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Observations from the Panel’s Information Gathering

During the past year, the panel’s inquiries into the health of the nuclear security enterprise and progress in reforming its governance and management included multiple interactions with key leaders in the National Nuclear Security Administration (NNSA), a meeting with the Deputy Secretary of Energy, and the following:

• “Pulse checks” with the head managers of all seven of NNSA’s sites and each site’s field office manager (FOM),
• A pair of detailed examinations of specific management practices,
• Two group discussions with Department of Defense (DoD) managers responsible for nuclear security,
• Seven pilot discussion groups at NNSA Headquarters (HQ),
• A site visit to the Kansas City National Security Campus, and
• Meetings with the NNSA Administrator and her principal deputies.

The following sections summarize what the panel learned in connection with the aforementioned information gathering. The panel’s analysis and conclusions in Chapter 3 are based on the following information.

PULSE CHECKS WITH LEADERS ACROSS THE ENTERPRISE

From late November through mid-December 2018, selected members of the panel and its staff conducted pulse-check interviews with NNSA field office and management and operating (M&O) leadership from six sites: Lawrence Livermore National Laboratory, Nevada National Security Site, Kansas City National Security Campus, Y-12 National Security Complex and Pantex Plant, Savannah River Site, and Sandia National Laboratories. The panel as a whole carried out a pulse check with the Los Alamos National Laboratory director and his associated FOM on January 7, 2019. The pulse checks were designed to gather current perspectives on the health, functioning, and culture of the enterprise; assess the level of understanding of priorities, roles, and responsibilities; and hear about relationships among the field offices, M&O partners, and HQ. They were exceptionally helpful as an indicator of the degree to which change is taking root.

Interviewees were given specific discussion prompts about their understanding of, and alignment with, the Administrator’s priorities; their thoughts on working relationships throughout the nuclear security enterprise; their awareness of, and involvement with, strategic planning; and any other insights about governance, management, and culture. Overall, the interviewees provided consistent comments in response to these discussion prompts. Generally, they recounted a sense of improvement almost across the board. It is important to temper that with the caveat that these interviews involved only high-level leaders,

who are in positions that allow them to see the vanguard of change. The degree to which improvements in management and collaboration have penetrated their organizations and become ingrained remains to be seen.

The pulse-check interviewees feel that the enterprise is moving in the right direction, and a number of them believe that relationships and operations have improved in recent years. However, the interviewees see the need for continued improvement—for example, in making the laboratory/plant/site strategic planning exercises more useful and in continuing to emphasize integration across the enterprise.

Following are some key takeaways organized by topic.

Administrator’s Communication on Change and Priorities

Most leaders offered positive remarks about the Administrator’s communication—through one-on-one conversations and NNSA Council meetings, for example—regarding governance and management and her priorities. They said that the Administrator has been clear and consistent with her messages. She communicates progress that has been made on governance and management and work that remains to be done.

The interviewees reported hearing the following priorities from the Administrator: teamwork, clarification of roles and responsibilities, workforce development, investment in infrastructure, improved governance, and improved leveraging of capabilities across the enterprise. Teamwork and leveraging capabilities were the two messages mentioned most often. Two sites also noted her operational priorities related to life-extension programs (LEPs) and defense programs more generally.

Several interviewees reported that the Administrator has communicated directly with personnel throughout the enterprise through social media and town hall meetings during site visits as a means of disseminating her priorities more broadly. Field office and M&O leaders believe employees have a general understanding of the Administrator’s priorities. Those leaders reported different methods of reinforcing the Administrator’s messages, ranging from talking about them in all meetings (including field office all-hands meetings and laboratory operational meetings) to including them in individuals’ performance measures.

Cross-Enterprise Relationships and Trust

All sites reported a good working relationship between field offices and M&O personnel. For example, one laboratory director emphasized the value of the field office providing an “independent set of eyes” on laboratory activities that can help the laboratory identify needed course corrections.

