, which 
are now directly reporting to the Administrator through the Associate 
Administrator for Infrastructure and Operations, who is dual-hatted as 
the NNSA Associate Principal Deputy Administrator. The consolidated 
office serves to oversee and direct the NNSA's Operations and 
Infrastructure, which as you know spans eight sites--from nuclear 
weapons laboratories to production plants--across seven States. The new 
office will make management of the nuclear security enterprise more 
efficient and effective.
    In addition, the recently established Office of Acquisition and 
Project Management (NA-APM) continues to integrate our acquisition and 
project management staffs in order to improve the way we manage and 
execute major construction projects once the design is sufficiently 
mature to baseline and begin construction, post phase Critical 
Decision-2 (CD-2). NA-APM combines its knowledge of contracting and 
project management to ensure identified and agreed upon needs of the 
NNSA are met in an effective and efficient manner. Federal Project 
Directors (FPD) responsible for project delivery have been re-assigned 
to NA-APM, and we are establishing Project Management Offices staffed 
with people possessing appropriate construction project management 
skills that will report directly to the FPDs. Lastly, the NNSA is 
better aligning contract incentives for Capital Asset Projects to 
structure contracts to provide an equitable balance of risks; ensuring 
each party bears responsibility for its own actions, rewarding 
contractors for generating savings while protecting the taxpayers from 
paying for contractor negligence. We expect these changes to 
fundamentally affect the way the NNSA reviews its projects and 
interacts with its contractors to continue to drive efficiencies while 
delivering on our mission under current fiscal constraints.
    In the last year, NA-APM's efforts resulted in $20 million in 
reimbursements from contractors as we moved to more fully utilize our 
contracts to hold them accountable for unsatisfactory performance. We 
issued an unambiguous design policy for our complex nuclear projects 
ensuring that sufficient design work (90 percent) is completed prior to 
approving project baselines at CD-2. Of nonmajor projects completed 
since 2007 with the construction budget baseline established in 2006 or 
later, 83 percent (10 out of 12) were delivered on time and at or under 
budget. These 12 nonmajor projects with a combined budget of $311 
million were delivered more than $32 million under budget. We are 
confident that the lessons learned in delivering this work are 
applicable and scalable to the major systems projects we have had 
problems with in the past.
    A third management change is to put more focus on cost planning 
relative to budgeting and execution, particularly in today's fiscal 
climate. Key decisions about priorities and resource allocations must 
be made centrally within the NNSA, rather than left solely to 
individual sites. The NNSA Act is clear that planning, programming, 
budgeting and financial activities comport with sound financial and 
fiscal management principles. Over a year ago, the NNSA embarked on a 
multiyear, iterative process with the Department of Defense's Office of 
Cost Assessment and Program Evaluation (CAPE) to conduct a rigorous 
analysis to try to determine how to best meet the President's nuclear 
strategy and the resources it will take to both accomplish the current 
program of work as well as to recapitalize our infrastructure. This 
ongoing effort will continue to inform our planning and programming 
decisions and will be the foundation upon which we build successive 
outyear budgets.
    In order to further improve transparency with Congress and to 
further drive efficiencies into our program planning and execution, the 
NNSA's fiscal year 2014 budget request makes some significant changes 
to our budget structure.
    In the fiscal year 2014 budget, the Infrastructure and Operations 
(NA-00) organization gains budget authority which will move the NNSA 
towards a tenant-landlord site model in which NA-00 is the landlord and 
the program offices are now tenants. As a result of this 
reorganization, the NNSA is proposing to eliminate the Readiness in 
Technical Base and Facilities (RTBF) GPRA unit in our budget and split 
these activities between the existing Site Stewardship unit and 
``Nuclear Programs'' within Defense Programs. The activities managed by 
NA-00 would be added to Site Stewardship under a new subprogram titled 
''Enterprise Infrastructure'' which would encompass Site Operations, 
Site Support, Sustainment, Facilities Disposition, and site 
infrastructure-related construction. Nuclear Programs will provide for 
capability investments and capital construction projects that uniquely 
support the mission of Defense Programs.
    The Defense Nuclear Nonproliferation appropriation account of the 
fiscal year 2014 budget request has been restructured to include the 
Nuclear Counter Terrorism Incident Response (NCTIR/NA-40) and 
Counterterrorism and Counterproliferation Programs (CTCP/NA-80) 
programs, both of which include activities transferred out of the 
Weapons Activities appropriation. By drawing together these NNSA 
programs in the Defense Nuclear Nonproliferation appropriation, we 
strengthen existing synergies and cooperation among these functions. In 
doing so, we provide priority and emphasis to the NNSA programs that 
are responsible for implementing the President's nuclear security 
priorities for reducing global nuclear dangers and the 2010 Nuclear 
Posture Review (NPR) which ``outlines the Administration's approach to 
promoting the President's agenda for reducing nuclear dangers and 
pursuing the goal of a world without nuclear weapons, while 
simultaneously advancing broader U.S. security interests.'' This change 
in budget structure will present with greater clarity the total funding 
and level of activity undertaken by the NNSA in this area, which the 
NPR identifies as the highest priority nuclear threat facing the 
Nation. At the same time, this realignment ensures that the Weapons 
Activities appropriation is now more focused on stockpile and related 
activities, such as physical and cyber security.
                           weapons activities
Defense Programs Overview
    After adjusting for the infrastructure-related budget realignments 
described previously, the fiscal year 2014 Defense Programs portion of 
the Weapons Activities account is $5.1 billion or $410.2 million above 
the fiscal year 2013 continuing resolution level, constituting a 9 
percent increase. As the President has committed, the NNSA is 
strategically modernizing our nuclear weapons infrastructure, weapons 
systems, and the supporting science to ensure a safe, secure and 
effective deterrent and to certify the stockpile without underground 
nuclear testing. Within today's constrained fiscal environment, we have 
closely scrutinized our strategies, plans, processes, and organization 
to ensure we make the most of our resources. The results of the NNSA 
and DOD budget-driven requirements analysis has forged a stronger link 
between DOD's requirements and the NNSA's resulting resource needs 
across the nuclear security enterprise. Some highlights include a new 
strategy for the conduct of Life Extension Programs (LEPs); an updated 
and more complete plutonium strategy; a refocusing of our science and 
infrastructure investments on the capabilities most urgently needed; a 
reorganization of the operations of facilities accounts and major 
infrastructure project responsibilities within NNSA's Defense Programs; 
and a significant effort to identify and implement management 
efficiencies. Each of these critical areas was determined following 
enormous effort to make smart business decisions on resourcing the 
highest priority mission work.
Life Extension Programs Strategy and Execution
    The DOD's ``3+2'' strategy calls for the transition of four 
warheads that make up the ballistic missile portion of our stockpile to 
be transitioned, over the next 25 years, to three life-extended, 
interoperable warheads that DOD could flexibly deploy across different 
missile platforms. Further, we will transition the three bomb/cruise 
missile warheads in the stockpile to two warhead types as part of their 
life extension.
    In January 2013, the Nuclear Weapons Council (NWC) changed the 
schedule and cumulative production quantity for the W76-1 program. This 
change reduced the total LEP production quantity and realigned the end 
of the production period for all operational units from fiscal year 
2021 to fiscal year 2019. Specifically, the scope and schedule 
parameters for the program in fiscal year 2013 and fiscal year 2014 
remain unchanged as the program will be executing steady-state rate 
production, and the annual production rates are the same for both 
fiscal years.
    Regarding the B61 LEP, the NWC selected the option (3B) which 
satisfies the minimum Department of Defense threshold requirements at 
reduced life cycle costs. Option 3B maximizes the reuse of nuclear and 
non-nuclear components while still meeting military requirements for 
service life extension and consolidation of multiple versions of the 
B61 into the B61-12.
    Following the W76 and B61 LEPs, the first of the LEPs to which the 
3+2 strategy applies is the W78/88-1. A joint DOD/NNSA Enterprise 
Planning Working Group developed schedules reflected in the forthcoming 
fiscal year 2014 Stockpile Stewardship and Management Plan (SSMP) which 
considers alignment of warhead development and production schedules 
with DOD system platform upgrades and balancing the workload across the 
nuclear security enterprise. Once developed as part of the Phase 6.2A 
activities, the DOD Cost Assessment and Program Evaluation (CAPE) team 
will review and the NWC will approve cost estimates for the W78/88 and 
future LEPs.
    Engineering development for an alteration to the W88, the W88 Alt 
370, is also under way. This Alt will address certain lifetime 
requirements by modernizing the Arming, Fuzing & Firing system and 
improving surety by incorporating a lightning arrestor connector. It 
will also provide additional logistical spares for the life of the 
system. The NNSA will complete the W88 Alt 370, the neutron generator 
replacement, and gas reservoir replacement will be completed at the 
same time with a planned first production unit for December 2018.
Plutonium Strategy
    NNSA is committed to ensuring continuity of required plutonium 
support capabilities and mission functions to include analytical 
chemistry, material characterization, manufacturing, and storage 
functions. The strategy for doing so is encompassed by the Defense 
Programs Plutonium Strategy that expands our capability over the next 
decade to achieve a 30 pits-per-year capability by 2021 to support the 
W78/88-1 LEP activities. Achievement of this capability requires 
additional investment in the Plutonium Sustainment program along with 
efforts to free up space within the PF4 facility at LANL by cleaning 
out the existing vault space and installing additional equipment in 
existing facilities.
    This strategy is critical for today's stockpile and is independent 
of the deferral period for the Chemistry and Metallurgy Research 
Replacement--Nuclear Facility (CMRR-NF). We are on track to move 
operations out of the existing Chemistry and Metallurgy Research 
facility at Los Alamos National Laboratory in 2019. Execution requires 
a $120 million reprogramming approval for fiscal year 2012 funds. This 
reprogramming is urgent for our workforce. NNSA and CAPE are developing 
a business case analysis of the plutonium strategy by August 2013. 
CMRR-NF deferral provides NNSA the opportunity to balance funding and 
requirements, and to evaluate an integrated, long-term plutonium 
capability solution.
Research Development Test & Evaluation (RDT&E)
    Last year we commemorated the 20th anniversary of the end of 
underground nuclear weapons testing in the U.S. Shortly after that 
decision in 1992, the Stockpile Stewardship Program was established to 
provide the science, tools, and critical skills necessary to certify 
that the stockpile is safe, secure, and effective without the need for 
nuclear testing. Since that time, we have been filling our toolbox with 
the cutting-edge science needed to accomplish this formidable 
challenge. Maintaining a stockpile under these conditions requires the 
best science and technology in the world. Breakthroughs have occurred 
that have enabled us to achieve this goal for today's stockpile. But as 
we look into the future, we see the need for the enhanced use of our 
science tools to gain better assurance that as our stockpile ages it 
will continue to be safe, secure and effective. The modern tools of 
Stockpile Stewardship not only serve as our insurance policy against a 
return to nuclear testing, but they also are increasingly revealing the 
``first principles'' physics and materials' properties of our weapon 
systems.
    Priorities of the Stockpile Stewardship Program include the 
development of capabilities to design and certify LEP options; 
preservation of specialized skills needed for maintenance of the 
nuclear stockpile by a generation of scientists who will not have 
worked with those experienced in nuclear testing; development of 
capabilities enabling timely resolution of issues from significant 
finding investigations resulting from surveillance observations; 
enabling annual assessment of the stockpile and associated operational 
decisions; and reducing nuclear dangers through the extension of 
capabilities used for assessments of foreign state weapons activities.
    In the fiscal year 2014 budget request, the Science Campaigns seek 
funding to provide the science underpinnings of our Plutonium Strategy 
and reuse options for the future stockpile, as well as advanced 
certification of nuclear explosive package options with improved surety 
to support LEP decisions and advanced diagnostics and experimental 
platforms (particularly optical imaging and radiography) for future 
subcritical experiments that augment and guide our plutonium science 
research. Through the National Boost Initiative (NBI), the Science 
Campaign is improving physics models for primary fission ``boost.'' 
This understanding is essential as we reduce the stockpile, especially 
since we will be reusing many nuclear components.
