    National Ignition Facility: Management and Oversight Failures Caused
    Major Cost Overruns and Schedule Delays (Letter Report, 08/08/2000,
    GAO/RCED-00-271).

    Pursuant to a congressional request, GAO provided information on the
    Department of Energy's (DOE) National Ignition Facility (NIF), focusing
    on the: (1) magnitude of NIF's cost and schedule overruns; (2) reasons
    for these cost and schedule problems; (3) effects of NIF's cost and
    schedule on other weapons and science programs; and (4) DOE's and
    Lawrence Livermore's actions to correct these problems.

    GAO noted that: (1) DOE and Lawrence Livermore now estimate that NIF
    will eventually cost about $3.3 billion and will be completed in 2008;
    (2) these new estimates mean NIF will cost over $1 billion more than
    originally planned and take 6 years longer to complete; (3) however, on
    the basis of analysis of figures from DOE and Lawrence Livermore, GAO
    estimates that NIF's cost is closer to $4 billion because DOE's estimate
    does not include all research and development costs from other program
    areas that are needed to support NIF; (4) furthermore, since significant
    research and development activities to support NIF remain to be
    completed and technical uncertainties persist, the cost of NIF could
    grow even higher and completion could take even longer; (5) NIF's cost
    increases and schedule delays were caused by a combination of poor
    Lawrence Livermore management and inadequate DOE oversight; (6) since
    NIF's beginning, the absence of effective independent reviews has
    enabled the project's costs and schedules to grow undetected by DOE
    program officials at headquarters and at Lawrence Livermore; (7)
    furthermore, none of these reviews has examined both the construction
    project and its supporting research and development activities; (8)
    paying for NIF's cost overruns has broad implications for DOE's nuclear
    weapons program; (9) the Secretary of Energy has said he wants to
    complete NIF but will not ask Congress for additional appropriations to
    pay for NIF's cost increases; (10) instead, he announced that the
    Department will pay for NIF's overruns by reallocating funds from within
    DOE's existing nuclear weapons budget; (11) however, DOE has not fully
    disclosed which programs will be cut to pay for NIF, nor when or how
    this will be done; (12) nor has DOE evaluated how this reallocation will
    affect components of the nuclear weapons program that might be
    eliminated, reduced in scope, or extended in order to fund NIF; (13) DOE
    tried but was unable to secure agreement among its three weapons
    laboratories that will use NIF--Lawrence Livermore, Los Alamos, and
    Sandia; (14) consequently, DOE's June "interim" cost and schedule plan
    was not developed by taking into account the many potential impacts on
    DOE's nuclear weapons program; and (15) in addition, because DOE has not
    determined how it intends to pay for NIF's cost overruns, the potential
    impacts on other science programs are unknown.

    --------------------------- Indexing Terms -----------------------------

     REPORTNUM:  RCED-00-271
         TITLE:  National Ignition Facility: Management and Oversight
    	     Failures Caused Major Cost Overruns and Schedule Delays
          DATE:  08/08/2000
       SUBJECT:  Financial management
    	     Contract oversight
    	     Cost overruns
    	     Schedule slippages
    	     Laboratories
    	     Test facilities
    	     Nuclear weapons testing
    	     Future budget projections
    IDENTIFIER:  DOE Inertial Confinement Fusion Program
    	     DOE Stockpile Stewardship Program

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    GAO/RCED-00-271

    Appendix I: Scope and Methodology

    36

    Appendix II: Comments From the Department of Energy

    37

    Appendix III: GAO Contacts and Staff Acknowledgements

    45

    Table 1: NIF's Estimated Cost and Schedule Changes 10

    Figure 1: The Completed National Ignition Facility 8

    Figure 2: Timeline of Laboratory's Disclosure of NIF Problems 22

    DOE Department of Energy

    ICF Inertial confinement fusion

    NIF National Ignition Facility

    Resources, Community, and
    Economic Development Division

    B-285985

    August 8, 2000

    The Honorable Duncan Hunter
    Chairman
    The Honorable Norman Sisisky
    Ranking Minority Member
    Subcommittee on Military Procurement
    Committee on Armed Services
    House of Representatives

    The University of California, under contract to the Department of Energy
    (DOE) to operate DOE's Lawrence Livermore National Laboratory in California,
    is building the National Ignition Facility (NIF) at the Laboratory. In this
    stadium-sized laser facility, DOE's goal is to produce intense pressures and
    temperatures that may, for the first time, simulate in a laboratory the
    thermonuclear conditions created in nuclear explosions. If successful, NIF
    would allow scientists to evaluate the behavior of nuclear weapons without
    explosive testing.

    DOE considers NIF an essential component of its multibillion-dollar
    Stockpile Stewardship Program, which is responsible for ensuring the safety
    and reliability of nuclear weapons in the absence of nuclear testing.1
    Stockpile Stewardship entails building and operating science facilities in
    addition to NIF, replacing aging laboratory and production plant
    infrastructure, and refurbishing weapons in the stockpile. DOE has
    experimental facilities to support Stockpile Stewardship in all three of its
    defense laboratories: Lawrence Livermore, Los Alamos National Laboratory in
    New Mexico, and Sandia National Laboratories in New Mexico and California.
    In addition, NIF will be used to address basic and

    applied science issues in areas such as astrophysics, materials properties,
    and fusion research.2

    NIF was originally expected to cost about $2.1 billion when completed in
    2002. In 1997, DOE approved a $100 million increase and delayed completion
    until 2004. In September 1999, DOE announced that NIF would cost up to $350
    million more and be completed in 2006. In the wake of these reports, you
    asked us to

    � determine the magnitude of NIF's cost and schedule overruns,

    � document the reasons for these cost and schedule problems,

    � assess the effects of NIF's cost and schedule on other weapons and science
    programs, and

    � evaluate DOE's and Lawrence Livermore's actions to correct these problems.

    To address these objectives, we (1) examined the reviews of NIF conducted by
    DOE and its advisory board, the University of California, and by Lawrence
    Livermore Laboratory's advisers and (2) analyzed NIF cost data from DOE,
    Lawrence Livermore, and other DOE laboratories conducting research in
    support of the project. We also conducted extensive interviews with Lawrence
    Livermore and DOE officials responsible for NIF and with officials from
    other DOE laboratories and scientific institutions whose programs are
    affected by NIF. Appendix I describes our scope and methodology in more
    detail.

    DOE and Lawrence Livermore now estimate that NIF will eventually cost about
    $3.3 billion and will be completed in 2008. These new estimates mean NIF
    will cost over $1 billion more than originally planned and take 6 years
    longer to complete. However, on the basis of our analysis of figures from
    DOE and Lawrence Livermore, we estimate that NIF's cost is closer to $4
    billion because DOE's estimate does not include all research and development
    costs from other program areas that are needed to support NIF. Furthermore,
    since significant research and development activities to support NIF remain
    to be completed and technical uncertainties persist, the cost of NIF could
    grow even higher and completion could take even longer.

    Our estimates of NIF's costs are based on DOE's "interim" report to the
    Congress made on June 1, 2000. Last September, a congressional
    appropriations conference committee directed DOE to present a NIF cost and
    schedule plan with supporting details by June 1, 2000, or prepare to
    terminate the project. But DOE said that it was unable to present a "final"
    plan until mid-September 2000. DOE's "interim" report did not contain
    details on NIF's cost and schedules.

