- [H.A.S.C. No. 115-18] OVERSIGHT REVIEW OF INFRASTRUCTURE NEEDS AND PROJECTS READY FOR IMMEDIATE IMPLEMENTATION IN THE NUCLEAR SECURITY ENTERPRISE

[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

[H.A.S.C. No. 115-18]

OVERSIGHT REVIEW OF
INFRASTRUCTURE NEEDS AND
PROJECTS READY FOR IMMEDIATE
IMPLEMENTATION IN THE NUCLEAR SECURITY ENTERPRISE

__________

HEARING

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS

FIRST SESSION

__________

HEARING HELD

MARCH 16, 2017

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

______

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Washington, DC 20402-0001

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

VICKY HARTZLER, Missouri, Chairwoman

K. MICHAEL CONAWAY, Texas SETH MOULTON, Massachusetts
MATT GAETZ, Florida TOM O'HALLERAN, Arizona
JIM BANKS, Indiana THOMAS R. SUOZZI, New York
LIZ CHENEY, Wyoming (Vacancy)
AUSTIN SCOTT, Georgia
Heath Bope, Professional Staff Member
Barron YoungSmith, Counsel
Anna Waterfield, Clerk

C O N T E N T S

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Page

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hartzler, Hon. Vicky, a Representative from Missouri, Chairwoman,
Subcommittee on Oversight and Investigations................... 1
O'Halleran, Hon. Tom, a Representative from Arizona, Subcommittee
on Oversight and Investigations................................ 3

WITNESSES

Klotz, Lt Gen Frank G., USAF (Ret.), Administrator, National
Nuclear Security Administration, accompanied by James J.
McConnell, Associate Administrator for Safety, Infrastructure,
and Operations, National Nuclear Security Administration....... 4
McMillan, Dr. Charles F., Director, Los Alamos National
Laboratory..................................................... 5
Reichert, Michelle, Deputy Enterprise Manager, Consolidated
Nuclear Security, LLC.......................................... 6
Sullivan, Hon. Sean, Chairman, Nuclear Defense Facilities Safety
Board.......................................................... 8

APPENDIX

Prepared Statements:

Hartzler, Hon. Vicky......................................... 31
Klotz, Lt Gen Frank G., joint with James J. McConnell........ 35
McMillan, Dr. Charles F...................................... 44
Moulton, Hon. Seth, a Representative from Massachusetts,
Ranking Member, Subcommittee on Oversight and
Investigations............................................. 33
Reichert, Michelle........................................... 52
Sullivan, Hon. Sean.......................................... 60

Documents Submitted for the Record:

Letter to Secretary of Energy, with photos................... 69
NNSA Unfunded Priorities List, October 2016.................. 84

Witness Responses to Questions Asked During the Hearing:

Mr. Suozzi................................................... 91

Questions Submitted by Members Post Hearing:

Mr. DesJarlais............................................... 103
Mrs. Hartzler................................................ 95
Mr. Rogers................................................... 98

OVERSIGHT REVIEW OF INFRASTRUCTURE NEEDS AND PROJECTS READY FOR
IMMEDIATE IMPLEMENTATION IN THE NUCLEAR SECURITY ENTERPRISE

----------

House of Representatives,
Committee on Armed Services,
Subcommittee on Oversight and Investigations,
Washington, DC, Thursday, March 16, 2017.
The subcommittee met, pursuant to call, at 2:21 p.m., in
room 2212, Rayburn House Office Building, Hon. Vicky Hartzler
(chairwoman of the subcommittee) presiding.

OPENING STATEMENT OF HON. VICKY HARTZLER, A REPRESENTATIVE FROM
MISSOURI, CHAIRWOMAN, SUBCOMMITTEE ON OVERSIGHT AND
INVESTIGATIONS

Mrs. Hartzler. Good afternoon. This hearing will come to
order. I appreciate everyone's patience during vote series. I
know we are getting started a little late. But in connection
with today's hearing, I welcome the members of the full
committee who are not permanent members of the subcommittee who
are or will be attending.
I also want to recognize and thank the distinguished
gentleman from Alabama, Chairman Rogers of the Strategic Forces
Subcommittee, for attending this hearing.
I ask unanimous consent that these committee members be
permitted to participate in this hearing, with the
understanding that all sitting subcommittee members will be
recognized for questions prior to those not assigned to the
subcommittee.
Without objection, so ordered.
Many of the buildings, facilities, and laboratories of the
U.S. nuclear weapons enterprise were constructed over 65 years
ago, in the 1940s and 1950s. These facilities currently have a
backlog of deferred essential repairs, rehabilitation, and
replacement construction totaling $3.7 billion. Infrastructure
needs at this magnitude, if not addressed, threaten both the
mission of the National Nuclear Security Administration, or
NNSA, its labs and facilities, as well as the safety of its
workers.
The House Armed Services Committee has made NNSA
infrastructure needs a high priority in recent years. The
committee has previously authorized substantial increases in
funding over Presidents' past budget requests. However, not
until last year did the NNSA, under the direction of the last
Secretary of Energy, halt growth in the deferred maintenance
backlog. This is an important first step, because as the old
saying goes, once you are in a hole, stop digging.
The funding challenges for the nuclear enterprise
infrastructure are twofold. We need to keep the current
infrastructure from deteriorating further. This is an expensive
proposition, especially when we must also support day-to-day
funding requirements. And we also need to provide additional
funding to start chipping away at the massive infrastructure
backlog.
We also need to look at policy, regulation, or statute
changes that can be implemented. We can do this without
sacrificing critical congressional oversight or for those that
supervise projects within NNSA.
There is an above-threshold reprogramming limit of $5
million and a general plant and projects, or GPP, limit of $10
million. We need to consider if such limits are still relevant
in today's fiscal environment. Perhaps they can be modified to
more effectively and efficiently implement and oversee
infrastructure projects.
Finally, we need to establish and maintain a transparent
and open dialogue about which funding mechanisms are most
appropriately utilized. It is possible to exercise the normal
line item authorization and appropriations process or use
third-party, public-private partnership financing arrangements.
Now, regardless of funding mechanisms, we need to ensure
that construction and recapitalization initiatives are not
plagued with major cost overruns and scope underruns that many
of NNSA's large line item projects in the past have
experienced.
An exemplary model project not on the bad list, and one
that was well implemented using third-party, public-private
partnership financing, is one that I don't mind sharing about
from my home State of Missouri. The Kansas City National
Security Campus project enabled rapid replacement of the
previous dilapidated facility that was housed in a former World
War II-era Navy aircraft engine manufacturing plant built in
1942.
In addressing the Kansas City infrastructure project, NNSA
and the General Services Administration competitively selected
CenterPoint Zimmer, a private developer, to replace the 70-
year-old Bannister Federal Complex. The 20-year lease on the
new facilities not only provides a flexible, responsive
infrastructure that helps attract top talent, but also saves
the taxpayer over $150 million annually in lower facility
maintenance, energy, and other costs. Additionally, this
project was completed ahead of schedule and under budget. Now
the outstanding and professional workforce at the Kansas City
campus today has a modern, clean, and safe environment in which
to conduct their vital and unique work for our nuclear
enterprise.
This is the standard that we should all hope to achieve for
our skilled and dedicated professionals throughout the entire
nuclear enterprise if we hope to recruit, train, and retain the
best of the best our scientific and engineering community has
to offer.
So I look forward to discussing the infrastructure needs of
the enterprise with our distinguished panel of witnesses we
have before us today. But before I introduce the witnesses, I
turn to Representative O'Halleran, sitting in for the
subcommittee ranking member, for any opening remarks that he
would like to make.
[The prepared statement of Mrs. Hartzler can be found in
the Appendix on page 31.]

STATEMENT OF HON. TOM O'HALLERAN, A REPRESENTATIVE FROM
ARIZONA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

Mr. O'Halleran. Thank you, Madam Chairwoman.
I would like to thank you, our witnesses, for appearing
before this panel today.
Today, our nuclear weapons enterprise is at a crossroads as
we begin to make the first major payouts on a nuclear
recapitalization program that is expected to cost over $1
trillion over 30 years.
As we do this, the Department of Energy, via the National
Nuclear Security Administration, is focusing extensively on
efforts to design and build new weapons systems and new nuclear
facilities. Reasonable investments in our nuclear deterrent are
essential, but I would caution that we should be wary of doing
all of this at the expense of adequate maintenance for our
existing nuclear labs and infrastructure.
When we discuss crumbling ceilings and flooded hallways at
our nuclear facilities today, I encourage us to ask not just
can we build a brand-new building to replace these facilities
and how will we find the money, but also, how did we get to
this point, and are there smart practices and proper incentives
that we could have adopted so that this maintenance breakdown
could have been avoided?
I am concerned that there may be ingrained patterns of
safety and budget practice at the NNSA that do not adequately
prioritize maintenance over our programmatic requests. These
maintenance problems are quite alarming when you consider that
proper maintenance in these facilities jeopardizes the morale
and safety of our nuclear workforce and poses the risk of a
dangerous nuclear accident.
Many of the facilities we are talking about here are old,
but for a frame of reference, these facilities are comparable
to many run by the Navy's Naval Reactors office, which are also
the same age, yet the facilities run by the Naval Reactors are
in excellent shape and their safety records are stellar,
because the Naval Reactors applies different maintenance and
safety procedures and tripwires.
Nearly 60 percent of Naval Reactors facilities are 50 to 70
years old, but they are in much better repair. That suggests
that we could be doing prioritization, maintenance, and safety
better.
In the current budget environment, we can't afford for our
nuclear enterprise to be governed by inertia and the ways of
the past.
Thank you, Madam Chair.
Mrs. Hartzler. Thank you, Mr. O'Halleran.
So I am pleased to recognize our witnesses today, and I
want to thank them for taking the time to be with us. We have
the Honorable Frank Klotz, the administrator of the National
Nuclear Security Administration and retired Air Force
lieutenant general. We have Mr. James McConnell, associate
administrator at the National Nuclear Security Administration
for safety, infrastructure, and operations. We have Dr. Charlie
McMillan, laboratory director at the Los Alamos National
Laboratory. We have Ms. Michelle Reichert, deputy enterprise
manager for Consolidated Nuclear Security, LLC, which oversees
operations at the Pantex nuclear facility in Amarillo, Texas,
and at the Y-12 nuclear complex in Oak Ridge, Tennessee. And
the Honorable Sean Sullivan, chairman of the Defense Nuclear
Facilities Safety Board.
So thank you all for being with us today, and we will now
hear your opening statements.
Administrator Klotz, my understanding is that you will be
giving the opening statement for Mr. McConnell and yourself. So
we will begin with you.

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

General Klotz. Thank you, Chairwoman Hartzler and
Representative O'Halleran and other members of the committee
and subcommittee. Thank you for the opportunity to discuss the
challenges and progress made by the Department of Energy's
National Nuclear Security Administration in improving the state
of our infrastructure. We recognize the subcommittee and the
committee's important oversight role and appreciate your
willingness to highlight the importance of our critical
national security missions.
As you said, I am pleased to be joined by Jim McConnell,
who has the principal responsibility for safety,
infrastructure, and operations within the NNSA headquarters. We
have provided the subcommittee with a written statement and
respectfully request that it be submitted for the record.
Let me emphasize at the outset that the success of the
Nation's nuclear security enterprise and its workforce depends
upon safe, reliable, and modern infrastructure at our
laboratories, production plants, and other facilities.
Unfortunately, as has already been pointed out, much of this
infrastructure is antiquated, with many facilities dating back
to the Eisenhower administration and in some cases even to the
Manhattan Project era. As a result, our critical operations are
subject to increasing risk, as is the physical safety of our
people.
As we contend with this aging infrastructure, NNSA is
presently busier than we have been in many, many years. We are
currently conducting three warhead life extension programs and
one major alteration to ensure the long-term health of our
nuclear deterrent, in addition to our usual stockpile
stewardship activities. This tempo of operations has put
increased pressure on an already fragile infrastructure. This
is also true for the Office of Naval Reactors, which over the
past 10 years has had to increase resource allocation to
support aging facilities.
Although the role of nuclear weapons in our national
security strategy is widely understood and enjoys broad
bipartisan support, the link between nuclear deterrence and the
infrastructure that supports it is less appreciated. As I have
stated before, before this committee and elsewhere, I can think
of no greater threat to the national nuclear security
enterprise than the state of NNSA's infrastructure. We are long
overdue to build a modern, safe complex that will meet military
requirements, keep the deterrent safe, secure, and effective,
and enhance worker and public safety.
My written statement catalogues our many efforts to improve
NNSA's infrastructure over the long-term by arresting the
growth of deferred maintenance, gradually reducing it across
the enterprise, disposing of excess facilities, and building
new, modern facilities for our workforce where appropriate. It
also describes our effort to ensure the long-term availability
of the strategic materials associated with nuclear weapons--
plutonium, uranium, tritium, lithium, and others--which are
essential to the Nation's nuclear deterrent.
All of these activities are being more effectively and
efficiently managed by employing new analytical and decision-
making tools over the past few years. In particular, NNSA is
making risk-informed management decisions using capabilities
such as the Mission Dependency Index and BUILDER, which use
hard data to evaluate assets and prioritize repair and
investments.
Furthermore, improved contract and project management
practices are providing clear lines of authority for managers,
improving cost and schedule performance, and ensuring that the
most qualified people are managing NNSA's work.
So, again, I appreciate this subcommittee's desire to draw
attention to both our successes and to our challenges. With
that, Jim and I look forward to answering any questions that
you may have.
[The joint prepared statement of General Klotz and Mr.
McConnell can be found in the Appendix on page 35.]
Mrs. Hartzler. Thank you very much.
Dr. McMillan.