    The fiscal year 2014 budget request for the Inertial Confinement 
Fusion and High Yield Campaign features an increased emphasis on 
nonignition high energy density (HED) experiments, diagnostics, and 
experimental platforms development to support reuse and stockpile 
modernization. Such platforms and diagnostics will help validate 
secondary performance and surety technologies for the future stockpile, 
as well as help provide radiation effects testing of non-nuclear 
components. In addition, the budget request supports progress on 
achieving ignition, or thermonuclear burn in the laboratory, in 
accordance with the Path Forward report supplied to Congress in 
December 2012. This report described our plan for resolving 
discrepancies between experimental results at the National Ignition 
Facility (NIF) and the prediction of our codes, as well as the 
development of alternate ignition approaches (polar drive, direct 
drive, and magnetic drive). An Independent Advisory Board on ignition 
will be a subpanel of new Federal Advisory Committee being formed to 
provide advice on NNSA stockpile stewardship challenges. Finally, the 
budget seeks support for the continued safe and efficient operation of 
NNSA's three major High Energy Density facilities: NIF, OMEGA, and the 
Z machine.
    The budget in fiscal year 2014 for our Advanced Simulation and 
Computing (ASC) program seeks to implement the ``3+2 Strategy'' agreed 
to by the NWC described earlier. To implement that strategy, an 
understanding of plutonium reuse and performance, which ASC simulation 
helps provide, is critical. Further, the ASC budget seeks support for 
improved and more responsive full system modeling and simulation 
capabilities for annual assessments, LEPs and significant finding 
investigations that provide enhanced fidelity in the stockpile. ASC is 
uniquely challenged by supercomputing technology advances that are 
forcing an evolution in computer architectures that are inconsistent 
with current methods used in our national computational tools for 
stockpile assessment. In response, ASC is coordinating high performance 
computing technology, research and development with the DOE Office of 
Science's Advanced Scientific Computing Research (ASCR) office, and 
attempting to maintain adequate essential skills and capabilities to 
support current and future requirements under flat budget restrictions. 
Foreign nuclear weapons assessments will continue to rely on our 
Nation's nuclear weapons code base.
Strategic Management
    Building on the strength of our experience working with DOD this 
past year, we are enhancing our partnership this year in areas where 
both of us will benefit. Specifically this year, studies are being 
conducted with DOD to find efficiencies and to identify workforce 
priorities. The ``3+2 strategy'' and the aggressive LEP schedule 
associated with that strategy are being implemented. Modernization of 
critical mission support infrastructure is focusing on the Uranium 
Processing Facility (UPF) with acceleration out of Building 9212, and 
moving forward with the plutonium Strategy.
    Our enhanced partnership with DOD will be evident not only this 
year but also over the FYNSP period (fiscal year 2014-2018), and 
beyond, throughout the next 25 years as the 3+2 Strategy, the LEPs, and 
modernization are all at various stages of planning and execution. The 
25 year Strategic Plan will be described in detail in the forthcoming 
fiscal year 2014 SSMP.
    NNSA is taking the initiative to improve the effectiveness and 
reduce the cost of its operations and business practices. We understand 
that every dollar counts in these fiscal times and NNSA will build upon 
a number of successful efforts in the past to improve our contractors 
operations and efficiencies. We have already saved considerable money 
through our supply-chain management initiative, planned consolidation 
of the Y-12 and Pantex contracts, and pressing our contractors to 
change their benefit plans for employees, particularly pension plans. 
The funding requested in fiscal year 2014 reflects anticipated 
``Workforce Prioritization'' and ``Management Efficiencies'' savings as 
part of the NNSA/DOD joint study.
Defense Nuclear Security Overview
    The NNSA recently reorganized our security organization to 
establish clear lines of authority for responsibility and 
institutionalize a formal performance assessment capability. The Office 
of Defense Nuclear Security's primary missions are policy development, 
strategic planning, and performance assessments of NNSA site 
activities. We also realigned security management for operational 
direction, resource execution authority, and field assistance 
activities to the Office of Infrastructure and Operations (NA-00) which 
is consistent with its existing line management authority over all NNSA 
sites. NNSA is changing our culture of how we assess security so that 
we do not rely on reports provided by others but instead assess 
operational readiness of security at the sites by dispatching experts 
from the Office of the Chief of Defense Nuclear Security.
    We are also committed to hiring the right caliber of security 
professionals; those with operational nuclear security field 
experience, to reshape and continue to improve the culture of nuclear 
security at NNSA. This initiative is focusing our leadership on 
instilling a culture that embraces security as an essential element of 
the NNSA mission, which is to provide the utmost protection for 
national security resources.
    DNS is also hiring 15 additional Federal security experts in fiscal 
year 2013 to conduct performance-based assessments at each of the NNSA 
sites. These security professionals will visit each site, to perform 
assessments of security readiness by directly observing security 
operations, and program implementation.
    In the period following the Y-12 security event on July 28, 2012, 
we have learned a lot about our organization, the assumptions we had 
made, and how we communicate. The incident at Y-12 was a completely 
unacceptable breach of security. The security of our Nation's nuclear 
material is our most important responsibility, and we have no tolerance 
for such unacceptable performance. We have taken strong and decisive 
action to fix the issues that led to the incident at Y-12.
    We immediately shared lessons learned with all the NNSA Field sites 
and directed each to perform self-assessments related to those concerns 
found at Y-12. We directed the sites to assess: (1) security culture; 
(2) formality of operations; (3) rules of engagement procedures; (4) 
security system maintenance and compensatory measures. We initiated 
efforts to establish a robust assessment model, which has included the 
new Acting Chief of Defense Nuclear Security leading teams of security 
professionals to conduct assessments of all NNSA sites to determine 
security readiness and review of Field Office and contractor security 
performance.
    We are executing a deliberate process to restore the DOE directives 
as the baseline safeguards and security policy for NNSA.
    Using NNSA's Corporate Performance Evaluation Process, our 
assessment of the Y-12 management and operating contractor's 
performance resulted in lost award fee totaling $12.2 million, which 
included 100 percent of their possible security-related fee and a 
negative overall management fee adjustment of $10 million.
Cyber Security
    The fiscal year 2014 budget reflects the consolidation of the 
activities managed by the NNSA Office of the Chief Information Officer 
under NNSA CIO (NCIO) Activities. The consolidation under a single 
account will allow more effective and integrated management of the 
program. Cyber Initiatives are supported by IT Investments and this 
change will provide better alignment of resources to focus on the 
emerging threat and to deliver capabilities that allow our employees to 
work anywhere, anytime, on any device. The fiscal year 2014 budget 
includes $148 million for the NCIO activities which includes support 
for Federal IT as well as all programmatic funding for cyber security 
(covering Federal employees and our Managing and Operating 
Contractors).
    Providing an effective enterprise IT/Cyber strategy is critical to 
enablement of the OneNNSA strategy, the achievement of cost savings, 
and the deployment of shared services for the nuclear security 
enterprise. The NCIO leads Federal efforts to deploy innovative IT 
solutions, research and develop cyber defense technologies, and to 
deploy effective cyber security tools such as continuous monitoring, 
data loss prevention, and strengthened access controls. The NCIO focus 
for the next 5 years is to continue execution of our integrated 
strategy of IT Transformation (the NNSA Network Vision (2NV)), improved 
security monitoring of our environment (Joint Cyber Coordination Center 
(JC3)), and deploying next generation cyber defense capabilities that 
alter the economics of the cyber battlefield (Cyber Sciences Laboratory 
(CSL)).
    The NCIO made significant progress towards the OneNNSA vision in 
fiscal year 2013. The organization deployed a new, secure wide-area 
network (OneNNSA Network), a first of its kind federated Identity 
Management solution (a critical path step to full HSPD-12 
implementation), a unified communications solution and agency wide 
social network allowing for the collaboration of over 45,000 employees 
(ONEvoice), and a state of the art cloud services broker (YOURcloud) 
that will provide a foundation for cloud computing adoption and was 
recently recognized by Excellence.gov as the most innovative project in 
government.
    Fiscal year 2014 will build on these achievements and progress all 
three elements of our integrated strategy forward. For 2NV, NCIO will 
consolidate data centers using YOURcloud, modernize our applications to 
reduce legacy IT costs and enable a mobile workforce, and consolidate 
our intranets, Web sites, and file servers to common platforms to 
reduce costs. NCIO will improve our classified network monitoring 
capabilities, provide monitoring for 2NV investments, and strengthen 
the partnership with DOE for unclassified JC3 capabilities. For CSL, 
NNSA will execute a robust cyber defense R&D portfolio center around 3 
signature programs: (1) Mission Resilience and Assurance; (2) Big Data 
and Behavioral Cyber Analytics; and (3) Scalable Testing of System 
Cyber Dynamics.
                    defense nuclear nonproliferation
    As I mentioned earlier, we decided to align all the global nuclear 
security activities under the Defense Nuclear Nonproliferation account. 
This will strengthen our focus on countering nuclear terrorism and 
proliferation, while encouraging cooperation among our programs in this 
area. The Request includes $2.1 billion for the DNN appropriation which 
includes the NNSA Defense Nuclear Nonproliferation (DNN/NA-20), Nuclear 
Counter Terrorism Incident Response (NCTIR/NA-40), and 
Counterterrorism/Counterproliferation (CTCP/NA-80) programs.
Office of Defense Nuclear Nonproliferation
    As we look to the future, we see challenges and opportunities 
across the globe. Over the past 4 years we have seen increased focus, 
determination and expansion of activities with our international 
partners. This has been due largely to the momentum created by the 
Nuclear Security Summit process to meet shared nuclear security goals. 
Russia, for example, has announced its intention to be a full partner 
with us, and remains a critical partner in the efforts to secure the 
most vulnerable nuclear materials and keep them out of the hands of 
proliferators and terrorists. The Russians are not alone, and dozens of 
countries have stood alongside President Obama and the United States at 
two Nuclear Security Summits to show their commitment to our shared 
cause.
    One of our most important accomplishments has been to support the 
Administration's commitment to secure the most vulnerable nuclear 
material across the globe in 4 years. Since 2009, our efforts to secure 
plutonium and highly enriched uranium (HEU) around the world have 
accelerated to make it significantly more difficult to acquire and 
traffic the materials to make an improvised nuclear device. I am proud 
to say that we are very close to meeting our goals to remove or dispose 
of 4,353 kilograms of highly enriched uranium and plutonium in foreign 
countries by the end of 2013, and equip 229 buildings containing 
weapons-usable material with state-of-the-art security upgrades, though 
some challenges remain.
    On April 5, 2013, we completed the removal of all HEU from the 
Czech Republic, making it the 10th country to be completely cleaned out 
of HEU in the last 4 years. The NNSA will complete prioritized removal 
of vulnerable nuclear material from three more countries this year.
    The 4-year effort allowed us to accelerate some of our most 
important work, but it has been accurately described as ``a sprint in 
the middle of a marathon.'' After our 4-year sprint, there will be much 
left to complete in the areas of the elimination, consolidation and 
securing of nuclear and radiological materials worldwide. Nuclear and 
radiological terrorism continues to be a grave threat, nuclear and 
radiological WMD technology and expertise remain at risk, and materials 
of concern, such as plutonium, still are being produced. While the 
challenges are substantial, they are not insurmountable.
    NNSA, working with its international partners and with strong 
support from the White House, will continue to eliminate, consolidate 
and secure high risk materials to ensure that terrorists can never 
acquire a weapon of mass destruction. The fiscal year 2014 request for 
ODNN provides $1.8 billion to: Continue efforts both domestically and 
internationally to convert research reactors and isotope production 
facilities from HEU to LEU, consolidate nuclear material in fewer 
locations, and permanently eliminate it where possible, improve and 
sustain safeguards and the security of nuclear materials at those 
locations, support the adoption of security best practices, prioritize 
efforts to secure or remove high-risk radiological sources, prevent 
illicit trafficking of nuclear and radiological material through the 
provision of fixed and mobile detection equipment and export control 
training, and work in collaboration with international partners to 
build global capability in these areas.
    We will continue to pursue a multilayered approach to protect and 
account for material at its source, remove, downblend or eliminate 
material when possible, detect, deter and reduce the risk of additional 
states acquiring nuclear weapons, and support the development of new 
technologies to detect nuclear trafficking and proliferation, as well 
as verify arms control treaties.
    We owe it to the American people to continually reevaluate our work 
and make strategic decisions for the future. The fiscal year 2014 
budget request takes a thoughtful look at the Mixed Oxide 
(MOX) Fuel Fabrication Facility project and our plutonium 
disposition options. The United States remains committed to disposing 
of excess plutonium, and we believe this review will ensure that we are 
able to follow-through on our mission in the decades to come. The U.S. 
plan to dispose of surplus weapons-grade plutonium by irradiating it as 
MOX fuel has proven more costly to construct and operate 
than anticipated. Considering these unanticipated cost increases and 
the current budget environment, the Administration has begun assessing 
alternative plutonium disposition strategies and identifying options 
for fiscal year 2014 and the outyears. During the assessment period, 
the Department will slow down its MOX project. We are 
committed to disposing of excess plutonium, we recognize the importance 
of the U.S.-Russia Plutonium Management and Disposition Agreement, and 
the U.S. will continue to engage key program partners and stakeholders 
as the assessment of alternative plutonium disposition strategies is 
developed.
