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"Forget the Rest" blog


April 17, 2013

Re: Resumption of NNSA budget and program hearings; the need for less grandiose plans, for exit ramps

Dear congressional colleagues --

Very best wishes in this year's cycle of budget and program hearings on nuclear weapons, which are now resuming.  We watched with interest today's Senate Armed Services Committee / Strategic Forces (SASC/SF) hearing and we are looking forward to the Senate Energy and Water Development (SEWD) hearing rescheduled for one week from today.

All of us finally now have the National Nuclear Security Administration's (NNSA's) budget request for FY2014, even though it is riddled with grand generalities and buzzwords.  Many of these shibboleths are encrusted with political significance despite (or because of) their lack of specific, accountable meaning.  Where baselined schedules and costs should be, a great many "to be determined" notations can be found.  This is where some of the budget-busting problems will lie.

There is still no Stockpile Stewardship and Management Plan (SSMP), nor is there a Section 1043 report covering the 10-year "modernization" budget. ("Modernization" is in quotes because it is one of those politically-charged buzzwords devoid of particular management sense or wisdom.)

Neither do we have a Plutonium Sustainment Plan.  We heard today that there is to be (another) "60-day study," but reprogramming of ($120 million in) funds is said to be needed immediately.  The Government Accountability Office (GAO) essentially said earlier this year to the SASC (which had requested a review) that not enough was known about this plan to actually review it in any depth.  Wasn't it something like, "Come back to us when you have a plan"?  (Our comments on the first 60-day study, to the extent it has appeared in public, are here.)

The ratio of politics to management clarity has reached a high and unstable level in NNSA, as recent project cancellations, delays, and revisions should demonstrate to all.  Usually Congress derives the wrong lesson from this.  The grand budgets and projects promised in the past weren't wise or sound just because they were big.  In the case of the Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR-NF), the Pit Disassembly and Conversion Facility (PDCF), and (as will be seen) the National Ignition Facility (NIF) and the Mixed Oxide Fuel Fabrication Facility (MFFF), they were somewhat delusional.  (As you know, this is an abbreviated list of troubled projects.)

Why such a delusional list of promised projects and budgets should be considered normative is beyond me.

So there is a learning process going on, and it is not over.  We all have to be open to learning from new realities, and not just ones we see from within our particular echo chambers.  Too many members of Congress want to hold the evolution of nuclear policy hostage to prior folly (e.g. the Section 1251 report of November 2010).  This lag between rapidly-changing realities and our ability to respond is one of the most dangerous features of today's national security field.  It is certainly true for nuclear weapons.

In such a time, it is important to bring as many eyes onto the issues as possible.  Yet as a former NNSA lawyer said to me earlier this year, this Administration -- which ran for office on government transparency -- is the most opaque ever.  This is also my view.

For the above project reversals, there is much blame to spread around.  The problem is not in stopping unnecessary projects.  It was in starting them in the first place.  Generally the problem mostly lies in the project conception and development stage, when powerful institutional self-interest shoves aside all other views.  Appropriate analysis under the National Environmental Policy Act (NEPA) may be omitted.  Congressional backbone has been lacking, specific members of Congress have pressed their parochial priorities too hard, the White House has been too passive, NNSA has been too subservient to its contractors, and the contractors have been too greedy.

Behind and underlying it all, there is no Nuclear Posture Review Implementation Plan, which would provide Presidential guidance on the stockpile of the future.

In other words, you are still facing much more planlessness than meets the eye.  Much of what you see before you is based on little more than a "wing and a prayer."  You are on thin ice.

Cost review by the DoD Cost Assessment and Program Evaluation (CAPE) group doesn't produce a sound budget if the program plan itself is riddled with excess.  Which it is.

We are absolutely appalled at the growing NNSA Weapons Activities budget line.  For too many in Congress (and for the laboratory M&O contractors especially), growing that budget line has been an end in itself.  These parties have succeeded over the years in creating a highly-dysfunctional, high-overhead structure within NNSA warhead programs.  It is now an agency where nuclear facilities cost 30 or more times per square foot in constant dollars what comparable space cost in the 1970s.  If preserving the U.S. nuclear deterrent so-called were the true goal, without the ever-evolving bells and whistles that are, as a group, just as likely to subtract overall system safety, reliability, and security as to add them, the work could be done for about half or two-thirds what is spent today, and with better management.  It costs as much as it does because Congress allows (or demands) it.  The problem with the complexity being attempted is that it is starting to fail in multiple cases, i.e. collapse toward simpler solutions.  Where there are no actual deliverables, NNSA and Congress may deceive themselves that all is well, until some event (e.g. peace activists waltzing into Y-12) shows otherwise.

Obviously, we are in a highly constrained and volatile budget situation.  In this regard, the Congressional Budget Office (CBO) predicts boom times just ahead (“The Budget and Economic Outlook: Fiscal Years 2013 to 2023;” projections here in .xls).  NNSA's budget request, along with the proposed additional transfer of $15 billion in DoD budget authority over the coming decade (Nuclear Weapons and Materials Monitor, April 12, 2013), are based on these assumptions.  Here's what CBO says:
Federal revenues will increase by roughly 25 percent between 2013 and 2015 under current law, CBO projects. That increase is expected to result from a rise in income because of the growing economy, from policy changes that are scheduled to take effect during that period, and from policy changes that have already taken effect but whose full impact on revenues will not be felt until after this year (such as the recent increase in tax rates on income above certain thresholds).  As a result of those factors, revenues are projected to grow from 15.8 percent of GDP in 2012 to 19.1 percent of GDP in 2015...
CBO assumes a nominal GDP growth that climbs to up to 6.6% per year by 2016, the peak of a predicted three-year boom before slowly settling back to steady, recession-free growth for the remainder of the decade.  As David Stockman has noted, CBO is counting on the U.S. economy producing 16.4 million new jobs in the next decade even though it produced only 2.5 million jobs in the last one.

I think CBO's projections are hogwash for a host of reasons, some chronic and others related to the combined risk of sudden events.  If I am right then all budget projections and promises (e.g. for DoD's budget authority transfers to NNSA) must be taken with a large grain of salt.  In the absence of significant new taxes or significant additional inroads into mandatory spending programs, both of which are politically problematic, federal resources are likely to be significantly more constrained than CBO projects.

If nuclear weapons are important, NNSA's budget should take this fiscal risk into explicit account.  Not all NNSA projects and programs are of equal importance.  NNSA needs exit ramps.

As you see in the budget request, NNSA is counting on finding $320 million in efficiency savings in FY2014, and more to follow every year after that.  The request is silent as to how these efficiencies will be created.

Meanwhile, despite a lot of wishful thinking, there is absolutely no congressional, nor any public, consensus on the role of nuclear weapons and how much of our scarce budget resources they should command.  In particular today's senatorial references to the 4-year-old report of the Congressional Commission on the Strategic Posture of the United States strike us as nostalgic and dysfunctional.  If the U.S. Congress cannot substantially revise its strategic ideas in these fluid times faster than this there is little hope for this country.


Greg Mello, for the Los Alamos Study Group

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