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

Dr. McMillan. Chairwoman Hartzler, Representative
O'Halleran, members of the committee, members of the
subcommittee, thank you for the invitation to come speak today.
Last fall in testimony, I said that the National Nuclear
Security Administration's laboratory and plant infrastructure
is the foundation that supports our Nation's nuclear weapons
enterprise. I personally have devoted 34 years of my career to
working in the weapons program, and based on that experience, I
bring an understanding of the set of capabilities that are
needed to ensure a safe, secure, and effective stockpile.
The current set of scientific tools that is used to manage
the stockpile are available today because of decisions that
Congress made over the last several decades. Those decisions
were informed by a belief that scientific analysis was the best
method to support the stockpile without additional nuclear
testing. Your decisions today will help set the course for the
future for us.
What are the essential features of our enterprise in 2030?
2030 is a date I think about a lot. I think they include modern
facilities that will handle high explosives, hazardous
materials, plutonium, tritium, uranium, lithium; and in
addition, new scientific facilities, like the enhanced
capability for subcritical experiments and others, that will be
needed to qualify new materials and manufacturing processes
before they are introduced into the stockpile.
Furthermore, we must not overlook the investments in the
people who are the stewards of the stockpile when discussing
infrastructure. The ability to attract, educate, and retain the
bright minds who make up our next generation of weapons
scientists and engineers depends on your investments.
My written testimony focuses on three main areas: shovel-
ready projects, plutonium infrastructure, and managing risk in
order to eliminate hurdles.
The shovel-ready projects that I address are more tactical
efforts that by themselves should not be expected to solve the
longer-term strategic infrastructure issues that we face. A
recent review that was led by Mr. McConnell detailed more than
$3 billion worth of needed investments across our enterprise,
with about a third of those at Los Alamos. Many of these,
though not all, are shovel-ready.
Our country currently has an extremely limited capability
to manufacture plutonium pits. A government analysis of
alternatives that is currently underway evaluates the
construction of plutonium modules that would connect as
extensions to the plutonium facility at Los Alamos. These
modules are designed to provide two important capabilities:
First, the ability to reach the military-required capacity of
50 to 80 pits made in a year; and second, to substantially
reduce the risk that is associated with the operation of our
plutonium facility.
In order to meet these goals that are currently set for
toward the end of the 2020s, we have to take action and make
decisions now.
As Chairwoman Hartzler mentioned in her opening comments,
the laboratories and plants have used general plant projects,
or GPP, as an efficient way to address modest-scale
infrastructure needs. One way to reduce hurdles would be to
raise the GPP limit, and based on my conversations with my
fellow lab directors, we believe $30 million would be a good
target to aim for, and then to index that to inflation.
Finally, on the subject of risk. Risk is inherent to
laboratory and plant operations. Past practice has led many
government managers as well as laboratory managers to be
extremely risk averse. Risks can only be managed; they cannot
be eliminated. Well-managed risk enables mission.
Thank you for the opportunity to testify today, and I
welcome your questions.
[The prepared statement of Dr. McMillan can be found in the
Appendix on page 44.]
Mrs. Hartzler. Thank you very much, Dr. McMillan.
Ms. Reichert.

STATEMENT OF MICHELLE REICHERT, DEPUTY ENTERPRISE MANAGER,
CONSOLIDATED NUCLEAR SECURITY, LLC

Ms. Reichert. Chairwoman Hartzler, Representative
O'Halleran, Representative Rogers, and members of the
subcommittee, thank you for the opportunity to speak with you
today about the infrastructure and deferred maintenance
challenges facing the production plants and the laboratories
that make up our nuclear security enterprise; more close to
home for me, the Pantex Plant in Amarillo, Texas, and the Y-12
National Security Complex in Oak Ridge, Tennessee.
First, I would like to thank the committee for its
longstanding support. The patriotic men and women that work at
Pantex and Y-12 are grateful for the committee's steadfast
commitment to maintaining our nuclear deterrent. I would
personally like to thank and express my appreciation to all of
you for continuing to shine a light on this very important
issue.
Our dedicated employees at both sites diligently plan and
work to maintain our production facilities in a safe and secure
working environment, but the effort necessary to sustain our
capabilities continues to grow. What we do at Pantex and at Y-
12 doesn't always get a lot of attention, but the work we do
every day is vital to the ongoing security of our Nation and
her allies.
Much of that work takes place in buildings that helped win
World War II and the Cold War, but the march of time has
certainly taken its toll on these facilities. Many of our
employees continue to experience roofs that leak onto their
workspaces, inadequate heating and air conditioning systems,
routine encounters with rodents and even snakes in their work
environment. They deserve so much more.
We have approximately $800 million of deferred maintenance
currently on our books between Pantex and Y-12. Given the
current pace of funding, erasing that backlog will be
impossible, and we experience issues that affect production
every day as a result.
I do not, however, want you to think we are sitting idly
by. Along with eliminating excess and deteriorating facilities,
we are embarking on the largest set of capital construction
projects at both sites seen in decades. Through third-party
financing, a new administrative support complex is being built
at Pantex. It will provide state-of-the-art workspace for 1,100
workers and improve recruiting and retention efforts. We also
recently finished construction on a new High Explosive Pressing
Facility at Pantex, and at Y-12 the Uranium Processing Facility
project is well underway.
With an appropriate investment, we could accelerate efforts
to reduce the deferred maintenance backlog at both sites by
moving forward on a broad complement of near-term efforts,
ranging from capital construction to new roofs, replacement of
our HVAC [heating, ventilation, and air conditioning]
equipment, installation of new electrical equipment. Each of
those projects would help us reduce the risks to our workers
and to our mission.
Near-term funding, combined with long-term
recapitalization, aggressive disposition of our excess
facilities, and increased utilization of additional funding
approaches, as discussed already by my colleague, is necessary
to preserve the mission work that occurs at our sites. Such an
approach is essential to ensuring the safety of our workforce
and essential to keeping Pantex and Y-12 on track to provide a
safe, secure, and effective nuclear deterrent for our Nation.
Again, thank you for the opportunity to speak to you today.
[The prepared statement of Ms. Reichert can be found in the
Appendix on page 52.]
Mrs. Hartzler. Thank you, Ms. Reichert.
Mr. Sullivan.