    Our continued focus on nonproliferation and nuclear security 
efforts is vital. The threat of nuclear terrorism and WMD proliferation 
remains. Detonation of a nuclear device anywhere in the world could 
lead to significant loss of life, and extraordinary economic, 
political, and psychological consequences. We must remain committed to 
reducing the risk of nuclear terrorism and WMD proliferation.
Nuclear Counterterrorism Incident Response
    This year, the request for NCTIR will support a strategy focused on 
reducing nuclear dangers through integration of its subprograms; 
Emergency Management, Emergency Response, Forensics and International 
activities supported by training and operations.
    In fiscal year 2014, the program will invest in leverage at a 
distance capability for the Nuclear Emergency Support Team, maintain 
training of the Consequence Management Home Team, sustain stabilization 
cities, complete improvements to U12P-tunnel, address and sustain 
emergency management requirements, maintain the Emergency 
Communications Network, and continue supporting international partners. 
The NCTIR program will continue to maintain essential components of the 
Nation's capability to respond to and manage the consequences of 
nuclear incidents domestically and internationally, and continue to 
conduct programs to train and equip response organizations on the 
technical aspects of nuclear counterterrorism.
Counterterrorism and Counterproliferation Programs
    The aforementioned budget realignment includes the Counterterrorism 
and Counterproliferation, or CTCP, program office, which we stood up 
last year. The funding request for CTCP includes the transfer of the 
discontinued National Security Applications funding into a consolidated 
and substantially revised budget line to support the highest priority 
counterterrorism and counterproliferation technical work, including the 
study of Improvised Nuclear Devices and other nonstockpile nuclear 
device threats. This increased funding will support unique nuclear 
device-related technical contributions derived from NNSA's core nuclear 
science and technology expertise. This activity supports interagency 
policy execution, DOD and Intelligence Community customers, and DOE's 
own emergency response operations.
                             naval reactors
    Naval Reactors' (NR) request for fiscal year 2014 is $1.246 
billion, an increase of 15 percent over the fiscal year 2012 request, 
to continue safe and reliable naval nuclear propulsion. The program 
directly supports all aspects of the U.S. Navy's nuclear fleet, which 
encompasses the Navy's submarines and aircraft carriers, over 40 
percent of the U.S. Navy's major combatants. Currently, the nuclear 
fleet is comprised of 54 attack submarines, 14 ballistic missile 
submarines, 4 guided missile submarines, and 10 aircraft carriers. Over 
8,300 nuclear-trained Navy sailors safely operate the propulsion plants 
on these ships all over the world, and their consistent forward 
presence protects our national interests.
    Continued safe and reliable naval nuclear propulsion requires that 
NR maintain the capability to anticipate and immediately respond to 
small problems before they become larger issues. Our technical base and 
laboratory design, test, and analysis infrastructure is required for us 
to thoroughly and quickly evaluate technical issues that arise from 
design, manufacture, operations, and maintenance, ensuring crew and 
public safety without impeding the mission of our nuclear-powered 
fleet. Uncompromising and timely support for safe operation of the 
nuclear fleet continues to be the highest priority for Naval Reactors.
    Beyond fleet support, Naval Reactors continues efforts on its three 
important new projects: the design of the Ohio Replacement reactor 
plant; the refueling overhaul for the S8G Land-based Prototype reactor; 
and recapitalization of our naval spent nuclear fuel infrastructure. 
Each of the projects is critical to fulfillment of the Navy's longer 
term needs.
    The current Ohio-Class ballistic missile submarines are reaching 
the end of their operational lives and will begin to retire in 2027. 
Naval Reactors is designing and developing a life-of-ship core for the 
Ohio Replacement that will increase SSBN operational availability and 
reduce strategic deterrence submarine procurements from 14 to 12. The 
fiscal year 2014 request is $125.6 million and supports the Navy's 
schedule and progresses on reactor plant design needed for procurement 
of reactor plant components beginning in 2019. This request is 
essential to component design, procurement and ship construction.
    The Land-based Prototype provides a cost-effective testing platform 
for new technologies and components before they are introduced to the 
fleet, and is essential for the testing of new materials and technology 
for the Ohio Replacement life-of-ship core. To preserve this vital 
research, development, and training asset for the long-term and to 
achieve life-of-ship core for the Ohio Replacement, core development 
and preparations for the refueling overhaul must continue in fiscal 
year 2014. The fiscal year 2014 request for the S8G Land-based 
Prototype Refueling Overhaul is $143.8 million.
    Finally, the Spent Fuel Handling Recapitalization Project (SFHP) 
supports the Navy's refueling and defueling schedule for nuclear-
powered aircraft carriers and submarines by providing the capability to 
unload and return spent fuel shipping containers to the shipyard. The 
fiscal year 2014 budget includes $70 million to continue conceptual 
design for a new facility. Significant portions of the existing 
Expended Core Facility are more than 50 years old, and were not 
designed for its current mission of processing and packaging spent 
naval nuclear fuel for permanent dry storage. The existing facility is 
not capable of handling full-length aircraft carrier fuel from M-290 
shipping/storage containers. The need to prioritize operational fleet 
support following enactment of the Budget Control Act resulted in a 
year and a half delay to the project; the fiscal year 2014 request 
supports this revised schedule. Further delay to the SFHP would create 
a need for additional M-290 containers, at approximately $100 million 
per year of delay, for temporary storage.
    Like our Weapons program, over the last year, DOE, NNSA, and the 
DOD CAPE conducted a comprehensive analysis of Naval Reactors' program 
and validated that our requirements are consistent with the President's 
overall strategy.
                      office of the administrator
    The NNSA's Office of the Administrator (OA) appropriation provides 
the Federal salaries and other expenses of the NNSA mission and mission 
support staff, including the Federal personnel for Defense Programs, 
Defense Nuclear Nonproliferation, Emergency Operations, Defense Nuclear 
Security, Acquisition and Project Management, the Office of the Chief 
Information Officer, Safety and Health, the Administrator's direct 
staff, and Federal employees at the Albuquerque Complex and site 
offices. The OA account is an essential enabler of the Federal roles 
and missions that are the heart of our Enterprise.
    The OA account continues to streamline operations and provide 
staffing for efficient and effective oversight to our programs. We have 
taken aggressive measures to significantly downsize the account, 
including cutting travel and support services by about one-third and 
offering voluntary separation incentive payments and early retirement 
to help right-size our workforce.
                        impact of sequestration
    The sequestration cuts now in effect will hamper NNSA's ability to 
carry out the full range of national security activities planned in our 
fiscal year 2013 budget. These cuts are coming 5 months into the 
current fiscal year, forcing the NNSA to absorb the spending reduction 
in a 7-month period rather than an entire year. Under the current law, 
the NNSA fiscal year 2013 budgetary resources have been cut by roughly 
7.8 percent, which equates to an effective reduction of over 13 percent 
when measured over the balance of the fiscal year. Under sequestration, 
the reduction for the entire NNSA is approximately $900 million. This 
results in the Weapons Activities appropriation is approximately $600 
million below the fiscal year 2013 request levels, and more than $250 
million below the fiscal year 2012 levels.
    Prior to sequestration taking effect, NNSA informed Congress 
through hearings on two separate occasions that thousands of contractor 
jobs at our labs and plants could be affected either through work hour 
reductions or other personnel actions with Directed Stockpile Work and 
the Life Extension Programs being impacted the greatest. While we 
continue to believe that sequestration will cause significant impacts, 
these preliminary impact statements, which were formulated in a period 
of uncertainty regarding the precise provisions of the final continuing 
resolution (CR), need to be revised.
    Now that we know the actual terms and conditions of the CR, NNSA is 
working closely with our partners in the labs and plants to develop 
mitigation strategies that will protect our highest priority workload 
to the best of our ability given the current resources. Our highest 
priority will remain the safety and security of our nuclear security 
enterprise. Once this review is completed, the Department plans to use 
a combination of the Operating Plan required by the CR, as well as a 
reprogramming to address the most critical funding needs and implement 
mitigation strategies to give program managers the flexibility they 
need to best handle the reductions across the enterprise.
    Due to the indiscriminate nature of these cuts and view that it 
remains poor policy, the President's fiscal year 2014 budget request 
does not reflect sequestration's impacts; either in fiscal year 2014 or 
across the FYNSP.
                               conclusion
    The fiscal year 2014 budget reaffirms the national commitment to 
the President's nuclear security vision, applying world-class science 
that addresses our Nation's greatest nuclear security challenges and 
building NNSA's 21st century nuclear security enterprise through key 
investments in our people, programs and infrastructure. We are looking 
toward the future and building an organization that will ensure 
success. I look forward to working with each of you to help us do that. 
Thank you.

    Senator Feinstein. Thank you very much. I think we have a 
lot of questions.
    I'd like to begin with Dr. Cook, with a question on the B61 
life extension program. This is $10 billion to refurbish 400 
bombs. As I understand it, the original purpose of the life 
extension program was to replace three critical components 
called the triple alt. As a matter of fact, I was briefed on 
that with a model, and it was a limited scope. It would have 
met the nuclear posture review goal of refurbishing the first 
unit by 2017 and would have cost about $1.5 billion.
    The current scope is now much more ambitious, replacing 
hundreds of components, and may cost as much as $10 billion. 
The date for refurbishing the first unit has now slipped 2 
years, to 2019, and with sequestration, it has slipped another 
6 months, to March 2020. And the cost has increased another 
$200 million.
    Given current budget conditions, Dr. Cook, cost overruns, 
schedule delays, competing priorities, do you plan on 
reassessing the scope for the B61?
    Dr. Cook. If I can answer that, we've had a continuous 
assessment of the scope, ongoing for the past several years. 
We've worked with the Department of Defense. We've worked with 
the U.S. Strategic Command, certainly the Air Force, in sorting 
out what you've mentioned, Chairman. The triple alt, or triple 
alteration, was considered in the analysis. It was considered 
in the judgment. And the conclusion made by the Air Force, 
supported by NNSA and U.S. Strategic Command, was that if we 
took the path to replace the B61 radar system and also the 
neutron generator--the neutron generator includes tritium; the 
radar system is the last unit still to have vacuum tubes. This 
is America's oldest system in the stockpile and the third 
element to improve the power supply, which is also degrading--
if we did that, we'd delay the need for a life extension 
program by about 10 years, but we would then need a life 
extension program that would be more expensive. It would have 
to be done under more extreme urgency. And so we instead have 
managed the scope. We've reduced the scope. We have the B61 as 
the lowest-cost life extension program that meets the military 
needs.
    If you have follow-up questions, I'd be happy to answer 
more.
    Senator Feinstein. Well, the problem is here we go from 
$1.5 billion to $10 billion. And that's just for starters. I 
appreciate the answer, but as we look at virtually every 
program here, they all run above budget and they all have 
problems. It's a very sobering thought to me, because I'm of 
the school that doesn't believe that we need all these nuclear 
weapons.
    Let me ask another question. According to budget documents, 
Ms. Miller, it's my understanding that you plan to spend $2.6 
billion over the next 4 years for pay increases for contractors 
at weapons labs. My understanding is that you plan to increase 
contractors' pay from the current 2.3 percent a year to 4 
percent a year.
    Now, here's the rub. We've had all Federal salaries frozen 
for 3 years now. The compensation, it seems to me, at the 
national lab is more than adequate. So why do contractors need 
a 4-percent increase a year totaling $2.6 billion?
    Ms. Miller. Thank you, Senator. The decision on what to 
allow for pay for contractors at Department of Energy national 
laboratories is a decision made by the Department of Energy, in 
this case, the Secretary himself. And it's not a separate NNSA 
decision. So there was a decision, I know, over the past year, 
and I will get you the details. I don't have them off the top 
of my head. I recall when it happened that there would be some 
increase allowed.
    [The information follows:]
                        contractor pay increase
    Contractors are not receiving a 4-percent pay increase per year.
    The Secretary of Energy implemented a 2-year salary freeze in 
fiscal year 2011 and fiscal year 2012 for Management and Operating 
(M&O) and major site and facility management contractor employees, 
other than those covered by collective bargaining agreements. During 
the 2-year salary freeze, the Secretary authorized a total salary 
increase fund of up to 2 percent, to achieve parity with the salary 
adjustments received by Federal employees.
