    Nuclear Security: NNSA Needs to Better Manage Its Safeguards and
    Security Program (30-MAY-03, GAO-03-471).

    The attacks of September 11, 2001, intensified long-standing
    concerns about the adequacy of safeguards and security at four
    nuclear weapons production sites and three national laboratories
    that design nuclear weapons--most of these facilities store
    plutonium and uranium in a variety of forms. These facilities can
    become targets for such actions as sabotage or theft. The
    Department of Energy (DOE) and the National Nuclear Security
    Administration (NNSA)--a separately organized agency within
    DOE--are responsible for these facilities. NNSA plays a crucial
    role in managing the contractors operating many of these
    facilities to ensure that security activities are effective and
    in line with departmental policy. GAO reviewed how effectively
    NNSA manages its safeguards and security program, including how
    it oversees contractor security operations.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-03-471
        ACCNO:   A06708
      TITLE:     Nuclear Security: NNSA Needs to Better Manage Its
    Safeguards and Security Program
         DATE:   05/30/2003
      SUBJECT:   Contract oversight
    	     Emergency preparedness
    	     Internal controls
    	     National preparedness
    	     Nuclear facility security
    	     Nuclear weapons plant security
    	     Counterterrorism
    	     Contractors
    	     DOE Safeguards and Security Information
    	     Management System

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    GAO-03-471

    Report to the Chairman, Subcommittee on National Security, Emerging
    Threats, and International Relations, Committee on Government Reform,
    House of Representatives

    United States General Accounting Office

    GAO

    May 2003 NUCLEAR SECURITY NNSA Needs to Better Manage Its Safeguards and
    Security Program

    GAO- 03- 471

    NNSA has not been fully effective in managing its safeguards and security
    program in four key areas. As a result, NNSA cannot be assured that its
    contractors are working to maximum advantage to protect critical
    facilities and material from individuals seeking to inflict damage. The
    four areas are as follows:

    Defining clear roles and responsibilities. NNSA still has not fully
    defined clear roles and responsibilities for its headquarters and site
    operations. Assessing sites* security activities. Without a stable and
    effective

    management structure and with ongoing confusion about roles and
    responsibilities, inconsistencies have emerged among NNSA sites on how
    they assess contractors* security activities. Consequently, NNSA cannot be
    assured that all facilities are subject to the

    comprehensive annual assessments that DOE policy requires. Overseeing
    contractors* corrective actions. To compound the problems in conducting
    security assessments, NNSA contractors do not consistently conduct
    required analyses in preparing corrective action plans. As a result,
    potential opportunities to improve physical security at the sites are not
    maximized because corrective actions are developed without fully
    considering the problems* root causes,

    risks posed, or cost versus the benefit of taking corrective action.
    Allocating staff. NNSA has shortfalls at its site offices in the total
    number of staff and in expertise, which could make it more difficult for
    site offices to effectively oversee security activities. Security Force in
    Action

    The attacks of September 11, 2001, intensified long- standing concerns
    about the adequacy of safeguards and security at four nuclear weapons
    production sites and three national laboratories that design nuclear
    weapons* most of these

    facilities store plutonium and uranium in a variety of forms. These
    facilities can become targets

    for such actions as sabotage or theft. The Department of Energy (DOE) and
    the National Nuclear Security Administration (NNSA)* a separately
    organized agency within DOE* are responsible for these facilities. NNSA
    plays a crucial role in managing the contractors operating many of these
    facilities to ensure that security activities are effective and in line
    with

    departmental policy. GAO reviewed how effectively NNSA manages its
    safeguards and security program, including how it oversees contractor
    security operations. GAO is making four recommendations to the Secretary

    of Energy and the Administrator of NNSA to focus more on certain key
    management and oversight issues. Commenting on the draft report, NNSA
    disagreed with GAO*s

    conclusion that NNSA was not ensuring the comprehensive, annual
    assessments of contractors*

    performance that DOE policy requires. GAO continues to believe that NNSA*s
    current efforts do not ensure conformance to DOE policy.

    www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 471. To view the full report,
    including the scope and methodology, click on the link above. For more
    information, contact Robin M. Nazzaro at (202) 512- 3841 or nazarror@ gao.
    gov. Highlights of GAO- 03- 471, a report to the

    Chairman, Subcommittee on National Security, Emerging Threats, and
    International Relations, Committee on Government Reform, House of
    Representatives

    May 2003

    NUCLEAR SECURITY NNSA Needs to Better Manage Its Safeguards and Security
    Program

    Page i GAO- 03- 471 Nuclear Security Letter 1 Results in Brief 4
    Background 7 NNSA*s Lack of Safeguards and Security Direction in Key Areas

    Results in Inconsistent Management of Contractors 9 Conclusions 16
    Recommendations for Executive Action 16 Agency Comments and Our Evaluation
    17 Appendix I Comments from the National Nuclear Security Administration
    20

    Appendix II GAO Contact and Staff Acknowledgments 23

    Abbreviations

    DOE Department of Energy FRAM Functions, Responsibilities, and Authorities
    Manual NNSA National Nuclear Security Administration Contents

    This is a work of the U. S. Government and is not subject to copyright
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    Page 1 GAO- 03- 471 Nuclear Security May 30, 2003 The Honorable
    Christopher Shays Chairman, Subcommittee on National Security,

    Emerging Threats, and International Relations Committee on Government
    Reform House of Representatives Dear Mr. Chairman: Over the past decade,
    we and others have raised concerns about the adequacy of security at
    nuclear weapons facilities within the Department of Energy (DOE) and the
    National Nuclear Security Administration (NNSA)* a separately organized
    agency within DOE. For example, we reported in 2002 that DOE had not
    addressed problems in implementing security initiatives, 1 while an
    independent study by the Commission on Science and Security, 2 conducted
    at the request of DOE, found deficiencies in cyber security. Concerns over
    security within the nuclear weapons complex were brought into sharper
    focus by the September 11, 2001, terrorist attacks. These attacks
    highlighted the importance of effective physical security 3 in response to
    a potentially large and well- organized threat.