    NIF's cost increases and schedule delays were caused by a combination of
    poor Lawrence Livermore management and inadequate DOE oversight. Troubles
    began when Lawrence Livermore officials planned, and DOE approved, a NIF
    budget and a construction cost contingency that were inadequate, virtually
    ensuring that NIF would exceed cost and schedule estimates. The project
    manager put in charge of NIF had little experience directing large projects
    and had no control over separately funded laser research and development
    programs that were essential for NIF's success. This resulted in a poorly
    integrated management team. Furthermore, the Laboratory's former laser
    director, who oversaw NIF and all other laser activities, assured Laboratory
    managers, DOE, the university, and the Congress that the NIF project was
    adequately funded and staffed and was continuing on cost and schedule, even
    while he was briefed on clear and growing evidence that NIF had serious
    problems. DOE's inadequate oversight contributed to these problems by
    failing to uncover the increasing costs and delays in schedule until more
    than 6 months after they were first documented within the Laboratory. A
    number of key DOE program officials in headquarters and at the Laboratory
    told us that while they suspected NIF problems earlier, they did not take
    aggressive action to force the Laboratory to address these problems sooner.
    Since NIF's beginning, the absence of effective independent reviews has
    enabled the project's costs and schedules to grow undetected by DOE program
    officials at headquarters and at Lawrence Livermore. Furthermore, none of
    these reviews has examined both the construction project and its supporting
    research and development activities.

    Paying for NIF's cost overruns has broad implications for DOE's nuclear
    weapons program. The Secretary of Energy has said he wants to complete NIF
    but will not ask the Congress for additional appropriations to pay for NIF's
    cost increases. Instead, he announced that the Department will pay for NIF's
    overruns by reallocating funds from within DOE's existing nuclear weapons
    budget. However, DOE has not fully disclosed which programs will be cut to
    pay for NIF, nor when or how this will be done. Nor has DOE evaluated how
    this reallocation will affect components of the nuclear weapons program that
    might be eliminated, reduced in scope, or extended in order to fund NIF. DOE
    tried but was unable to secure agreement among its three weapons
    laboratories that will use NIF--Lawrence Livermore, Los Alamos, and
    Sandia--about how, when, or at what cost NIF should be completed.
    Consequently, DOE's June "interim" cost and schedule plan was not developed
    by taking into account the many potential impacts on DOE's nuclear weapons
    program. In addition, because DOE has not determined how it intends to pay
    for NIF's cost overruns, the potential impacts on other science programs are
    unknown.

    While Lawrence Livermore and DOE have made changes to improve NIF management
    and strengthen oversight, concerns remain about NIF's cost and technical
    uncertainties, the absence of an independent review, and the impact of
    paying for NIF's cost overruns on the Department's nuclear weapons program.
    To ensure that DOE has an effective independent assessment of NIF, we
    recommend that the Secretary of Energy arrange for an outside scientific and
    technical review of the technical challenges remaining for NIF that could
    affect the project's cost and schedule risks. To ensure an appropriate
    balance between NIF and the rest of the nuclear weapons program, we further
    recommend that the Secretary of Energy not reallocate funds from the nuclear
    weapons program to pay for NIF until DOE (1) evaluates the impact of the
    current cost and schedule plan, as well as any other options for NIF, on the
    overall nuclear weapons program and (2) certifies that the selected NIF cost
    and schedule plan will not negatively affect the balance of the Stockpile
    Stewardship Program.

    NIF's primary mission is to support DOE's Stockpile Stewardship Program,
    which is intended to maintain the nation's nuclear arsenal indefinitely
    through scientific research and periodic weapon refurbishment. In 1990, the
    National Academy of Sciences recommended that DOE build a laser capable of
    simulating thermonuclear conditions, which would allow nuclear weapons
    scientists to evaluate nuclear weapons' behavior without testing. In 1993,
    DOE approved plans for the laser, now called the National Ignition Facility,
    and in 1996, chose to build it at Lawrence Livermore National Laboratory in
    Livermore, California. DOE has two other weapons laboratories that also
    perform essential research in support of maintaining the safety and
    reliability of the nuclear weapons stockpile: the Los Alamos National
    Laboratory in New Mexico and the Sandia National Laboratories in New Mexico
    and California.

    The NIF project was originally approved in 1995 at a cost $1.1 billion,
    excluding another $1 billion in related research and development costs and
    program funding, for completion in 2002.3 Increases approved in 1997 brought
    the project cost to $1.2 billion, with completion in 2004, which is the
    current approved baseline. DOE now estimates that NIF project costs will be
    about $2.2 billion, with completion delayed until 2008.

    The stadium-sized NIF (85 by 200 meters) will focus 192 laser beams on a
    tiny capsule of nuclear fuel, compressing it by pressure. If NIF achieves
    its ultimate goal, the compressed nuclear fuel will "ignite" to release more
    energy than was added and simulate conditions during a thermonuclear
    explosion. Achieving ignition is an important goal in certain types of
    weapons physics experiments and is important for understanding basic fusion
    science. Achieving ignition is not expected until 2010, or about 2 years
    after NIF begins full operations. Originally, Lawrence Livermore estimated
    it would achieve ignition by 2003.4

    NIF, when completed, will be nearly 60 times as powerful as any previous
    laser. As shown in figure 1, NIF has many different components. It is
    composed of a conventional facility, or building; the laser beam path
    infrastructure, which includes supporting structures, vessels, cabling, and
    utilities; the laser, which includes thousands of glass and optical
    components; and a target chamber surrounded by lenses known as "final
    optics."

    Source: DOE.

    NIF is managed by DOE's Inertial Confinement Fusion Program, which is part
    of the agency's Office of Defense Programs.5 This office conducts essential
    research for the NIF effort. According to DOE plans, about 85 percent of the
    facility's experiments will be for nuclear weapons physics. The remaining
    experiments will be for nuclear weapons effects and basic and applied
    sciences. DOE's Oakland Operations Office is responsible for day-to-day
    oversight of NIF and is expected to ensure that the Laboratory is meeting
    its contracting responsibilities. The Oakland office also prepares the
    Laboratory's annual performance appraisal. For the NIF project, Oakland
    staff also review monthly and quarterly Laboratory progress reports and
    transmit them to DOE headquarters for review. The University of California
    manages the Laboratory for DOE and reviews Laboratory performance annually
    as part of its oversight role.

    Using preliminary projections by DOE and Lawrence Livermore, we estimate
    that the total cost of building NIF is about $3.9 billion, when all
    supporting research and related program activity costs are included.
    Moreover, because significant research and development remains to be
    completed, the cost of completing NIF could grow even higher. DOE has not
    provided details on how much NIF will cost each year, how cost increases
    will be paid for, or what existing programs and activities will be cut to
    fund NIF in the future. DOE knew in June 1999 that a new NIF cost and
    schedule was needed, and a congressional appropriations conference committee
    directed DOE to present a new cost and schedule plan by June 1, 2000.
    However, DOE provided only "interim" estimates on June 1, 2000, and
    announced it will give the Congress a "final" cost and schedule plan by
    mid-September 2000.

    Delayed 6 Years

    We estimate that, on the basis of DOE and Laboratory data, NIF's total cost
    could reach at least $3.9 billion. Although DOE's June 2000 "interim" NIF
    cost estimate is about $3.3 billion, we identified additional costs of over
    $600 million that directly support the completion of NIF and should be
    considered part of its total costs. As shown in table 1, DOE's latest
    estimate includes $2.12 billion for total project costs (funds for
    construction activities associated with the NIF building and its contents)
    and $1.14 billion for research and development and related program funds
    that directly support NIF (drawn from DOE's Inertial Confinement Fusion
    Program).

    Although DOE officials included most of the supporting research and
    development and related program funds as part of the Department's June 2000
    "interim" estimate, they did not include all supporting costs. Specifically,
    they excluded costs for designing and fabricating a NIF target and funds
    directly contributing to the NIF effort at other laboratories and
    contractors.6 DOE officials told us that funds for developing a NIF target
    are more of a weapons research concern and therefore should be considered
    outside the program. Since these funds are necessary for NIF's success, we
    believe they should be included in any discussion of total NIF costs. The
    costs for designing and fabricating a NIF target ($491 million) and NIF
    support costs from other laboratories and contractors ($136 million) should
    be added to DOE's estimate, according to our analysis of Laboratory costs
    and discussions with the individual laboratories contributing to the NIF
    effort. As shown in table 1, this would bring the total estimated cost of
    completing NIF to about $3.9 billion.