STATEMENT OF HON. SEAN SULLIVAN, CHAIRMAN, NUCLEAR DEFENSE
FACILITIES SAFETY BOARD

Mr. Sullivan. Chairwoman Hartzler and distinguished members
of this committee and subcommittee, it is an honor to be before
you today as chairman of the Defense Nuclear Facilities Safety
Board to share my observations on the challenges and actions
associated with the aging infrastructure within the Department
of Energy's defense nuclear facilities complex.
I have submitted a written statement, and respectfully
request that it be included in the record.
Mrs. Hartzler. So ordered.
Mr. Sullivan. The Board is responsible by statute for the
independent oversight of all programs and activities impacting
the adequate protection of the public health and safety within
DOE's [Department of Energy's] defense nuclear facilities. The
Board is statutorily mandated to review the content and
implementation of the DOE's standards, facilities and systems
design, and events and practices at DOE defense nuclear
facilities.
As my fellow panelists have shared, many NNSA facilities
are very old. Aging defense nuclear facilities present several
potential safety problems that must be simultaneously managed.
Systems degrade with time. The risks associated with
radiological holdup within a facility increase with time. Waste
streams with no defined disposition path may accumulate with
time. Replacement parts for critical systems become unavailable
as manufacturers go out of business or the technology becomes
obsolete. And new or evolving missions require existing
facilities to be used in ways for which they were not initially
designed.
To mitigate these issues, NNSA prioritizes maintenance at
high-risk defense nuclear facilities, and within each facility
NNSA prioritizes maintenance on safety class and safety-
significant equipment and components. Nevertheless, many of
these defense nuclear facilities are past or are approaching
the end of their design life.
Additionally, nondefense nuclear facilities, that is, NNSA
facilities that do not contain special nuclear material,
generally do have significant maintenance backlogs, and an
accident, such as a major fire in one of those facilities,
could pose a risk to nearby defense nuclear facilities.
Many NNSA sites also have significant aging issues with
critical site infrastructure, such as in-ground water pipes and
overhead electrical transmission lines. Finally, aging
infrastructure has a hard-to-quantify, but no less real,
negative impact on human capital.
For the Board in its role as an independent executive
branch agency advising the Secretary of Energy on nuclear
safety, the sheer number of issues posed by aging
infrastructure is cause for concern. To the extent that a
specific failure at a specific place can be anticipated, NNSA
has demonstrated that appropriate action will be taken, but the
risk of a significant unanticipated failure continues to
increase with time.
The written testimony I have submitted to this subcommittee
contains several detailed examples of potential safety problems
caused by aging infrastructure as well as some positive
observations on existing NNSA programs to manage these safety
risks.
I look forward to answering any questions you may have.
Thank you.
[The prepared statement of Mr. Sullivan can be found in the
Appendix on page 60.]
Mrs. Hartzler. Thank you very much, Mr. Sullivan.
Dr. McMillan, I wanted to start with you with a few
questions. You shared about reference to my opening remarks
about the GPP and said that you thought, visiting with
colleagues, it should be raised to $30 million, would give you
more flexibility. Can you clarify that? Because I understand it
was $5 million for the above-threshold reprogramming, and then
general plant and projects, a limit of $10 million. So which
one are you saying should be $30 million raised?
Dr. McMillan. It is the general plant projects.
Mrs. Hartzler. Okay.
Dr. McMillan. And, Chairwoman, the logic there is as
follows. Particularly in California, since the last time the
GPP limit was raised, we have seen substantial increases in
construction costs. It is true across the country, but both my
colleagues at Lawrence Livermore and Sandia have facilities in
California where that has been particularly steep.
In addition, as we look at issues like efficiency for the
buildings, being able to build somewhat larger buildings allows
us to have greater energy efficiency, better space efficiency
in terms of how much is occupied by hallways rather than
offices and labs.
So having a higher limit allows us to more efficiently use
that money.
Mrs. Hartzler. Great. And do you have any recommendation
for the funding reallocation limits related to the interagency
above-threshold reprograms, which is now $5 million?
Dr. McMillan. I don't have specifics, but I would like to
defer to my NNSA colleagues on that, because they tend to be
the ones who have to deal with those issues.
Mrs. Hartzler. Sure.
Administrator Klotz.
General Klotz. Sure. Thank you very much for the question.
Let me say, I have made it a point, as I have gone out to
visit our laboratories and other sites, to see some of the GPP
projects that are out there. In fact, on one of my last visits
to Los Alamos, Dr. McMillan took me over to view a facility
that they had just recently completed. And I must say, I was
very impressed, one, with the quality of the work that was
done, and secondly, its impact on the morale of the employees
that work in that particular facility.
We hire the absolute best and brightest to be our
laboratory and plant directors and the key personnel in each of
those facilities. I am certainly willing, as the Administrator,
to give them more discretion and more leeway in terms of the
decisions that they would make in terms of what they would do
for general purpose projects.
We have a healthy discussion between us and all of our
sites as they contemplate these kinds of projects to decide
what is the best way to get at it. One shoe does not fit all.
And I think what we really need are a lot of different shoes or
tools, to mix a metaphor, in our toolkit to deal with some of
the infrastructure issues that we have, ranging from line item
capital construction projects of a more traditional nature, to
any number of different types of third-party financing schemes,
to things like the GPP, as a way of getting at this issue.
So from the NNSA perspective, we are very supportive of
what the laboratory directors and plant directors have told us
repeatedly that would help them help us in terms of maintaining
those sites.
Mrs. Hartzler. Do you have a dollar amount that you would
recommend, though, for the increase on the first, the
interagency above-threshold reprogramming account?
Mr. McConnell. I believe that the $10 million threshold,
exactly as Dr. McMillan said, has come to be a problem where
projects of----
Mrs. Hartzler. Okay. Well----
Mr. McConnell [continuing]. Equal complexity this year----
Mrs. Hartzler. Maybe there is a----
Mr. McConnell. Is this the minor----
Dr. McMillan. This is the $5 million----
Mr. McConnell. Oh.
Mrs. Hartzler. Yes. So there are two different funds, one
has a $5 million threshold, one has 10. I think we have fully
explored that the $10 million should be raised to $30 million,
but my question is about the $5 million----
Mr. McConnell. Oh, reprogramming.
Mrs. Hartzler [continuing]. Should it be increased, and if
so, how much?
Mr. McConnell. Can I add one other element to that first,
because one other issue is the structure of the budget, because
if you have--if you raise the budget thresholds for, for
example--I will get into a couple of details here--to combine
previous control points, then there is the ability to move
money within the account as necessary to address issues without
requiring any reprogramming at all.
In the last couple of years, the Congress and your
committee have helped us to restructure our budget such that we
have three major infrastructure and operations control points
that allow us to then do maintenance as a single entity across
the enterprise, do recapitalization as a single budget line
across the enterprise, and therefore inherent in that is the
flexibility to move money between one lab that is having a
problem and another lab that for some reason doesn't.
This year in particular, the Congress has looked at
combining our operations at facilities control points, which
are currently eight specific unique control points, one for
each plant or site, into a single amount, that would allow the
flexibility to move those operating dollars to wherever the
needs are within our enterprise.
So without perhaps deferring to the Administrator on a
level for reprogramming, I would recommend that that current
idea to combine the ops at facilities control points into one
more flexible element would be an element that could help us
solve this problem.
Mrs. Hartzler. Flexibility sounds good if you are able to
combine.
Before we move on, anything you want to say, Administrator?
General Klotz. That is exactly what I was going to say,
Congresswoman. Flexibility is good.
Mrs. Hartzler. Yeah.
Dr. McMillan. If I could maybe add, based on the comments
that my head of operations has provided since my earlier
statement, he suggests that if we were to go to $10 million, it
would give us quite a bit more flexibility, as General Klotz--
--
Mrs. Hartzler. Ten million on that first account, $30
million on it.
Dr. McMillan. Correct.
Mrs. Hartzler. Okay. Thank you.
And if we did raise those limits, how would you foster the
relationship with oversight committees in Congress to ensure
that we are still gaining the necessary insight into various
projects so that we can conduct proper oversight of NNSA's
spending of our taxpayer dollars?
Dr. McMillan. I am happy to start with that, Chairwoman.
One of the things that we do and I think we could certainly
continue to do to ensure that oversight is provide reports both
on the projects that we are doing as well as our progress on
those projects. I am perfectly comfortable with the idea of
transparency as a mechanism for oversight.
What gives us difficulty is if there is a very elaborate
decision-making process that goes with these, I call them
medium-scale projects. So transparency is something we can very
easily provide that I think can help your committee with that
kind of insight.
Mrs. Hartzler. Okay. So this is a recommendation to change
it. The policy--are there any other statutes, regulations, or
policies that would impede immediate implementation of the
projects that you would consider shovel ready for immediate
implementation?
Dr. McMillan. Yes.
Mrs. Hartzler. What are some of those things?
Dr. McMillan. An example of a practice or policy, I am not
quite sure where it fits, is the requirement that we destroy
and decommission a building in the same year that we build the
new building. It makes perfect sense to me that we should take
down old facilities and be held accountable for that. The logic
is when we take down an old building, we get rid of the
maintenance costs associated with that, and that can then go
into a new building.
However, we would very much like to be able to bank that
space when we--take it down as soon as we can, as soon as we
can afford it. And then we may not be able to afford to put up
new space in that year, but a year or two later draw from that
bank of space so that we can then--so that would help us a lot.
Mrs. Hartzler. Okay. Ms. Reichert, do you have----
Ms. Reichert. I think from our plant's perspective, as well
as allowing funding for us to take down the facilities, not
process-related facilities that aren't contaminated, allowing
some budget flexibility to do that, because we are investing a
lot of money right now in facilities we no longer need. And the
more efficient we become at the sites, the more we can invest
in the critical infrastructure that we are maintaining for the
long term.
We don't do much of that now, but we have in the past, and
I think that would help all of us, both the labs and the
plants, to have that flexibility within the budget to bring
more of those projects to fruition. And we do seek to do that
in the out-years to make us more efficient.
Mrs. Hartzler. Great.
Any other change in policies that you would recommend,
Administrator Klotz or----
General Klotz. Well, one that we have talked to other
members of the committee about in the past is clearly more
flexibility in how we use third-party financing related to
doing construction. You have already mentioned, and, of course,
we have pictures, I think on page 6 is the Kansas City National
Security Campus that you spoke about. That was built, as you
mentioned, through a GSA [General Services Administration]
lease with a third-party developer.
We are also--again, great support from the committee--we
are also in the process of building a facility at Amarillo, in
fact, that is on page 9 of the slides which we provided, an
Administrative Support Complex which will allow roughly a third
of the Pantex workforce to get out of 1950s-era buildings into
a modern, efficient building to do their work. That also is
third-party financed. GSA was not part of that. This was a
straight contract between Michelle Reichert's people, who have
responsibility for operating and managing Pantex and Y-12 for
us, and a private developer.
[The slides referred to are retained in committee files and
can be viewed upon request.]
General Klotz. I approved the mission need for this
particular site in early 2015, and Michelle and her people are
going to occupy it in early 2018. That is 3 years. That is a
lot faster, much, much faster than we would have been able to
do if it had been a line item construction project in which we
would have had to come over probably a series of a couple
legislative sessions in order to request the funding for it.
So I think that is another area where more flexibility for
us is something that we have certainly advocated and would
continue to advocate.
Mrs. Hartzler. It sounds like you have already got that
flexibility, though, because you have been able to complete
these two projects.
General Klotz. There are two, but there are other projects
we would have done. And I will probably get in a lot of trouble
with my executive branch colleagues, but I will tell you, it
was exceedingly challenging work over a period of about 16
months in order to secure the approval--to secure authority to
give approval to the M&O [management and operating] contractor
to go ahead and enter into this lease. So some streamlining
there would be very, very helpful.
And there are other projects which we would like to do,
which, quite frankly, don't meet the scoring requirements, not
just for the Office of Management and Budget, but also for the
Congressional Budget Office. So there is where I think we need
more flexibility.
Ms. Reichert. I think lease scoring changes is a big
impediment to a lot of the projects that are being looked at
right now, and a firmer policy on alternative financing as
being a viable approach. As General Klotz mentioned, it wasn't
worth--wasn't without considerable effort over a long period of
time to make the Administrative Support Complex a reality.
Dr. McMillan. And if I could also support General Klotz in
the statement about difficulty. My colleagues at Livermore and
Sandia have projects that they have been working on for years
in the third-party finance domain without success. It is a
process that, while we have successes, and I applaud those
successes, it is sort of beyond difficult right now.
The other addition, and Michelle mentioned it, is effective
use of lease space, lease scoring. While we certainly don't
want all of our facilities to be leased facilities, there are
times when that can be a very cost-effective way to either
buffer changes in facilities, deal with peak loads, those kinds
of things. And, again, if we had policies that made that easier
for us to use in a responsible way, it would be very valuable.
Mrs. Hartzler. I want to make sure my colleagues have a
chance to ask their questions, so I will come back with some
others. But would it be possible for each of you to put in
writing to us suggested changes in policy that would be helpful
to expedite these projects?
Dr. McMillan. These were included----
Mrs. Hartzler. We have been taking notes here, but, you
know, this would be something that we could actually move
forward with legislation, and be helpful to have it in writing.
Dr. McMillan. All of these are in my written testimony.
Mrs. Hartzler. Okay.
Ms. Reichert. Mine as well.
Mrs. Hartzler. Okay. Very good. We will glean those out.
Thank you very much.
Mr. Scott.
Sure. Mr. Suozzi. Sorry.
Mr. Suozzi. Suozzi.
Mrs. Hartzler. Suozzi.
Mr. Suozzi. Good afternoon. My name is Tom Suozzi. I am a
freshman Congressman. This is all brand-new to me, this topic.
I want to first say that it is obvious that you do very, very
important work, and probably don't get very much attention,
considering how important it is, and I recognize what a
challenge it has been for you.
My former public service career was as mayor of my home
town and county executive of a large county. I had a $2.8
billion budget, larger than 16 States. And my county grew
rapidly from the 1940s through the 1960s to today. We went from
400,000 people in 1947 when Levittown was built to 1.2 million
people in 1960, and it was the same type of growth that you
probably saw in your operation during World War II and
afterwards.
And when I look at these pictures, it is the exact same
thing that I came into in my government, which is you had this
sprawling enterprise that was pieced together over a period of
time, and it kind of was just--you know, if you started from
scratch, you would have never built all these different
sprawling facilities. And nobody paid attention, and now all
the buildings are falling apart. And you are scientists working
on nuclear stuff, and you are not really probably as expert or
as focused on maintenance and things like that.
So there are a couple different things that I would like to
understand. And it is not going to happen today, but I would
love to see some sort of report if it is done in some sort of
comprehensive way.
There are four different ways that I think that you should
be looking at, which it sounds like from your testimony that
you are already doing this already. But number one is