    NNSA relies upon its safeguards and security program to ensure the
    physical security of the nation*s nuclear weapons complex. Currently, the
    complex has four production sites: the Pantex Plant, Amarillo, Texas; the
    Y- 12 Plant, Oak Ridge, Tennessee; the Kansas City Plant, Kansas City,
    Missouri; and the Savannah River Site, Aiken, South Carolina. In addition
    to the production sites, the complex includes the Nevada Test Site and
    three national laboratories that design nuclear weapons: Lawrence

    1 U. S. General Accounting Office, Nuclear Security: Lessons to Be Learned
    from Implementing NNSA*s Security Enhancements, GAO- 02- 358 (Washington,
    D. C.: March 29, 2002). 2 Commission on Science and Security, Center for
    Strategic and International Studies, Science and Security in the 21st
    Century: A Report to the Secretary of Energy on the

    Department of Energy Laboratories (Washington, D. C.: Apr. 2002). 3
    Physical security is the combination of operational and security
    equipment, personnel, and procedures used to protect facilities,
    information, documents, or material against theft,

    sabotage, diversion, or other criminal acts.

    United States General Accounting Office Washington, DC 20548

    Page 2 GAO- 03- 471 Nuclear Security Livermore National Laboratory,
    Livermore, California; Los Alamos National Laboratory, Los Alamos, New
    Mexico; and the Sandia National

    Laboratories, Albuquerque, New Mexico, and Livermore, California. To
    implement its safeguards and security program, NNSA relies on site
    contractors that are responsible for conducting day- to- day security
    activities and adhering to DOE policies as they operate the complex*s
    laboratory and production facilities. The contractors* activities are
    subject to DOE- NNSA oversight. NNSA has offices* site offices* co-
    located with each site. Many of these sites possess Category I special
    nuclear material. Category I material includes plutonium and uranium in
    the following

    forms: (1) assembled nuclear weapons and test devices; (2) products
    containing higher concentrations of plutonium or uranium, such as major
    nuclear components, and recastable metal; and (3) high- grade materials,
    such as carbides, oxides, solutions, and nitrates. The risks this
    radioactive material poses vary, but include the potential for sabotage,
    or theft for illegal use in a nuclear weapon. Because these materials pose
    such risks, NNSA*s management of the safeguards and security program,
    which includes overseeing contractor activities, is essential to
    preventing an unacceptable, adverse impact on national security.

    DOE*s Office of Security develops and promulgates orders and policies that
    guide NNSA*s safeguards and security program. NNSA is responsible for
    ensuring that its contractors* security activities are effective and
    conform to DOE*s orders and policy requirements. In conducting this
    oversight, NNSA generally uses certain key processes intended to identify
    specific weaknesses at contractor- operated sites and ensure that
    weaknesses are corrected. These processes include, among other things, (1)
    annual, comprehensive surveys conducted by subject matter experts from
    across the complex and (2) ongoing reviews of one or more aspects of
    contractors* program (surveillance) by NNSA site officials. 4 DOE*s Office
    of Independent Oversight and Performance Assurance also

    assesses contractor security activities. In response to NNSA surveys and
    assessments conducted by the Office of Independent Oversight and
    Performance Assurance, DOE policy requires contractors to prepare
    corrective action plans for identified problems and to ensure that these

    4 A surveillance is generally conducted by a single or small number of
    subject matter experts, and the documentation from a surveillance or group
    of surveillance activities may be used as part of the survey.

    Page 3 GAO- 03- 471 Nuclear Security actions are based on documented root
    cause analysis, risk assessment, and cost- benefit analysis.

    You asked us to review physical security at NNSA and DOE facilities that
    contain Category I materials. Specifically, as agreed with your office,
    this report examines how NNSA manages its safeguards and security program.
    This report is the first of two that we will be issuing to you on various
    aspects of physical security at NNSA and DOE facilities. Our followup
    report will focus on the extent to which physical security has improved;
    the effectiveness of the process for establishing safeguards and security
    requirements following the September 11, 2001, attacks; and the remaining
    vulnerabilities.

    To evaluate the overall safeguards and security oversight process, we
    reviewed DOE policy and planning documents, including orders,
    implementation guidance, and reports. We looked at what the orders and
    guides prescribed, particularly DOE Order 470.1, and compared this to

    how operations and site offices were following and implementing the
    policies to see if there were any deficiencies. To determine how NNSA
    organizes and conducts overall safeguards and security oversight, we met
    with officials from DOE and NNSA headquarters and NNSA site offices. The
    primary offices from which we obtained information were from DOE*s Office
    of Security, Office of Independent Oversight and Performance

    Assurance, and NNSA*s Office of Defense Nuclear Security and Nuclear
    Safeguards and Security Program. 5 We also evaluated the NNSA
    reorganization with regard to the potential impact on oversight roles and
    responsibilities of NNSA headquarters and site offices.

    We visited 7 site offices from March 2002 to October 2002, to determine
    how federal contractor oversight and the safeguards and security program
    is managed. Specifically, we visited Los Alamos National Laboratory and
    the Office of Los Alamos Site Operations in New Mexico, Sandia National
    Laboratory and the Office of Kirtland Site Operations in New Mexico,
    Department of Energy*s Albuquerque Operations Office in New Mexico, the
    Office of Transportation Safeguards in New Mexico, Y- 12 Plant, and the Y-
    12 Site Office in Tennessee, Pantex Plant and the Office of Amarillo

    5 We did not include naval reactors in our review because it is a
    semiautonomous entity within NNSA with a unique security structure and
    program.

