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Friday, August 3, 2012

Pentagon Official Casts Doubt On Possible Move Of Major NNSA Projects To DOD

Anonymously contributed: ============================================================================= Pentagon Official Casts Doubt On Possible Move Of Major NNSA Projects To DOD Weapons Complex Monitor August 2, 2012 ============================================================================ House authorizers went too far in drafting language that would move the National Nuclear Security Administration’s two biggest projects, the Uranium Processing Facility and the Chemistry and Metallurgy Research Replacement-Nuclear Facility, to the Pentagon, according to a senior Department of Defense official. Speaking at a Capitol Hill Club breakfast event yesterday, Deputy Assistant Secretary of Defense for Nuclear Matters Steve Henry said the Pentagon sees the value in treating the facilities as military construction projects, but did not favor completely absorbing the projects. Language in the House-passed version of the Fiscal Year 2013 Defense Authorization Act would move management of the project to the Pentagon while authorizing forward-funding for the projects starting in FY2014. “We thought it would be good for the Department of Energy, NNSA to also have those authorities,” Henry, who is leaving the Pentagon this week to head up global security work for Nevada National Security Site contractor National Security Technologies, LLC, told NW&M Monitor after his speech. “We did not mean we would do that.” The Pentagon has taken a keen interest in efforts to modernize the nation’s weapons complex, and Henry said DoD had become concerned with massive cost and schedule overruns for UPF and CMRR-NF, the linchpins of the modernization effort. “Huge projects always have their own problems, and we said, based upon the funding, we didn’t see that they were funded quite properly the way DoD does it,” Henry said during a question and answer session after his speech. “And we would have liked to have seen it reduced in time to build, which helps reduce cost, but that means your funding has to go up. And we could not see how DOE/NNSA could fund both projects within their budget that had been appropriated.” Because of the funding problems, Henry said DoD suggested it couldn’t build both facilities at the same time, and it prioritized UPF because of the deteriorating condition of existing uranium facilities at Y-12. But he noted that treating the projects as military construction projects would have significant benefits. The approach “allows you to up-front fund. It allows you to understand how much money you’re going to have in the out years,” Henry said. He later added, though, that DoD was not well-suited to take over management of the projects. “From my gut feeling I’d have to say that it’s one thing for NNSA to have a contractor to say what they want for their specifications, and to monitor how it’s built. But it’s completely different to have DoD do it and saying here it is, and handing them the key to that,” Henry said. “How do we make sure it still meets all the safety bases and the operational issues? Although we work closely with them, we haven’t worked that closely on building kinds of facilities and developing the integration to be able to support something like that.”


Anonymous said...

The pentagon is saying they can do budgeting better than NNSA or DOE.
That is just too funny.

Anonymous said...

5:49 AM hints that DOD has experienced a few cost over runs on some projects. Considering that they manage thousands of projects each year, this may be understandable. It would be better if they had no cost over runs, so there is room for improvement.
NNSA and DOE, on the other hand, have a near perfect record of running over on each and every project that they manage. It probably gives comfort to Russia, China, North Korea, Iran, Syria and others to observe that the same folks that gave us Solyndra are in charge of the nuclear weapons complex.

Anonymous said...

Though both have some success that they can cite for arguments sake, neither's record is particularly good deploying advanced technology within project plans.

Managing the development and deployment of new technology is a risky enterprize.

In unsubstantiated conversation some years ago, I was told that Intel directors are prepared to plan for 3x the project estimated cost of a new technology deployment. In other words they know from experience deployment is uncertain and that they need to have deep pockets.

DOE personnel also knows from experience that novel technology deployments are uncertain. The difference is they are not able convince congress that an uncertain project is worth funding, so all must downplay the uncertainty and then work very hard to keep scope, budget, schedule and risk in-line.

Pentagon, CIA, DHS and DOE all have the same general issues when deploying novel ideas, it is part of the process of revealing the unknowns, not related to personnel expertise.

When asked how he managed this dilemma the late, great Carl Hausmann said that he made sure his sponsors were well informed of the risks, were committed and had sufficiently deep pockets.

Anonymous said...

5:49 here:
Here a quote from Sen Coburn(Oklahoma) in Feb 2011. Please note the first sentence. I don't see how this would give me any confidence that the budgeting with DOD would be better.

"As you know, the Pentagon is one of the few agencies in the federal government that cannot produce auditable financial statements in accordance with the law...
For decades, the mission of the Department of Defense to comply with basic financial standards has been viewed as a waste of scarce resources, even more so during a time of war. However, this is not supported by the actual experiences of Department of Defense agencies. For example, the Marine Corps is already seeing impressive returns on their meager investments in the pursuit of financial improvement and audit readiness. The Defense Information Systems Agency has also identified tens of millions in net savings by improving their financial operations.
In light of these savings and upcoming budget challenges, I ask you to aggressively pursue financial improvement and audit readiness in order to preserve the military's ability to take care of our troops today and to invest in the needed modernization of our weapon systems for the future. If done properly, this effort to improve your financial management will yield savings and prevent cuts to military personnel and programs which could occur otherwise." (Sen Coburn, Feb 2011)

Anonymous said...

Almost nobody in government produces an auditable financial statement, except in some instances where bond financing is involved and then only about the material bond issues.

To comply with generally accepted ,accounting principles including audit records and procedures are required that are very expensive.

Anonymous said...

To 2:56 pm:
You may be right about the cost estimates for advanced technology development and deployment. The subject under consideration does not fall in any way close to that field. Military construction is just what it sounds like, construction of buildings and facilities for military use. There is a good DoD record of estimating and managing such projects, and this was one tactic to attempt to get needed projects moving forward in spite of the legacy of DoE construction estimation and management.

Anonymous said...

Agreed. They are repetitive, the specifications and scope are well known, the work processes are established and well known, quality metrics are characterized and the risks are identifiable.

Almost by definition though, advanced technology deployment is none of the above. It is the first deployment, it has new items, it has both known and significant unknown risks, and previous experience may only apply to part of the work scope. NIF and CMMR certainly fit this definition as does almost all of the non conventional facility work at both labs.

There are ways of minimizing the risk, and it is very important to manage sponsor and customer expectations, but the likelihood of late delivery, higher than estimated cost and scope shortfall is naturally higher in advanced technology deployments than in ordinary conventional facility projects.

For example, Pulte met its original project goals much more often than Frank Lloyd Wright. (a and the customers wife's chastity was not at risk..)

Still Wright's work has its place.

Likewise, NIF and CMMR have their place.

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