Three field offices reported that they have been working on improving their relationships with HQ. They have achieved some success, but more needs to be done. One field office reported participating in a variety of activities with HQ, including executive forums and Management Council meetings, to maintain alignment.

Three sites reported that HQ oversight is becoming more collaborative and less transactional. One laboratory noted in particular a good partnership with HQ program offices, and an improving relationship with HQ functional offices, while observing that there is some unevenness across NNSA in terms of teamwork. There were reports that portions of the Albuquerque Complex exhibit less of a spirit of partnership and seem less aligned with the Administrator’s priorities, as evidenced by slow responses to some inquiries and a high level of risk aversion in some decision making. The panel will examine this topic further in 2019.

Four sites reported an improvement in cross-enterprise relationships in terms of communication, sharing of best practices, and transparency. In particular, some of the interviewees mentioned

improvements in cross-enterprise integration, though they added that more needs to be done. Two interviewees noted the value of temporary details from HQ to the field and vice versa.

Enterprise-Wide Strategic Planning

All interviewees except one reported being engaged to some extent in the enterprise strategic planning process, with two field offices being very engaged, including participating in working groups. Most of the M&O partners noted that their site strategic plans had been used to inform the strategic vision, and most reported seeing and commenting on Strategic Vision drafts. Four sites observed that NNSA is in a time of dynamic change, and looking at things from a strategic perspective will foster integration and build on the strengths across the enterprise.

Laboratory/Plant/Site Strategic Planning

Some sites reported field office involvement in the development of the site strategic plans, and it was noted that discussions during the presentation of these plans are becoming more strategic from year to year. One field office said that briefings of the plan revealed that some NNSA offices were surprisingly uninformed about the work of the sites, while others were surprisingly well informed. There is more integration across the enterprise than some had realized. To strengthen integration, it was suggested that the plans be shared among the seven M&O partner organizations before presenting them to NNSA. It was also suggested that metrics should be developed, that the plans should look further out, and that the laboratories and plants should attend one another’s presentations to improve understanding of each other’s challenges and plans.

Overall, there is a sense that the components of the enterprise are moving toward an increased sense of shared mission and that management and governance have improved. It was widely felt that the ability of the FOMs to report directly to the Administrator has been beneficial.

BUDGET AND REPORTING CLASSIFICATION CODES AND OTHER BUDGETARY CONTROLS

Both A New Foundation for the Nuclear Enterprise (the “Augustine-Mies” report) and Securing America’s Future: Realizing the Potential of the Department of Energy’s National Laboratories (the “CRENEL” report) noted a proliferation of budgetary categories and controls at NNSA that imposed undue burdens and constraints on the ability of NNSA and its M&O partners to manage.¹ Those reports recommended that the numbers of these budgetary categories and controls, both those established by NNSA and the Department of Energy (DOE) as well as some by Congress through appropriation, be pared down and loosened where possible.

The panel examined these issues through a series of interviews with officials in HQ offices, their M&O partners, and at the White House Office of Management and Budget (OMB). NNSA has demonstrated a significant reduction over the past several years in the numbers of budget and reporting (B&R) codes under its direct control, largely by eliminating categories that contain only small amounts of

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¹ Budgetary categories and controls define blocks of appropriated funding and specify the purposes for which such funding may be used, such as for labor or construction under particular programs or at particular sites. Such controls may also limit use of the funds to particular fiscal years or other periods and may impose other limits on permissible use. Moreover, spending must be reported in terms of these categories.

money left over from earlier appropriations. However, in many cases it appears that the reduction in numbers has had little effect on the burden felt across the enterprise, because the elimination of these seldom-used leftover accounts affects few people at the sites. Thus, while NNSA made some progress on one of the specific “budget atomization” recommendations made in the Augustine-Mies and CRENEL reports, that progress may have actually yielded little improvement in efficiency or reduction in burden.