    Page 4 GAO- 03- 471 Nuclear Security Site Operations in Texas, the
    Savannah River Site 6 and the Savannah River Site Office in South
    Carolina, and Lawrence Livermore National

    Laboratory and the Livermore Site Office in California. At each location
    we met with both federal and contractor officials and obtained pertinent
    supporting documentation.

    To determine how NNSA sites prepare and document corrective action plans
    and related analyses, we examined 43 closed and open corrective action
    plans dated from 1999 through 2002 that we selected at random from each of
    the 6 NNSA sites (as well as the DOE Savannah River Site, which is
    expected to come under NNSA*s jurisdiction in the future) that contain
    category I special nuclear materials. 7 We reviewed these plans to
    determine the extent and type of analyses that support the corrective
    actions in the plans. These plans generally represent the contractors*
    actions to address high priority findings in contractors* security and
    safeguards program. To understand how the corrective action process
    currently works, we compared the processes in place at each NNSA site we
    visited during 2002.

    We performed our review from December 2001 through April 2003 in
    accordance with generally accepted government auditing standards.

    NNSA has not been fully effective in managing its safeguards and security
    program in four key areas, and therefore, it cannot be assured that its
    contractors are working to maximum advantage to protect critical
    facilities and material from individuals seeking to inflict damage. The
    following four areas are key:

     Defining clear roles and responsibilities. Since its creation in March
    2000, NNSA*s management structure has been in a state of flux. While in
    December 2002, NNSA issued what it considers final directives for
    reorganizing headquarters and site offices, NNSA expects it will take
    until at least September 2004 to fully implement its new management
    structure. In particular, NNSA is still defining its site offices* roles
    and

    6 Although the Savannah River Site is still an Environmental Management
    designated site, according to site officials, it will likely become an
    NNSA site once the accelerated cleanup is complete. Because of its present
    role as a key DOE nuclear weapons production site, we included it in our
    review of site offices.

    7 One of the seven sites* Transportation Safeguards** is operated by NNSA,
    not a contractor. Results in Brief

    Page 5 GAO- 03- 471 Nuclear Security responsibilities for safeguards and
    security. Specifically, it is still developing the components of a
    Functions, Responsibilities, and

    Authorities Manual, which will not be completed for several months because
    of the highly detailed planning necessary for determining staff functions
    at the various sites. This manual, which NNSA itself recognizes as
    crucial, is intended to set out roles and responsibilities clearly. This
    still- developing management structure led to confusion about the roles
    and responsibilities of the headquarters and site offices.  Assessing
    sites* security activities. Without a functional management

    structure and with ongoing confusion about roles and responsibilities,
    inconsistencies have emerged among the NNSA sites on how to conduct key
    aspects of safeguards- and- security assessment activities. In particular,
    three out of the seven NNSA site offices use the traditional survey
    approach, as required by DOE policy, to oversee security activities, while
    four have discontinued surveys and instead rely on surveillance
    activities. The distinction between these two activities is important: A
    survey provides a comprehensive annual review, by a team of experts from
    throughout NNSA, of contractor safeguards and security and generally takes
    about 2 weeks. In contrast, surveillance relies on a single or small
    number of NNSA site officials overseeing one or more aspects of a
    contractor*s safeguards and security activities throughout the year.
    However, officials from DOE*s Office of Security* which developed the
    policy for conducting surveys* believe the surveillance model does not
    comply with the DOE order because it does not provide a comprehensive
    overview. Furthermore, officials from DOE*s Office of Independent
    Oversight and

    Performance Assurance and NNSA headquarters expressed concern about the
    site offices* ability to conduct surveillance because of shortfalls in
    available expertise. The four site offices have been able to operate using
    only surveillance activities because, during the reorganization of the
    management structure, NNSA has not issued guidance on complying with DOE
    policy for conducting surveys.

     Overseeing contractors* corrective actions. NNSA contractors do not
    consistently conduct the analyses DOE policy requires in preparing
    corrective action plans, compounding the problems in ensuring physical
    security. Inconsistency occurs because the NNSA site officials do not have
    implementation guidance from headquarters on how to address corrective
    actions. Of the 43 corrective action plans we reviewed for 1999 through
    2002, less than half showed that the contractor had performed the required
    root cause analysis.

    Furthermore, less than 25 percent demonstrated that the contractor had
    performed a required risk assessment or cost- benefit analysis. As a

    Page 6 GAO- 03- 471 Nuclear Security result, potential opportunities to
    improve physical security at the sites are not maximized because
    corrective actions are developed without

    fully considering the problems* root causes, risks posed, or cost versus
    benefit of taking corrective action. However, at the 7 sites we visited in
    2002, the site offices and contractors are making some progress to
    establish formal processes for root cause and other analyses.
    Nevertheless, inconsistencies remain regarding the approaches used to
    complete these analyses. For example, some site processes specify that
    root cause analyses will be conducted for all corrective action plans,
    while other sites consider the completion of these analyses optional. An
    NNSA headquarters official stated that the agency expects to issue
    additional guidance for implementing DOE security policies in 2003.