    More broadly, NNSA Integrated Contractors (ICs) have had an 
authorized salary growth of about 2 percent since 2010, about the rate 
of Federal employees while under a Federal salary ``freeze.'' For 
active contractor employees, the weighted average growth rate across 
all sites was: 2.6 percent in fiscal year 2010; 2 percent in fiscal 
year 2011; and 2 percent in fiscal year 2012. This salary growth rate 
is about equal to Federal employees, where according to OPM data, 
average salaries increased by 2 percent from fiscal year 2009--fiscal 
year 2012 when there was a salary ``freeze'' in Federal pay tables, but 
employees could still earn more within the Federal tables.
    Note: Authorized percentages represent the maximum allowable--some 
contractors spent less than authorized due to affordability.
    Moreover, for some contractors, take-home pay has declined for many 
years in a row because of negative growth rates in non-salary 
categories. LANL, in particular, has seen declines in average 
compensation every year since 2009, according to a CAPE study. As an 
example, in fiscal year 2012, LANL employees received about a 2-percent 
salary increases on average, while increasing their contributions from 
up to 6 percent to up to 8 percent of salary towards their pension plan 
(applicable to participants in the pension plan).
    Contractor benefits have also had negative growth, while Federal 
benefit costs have been increasing. From 2010 thru 2012, the weighted 
average active contractor employee benefit costs have decreased 0.9 
percent per year (-1.8 percent cumulatively). In comparison, OMB 
guidance requests that Federal agencies assume a 5-percent growth rate 
in Federal benefit costs starting in fiscal year 2014 (actual USG-wide 
benefit growth rates the past few years is not readily available to 
NNSA staff, but presumably the OMB direction on benefit guidance would 
be based on actuals).
    For fiscal year 2014, NNSA authorized between 2.5- to 3-percent 
base contractor salary growth for fiscal year 2014, still below the 4-
percent figure. This was determined by evaluating each site against the 
market independently. Hence, base salary growth over the last several 
years has been held at or below industry market movement rates of about 
3 percent.
    Although we cannot confirm the source, the referenced 4-percent 
increase per year figure may have originated from a CAPE study that 
found that between the 1990s and 2011, annual LANL cost (roughly equal 
to annual appropriations sent to LANL plus WFO) divided by the 
workforce at LANL grew at about 4 percent per year. This rate does not 
reflect the compensation earned by contractor employees, but rather 
reflects expenditure growth rates divided by FTEs. The expenditures are 
also used for a variety of activities, including things directly 
related to LANL employee compensation such as FTE salary and benefits; 
and things not related to LANL FTE employees, such as pension payments 
to retired employees and sub-contract work. Moreover, the average rate 
over 20 years at LANL is not reflective of growth rates over the last 5 
years across all of the M&Os. That said, this percentage is important 
for NNSA in its management of NNSA's program of work and is something 
that NNSA does need to be aware of.

    Ms. Miller. I know that one of the major concerns of 
national laboratory directors is that salaries were frozen, and 
as you know, pay scales can be complicated. There was some 
freeze put on. There was deep concern that this was going to 
affect the laboratories' ability to attract and retain the 
level of employee that they needed.
    Senator Feinstein. Okay. Well, I mean, that's a lot of 
money. It's $2.6 billion right there. You're saying it's made 
at the Secretarial level?
    Ms. Miller. Correct.
    Senator Feinstein. We'll find out.
    As I mentioned and you mentioned, the President has 
described nuclear terrorism as the most immediate and extreme 
threat to global security and that radiological, or nuclear 
attack, on United States soil would result in dire and profound 
consequences for the country. It seems to me this budget 
abandons that. The goal to convert research reactors using 
highly enriched uranium to low-enriched uranium has slipped 8 
years to 2030. Efforts to secure radiological sources in the 
United States and overseas has slipped 20 years to 2044.
    In addition, there's no target date to secure more than 
1,000 kilograms of highly enriched uranium and 1,000 kilograms 
of plutonium. So rather than getting the job done, these 
materials are going to be vulnerable for a long, long time.
    So I would very much like to understand what's going on 
here. Because to me, it's a total backing away of a major 
commitment. People say one thing and do another. Could you 
comment as to whether this is correct in the slippage? If it 
isn't, please correct it.
    Ms. Miller. I'm going to ask Ms. Harrington to answer that. 
You're the lucky one.
    Ms. Harrington. Well, I do consider myself lucky to have 
this program under me. And I would say that in our planning, 
you know, this is a very complicated environment. Radiological 
sources in the United States, of course, are regulated by the 
Nuclear Regulatory Commission (NRC). They are not regulated by 
us. We work in close partnership with both NRC and with the 
Department of Homeland Security, which clearly has a role to 
play, as well as others.
    Senator Feinstein. Why don't you just tell me, is this 
slippage that I have just indicated correct?
    Ms. Harrington. There is some schedule slippage in our 
projection.
    Senator Feinstein. Is the answer yes?
    Ms. Harrington. Yes.
    Senator Feinstein. Okay. What are you going to do about it?
    Ms. Harrington. Part of the strategy to try to accelerate 
some of those conversions is to work more intensively with our 
both international and domestic partners through the G8 Global 
Partnership, through other international mechanisms. We are 
able to team with other countries to be able to do this.
    Russia, for example, is taking much more responsibility 
itself for the conversion of its own reactors. And you know 
this topic well. You are well aware that about 70 of the 
remaining reactors to be converted are in Russia. So having 
Russia to step up and take a much more active role in this area 
is important. They have a commitment to get the first one done 
by the 2014 Nuclear Security Summit.
    Similarly, in the United States, we cannot, as NNSA, we 
should not be paying for private entities to upgrade their 
security. We can give them technical advice. We can partner 
with them. We can work with suppliers of equipment that contain 
radiological sources to improve the security.
    Senator Feinstein. Let me stop you. I understand all that.
    Is there a target date to secure more than the 1,000 
kilograms of highly enriched uranium and the same of plutonium? 
Is there a target date to get that done by?
    Ms. Harrington. We are working on new target dates for 
those things. We can get back to you with more information on 
that, yes.
    Senator Feinstein. I'm serious. Before the budget goes, 
please.
    Ms. Harrington. We will.
    [The information follows:]

    The Global Threat Reduction Initiative (GTRI) remains on track to 
achieve the goals laid out in the 4-year plan as well as to remove or 
confirm the disposition of at least another 1,000 kilograms of material 
beyond the 4-year plan by 2019.

    Senator Feinstein. Okay.
    Senator Alexander.
    Senator Alexander. Thanks, Madam Chairman. Welcome.
    On page 51 of President Obama's budget, it says the 
following about the Tennessee Valley Authority (TVA): After a 
long paragraph, it says, ``The administration intends to 
undertake a strategic review of options for addressing TVA's 
financial situation, including the possible divestiture of TVA 
in part or as a whole.''
    Is the Obama administration really going to sell TVA?
    Ms. Miller. Senator, as you know, TVA does not come under 
the Department of Energy. So I'm not privy to all the 
discussions of the administration on----
    Senator Alexander. Well, if it's not under the Department 
of Energy, what Department would it be under? It wouldn't be 
under education or----
    Ms. Miller. No. I believe it's Interior. We don't control 
the TVA. It is not in our budget.
    Senator Alexander. But wouldn't you think that if the 
President were going to propose selling the Nation's largest 
public utility and supplier of electricity, that they would ask 
advice? Were you consulted about the sale of TVA?
    Ms. Miller. He may well have consulted with the Secretary 
of Energy. I was not consulted. But I don't work on the energy 
side. So if it was with respect to a utility, that's true. If 
it's with respect to the national security aspect of it, 
certainly defense needs would have to be taken into 
consideration before any movement could be done.
    Senator Alexander. Well, is tritium not important in the 
development of nuclear weapons?
    Ms. Miller. Very important.
    Senator Alexander. Do you know where the tritium supply 
comes from?
    Ms. Miller. TVA.
    Senator Alexander. What?
    Ms. Miller. We irradiate our fuel rods at TVA.
    Senator Alexander. Right. So TVA provides the tritium that 
we use to make our nuclear weapons. Is there any other source 
of tritium that we have?
    Ms. Miller. No.
    Dr. Cook. There is not, sir.
    Senator Alexander. There's not. And how difficult would it 
be to find a second source?
    Dr. Cook. We have not had a need to look into that.
    Senator Alexander. But you would if you sold TVA. Do you 
think an investor-owned utility might be quick to change its 
reactors and start producing tritium?
    Dr. Cook. I think it's a reasonable question. I won't 
speculate. But we do have a continuing need for tritium, and 
it's important to the stockpile.
    Senator Alexander. Well, my suggestion would be that you 
might suggest to the President's advisors that if he's going to 
sell the Agency that produces tritium for--all of the tritium--
for our nuclear weapons system, he might get some advice from 
the Department of Energy before he does that.
    I have some other questions about the sale of TVA. What 
would you do about the debt? What would you do about--what 
price would it bring? But my question, fundamentally, is that 
the rationale for TVA is that it is a Federal entity. It's 
basically owned by the taxpayers of the country. And as a 
result of that, it's in a position to take on missions that a 
private investor-owned utility might not, such as the 
production of tritium, such as building one of the first small 
nuclear reactors, a project in which the Department of Energy 
is very interested.
    So I would think that the Department of Energy would want 
to give advice to the administration about thinking through any 
proposal to sell our only producer of tritium and an agency 
that could undertake national missions such as small reactors 
that investor-owned utilities might not.
    Let me move to a different area. With the deferral of the 
plutonium facility at Los Alamos, what's our strategy for 
plutonium production for the foreseeable future? Can we meet 
our needs, and how will we do it?
    Dr. Cook. I'll begin from sort of the middle. Yes, we can 
meet our needs. We're in peril with the deferral of the 
Chemistry and Metallurgy Research Replacement (CMRR). We've 
done a fairly comprehensive study. We've enjoined the 
Department of Defense in that study.
    The strategy is to use the capabilities that we have, 
consider other capabilities in addition. But one element, for 
example, is the radiation lab, utility, and office building 
that was constructed as a part of the CMRR project is fully in 
place. We're fairly close to completing the equipment 
installation in radiological laboratory utility and office 
building (RULAB). We've granted it an ability to operate with 
higher levels of plutonium for analytic chemistry, and that's a 
key part.
    Another part of the strategy is to look through, 
comprehensively, the missions that we undertake in the 
plutonium facility number 4----
    Senator Alexander. Are we talking about reusing pits? Is 
that what we're talking about?
    Dr. Cook. It's all tied together. Yes. Our strategy is a 
combination both of pit reuse and remanufacturing pits of 
existing and well-known and previously tested designs. So it's 
that combination, again, that we've worked through and have 
concluded that we can meet the stockpile needs for the life 
extension programs that we have, with a level of 30 pits per 
annum newly manufactured, and up to 90 pits per annum pit 
reuse.
    Senator Alexander. So you could do that that much?
    Dr. Cook. We can do that much, right.
    Senator Alexander. Okay.
    Dr. Cook. The question is what we would have to do if we 
have a need to go beyond 30 pits per annum, if for example, we 
couldn't progress with the strategy that has been agreed now at 
the Nuclear Weapon Council and U.S. Strategic Command, NNSA, 
and the DOD, and the services to have a series of life 
extension programs moving through for the next 30 years or so. 
If one got stopped, it would pile onto another. In that case, 
we'd have a need that's higher.
    Senator Alexander. Well, my time is up. But let me ask this 
last question. Is your customer, the Department of Defense, 
satisfied that you can meet its needs?
    Dr. Cook. The answer is that our interagency partner, the 
Department of Defense, is satisfied it can meet its needs. The 
DOD is a customer and a partner, but this is the Nation's 
nuclear deterrent.
    Senator Alexander. Thank you, Dr. Cook. Thank you, Madam 
Chairman.
    Senator Feinstein. Thank you very much.
    Senator Graham, and then Senator Udall.
    Senator Graham. We'll make this as painless as possible. 
Okay.
    Senator Feinstein. That's a warning.
    Ms. Miller. Got it.
    Senator Graham. All right. So here's the deal. We've got 34 
metric tons of weapons-grade plutonium destined for the 
Savannah River site that will be converted from weapons-grade 
material to commercial-grade nuclear fuel. We're talking swords 
to plowshares. That's pretty good, right? Seventeen hundred 
warheads will be disposed of forever between the U.S. and 
Russia, 8,500 each.
    Do you agree with that, Ms. Miller?
    Ms. Miller. I do. I do agree.
    Senator Graham. And we have an agreement with the Russians, 
where they will dispose of 34 metric tons. Right?
    Ms. Miller. That's correct.
    Senator Graham. So this is a good thing. It's been going on 
since the 1990s.
