The National Nuclear Security Administration’s W76 warhead life extension program could face cost overruns and schedule delays if agency officials can’t better control the per-unit cost of the refurbishment effort, the Department of Energy’s Inspector General said in a report released yesterday. The IG said that the NNSA’s own cost projections indicated that it would miss cost reduction targets by Fiscal Year 2014, jeopardizing the project’s production schedule and endangering a follow-on effort to refurbish the B61 bomb. “If NNSA is unable to achieve the cost per unit reductions necessary to meet the W76 LEP’s planned production requirements, it will require additional funding, a reduction in scope, or a delay in production,” the IG said in the report. “Delays in completing the W76 LEP within schedule, for instance, could prevent NNSA from beginning full production work of the B61 bomb refurbishment to meet existing United States’ commitments.”
Funding for the program is expected to be relatively flat over the next few years, the IG said, noting that budget increases for FY 2013 and FY 2014 are only expected to be 2.9 percent higher than FY 2011 levels. However, production is expected to increase 59 percent during the same period. To compensate, the NNSA had worked to reduce the unit cost of refurbished warheads by 35 percent starting in FY2014, but it is only expected to realize 25 percent savings. “The increase in production appears to be unsustainable given the projected funding,” the IG said. “The goal of reducing the unit cost of W76 LEP production appeared to be one of the only paths to keeping the Program on track without adversely affecting other NNSA programs.”
The IG said it was told by NNSA officials that funds would be shifted from other programs if necessary to boost the W76 refurbishment, but the agency hadn’t compiled a plan for moving funds or analyzed the impact of such a decision. In response to the IG report, the NNSA said it would develop a “forward-looking” plan to help get the program back on track and that the agency’s earned value management system would be tailored for the refurbishment effort. “While NNSA acknowledges that additional adjustments to plans will be required to maintain the program within budget constraints, we believe that the appropriate management tools and management focus are in place to ensure successful execution of the W76 refurbishment,” NNSA Associate Administrator for Management and Budget Cynthia Lersten said in a response to the Inspector General included with the report.
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