Detailed Information on the
National Nuclear Security Administration: Elimination of Weapons-Grade Plutonium Production Program Assessment

Working with Russia to ensure replacement reactor construction milestones are linked to nuclear reactor shutdown.

The National Nuclear Security Administration/Elimination of Weapons-Grade Plutonium Production will continue to work with Russia to minimize the risk to shut down of the Plutonium Uranium Graphite (ADE)-2 reactor.

The Budget includes funding at the 2004 level.

NNSA will evaluate the possibility of re-allocating funds from other delayed programs to accelerate the EWGPP program and establish a funding profile more consistent with a construction project.

NNSA will study lessons learned from the Plutonium Disposition program and other nonproliferation and threat reduction programs to minimize the programmatic risk inherent in working on projects in Russia.

NNSA will re-visit the EWGPP milestones and performance measures on a regular basis.

Working with Russia to ensure replacement reactor construction milestones are linked to nuclear reactor shutdown.

Continue working with Russia to ensure replacement heat and power milestones are linked to nuclear reactor shutdown.

Measure: Cumulative percentage of progress towards constructing a fossil plant in Zheleznogorsk facilitating the shut down of one weapons-grade plutonium production reactor

Explanation:

Measure: Cumulative percentage of progress towards refurbishing a fossil plant in Seversk facilitating shut down of two weapons-grade plutonium reactors

Explanation:

Measure: Annual Costs Performance Index (CPI) for Seversk construction as measured by the ratio of budgeted costs of work performed to actual costs of work performed

Explanation:DOE O 413 Cost Performance Index

Measure: Annual percentage of Russian weapons-grade plutonium production capability eliminated from its FY 03 baseline of 1.2MT per year (0.4 MT per reactor)

Explanation:

Is the program purpose clear?

Explanation: The EWGPP Program has a clear purpose to reduce the risk of nuclear terrorism by assisting Russia to shut down three reactors that currently produce 1.2 metric tons of weapons-grade plutonium each year. Assistance in shutting down the three remaining weapons-grade plutonium production reactors in the Russian Federation is being provided through: (1) Construction of a new fossil-fuel (coal) plant at Zheleznogorsk; and (2) Refurbishment of an existing fossil-fuel (coal) power plant at Seversk.

Evidence: NNSA Strategic Plan (February 2002); Program Strategic Plan, (October 2002); Justification of Mission Need, approved by the Deputy Secretary on 12/20/03. Implementing Agreement between the Department of Energy and the Ministry for Atomic Energy of the Russian Federation, (signed 3/12/03).

Does the program address a specific and existing problem, interest, or need?

Explanation: The three remaining plutonium production reactors in the Russian Federation (RF) represent a specific and existing problem to U.S. national security because they generate about 1.2 metric tons of weapons-grade plutonium per year. These plutonium production reactors also supply heat and electricity to the local cities. Therefore, fossil energy replacement plants are needed to provide heat and electricity while preventing the production of several metric tons of weapons-grade plutonium for the Russian stockpile, based on production rates and the estimated time (5 years for Seversk and 8 years for Zheleznogorsk) to complete new fossil-fueled power plants. Actual weapons production figures are classified.

Evidence: National Security Council (NSC) Review of EWGPP Program (December 2001); U.S./RF Gov't-Gov't Plutonium Production Reactor Agreement of 1997

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The EWGPP Program offers a unique opportunity to reduce world-wide nuclear risk that is neither redundant nor duplicative of any other program. Although other programs address the disposition and safeguard of existing plutonium in the RF, no other program addresses ending the production of new plutonium in the RF.

Evidence: 2001 NSC Russian Program Review designated the EWGPP as a cost-effective, unique contribution to the nonproliferation initiative. An Implementing Agreement between DOE and the Russian Federation for Atomic Energy (March 12, 2003) has defined this unique method.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The nature of the program is that the U.S. Government must rely on the Russian Government to create conditions that would not limit the program's effectiveness and efficiency. This is largely out of the control of the program office, but still a potential flaw in the structure of the program. Notwithstanding this potential flaw, DOE has sought external, objective experience and insight to develop tools to establish program structure, monitor status and track costs for the program. However, it should be noted that we can withhold payment if work performed is substandard.