NNSA is undertaking a multiyear financial integration project to develop and apply a cost-collection tool intended to enable direct and indirect costs to be determined and compared across all sites and programs.² According to some officials at both HQ and its M&O partners, the initiative also would enable NNSA to consolidate its reporting categories down to fewer B&R codes for each congressional control category.

EXAMINATION OF THE APPROVAL PROCESS FOR MANAGEMENT AND OPERATING CONTRACTOR ANNUAL COMPENSATION INCREASES

The Secretary of Energy Advisory Board (SEAB) Task Force identified the annual process to approve M&O contractors’ compensation-increase plans (CIPs) as an example of “duplicative oversight layered onto laboratory operations in response to process lapses” resulting in “a reduction of laboratory authority for decision making.”³ DOE and NNSA began making process improvements in 2015, and—working with M&O partners—continue to make improvements today. The panel decided in spring 2018 to review these changes as an example of how effectively NNSA is working with its M&O partners to identify and address burdensome practices and unnecessary oversight and, in this instance, to determine whether “laboratory authority for decision making” was restored.

To perform this assessment, the panel reviewed directives and guidance issued by NNSA and DOE, analyzed data and results of the 2017 and 2018 increase plans by site, and conducted interviews with NNSA officials in the acquisition and procurement office who are responsible for the annual CIP approval process. Panel members and staff also interviewed human capital officials at two laboratories to understand their partnership with NNSA and its impact on the elimination of burdensome practices.

NNSA established a working group with representatives from each M&O partner to collaboratively discuss the CIP steps, the complicated process of comparing categories of M&O employees’ salaries against market rates for comparable categories in the private sector, and the needs of M&O partners to be able to attract, pay, and retain leading candidates, especially in hard-to-fill skill areas. The M&O contractors rightfully emphasize that their ability to be competitive is critical to their ability to accomplish their goals. NNSA leaders understand this need and have emphasized the importance of attracting top talent. To do so, NNSA’s Office of Contract Human Resources has indicated a willingness to partner with M&O personnel to develop special programs to meet laboratory-specific challenges, if and as needed.

Additional improvements have been made to streamline and reduce the burden noted by the SEAB Task Force. New procedures, developed in collaboration with the M&O partners, allow CIPs that fall within well-documented third-party thresholds (specified by NNSA based on OMB guidance) to get approval without needing to submit extensive background/supporting data. In 2018, two M&O

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² The Government Accountability Office recently issued a report about NNSA’s financial integration effort: “National Nuclear Security Administration: Additional Actions Needed to Collect Common Financial Data,” January 2019, https://www.gao.gov/assets/700/696683.pdf.

³ Secretary of Energy Advisory Board (SEAB) National Laboratory Task Force, 2015, Report of the Secretary of Energy Task Force on DOE National Laboratories, https://www.energy.gov/sites/prod/files/2015/06/f23/SEAB%20Lab%20Task%20Force%20Interim%20Report%20Final_0.pdf, Recommendation 2.2.1, p. 22.

contractors exercised this option, and they reported that they filed CIP submissions of about five pages in length to document their circumstances. This is in contrast to the previous paperwork requirement that often resulted in CIP submissions of 100-page Excel spreadsheets to document and justify compensation requests.

The panel found that NNSA has met the goal specified by the SEAB Task Force recommendation and has made several additional changes to decrease the burden and standardize the timeliness of the annual CIP process. Specifically during the past years, NNSA has been meeting the November deadline for final approval of CIPs.

With better collaboration between NNSA and the M&O contractors on compensation, new questions are now arising about the kinds of total compensation packages—pay and benefit combinations—that M&O contractors can offer candidates and their employees. M&O contractors point out that to attract top talent, industry leaders with whom they compete increasingly offer job candidates and employees packages that include more flexible working arrangements, profit sharing, employee-choice benefit programs, and other innovative combinations of pay and benefits.

