The National Nuclear Security Administration (NNSA) incorporated most cost estimating best practices to develop the program cost estimate for the B61-12 Life Extension Program (LEP), which seeks to consolidate four versions of a nuclear weapon—the B61 bomb—into a bomb called the B61-12. The program substantially met best practices for ensuring the estimate was comprehensive, well-documented, accurate, and credible.
The B61-12 LEP's program cost estimate differs from an estimate prepared by another NNSA office independent of the program primarily because the program used different methods and assumptions than the independent office. (In October 2016, NNSA estimated program cost at about $7.6 billion, which is lower than the independent cost estimate of about $10 billion--Ed.)
The program developed its estimate by compiling cost and schedule estimates for activities at each of the NNSA contractor sites participating in the LEP. In contrast, the independent office evaluated program activities completed to date and applied a historical model to estimate costs and durations for remaining activities.
NNSA management met with officials from both offices to reconcile the estimates but did not document the rationale for adopting the program estimate unchanged.
GAO recommended in a January 2018 report that NNSA document and justify such decisions, in part because GAO's prior work has shown that independent cost estimates historically are higher than programs' cost estimates because the team conducting the independent estimate is more objective and less prone to accept optimistic assumptions.
In response to the January 2018 report, NNSA agreed to establish a protocol to document management decisions on significant variances between program and independent cost estimates, but it has not yet provided evidence that it has done so.
NNSA and the Department of Defense (DOD) have identified and are managing risks that could complicate efforts to meet the LEP's fiscal year 2025 completion date.
Risks within the program's areas of responsibility include an aggressive flight test schedule for bomb delivery aircraft. The program is managing these and other risks with a formal risk management process. The program has also taken steps to address risks outside its direct control, such as risks related to the readiness and certification of the weapon's F-35 delivery aircraft, by providing information to the responsible DOD organizations.
The National Nuclear Security Administration undertakes life extension programs to refurbish/replace aging components of nuclear weapons. NNSA recently estimated that the program for the B61-12 nuclear bomb would cost about $7.6 billion—but an independent estimate put the cost at $10 billion.
We found that NNSA incorporated best practices for cost estimates for the program, but also found room for improvement—such as documenting management decisions on the differences between these two cost estimates.
Click here for the full report (44 PDF pages) on the GAO website.