Evidence: DoD draft "Fossil Replacement Option" document (10/2000) Team of Independent Professionals (TIP) Report on Acquisition Strategy for EWGPP, (12/2002) NSC review, including cost/benefit analysis of the EWGPP concept (2001)

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: The EWGPP Program is effectively targeted to epecifically address the objective of facilitating shutdown of three specific Russian reactors through replacement with fossil-fueled power plants. The program uses the DOE Order 413 process to plan, proritize, budget and track execution of resources. The program is hiring a Resident Officer for Construction (ROFC) who will be based in Moscow and who will confirm through verification that proper execution is complete before payment is made to the Russians.

Evidence: U.S./Russian Federation commitment to cease plutonium production (1994) Implementing Agreement between DOE and the Russian Federation for Atomic Energy (March, 2003) Seversk & Zheleznogorsk Project Plans (June, 2003)

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The EWGPP Program has a limited number (four) of ambitious long-term outcome goals: (1) Complete Seversk Plant by 2008; (2) Complete Zheleznogorsk Plant by 2011; (3) Eliminate all Russian Plutonium Production by 2011; and (4) Maintain a Seversk Cost Performance Index of 1.00 or below (Index defined as cumulative actual costs per budgeted cost of work performed at Seversk).

Evidence: FY 2006-2010 FYNSP (Jan. 2005) FY 2006 Budget Submittal (2005) EWGPP Critical Decision Briefings (CD-0,1,2/3) to the Deputy Secretary and Energy Systems Acquisition Advisory Board (Dec. 2002-Nov 2004)

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The EWGPP Program has identified ambitious, quantified targets for its long-term performance measures. The timeframes for accomplishment of the goals are also ambitious, driven by the need to terminate plutonium production as quickly as possible to reduce the threat from continuing production. The program has an established baseline for Seversk and a preliminary scope, cost, and schedule baseline for Zheleznogorsk.

Evidence: FY 2006-2010 FYNSP (Jan 2005) FY 2006 Budget Submittal (2005) EWGPP Program Plan (June 2003) Acquisition Executive approval of CD-2/3 (Project Baseline/Start of Construction) for Seversk in Nov 2004 and CD-1 (Preliminary Baseline) for Zheleznogorsk in Nov 2004

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The EWGPP Program has established specific annual performance goals. For FY 2007, they are: (1) Seversk: Completion of a total 82.4% towards construction of a fossil-fuel plant. (2) Zheleznogorsk: Completion of a total of 15.8% towards construction of the fossil fuel plant for Zheleznogorsk. (3) Plutonium Production: Eliminate 0 MT of plutonium from the 1.2 MT per year baseline. (4) Efficiency Measure: Maintain a Seversk Cost Performance Index of 1.00 or below. See Measures tab for additional details.

Evidence: FY 2006-2010 FYNSP (Jan 2004) FY 2006 Budget Submittal (2005)

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The EWGPP Program has an approved Seversk baseline and a baseline range for Zheleznogorsk with ambitious targets for its annual measures to support the aggressive schedules. Baseline development was performed as part of the DOE 413.3 Critical Decision process. The EWGPP Program is adhering to the DOE standards for program/project management. The approved baseline/baseline range will provide a basis for measuring progress against ambitious targets identified for completion on an annual basis. For Seversk with an approved baseline, an earned value measurement system (EVMS) and a Phase II incentivized contract through Defense Threat Reduction Agency (DTRA) are in place for the project.

Evidence: FY 2006-2010 FYNSP (Jan 2005) FY 2006 Budget Submittal (2005) EWGPP Program Plan (June 2003) EWGPP Project Controls Plan (June 2003)

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The EWGPP Program uses input from its contractors, Russian subcontractors, and other stakeholders in development of annual targets and long-term goals for the program. Commitment of all partners to the annual and long-term goals of the program is achieved through implementation of bilateral agreements, program and project plans.