consolidation. What are you doing to take your eight major
facilities, and I am sure there are lots of other facilities,
what are you doing to reduce it? Are you reducing it to six?
Are you reducing it to five? What are you doing to consolidate
your operations? I don't expect you to answer this all now.
[The information referred to can be found in the Appendix
on page 91.]
Mr. Suozzi. But consolidation is probably one of the great
things you can do, and maybe even sell your surplus property or
give it away just to get rid of it or give it to some other
government agency. And so that is number one, is consolidation
and sale of surplus, elimination of surplus.
Number two is, you know, in the earlier statement from
Congressman O'Halleran, which he is taking the place of the
ranking member today, he talked about how the Navy does a good
job with their maintenance, and you guys are--you know, they
have old facilities, but you guys don't do as well. But they
are big and you are, by comparison, small. You are not small,
but by comparison you are small to them. And they have got, you
know, a lot more depth and lot more funding and stuff like
that.
Is there some way that you could collaborate with another
Federal agency that maybe is good at doing these type of
things, that they could help you to do some of this day-to-day
stuff and figuring out some of this capital planning? Because
you have got all your resources dedicated to the science and to
nuclear issues, and maybe there is somebody else that has a
much larger operations and maintenance and capital building
background than you, that you could get the big guys to help
the little guys and help you figure out how to do this stuff
instead of you trying to recreate the wheel.
[The information referred to can be found in the Appendix
on page 91.]
Mr. Suozzi. It is like hospitals today. Hospitals can't
survive by themselves because they have got too many areas of
expertise, so they create these big networks, and instead of
everybody trying to be expert at everything, you get one group
is an expert at payroll, and this guy is an expert at cancer,
this one is an expert at oncol--chiro--you know what I mean.
So one is consolidation, two is can you collaborate with
other agencies.
Three is I am very interested in public-private
partnerships [PPPs], and it seems like you are interested in
that as well. And it would be great if, as part of a report,
you would talk about your long-term vision for consolidation,
collaboration, and public-private partnerships. What would be
the projects you would want to focus on getting this private
money in for, so that we could--I see these guys nod their head
talking about how we should be doing more PPPs over here. You
know, give us examples of it so we could help fight for you.
[The information referred to can be found in the Appendix
on page 91.]
Mr. Suozzi. And number four is, are there any other
reforms, other than these numbers of $10 million and $30
million increases?
[The information referred to can be found in the Appendix
on page 92.]
Mr. Suozzi. But I think the best thing would be if your
agency as a whole had a comprehensive plan, which maybe you
have and I just haven't seen something like that, a
comprehensive plan, this is our plan for the next 10 years as
to how we are going to shrink our footprint, take care of it
better in the future, collaborate with other people, save some
money, and do things more efficiently.
So I know I went a little bit all over the place, but go
ahead.
General Klotz. Can I dive just a little bit into that? And
I really would welcome the opportunity to follow up over a
series of visits and meetings to delve into this, because you
raise extraordinarily important points.
On the point of consolidation, the overall nuclear security
enterprise has contracted significantly since the end of the
Cold War. We shut down Rocky Flats, where we made plutonium
pits; we have closed Pinellas, where we made neutron
generators; we used to do uranium enrichment at Paducah,
Kentucky, and in Portsmouth, Ohio, and all that----
Mr. Suozzi. Are these surplus, or the government still
holds onto them and they are contaminated?
General Klotz. It depends on the specific site. Some, for
instance, I believe Pinellas has been turned over to a local
development authority, others are contaminated and we are
still--we, I say we, the larger Department of Energy is
involved in the decontamination process associated with that.
On the Naval Reactors, there is one point I think we should
make, and that is Naval Reactors is a part of the NNSA wearing
one hat; the other hat takes them back to the Navy. It is true
that they have done an extraordinarily good job in terms of
maintaining their facilities and building new facilities. I
think they would also tell you that they are behind. You know,
if you go back and poke around in the back of their facilities,
there are a lot of issues there as well.
Mr. Suozzi. Similar to yours?
General Klotz. Similar to us. And, in fact, we fund their
recapitalization and their maintenance, so we are very aware of
the issues they have and are very, very supportive of fixing
the laboratories. In fact, the facilities where they operate
are DOE-owned facilities.
Public-private partnership we have already talked about,
but I am glad you raised working with other government
agencies. We rely a lot on the U.S. Army Corps of Engineers in
many of our projects, and they have been extraordinarily
helpful in terms of design and in some cases actually being the
build agent that would go out. They are very, very good on, you
know, sort of general purposes, light laboratory, light
industry types of work, and they even helped us out on some
very specialized facilities associated with nuclear operations,
which is not really their primary business.
So we are trying a lot of these as we are working to
improve the way in which we do work. And as I said at the
outset, I would be delighted to spend more time with you on
that.
Mr. Suozzi. Thank you so much.
Dr. McMillan. Congressman.
Mr. Suozzi. Yes.
Dr. McMillan. If I could just add to what General Klotz
said in a couple of regards. You ask are facilities being
turned over. Rocky Flats Plant is an excellent example outside
of Denver. It is now parkland. Okay.
So the consolidation for our enterprise really occurred
during the 1990s at the end of the Cold War. So we have done
that.
Something I would add is, you asked about whether we had
plans. Something that Mr. McConnell has been leading is
something that we call the Management Asset Plan, MAP. All of
the sites are providing input into that. He has been doing
reviews at all of the sites. And what we traditionally had as
our 10-year site plans are now being rolled up to the whole
NNSA level. So those plans are being built, they exist, and I
think it is well worth taking a good look at that.
Ms. Reichert. One other area I want to emphasize on
consolidation as well, not just consolidation across the
enterprise, but within each of our sites. At our Y-12 complex,
for instance, we reduced about a million square feet in the
last decade, a little over the last decade. At Pantex, our new
Administrative Support Complex will eliminate 52 facilities on
our sites.
So being able to use efficiencies as well as any additional
funding to bring those buildings down, it not only brings our
workforce together in a nice modern facility, but it makes them
so much more efficient, because they are together, and they can
collaborate and work together in facilities where they are
collocated. So I think we are looking at a bigger complex issue
of consolidation, but we are certainly looking at it within
each of our sites as well.
Mr. Suozzi. I am certainly taking up too much time, but how
many square feet do you have in your total enterprise? Do you
know?
Mr. McConnell. So real property-wise, we have a little over
2,000 square miles that NNSA is responsible for. As far as the
actual gross square footage, I will get you the specific
number, but it is equivalent to about six Pentagons.
Dr. McMillan. To give you a sense of scale, Los Alamos
alone covers 35 to 40 square miles.
Mr. Suozzi. Well, thanks very much.
Mrs. Hartzler. Thank you. Good question.
Mr. Scott.
Mr. Scott. Thank you, Madam Chairman.
And just for the record, on page 5 of your testimony, Ms.--
is it ``Reichert'' or ``Rickert''?
Ms. Reichert. It is Reichert.
Mr. Scott. Reichert.
Ms. Reichert. It is Reichert.
Mr. Scott. I have a mayor back home that spells it the same
way. It is ``Rickert'' for him. That is why I asked.
But I had circled your testimony on page 5 about the
public-private partnership. And you mentioned two different
ways of doing things. One of them was a GSA lease and one of
them, I think the general said you went direct.
What are the primary differences in going through GSA and
you going direct?
Ms. Reichert. The direct approach that we took was
certainly supportive of the NNSA, was a local area economic
development agency took on the project. So we approached both
Amarillo and the Panhandle communities. Panhandle stepped
forward. They put out a bond offering, and we got a very good
bond rating for that. They put out a bond offering that will
finance the facility, and then they hire directly a developer
and a contractor to build the facility for which we lease. And
that has worked very well for us just going direct.
I don't have a lot of detailed knowledge, you guys may have
more, on the Kansas City approach going through GSA, but it
worked very efficiently going direct with the local agency.
Mr. Scott. Let me follow up on that, if I may, because that
brings to mind one of the other questions that I had. So you
said that you used a local development agency. So you did not
use a private company, you used a local government entity?
Ms. Reichert. Panhandle Area Economic Development
Corporation that actually bond issued and then hired the
developer and the contractor that built our facility.
Mr. Scott. And they own the facility, and your lease is
then with that economic development authority?
Ms. Reichert. Yes.
Mr. Scott. Okay. One of my concerns was with facilities of
this magnitude, of this importance to our country, that we end
up 30 years from now, whenever the lease ends, subject to
whatever the person who owns the property.
Ms. Reichert. We have got very specific lease agreements in
place as far as what they provide for us. At the end of 30
years, if you saw our Amarillo complex, we are a bit out of the
way, so I can't imagine that there is going to be a huge demand
for the facilities. We are about 25 miles from town, and there
is not much out there with us. But we have got very specific
language in there that we can continue our leases in order to
support the Nation and our plant.
Mr. Scott. I assume at a set rate?
Ms. Reichert. Yes, sir.
Mr. Scott. Be careful of the change orders.
Ms. Reichert. It is a firm fixed price turnkey project, so
it is capped.
Mr. Scott. Fair enough. So the third-party financing in
this case comes through a local development authority, which I
think is probably the better way to do it.
General, going through GSA versus going direct, what are
the advantages of each one and disadvantages?
General Klotz. Let me put it in--as I understand it. First
of all, in working with the GSA, the GSA then has to make a
business decision in terms of whether or not they want to
acquire a particular--build a building or acquire a particular
piece of real estate.
And in the case, as Ms. Reichert alluded to, in the case of
Kansas City, that was an easy business decision for them to
make, because it is a very active metropolitan area. If for
some reason the government ever left that particular facility,
there are other government agencies that could move in there or
there is a market for it on the commercial side.
That is not quite the same case in the area outside of
Amarillo, Texas, and I am from that part of the country. And
Michelle is right, they are a long way away. So we approach--on
all of these things, we do what is called--on all our major
capital construction projects, we do a very rigorous analysis
of alternatives. That is a new process we brought in about 3
years ago.
Mr. Scott. In that analysis, do you include the maintenance
of the facility?
General Klotz. Yes, sir.
Mr. Scott. Is that included in the lease?
General Klotz. Yes.
Ms. Reichert. Yes, sir.
General Klotz. And all of our analyses of alternatives,
they will run the range from do nothing, in other words
maintain the status quo, fix the status quo a little bit, build
a new building, approach the GSA, do private development, or go
for a line item construction project. So we generally consider
the whole gamut. And we are not necessarily restricted to a
particular location in terms of doing that.
Mr. Scott. My time has expired.
Mr. McConnell. And one item is we do a full lifecycle
analysis all the way through the D&D [design and development]
of the facility to compare apples to apples.
Mr. Scott. And on average, is that 20 years, 30 years?
Mr. McConnell. Forty years.
Mr. Scott. Forty years.
Thank you very much.
Mrs. Hartzler. Thank you.
Mr. Rogers, Chairman Rogers.
Mr. Rogers. I thank the chairman.
Ms. Reichert, as you know, I have been through Pantex and
Y-12, and you are right, the great Americans that work at those
two places are real patriots for doing that. They have options.
These are not people that need that job. And they are patriots,
and I appreciate their service to their country.
General Klotz, we have talked about this before. I know you
and I share the same goal, and that is to ensure the nuclear
enterprise and its people are ready to be able to meet the
challenges in the future. A big part of that is a mutual
understanding that we simply must recapitalize NNSA's
facilities. You have said to this committee several times,
quote, ``I think of no greater threat to the nuclear
enterprise, security enterprise, than the state of the NNSA's
infrastructure,'' close quote. And you know I agree with that.
That is why this hearing is so important. I thank Chairwoman
Hartzler for calling it.
Chairwoman Hartzler and I sent a letter, which I will
introduce for the record, without objection----
Mrs. Hartzler. Without objection.
[The letter referred to can be found in the Appendix on
page 69.]
Mr. Rogers [continuing]. To Secretary Perry last week that
asked the Secretary personally to engage to ensure you bring to
this committee hearing a list of infrastructure projects that
NNSA could be carried out in the intermediate range if funding
was provided. This follows up on a request this committee made
to DOE back in January.
I understand that you are not able to provide that today.
Is that correct?
General Klotz. That is correct.
Mr. Rogers. That is disappointing. Please ensure that
Secretary Perry and the OMB [Office of Management and Budget]
understand that we are asking for a simple data call here, not
a peek at predecisional budget plans. For example, you sent a
letter to us with a similar list last year in response to a QFR
[question for the record] from a September hearing.
I would like to introduce that for the record, if I could.
Mrs. Hartzler. So ordered.
[The information referred to can be found in the Appendix
on page 84.]
Mr. Rogers. It lists projects that you say are, quote,
``currently underfunded recapitalization projects that NNSA
could execute in the next several years should additional
resources be available. The list provided is unconstrained and
builds from the project list included in the fiscal year 2017
budget request,'' close quote.
Chairwoman Hartzler and I are simply asking for a
comprehensive update to that list with a bit more detail. You
and I both know that there are plenty of projects that meet
this criteria of, quote, ``shovel ready,'' and are not on the
list that you gave us in September.
So I build to this: Can you get us that list in the next 30
days?
General Klotz. I can't promise that, Chairman, because you
know what time we are in. We are in budget preparation time. As
everyone here well knows, the Office of Management and Budget
released its blueprint for the President's fiscal year 2018
budget today, and I am happy to say that blueprint demonstrates
the administration's strong support for the United States
nuclear security enterprise and will help ensure that we have a
nuclear force that is second to none.
The details of--well, I mean, the numbers are pretty--are
laid out in there, a $1.4 billion increase for NNSA over the
fiscal year 2016 enacted level, which was $12.5 billion, so
that is about an 11 percent increase to that. And, of course,
obviously much of that will be going towards all the line items
within our budget, in addition to the life extension programs,
recapitalization, and maintenance as well.
Mr. Rogers. How much toward deferred maintenance?
General Klotz. I don't have the--and I can't release that
until the President's budget comes----
Mr. Rogers. It was worth a try.
General Klotz. Yes, sir. So believe me, we are on the same
sheet of music, we have the same goal at the end. And we
continue to update this list. We were using our--since the last
time we have discussed this with your subcommittee, you know,
we continue to refine our tools, Jim, and work with the labs
and the plants to make sure we have the list prioritized in a
way that we can.
But right now, as we are in the process of defining what
the actual outlines of the President's budget are, we do not
want to get ahead of the budget request that he will send up to
the Congress in the May timeframe.
Mr. Rogers. Okay. Well, I thank you again for your service.
And you know this is something that is very important to me and
to this committee, not only the subcommittee, but this full
committee, and we want to stay after it and we want to be
supportive. So I look forward to seeing that number.
With that, I yield back, Madam Chairman.
Mrs. Hartzler. Yes. Thank you, Mr. Chairman.
Dr. DesJarlais.
Dr. DesJarlais. I thank the chair.
Representing the great State of Tennessee, I thought I
would take the opportunity to share the photo of the fallen
concrete incidents at Y-12 to let you help shed some light on
the consequences and the magnitude of the problem that we are
discussing today.
Ms. Reichert, the picture here of Y-12, what operations
were being conducted in that building prior to this happening?