RELATIONS BETWEEN THE NATIONAL NUCLEAR SECURITY ADMINISTRATION AND THE DEPARTMENT OF DEFENSE

The panel met with personnel from HQ, field offices, M&O partners, and various organizations within the DoD during 2018 to explore relationships between DoD and NNSA.⁴ The panel heard from most of these sources that the partnerships and working relationships have improved significantly since the 2013–2014 time period of the Augustine-Mies study. Although some concerns were raised, most personnel are optimistic about the future of the relationship.

A common sentiment from both DoD and NNSA personnel is that these relationships have improved in part due to shared objectives and increased opportunities to work together. The NNSA Administrator told the panel that meeting Nuclear Posture Review (NPR) requirements is her top priority and that she has repeatedly emphasized the need for NNSA personnel to work effectively with their DoD counterparts. While there are written directives regarding the NNSA and DoD relationship,⁵ they do not appear to be well understood or highly valued by many of the individuals with whom the panel interacted. Instead, individuals credited the personal relationships they had built with their counterparts across organizations.

Personnel interviewed largely noted clarity in their organizational processes and an improved understanding of processes within their collaborating organizations. NNSA has established a new Program Executive Office for weapons in Albuquerque, which works closely with DoD. Long-standing formal structures for collaboration, including the Nuclear Weapons Council, its subordinate Standing and Safety Committee, and the weapon-specific Project Officers Groups, are active, meeting regularly, and deemed to be effective. These mechanisms should encourage the transparent exchange of information about program plans and operations and should also foster teamwork.

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⁴ See Appendix B for the complete list of interviewees.

⁵ Some selected examples include “Procedural Guideline for the Phase 6.X Process”; the Federal Program Managed Weapon Acquisition Guidebook; NNSA’s “DP Program Execution Instructions”; DoD Instruction 5030.55, “DoD Procedures for Joint DoD-DOE Nuclear Weapon Life Cycle Activities”; AFI 63-103, “Joint AF-NNSA Nuclear Weapons Life Cycle Management; Development, Production, and Standardization of Atomic Weapons Agreement”; “Interagency Agreement between Department of Navy, Strategic Systems Programs, and DOE, NNSA”; and a memorandum of understanding between the Energy Research and Development Administration and the DoD on Nuclear Weapons Development Liaison Procedures.

While most participants believe their partnerships could weather possible future stresses, several potential concerns were raised, including rates of progress on building and maintaining facilities, options for replacing obsolete components, rate of technology maturation, common cybersecurity strategies, and sufficient funding for the increasing workloads required by the NPR. Both DoD and NNSA personnel suggested that more opportunities to share staff, perhaps through rotations among DoD and NNSA offices, would further improve relationships and increase understanding.

HEADQUARTERS DISCUSSION GROUPS

The panel and its staff built on the discussion groups held with field office and M&O personnel during site visits in 2017 and 2018 by conducting seven “pilot” discussion groups at HQ with the following offices:

• Materials and weapons, a mix of program senior and middle managers (due to scheduling issues, this group was split into two discussion groups);
• A mix of program senior and middle managers who interact with the laboratories and scientists;
• Contracting leadership;
• Safety leadership;
• Safety experts; and
• Programs and projects (infrastructure), senior and middle managers.

The groups were small and involved fewer than 30 participants in total. In addition, the topics discussed and perspectives offered by each group varied widely. As such, the observations reported here should be taken as suggestive only, not definitive or generalizable; the discussion groups are referred to as “pilots” because they served as a way to explore topics, but they are not necessarily representative of the full staff. Since the discussion groups provided useful insights, the panel will use these results to identify issues to explore further in 2019, and it intends to conduct more discussion groups with HQ offices during that period.