Evidence: EWGPP Program Plan (June 2003) U.S./Russia Implementing Agreement (March 2003) Team of Independent Professionals Acquisition Strategy Evaluation (2002)

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Independent evaluations of sufficient scope and quality are conducted on a regular basis and as needed to support program improvements and evaluate the program. To date, independent reviews and evaluations have been performed by: (1) Stone and Webster and Burns and Roe on the RF cost estimates; (2) National Nuclear Security Council (NSC); (3) A Team of Independent Professionals on the acquisition strategy; (4) A GAO review of the program started in July 2003; and (5) the U.S. Army Corps of Engineers, NA-54 and independent experts.

Evidence: Draft DOE Project Management Manual, 413.3-1 Draft EWGPP Quality Assurance Plan (May 2003) Draft EWGPP Management Assessment Plan (May 2003) NSC Russian Program Review (2001) Independent Professional Review of Program Acquisition Strategy (TIP Team) (Dec. 2002) Stone and Webster & Burns and Roe Review of RF Cost Estimates (June 2002 ) Review of Estimated Total Project Cost for Seversk Plutonium Production Elimination Project (March 2004)

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The program's budget request is explicitly tied to the accomplishment of its annual targets and long-term goal. The long-term goal is linked to the annual targets, which further cascade into the detailed baselines/milestones. Resource trade-offs are evaluated based on their impact on the goals and targets. These trade-off discussions are used to develop the budget request, allowing resource needs to be presented in a clear and transparent manner. NNSA has adjusted the funding profile in the FY2006 budget request from a flat line of $50M/year to a profile that more accurately represents the lifecycle construction costs. The Seversk project is now fully funded for a 2008 completion date. Zheleznogorsk: completion in 2011 is contingent on achieving an International Participation funding target of $100M in FY 2005-2006.

Evidence: NNSA PPBE Guidance Documents located on the NNSA web-site FY04 Congressional Budget Request, FY 06 Program Decision Memorandum (PDM) FY06-10 FYNSP

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: "Through strategic planning, the EWGPP Program is assimilating 'Lessons Learned' from other Russian programs such as MPC&A, HEU-T, and Plutonium Disposition, which identify potential deficiencies such as training, communications, and site access. The program is also assimilating lessons learned by two Cooperative Threat Reduction programs (CTR): (1) The Fissile Material Storage Facility at Mayak and its use of incentive contracts; and (2) EWGPP Program when it was under the responsibility of CTR. The program used an established DoD CTR Integrating Contract (CTRIC) process to gain the benefit of a high level of competition to select two qualified contractors with years of experience in completing this type of work in Russia while keeping acquisition costs low. The program is also implementing Action Plans to provide project management training to program staff and Rosatomstroi, the Russian integrating contractor. In addition, the Program Office is planning to utilize the U.S Army Corps of Engineers to evaluate performance and progress on an annual basis. "

Evidence: Draft Management Assessment Plan (June 2003) Draft Training Plans for EWGPP Program staff and Rosatomstroi (June 2003) U.S./Russian Implementing Agreement (March 2003)

Has the agency/program conducted a recent, meaningful, credible analysis of alternatives that includes trade-offs between cost, schedule, risk, and performance goals, and used the results to guide the resulting activity?

Explanation: The Program Office commissioned Teams of Independent Professionals to identify and analyze strategies for carrying out the mission, including (1) Acquisition strategy; (2) Costs of plutonium storage; (3) Reactor shutdown issues; and (4) Cost reduction measures. Data was used to establish acquisition strategy and support Mission Need approval by the Deputy Secretary. The DoD conducted extensive alternative analyses in 2000-2002, resulting in the decision to cancel plans for reactor core conversion and select fossil-fueled power plants as the preferred alternative to meet the mission. The program recently utilized the U.S. Army Corps of Engineers to perform independent, external cost reviews of the Seversk and Zheleznogorsk projects and an External Independent Review (EIR) of the Zheleznogorsk project. Risk assessment workshops were conducted in November 2004 and March 2005.