     Allocating staff. NNSA has shortfalls at its site offices in the total
    number of staff and in areas of expertise, which could make it more
    difficult for the site offices to oversee safeguards and security
    effectively and to ensure that the agency fully knows security

    conditions at its sites. According to officials at 5 of the 7 site offices
    we visited, they have, or expect to have, an average of 2 to 6 vacancies
    per site for overseeing contractors* safeguards and security; typically,
    each site expects to have 10 to 14 security- related positions within the
    next 2 years. The vacancies occur, in part, because staff are reluctant to
    move

    to locations they view as less desirable and because NNSA has frozen
    hiring in response to budget constraints. Some of these vacancies are for
    specialists in particular subject areas, such as Industrial Security
    Systems* a key specialty needed for conducting physical security
    inspections. The lack of expertise and staff could be further complicated
    for some sites by NNSA*s realignment plan. Under this plan, NNSA expects
    to streamline federal oversight of contractors and reduce headquarters and
    field staff by 20 percent by the end of fiscal year 2004. Site officials
    said that they will fill some vacancies through a virtual organization in
    which experts at other locations will assist with certain components of
    the surveillance activities. However, it will take time to work through
    some of the difficulties associated with making the transition to this
    approach.

    We are making recommendations to the Secretary of Energy and the
    Administrator of the NNSA that are intended to place additional focus on
    key management and oversight dimensions during NNSA*s ongoing

    reorganization. In commenting on our draft report, NNSA concurred with two
    of our four recommendations, disagreed with one, and did not indicate
    agreement or disagreement with the fourth. NNSA concurred with our
    recommendation

    Page 7 GAO- 03- 471 Nuclear Security to formally establish roles and
    responsibilities, and it plans to issue a formal document in 2003. NNSA
    also concurred that corrective action

    plans must be prepared in accordance with established standards and
    policy. NNSA disagreed with the conclusion that it was not ensuring the
    comprehensive annual assessments of contractors* performance that DOE
    policy requires. NNSA believed that its surveillance activities were also
    comprehensive; however, NNSA provided no evidence* such as implementation
    guidance to the sites that are conducting surveillances* that would ensure
    that the sites* surveillance activities conform to DOE*s policies.
    Finally, regarding our recommendation that NNSA develop and implement a
    plan for effectively allocating staff for safeguards and security
    oversight, NNSA commented that managers have staffing plans and that its
    virtual organization and additional hiring will address sites* need for

    certain types of skilled personnel. In our view, while reliance on the
    virtual approach may be effective in the short term, the continuing
    vacancies at some sites indicate that NNSA may have difficulty attracting
    and retaining necessary expertise at specific, understaffed locations over
    the long term.

    Since its creation in 1977, DOE has been responsible for developing,
    producing, and maintaining nuclear weapons; preventing the proliferation
    of weapons of mass destruction; designing, building, and maintaining naval
    nuclear propulsion systems; and ensuring the security of the nuclear
    weapons complex. In 2000, however, the Congress created a separately
    organized agency within DOE* the NNSA. 8 NNSA*s Office of Defense Nuclear
    Security is primarily responsible for

    developing the agency*s security programs, including protecting,
    controlling, and accounting for material and ensuring physical security
    for all facilities in the complex. Historically, NNSA has conducted
    comprehensive annual surveys of contractors* operations for safeguards and
    security. These surveys, which can draw upon subject matter experts
    throughout the complex, 9 generally take about 2 weeks to conduct and
    cover 5 *topical* areas and 32 subtopical areas. The topical areas include

    8 National Defense Authorization Act for Fiscal Year 2000, Pub. L. No.
    106- 65, tit. 32 (also known as the National Nuclear Security
    Administration Act). 9 The core skill sets needed to address the
    safeguards and security elements at a facility

    include program management and planning; protective force operations;
    classified matter protection and control; physical security; technical
    security and security systems; nuclear material control and
    accountability; and safeguards and security program infrastructure.
    Background

    Page 8 GAO- 03- 471 Nuclear Security program management, protection
    program operations, information security, nuclear materials control and
    accountability, and personnel

    security. The survey team assigns ratings of satisfactory, marginal, or
    unsatisfactory. Currently, NNSA*s facilities have been rated satisfactory
    in most topical areas. All deficiencies (findings) identified during a
    survey require the contractors to take corrective action, and both
    findings and corrective actions are to be entered in the Safeguards and
    Security Information Management System* a DOE- wide, integrated tracking
    database for findings of surveys and other safeguards and security
    activities.

    In addition, NNSA*s Office of Facilities and Operations is expected to
    provide policy guidance for safeguards and security. This office is also
    expected to be responsible for the Nuclear Safeguards and Security
    Program, which oversees the implementation of safeguards and security in
    NNSA facilities. The office is expected to integrate and defend the budget
    for safeguards and security to ensure that program components can

    achieve mission objectives. Through various contract mechanisms, NNSA
    provides financial incentives, such as award fees, for contractor
    performance. NNSA assesses this performance based on the extent
    contractors meet a set of measures, which are generally established in
    annual performance plans* so- called performance measures.

    DOE*s Office of Independent Oversight and Performance Assurance supports
    NNSA in safeguards and security assessments and conducts independent
    oversight activities in line with DOE and NNSA policies and priorities.
    Among other things, the office is responsible for evaluating the
    effectiveness of contractors* performance in safeguards and security. To
    carry out this function, this office periodically assesses both federal
    and contractor operations at a site and identifies findings, issues, and

    opportunities for improvement. It also performs follow- up reviews to
    ensure corrective actions are effective and that weaknesses in safeguards
    and security are appropriately addressed.