     Dollars in billions
                                  Supporting research
     Baseline change     Project  and development and   Total   Fiscal year of
                         costs    related program       costs   completion
                                  funds
     1995 Original
     baseline            $1.07    $1.00a                $2.07   2002
     1997 Baseline
     change              1.20     1.04a                 $2.24   2004b
     2000 Estimates--DOE
     (6/1/00)            2.12     1.14                  $3.26   2008
     2000 Estimates--GAO
     (6/1/00)            2.12 c   1.77d                 $3.89   2008e

    a1995 and 1997 costs are GAO estimates based on available Laboratory data.

    b DOE defined completion in the 1997 baseline as occurring in fiscal year
    2003, when half of NIF's beams become operational. This baseline assumed all
    192 beams would be operational in fiscal year 2004.

    cWe did not assess the accuracy of DOE's estimates of project costs ($2.12
    billion), supporting research and development (R&D) and related program
    funds ($1.14 billion).

    dIncludes the following additions to DOE's 6/1/00 estimate: $491 million for
    target physics and $136 million for direct support of NIF by other DOE
    laboratories and inertial confinement fusion contractors.

    eWe did not assess the accuracy of DOE's revised completion date.

    Unresolved technical problems may further drive up the cost of NIF. A
    November 1999 review by a technical subgroup to Lawrence Livermore's
    advisory panel (the NIF Council7) highlighted several technical problems
    that must be solved for NIF to operate as planned.8 The most challenging
    technical issue raised by the subgroup is the need to develop optical
    components that can withstand the laser's powerful beams as they reach the
    spherical target chamber. When operating, the laser beams focus on a system
    of glass lenses that surround the target chamber. These lenses must be able
    to withstand high levels of intense ultraviolet energy. Several Laboratory
    officials agree that lenses for the target chamber pose a major technical
    challenge and that there is currently no solution to this problem. So
    serious is this issue that the subgroup recommended that NIF scientists
    should be thinking "out of the box" for design alternatives. A May 2, 2000,
    technical review by another NIF Council subgroup also noted that the optical
    lenses remain an unresolved issue. Unless the Laboratory can fabricate
    lenses to withstand the enormous energy from the laser beams, the lenses
    will have to be replaced more often, making laser operation at high power
    levels much more expensive than planned.

    Substantial technical and cost uncertainties also persist in the research
    and development needed to design and build a target for NIF's laser beams,
    according to the NIF Council and its subgroups. Still to be determined are
    physics and engineering issues for designing and fabricating a NIF target.
    The NIF Council's May subgroup report noted that fundamental work also
    remains on this technical issue.

    The NIF Council and its subgroups have all concluded that the difficult
    technical issues facing NIF pose serious challenges but should not present
    insurmountable obstacles to completing the project. Laboratory officials
    said that they are confident that all these difficult technical challenges
    can be solved and noted the Laboratory has met other NIF technical
    challenges successfully.

    In its January 2000 interim report on NIF, the Secretary of Energy Advisory
    Board NIF Laser System Task Force also noted the technical issues cited by
    the NIF Council and acknowledged that technical issues still remain that
    will require significant attention. However, it stated that these issues
    should not prevent the completion of NIF.9 Although both the NIF Council and
    the Advisory Board's task force expressed confidence in the Laboratory's
    ability to solve its remaining technical problems, neither group speculated
    on the risks posed by the many technical uncertainties, nor estimated their
    impact on future costs and schedules.

    The details of DOE's June 1, 2000, NIF cost estimates are sketchy, even
    though DOE senior officials learned in late June 1999 that NIF was over
    budget and behind schedule and that a new cost and schedule plan was needed.
    In its September 1999 report on energy and water development appropriations
    for fiscal year 2000, the conference committee directed DOE to submit a new
    cost and schedule by June 1, 2000, after declaring "disappointment" at
    learning of NIF's cost overruns and schedule delays.10 The committee also
    directed that if DOE could not prepare a new cost and schedule by this date,
    it should develop a plan for terminating the NIF project. However, DOE's
    June 1, 2000, report provided only "interim" figures for a new NIF cost and
    schedule and no termination plan. DOE did not provide annual funding
    profiles for its cost and schedule plan, stating only that it will seek "up
    to" specific amounts in fiscal years 2002 to 2005 ($130 million to $150
    million), and "additional funds as needed" to complete the project in later
    years. DOE officials also did not disclose the programs from which NIF
    increases will be funded or the impacts of these changes. DOE promised to
    submit a "final" plan to the Congress by mid-September 2000. This final
    plan, according to DOE, will include cost and schedule estimates with
    supporting details on annual funding requirements, funding sources, and
    deadlines, and an independent cost analysis. On June 27, 2000, DOE submitted
    a revised budget request for fiscal year 2001 that provides more cost
    information but does not give many details beyond fiscal year 2001.

    Schedule Delays

    NIF's cost increases and schedule delays were caused by poor Laboratory
    management, which included weaknesses in planning, budgeting, and project
    control. DOE's oversight weaknesses contributed to cost and schedule
    problems, and coupled with no effective independent review of NIF, allowed
    NIF problems to go undetected. Standards we have developed require federal
    agencies to establish and maintain an effective system of internal controls
    over their operations.11 Such a system is the first line of defense in
    safeguarding assets and preventing and detecting errors. Under our
    standards, managers should, among other things, ensure that their staff have
    the required skills to meet organizational objectives, that the
    organizational structure clearly defines key areas of authority and
    responsibility, that progress be effectively measured, and that operations
    be effectively monitored. These conditions were not present in the way NIF
    was managed by the Laboratory and overseen by DOE.

    Laboratory managers told us that NIF will cost more and take longer because
    they (1) had not planned for the complexities associated with assembling and
    installing the highly intricate and tightly packed network of laser beams in
    a structure that requires high cleanliness standards and (2) underestimated
    the cost of building major laser components. These results occurred,
    according to Laboratory officials who examined the project, because the
    original NIF managers lacked adequate project management capabilities and,
    in particular, had no systems engineering focus within the NIF management
    hierarchy. As a result, these managers did not properly identify the full
    scope of the NIF effort and had greatly underestimated the project's
    engineering complexities. On the basis of our discussions with current and
    former DOE officials, Laboratory managers, and other experts, we believe
    several additional reasons contribute to NIF's cost overruns and schedule
    delays. For example:

    � DOE and Laboratory officials initially developed a budget for the NIF
    project that was clearly inadequate, given its technical risks, complexity,
    and large size. DOE and Laboratory officials associated with NIF told us
    that they recognized it would cost more than planned but that they accepted
    this unrealistic budget in the belief that the Congress would not fund NIF
    at a higher cost and that the value of NIF to the future of the Laboratory
    overshadowed potential cost concerns. Current and former DOE and Laboratory
    officials also told us that NIF would help the Laboratory maintain its
    nuclear weapons and science capabilities and attract new scientists.

    � DOE and Lawrence Livermore used a construction budget contingency of 15
    percent, which is now widely recognized by DOE and the Laboratory as being
    too low for such a complicated project. Contingencies are an essential
    planning factor in any construction project, allowing for unanticipated cost
    increases. The NIF Council and an independent engineering firm indicated
    that a 25- to 35-percent contingency in the beginning of the project would
    have been more realistic given the risks associated with NIF. DOE guidelines
    suggest a 20- to 40-percent contingency, depending on project complexity.

    � After the project was approved, Laboratory officials began construction in
    tandem with essential research and development. While such a "fast-track"
    strategy is successful on projects with well-defined costs and designs and
    with little technical complexity, the NIF project does not meet these
    conditions. Starting construction early can save costs initially but is more
    costly if extensive changes are needed later. For NIF, the fast-track
    approach may have caused the Laboratory to focus too much attention on
    meeting construction goals at the expense of conducting and integrating
    necessary research and development solutions. DOE and Laboratory officials
    acknowledge that this approach affected basic construction decisions on the
    size and design of the facility and eventually led to cost increases and
    delays when changes had to be made to accommodate the results from
    subsequent research and development.