Governance and Management Initiatives

The participants’ awareness of governance and management initiatives in the past 5 years or so, and of their effectiveness, varied. Some participants were vaguely aware of the NNSA’s Special Directive on Site Governance (SD 226.1B) and the site governance peer reviews, while others had detailed knowledge of these and other governance and management directives and initiatives. Not surprisingly, those with little or no awareness of management and governance initiatives could not pinpoint improvements in that area. Those with awareness could identify improvements, and improved transparency, communication, collaboration, integration, and mission focus and alignment were named as outcomes. Only one or two participants were aware of these initiatives but had not observed improvements.

Other governance and management issues raised include institutionalized risk aversion that has created an environment where it is difficult to operate and the need for greater integration across HQ offices.

Relationships with Field Offices

HQ interviewees reported widely varying relationships with the field offices. Some feel that relationships with field offices have improved, while others have relationships they describe as stagnant or even nonexistent (one participant noted a reluctance to even interact with field offices). There is also a wide range of variance in the level of contact and coordination with field offices. Some HQ offices communicate regularly with field offices through institutionalized and informal pathways, including annual planning meetings, biweekly and monthly calls, and sharing of lessons learned. Others have no formal ties with field offices and little to no informal communication. Some comments indicate that clarity on the role of the field offices is lacking. There is consensus that the quality of relationships with field offices depends on the site and is driven by both personality and culture.

Relationships with M&O Partners

There was an overall consensus across all discussion groups that relationships with M&O partners are strong, collaborative, and have improved within the past 5 years. Participants emphasized that there is an open line of communication and trust between the M&O contractors and HQ and a strong partnership mentality with well-defined lines of accountability. M&O contractors were repeatedly deemed to be essential to NNSA’s work. There was no negative feedback on relationships with M&O contractors; however, one participant indicated that his office does not have relationships with M&O contractors because the field office serves as the intermediary.

Adequacy of Decision-Making Authority

HQ personnel appeared comfortable, in general, that they have the authority needed to make decisions. Those in senior positions were quite clear about their responsibility and how to wield it. In several instances, authority per se is invested in their responsibility to carry out specific requirements that have been fully documented or which they are to report to a “higher authority” (e.g., DOE or Congress). On the other hand, some participants reported an abundance of caution and checking of decisions, with multiple decision makers involved before final approval is obtained, resulting in a lengthy process in some instances. In addition, multiple layers of decision making and approval sometimes result in conflicting opinions that are difficult to adjudicate—especially if the source of one of the opinions is DOE. However, programs that coordinate with DOE on their area of responsibility reported that communication and coordination with DOE to work out questions or decisions is typically collegial and routine, especially in cases where NNSA needs DOE’s advice but not its permission.

Burdensome Practices

In general, participants continue to observe several areas where there are burdensome practices. This issue seems to be strongly correlated with the culture of risk aversion (and related to decision making per the preceding paragraph), and it is difficult to disentangle the issues. Oversight, second guessing, and multiple requirements for reporting by and to internal and external groups are among the areas that were mentioned most frequently. Interaction with DOE on requirements can reportedly lead to burdensome practices; for example, DOE seemingly sometimes issues regulations with far-reaching implications without consulting NNSA. However, in at least one instance, NNSA has worked with DOE intensively to coordinate and avert some practices that would have been burdensome and unnecessary.

Some participants noted that burdensome practices such as reporting requirements, once initiated, were rarely if ever retracted.

Accountability and Cooperation

In general, participants felt that there is a shared responsibility to get the work done and that considerable effort is being expended to work collaboratively across the enterprise. However, there is still progress to be made. The issue raised by multiple program groups was the need to integrate from the design phase onward to production, which requires collaboration across multiple locations from early on in the project or program. This also requires those involved to recognize that successful completion means interdependency, such as weapon designers being equally accountable for success as the end-point production organization, and vice versa. Further investigation by the panel into the effectiveness of product realization teams may be useful.

Functional offices recognize that—in accordance with SD 226.1B—defining their roles and then successfully operationalizing those definitions will take ongoing cooperation and attention across multiple sites, depending extensively on transparency as a mechanism for building trust, as well as open communication around the end goal. The Office of Defense Programs has formally spelled out accountability, and some participants felt that that model could and should be used by other parts of the organization.