    Now, we've been studying since the 1990s how to dispose of 
the plutonium. And direct disposition would be a violation of 
the agreement; do you agree with that?
    Ms. Miller. It would be a violation of the agreement, 
correct.
    Senator Graham. Yes, because you could reconstitute it. We 
want to make sure that no one can ever use this stuff for 
weapons material again.
    So we chose mixed oxide (MOX) disposition; is 
that correct?
    Ms. Miller. Yes.
    Senator Graham. And we have an agreement, which the 
Russians signed in 2010, where we say we will put the 34 tons 
through the MOX system to turn it into commercial-
grade fuel; is that correct?
    Ms. Miller. Yes, partly.
    Senator Graham. Okay. And part of that MOX plan 
was to build three facilities at Savannah River site, one for 
Pit Disassembly and Conversion Facility (PDCF), one for waste, 
and the other to MOX; is that correct?
    Ms. Miller. That was the plan.
    Senator Graham. Okay. And because we're such good stewards 
of the taxpayer dollars, and we're so creative, and y'all did a 
good job here, we found a way to save $2 billion by not 
building the PDCF facility; is that correct?
    Ms. Miller. We hope that it won't be that much, yeah.
    Senator Graham. Yeah. So we think it will be $2 billion. We 
don't have to build a third facility.
    Now, an environmental impact study was done when we were 
talking about the PDCF facility, and if you went down the 
vitrification route, turning all this into glass, that study 
said you'd have to bring in high-level waste from somewhere 
else to make this work. Do you remember that?
    Ms. Miller. I do not. There is high-level waste in Savannah 
River already that's being vitrified, as I know you're all 
aware.
    Senator Graham. Yes. But the study says you'd have to bring 
some in for Hanford to make this work. And the study also said 
that the current vitrification facility could not process 34 
metric tons of plutonium. You'd have to build a new facility, 
and it would be in violation with the agreement with the 
Russians.
    So my State, Madam Chairman, years ago accepted 34 metric 
tons of plutonium with the promise we would dispose of it in a 
way to make the world safer, create jobs in South Carolina and 
Georgia, and at the end of the day not be stuck with this 
stuff.
    So we're halfway through building the MOX 
facility. And I want to compliment the Obama administration. 
You're the first people to ever actually build anything. We've 
been talking about it forever. Now we've got about a $2 billion 
cost overrun; is that correct?
    Ms. Miller. Oh, no. It's much larger than $2 billion. It's 
huge.
    Senator Graham. Are you sure?
    Ms. Miller. Well, the estimate a year ago was that the full 
cost of construction would be about $4 billion. We are now 
entertaining a baseline change proposal from the contractor for 
nearly $8 billion.
    Senator Feinstein. Oh, my goodness.
    Senator Graham. Is that right? The last numbers we were 
given were around 6. Let's say it's 8. We're saying 6.
    Senator Feinstein. I'd like to see it.
    Senator Graham. Yes, yes. Let's just live on the edge here.
    Ms. Miller. I think the contractor is hoping they can save 
money. They're now talking about what they might do. But 
there's no proposal to us for----
    Senator Graham. Right. Well, we can pretty well assure you 
we can get this thing down to 6, 6.2, I think. And I want to 
save money. But one thing I will not accept is breaking the 
agreement with the Russians and coming up with an alternative 
that is going to cost more and take longer.
    Can you think of any other way to do this that would keep 
this program on schedule, other than MOX?
    Ms. Miller. I cannot. But I am not a technical person. So I 
couldn't, would not even begin to put down on paper.
    Senator Graham. Yes, ma'am. And that's an honest answer.
    I can tell you they've studied this since 1995. You can't 
do direct disposition. Vitrification is the only other 
alternative. You'd have to build a new facility. It would cost 
a lot more than $4 billion. So I think the goal here is to 
reduce the cost by talking to the contractor. And I just talked 
to Dennis McDonough, and I am willing to do that. I think your 
concerns about cost overruns are correct.
    But in the budget, you have stamped out your construction. 
And that is an absolute nonstarter for me and the program. 
We've got to get this stuff off the market. And we can't keep 
playing games with the people of South Carolina and Georgia.
    So, Madam Chairman, what I will do is work with the NNSA of 
reducing costs to the program that we've committed to, that 
we've signed up with the Russians to get this stuff done. And 
there is a possibility, I know my time is up, that the British 
have plutonium, weapons-grade plutonium. They don't know what 
to do with it. If we could ever get MOX up and 
running, and we can, we've got to have a customer for the 
disposition. Maybe we could do something with the British where 
we could take their weapons-grade plutonium, get it off the 
market, it could never be used for bombs again, and they could 
help pay for this thing.
    So I'm definitely thinking outside the box. I've just 
talked to the White House. I've got a hold on Secretary Moniz, 
the nominee. He's a fine man, would be a great Secretary. But 
this is an unacceptable alternative, to stop this program in 
the middle when there is no other plan. I am confident there is 
no other plan. We can lower costs, but we can't find a new way 
to do this in terms of cost and timeliness.
    So thank you for your time. I look forward to keep working 
with you, Ms. Miller.
    Ms. Miller. Thank you.
    Senator Feinstein. Thank you very much, Senator.
    Senator Udall.
    Senator Udall. Thank you, Madam Chair.
    The budget that has been presented here today is a good 
start, I think. But far from meeting the goals that Congress 
and even the President have set out for NNSA, your testimony 
states that NNSA supports the President's nuclear security 
strategy, including New Strategic Arms Reduction Treaty (New 
START) and Nuclear Posture Review (NPR). While some of the 
aspects of this budget clearly support the positions in the NPR 
and the New START, such as the B61 life extension program, 
other aspects do not, such as the lack of a plan from the NNSA 
to present a clear alternative plutonium strategy after the 
deferral of the CMRR.
    While outside NNSA, I must also note that the current lack 
of sufficient funding for important cleanup programs at Los 
Alamos, which are crucial to maintaining strong community 
support for the lab, NNSA for over a year has failed to present 
a full plan for how to deal with the deferral of the CMRR. 
While I am open to a plan that includes a modular option to 
meet mission requirements, this idea is far from mature. In 
addition, the interim plan has more questions than answers, 
such as where important scientific work will be done when the 
Chemistry and Metallurgy Research (CMR) building is closed in 
2019 and before a more permanent solution is completed.
    NNSA has expressed confidence that this work can somehow be 
done at the newly constructed radiological lab, a facility with 
a lower HAZMAT category than is needed to carry out the 
required work. I'm concerned about this delay because I believe 
that our workers and scientists deserve the best possible 
facilities to carry out their mission safely.
    It is because of this strong conviction that I also worked 
with Senator Kyl during the last Congress to create an advisory 
panel to make recommendations on how to reform the NNSA. The 
cost overruns, safety and security incidents, and failed 
projects at NNSA must come to a stop. Now, according to your 
testimony, instead of presenting a plan to Congress regarding 
how to deal with the deferral of the CMRR, NNSA and DOD's cost 
assessment and program evaluation (CAPE) directed developing a 
business case analysis of the plutonium strategy to be 
completed by August 2013.
    My question here is: Where is the NNSA in analyzing the 
business case for a modular option to the CMRR? What additional 
studies need to be done before we know if this option will meet 
mission requirements and when NNSA could feasibly begin 
construction?
    Ms. Miller. Thank you, Senator Udall.
    I would just like to begin by noting that, as Senator 
Feinstein said, we too, inside the NNSA, have grown very, very 
concerned and very committed to address the issue of buildings 
that we start at one price, even in thinking about them, only 
to find over a period of a few years have doubled, tripled, 
quadrupled in price.
    As a result of that, and driven to begin with by the 2011 
Budget Control Act, which set us back in terms of our budget by 
a couple of years, we did announce last year, as you noted, 
that we were not going to go forward with the building of the 
CMRR as it had been conceived up to that point.
    Instead, at this stage, we've done two things. One, we've 
developed a strategy, which I'm going to ask my colleague, Dr. 
Cook, to speak to, on how to address plutonium needs for the 
stockpile until we do have a full capability for plutonium 
handling. But the second thing is we are looking at the modular 
proposal that the Los Alamos laboratory has discussed with us. 
But as my colleagues in the Nuclear Weapons Council and I 
agreed a few weeks ago, we are looking at a range of 
possibilities. Because what's important here is not to just 
hitch onto the next thing only to find that, too, is an 
unsustainable project at an unsustainable cost and 
unjustifiable.
    So what we're committed to at this point is addressing the 
needs in the best possible way that we can actually afford. So 
to that end, there is a business case being developed with a 
joint working group of the DOD, CAPE, and the NNSA, and the 
laboratory, because you can't do it with only one group. And 
that business case is looking at options, not just the modular 
facility, but other things as well.
    I'd like to ask Dr. Cook to talk about the interim 
strategy.
    Dr. Cook. Sure. I'll follow up directly, sir.
    There are at least four elements, and we're taking actions 
on all of them. So an immediate element is that the new RLUOB, 
which is constructed and I believe you've been to, we will 
complete the equipment installation most likely by the end of 
June. That's already in the very beginning of initial 
operations, and that's where we'll undertake analytic chemistry 
capabilities that really replace part of the existing CMR.
    The second part of the strategy is to go through PF4 
conceptually, determine what missions used to be deployed there 
that no longer need to be met. I tasked the laboratory in 
responding back to me by the end of 60 days, that will be by 
the end of April, with their analysis of that. And there is 
some good indication that we will be able to use, reuse some of 
the space of PF4, but rip some of the old equipment out. So 
that's element number two.
    Element number three--and in parallel, we'll be doing this 
business case analysis with the Office of the Secretary of 
Defense (OSD), CAPE, and certainly we're keeping U.S. Strategic 
Command, the DOD, the Armed Services informed on where we are 
with the basic plutonium capability that leads to pits.
    The third part of the strategy, which is actually getting 
out of CMR, we're holding to the date of doing that by 2019. 
And to do that, we need to clean up a number of things. I won't 
go into detail here. But we have a resourced plan to actually 
clean those up and move capability, but not the old equipment 
for the remaining parts, into PF4. Those are three parts of the 
strategy.
    The fourth part, as Administrator Miller has said, is 
considering the acquisition of additional and new capability in 
a modular way. That is promising because we can get some of the 
earlier capabilities at less initial cost or, as with our past 
strategy and the one that is still on the books, with full 
CMRR. We don't get the first capability until we get all of the 
capability. We think we can come up with a more clever path, 
one that will get us to the case that we need to be with 
plutonium research, as well as plutonium manufacturing. But 
that's why we're going through this work fairly intensively.
    All of this is shaping the budget request for 2015 through 
2019 that will be made. We'll begin that work in the summer. 
We'll complete that work by the end of the calendar year. Thank 
you.
    Senator Feinstein. Ms. Miller, you've inherited a big 
problem, I think. Let's talk about it a little bit.
    We've talked about it, the ranking member and I. And there 
are all these starts, and they all seem to crumble. According 
to the GAO, one of the biggest management weaknesses is a 
failure to properly assess alternatives before embarking on 
multimillion-dollar construction.
    Now, I hope I'm not confusing it. But it's my 
understanding, and we had a hearing with General Cartwright 
awhile ago, that that plutonium facility at Los Alamos is two 
buildings that you could join together and that you wouldn't 
have to raise the roof. Is that correct, or am I mixing 
buildings?
    Ms. Miller. I think the roof being raised is at UPF. There 
was no issue of roofs being raised at Los Alamos. And I just 
want to say that the roof being raised at UPF is still in the 
design phase. We didn't have to rip off an actual roof. Nothing 
has been constructed there.
    Senator Feinstein. So that won't be necessary. Is that what 
you're saying?
    Ms. Miller. Well----
    Senator Feinstein. Or you will have to rip off the roof?
    Ms. Miller. No, no, no. No. There's no facility right now 
in Tennessee where it's still in the design phase. But in the 
design phase----
    Senator Feinstein. Okay. So what I was talking about was 
the pit production facility that you, Dr. Cook, are saying is 
not necessary.
    Dr. Cook. While I'm not sure what specific issue you're 
asking, I can get part of the way there. And then you may be 
able to follow up.
    The pit-making facility is in PF4. I just addressed the 
modular acquisition of new capability. And an issue of PF4 has 
to do with the seismic stability and what we have to do to 
improve the building to keep it there for a long time.
    There are a couple of elements in our strategy. And again, 
we're not only developing them, they are funded for the work to 
do the analysis and early parts. We've already substantially 
strengthened PF4. And the question remains, What if there is an 
extraordinary earthquake beyond the design basis once every 
7,500 years? To withstand an earthquake like that, we have to 
do additional work. And some part of that work is in the roof 
of PF4. But it doesn't require replacement.