Ms. Reichert. It is our lithium operations, which are
essential to the mission that we support at Y-12.
Dr. DesJarlais. Okay. If we were to lose operating capacity
there, which did happen for a period of time, would you deem
that a single point failure?
Ms. Reichert. It is one of the key areas of concern that we
have for our capabilities, uranium being one, lithium being one
as well, high explosives at Pantex being another. All of those
are integral to the weapons program, so if we did lose the
lithium capability, it would be significant to the weapons
program and the deterrent overall. We are working with NNSA
right now on a lithium strategy so we can ensure that we have
those materials for the future for the weapons stockpile.
Dr. DesJarlais. So when an operation like this has to shut
down, there is a direct impact to national security?
Ms. Reichert. Yes, sir.
Dr. DesJarlais. All right.
You talked about rodents and snakes and now falling
concrete. Does anybody want to just further stress the impact
that this has on the mission of the NNSA and to our overall
national security?
Dr. McMillan. I would, Congressman.
Dr. DesJarlais. Thank you, Dr. McMillan.
Dr. McMillan. I think in Chairwoman Hartzler's opening
remarks she very accurately said that this affects the morale
of the people that we hire. We work very hard to bring in some
of the very best people in the world to our laboratories, and
when they come from a university setting, let's leave aside the
Googles and the Apples, when they come from a university
setting and then come to a national laboratory or one of our
plants and they say, ``This isn't as good as what our
university was,'' it really doesn't say, ``What you are doing
is critical for the Nation.''
That is the case. I have trailers that were brought onto
Los Alamos 30 years ago as temporary structures. They are still
there 30 years later. We are working to get rid of them, but we
have to be able to move people into real space. There are
experiments that we are doing right now with things like
manufactured buildings. This year we want to bring a
manufactured building onto our site as a way to keep the costs
down but take the quality up. We think there is opportunity in
places like that.
But one of my biggest concerns after safety is the morale
of the people and our ability to retain those people in the
service of the Nation.
Ms. Reichert. I would like to expound on that just a little
bit. Representative Rogers, you got to see one of my
highlighted facilities on what we call our ugly tour.
Mr. Rogers. Yeah. There was a lot of ugly too.
Ms. Reichert. There was a lot of ugly that day, yes, sir.
We bring in some of the best and brightest scientists from
across the country, especially in our high explosive technology
area, in World War II vintage facilities. Rodents certainly are
in those facilities. We get rain intrusion into those
facilities, such that we have got high-tech equipment that we
have to cover with tarps, and the mold and mildew was starting
to attack those facilities as well. We have literally had to
move those scientists out to 30-year-old trailers, which were
an improvement from their R&D [research and development]
facility in which they live now, and then they just go back and
forth to the facility to do their R&D work.
I have had young engineers look at me and say, ``Ma'am, I
could work at a high rise in Dallas and have a company car, you
know, I don't need to be uncovering my equipment in order to
work on it during the course of the day.'' So they deserve
better than that.
General Klotz. Could I just add one thing? As I indicated,
I think, in my verbal opening statement, we are doing an awful
lot of very important work for the Air Force and the Navy now
in terms of the life extension programs for the bombs and the
warheads that will go on the new submarines, that will go on
the new bomber, will go on the new fighter, will go on
hopefully someday a new intercontinental ballistic missile. And
it is a very, very tight schedule. The labs and the production
facilities are ramping up people and have very tight deadlines
to do their work.
If we have to shut down operations for a day, a week, a
month because of a corroding sprinkler system or a collapsed
ceiling, as you rightly point out, or a whole host of other
kinds of age-related issues--and we will always put safety
first, we will always put safety first for both our employees
and the general public--if we have to shut down for that, the
margin we have to deliver what this Nation needs for its
nuclear deterrent gets stressed that much more.
So there really is, in addition to recruiting and retention
and safety, there is a real, no kidding, potential operational
impact to what we are doing.
Dr. DesJarlais. I would like to thank the panel.
Mr. Sullivan. Congressman, can I add something to that
quickly?
Dr. DesJarlais. Yes, sir. Mr. Sullivan.
Mr. Sullivan. Your question about the impact, I want to
just make the point that safety systems and design, building
design has come a long way in the last several decades. And so
I would use the analogy, I had a friend who had a 1952 Packard,
an old automobile, and he spent a lot of money on that
automobile and he kept it running as well as it ran in 1952.
But it was still a 1952 Packard, and it didn't have modern
safety features like seatbelts and antilock brakes. And we see
the same things in these facilities as well.
And really for the Nation, the question is, since we now
have the technology that could significantly reduce risk, we
should be considering trying to use that, because we still
maintain a lot of risk even in well-maintained older
facilities.
Dr. DesJarlais. Yeah. Great illustration. Thank you.
Mrs. Hartzler. You bet. Thank you.
Mr. Suozzi.
Mr. Suozzi. Madam Chairwoman, I would like unanimous
consent to enter Ranking Member Moulton's statement in its
entirety into the record.
Mrs. Hartzler. So ordered.
[The prepared statement of Mr. Moulton can be found in the
Appendix on page 33.]
Mr. Suozzi. Thank you.
Mrs. Hartzler. I have a couple more questions here.
Administrator Klotz, so in the fiscal year 2017 budget
request, NNSA requested a one-time funding line of $200 million
to pay for final disposition of the Bannister Road Federal
Complex in Kansas City. This funding allows NNSA and the U.S.
Government to turn the facility over to a contractor for
remediation and disposition and is a good deal for everyone.
Would you please tell us what happens if NNSA does not get
this funding in fiscal year 2017? And when is the deadline that
NNSA must have this funding appropriated by in order to proceed
with the transfer and remediation project? And what happens if
the energy and water appropriation gets a full-year continuing
resolution and this one-time program does not get a $200
million anomaly?
General Klotz. If you would permit me, Madam Chairwoman,
let me start this, but actually Jim McConnell, who is sitting
here to my left, is our lead senior executive who is working
this for the NNSA as well as our team, Mark Holecek and team
out in Kansas City.
This is an extraordinarily good deal for the American
taxpayer. As you indicated, we were operating out of a 3
million--we were using 3 million square feet of an even larger
facility that was built in World War II. We have now moved out
of that. We have made a commitment to the people of Kansas City
and the State of Missouri and the State of Kansas that we would
not leave that as an eyesore for years or decades to come.
And as it turns out, there are commercial interests in that
particular facility. And we can, for $200 million, which seems
like a lot, we can turn that over to a commercial entity to do
the demolition and remediation of the property for a sum that
is roughly--is less than 25 percent of what we would have to do
if we, the U.S. Government, if we, the Department of Energy,
were having to remediate it. So big cost savings.
But all committees involved, the two authorizing committees
on both sides of the Hill, the two appropriations subcommittees
on both sides of the Hill, agreed that this was a good deal and
gave us the full mark to be able to pay the private developer
the money that is necessary to do that this year, which is when
the deadline is.
So without a fiscal year 2017 budget, or if capped at flat
line in a continuing CR [continuing resolution] at the fiscal
year 2016 levels, we will not have the money to consummate this
deal, in a nutshell.
Do you want to add anything to that?
Mr. McConnell. Just one of your questions was about timing,
ma'am. The three main entities, the State of Missouri, the
private corporation that we are engaged with, and the
Department of Energy, are on track to work through the issues
that need to be resolved prior to transfer. They are mostly
involved with the Resource Conservation and Recovery Act, the
RCRA, that underpins the environmental cleanup. That is on
track with public hearings in Missouri in the not-too-distant
future that would result in a transfer in August.
In order to have an August transfer, there has to be the
money available for this entity to certify that it has the
ability to complete the environmental cleanup, and so that
requires us to back up several months to have the money to
reach an agreement with CenterPoint, who is the corporation
going to do the cleanup. That means that it is April or May,
right at about the time that this continuing resolution ends,
is when we would actually need that $200 million.
General Klotz. If I could just add one thing,
Congresswoman. The Congress actually was very helpful in the
passing of the continuing resolution by giving us an anomaly,
which allowed us to move moneys around in the weapons activity
account to cover bills, and without having to go to Congress
beforehand. We did have to notify you within 15 days after
doing that.
We have exercised that authority, and we exercised that
authority to provide some money for this particular effort in
order to keep the deal alive, as it were, into the summer while
the State of Missouri government and the contractor and our
people continued to work through the issues that Mr. McConnell
just talked about. But we were borrowing money from other
accounts, other activities, that those bills are still going to
come due, so they will have to be paid.
So flexibility to move money around is not enough, because
there is not enough money in the bank account to cover all that
and do all the other things that we need to do in terms of our
life extension programs, in terms of the salaries we have to
pay, and other activities in that account.
Mrs. Hartzler. It is very, very important that we get this
done. So I appreciate the summary of where you are at right now
and then also emphasizing how important it is that we get this
figured out in April and May, that we get a full budget.
Administrator Klotz, as it relates to some of the NNSA's
large line item nuclear facility construction initiatives, how
have the projects performed related to original planned costs
scheduled and building specifications, and what mechanisms are
in place within NNSA to provide sufficient oversight of
construction and adherence to budget and building requirements.
General Klotz. Thank you very much.
I think maybe one of the underlying premises of that
question is that in recent times the DOE has had challenges in
doing large-scale nuclear-related construction projects, and
that is fair. But over the past several years, we have made
some significant changes in the way in which we manage both
programs and projects to ensure that we have the most highly
qualified people leading those projects. We have done a good
job, I think, of bringing in practices that were used by the
Army Corps of Engineers and by Naval Construction, in fact
hired many of their best people into the NNSA, and have begun
to make some significant--see some significant progress.
The vast majority of our portfolio is delivered on time and
on budget. We have a couple of--and, in fact, except for--you
know, we are off the high risk category list the GAO
[Government Accountability Office] has for all projects under
$750 million. That leaves three major projects, MOX [mixed
oxide fuel], the Uranium Processing Facility at Y-12, and our
project to move out of the chemical metallurgy building at Los
Alamos is still on the high risk list.
As I think you know, and other members of the committee
know, about 3 years ago we restructured our approach to how we
are doing that, and I would be happy to go into details now or
later, but since we have made those changes and changed our
management structure for watching how we exercise oversight
over that, both of those are on schedule and on budget. In
fact, I have some pictures of the construction that is going on
at the Uranium Processing Facility. We are still committed to
delivering that facility for $6.5 billion by 2025. And I was
just down there a couple weeks ago, and it is very impressive,
the work that is being done.
I don't know if you wanted to add anything to that.
Mrs. Hartzler. Very good.
Well, I really appreciate your coming today and certainly
the important work that you do.
Before we close the hearing, I will give each one of you a
chance to make any closing remarks if you haven't perhaps had a
chance to make those points before.
So, Administrator Klotz, do you have anything else you want
to add?
General Klotz. I would. There is a lot of talk, and we will
be sending a report to the Congress soon on what we call having
a responsive stockpile. To me, that involves a number of
different factors. It involves having the right facilities to
do the work, the right equipment to do the work, the right
people, the talent, the intellectual capital that we need to do
that work, and it requires the resources to pay for all three
of those things.
And I certainly appreciate the extraordinary support that
we have received from this committee as well as other
committees in the Congress for moving forward. As I indicated,
there appears to be broad bipartisan support across the aisles
and across both sides of Capitol Hill, and I would add, at both
ends of Independence or Pennsylvania Avenue, on the importance
of strategic deterrence for the security of our Nation and that
of our allies. So it is very, very important that we get this
right, and we are going to need your support to do that.
Mrs. Hartzler. Thank you. It is our number one priority.
That is right.
Mr. McConnell.
Mr. McConnell. First, the question I didn't answer before.
NNSA operates about 36 million square feet of real property.
Mrs. Hartzler. Okay.
Mr. McConnell. The one point I would like to add, which the
Administrator has already made, is we didn't get into this
situation overnight. This is the result of a fairly long period
of slow deterioration in some of these key facilities. We have
now gotten ourselves to the point where we have a significant
infrastructure challenge, and we won't be able to get out of it
overnight.
So we appreciate your continued support. And this is going
to require a collaborative, continuous effort for many, many
years at a fairly substantial funding level in order to be able
to address the several--$2 billion--more than $2 billion worth
of current infrastructure needs.
Mrs. Hartzler. Dr. McMillan.
Dr. McMillan. Chairwoman, I would like to quantify what my
colleagues have said. The National Research Council has looked
at sort of ratios of how much should be spent as a function of
overall replacement value. The number they have come up with is
of order 4 percent of the replacement value.
Let me just give you an idea of what that means. At Los
Alamos, our replacement value is something like $14 billion,
give or take a little bit. That would mean that we should be
spending something on the order of $550 million a year in
maintenance. We spend about $150 million.
So when we talk about not only the integrated issues of the
past, when we haven't had the resources to do that, and how do
we not get into this situation in the future, it is going to
require substantial resources to do that. This is not a trivial
amount of money.
Ms. Reichert. One thing that I want to reemphasize, like
Dr. McMillan, I have been in this enterprise for 30-plus years
and have dedicated my life to it. And often my family would
say, ``Why do you stick with it, especially if you describe the
infrastructure as we have it?'' And I say, ``Because we do very
important work.'' And that is truly what our folks at both of
our sites truly feel about their mission.
But as the leaders of our company especially, we have
imperatives, which are safety and security. Only when we are
safeguarding our folks and the materials to which we have been
entrusted can we truly deliver on our mission.
We are very encouraged by the interest we are seeing from
the committee, and many members have been to visit our sites
and truly understand the issues that we face. We look forward
to working with you on addressing these issues in our
infrastructure. We have got plenty of very important work ahead
of us. So we thank you for the opportunity.
Mrs. Hartzler. Thank you.
Mr. Sullivan.
Mr. Sullivan. Thank you, Chairwoman.
I served many years on U.S. Navy submarines, and a
submarine is designed with a hull that will take a certain
number of cycles of sea pressure as it submerges and comes back
up. And when that predetermined designed life is reached, the
ship is taken out of service, and there is very little that can
be done to make it extend any further, because the risk is too
great.
We don't have that in most NNSA facilities. I mean, the
facilities were built many years ago. They had a designed life,
you reached the designed life, and then for various reasons
most of them are extended beyond the designed life. And I just
wanted to reiterate that that brings a safety risk that I would
encourage all of us who are in positions of responsibility for
the United States Government to think about as to whether or
not that risk is something that deserves priority, as the
dollars, which are always scarce, are put to various needs.
Thank you.
Mrs. Hartzler. Thank you. Very, very important.
We appreciate everything that you do, and you really are
patriots. We appreciate what that means to our country. So
thank you for being here today.
This hearing is now adjourned.
[Whereupon, at 3:40 p.m., the subcommittee was adjourned.]