Evidence: Team of Independent Professionals (TIP) Report of Acquisition Strategy Alternatives (Dec. 2002) DoD Fossil Replacement Option Studies (Oct. 2000) Review of Estimated Total Project Cost for Seversk Plutonium Production Elimination Project (March 2004) Independent Review Draft Final Report of the EWGPP Seversk Project by the U.S. Army Corps of Engineers (Nov 2004) Independent Review Draft Final Report of the Zheleznogorsk Project by the U.S. Army Corps of Engineers (Jan 2005)

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The EWGPP Program requires monthly reporting of progress for support contractors who are on board. The U.S. contractors are monitored against milestones and baselines identified to Work Breakdown Structure (WBS) elements through an earned value management system. The program reporting systems apply to the U.S. contractors and to Russian participants, and are used to measure performance, identify management issues and improve performance. Quarterly Joule reports and annual Congressional and NA-1 briefings ensure that timely and credible performance information are collected and monitored to manage the program and improve performance.

Evidence: EWGPP Reporting Policy and Procedures (June 2003) EWGPP Program Plan (June 2003) EWGPP Joule Quarterly Report (March 2005)

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: The EWGPP Program has established clear and documented baseline change control, cost reporting, schedule tracking and performance review criteria and procedures. Each HQ manager has a critical element in his or her performance appraisal on project management that includes cost, schedule and quality criteria. Finally, the program will provide payment in Russia for work confirmed to be completed -- final management accountability.

Evidence: EWGPP Program Plan (June 2003) Performance Evaluation Plans (annual) Program/Project Controls Manual (June 2003)

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: In the past, the program experienced problems with uncosted carryover and the transfer of funds to support the program. Both problems were resolved and a corrective action plan is in place to ensure that funds are obligated in a timely manner and spent for the intended purpose. FY 2003 was the first fiscal year for DOE program responsibility, and, before then, it was under the cognizance of DoD's CTR program. The DOE Program started late because funds were not fully transferred from DoD until May 2003. Plans for the Seversk and Zheleznogorsk projects have been developed. Systems and procedures are established to monitor and control program obligations.

Evidence: FY 2003 Budget Submittal (2002) FY 2003 Project Work Plans and WAS Monthly cost reports

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The EWGPP Program is utilizing incentive-based contracting for implementing its work in the RF, and will make payment only on completion of work. Two contractors with years of experience in completing this type of work in Russia were awarded Cost Plus Incentive Fee contracts through the highly competitive DoD CTRIC contract mechanism. The established DoD CTRIC process allowed DOE to gain the benefit of a high level of competition to select qualified contractors while keeping acquisition costs low. Program and contract procedures are in place to measure and achieve efficiencies and cost effectiveness in program execution. For example, the U.S. contractor will pay Russian subcontractors for work only after inspection to ensure the work is complete and in accordance with contract specifications. The projects are being phased so that Zheleznogorsk will benefit from the lessons learned at Seversk. EVMS principles are being used to measure actual/budgeted cost of work performed to determine efficiencies and effectiveness in project execution.

Evidence: EWGPP Statement of Objectives for Seversk and Zheleznogorsk (March 2003) DOE contracts with U.S. contractors (June 2003)

Does the program collaborate and coordinate effectively with related programs?

Explanation: The EWGPP Program is coordinating with the MPC&A, HEU-T, and Pu Disposition programs, which have related efforts in the RF, to assimilate 'lessons learned' and identify areas of similarity and potential commonality. Through this coordination, we can apply management solutions from those programs to EWGPP. The EWGPP Program has coordinated with the Departments of State and Defense to ensure full collaboration and effective management. We are also working actively to coordinate with the RF and have made several agreements, including an amendment to the Plutonium Production Reactors Agreement (PPRA), and further agreements are being negotiated.

Evidence: U.S./Russian Implementing Agreement (March 2003) Draft EWGPP Program Plan (June 2003)

Does the program use strong financial management practices?