    Page 9 GAO- 03- 471 Nuclear Security NNSA has not been fully effective in
    managing its safeguards and security program in four key areas, and
    therefore, it cannot be assured that its contractors are working to
    maximum advantage to protect its sites. First,

    NNSA has not fully defined safeguards and security roles and
    responsibilities. Second, without an effective management structure, site
    offices are uncertain about how to conduct their safeguards and security
    responsibilities. This uncertainty has resulted in inconsistencies in how
    site offices comply with DOE orders in assessing contractors. Third, even
    when assessments are done, NNSA contractors do not consistently conduct
    required DOE analyses in preparing corrective action plans. Finally,
    NNSA*s shortfalls at its site offices in the total number of staff and
    expertise could make it more difficult for the site offices to oversee

    safeguards and security effectively. Since its creation in March 2000,
    NNSA*s management structure has been in a state of flux, and NNSA expects
    it will take at least to September 2004 to implement a new management
    structure. However, NNSA needs a stable structure to establish clear roles
    and responsibilities for its headquarters and site offices, including
    safeguards and security oversight. In May 2001, NNSA*s Administrator
    proposed a management structure for

    his organization, 10 but in December 2001, we reported that a clearly
    delineated overall management structure still did not exist. 11 In
    February 2002, NNSA reported in more detail to Congress on its outline for
    a new management structure 12 to improve NNSA*s effectiveness and
    efficiency. NNSA expected to implement the new structure later in the
    year.

    Since then, NNSA headquarters and field officials have been defining
    safeguards and security roles and responsibilities. In December 2002, NNSA
    fundamentally changed the management structure for safeguards and
    security. It abolished operations offices, which had been responsible for
    conducting the annual, comprehensive surveys as well as other

    10 National Nuclear Security Administration, Report to Congress on the
    Plan for Organizing the National Nuclear Security Administration
    (Washington, D. C.: May 3, 2001).

    11 U. S. General Accounting Office, NNSA Management: Progress in the
    Implementation of Title 32, GAO- 02- 93R (Washington, D. C.: Dec. 12,
    2001). 12 National Nuclear Security Administration, Report to Congress on
    the Organization and Operations of the National Nuclear Security
    Administration (Washington, D. C.: Feb. 25, 2002). NNSA*s Lack of

    Safeguards and Security Direction in Key Areas Results in Inconsistent
    Management of Contractors

    NNSA Has Not Clearly Defined Roles and Responsibilities, Resulting in
    Confusion at Sites

    Page 10 GAO- 03- 471 Nuclear Security safeguards and security activities.
    It divided these operations offices* responsibilities among the site
    offices and a service center, formerly the

    Albuquerque operations office; headquarters will oversee the performance
    of the site offices. The restructuring brings day- to- day federal
    oversight of laboratories and plants closer to the site offices. However,
    these changes

    do not complete the management structure. NNSA plans to further streamline
    its oversight of contractors by reducing site activities. Among other
    things, NNSA plans to focus more on ensuring that contractors* management
    systems are valid. Furthermore, NNSA plans to review its policies and
    practices and decide which site office oversight activities can be reduced
    or eliminated in order for the site offices to work more efficiently. It
    has not yet identified which specific activities will be modified. At the
    time of our review, headquarters could not provide details on how it
    intends to monitor the NNSA site offices* performance with respect to
    safeguards and security or address deficiencies.

    In creating this new management structure, NNSA has not yet developed a

    Functions, Responsibilities, and Authorities Manual (FRAM), an
    organizational tool used by managers at federal agencies, including DOE,
    for defining roles and responsibilities. This manual is to address the
    functions, responsibilities, and authorities of all elements within NNSA.
    NNSA headquarters security officials agree that this guidance is crucial
    and stated that they are currently developing the components of a FRAM,
    which should be finalized in 2003. NNSA told us that completing the FRAM
    takes significant time because of the highly detailed planning necessary
    for

    determining staff functions at the various sites. According to NNSA site
    office officials, as they wait for formal guidance from headquarters on
    conducting security oversight, each office is carrying out oversight
    activities as it deems appropriate. In addition, these officials told us
    that they have not received formal notification about the change in their
    safeguards and security oversight responsibilities, such as
    responsibilities for the survey program. Officials at several site offices
    expressed frustration with this lack of direction. NNSA site offices are
    not consistent in how they assess contractor

    safeguards and security activities, and they may not be conducting these
    assessments in accordance with DOE policy. The lack of consistency and the
    failure to implement DOE policy occurs in part because the site offices
    have had to assume new oversight responsibilities without, among other
    things, clear guidance from headquarters on how to carry out these
    responsibilities. As a result, three offices of the seven NNSA site
    offices we NNSA*s Security

    Assessment Processes Differ among Sites and Are Inconsistent with DOE
    Requirements

    Page 11 GAO- 03- 471 Nuclear Security visited continue to use the
    traditional survey approach to oversee security activities (Oak Ridge,
    Savannah River, and NNSA*s Office of Transportation Safeguards), while the
    remaining four have adopted or are adopting a surveillance model*-
    Amarillo, Kirtland, Livermore, and Los

    Alamos. The distinction between these two activities is important: A
    survey provides a comprehensive annual review, by a team of experts, of
    contractor safeguards and security and generally takes about 2 weeks;
    formerly, the operations offices generally conducted surveys, assisted by
    experts from throughout the complex, as necessary. In contrast,
    surveillance relies on a single or small number of NNSA site officials
    overseeing one or more aspects of a contractor*s safeguards and security
    activities throughout the year, and the documentation from a surveillance
    or a group of surveillance activities may be used as part of the survey.

