Federal audit calls out managers, contractor at Nevada National Security Site

• By John L. Smith
• December 4, 2022

Nevada National Security Site, photo via energy.gov

A contractor at the Nevada National Security Site took a substantial hit in a recent Office of Inspector General performance audit of a National Nuclear Security Administration project to better monitor the safety and reliability of the U.S. nuclear weapons stockpile.

Released Nov. 28, the 27-page audit report raises serious questions about the credibility of the Department of Energy’s U1a Complex Enhancements Project (UCEP) located at the national security site 65 miles northwest of Las Vegas. It leaves unanswered questions about how the construction of an addition to the project’s underground laboratory managed to climb from as little as $109 million to as much as $577 million in a few short years. The cost overruns coincide with construction delays that have moved the project’s estimated completion date from fiscal year 2023 to 2027.

“Because of the significant increase in costs and schedule, we initiated this audit to assess the project management of UCEP,” the report states.

The OIG audit of the complex enhancement laboratory was conducted from February 2021 through April 2022 and concluded with three recommendations and suggested actions with the goal of improving management performance “if fully implemented.”

Given the current overruns and delays, readers of the report might wonder whether at this point the project’s managers are capable of full implementation. The audit wastes little space focusing on a key contractor at the site, Mission Support and Test Services, LLC, a Nevada company.

The audit: “We noted that the project management weaknesses were due, in part, to the Nevada National Security Site management and operating contractor’s lack of experienced staff initially assigned to the project, poor project performance, and Earned Value Management System certification issues.”

The subpar performance raises questions about the oversight on the ground. It’s something OIG auditors appeared to wonder about, too.

“Further, the NNSA did not include a defined performance standard or an acceptable level of performance to reward or penalize actions on significant contractor activities and requirements,” the audit states in a summation of its findings. “Finally NNSA could improve its efforts to identify the root cause of cost increases when initial estimates are exceeded.”

The underground laboratory’s stated purpose is to conduct “subcritical experiments and physics experiments to obtain technical information about the United States nuclear weapons stockpile” with a goal of maintaining the safety and reliability of the nation’s arsenal without violating the 1996 Nuclear Test Ban Treaty. But some might wonder whether the goal is not just to monitor the nuclear stockpile, but to develop it.

Several reasons were stated for the delays and costs of the lab project, namely a slow supply chain and increased material and equipment prices.

Other findings might be harder to defend, including the NNSA and contractors’ failure to “ensure that UCEP’s work scope was fully defined during the project’s planning phase.” The audit calls the project’s early planning inadequate — and requiring costly major infrastructure upgrades.

Then there are findings that raise questions about the project’s delayed design phase, including the submission of “key project documents that were incomplete, insufficient, and required additional work.”

The delays and what the audit calls the lack of a “defined minimum performance standard and acceptable level of performance for each of the significant activities and requirements,” might have raised alarms, but didn’t halt the project.

After determining that the performance standards, such as they were, were essentially subjective, at one point the auditors appear to express their frustration: “An independent third party such as the Office of Inspector General (OIG) cannot determine the appropriateness of the fee or penalty amount without any documentation or justification regarding how [the construction project’s] delays were evaluated as part of the goal award.”

Getting the laboratory online continues to come at a cost that so far has drawn few critics. Greg Mello is one. Since co-founding the Los Alamos Study Group, Mello and his colleagues have worked for nuclear disarmament, in part, by digging into the deep details of issues that seldom reach the light of public scrutiny.

It's hardly the first time he’s seen program expenditures grow with insufficient oversight. Unlike major capital expenditures, which have more visibility and accountability in Congress, Mello says, “Program expenditures are extremely difficult to audit and they have almost no controls over them.”

Mello regularly monitors the National Nuclear Security Administration and can’t help wondering about the real purpose of underground labs that can be used to develop technology effectively circumventing the spirit of the Comprehensive Nuclear Test Ban Treaty. Mello considers the nuclear security administration’s lab addition more interested in testing technologies for new weaponry than safeguarding the old stockpile.

That puts the OIG audit in an even more intense light.

A few hundred-million-dollar cost overrun isn’t the worst snafu on record, but it provides a reminder of how easily the budgets of government defense programs can fail upward without reaching the finish line.

John L. Smith is an author and longtime columnist. He was born in Henderson and his family’s Nevada roots go back to 1881. His stories have appeared in Time, Readers Digest, The Daily Beast, Reuters, Ruralite and Desert Companion, among others. He also offers weekly commentary on Nevada Public Radio station KNPR.