    � According to Laboratory officials, to cut costs early in the project, they
    considered, but rejected, hiring outside industrial engineering firms to
    manage major parts of NIF construction. Such firms could have provided the
    experience to manage this large project, especially for assembling laser
    components with exacting cleanliness standards, such as those in the
    semiconductor assembly industry. The Laboratory is now contracting with such
    firms to help complete NIF.

    Unrealistic budgets, a low contingency, and the fast-track construction
    strategy imposed substantial cost pressures that affected project management
    decisions. The NIF Council criticized Laboratory officials for failing to
    develop engineering prototypes that could have tested various NIF components
    and technologies before planning to assemble them--a strategy rejected, in
    part, because of cost pressures. For example, according to the Council, to
    save money, Laboratory managers dismantled a laser scientific
    prototype--called the Beamlet--that would have been useful for conducting
    experiments on technical problems now affecting NIF.

    After DOE approved NIF in 1993, the Laboratory did not appoint project
    managers with the management and technical expertise needed for such a large
    and complex undertaking and failed to install an effective reporting
    structure that could have flagged emerging technical issues and project
    risks. For example:

    � The NIF Project Manager originally selected had no previous experience
    managing large projects, and other managers had little or no expertise in
    lasers, hindering their ability to understand the significance of some
    problems as they arose. Furthermore, the project lacked a chief engineer,
    whose responsibilities could have focused on integrating the construction
    project with needed research and development efforts.

    � The NIF Project Manager held a relatively low position in the Laboratory's
    organization. Despite the NIF project's high profile and its critical
    importance to the future of the Laboratory and to DOE's Stockpile
    Stewardship Program, the NIF Project Manager reported to a Deputy Associate
    Director who, in turn, reported to the Associate Director for Laser
    Programs, who then reported to the Director of the Laboratory. A separate
    manager was in charge of the inertial confinement fusion (ICF) research and
    development programs, which were crucial to the success of NIF. The NIF
    project manager and the ICF research manager each reported on different
    milestones. No one coordinated the two efforts or estimated how one
    program's missed milestones could affect the other program or the overall
    NIF effort. Both the project and research and development managers filed
    separate progress reports, and no one at the Laboratory or DOE assessed the
    impacts of problems and risks on projected budgets and schedules.

    � Senior officials from Lawrence Livermore, the University of California,
    and DOE concluded that the NIF managers were overconfident about their own
    abilities to solve project problems. These officials now acknowledge that
    they should not have placed as much trust in the NIF managers and that the
    Laboratory's "can-do" culture prompted the NIF managers to convince
    themselves, then DOE and others, that they needed no outside help to
    successfully build NIF. The Laboratory's former top laser manager embodied
    this self-reliant attitude and was very persuasive in convincing others that
    NIF would be built within cost and schedule. In its review of NIF, the
    Secretary's Advisory Board task force reported that DOE's weapons
    laboratories "have a tendency not to flag problems to the outside world,
    where they actually might find counsel and help, but rather prefer to go it
    alone for periods too long."

    DOE acknowledges that its managers in headquarters and at the Laboratory
    site office did not properly oversee NIF and, as a result, remained unaware
    of major cost and schedule problems until several months after Laboratory
    managers had first documented them. As a result, the Laboratory continued to
    present--unchallenged by DOE--an inaccurate picture of NIF's progress.

    Several reasons help to explain DOE's oversight weaknesses. At the core of
    DOE's problems is its historical reliance on contractors to conduct the
    Department's missions in the absence of an effective oversight process and
    structure. For example, in response to the charge by outside reviewers of
    DOE's "micro-management," the Department, in the mid-1990s, shifted from a
    "compliance-based" to a "performance-based" management style. DOE's Oakland
    Operations Office, which is directly responsible for NIF, explained to us in
    1997 that it had changed its "approach to oversight." The old approach
    "relied on DOE identifying problems and solutions" while the new approach
    "relies on [the] contractor identifying problems and solutions."

    In addition, the Department lacked staff with sufficient management and
    technical skills to properly oversee NIF's managerial and technical
    complexities. Neither DOE headquarters staff nor field managers were skilled
    in managing large projects, nor did the field staff have technical
    proficiency in laser operations. Also, these staffs' oversight roles were
    diluted by other competing responsibilities--neither headquarters staff nor
    field managers were full-time NIF overseers. Only four DOE on-site technical
    staff worked on NIF oversight, along with one senior headquarters manager,
    and each had other duties.

    To gauge NIF's progress, DOE relied heavily on Laboratory-prepared monthly
    and quarterly NIF reports. However, the reports did not reveal emerging cost
    and schedule problems, even though they required an assessment of project
    risk. These progress reports conveyed project status for senior DOE
    officials, based on criteria developed jointly by DOE and the Laboratory.
    The progress reports focused mainly on meeting construction and research
    milestones, not on linking specific successes and failures to impacts on
    future milestones, the budget, or the overall project schedule. The reports
    also did not identify significant technical or managerial risks facing the
    project, even when these were recognized by senior project managers.
    Moreover, the Laboratory downplayed potential problems in its reports,
    hoping that as problems emerged they would be resolved quickly.

    There was not a clear chain of command between DOE's headquarters and its
    on-site field office at Lawrence Livermore, thereby diffusing accountability
    for NIF. DOE's Defense Programs funded NIF and assigned a project director
    in headquarters, who provided Laboratory managers with programmatic
    direction. Day-to-day supervision of NIF, however, was assigned to a project
    manager from DOE's field office located on site at Lawrence Livermore.
    However, this field office manager reported to another part of DOE--the
    Office of Science--and not to the project director in Defense Programs.12
    While a 1997 memorandum of understanding defined the field project manager's
    responsibilities, it left unchanged the misdirected reporting to Science
    rather than Defense officials in Washington, D.C., who were responsible for
    the project. Laboratory officials said that they considered DOE's chain of
    command confusing and really did not know to whom they reported on a
    day-to-day basis. Because of this confusion, the DOE field manager had
    difficulty in taking active control of a project that fell outside of his
    chain of command. When suggesting revisions to the memorandum of
    understanding in 1998, DOE's field manager noted that the memorandum
    continues to serve a useful purpose in the "absence of consistently accepted
    understanding of the roles of HQ and the Field."

    While DOE managers were hampered by their own technical, managerial, and
    organizational weaknesses, they missed opportunities to enforce Laboratory
    accountability. For example:

    � DOE officials did not aggressively act on their own suspicions. DOE field
    and headquarters officials told us they started suspecting NIF cost and
    schedule problems early in 1999 but then allowed the Laboratory's monthly
    and quarterly reports, which were reviewed and approved by on-site DOE
    staff, to continue reporting satisfactory progress until June 1999. These
    DOE officials, including both headquarters and field staff, did not
    aggressively pursue their suspicions by demanding more information in
    progress reports or by alerting senior DOE officials to potential problems.
    When the Secretary of Energy visited the Laboratory in early June to
    dedicate the NIF target chamber--and declared NIF to be within budget and on
    time--many DOE staff already knew that NIF had cost and schedule problems.

    � DOE's Office of Field Management, a headquarters office that was
    responsible for, among other things, preparing status reports for senior DOE
    managers on large construction projects, raised management issues regarding
    NIF that were largely ignored by NIF program managers in headquarters. In
    June 1999, as a result of growing concern with NIF, this office proposed a
    management action plan for NIF that recommended DOE track eight different
    elements, including status measures, risk assessments, pending actions, and
    completion dates. The office was abolished in June 1999 as part of a broader
    DOE reorganization. Its functions were transferred to other parts of DOE,
    but the recommendation was never acted upon.

    � DOE negotiated a contract with the University of California that placed
    little emphasis on NIF performance, even though the project dominated the
    Laboratory's budget and mission. Also, DOE's evaluation of the Laboratory's
    performance did not reflect NIF cost and schedule problems. As late as
    August 1999, the Laboratory's self-evaluation claimed "outstanding"
    performance for the Laser Directorate, which included NIF. This score
    contributed to an overall DOE score for the Laboratory of "excellent." The
    Laboratory's performance fee is based on these scores.