    Part of the long-term strategy now with acquisition of 
modular capability is we see our way through, taking some of 
the elements that are in PF4 associated with pit making and the 
making of power supplies, and putting those things that present 
the greatest hazard due to material at risk, for example, 
molten plutonium, taking those out of PF4, putting those in 
some modular facilities that are small, special purpose and 
less expensive than trying to change a whole facility. So we're 
considering that in a comprehensive strategy. That may be part 
of what you're hearing.
    Senator Feinstein. Ms. Miller, this is all in your tent 
now. Do you have a methodology to sort out these problems, 
facility by facility, and to hold people accountable to time 
deadlines and to estimates?
    Ms. Miller. Thank you, Senator, and thank you for the 
opportunity to talk about accountability.
    I think the message has begun to spread in the NNSA world, 
which of course includes Federal people as well as the 
contractor community, the laboratories is that accountability 
is going to be applied to absolutely everybody.
    But in order to hold people accountable, you have to have 
the place managed in a way that you have actual visibility into 
what people are doing. You have to have a system in place that 
you can be clear and consistent about what the expectations 
are. And then you have to have the right people in the right 
places to drive that accountability. Again, this is important 
for us on the Federal side, this is important for us on our 
contractors side, and in between.
    I mentioned it briefly in my opening statement, but coming 
up on a year ago, we announced that we were no longer going to 
operate the field as independent sites with each place running 
its own version of what the policies were out of headquarters. 
So we have stood up an organization in the NNSA for the first 
time, there is no parallel in DOE, which makes the field 
offices and the sites part of our line, which means they're 
directly accountable. Through the head of the Office of 
Infrastructure and Operations, they're directly accountable to 
me.
    So I think between that and discussions that I have had 
repeatedly and broadly throughout our contractor community on 
what the expectations are, we can begin to make it clear to 
people what we mean by accountability.
    Senator Feinstein. Okay. And while you were talking, and 
the staff just handed me some material.
    Ms. Miller. Yeah, I know. I'm sorry.
    Senator Feinstein. And said, ``Ask this.''
    Ms. Miller. Okay. Go ahead. Ask that.
    Senator Feinstein. So I will. And it's my staff's 
understanding that this year NNSA granted award term extensions 
to the contractors that run both Los Alamos and Livermore, even 
though the contractors did not meet performance requirements.
    The decision to extend contracts, which are worth billions, 
is one of the main mechanisms to hold them accountable. A 
failure to meet performance thresholds means the contract is 
not extended, and the contractor must compete once the contract 
ends. In the case of Los Alamos and Livermore, neither met 
performance thresholds because of a combination of management 
and safety issues and missed scientific milestones. But their 
contracts were extended.
    To make matters worse, the contracts were extended to 2018 
and 2019, based on an unusual contract mechanism that extends 
contracts 7 years in the future. Regardless of performance and 
barring a major catastrophe, Los Alamos and Livermore 
contractors would manage the labs until at least 2018 and 2019. 
This decision was strongly criticized by the GAO.
    So there's one in Senator Udall's State, one in my State. 
And I think we're both very proud of them. But I mean, this is 
just unbelievable. Why would contracts be extended if people 
are not performing adequately?
    Ms. Miller. Senator Feinstein, the annual fee award process 
is something that I, in my capacity as the principal deputy, 
have had the final word on as the fee determining official for 
the NNSA. And I'm happy to talk about both of those decisions.
    First of all, a serious amount of fee was taken on both 
places.
    There are two things that go on with the fee determination. 
One is the amount of fee that is earned in a given year. And 
this is very carefully laid out. We are in the process of 
renovating, I would call it, the way that we are doing this in 
concert with the laboratories as partners and how we will judge 
that. But there is fee annually that is under consideration.
    And in both the case of Los Alamos and Livermore, for the 
reasons you alluded to, fee was decreased of what they could 
have been awarded in serious amounts in recognition of their 
failed milestones and failed performance. In the case of Los 
Alamos, that was the NMSSUP project that was referred to 
earlier. In the case of Livermore, it was the National Ignition 
Facility (NIF) and some other things.
    However, with regard to the award term, in both of those 
laboratories we had relatively new, and in one case very new, 
laboratory directors. This was their first real year being at 
the place. So my options were to either show support for what I 
personally know they are trying to get done to improve 
performance at those laboratories, or to take this very strong 
step of not awarding the award term, which, in my view, would 
serve possibly to undermine them not only with their boards, 
but with their employees.
    In my judgment, for the health of the enterprise, I went 
ahead and awarded the award term, but got them on fee. They all 
know they're on strong notice now that they got a one-time 
pass, if you will, for that. But, you know, I think everybody 
in these situations has to decide.
    Senator Feinstein. Well, let me ask you. Are they competent 
to do the job?
    Ms. Miller. The laboratory directors?
    Senator Feinstein. The contractors.
    Ms. Miller. Well, the laboratory director is the head of 
that contract. I believe, and again, in both cases, those were 
very specific statements of support for those new laboratory 
directors, who marked a--I think in both cases it's safe to 
say--the appointment of those laboratory directors was a 
serious statement by the boards of the contractors, that 
combined LLC board, on where they understood they needed to 
take management of the laboratory.
    Senator Feinstein. Stop for a second. Does the lab 
director, the overall lab director, run the contract?
    Ms. Miller. Yes. He is the chief official. Yes. He is the 
head of it.
    Senator Feinstein. Does that make sense that you have the 
director of the lab, who I'd assume has a scientific 
background, running these contracts?
    Ms. Miller. It may be a fair question to ask. And again, 
this of course dates from the time when the change was made to 
a for-profit model. As you know, in both cases, the lead 
partner on those contracts at both Los Alamos and Livermore 
continues to be the University of California, which has this 
historic connection to both laboratories. The laboratory 
director is an employee of the University of California in both 
cases.
    The number-two people at both facilities are employees of 
the partner, which in this case, in both cases, is Bechtel. So 
that's how they set it up in the LLC.
    Senator Feinstein. Well, this is a horse of another color.
    Ms. Miller. That's right.
    Senator Feinstein. Now, when you want to get down and talk 
about that and whether this is really working out to be an 
economically sound arrangement----
    Ms. Miller. That's a very good conversation.
    Senator Feinstein. I remember going back at Los Alamos, 
where some 2,000 employees were fired and the costs of the 
Bechtel contract are substantial. I am very much aware, in the 
interest of full disclosure, my husband is a regent of the 
University of California. I don't discuss this with him. That's 
the best way of handling it.
    Ms. Miller. I'm sure.
    Senator Feinstein. But I am really concerned. Because these 
labs used to be pristine. Now we come across all these 
problems, just problem after problem after problem. And 
seemingly, there's no resolution.
    Now, I just don't know enough to know whether a lab 
director can do the spreadsheets and do all the rest to direct 
a contracting team.
    Ms. Miller. This is a conversation I would very much 
welcome having with you, including about the model overall. 
Frankly, we have concerns about the financial aspect, as well.
    I would say that, you know, to be fair, the laboratory 
director himself is not spending the time actually composing 
the spreadsheets, obviously. That's done by other people. But 
he is expected to run the business, along with the number-two 
person who's really the chief operating officer, to that 
extent, and is running the business operations.
    But I think without question, we hold--and we are expected 
to under the terms of the contract--we hold the laboratory 
director responsible for what goes on at the laboratory.
    Senator Feinstein. I just don't know what to say. How long 
have we been at this now, 2 years? Would that be fair to say 
it, looking at these overruns everywhere? Nothing seems to 
change. We have people in, and Senator Alexander and I, we have 
meetings. We try to understand and hold them accountable.
    Ms. Miller. So with respect to overruns, if I can talk 
about that for a moment. And I think this is not necessarily a 
function of the laboratory or not the laboratory. I think this 
is really a function of how we have conducted project 
management and how we have used that contract traditionally, 
traditionally in the NNSA.
    I say ``traditionally'' and I stress that because we did 
make a change about 18 months ago. And first of all, we agreed 
to remove the management of construction, as we call it at DOE, 
post-critical decision two, when construction actually starts. 
We moved this out of defense programs, driven by the fact that 
root cause analysis--after root cause analysis had told us that 
the people driving the need for the facility, whatever facility 
it was, continued to work on design even after we began 
construction or continued to tinker enough with this that we 
got killed by the change orders, to be frank.
    Senator Feinstein. Wow.
    Ms. Miller. So we took this out of defense programs. We 
stood up an independent acquisition and project management 
organization. Again, I mentioned it in my opening statement. We 
hired Bob Raines, who had spent time in the Department already, 
but had a long career at Naval Facilities managing projects--
construction projects--through the construction management and 
acquisition policy.
    And this was something we've never done before. We've never 
managed the contractor for their behavior, other than grossly 
through the management and operating (M&O) contract. So in the 
case of the NMSSUP project in Los Alamos, in fact, in that case 
we had budgeted $245 million to do the job. When the design 
bids came in, they came in at $213 million. So everybody 
thought, ``That's great. We'll save all this money.'' And lo 
and behold, of course, there were serious flaws in the design.
    So it was revealed that, in fact, to actually get this 
thing to be what it needed to be, it was going to be $254 
million. And again, we budgeted $245, $255. Bob Raines went to 
the contractor--to Bechtel--and said, ``I'm sorry. It's not 
acceptable that we're going to pay the cost overrun for your 
mistakes.''
    The contractor, and I'm sure you know this, Bechtel put $10 
million ultimately of their own money back on the table to 
cover that overrun. So that project is coming in, in fact, at 
what we budgeted for. Not what we had hoped it would be, which 
was much less than what we budgeted for, but at what we 
budgeted for. And Bechtel is paying the extra $10 million.
    Again, I'm pretty sure we haven't done this; I know DOE 
many years, I personally don't know of this. But this is what I 
mean by accountability and changing the way we manage the 
business.
    Senator Feinstein. Well, let me thank you. I'm very 
impressed. Thank you for being so up front. We don't want to 
sit here and criticize. But when it's project after project and 
it's right in your face and the dollars are so big, you can't 
ignore it. For us, this mandatory part of our portfolio pushes 
everything else out--the Department of Energy, the Army Corps 
of Engineers--so these dollars are really critical dollars.
    Ms. Miller. Yes. I understand.
    Senator Feinstein. So I thank you for being up front. And 
I'd like to suggest that if Senator Udall is interested, that 
we sit down outside of this and go through each one with the 
changes that you are making so that we can be assured that the 
right thing is going to happen in the future.
    Ms. Miller. I would welcome that opportunity, Senator. 
Thank you.
    Senator Feinstein. Thank you.
    Senator Alexander. Thanks. Thanks, Madam Chairman. I'm 
going to have to leave in a moment to go to the floor with a 
bill that I'm helping to manage, if that's all right with the 
chairman.
    But I do have one comment. It is possible for the 
Department of Energy to build a building on time, on budget and 
for a contractor who hires a lab director to be in charge of 
that. I know Thom Mason is the head of the Oak Ridge National 
Laboratory. He got that job after he supervised the building of 
the Spallation Neutron Source, which is a $1.4 billion project 
managed by the Office of Science. But it came in on time and 
slightly under budget. So that contractor arrangement has 
worked out well there.
    I wanted to give Admiral Richardson a chance to explain, as 
he did to me in his office visit, why the nuclear navy needs an 
increase this year.
    Admiral Richardson. Senator, thank you very much for the 
question, and thank you for the opportunity to appear here 
before the subcommittee.
    Sir, as you know and we discussed during our visit, we 
exist--Naval Reactors exist solely in support of the fleet. And 
so our three primary growth projects that are included in this 
budget are consistent with that philosophy of fleet support. 
Two of those three projects directly support the replacement 
for the Ohio-class SSBN that sustains the undersea leg of our 
strategic triad out beyond 2027, when those submarines reach 
the end of their life and begin to come out of service.
    So we have one major project where we have begun and hope 
to continue the design for the reactor plant for that 
submarine. We have another project where we are refueling a 
land-based prototype reactor, using that opportunity to 
validate some of the technology that will allow us to reach a 
core for the new class of submarine that lasts the entire life 
of the ship, saving two submarines and billions of dollars in 
maintenance over the lifetime of that program.
    Additionally, this land-based prototype reactor will allow 
us to continue to train fleet operators for the next 20 years, 
sending nuclear-trained sailors to the submarines and carriers 
in the fleet.
    Our third project is also directly tied to fleet support, a 
project to recapitalize our spent fuel-handling facility in our 
facility in Idaho. This current facility is over 50 years old. 