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A P P E N D I X

March 16, 2017

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PREPARED STATEMENTS SUBMITTED FOR THE RECORD

March 16, 2017

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DOCUMENTS SUBMITTED FOR THE RECORD

March 16, 2017

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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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WITNESS RESPONSES TO QUESTIONS ASKED DURING

THE HEARING

March 16, 2017

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RESPONSES TO QUESTIONS SUBMITTED BY MR. SUOZZI

General Klotz. Since the end of the Cold War, the nuclear security
enterprise has contracted significantly, including eliminating
unnecessary redundancies. For example, in 1994 the Department of Energy
ceased operations at the Rocky Flats Plant in Colorado, where plutonium
pits were produced. Similarly, operations at the Pinellas Plant in
Florida, where neutron generators were produced, ceased in 1997.
Operations were also ceased at the Mound Site in Ohio in 2003, where
beryllium initiators were manufactured and used in early atomic
weapons. More recently, NNSA moved operations of our Kansas City Plant
from the aging Bannister Federal Complex to the modern, efficient
Kansas City National Security Campus (KCNSC), reducing the KCNSC
footprint from 1.5 million gross square feet to 2.9 million gross
square feet.
Although the current enterprise is extensive and complex, each NNSA
site fills a unique role and responsibility. Therefore, further
consolidation of NNSA sites is not anticipated at this time. However,
NNSA is making investments to improve the efficiency and responsiveness
of our infrastructure. For example, NNSA is recapitalizing the
facilities that support strategic materials capabilities with projects
such as the Chemistry and Metallurgy Research Replacement project at
Los Alamos National Laboratory (LANL) and the Uranium Processing
Facility at the Y-12 National Security Complex. Both projects will move
operations from degraded facilities into newer buildings, increasing
the responsiveness of the enterprise.
Additionally, current and future support to readiness and
responsiveness is provided through investment in vital general purpose
infrastructure projects, such as the TA-3 Substation Replacement
project at LANL. This project, which began in FY 2016, will replace a
dilapidated and increasingly unreliable system with a modern, reliable,
and robust system that is easier and more cost effective to maintain
and operate. The new substation will reduce deferred and emergency
maintenance, improve safety, and upgrade and increase power import
capacity to support new programs. [See page 14.]
General Klotz. NNSA collaborates with other Federal agencies to
implement proven systems and tools to improve NNSA's infrastructure.
During the past several years, for example, NNSA has been collaborating
with the U.S. Army Corps of Engineers (USACE) to implement the BUILDER
Sustainment Management System, which has been recognized by the
National Academy of Sciences as a best-in-class practice for
infrastructure management. BUILDER is a web-based software tool to help
decide when, where, and how to best maintain, repair, and recapitalize
infrastructure. The tool uses preexisting engineering data to predict
facility and component conditions, prioritize maintenance work, and
support analysis of different spending scenarios. NNSA's full
implementation and sustainment of BUILDER is planned to be achieved in
2018.
Additionally, NNSA developed a new customized Mission Dependency
Index (MDI) based on models used by the Marine Corps, Coast Guard, and
Navy. NNSA's new MDI measures the ``consequence to mission'' by
combining the impact to mission if an asset were lost, the difficulty
to replace the asset, and the interdependency of assets to calculate a
score from one to 100. As a result, MDI provides much greater insights
into prioritization of risks, opportunities, and investment decisions
than prior analytical tools. [See page 14.]
General Klotz. NNSA always selects between leveraging public-
private partnership financing or line item construction based on what
is in the best interest of the government. NNSA uses OMB Circular A-11
and A-94 standards as guidance for such assessments, and when
appropriate consults with the General Services Administration (GSA). As
part of our improved project management initiatives, NNSA implements a
comprehensive Analysis of Alternatives process to help inform many of
these decisions.
For example, NNSA recently selected a third-party financing
solution to construct the Pantex Administrative Support Complex in
Amarillo, Texas, based on an assessment that such an approach would be
in the government's best interest. In contrast, NNSA determined that
line item construction was in the government's best interest for the
new Albuquerque Complex, the Federal administrative building in
Albuquerque, New Mexico. [See page 15.]
General Klotz. NNSA continues to study ways to improve the
efficiency and effectiveness of our operations. We will be working to
vet proposals within the new Administration to decide what specific
steps would be most helpful going forward. [See page 15.]

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QUESTIONS SUBMITTED BY MEMBERS POST HEARING

March 16, 2017

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QUESTIONS SUBMITTED BY MRS. HARTZLER

Mrs. Hartzler. General Klotz, what are the consequences to the U.S.
government and taxpayers if we do not close the deal on the Bannister
Road Complex in Kansas City soon? What if we do not get this $200
million appropriated here in FY2017?
General Klotz. NNSA requires $200 million in FY 2017 to transfer
ownership of the Kansas City Bannister Federal Complex--a high-risk,
excess facility formerly home to the Kansas City Plant--to a private
developer for demolition, remediation, and redevelopment. If the FY
2017 transfer window is missed, the private developer may walk away
from the project, preventing NNSA from transferring the property. In
the event the transfer is missed, NNSA will be required to carry the
Bannister Federal Complex until disposition, which is estimated to cost
between $8 million-$10 million per year. Additionally, NNSA may need to
invest in improvements to keep the facility in stable condition until
eventual disposition. The extent of these facility stabilization
investments will vary significantly depending on the long-term
disposition plan (e.g., disposition in several years versus 10 years or
more). Additionally, the full extent of future funding requirements
cannot be estimated due to unforeseeable emergent failures, such as a
recent water main break in February 2017. Ultimately, if the Federal
Government is required to complete the demolition and remediation, the
cost is expected to be approximately $900 million.
Mrs. Hartzler. General Klotz, you've said several times to this
committee and the public: ``I can think of no greater threat to the
nuclear security enterprise than the state of NNSA's infrastructure.''
This is a tremendously important statement and one that Congress and
the American people need to internalize. Would you please elaborate on
why you say this? And what you believe must be done?
General Klotz. Infrastructure plays a vital, cross-cutting role in
enabling NNSA's multiple national security missions, from ensuring the
reliability of the U.S. nuclear deterrent to reducing the threat of
nuclear proliferation and nuclear terrorism. Much of our infrastructure
dates to the Eisenhower Administration, and in some cases the Manhattan
Project era. Failure to revitalize this antiquated infrastructure
presents significant risks to our ability to deliver missions
effectively and efficiently, expand our capabilities and production
capacity, and attract and retain new employees. Furthermore, without
adequate investments, NNSA's infrastructure can pose safety risks to
our workers, the public, and the environment. The breadth of these
impacts informs my assessment that there is no greater risk to NNSA's
missions than the current state of our infrastructure. Yet, although it
has presented significant challenges, NNSA infrastructure has
successfully enabled execution of the mission to date, and we are
taking steps to address known challenges.
The establishment of the Office of Safety, Infrastructure, and
Operations in January 2015 was the first action of many to improving
the state of NNSA's infrastructure. This new organization enables NNSA
to focus on identifying infrastructure gaps and risk, responding to
emergent needs as they arise, and improving NNSA infrastructure over
the long term. Within the Office of Safety, Infrastructure, and
Operations, NNSA has two programs that target investments to improve
the condition of infrastructure and reduce programmatic and safety
risk:
Maintenance and Repair of Facilities; and
Recapitalization: Infrastructure and Safety.
NNSA began requesting and receiving additional funding for
maintenance and recapitalization activities starting in FY 2015.
Sustained, predictable, and increased investments in these two programs
along with strategic investments for new construction are needed to
improve the condition of NNSA's infrastructure.
Additionally, the Office of Defense Programs also employs a smaller
recapitalization program, Capability Based Investments (CBI), focusing
on managing risks in existing capabilities by prioritizing investments
to upgrade and improve the reliability, efficiency, and capability of
programmatic equipment and associated infrastructure.
Mrs. Hartzler. One of the many unique elements necessary for the
proper maintenance and operation of the nuclear stockpile is beryllium.
This strategic and critical material, along with its cousin, beryllium
oxide, cannot be replaced without significant risk to our nuclear
deterrent. Is NNSA, and especially Los Alamos National Laboratory,
exploring ways to ensure that its requirements for beryllium and
beryllium oxide will be met in a cost-effective and efficient manner in
the coming decades?
Dr. McMillan. Beryllium and beryllium oxide are critical materials
for the stockpile. Replacement with acceptable alternative materials
would pose a significant technical challenge and potential risk to as-
designed and tested performance. Ensuring the necessary infrastructure
for the manufacture and supply of beryllium and beryllium oxide is
vitally important to stockpile stewardship. The Laboratory has
maintained beryllium fabrication capabilities, but relies on industry
for supply. The National Nuclear Security Administration (NNSA) has
assigned staff to oversee beryllium supply issues. The Laboratory has
also conducted preliminary studies to help identify cost-effective
technical solutions and produced a strategy document currently under
review by NNSA. An essential part of that strategy is to examine
potential long-term and cost-effective partnerships with industry to
provide additional capabilities for the nation.
Mrs. Hartzler. Dr. McMillan, would you please elaborate on your
suggestions for new authorities, streamlined processes, or other
actions the government could take to more efficiently and speedily
address NNSA's massive infrastructure problems? Are there particular
statutes, regulations, policies, or processes that should be revisited
and streamlined (or eliminated)?
Dr. McMillan. Broadly speaking, there are three steps in the
infrastructure process where streamlined approaches would be of help:
Obtaining funding
Planning and obtaining approvals on the work and
Construction. The table below summarizes a recommendation
for the funding stage for each major level of project.

----------------------------------------------------------------------------------------------------------------
Current Funding Relative Utility towards
Limits Funding Type infrastructure Recommendation
----------------------------------------------------------------------------------------------------------------
Up to $10M General Plant Project Most useful method for small Consider increasing limit to $30M
(GPP) projects and index to inflation
----------------------------------------------------------------------------------------------------------------
>$10 M Major Item of Equipment Most useful for replacing process Enable process tailoring by
(MIE) equipment and facility support acquisition official to
systems streamline or exempt like for
like replacements of equipment
from 413 management processes.
----------------------------------------------------------------------------------------------------------------
>$10 M Line Items Used only when there is no other For Line Items below $50M,
alternative eliminate Analysis of
Alternatives, Independent Cost
Evaluations, and require NNSA to
make Critical Decisions within
30 days from Submittal Dates.
----------------------------------------------------------------------------------------------------------------

Mrs. Hartzler. Ms. Reichert, would you please elaborate on your
suggestions for new authorities, streamlined processes, or other
actions the government could take to more efficiently and speedily
address NNSA's massive infrastructure problems? Are there particular
statutes, regulations, policies, or processes that should be revisited
and streamlined (or eliminated)?
Ms. Reichert. As I testified, it would significantly increase
efficiency and safety if operating lease language in OMS Circular A-11,
Appendix B was relaxed to reinstate a viable lease-to-own option and
allow third-party financed projects like the Pantex Administrative
Support Complex to be scored by OMS as an operating lease. It would
also be beneficial if the Congressional cap on NNSA line item projects
was increased from $10 million to $25 million, and if regulations were
changed to allow NNSA to move $10 million across control points per
site with notification (up from $5 million).
In addition to these provisions, there are several other actions
that would help address infrastructure issues at the sites. These
include:
Permitting NNSA to consolidate Consolidated Nuclear
Security, LLC, (CNS) cost savings from various control accounts into
infrastructure improvement initiatives under $25 million with
notification to Congress.
Altering the 1931 Davis-Bacon Act with language that
would grant flexibility in making wage determinations in order to allow
the use of the most appropriate labor resource and the use of
prevailing rates. Currently, the act applies to ``contractors and
subcontractors performing on federally funded or assisted contracts in
excess of $2,000 for the construction, alteration, or repair (including
painting and decorating) of public buildings or public works.'' At a
minimum, the act should be updated to reflect a meaningful financial
threshold to trigger action. A sum of $2,000 in 1931, when the bill was
passed, is equivalent to $125 in 2017.
Reducing the number of control points for stockpile
systems to allow more flexibility to accommodate changing requirements
and increased efficiency.
Repealing 40 CFR 761 and include Polychlorinated
Biphenyls (PCBs) under Resource Conservation and Recovery Act (RCRA)
rules for management of hazardous wastes, eliminating separate
management and administrative requirements for PCBs and hazardous
wastes.
Amending Clean Water Act Section 404 and related
regulations to limit federal agency jurisdiction to high quality
wetlands larger than one acre, an increase from the current requirement
for permits on wetland disturbance greater than one-tenth of an acre.
Removing emergency stationary engines from 40 CFR Part 60
Subpart 1111 and 40 CFR Part 63 Subpart ZZZZ from air permitting rules
because of their limited use and limited amount of pollutants emitted
to the atmosphere.
Eliminating application of the RCRA ``mixture'' and
``derived from'' rules under 40 CFR 261.3 to the management of
environmental media (soil, water) and treatment residues that otherwise
might contain RCRA ``listed'' wastes. As currently applied, these rules
cause soil and groundwater that contain any detectable quantity of a
``listed'' waste to be managed as a hazardous waste.
Altering the McKinney-Vento Act to allow the United
States Department of Housing and Urban Development (HUD) assessments
for homeless occupancy of buildings scheduled for demolition to occur
on a site-by-site basis rather than building-by-building, eliminating
the need for hundreds of redundant reviews.
Mrs. Hartzler. Ms. Reichert, would you please provide information
to us regarding successful public-private partnerships and third-party
financing arrangements that have been used at Pantex and Y-12? What
were the cost and benefits to the U.S. Government for the Jack Case
Center, the Pantex Administrative Support Complex, and other examples?
Ms. Reichert. The Jack Case/New Hope Center project at the Y-12
National Security Complex was a third party financed project that
provided 550,000 square feet of new administrative/office space to
replace aged, deteriorated 1940s-era facilities. Y-12 staff moved into
the new facilities in 2007. The Administrative Support Complex project
at the Pantex plant provides 343,000 square feet of administrative/
office space and will be accomplished by the same third party financing
process, replacing aged, deteriorating facilities. It will be ready for
occupancy in the spring of 2018.
The primary advantages of this third party financing approach are:
1) a shorter construction schedule (by two to three years); 2) a
reduced construction cost (by about 25 percent); 3) the flexibility to
vacate the lease with a one-year notification; and 4) allowing federal
line item funding to be focused on recapitalizing mission-critical
processes and facilities. Through this approach, the facilities can be
constructed faster and more economically by using commercial standards
and construction practices while not being constrained by a staged
decision-making process and federal budget cycles where budget
appropriations are received annually.
The modern facilities allow increased operational efficiency by co-
locating technical and administrative staff, as well as helping to
attract, retain, and motivate workers. In both the Y-12 and Pantex
projects, NNSA evaluated and approved mission need and performed a
thorough analysis of alternatives to select the best acquisition
option. This was followed by developer solicitation, proposal
evaluation, and developer selection. In both cases, the developer
performed 60 percent design and developed a guaranteed maximum price to
allow project review and approval.