    � DOE did not enforce the requirement that the Laboratory update its
    estimates for the project's total cost and schedule in its monthly and
    quarterly reports. Enforcing this requirement could have revealed growing
    cost and schedule problems months earlier, giving DOE and Laboratory
    officials more time to prepare a new baseline.

    The absence of effective independent reviews to ensure that project risks
    were recognized and addressed in a timely and effective manner was a major
    flaw in how DOE and the Laboratory managed NIF. Attempts to provide
    independent reviews all had limitations. For example:

    � In 1996, the Laboratory established the NIF Council as an advisory group
    to provide Livermore staff with technical advice; however, this group was
    not independent. Members were chosen by the Laboratory's senior laser
    manager, who also prepared its charter, and received and responded
    personally to its reports. Some NIF Council members described themselves to
    us as "friendly advisers" rather than as independent overseers. Although the
    Council provided valuable advice on wide-ranging technical issues, its
    members were unaware of the project's cost and schedule problems for many
    months. Also, the NIF Council was not aggressive in providing managerial
    advice, although this was one of its charter responsibilities.

    � To fulfill a congressional request that DOE contract for independent
    reviews of its projects, a NIF review was conducted in early 1999, but the
    contractor performing the review did not report any significant cost,
    schedule, or technical issues for NIF.13 At the time of this review, over
    two dozen senior NIF managers knew the project faced growing problems that
    threatened both its costs and schedules, but these concerns were not shared
    with the reviewers. The contractor's report concluded that NIF was "by far
    the best managed of any U.S. Government Project" that the contractor had
    reviewed. DOE's actions may have compromised the contractor's independence.
    For example, DOE imposed strict time limits on the contractor, which
    prevented a detailed review. DOE also instructed the contractor to not
    examine NIF supporting research and development, which was a vital part of
    the NIF program. We discovered that a DOE manager and the Laboratory's NIF
    Project Manager edited the contractor's draft report before it was submitted
    to the Congress. For example, they suggested changes to the final report
    that had the effect of downplaying the extent to which some research and
    development tasks remained unresolved and posed cost and schedule risks.
    Finally, DOE's on-site office at Livermore urged headquarters to discourage
    the contractor from making a second visit to the Laboratory.

    of California

    The failure of senior Laboratory officials to disclose technical issues that
    threatened the NIF project's costs and schedules was a serious error in
    judgment, according to Laboratory and DOE officials we interviewed. Many
    Laboratory managers were aware of serious NIF problems months before these
    became public, yet they told us that they were not in a position of
    responsibility to report the problems outside the Laboratory. When asked why
    he did not disclose that a consensus of his senior managers believed NIF
    could no longer be completed within current budgets and schedules, the
    Laboratory's highest ranking laser manager responded that he first wanted to
    "validate" the extent of the problems before reporting them to the
    Laboratory Director, the University of California, or DOE. Even after these
    problems were validated, the laser manager delayed disclosing NIF's cost and
    schedule problems. As figure 2 shows, technical issues affecting NIF's cost
    and schedule were first raised in the summer of 1998, were documented in
    early December, and were more completely documented and presented to the
    Laboratory's laser director in March 1999. Yet DOE was not formally told
    about the significance of these issues until late June 1999. The Secretary
    of Energy was not made aware of the cost and schedule problems until August
    1999, 2 months after he and DOE's Chief Operating Officer had publicly
    praised NIF's budget and schedule successes.

    Programs

    NIF's primary mission is to support DOE's nuclear weapons program--also
    known as the Stockpile Stewardship Program. This program, which costs $4.5
    billion annually, is intended to maintain the nation's nuclear arsenal
    indefinitely through scientific research and periodic refurbishing of
    weapons. Three different weapons laboratories--Livermore, Los Alamos, and
    Sandia--conduct significant weapons-related scientific research. Paying for
    NIF's cost overruns from within DOE's current nuclear weapons program
    accounts--as the Energy Secretary has pledged--could significantly affect
    portions of these laboratories' programs, as well as the Stockpile
    Stewardship Program as a whole. In developing its new cost and schedule
    estimate, DOE did not take into account which Stockpile Stewardship Program
    components might be eliminated, reduced in scope, or extended in order to
    fund NIF.

    DOE's Stockpile Stewardship Program is intended to maintain the nation's
    nuclear weapons in a safe and reliable state through a program of scientific
    study and periodic refurbishing of the weapons. Currently, the scientific
    study of nuclear weapons is organized around the concept of "campaigns." DOE
    describes campaigns as focused scientific and technical efforts to develop
    and maintain critical capabilities needed to certify that the nation's
    nuclear weapons are safe and reliable. Campaigns have definitive milestones,
    specific work plans, and specific end dates. All campaigns have milestones
    for completing scientific studies by 2005, although some will be completed
    later, up to 2010. NIF experiments would be useful for a number of
    campaigns, including the campaigns to (1) certify the yield (explosive
    energy) in a nuclear weapon's "primary," (2) determine what is needed to
    produce a militarily effective nuclear weapon's "secondary," and (3) certify
    that a nuclear weapon can withstand a hostile (i.e., wartime) environment
    during use.14

    The other key feature of the Stockpile Stewardship Program is the effort to
    extend the lifetime of the nation's nuclear weapons through a series of
    planned refurbishments. These refurbishments will involve disassembling
    weapons and replacing selected components in order to extend each weapon's
    life for several more decades. Refurbishments for two weapons in the
    stockpile--the W76 and the W80--are scheduled to begin later this decade.
    NIF could be useful to the refurbishment process by allowing weapons
    scientists to study the potential effect of proposed changes on a weapon's
    safety and reliability.

    Stockpile stewardship is being carried out as an integrated program
    involving the three nuclear weapons laboratories, four production plants,
    and a test site. Integration can occur on several levels. For example, the
    three laboratories are expected to share experimental facilities, like NIF,
    in order to reduce the overall cost of the program. In addition to sharing
    facilities, the DOE laboratories work together to develop an annual
    certification to the President and the Congress that the nation's nuclear
    weapons remain safe and reliable without the use of underground testing.

    DOE and its three weapons laboratories believe that NIF is a major component
    of the Stockpile Stewardship Program. Experiments conducted on NIF are
    expected to assist in the work of the campaigns as well as in the
    refurbishment of the stockpile. NIF is also expected to help attract and
    train new weapons scientists to replace the program's currently aging
    workforce.

    In general, the delays NIF will experience will not affect meeting the
    campaigns' 2005 milestones since NIF was not expected to be ready in time
    for those. Some weapons scientists told us that, even before NIF's problems
    became public, they had already planned alternative experiments in case NIF
    was not ready on time. However, according to program documents, NIF's delays
    will in turn delay the achievement of some of the experiments needed for the
    2010 milestones by as much as 3 years. With respect to weapons
    refurbishment, the expected delays in NIF will mean that it will not be
    available to help analyze the impact of any proposed changes in the W76 or
    W80 weapons.

    Many important experiments can still be conducted on other facilities or on
    a partially completed NIF. For example, studies of the high-energy density
    properties of materials used in nuclear weapons can be conducted with only
    48 to 96 beams installed in NIF (NIF is designed for 192 beams). This
    information is vital in modeling the performance of nuclear weapons.
    Livermore's Target Physics Review Committee, a NIF Council technical
    subgroup, recommended in May 2000, that while NIF should be completed to its
    full 192-beam configuration, a first cluster of 48 beams should be given a
    high priority and brought up for experiments as soon as practical, both for
    weapons physics experiments and to attract and retain the best scientists.
    The former Associate Director for Defense and Nuclear Technologies at
    Lawrence Livermore told us that while he believes not having NIF available
    may introduce some risk into the stockpile, this increased risk does not
    approach any level that would indicate that the stockpile is unsafe and
    unreliable.

