GAO: Uranium Processing Facility faces cost, schedule and technical challenges

While President Obama urges reluctant Senate Republicans to ratify a new Strategic Arms Reduction Treaty with Russia, a recent report from the Government Accountability Office raises concerns about a key Energy Department program designed to ensure the safety and reliability of the nuclear weapons stockpile.

The Uranium Processing Facility is intended to replace deteriorating Cold War-era facilities at the Y-12 plant in Oak Ridge, Tenn., but GAO reported last week that "costs and potential schedule delays raise concerns about [the National Nuclear Security Administration's] ability to construct the facility within its cost and schedule goals."

In addition, the auditors found that NNSA plans to make key project decisions involving unproven technologies before those technologies can be reliably demonstrated, thereby offering reasonable assurance they will work as planned.

"As a result, NNSA may be forced to modify or replace some technologies, which could result in costly and time-consuming redesign work," GAO reported. "Moreover, Congress may not be aware that NNSA may be making critical decisions to proceed with construction projects without first ensuring that new technologies reach the level of maturity called for by best practices."

Also, changes in the composition or size of the nuclear stockpile that would result from the new START treaty, if it is ratified, or from implementing recommendations in the Nuclear Posture Review the Obama administration conducted earlier this year, could affect some capability or capacity requirements of the UPF, but Energy officials expect the impact on the project to be relatively minor.

Agency officials generally concurred with GAO's findings, but said they are taking appropriate steps to manage the technology risks inherent in such a complex project.

Construction of the Y-12 plant, which the new facility is intended to replace, began in 1943 under the Manhattan Project. Now a patchwork of facilities, Y-12 is the central weapons complex for producing enriched uranium components necessary for maintaining the nuclear stockpile and providing nuclear fuel to the Navy. The new facility would consolidate and modernize operations, thus reducing production and processing costs while improving worker safety.

In 2004, Energy estimated the UPF would cost between $600 million and $1.5 billion to build. The department's current estimate, which was developed three years ago, is between $1.4 billion and $3.5 billion -- double the original. GAO noted engineering and design costs, which are less than half complete, have increased 42 percent. Funding shortfalls have led to schedule delays as well, the auditors noted. NNSA officials expect the facility will be completed in 2020 or later.

Energy officials said an updated cost estimate for the project would be included in the administration's 2012 budget request for the department, which will be submitted to Congress early next year.

"Cost estimation is a huge issue," said Deputy Secretary of Energy Daniel Poneman in an interview last month with Government Executive about the department's long-standing problems with project management. Improving project management and cost estimation are top priorities for department leaders, he said, noting the technical complexity of many of Energy's projects contributes to the challenge.