----------------------------------------------------------------------------------------------------------------

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Financial Benefits Reductions to Maintenance costs: Enable banking of square footage,
interchangeability between banked square footage space types, and exemptions for
legitimate construction needs over the baseline would alter the incentive structure
away from maintaining ageing and excess facilities until they are aligned with
construction efforts.
----------------------------------------------------------------------------------------------------------------
Technical Benefits Integration of longer-term solutions to space reduction allows mission needs to
be met while optimizing utilization of space.
----------------------------------------------------------------------------------------------------------------
Other Benefits Acceleration of demolition Efforts: Allowing for greater site flexibility would
allow for better incentive structures to encourage contractors to aggressively pursue
demolition without having to absorb mission risk for not having the square footage to
construct replacements.
----------------------------------------------------------------------------------------------------------------

Mrs. Hartzler. Ms. Reichert, please describe the Material Staging
Facility project at Pantex. What are the expected costs and benefits of
this project? What cost savings/avoidances are likely to be realized by
eliminating the need for recapitalizing Zone 4 at Pantex and shrinking
the size of the protected area? How would security and safety be
improved by eliminating the need for intra-site transportation of
weapons and components? What is the status of this project and when
will be it be initiated, constructed, and opened?
Ms. Reichert. The Material Staging Facility has received mission
need approval (Critical Decision 0) from NNSA and is beginning the
requirements validation and analysis of alternatives phase. At Critical
Decision 0 submittal to NNSA, the preliminary estimate for the facility
was $179M to $714M with a point estimate of $357M (range of -50 percent
to +100 percent of point estimate). This estimate is based on very
preliminary information; as the project proceeds, existing designs for
similar Air Force base facilities will be examined for direct
applicability and potential cost savings.
Cost savings projected over a 50-year period approach $2 billion.
Primarily, we would avoid having to replace deteriorating Pantex Zone 4
facilities (including the development of additional storage space as
the current facilities approach maximum capacity) and the Zone 4
Perimeter Intrusion Detection & Assessment System (PIDAS), which is
estimated to cost between $81-322 million. It would also avoid costly
material transport between separated Protected Areas and reduce
operating, maintenance, and protection costs. Security would be greatly
improved by having material storage and staging directly coupled to the
assembly/disassembly operations at the Pantex Plant rather than having
to transport material several miles. Assuming the project can complete
the analysis of alternatives and receive FY 2019 capital funding, the
earliest facility completion would be FY 2023.
______