    In a September 1999 statement responding to the problems NIF was
    experiencing, the Secretary of Energy said,

    "I expect all cost issues to be handled within our DOE defense programs and
    Lawrence Livermore National Laboratory (LLNL) budget funding lines. We will
    reprioritize our national security program to reallocate dollars, people,
    and other resources--so the U.S. taxpayer does not foot additional bills
    because of these problems."

    Assuming the Secretary enforces his pledge to fund NIF's cost overruns from
    the Stockpile Stewardship Program's current budget, significant portions of
    the nuclear weapons program could be affected. Currently, several DOE
    officials and veteran weapons experts believe the program is under
    significant stress as numerous activities compete for its limited budget.
    These activities include building and operating additional science
    facilities beyond NIF, replacing aging laboratory and production plant
    infrastructure, and refurbishing weapons in the stockpile. This stress is
    expected to increase as the result of increased security requirements,
    potential new problems with the stockpile, and the need to address the
    program's aging scientific and production workforce.

    DOE has not revealed how it intends to pay for NIF's cost overruns, and Los
    Alamos and Sandia officials are concerned about how NIF's cost increases
    will affect the Stockpile Stewardship Program at their laboratories. DOE
    attempted to gain consensus among the weapons laboratories on a path forward
    for NIF. An April 2000 "White Paper" signed by DOE and its three weapons
    laboratories concluded that NIF was important to the Stockpile Stewardship
    Program, but no agreement was reached on how many beams NIF should have or
    how it should be funded. The paper's authors explicitly stated that the
    White Paper

    "does not address the appropriate revised scope for NIF, the schedule for
    deployment, the proper cost baseline, or the impact on the balance within
    the Stockpile Stewardship Program. Consequently, concurrence with the views
    stated here should not be construed as support for any specific path forward
    or for other yet to be resolved issues."

    This lack of agreement regarding how NIF should be developed and funded was
    echoed in comments made to us by senior weapons scientists at the three
    laboratories. For example:

    � The Associate Director for NIF Programs at Livermore believes that NIF is
    critical to certifying the nuclear weapons stockpile and supports completing
    a full 192-beam NIF. In discussions with us, he recognized that NIF is not
    the only essential facility in the Stockpile Stewardship Program and agreed
    that the rest of the program should not become unbalanced by funding NIF. He
    believed Livermore might accept a "pause" in completing NIF of about 3 years
    at the 120-beam level.

    � The Deputy Director of the Nuclear Weapons Program at Los Alamos told us
    that he believes NIF should be stopped at 48 beams. This level of NIF would
    support about 80 percent of the experiments the program needs to perform. He
    believes that funding a larger NIF would seriously unbalance the stewardship
    program by taking funds away from needed research and production activities.
    Other Los Alamos weapons scientists also expressed the view that NIF had
    only a 50-percent chance of achieving ignition.

    � The Senior Vice President for Nuclear Weapons Programs at Sandia National
    Laboratory told us he believes there is no clear role for NIF that requires
    it to be built to full power immediately. He believes that NIF should be
    built to a smaller scale--such as 48 or 96 beams--and operated for some
    period of time before additional investments are made. Taking this approach
    would allow the NIF program to demonstrate with certainty how much it costs
    to build and operate NIF.

    Senior DOE officials told us that when such fundamental disagreements
    existed in the past, they would hold a "summit" to reconcile the views.
    However, according to our interviews with senior DOE officials, the
    Secretary did not reconcile these views before he made his decision
    regarding the "interim" cost estimate (rebaseline). The Secretary's
    rebaseline decision was not made in the context of which stewardship program
    components might be eliminated, reduced in scope, or extended in order to
    fund NIF. Rather, the Secretary relied on overall funding options. None of
    the various rebaselining options considered by the Secretary described what
    the specific effects would be on the overall stewardship program for fiscal
    year 2001 and in the future. DOE is still trying to determine how to adjust
    the Stockpile Stewardship Program for fiscal year 2001 and beyond to pay for
    NIF.

    The Secretary's pledge notwithstanding, some scientists believe that science
    programs are vulnerable to budget cuts. DOE sponsors a wide variety of
    science activities in such areas as high-energy physics, advanced computing,
    and fusion. Scientists at several universities told us that they believe
    funding for civilian research may be cut as a result of NIF cost overruns.
    Several scientists pointed out that each fusion energy experiment may take
    several years to plan, design, and conduct, requiring a long-term commitment
    for funding. Budget cuts would delay the development and implementation of
    these experiments--the very research that in 1990 the National Academy of
    Sciences recommended NIF be designed to conduct.

    Scientists expressed mixed views about NIF's effect on science research
    schedules. While some scientists told us that schedule problems may delay
    needed experiments on NIF, others said that delays could actually be
    beneficial. Delays could provide additional time to observe the initial
    operations of NIF and to better design and modify planned experiments.

    DOE, Laboratory, and University of California officials are taking several
    actions designed to strengthen the management and oversight of NIF. Some
    actions are complete, but most are still under way. Many of these actions
    address specific deficiencies in existing processes and organizational
    structures. These actions are encouraging, but implementation has only just
    begun in many areas, so an assessment of their ultimate value is premature.

    The Secretary of Energy has taken several actions to establish
    accountability for NIF's problems and to improve DOE's oversight. Stating
    that he was "deeply disturbed" to learn of NIF's cost and schedule problems
    and "gravely disappointed" with both the Laboratory and the University of
    California, he ordered DOE to withhold at least $2 million of the
    University's 1999 program performance fee in recognition of the "significant
    mission disruption caused by the project's problem." The Secretary also
    ordered a report, due later in the year, that can recommend disciplinary
    action against DOE officials responsible for NIF's mismanagement. Other
    actions announced by the Secretary include the following:

    � creating a new headquarters NIF Project Office whose manager is dedicated
    to NIF,

    � assigning six full-time employees to oversee NIF on site at Lawrence
    Livermore, and

    � placing NIF on the Department's Chief Operating Officer's list of projects
    that require senior management attention (watch list), where it is subject
    to more stringent reporting requirements.

    NIF has also been designated a pilot project for the new Project Management
    and Oversight function. DOE intends to hire an outside contractor who will
    give DOE project management expertise on-site at the Laboratory. This
    contractor will be paid from the $2 million fee that the University was
    required to return to DOE. Although not yet fully in place, other key
    features of this new function include the following:

    � creating a headquarters Office of Engineering and Construction Management
    to provide guidance and expertise on project management,

    � developing a career track for project managers, long a weak link in DOE's
    ability to attract and hire highly qualified project managers, and

    � requiring and budgeting for more research and development before
    committing to major construction funding.

    This new project management system will also attempt to establish clearer
    lines of responsibility from DOE headquarters to the field units that
    perform day-to-day contractor oversight at major construction projects. This
    is to be accomplished by requiring that DOE's on-site oversight managers
    report to the headquarters program offices responsible for the projects, as
    well as reporting through their field offices. DOE's headquarters chain of
    command is now more direct for the NIF project. DOE's on-site field manager
    for NIF will report directly to Defense Programs in headquarters, and DOE
    has advised us that his performance rating will be the responsibility of
    Defense Programs in headquarters, not the Oakland Operations Office.

    The Secretary of Energy Advisory Board NIF Task Force also made
    recommendations in its January 2000 interim report. A main recommendation
    was to have DOE develop intensive internal review processes similar to those
    used successfully by its Office of Science to track projects for budget and
    schedule. DOE plans to start this new process in August 2000. The task force
    also called on DOE to clarify roles and responsibilities between
    headquarters and field offices and recommended that NIF be completed in
    phases. DOE is still studying these recommendations.

    While improved processes and organizational fixes are helpful, DOE has
    difficulty implementing management reforms. For example, a 1991 DOE
    initiative, called the "Financial and Project Management Improvement
    Program," sought to give line managers early review authority over projects
    and outlined a plan to hire more well-qualified project managers. DOE
    acknowledged in 1999 that its project management suffers from "serious
    systemic issues needing correction." In addition, past DOE reorganizations
    have attempted to clarify chains of command and upgrade project management
    skills, also with little success.