Time has marched on. The regulatory landscape has marched on. 
We did analysis of a number of alternatives and determined that 
the most responsible way to recapitalize that facility in Idaho 
was to build a new spent fuel handling facility.
    This facility is really meeting the need to refuel and 
defuel our carrier fleet. The Nimitz-class carriers are 
starting--are in the middle of their midlife refueling process. 
Those spent cores get transported to Idaho for processing and 
dry storage, as well as the USS Enterprise is being defueled as 
part of her inactivation and decommissioning. And the 
confluence of those heel-to-toe projects required that we move 
to a facility that is designed to process those cores and move 
them to dry storage in Idaho.
    So those are the three projects that constitute the growth 
in our budget this year. And we're thankful for your support.
    Senator Alexander. Thank you, Madam Chairman.
    Senator Feinstein. Thank you, Senator.
    Senator Udall.
    Senator Udall. Great. Thank you, Madam Chair.
    And, Madam Chair, I certainly am very interested, as you 
alluded to, talking through the changes and happy to 
participate in that. And I think that's an excellent suggestion 
that you've made, and I'd like to take you up on that.
    I want to applaud the NNSA for taking the B61 life 
extension program (LEP) seriously and requesting adequate funds 
to carry out this program. The life extension and stockpile 
stewardship programs ensure that the United States will not 
need to build new weapons or conduct tests on existing weapons. 
These programs are important to both Sandia National Laboratory 
and Los Alamos National Labs.
    Maintaining these scientific and engineering capabilities 
also helps our scientists apply their skills in other areas and 
underwrite a whole host of scientific and technological 
achievements.
    So my question is: Is the NNSA committed to providing 
adequate funding for the LEP and the stockpile stewardship 
programs into the future? And can you address how delaying the 
B61 LEP could impact the timetable for future LEP's such as the 
W78 and the W88?
    Ms. Miller. Thank you, Senator. I'll attempt to answer the 
first part of your question and let Dr. Cook take up the second 
part.
    With respect to money in the NNSA budget to assure that 
these LEP's are resourced right now, with the proposal that you 
have from the President for 2014 and the 4 years following it, 
those systems and those LEP's are properly resourced. The 
challenge for us, as we all have noted repeatedly, is going to 
be to meet the budgets as we are assessing them right now, the 
estimates for what these things will cost. Some of these 
projects, as you know, are in the very early stages, the 78, 
88. We don't know the cost of that yet. We will not know the 
cost of it for awhile. And the last thing we want to do at this 
point is start putting numbers on the table when we don't have 
all the information.
    With respect to B61, it's true that everyone will quote the 
$10 billion number that the DOD CAPE has assessed. And I 
welcome their assessment, capabilities of the CAPE. I know them 
many years, and I work very, very closely with them. I think 
the reason that there is a $2 billion difference between the 
assessment that we have composed with Sandia Laboratories and 
the CAPE, and I discussed this recently with the person leading 
this team at the CAPE, really comes down to risk. And I think 
that's the case with all LEP's. These are very complicated 
systems. We haven't done this kind of work, in some cases, 
ever. And there is a lot of risk built into that lower number.
    However, the challenge--and the CAPE agrees with us about 
this--our challenge, working together with the laboratory, is 
going to be to manage that risk and in order to keep the number 
on the lower end, the lower estimate, and not go to that $10 
billion estimate. CAPE doesn't believe it's a foregone 
conclusion that it will go to $10 billion. That number, again, 
reflects the risk that's built into this system. So I want to 
be clear about that. Ask Dr. Cook.
    Dr. Cook. It is a good question; I'll try to be succinct in 
the answer.
    The major difficulty with delay, the improvement in 
maintaining the B61 family is that if we had to delay, we would 
not be able to meet all elements of the New START treaty. The 
treaty has been in place now for awhile. The nuclear posture 
review called out the requirements. B61 was involved in that.
    Some of the background in that is we have agreed to 
consolidate four families of the B61 into a single weapon 
family that has improved safety, improved security, and will 
meet its through-life cost in the lowest way for a full life 
extension program. It has a first production unit of 2019.
    And as Administrator Miller just said, you know, we've 
worked with the interagency. We're mindful of the cost. CAPE 
did consider what the problem might be if we delay, and of 
course, the cost goes up.
    It's actually a bit more severe than that because then we 
would have to maintain four families of the current B61 bomb as 
they get even older. And so we're very driven in a cost-
effective way to achieve this LEP.
    Now, things we've undertaken to enable that are requiring 
that we have an integrated master schedule. It's now fully in 
place. Last year, I think I had an opportunity to comment on 
that. We have now fully completed risk register. We know the 
risks; they are assigned to individuals; actions are being 
taken. We're developing a resource-loaded schedule in industry-
standard tools like Oracle and Primavera. So that means we know 
the amount of money and the time that each task will take, and 
we're tracking those.
    We have the engineering disciplines in place to meet the 
first production unit (FPU), and this FPU comes now with the 
beginning of fiscal 2014 only 5 years later: It's 2019. So the 
majority of funding that is required for the B61 change to get 
down the number of families as well as to reduce the number of 
weapons overall, is in the principles. So it is resourced.
    Additionally, this will allow us in the course of time to 
replace the B83, actually a larger system, a system that is not 
as old as the old B61s, but will be older than the newer 61 
family. And that allows us across the deterrent to reduce not 
only the number of weapons, but the number of weapon types and 
to improve the safety and security at the same time.
    Senator Udall. Thank you. As I mentioned in my opening, I'm 
very concerned about how NNSA has been managed in recent years. 
And I think Congress should be considering structural reforms. 
The NNSA advisory panel was a bipartisan effort between Senator 
Kyl and myself, and I'm glad to see that the panel will soon be 
working to provide recommendations to Congress.
    What are the top one or two challenges and limits you are 
facing at NNSA, and what are the top one or two recommendations 
you would make to reform the Agency you are currently heading?
    Ms. Miller. With respect to the challenges we're facing, I 
would say, first of all, the number-one challenge in my view is 
not unique to the NNSA. It's the uncertainty of the funding 
climate we live in. And I think all of us who work in this, on 
your side and on our side, know that it is difficult and a 
little bit crazy to be deciding a budget 2 and sometimes 3 
years in advance and try to prepare actual plans for actual 
people to execute 3, 2 years in advance of when you're 
executing. That's number one. So the system, to begin with, is 
difficult, but we've all learned to at least live with it.
    To live in an era where, then, you don't know from one year 
to the next whether you'll actually have a budget to count on 
or whether you're living off of a number you didn't plan to 
causes all sorts of havoc, and that is the number-one 
challenge. But I don't think the commission is going to be able 
to solve that one.
    I think the other challenges, and this would be something 
interesting, I think, for that group to look at, is how we can 
better manage a very large far-flung group of sites that have a 
history and long-time way of doing business that is not really 
conducive to the way we run things today and the way we're 
expected to run.
    Our system, after all, was very generously funded for the 
entire period of the cold war. And of course, the cold war has 
been over many, many years. But the system that we run, for the 
most part, was created in that time. The way we operate between 
the field and the headquarters, the way we operate with our 
contractors, this has all been pretty much the same way we ran 
things when money was no object. And as I said, we don't live 
that way anymore; we fully understand that.
    But the biggest challenge we face now is to modernize, as I 
said to begin with, the way we do things. Because the models 
that we work off of clearly are not serving us right now. So I 
think that would be interesting for them to look at.
    I know there are many people who have concerns about 
whether there is too much or not enough oversight by groups 
inside the Department of Energy or outside of the Department of 
Energy. And this is certainly an issue that this plays a role 
in how people react and how costs can be driven one way or the 
other.
    But personally, I don't see that as the biggest challenges 
we face. I think it's much more within, to begin with. And by 
having a system and a management approach that actually works, 
we can probably better manage the oversight and maybe even 
address better what people's concerns are that drive the 
oversight in the first place.
    Senator Udall. In your testimony, you stated the NNSA is 
proposing to eliminate the readiness and technical base and 
facilities and instead split activities between the existing 
site stewardship unit and nuclear programs within defense 
programs. However, there is a lack of details that I'd like to 
try and clarify with you.
    What is the purpose of moving the readiness in technical 
base facility (RTBF), and more specifically, can you elaborate 
regarding what specific workforce restructuring and management 
efficiency savings are being proposed?
    Ms. Miller. So, with respect to RTBF and why the interest 
in essentially getting rid of the name, and also moving where 
the money is managed, stems from something I talked about 
earlier, which was a management or an organizational change to 
bring the various sites into alignment and into the line of 
management for the NNSA. So as I mentioned, we created an 
Office of Infrastructure and Operations so that we now have a 
relationship at the sites where we have the owner of the site, 
the people running the site, and we have the tenants, who are 
all the people doing the programs at the site.
    So that site is responsible for the actual infrastructure 
and the facilities at the site. They need to be responsible for 
the money. And when I say ``they,'' what I'm really talking 
about is the organization infrastructure and operations, not 
each individual site alone.
    So through infrastructure and operations, we'll now fund 
the actual physical infrastructure of the Agency. And it's 
nothing more complicated than that.
    Up until now, RTBF was all done through defense programs. 
Pretty much everything was done through defense programs. But I 
think it's difficult to explain 13 years after the creation of 
NNSA, and certainly after our missions in so many areas beyond 
defense programs have grown so much, why we would still run the 
whole place out of defense programs.
    So again, infrastructure and operations has that money in 
the budget, for the most part, with the exception of the 
facilities that you described that stay in defense programs 
because they're specific to defense programs.
    Senator Udall. Thank you for those answers. Thank you, 
Madam Chair.
    Senator Feinstein. Thank you, Senator. We welcome your 
interest.

                     ADDITIONAL COMMITTEE QUESTIONS

    Well, Ms. Miller, I'm glad I'm not in your shoes, I think 
it's going to be very hard. But let me just say, and I think I 
speak for the vice chairman as well, we really do want to work 
with you. We don't want to be adversaries. You can imagine the 
amount of frustration when you see things that you think are 
also important, like nonproliferation, which is getting cut the 
way it is, to do these things that are filled with cost 
overruns and real problems.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
           Questions Submitted by Senator Frank R. Lautenberg
    Question. In April 2009, President Obama pledged to launch a new 
international effort to secure all vulnerable nuclear material around 
the world within 4 years. That deadline passed this month and hundreds 
of facilities across the globe still hold separated plutonium or highly 
enriched uranium under varying degrees of defense. The fiscal year 2014 
budget request includes a 15-percent cut to the Global Threat Reduction 
Initiative, which works to reduce vulnerable nuclear and radiological 
materials worldwide, as well as a 36-percent cut to programs that 
enhance the security of nuclear weapons stockpiles in countries of 
concern and reduce illicit trafficking of weapons-usable nuclear 
material.
    While great strides have been made under President Obama to secure 
vulnerable nuclear materials, what has been the greatest challenge to 
meeting President Obama's 2009 commitment to secure vulnerable nuclear 
material around the globe in 4 years? How will NNSA work to ensure that 
the requested cuts in funding to the Global Threat Initiative in fiscal 
year 2014 will not set back efforts to secure vulnerable nuclear and 
radiological materials? What specific benchmarks does the 
Administration hope to achieve on nuclear material security and nuclear 
terrorism prevention in its second term?
    Answer. The Global Threat Reduction Initiative (GTRI) has indeed 
made great strides to reduce the prospect of nuclear terrorism in the 
last 4 years. As of September 1, 2013, GTRI has removed or confirmed 
the disposal of 5,017 kilograms of vulnerable nuclear material, 
exceeding the 4-year goal by more than 650 kilograms. Despite this 
major success, there are some countries--including Belarus, South 
Africa, and Pakistan--where GTRI was unable to remove all material, 
primarily due to political reasons. While negotiations on future 
removals continue, security upgrades are underway at the respective 
sites in Belarus and South Africa. GTRI continues to work with the 
interagency and its international partners to eliminate these 
additional stores of HEU.
    The top-line reduction in funding in the fiscal year 2014 request 
for GTRI is mainly the result of the successful completion of our 4-
year acceleration in nuclear material removals. It is consistent with 
the 4-year plan and reflects funding requested in fiscal year 2013 for 
removal efforts occurring in early fiscal year 2014.