    By relying on surveillance, NNSA may have less assurance that it fully
    knows the condition of security at its sites and therefore potentially
    cannot act to correct deficiencies undisclosed by this limited review.
    Surveillance allows subject matter experts at the sites to evaluate areas
    of contractor safeguards and security performance more often than the
    traditional survey process and therefore potentially identify deficiencies
    faster. However, according to DOE officials, reliance on surveillance is
    not consistent with DOE orders calling for a comprehensive survey of a

    contractor*s safeguards and security performance. This survey provides a
    unified assessment of all security- related topical areas. 13 Officials
    from DOE*s Office of Security* which developed the policy for conducting
    surveys* believe the surveillance model does not comply with DOE order
    survey requirements because it is not comprehensive. Officials from DOE*s
    Office of Independent Oversight and Performance Assurance expressed
    concern about the site offices* ability to conduct surveillance because of
    shortfalls in available expertise. Furthermore, the director of NNSA*s
    Office of Defense Nuclear Security acknowledged that although some NNSA
    site offices, such as the Los Alamos site office, are using the
    surveillance model, this site and others lacked the necessary personnel to
    conduct surveillance.

    According to officials from DOE*s Office of Independent Oversight and
    Performance Assurance and one site office, surveillance is not compatible
    with the current Safeguards and Security Information Management

    13 The frequency of survey schedules can be modified if the site being
    surveyed meets certain criteria.

    Page 12 GAO- 03- 471 Nuclear Security System, a DOE information database
    system used to track findings and associated corrective actions, and
    therefore could pose problems for sites

    in entering information. On the other hand, NNSA officials at site offices
    and headquarters argue that using the surveillance model for oversight
    will produce an annual end of the year survey report and should have the
    same end result as an annual survey. However, NNSA could have difficulty
    ensuring consistent and comprehensive assessments because of the
    difficulties posed by using the surveillance model without appropriate
    NNSA- wide implementation guidance, site office staffing shortfalls, and
    database compatibility problems.

    Contractors have not consistently prepared effective, formal root cause
    analyses in developing corrective action plans for identified
    deficiencies, as DOE policy requires. 14 An effective, formal, root cause
    analysis can enhance the development of corrective actions, as we observed
    while reviewing some plans. However, less than half of the 43 corrective
    action plans we reviewed, dated between 1999 and 2002, showed that the
    contractor had performed the required root cause analysis. Furthermore, in
    a few cases corrective action plans were based on root cause analyses that
    were poorly prepared, resulting in confusion and contradictions. For

    example, NNSA had identified a deficiency at one site of potential entry
    into a critical facility. The contractor did not fully develop a root
    cause for this problem but merely rebutted the finding*s validity.
    Nevertheless, the contractor took a corrective action in response to this
    deficiency* spending about $150,000. However, because the root cause
    analysis was not fully developed, we could not determine how, or if, the
    contractor*s corrective actions would correct the deficiency. Furthermore,
    the contractor*s staff preparing the analysis did not have formal training
    in how to conduct root cause analyses. NNSA site officials agreed that the
    root cause analysis was performed incorrectly and that their oversight
    review of the analysis had not detected this problem.

    Despite the problems some contractors have had in preparing root cause
    analyses, corrective action processes in 2002 at all 7 sites showed that
    some sites are making progress. For example, in late 2000, the Office of
    Transportation Safeguards, which is responsible for securely transporting
    critical NNSA items and material, had begun to correct significant
    weaknesses in its process for preparing and tracking corrective actions.

    14 DOE Order 470.1 Safeguards and Security Program; Sept. 28, 1995. NNSA*s
    Corrective Action

    Practices Are Inconsistent with DOE Requirements

    Page 13 GAO- 03- 471 Nuclear Security According to an official responsible
    for corrective actions at the office, the new process has already resulted
    in documented improvements to the

    quality and completeness of its corrective action plans. For example, the
    new process for root cause analyses identified additional reasons for a
    recurring NNSA finding on problems in how three federal agent facilities
    in NNSA*s Office of Transportation Safeguards inspected the vehicles used
    to transport critical materials across the nation. These inspections are

    crucial in preventing individuals from attaching explosives or other
    foreign devices to the vehicles in potential attempts at sabotage or
    theft. The new process enabled NNSA to identify specific actions to ensure
    consistent interpretation and implementation of vehicle inspection
    procedures among the three facilities. Because the finding has not been
    repeated since July 2000, it appears that the additional corrective
    actions proved effective. Another site, Sandia National Laboratories, has
    developed a process for root cause analysis that other sites may find
    useful. Sandia uses a designated root cause analyst to systematically lead
    teams of subject matter experts at the laboratory through the steps for
    determining root cause. With this expert in root cause analyses, Sandia
    helps ensure that these analyses are consistent and effective. Other
    analyses and assessments that are critical to planning corrective

    actions are also not consistently prepared at NNSA sites. In particular,
    less than 25 percent of the corrective action plans we reviewed showed
    documentation of other analyses required by the DOE order for corrective
    action, such as risk assessment or cost- benefit analysis. Without this
    documentation, we found it difficult to determine what process, if any,
    the sites had used to determine the risk level of the problem or the cost
    and relative benefit of implementing corrective actions.

    Consistency problems are likely to continue without effective NNSA
    guidance for corrective actions. For example, at four sites we visited,
    the sites either did not require a risk assessment and cost- benefit
    analyses or stated that they were optional, depending on the site*s
    evaluation of the need for an analysis. However, the remaining three sites
    we visited required these analyses for all corrective action plans. This
    inconsistency resulted in part from differing interpretations of the DOE
    order governing corrective actions. As a result, NNSA cannot be assured
    that all contractors are considering the costs of corrective actions in
    conjunction with the risk posed or the potential benefits to be gained.
    NNSA officials at some sites stated that, without implementation guidance,
    the intent of the DOE order requiring these analyses can be interpreted
    differently from site to site, which contributes to the inconsistent
    practices we observed. Since we provided our draft report to NNSA in April
    2003, it has sent a brief

    Page 14 GAO- 03- 471 Nuclear Security guidance letter on corrective action
    plans to its site offices, clarifying its analysis and documentation
    requirements. An NNSA headquarters official

    stated that issuance of additional guidance for implementing DOE security
    policies is expected in 2003.