    The Laboratory is taking a variety of corrective actions to improve its
    management of NIF. The original NIF project manager was reassigned to
    another laboratory, and the Laboratory's laser director resigned. In
    addition, the University of California did not give its Lawrence Livermore
    director a salary raise. Other Laboratory actions include the following:

    � The Laboratory is reorganizing the NIF project to create clearer lines of
    responsibility and to better focus on major risk areas. The new structure
    promises to give the NIF project manager more authority and a more direct
    line to top management. This new structure could more closely integrate the
    NIF project with the laser research and development program that supports
    it. The new project manager has experience with large projects and has
    appointed a chief engineer.

    � The reporting details and procedures for NIF progress reports are being
    changed to better reflect project risks and their potential impacts on
    future budgets and schedules. While reporting standards already exist, these
    new requirements are intended to make the reporting process more accurately
    reflect the NIF's project status.

    � The Laboratory has replaced its NIF Council with a new NIF Programs Review
    Committee that will report to the Laboratory director, not just the laser
    director. In turn, the Laboratory director will forward each report to DOE.
    Laboratory officials told us that they will "invite" DOE to participate in
    selecting new committee members.

    The University of California, as the contractor operating Lawrence Livermore
    for DOE, maintains its own oversight structure for the Laboratory. In its
    report on NIF's problems, the University called for clearer roles and
    responsibilities within the Laboratory, involving the Laboratory director
    more directly in NIF management, creating a new senior position of associate
    director for NIF, and improving the Laboratory's communications
    procedures.15 The report also called on DOE to demand accountability from
    the Laboratory. The University has restructured its own advisory council to
    better oversee all of its national laboratories and has created a new panel
    on project management. The Laboratory is addressing these recommendations.

    DOE, the Lawrence Livermore National Laboratory, and the University of
    California all share responsibility for NIF's cost and schedule problems.
    Each lacked the appropriate skills to manage and oversee the project and
    exercised oversight powers poorly. In addition, inadequate independent
    reviews enabled the Laboratory to withhold significant information from
    external reviewers and the Congress for months. The result is a
    billion-dollar overrun and multiyear schedule delay that could worsen
    because substantial research and development is still incomplete.
    Unfortunately, the Congress cannot know with assurance just how much NIF
    will cost, where in DOE's budget the money will come from, what impact NIF
    will have on the overall nuclear weapons program, or how long it will take
    to complete, even though 1-1/2 years have passed since the Laboratory first
    questioned whether it could meet its most recent cost and schedule.

    These conditions have now spawned new reforms by the Laboratory and the
    University to improve their management and organizational shortcomings. NIF
    has also taught DOE to continue its efforts at streamlining chains of
    command between headquarters program offices and field management units. But
    the Department must work hard to hire--and retain--competent project
    managers. Also, since construction began, the NIF project has not been
    subject to a comprehensive and effective independent review that covers both
    the project and its supporting research and development activities. DOE must
    provide for effective independent review of its projects to ensure that it
    has the best possible advice on technical and managerial issues and that it
    is aware of the remaining risks to NIF's cost and schedule.

    NIF was designed to be a national facility to support an integrated
    Stockpile Stewardship Program for maintaining the safety and reliability of
    the nation's nuclear arsenal. As such, we would have expected any decision
    about future NIF funding to be made in the context of what stewardship
    program components might be eliminated, reduced in scope, or extended in
    order to fund NIF's cost increases, as well as what impact any decision
    would have on the success of the overall program. The lack of agreement
    among NIF's users--the nuclear weapons laboratories--about the appropriate
    path forward indicates to us that considerably more work needs to be done
    before a final decision on NIF is made. Without such an agreement, the
    Secretary of Energy is unable to assure himself, and the Congress, that the
    appropriate cost/benefit trade-off has been made between funds for finishing
    NIF and funds for the other portions of the Stockpile Stewardship Program
    needed to maintain a safe and reliable nuclear weapons arsenal.

    To ensure that DOE has an effective independent review of NIF, we recommend
    that the Secretary of Energy arrange for an outside scientific and technical
    review of NIF's remaining technical challenges as they relate to the
    project's cost and schedule risks.

    To ensure an appropriate balance between NIF and the rest of the nuclear
    weapons program, we recommend that the Secretary of Energy not reallocate
    funds from the nuclear weapons program to NIF until DOE (1) evaluates the
    impact of its cost and schedule plan, as well as any other options for NIF,
    on the overall nuclear weapons program and (2) certifies that the selected
    NIF cost and schedule plan will not negatively affect the balance of the
    Stockpile Stewardship Program.

    In commenting on a draft of this report, DOE raised a number of issues
    concerning how NIF's costs should be counted and our characterization of the
    technical uncertainties facing the project. DOE also said that it is already
    implementing our recommendation for an external independent review and that
    it has met the "intent" of our recommendation to evaluate the impact of
    NIF's cost increases and schedule delays on the overall nuclear weapons
    program.

    With respect to the first issue, DOE said that a substantial portion of the
    cost increases we cited is for developing a target for NIF and that this
    amount should be not included as part of NIF's construction costs. We are
    not suggesting that these costs be included as construction costs. But we
    are suggesting that all NIF costs be identified. Both our figures and DOE's
    show cost increases in related programs and research and development. To
    give the Congress a more accurate picture of the total costs associated with
    the NIF project, the cost of designing and building a target--without which
    the NIF cannot operate--is an essential component of the entire NIF effort,
    regardless of its budget account label. In addition, we included costs borne
    by other laboratories that directly contribute to the NIF effort that are
    not reflected in the NIF project figures that DOE has prepared.

    Concerning our presentation of the project's technical uncertainties, DOE
    disagreed with our characterization of final stage optics as an unresolved
    technical risk, noting that problems associated with optics are only an
    issue of "economics" and that NIF's technical uncertainties are well
    understood. We disagree. As DOE's own expert reviewers have noted, final
    optics is NIF's most challenging technical area and remains an unresolved
    issue. As DOE noted in its letter, if optics cannot be made to withstand
    NIF's high-intensity lasers, they will suffer damage and will have to be
    replaced more often. This outcome has the effect not only of increasing
    NIF's operating costs but also of limiting its performance because fewer
    laser firings would result for a given operating budget. In addition, as we
    noted in our report, substantial technical and cost uncertainties persist in
    the research and development needed to design and build a target for NIF's
    laser beams.

    DOE said that it is implementing our recommendation on the need for an
    independent scientific and technical review of NIF. DOE also cited a large
    number of past and ongoing technical and cost reviews of NIF, noting that it
    has been aggressive in obtaining expert reviews of NIF's technical
    challenges. DOE also said that it is planning an internal review of NIF in
    August 2000 that will include an independent cost estimate, and that this
    review is designed to give the Department "a higher level of confidence"
    that it can complete NIF as planned. We agree that the technical and cost
    components of NIF have been frequently reviewed in the past. However, past
    reviewers did not discover and report on the NIF's fundamental project and
    engineering problems, bringing into question their comprehensiveness and
    independence. Also, since cost and schedule problems were first identified
    in late 1998, there have been no effective independent reviews of NIF that
    have related technical challenges to its cost and schedule risks. The
    internal review DOE is planning for August 2000 resembles the process DOE's
    Office of Science uses to evaluate its major science projects and has
    potential for providing valuable insights into technical and managerial
    issues. However, we believe internal review processes supplement--but cannot
    replace--the value of a separately conducted scientific and technical
    evaluation managed by experts outside DOE and its laboratory system.