SITE VISIT TO THE KANSAS CITY NATIONAL SECURITY CAMPUS

The panel made a 1-day site visit to the Kansas City National Security Campus (KCNSC) in early July 2018. It came away with a very favorable impression of the site, particularly with regard to the following aspects.

Communications and Shared Responsibility

Communications among the plant, the field office, and HQ is good. Communications with federal HQ program managers (e.g., for particular LEPs) are consistent and occurring regularly. The field office and plant staff regularly meet to discuss performance measures and to ensure that the channel of communication is clear and open. The site has a culture in which everyone feels they own the outcome and share common goals. There is good communication up and down the organizations. If M&O staff are unclear about something, they are comfortable going to a counterpart in the field office with a question or problem. This relationship was developed over the years, and several people at the site emphasized that their level of mutual trust was built by spending time together over a long period and working on their relationship.

Tier System/Honeywell Management System

Honeywell’s tiered-review management system supports the concept of continuous improvement. Surfacing problems is easy and encouraged. They are addressed quickly, at the lowest level possible, and rapidly elevated to a higher level (tier) if necessary. Dashboards are posted in public spaces within KCNSC to show measures of performance, from which anyone can discern emerging or remedied issues.

Field office personnel are involved in many tier meetings and have access to all the posted performance information. The field office recognizes that M&O staff are their eyes and ears, and the field office encourages M&O staff to bring their self-identified problems. To protect this relationship, the field office tends to write up self-identified problems in a positive light; for example, if a cell phone is inadvertently brought into a secure area, it may be reported as an “incident” rather than as an “infraction” to encourage staff to feel free to report minor lapses. One field office official relayed that when the Honeywell Model was implemented, the field office realized quickly that it must celebrate, rather than penalize, when the M&O contractor finds problems. This in turn leads to a shared spirit of continuous improvement, to finding ways to adjust the context and system so that mistakes will be less likely. This trusting relationship also means that M&O employees are broadly willing to tell the field office what it needs to hear rather than what they think it wants to hear.

Metrics and data are important at KSNSC. KSNSC has put together classes to teach employees how to create meaningful metrics, and employees are constantly evaluating whether or not their metrics or data are providing value.

Culture and Expectations

At KCNSC, leaders stated that no one is criticized for escalating problems. A continuous improvement culture has existed at the site since the late 1980s. The panel was told that people at the site expect change, as opposed to the resistance to change that seems common in some organizations. The M&O staff have a culture of rallying around problems to establish a clear statement of what they want to accomplish, and then developing milestones and driving toward resolution. The staff is generally very serious and committed to meeting quality standards, and they recognize that no one can do the job alone. The general manager of the plant emphasizes that he is not afraid of sharing a red number (a problem) on a dashboard because that helps everyone see an opportunity for improvement.

The panel and others have raised the question of how much of the operating system and culture of KSNSC can be adapted in other parts of the enterprise, and how much NNSA is doing to take broader advantage of the successful practices seen in Kansas City. Those processes no doubt need adaptations to fit the work at other sites, and they need not be applied to all aspects of other sites’ work.

The Site’s Exemption from Some Regulations

Because of the Kansas City plant’s demonstrated commitment to continuous improvement, as evidenced, for example, by its achievement of ISO 9001 certification, former NNSA Administrator Linton Brooks exempted the site from certain NNSA and DOE regulations when the plant could demonstrate that it adhered to other relevant federal, state, local, or commercial or industrial standards. This has provided occasional relief from some federal oversight requirements. Some HQ personnel have resisted that exemption and push the field office to exert greater oversight. In general, the field office protects this special exemption, but time can be lost in the process. It does not appear that this practice has been adopted elsewhere in the enterprise. The panel questions the reluctance to replicate this model and management approach.