    And finally, NNSA sites do not consistently measure all performance
    aspects of contractors* preparation of corrective action plans and may
    reward contractors simply for closing the finding on schedule. According
    to our review of performance measures concerning corrective actions, four
    of the six contractor- operated sites we visited had measures that were
    primarily based on whether the contractor met the schedule for completing
    corrective actions, not on whether and how well the contractor had
    performed the analyses. 15 The other two sites did not consider any
    corrective action performance measures in assessing contractor
    performance* not even the schedule. However, DOE guidance encourages sites
    to measure qualitative factors, whenever possible, to

    minimize the need to rely solely on schedule- driven measures. 16
    Effective qualitative performance measures would essentially reflect how
    well the contractor completes root cause analyses, risk assessment, and
    costbenefit analyses.

    The lack of qualitative performance measures affects the quality of the
    correction plan. For example, in fiscal year 1999, DOE*s Office of
    Independent Oversight and Performance Assurance criticized a site that had
    schedule- driven performance measures for poorly prepared corrective
    action plans. Out of the 50 plans reviewed for that site, 27 had
    inadequate root cause determinations, and 15 had corrective actions that
    were unlikely to fix the deficiency cited. The performance measures in
    place for this contractor in fiscal year 1999* and then again in fiscal
    years 2000 and 2001* did not reflect qualitative aspects of these
    analyses; instead, they were primarily focused on schedule- driven
    outcomes. Some contract

    provisions permit the contractor to forfeit some of the award fee based on
    other generic performance factors, such as *management failure.* However,
    these generic provisions may not be fully effective in motivating
    contractors in all aspects of their corrective action performance because
    15 One site, the Office of Transportation Safeguards is federally operated
    and therefore performance award fees are not applicable.

    16 U. S. Department of Energy, Guidelines for Performance Measurement, DOE
    G 120. 1- 5 (Washington, D. C.: June 30, 1996).

    Page 15 GAO- 03- 471 Nuclear Security these provisions are not explicitly
    focused on corrective action and are therefore not highly visible.

    NNSA*s site offices have shortfalls in the total number of staff and in
    the expertise for effectively overseeing contractors, including covering
    all topical areas in the annual surveys. At five of the seven sites we
    visited,

    NNSA officials told us that they currently have, or will have, two to six
    vacancies in safeguards and security positions once NNSA fully implements
    its new management structure; each site believes that it needs from 10 to
    14 security- related positions in order to carry out its oversight
    activities under NNSA*s new organization. In particular, some of the site
    offices are experiencing difficulty in filling positions because some
    staff consider the site locations less desirable than others and because
    NNSA has instituted a hiring freeze. Some of these vacancies are for
    specialists in particular subject areas, such as industrial security
    systems* a key specialty needed for conducting physical security
    inspections. Officials in the Office of Independent Oversight and
    Performance Assurance concurred that NNSA*s reorganization and the
    shifting of responsibilities to the site offices has the potential to
    weaken security oversight.

    To offset the lack of some subject matter experts at sites, NNSA field
    officials indicated that they frequently rely on subject matter experts
    from headquarters or other site offices to cover site offices that do not
    have

    expertise locally. With only a limited number of subject matter experts in
    the complex, the sites have to coordinate oversight carefully.
    Coordination is particularly complicated at those sites that have switched
    to a surveillance model since they may have to rely on particular subject
    expertise that is only available during certain times.

    NNSA*s new management structure further complicates the problems in staff
    allocation. NNSA expects to reduce headquarters and field staff by 20
    percent by the end of fiscal year 2004. In this restructuring, NNSA plans
    to share staff expertise, creating a *virtual* organization to cover the
    needs of site offices and other areas within the complex until a final
    move of personnel can be made. Headquarters officials told us that it may
    take 1 to 2 years to move the appropriate safeguards and security persons
    to the areas where they are needed. Until then, they expect the virtual
    organization to meet the complex*s needs. The virtual organization will
    include subject matter experts whose knowledge will be needed throughout
    the nuclear weapons complex and not just at their current sites. Some of
    these experts will work from the service center or be detailed to site
    offices as needed. With competing demands for the Difficulties in
    Allocating

    Staff Could Hinder Effective Safeguards and Security Oversight

    Page 16 GAO- 03- 471 Nuclear Security experts, it is unclear how they will
    successfully provide assistance to site offices in their surveillance
    processes. The assistance may be unavailable when needed since components
    of surveillance are ongoing and may span

    an entire year. Without effectively managing its safeguards and security
    program, NNSA cannot be assured that its contractors are working to
    maximum advantage to protect its nuclear weapons sites. These sites may
    have critical materials that could be prime terrorist targets. Several
    factors contribute to this lack of assurance. NNSA continues to change its
    management structure, making it difficult to define roles and
    responsibilities clearly. Without a functional management structure, some
    site offices and

    contractors may not be carrying out their security responsibilities, as
    DOE orders require. In particular, NNSA has not fully assured itself that
    the four sites that rely on surveillance activities, rather than on the
    DOE- required surveys, are overseeing contractors* security activities in
    the integrated, comprehensive fashion that are called for in the annual
    surveys. Moreover, when NNSA site offices allow and reward contractors for
    closing findings without ensuring that the contractors have correctly
    identified the root cause, assessed risk, and conducted a cost- benefit
    analysis, NNSA cannot be assured that the security problem identified was
    adequately addressed. Finally, to provide effective oversight, NNSA needs
    to develop an

    approach, beyond its *virtual* organization, that ensures its limited
    security resources are able to provide oversight, over the long term,
    where and when it is needed.