QUESTIONS SUBMITTED BY MR. ROGERS
Mr. Rogers. Mr. McConnell, would a FIRP-like program, with special
authorities to quickly pursue key projects, provide added value to
NNSA's infrastructure recapitalization efforts? What special
authorities could be included in such a temporary program?
Mr. McConnell. During the last several years, NNSA restructured our
budget to provide clarity and focus on infrastructure investments
consistent with what was achieved under the Facilities and
Infrastructure Recapitalization Program (FIRP). The two FIRP-like
programs that address deferred maintenance today are:
Maintenance and Repair of Facilities; and
Recapitalization: Infrastructure and Safety.
Sustained, predictable, and increased investments in these two
programs, rather than the creation of a separate program, are needed to
improve the condition of NNSA's infrastructure and reduce deferred
maintenance.
The Administration will consider changes to existing authorities
that could help NNSA implement infrastructure improvements faster and
more efficiently to eliminate deferred maintenance and arrest the
decline of infrastructure. We look forward to engaging Congress when
and if specific legislative changes are sought by the Administration.
Mr. Rogers. Mr. McConnell, does NNSA have metrics or ways to
measure the inefficiencies or costs that are being borne because of the
existence of very old buildings and a very large backlog of deferred
maintenance? What are those costs, as a rough order of magnitude
estimate?
Mr. McConnell. NNSA is investigating new measures to give greater
insight into the costs and inefficiencies caused by the declining state
of infrastructure. A clear indicator of costs borne from old and
declining facilities is the annual carrying cost of excess facilities.
NNSA spends approximately $50 million annually for excess facility
maintenance, surveillance, and stabilization to keep the facilities in
safe and stable condition until eventual disposition.
Mr. Rogers. Dr. McMillan, how would you improve DOE and NNSA's
approach to managing risk? Are mission risks being appropriately
weighed and balanced against operational risks and other types of risk?
Is there an appropriate process for elevating such risks to senior
levels and getting timely decisions? How should this be structured?
Dr. McMillan. There are many forms of risk present in the NNSA
portfolio. Two areas of specific concern are mission/program risk and
operational risk. Over the past twenty years, the NNSA has developed a
robust, but cumbersome and expensive system for managing operational
risk, which has had some positive effect on the rate of NNSA safety
incidents. This system can also limit productivity in the constant
pursuit of engineered facilities regarded as ``perfect''. An
overemphasis on operational risk can actually increase mission risk.
The process to improve infrastructure is a good example of unbalanced
risk. Regulatory requirements and long government deliberations for new
facilities increase costs and delay the acquisition process. As a
result, fewer facilities are built and those in construction take too
long to complete. The net result is the prolonged use of older, aging
facilities and increased safety and mission risk from extended use. For
example, NNSA and its predecessor organizations have been actively
trying to replace the capabilities from the Chemistry and Metallurgy
Research (CMR) facility since 1984, a process that will now likely
extend to near 40 years. There are limited incentives in government to
make timely and balanced risk decisions. Often, as a result of multiple
layers of reviews, the most conservative accident scenarios and
solutions are chosen that lead to increased project costs and delays.
Elevating risk decisions can sometimes lead to multiple layered reviews
adding to the time to make decisions. Because NNSA Defense Programs is
responsible for the budget funding these projects, we suggest that the
responsibility for balancing program, operational and project risk
reside there. There is a desire on the part of Congressional
appropriators to have projects that never exceed budget even though the
project costs are often forecasted years earlier. This creates pressure
on NNSA to always request more funding than is needed to ensure that
projects never overrun. This conservative behavior leads sometimes to
fewer projects being requested than are needed because not enough
funding is available to guarantee all the project's success.
Mr. Rogers. Dr. McMillan, how would you suggest enforcing a
lockdown of safety requirements during development and design of a
large construction project? At what phase/stage of the project should
all requirements be locked? What level of senior official approval
should be required after that stage to make changes to such
requirements? Can you provide an specific example where changing
requirements late in a project has led to increased costs?
Dr. McMillan. The philosophy of safety through integration in
design is being carried to extremes. The interpretation of how
requirements are applied sometimes changes during the development of
the safety basis documents. Improved consistency in risk acceptance
across government could be achieved by revising DOE Standards and
Orders to reflect industry standards wherever possible and to seek
consistency with other non-DOE regulatory, risk acceptance requirements
(e.g., Nuclear Regulatory Commission (NRC), Occupational Safety and
Health Act (OSHA) to reduce costs and provide adequate risk reduction.
a) How would you suggest enforcing a lockdown of safety
requirements during development and design of a large construction
project?
Lockdown of reasonably conservative safety requirements early in
projects can improve the likelihood of project success. Imposing
additional safety requirements at later stages of the project leads to
increased costs and extended schedules. After CD-1, given that our
current process is conservative by design, any additional requirements
should be accompanied by a cost-benefit analysis and a proposal for a
cost-neutral impact to the project. If the additional requirement is
not cost neutral, then it should not be implemented unless it addresses
a previously unidentified gap that must be closed. The project manager
and program owner must be empowered to examine these requirements as
they are gathered and compile a reasonable list of applicable
requirements.
b) At what phase/stage of the project should all requirements be
locked?
The current practice of locking in controls at the Critical
Decisions stage is appropriate. Design requirements, including code-of-
record (COR), are locked down at the declaration of conceptual design
(CD-1). Credited safety class and safety significant Systems,
Structures and Components (SSC) are supposed to be locked down with
approval of a Preliminary Documented Safety Analysis (PDSA) (CD-2). As
previously stated above, the lockdown of safety requirements should be
viewed as conservative at these stages and the expectation should be
made clear that the final set of controls identified in the Documented
Safety Analysis (DSA) (CD-4) can be reduced from the controls in the
PDSA when assumptions and uncertainties about facility operations are
better known. Reliance on appropriate Specific Administrative Controls
(SACs) and Initial Conditions in the DSA should also be expected as an
appropriate means to augment expensive engineered controls. Relying
only on engineered controls may not be affordable.
c) What level of senior official approval should be required after
that stage to make changes to such requirements?
As discussed earlier, any increased changes to safety requirements
or credited controls should be subjected to a cost benefit analysis and
not implemented if they increase total project costs and provide
marginal improvements in safety. Any increase must be elevated to the
National Nuclear Security Administration (NNSA) Administrator for
approval and resolved quickly (time is money). To support these
decisions, reductions in mandated Code of Record requirements may
require an exemption request, which should be approved by the local
safety basis approval authority. Currently all exemption requests must
be approved by U.S. Department of Energy/Headquarters (DOE/HQs) and
these deliberations can take months to resolve, not including the
desire by the Defense Nuclear Facilities Safety Board (DNFSB) to also
review and weigh in all of these matters.
d) Can you provide a specific example where changing requirements
late in a project has led to increased costs?
The combination of the following LANL specific examples has
resulted in excessive additional costs during project design,
construction, and operations for engineered controls, without
consideration of costs against the benefit of risk reduction. TRU Waste
Facility (TWF) Fire Suppression System (FSS) and Use of Forklifts
Significant debate between NNSA and Los Alamos occurred to resolve a
disagreement regarding need for credited building fire suppression
systems (FSS). NNSA directed that six months after startup the
Transuranic Waste Facility (TWF) FSS be upgraded to Safety Significant
(SS). One reason is to control battery failure-caused forklift fires in
lieu of using administrative controls on combustible loading (removing
the hazard; a preferred strategy), maintenance on a forklift
(preventive), and a fire watch during forklift waste handling within
the buildings. Electric forklifts were already planned instead of
hydrocarbon-powered units to improve safety during the earlier
conceptual design phase of the project. Ultimately, the Laboratory will
be required by NNSA to credit the FSS for this facility, regardless of
the work to remove ignition sources and combustibles from the facility.
This direction will increase operational costs for marginal safety
improvement and the debate added months to the schedule. TRU Waste
Facility (TWF) Sealed Sources, Government Furnished Equipment (GFE),
and Safety Controls In this case, additional safety controls were
required for Government Furnished Equipment (GFE) of a High-Energy
Neutron Counter (HENC) trailer for an operational fire hazard. The
trailer will contain the GFE provided DOE EM Central Characterization
Program (CCP) HENC. ANSI-certified calibration sources (designed per
DOE CCP specifications) required additional controls, in this case a
Safety Significant fire rated safe as a control. This is inconsistent
with other sites in the DOE complex using the same equipment. This
example highlights inconsistent application of DOE safety requirements.
Chemical Hazards Analysis for the Hazard Category 3 Transuranic Liquid
Waste (TLW) Facility A chemical hazard (Sodium Hydroxide) at TLW that
is commonly used in industrial applications, such as making paper and
soap, is being required to go beyond standard industry practice with
respect to controls. In this case, a splash shield around piping and
equipment is being driven to increased nuclear safety requirements when
industry practice and DOE guides don't require it. A sodium hydroxide
solution leak and spray that could burn operators is beyond unlikely
since we can administratively bar them from the work area during
solution transfers. This ultra-conservative direction and
interpretation of DOE regulations is leading to overly conservative
controls for chemical hazards in Los Alamos National Laboratory (LANL)
nuclear facilities.
Mr. Rogers. Dr. McMillan, you specifically mention reviewing
several OMB and DOE rules and policies on disposing of unneeded
facilities. What would you suggest be changed in these policies? What
are the impacts on your organization and the enterprise from the
existing policies?
Dr. McMillan. Los Alamos has annually worked to manage the site
footprint, resulting in a reduction of nearly 1.6 million square feet
of facility space over the last 10 years. We used to be able to take
down facilities and ``bank'' the space reduction to offset needed
building to prove that we are actively managing the total Laboratory
square footage. We had banked a lot of space reduction credit that was
erased in 2015 by new OMB rules. So now we must plan to reduce space in
the same fiscal year as we build new and receive no credit for our
demonstrated history of good stewardship. Clearly, this policy is
cumbersome and unlikely to achieve the intended benefit. We should get
the credit from previous space reduction so we can continue to provide
the enterprise the agile facilities necessary to respond appropriately
to changing mission demands. Proposed Action and Justification We
propose that OMB modify the Management Procedures Memorandum 2015-01 to
address deficiencies in the current guidance that unintentionally
imposes costs associated with delayed demolition and slows the
effective reduction of the Federal real property footprint at some
sites. To enable more effective Footprint reduction and impose fewer
impacts on new construction planning, we propose the following actions:
Modify Memorandum 2015-01 to include language authorizing
Federal sites to re-establish their previous Square Footage Bank that
includes all offsets accrued through disposition since 2002 and from
which square footage can be deducted when mission needs require new
construction. Because the relationship between demolition and
construction is often sequential, it is necessary to first demolish
before new construction can be funded in the out years. Prior to the
Reduce the Footprint initiative, NNSA sites were permitted to maintain
a Square Footage Bank of demolished assets from which deductions could
be made when missions require additional space. This process led to
highly aggressive demolition efforts to reduce the overall maintenance
burden and free up funding for construction of modern and efficient
facilities. In order to return to the efficiency and flexibility of
this system we recommend the addition of a section authorizing sites to
utilize the Square Footage Banks they have established since 2002 to
``right size'' the federal footprint.
Modify Memorandum 2015-01 to specify that Office and
Warehouse spaces are convertible and the demolition of one space type
can provide offsets for the construction of the other space type. In
order to provide maximum flexibility to the guidance that office and
warehouse space be tracked and reduced, we recommend that OMB add
language to enable the conversion between the two space types.
Providing clarification to enable the demolition of office space to
offset new construction of a warehouse and vice versa would improve
flexibility in meeting changing mission requirements.
Modify Memorandum 2015-01 to include guidance on how
agencies may obtain an exemption from the requirements of this
Memorandum. In the event that agencies and their sites experience
growth in mission and have a legitimate need for increasing the square
footage above baseline, there is no formal mechanism for obtaining an
exemption. We propose that a section be added to Memorandum 2015-01
that provides guidance for how agencies and sites can obtain exceptions
to the rules when mission requires or when Congress authorizes Capital
construction in excess of the baseline limits.
Mr. Rogers. Dr. McMillan, how could we go about ensuring analyses
of alternatives are completed in a timely fashion and decisions are
made shortly thereafter?
Dr. McMillan. A formal Analysis of Alternatives (AOA) should not be
required for all projects. Applying requirements for AOAs and other
reviews as a one size fits all approach may lead to increased costs and
delays to achieve new facilities and capabilities. An AOA is too
cumbersome for projects where the solution is obvious (like replacing
the 40-year-old plutonium facility fire alarm panels), yet appropriate
for larger projects such as plutonium facility modular additions. Also,
additional scheduling delays are inevitable due to the sheer volume of
projects currently requiring AOA review. The same is true for other
reviews required by DOE O 413.3B, including Independent Project Reviews
and Independent Cost Estimates. Small projects should have a tailored
process that balances increased costs and delays against unquantifiable
risk. Full compliance with DOE O 413.3b should be returned to the
previous limit of projects costing more than $50M and above, instead of
the current $10M and above. Project Management Executives (PME) should
be allowed greater authority over scope definition and approvals. PMEs
have the ultimate authority to make decisions and resolve conflicts. We
recommend the following:
Eliminate requirement for NNSA cost evaluation
organization to concur with AOAs scope or results, since there is no
benefit to this requirement.
Clearly articulate the program requirements for the AOA
at the initiation of the process.
While the AOA process should be independent, ensure each
team includes members who understand the labs, how the project fits
within the mission, and is able to work with lab representatives to
gather additional data.
Ensure that the AOA team is staffed with members
possessing necessary expertise.
The AOA team should stay focused on what is the right
choice for the nation, between well-defined alternatives, for various
alternatives with different scopes, schedules and budgets--and the
extent to which they meet the requirements.
Ensure that the AOA team clearly understands the scope
and focus of their tasking.
Mr. Rogers. Dr. McMillan, does the condition of the infrastructure
at your sites affect your ability to attract, retain, and motivate
workers? Do the substandard conditions harm morale?
Dr. McMillan. The Laboratory works hard to attract and retain the
best and brightest workforce possible; we are mindful that we are
recruiting in a very challenging environment, competing against other
laboratories, the tech giants in Silicon Valley and elsewhere. We
typically succeed when we can demonstrate that recruits will be able to
work on complex scientific and technical challenges in the service of
national missions, and will have access to state-of-the-art
experimental and supercomputing tools.
Workers can become demotivated quickly, however, as a consequence
of residing in spaces that are in poor condition, buildings with
systems that break down frequently and areas where repairs are
difficult or delayed.
When I testified before the Committee, I talked about the need to
invest in the people who are the stewards of the stockpile who must not
be overlooked when discussing infrastructure investment; in fact, the
two must go hand-in-hand. The ability to attract, educate, and retain
the best-and-brightest minds who will be our next generation of weapons
scientists and engineers are integral to, and dependent upon, such
investment. Every year we make tough calls when setting priorities for
infrastructure and maintenance spending. Mission priorities rank
highest, with roads, electrical infrastructure, and offices as lower
priorities. As a result, we currently have some employees in
``temporary'' trailers that have been in use for more than 30 years,
and we regularly have to manage rodent issues, leaking roofs, and other
effects of aging.
Such an environment is not conducive to hiring the nation's best-
and-brightest workforce, and certainly doesn't provide our laboratories
with a competitive edge in recruitment and retention when contemporary
private-sector technology companies offer attractive and inviting
campuses. Investments would allow us to demolish old structures and
move the workforce of the future into offices and laboratories that are
appropriate for the mission. Staff morale is also impacted by the pace
infrastructure upgrades can be made. Los Alamos works to efficiently
address infrastructure issues. At the same time, the scale of the
Laboratory and the age of our facilities make it impossible to get to
everything at the pace that we would prefer.
Mr. Rogers. Ms. Reichert, does the condition of the infrastructure
at your sites affect your ability to attract, retain, and motivate
workers? Do the substandard conditions harm morale?
Ms. Reichert. Attracting and retaining the next generation of great
workers becomes more challenging in facilities that are in a
deteriorated state and morale is impacted by the conditions of our
facilities. As I discussed during the hearing, our workers experience
the infrastructure challenges every day. They remain vigilant in
performing their jobs to the highest standards while often working in
facilities that are less than ideal, and are the subject of frequent
repairs and outages. Furthermore, many of our workers have had life
long careers at the sites and for them, keeping the sites going is
truly a service to the nation with a knowledge of the past difference
these sites have made. But they deserve better.
Projects like the Jack Case and New Hope Centers at Y-12, the
Highly Enriched Uranium Materials Facility at Y-12, and the
Administrative Support Complex and the High Explosives Pressing
Facility at Pantex go a long way toward addressing morale issues, but
it is no doubt a challenge to recruit top talent while competing
against industries that can provide better facilities with modern
safety, security, and work environment amenities. The excitement at the
groundbreaking for the Pantex Administrative Support Complex in August
was palpable, and it is very apparent that employees are excited to
work in a state of-the-art facility that is commensurate with the
importance of their jobs to national security.
Mr. Rogers. Can you elaborate on the process used to pick a
developer for the Pantex Administrative Support Complex?
Ms. Reichert. Consolidated Nuclear Security went through a rigorous
process to select a developer for the Pantex Administrative Support
Complex. That process began in April 2015 after CNS received approval
from the National Nuclear Security Administration to pursue a leasing
arrangement. On April13, 2015, CNS published a Sources Sought Notice on
FedBizOpps (fbo.gov) to seek parties interested in developing/leasing
an administrative complex.
A meeting was held at Pantex on May 19, 2015, to provide
information to and answer questions from companies that responded to
the Sources Sought Notice. At that time, proposals were requested from
interested developers. Four responsive proposals for the new
Administrative Support Complex were received. CNS established a
selection team and selection criteria and hosted four proposal teams
for oral presentations on June 2-3, 2015. The team selected Lawler-
Wood, LLC, to further develop an Administrative Support Complex leasing
agreement.
Lawler-Wood's proposal called for construction on land owned by
Texas Tech University, funding through a bond offering, and partnership
with a local economic development agency to establish a special purpose
entity to own the facility. The approach was identical to the model
that was used to develop and construct the Jack Case Center and New
Hope Center at the Y-12 National Security Complex.
After CNS entered into a pre-construction agreement with Lawler-
Wood, Lawler-Wood entered into an agreement with the Panhandle Economic
Development Corporation (PEDC) to issue bonds to pay for the facility
and to establish a special purpose entity to own the facility and repay
the bonds. Following NNSA approval for the Administrative Support
Complex project, Pantex Administrative Support Complex, LLC, (the PEDC
special purpose entity) was established and a final lease agreement was
signed by Pantex Administrative Support Complex, LLC, and CNS
establishing a five-year lease agreement with two five year renewal
options. The purchase of the land from Texas Tech University was also
completed at that time and Pantex Administrative Support Complex, LLC,
entered into a development agreement with Lawler-Wood Pantex, LLC, to
design, build, and manage the Administrative Support Complex.
______

QUESTIONS SUBMITTED BY MR. DESJARLAIS
Mr. DesJarlais. Could you please provide a list of ``single-point
failures'' within the NNSA enterprise. Facilities that, if they go
down, we lose a critical capability that endangers the ability of the
entire enterprise to sustain the stockpile.
General Klotz and Mr. McConnell. Over the last several decades,
NNSA has taken action to eliminate unnecessary redundancies across the
NNSA enterprise. As a result, most facilities under NNSA's purview are
considered to be single points of failure. Additionally, most pieces of
programmatic equipment and facility systems (such as fire suppression,
heating and cooling, and dehumidification) housed in these facilities
are also single points of failure.
Mr. DesJarlais. You stated that you are working with the NNSA on a
lithium strategy to ensure we have materials in future for weapons
stockpile. Could you elaborate on this strategy? Are similar strategies
being developed for the other key areas of concern (uranium, high
explosives at Pantex)?
Ms. Reichert. All three of our main capabilities--uranium and
lithium at the Y-12 National Security Complex and high explosives at
Pantex--are essential to the National Nuclear Security Administration's
weapons program and are priorities for modernization. Lithium
capabilities are housed at Y-12 in Building 9204-2, an original
Manhattan Project facility built in 1943. As I testified, the facility
infrastructure and process equipment is deteriorating rapidly making it
costly to maintain safe and reliable operations while production is
ongoing and requirements are increasing. Currently, several initiatives
are under way to ensure we maintain our lithium capabilities. Planning
is ongoing for a new Lithium Production Capability, but as part of a
Lithium Bridging Strategy, we are also increasing useable inventory,
repairing degrading infrastructure, and deploying new technologies.
Similar strategies have been developed for uranium at Y-12 and high
explosives at Pantex. The Uranium Processing Facility is key to the
uranium strategy. When it's completed, it will be a first-of-its-kind
complex for enriched uranium operations in support of Y-12 missions,
replacing a 70-year-old facility, the 9212 complex. At the same time,
other facilities that support uranium work at Y-12, Buildings 9204- 2E
and 9215, are undergoing Extended life Programs that will help sustain
operations there in the coming decades. A three-prong approach to the
facilities is being taken that includes reducing material-at-risk so
the consequences of an accident are significantly reduced, replacing or
refurbishing key facility infrastructure and process equipment, and
addressing and updating regulatory requirements.
At the Pantex Plant, we've also been moving to modernize our high
explosives infrastructure. In February, we completed construction on
the 45,000-square-foot High Explosive Pressing Facility, which will
provide a new high explosive main-charge pressing facility that can
meet the needs of changing weapons complexity, projected workload, and
Life Extension Program activities. The facility consolidates high
explosive main-charge pressing operations from six outdated buildings
into a single, state-of-the-art facility while providing increased
levels of protection for workers. Planning is also under way for a new
High Explosive Science and Engineering facility that will consolidate
science and engineering offices and high explosive laboratories into
two new buildings, including a 27,420-square-foot High Explosives
Laboratory, a 38,487-square-foot Technology Development & Deployment
Laboratory and a high explosive staging area.

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