    Finally, DOE also said it has already met the "intent" of our recommendation
    to evaluate the impact of NIF's funding options on the Stockpile Stewardship
    Program. DOE stated that its June 1, 2000, "interim" report to the Congress
    and its fiscal year 2001 revised budget request of June 27, 2000, contain
    "an option that considers" the impacts of NIF on the overall Stockpile
    Stewardship Program. However, neither of these reports contains an analysis
    of the impacts of NIF's cost increases on the balance of the Stockpile
    Stewardship Program. DOE's June 1 report contained no details on how NIF
    cost increases will be funded. Its June 27 revised budget request only
    contains details for fiscal year 2001 on how the Department intends to
    reallocate funds to pay for NIF's cost increases. These reallocations
    included reductions in various Stockpile Stewardship Program components
    managed by Lawrence Livermore and other national laboratories but did not
    describe how its proposed reallocations and associated delays will affect
    the Stockpile Stewardship Program's campaigns and their objectives and
    milestones. In addition, the revised budget request did not describe how
    paying for NIF affects Stockpile Stewardship Program activities beyond
    fiscal year 2001. Because this is a long-term integrated program, we believe
    that the Secretary of Energy needs to present in more detail how planned
    cuts and delays caused by NIF affect the overall Stockpile Stewardship
    Program's objectives and milestones. The Laboratory's own technical advisers
    have recommended that better planning is needed to show how NIF is to be
    used within the Stockpile Stewardship Program and that such a plan should
    assess the impacts of delays on both NIF and other Stockpile Stewardship
    Program facilities.16

    Appendix II includes the full text of DOE's comments and our response.

    As arranged with your offices, 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 to the Honorable
    Bill Richardson, Secretary of Energy, and the Honorable Jacob J. Lew,
    Director, Office of Management and Budget. We will also make copies
    available to others on request.

    If you or your staff have any questions about this report, please call me at
    (202) 512-3841. Key contributors to this report are listed in appendix III.

    Jim Wells,
    Director, Energy, Resources,
    and Science Issues

    Scope and Methodology

    To determine the magnitude of the National Ignition Facility's (NIF) cost
    and schedule overruns, we examined all Laboratory progress reports and
    quarterly documentation and interviewed Laboratory and Department of Energy
    (DOE) program officials. We worked closely with budget officials from each
    of the three defense laboratories to determine the amount of their funds
    that supported the NIF project. From these discussions, we constructed a
    detailed table of NIF's costs.

    To document the reasons for the cost and schedule problems, we examined past
    reviews of NIF, including those conducted by the University of California
    and the Secretary of Energy Advisory Board Task Force on NIF. We also held
    extensive interviews with the authors of these reviews. We also interviewed
    all former and current project managers and past senior managers at DOE and
    the Office of Management and Budget. We also examined documents from the NIF
    Council and interviewed its members on several different occasions. We also
    interviewed senior budget officials from DOE and officials from the now
    defunct Office of Field Management. These individuals provided us with
    substantial documentation of past reviews of NIF's progress.

    To assess the impacts from the problems, we interviewed a wide range of
    scientists from Lawrence Livermore, Los Alamos, and Sandia national
    laboratories. We also interviewed past and current officials and scientists
    from universities and from private interest groups.

    To evaluate DOE and Laboratory actions to correct these problems, we
    examined the previously mentioned reviews and interviewed the authors of
    these reviews. This included interviewing officials from the University of
    California and Lawrence Livermore Laboratory. We also attended each of the
    four Secretary of Energy Advisory Board meetings on NIF and interviewed
    members of the board to ascertain their understanding of NIF's technical and
    managerial problems. We also interviewed the authors of the engineering firm
    that conducted a review of NIF.

    Our review was performed from October 1999 through July 2000 in accordance
    with generally accepted government auditing standards.

    Comments From the Department of Energy

    The following are GAO's comments on the Department of Energy's letter dated
    July 28, 2000.

    1. Our response is included in the body of the report.

    2. Our response is included in the body of the report.

    3. Our response is included in the body of the report. In addition, DOE's
    listing of a GAO review of the NIF Project/ICF Program in 1998 is misleading
    because we have not previously analyzed the NIF Project or ICF Program. We
    did receive a one-day briefing in 1998 on NIF and ICF program issues that
    was part of another assignment. Also, DOE stated that the Lockwood-Greene
    review was conducted before the NIF cost and schedule problems were
    identified. However, as we noted in our report, Lawrence Livermore's NIF
    managers were aware of cost and schedule problems before Lockwood-Greene
    conducted its visits in early 1999.

    4. Our response is included in the body of the report.

    GAO Contacts and Staff Acknowledgements

    Jim Wells, (202) 512-3841

    Gary Boss, (202) 512-3841

    In addition to those named above, James Noel, Thomas Kingham, William
    Lanouette, and Robert Sanchez made key contributions to this report.

    (141482)

    Table 1: NIF's Estimated Cost and Schedule Changes 10

    Figure 1: The Completed National Ignition Facility 8

    Figure 2: Timeline of Laboratory's Disclosure of NIF Problems 22

    1. On July 3, 1993, President Clinton announced that the United States would
    no longer conduct nuclear tests, as a result of the Cold War's end and the
    desire to reduce the threat of nuclear weapons. As an alternative to such
    testing, DOE created the Stockpile Stewardship Program to certify that
    nuclear weapons are safe and reliable.

    2. Fusion results when light atoms, such as isotopes of hydrogen, are
    combined under very high temperatures and pressures to make heavier ones,
    such as helium. Fission is the opposite: It starts with very heavy atoms,
    such as uranium, and splits them into two or more pieces called fission
    products. Both fusion and fission release large quantities of energy as heat
    or radiation. Heat energy can be converted into steam to generate
    electricity.

    3. Completion occurs when the building, infrastructure, laser systems, and
    optical components are installed. At that point, experiments can begin.

    4. In commenting on a draft of this report, DOE said that 2004 would be the
    earliest year for gaining ignition.

    5. During our review, the National Nuclear Security Administration was
    created and assumed responsibility for DOE's Defense Programs (including the
    Stockpile Stewardship Program and NIF), effective March 1, 2000. The
    stockpile stewardship activity was reorganized and renamed. Since our work
    was performed before and after these administrative changes were occurring,
    for clarity we refer throughout this report to the organization and
    terminology in use before the changes took place.

    6. Participating Internal Confinement Fusion contractors besides Lawrence
    Livermore National Laboratory are Los Alamos National Laboratory, Sandia
    National Laboratories, the University of Rochester, and General Atomics.

    7. The NIF Council, which advises the Laboratory on NIF-related issues, is
    composed of leading experts on lasers from academia, government, and
    scientific institutions. It has recently been replaced by the NIF Programs
    Review Committee.

    8. NIF Technology Review, Technology Resource Group of the NIF Council (Nov.
    4, 1999).

    9. On October 6, 1999, Secretary Richardson requested that the Secretary of
    Energy Advisory Board form a task force to review the engineering and
    management aspects of the assembly and installation of the NIF laser system.
    The task force is composed of board members and individuals with expertise
    in systems engineering, laser science, and project management. It issued an
    interim report on January 10, 2000.

    10. H.R. Rep. No. 106-336, at 96-97 (1999).

    11. Standards for Internal Control in the Federal Government
    (GAO/AIMD-00-21.3.1, Nov. 1999)

    12. We previously highlighted weaknesses in DOE's chain of command. See
    Department of Energy: Views on DOE's Plan to Establish the National Nuclear
    Security Administration (GAO/T-RCED-00-113 , Mar. 2, 2000).

    13. External Independent Review of the Department of Energy National
    Ignition Facility Project At the Lawrence Livermore National Laboratory
    Site, Detailed Review and Assessment Report. Lockwood Greene Technologies
    (Mar. 29, 1999).

    14. The "primary" is the fission stage of a thermonuclear weapon. Detonated
    first, the primary produces the extremely high temperatures and pressures
    required to produce fusion in the weapon's "secondary." The "secondary," or
    thermonuclear stage, of a nuclear weapon produces its energy through the
    fusion of deuterium and tritium nuclei.

    15. Report of the University of California President's Council National
    Ignition Facility (NIF) Review Committee, University of California, (Nov.
    18, 1999).

    16. Report of the National Ignition Facility Target Physics Program Review
    Committee, May 2, 2000.
    *** End of document. ***