January 2, 2014

NNSA’s Management of the $245 million Nuclear Materials Safeguards and Security Upgrades Project Phase II at Los Alamos National Laboratory

To address aging security infrastructure, the National Nuclear Security Administration is now in the final phase of a project to upgrade security at the Los Alamos National Laboratory's (LANL) Technical Area-55.  These upgrades, known collectively as the Nuclear Materials Safeguards and Security Upgrades Project - Phase II (NMSSUP), began in 2009.  LANL divided the bulk of the project into five firm-fixed price subcontracts that were awarded to one design company and three construction contractors.  Due to favorable contract bids in April 2011, NNSA reduced the estimated total project cost from $245 million to $213 million.  The project consisted of more than 2,200 scheduled activities and was expected to be completed in January 2013.  Los Alamos National Security, LLC (LANS) is the management and operating contractor for LANL.

Our review revealed that the NMSSUP suffered from a number of project management weaknesses.  These issues ultimately resulted in cost increases of as much as $41 million and delayed completion of the project by nearly a year.  In addition, management information systems failed to provide accurate and complete information about the funds available to complete the remaining work scope.  These project management issues created a series of problems that collectively resulted in significant unanticipated cost and schedule impacts.  Although it failed to take effective action to address project management weaknesses in NMSSUP, the Department implemented detective controls that identified many of the issues in this report and are key tools for holding Department contractors accountable for their performance.  NNSA had taken a number of positive actions to hold LANS accountable for lack of performance; however, project management concerns remain despite these actions.

NNSA management generally concurred with our recommendations and acknowledged the problems that previously plagued the project; however, Management disagreed with our description of the evolution of NMSSUP's cost baseline and our conclusion that the project's costs exceeded its approved baseline. Management's existing and planned corrective actions are fully responsive to our recommendations. 

Topic: Management & Administration