System Upgrade on Hold Due to Lack of Funding
Kenneth Fletcher
NS&D Monitor
5/15/2015
Costs have more than quadrupled for a security system upgrade at the Nevada National Security Site with no firm completion date due to a lack of funding and project management issues by contractor National Security Technologies, LLC, according to a Department of Energy Inspector General report released this week. The Argus project aims to update the current aging enterprise security system at NNSS, and was launched in November 2010 with a cost estimate of $8.4 million and an October 2011 targeted completion. However, total project costs have increased to $35.3 million and the project has been on hold since May 2014. “We determined that the Argus project experienced schedule delays and cost increases as a result of inadequate project management and funding issues,” the IG report states. “As a result, [protective forces contractor] Centerra Nevada has continued to rely on an outdated security system with backup countermeasures to ensure security is maintained.”
NSTec did not perform its role as project integrator, according to the IG, and Argus has “lacked consistent NSTec leadership throughout its existence.” For example, the project manager has changed five times since the effort began in 2010. “In our opinion, the lack of consistent management also likely hindered the project’s progress,” the IG stated. “Further, [the National Nuclear Security Administration’s] Office of Acquisition and Project Management told us that NSTec’s inexperience with projects of this complexity and their associated project management requirements led NSTec to significantly underestimate the challenges involved in the Argus project.” Additionally, “poor communication between the Nevada Field Office and NSTec personnel managing the Argus project was also a contributing factor to the situation,” according to the report.
NSTec’s original estimate of 8.4 million jumped to $17.8 million in a June 2012 estimate largely to a huge increase in labor and contingency costs. “Basic project management principles related to incorporating risk management into the early stages of a project were not followed as required by applicable Department guidance,” the report states. The cost increase triggered the more stringent project management requirements necessary for DOE projects over $10 million, which as a result further increased the price tag, according to the report.
Due to Failure to Respond to Congress, Project Not Funded Since FY’14
While the NNSA requested funding for the project in Fiscal Year 2014, it did not receive any funding because “the Nevada Field Office had not provided a detailed explanation for the project’s significant cost increases to the Senate Appropriations Committee” and House appropriators had put off funding pending NNSA’s reorganization, the report states. The project is not funded this fiscal year because “by the time Nevada Field Office officials learned that the Argus project was not funded in the FY 2014 budget, the deadline to submit the FY 2015 budget request had passed,” the report states. Funding for Argus has been requested in FY’16. If funding is provided, the project could restart in March 2016 and be completed by the end of FY 2019.
Integrated Project Team Addressed Issues
The NNSA and NSTec have taken a number of actions to address the project management issues, the report notes. An integrated project team was established in May 2012 with officials from NNSA, NSTec and Centerra Nevada. The team developed a recovery approach for Argus and a project recovery plan with a new cost, schedule and risk baselines and clearly defined roles. “Further, to improve communication, NSTec’s project managers were reorganized, and project management was elevated to the division level,” the report states. “NSTec also hired a new Project Division Manager and conducted communication training for its project managers. Finally, NSTec obtained technical guidance from NNSA’s Office of Acquisition and Project Management on how to incorporate the more stringent line item project management requirements into the Argus project.”
Those actions should help address the issues uncovered by the IG, according to the report. “Should Congress authorize funding for the Argus project, we suggest that the Manager, Nevada Field Office, ensure that Argus project requirements, including all safety requirements, are identified and incorporated into the design and that effective communication is maintained among the implementing entities,” the report states.