    In order to strengthen the safeguards and security program of the nuclear
    weapons complex, we recommend that the NNSA Administrator and Secretary of
    Energy  formalize the roles and responsibilities of site offices and
    headquarters

    for conducting oversight;  ensure that sites are performing oversight
    using a survey approach that provides an integrated comprehensive view of
    security conditions and is consistent with DOE orders;  ensure that
    contractors* corrective action plans are prepared and

    documented consistently and are based on qualitative root- cause, risk-
    assessment, and cost- benefit analyses, and that appropriate incentives
    are used to help motivate contractors toward effectively addressing
    findings; and Conclusions

    Recommendations for Executive Action

    Page 17 GAO- 03- 471 Nuclear Security  develop and implement a plan to
    ensure that NNSA allocates safeguards and security staff so that it
    provides effective safeguards and security oversight over the long term.

    We provided the DOE*s NNSA with a draft of this report for review and
    comment. Overall, NNSA concurred with two of our four recommendations,
    disagreed with one, and did not indicate agreement or disagreement with
    the fourth. In the area of concurrence, NNSA concurred with our
    recommendation to formally establish roles and responsibilities, and it
    plans to do so in 2003. NNSA also concurred that corrective action plans
    must be prepared in accordance with established standards and policy and
    based on documented root cause analysis, risk assessments, and cost-
    benefit analysis. Since we provided our draft report to NNSA, it has sent
    its site offices a guidance letter on corrective action plans that
    clarifies its analysis and documentation requirements. NNSA now allows
    required elements to be omitted from corrective action plans, but only if
    the contractors document the rationale for the exclusion as a formal part
    of their plan. We believe this guidance letter is a positive step in
    clarifying some implementation aspects of the DOE requirements, and we
    encourage

    continued management attention to this area. NNSA did not comment on the
    portion of this recommendation concerning the use of appropriate
    incentives to motivate contractors to address findings effectively.

    NNSA disagreed with the conclusion that led to our recommendation to
    conduct oversight using a survey approach, which provides an integrated,
    comprehensive view of security conditions and is consistent with DOE

    orders. Specifically, NNSA disagreed with our conclusion that it was not
    ensuring the comprehensive annual assessments of contractors* performance
    that DOE policy requires. As we reported, four of the seven site offices
    no longer conduct comprehensive, integrated surveys to assess

    security but instead rely on surveillance activities. NNSA believed that
    these surveillance activities were also comprehensive; however, NNSA
    provided no evidence* such as implementation guidance to the sites that
    are conducting surveillances* that would ensure that the sites*
    surveillance activities conform to DOE*s policies. Without such guidance,
    NNSA cannot be fully assured that surveillance activities, as presently
    conducted, provide the comprehensive assessment DOE requires in its
    surveys. Our recommendation therefore is intended to focus NNSA management
    attention on ensuring that site offices conduct security assessments that
    are integrated, comprehensive, and on par with the survey approach
    previously used and currently described in DOE orders. Furthermore, NNSA
    asserted, incorrectly, that we found its security Agency Comments

    and Our Evaluation

    Page 18 GAO- 03- 471 Nuclear Security posture to be at risk. Assessing
    NNSA*s security posture was not the objective of this report. Rather, our
    objective was to assess the way NNSA

    manages its overall security program. We have clarified the report, where
    appropriate. Finally, regarding our recommendation that NNSA develop and
    implement

    a plan to ensure that it effectively allocates staff to provide safeguards
    and security oversight, NNSA commented that managers have staffing plans
    and that its virtual organization and additional hiring will address
    sites* need for certain types of skilled personnel. Reliance on the
    virtual approach may be effective in the short term. However, the
    continuing vacancies at some sites indicate that NNSA may have difficulty
    attracting and retaining necessary expertise at specific, understaffed
    locations over the long term. NNSA*s comments do not indicate that it
    fully understands the need to address this longer- term problem. We have
    modified our recommendation to target this specific long- term concern.

    We modified our report, where appropriate, to reflect NNSA*s comments and
    to clarify some of our conclusions. NNSA*s comments on our draft report
    are presented in appendix I.

    As arranged with your office, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30 days
    after the date of this letter. At that time, we will send copies of the
    report to the Secretary of Energy, the Administrator of NNSA, the Director
    of the Office of Management and Budget, and appropriate congressional
    committees.

    We will make copies available to others on request. In addition, the
    report will also be available at no charge on the GAO Web site at http://
    www. gao. gov.

    Page 19 GAO- 03- 471 Nuclear Security If you or your staff have any
    questions about this report, please call me at (202) 512- 3841. Major
    contributors to this report are listed in appendix II. Sincerely yours,

    Robin M. Nazzaro Director, Natural Resources

    and Environment

    Appendix I: Comments from the National Nuclear Security Administration
    Page 20 GAO- 03- 471 Nuclear Security

    Appendix I: Comments from the National Nuclear Security Administration

    Appendix I: Comments from the National Nuclear Security Administration
    Page 21 GAO- 03- 471 Nuclear Security

    Appendix I: Comments from the National Nuclear Security Administration
    Page 22 GAO- 03- 471 Nuclear Security

    Appendix II: GAO Contact and Staff Acknowledgments

    Page 23 GAO- 03- 471 Nuclear Security James Noel (202) 512- 3591 In
    addition to the individual named above, Christopher R. Abraham, Jill

    Berman, Jonathan M. Gill, Andrea R. Miller, Christopher M. Pacheco, and
    Carol Herrnstadt Shulman made key contributions to this report. Appendix
    II: GAO Contact and Staff

    Acknowledgments GAO Contact Acknowledgments

    (360159)

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