    Four years of accelerated effort helped GTRI make an important 
contribution to global security, but it is accurately described as ``a 
sprint in the middle of a marathon.'' Significant stockpiles of HEU 
still exist in too many places, and global inventories of plutonium are 
steadily rising. GTRI will continue to work with international partners 
to eliminate additional stocks of HEU and plutonium after the 
completion of the 4-year effort. GTRI has recently completed a 5-year 
effort to reconcile the amounts and location of U.S.-origin HEU outside 
the United States. As a result of that effort--as well as efforts to 
identify additional non-U.S.-origin HEU and plutonium that could be 
eliminated--GTRI has identified up to 3,000 kilograms of additional HEU 
and plutonium that could be targeted for removal or downblending.
    Question. The Second Line of Defense Megaports Initiative provides 
radiation detection equipment to key international seaports to screen 
cargo containers for nuclear and other radioactive materials. The 
program aims to deploy radiation detection equipment at 100 
international seaports to screen cargo containers by 2018. However, 
NNSA has only transferred this equipment to less than half of the 
identified partner countries, and an October 2012 Government 
Accountability Office (GAO) report highlighted several concerns with 
the sustainability of the Megaports Initiative.
    How is NNSA addressing the GAO's concerns in developing a long-term 
plan to ensure that partner countries have the ability to sustain 
Megaports operations after our equipment is transferred?
    Answer. As noted above, the GAO recommend that NNSA: ``Finalize its 
draft sustainability plan for ensuring ongoing sustainability of 
Megaports operations after NNSA transfers all equipment, maintenance, 
operations, and related financial responsibilities to partner 
countries.'' To meet this recommendation, in October 2012, NNSA's 
Office of the Second Line of Defense (SLD) finalized its Sustainability 
Program Plan, which had been in draft form during the GAO review. GAO 
has been informed of the completion of the requested Plan.
    In order to ensure the long-term sustainability of the radiation 
detection systems it deploys to partner countries, SLD typically 
provides 3 years of maintenance and sustainability support once an 
installation is complete. During this 3-year transition phase, 
information on progress toward transition is gathered through a variety 
of sources, including joint assurance visits conducted by the partner 
country and SLD personnel; analysis of daily files from the SLD-
provided monitors; reports from the local maintenance providers; and 
reports from the SLD Help Desk. Each site is assessed quarterly to 
determine its progress in the three key areas of operations and 
management, training, and maintenance and logistics. The results of 
these assessments are formally documented in a SLD database so that 
progress can be tracked and measured. SLD also tracks the progress of 
partners beyond the transition phase to ensure that systems continue to 
operate after the SLD-provided maintenance period ends. Given the 
complex nature of radiation detection systems and the wide-range of 
partner country capabilities, SLD program planning accounts for such 
challenges to transitioning systems to partner country responsibility.
                   protecting critical infrastructure
    Question. The Defense Nuclear Security (DNS) program provides 
protection for NNSA personnel and facilities and our nuclear weapons 
from a full spectrum of threats--most notably terrorism. DNS Operations 
and Maintenance integrates personnel, equipment, and procedures to 
protect a facility's physical assets and resources against theft, 
sabotage, diversion, or other criminal acts. New Jersey is home to an 
area that the FBI has called the most at-risk for a terror attack in 
part because of a high concentration of critical infrastructure.
    How are the security measures DNS is developing for nuclear weapons 
facilities applicable to protecting other critical infrastructure in 
New Jersey and around the country?




                Illustration of Layered Defense Concept

    Answer. The security measures implemented at the NNSA sites to 
ensure the security of our Nation's critical nuclear assets are based 
on a layered defense concept, consistent with standard security 
principles. The layered defense concept is intended to, first, deter 
the adversary from attacking. If an adversary does choose to attack, 
the layered defense concept allows for early detection and assessment 
of the attacking forces, as well as delaying the adversary to allow 
security forces to respond in time to deny and defeat the adversary 
before reaching their objective. These four layers are further 
described below:
  --Deter Layer.--Consists of a property protection area marked by 
        signs and randomly patrolled by protective forces. The 
        objective of the Deter Layer is to discourage penetration of 
        the facility perimeter.
  --Detect Layer.--Consists of gradually more rigorous detection layers 
        with sensors and cameras. The objective of the Detect Layer is 
        to detect and confirm/assess the presence of any unauthorized 
        intruders.
  --Delay Layer.--Consists of barriers and obstacles (e.g. channeled 
        pathways, hardened buildings and fighting positions, vault 
        doors, razor wire) and tactically trained protective forces 
        with substantial firepower. The objective of the Delay Layer is 
        to slow and help predict the intruders' movement toward 
        protected assets, in order to allow protective forces 
        sufficient time to respond, engage, and defeat adversary 
        forces.
  --Deny/Defeat Layer.--Consists of a hardened building perimeter and 
        interior protective forces. The objective of the Deny Layer is 
        to defeat any remaining intruders before reaching protected 
        assets.
    This concept is based on commonly used security tenets and may be 
adapted and applied to the security of critical infrastructure 
anywhere. It is important for security experts and decision makers to 
evaluate individual potential terrorist targets to determine the most 
effective way to posture security systems and balance resources between 
the four layers. Additionally, it is critical to use risk management 
principles including likelihood and consequence of an attack across a 
spectrum of targets to understand the complete risk picture for a set 
of potential targets and inform decisionmakers for resource allocation.
                 cyber security incident report systems
    Question. NNSA has said that the agency and our nuclear weapons 
complex experience up to 10 million ``security significant cyber 
security events'' each day. A December 2012 Department of Energy (DOE) 
audit found that DOE and NNSA have still not developed and deployed an 
effective cyber security management program. The audit found that both 
DOE and NNSA run duplicative cyber security incident report systems and 
reported incidents were not always reported to the proper law 
enforcement organizations.
    How is NNSA working to better coordinate with DOE to create a 
unified cyber security incident management system to ensure incidents 
are properly reported to law enforcement in a timely manner?
    Answer. NNSA OCIO is working very closely with the DOE CIO to 
develop and implement a comprehensive incident management system for 
the Department enterprise. The Joint Cyber Security Coordination Center 
(JC3) will provide information sharing, reporting and incident response 
for both the unclassified and classified computing environments. The 
DOE CIO will provide overall requirements and NNSA CIO will ensure that 
those requirements are implemented complex-wide.
                                 ______
                                 
               Questions Submitted by Senator John Hoeven
    Question. The W-78 is the warhead that goes in our ICBMs. It is 
aging and needs to be sustained and extended. I am concerned, however, 
that the budget for work on the W-78 stockpile appears to be shrinking.
  --The NNSA's fiscal year 2011 Budget Justification projected that in 
        fiscal year 2014, it would need $347 million for work on the W-
        78 stockpile.
  --This year, NNSA is requesting $54 million for work on the W-78 
        stockpile.
  --I understand that NNSA has budgeted an additional $73 million to 
        begin the W-78 life extension program (LEP).
  --Nevertheless, NNSA is requesting less than half of the money for 
        the W-78 than it projected it would need just 3 years ago.
    Can you provide an update on the W-78 program and describe why 
there has been such a decrease in funding and how we intend to ensure 
those warheads remain viable into the future?
    Answer. The decrease in the funding profile reflects an extension 
of the Life Extension Program (LEP) schedule. The current work on the 
W78 program encompasses the stockpile system and the life extension 
activities. The W78 stockpile system has consistently funded 
maintenance and surveillance activities. However, the LEP scope and 
schedule have changed significantly from 3 years ago as follows:
  --In fiscal year 2011, Congress authorized NNSA to begin the W78 life 
        extension study to address components approaching their end of 
        life and improve system safety and security. NNSA based the 
        projected FYNSP requirements on a 12-month Phase 6.1 start in 
        fiscal year 2011, a Phase 6.2/2A start in fiscal year 2012, a 
        Phase 6.3 start in fiscal year 2014, and a First Production 
        Unit in fiscal year 2021.
  --The fiscal year 2011 budget request included approximately $280 
        million annually for fiscal year 2014-2016 LEP Phase 6.3 work.
  --In June 2012 the Nuclear Weapons Council (NWC) authorized NNSA to 
        pursue a W78/88-1 LEP feasibility study and option down select 
        of an interoperable nuclear explosive package (NEP) compatible 
        with the USAF Mk21 reentry vehicle and USN Mk5 reentry body 
        (a.k.a. a common W78/88 warhead).
  --This current LEP schedule shows a Phase 6.2/2A start in July 2012, 
        a Phase 6.3 start in July fiscal year 2015, and a First 
        Production Unit in fiscal year 2025. Therefore, the decrease in 
        the fiscal year 2014 funding request is due to the delay of the 
        Phase 6.3 start.
  --With the FPU in fiscal year 2025, the W78/88-1 LEP is scheduled to 
        complete production in the early to mid-2030s, consistent with 
        the DOD requirement to begin modernization of the Minuteman III 
        in 2030. The assessment by the laboratories on the aging of the 
        W78 indicates the risk of the extended schedule is acceptable.
    Question. The fiscal year 2014 budget decreases the Inertial 
Confinement Fusion Ignition Program funding by $70.6 million from 
initial 2012 projections. According to the report, these reductions 
will reduce operations at the National Ignition Facility, presumably 
due to failed efforts to achieve ignition. The budget report states 
``initial ignition efforts have shown physics unknowns and complexities 
that require a shift in emphasis from ignition experiments''.
    Can you explain in layman's terms what difficulties you are 
encountering with this process?
    Answer. Codes, models, and assumptions used to predict the required 
power profile and aiming of the laser system have proven to be 
insufficiently accurate to determine how to achieve ignition on NIF, 
whether or not ignition can be achieved, or to provide insight into why 
ignition has not yet been achieved. Experimental results show that the 
shape of capsule implosions departs significantly from the spherical 
shape required for efficient implosions. Additionally there are unknown 
sources of mix from colder fuel regions into the hot spot.
    Question. Does this mean the NNSA is moving away from attempts to 
create fusion ignition?
    Answer. NIF was built for stockpile stewardship, and there is a 
backlog of experiments directly in support of the stockpile stewardship 
program that must be given priority. NNSA remains committed to pursuing 
ignition within a balanced program of experiments on NIF in support of 
stockpile stewardship and other assigned national missions. In 
particular, the experience from the National Ignition Campaign 
demonstrated gaps in codes, models, and understanding; and the emphasis 
of the ignition effort has shifted towards a science-based approach 
with more time devoted to collecting data to resolve the experimental 
inability to achieve ignition as was predicted by the codes.
    Question. What impact will this failure to achieve ignition have on 
our ability to test our stockpile in the future and insure reliability?
    Answer. Present confidence in our stockpile is based on the fact 
that our weapons systems were tested underground prior to the 1992 test 
moratorium. That basis for our confidence has not changed. The 
underlying question is whether that confidence will be affected by 
issues of aging or by changes in configurations or materials as we 
execute Life Extension Programs (LEPs) to refurbish aging systems and 
to upgrade safety, security, or manufacturability. The extent to which 
we can make such changes without affecting confidence in the 
reliability of the stockpile depends on our confidence in codes and 
models used to make those assessments. A broad range of experimental 
capabilities go into making those assessments including subcritical 
experiments, hydrotest experiments, smaller scale science experiments, 
and of course, experiments on our ICF facilities, including NIF at 
Livermore, Z at Sandia, and the Omega laser system at the University of 
Rochester. The ability to correctly model ignition processes, whether 
or not we are ultimately successful in achieving ignition, is an 
important part of that evaluation.
    Question. The budget request states the NNSA will be charging 
external agencies to use the ignition facility. ``The IFC Campaign will 
begin directly charging external users for the use of the facility.''
    How much funding do you expect to generate from this facility?
    Answer. A survey of potential external users of NIF has determined 
that none have planned or budgeted for the facility costs of their 
experiments, expecting NIF to be made available on the same cost basis 
as other DOE user facilities. NNSA is exploring how to make best use of 
the available funding to support our highest stockpile stewardship 
objectives and checking the legal basis for not charging external users 
full-cost reimbursement called for under the Work-for-Others (WFO) Act.
    Question. What does the NNSA plan to do with the funding generated?
    Answer. The funds collected from external users would only have 
been used to compensate NIF for the costs of operations in support of 
those specific users. The issue is moot, however, as NNSA has rescinded 
the policy and will not seek to collect funds from external users 
except, hypothetically, in those cases where DOE user facility policies 
require it (i.e. the data would be proprietary to a commercial user).

                          SUBCOMMITTEE RECESS

    Senator Feinstein. So in any event, I thank you. Gentlemen, 
thank you. Thank you very much. And we'll talk again.
    Ms. Miller. Thank you, Senator.
    Senator Feinstein. Thank you. The hearing is adjourned.
    [Whereupon, at 4:08 p.m., Wednesday, April 24, the hearing 
was recessed to reconvene subject to the call of the Chair.]