Explanation: NNSA is covered by DOE's financial management policies, procedures and practices that meet all statutory requirements. The accounting services for NNSA are provided by DOE, and these are free of material internal control weaknesses. The DOE's financial statements have been given a clean audit opinion in 8 of the last 9 years. Day-to-day NNSA operations are supported through the NNSA PPBE processes that require the integration of financial and performance management information systems at each phase. The DOE is well underway on a new initiative (I-MANAGE) in support of the President's Management Agenda to fully integrate all financial, performance and administrative data for the DOE in a single system within the next 5 years that will include all NNSA information.

Evidence: NNSA PPBE Guidance Documents located on the NNSA web-site DOE Financial Management Orders

Has the program taken meaningful steps to address its management deficiencies?

Explanation: Corrective actions and procedures are in place to identify and address management deficiencies. The EWGPP Program has augmented staff resources through direct hires, transfers and contractor personnel. Immediate, meaningful and decisive steps such as senior management involvement in weekly meetings and in the definition of all major milestones have been taken to address past program problems. Systems and procedures to control program costs and obligations, schedules, and performance have been developed. The program is planning to utilize the U.S. Army Corps of Engineers to perform annual assessments and identify management deficiencies in the areas of quality control/quality assurance; environment, safety and health; risk assessment; and earned value management system. The program is developing a financial/project management system.

Evidence: EWGPP Program Plan (June 2003) Management Assessment Plan (June 2003)

Is the program managed by maintaining clearly defined deliverables, capability/performance characteristics, and appropriate, credible cost and schedule goals?

Explanation: In accordance with DOE 413.3, the program plan, project execution plans and supporting documents clearly define capability and performance objectives. The program has developed an acquisition strategy, which defines the relations between the contractors and only allows payment for work completed. The Program Deliverable Acceptance Policy will only allow payment in Russia for work completed and inspected, which addresses quality, capability and performance objectives for each deliverable. Cost and schedule goals for the three projects are contained in their respective draft Project Execution Plans, which were completed in FY 2003.

Evidence: Draft Project Execution Plans (Seversk & Zheleznogorsk) (Feb. 2004) Draft EWGPP Deliverable Acceptance Policy, (June 2003) Draft EWGPP Program Plan (June 2003) Implementing Agreement (March 12, 2003)

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: Seversk project received CD-2/3, Approval of Baseline/Start of Construction in Nov 2004. Construction started in December 2004. Procurement contracts for construction/retubing have been placed for seven boilers and one turbine. Zheleznogorsk project received CD-1 (Preliminary Baseline) approval in November 2004 and has scheduled CD-2 (Approval of Performance Baseline) in June 2005.

Evidence: FY 2007 Budget Submittal (April, 2005)

Does the program (including program partners) achieve its annual performance goals?

Explanation: Zheleznogorsk project achieved 5% vs. a 3% target completion in 2004. Seversk project achieved 12.9% against a performance target of 15% completion in 2004 due to procurement delays in Russia. Corrective actions taken have recovered schedule slip. The program is on track to fully achieve all FY 2005 annual targets.

Evidence: Joule First Quarter FY 2005 Report (Jan. 2005)

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Both the Seversk and Zheleznogorsk projects have realized cost savings of about $100 million each due to value engineering and scope refinements.

Evidence: EWGPP Program Report to Congress ( Preliminary Project Management Plan, July 2004)

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The NSC review of RF programs designated the EWGPP Program as a high-priority program. The program planning and development process compares favorably with other programs; EWGPP Progarm is being implemented in accordance with DOE 413.3 and good management practices.

Evidence: Joule Second Quarter FY 2005 Report (April 2005)

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: The U.S. Army Corps of Engineers has conducted independent external cost reviews of both the Seversk and Zheleznogorsk projects. The Corps of Engineeers has also performed an External Independent Review (EIR) of the Zheleznogorsk project.

Evidence: "Based on the project documentation provided to the EIR review team, the USACE expects the project to be successfully completed and recommends that DOE/OECM validate the Performance Baseline." --------- Draft EIR of the Zheleznogorsk Project by the USACE, Europe District, April 2005.

Were program goals achieved within budgeted costs and established schedules?

Explanation: At the end of FY 2004, both Seversk and Zheleznogorsk were within budgeted costs. Zheleznogorsk was on schedule and Seversk was behind schedule by three months. Seversk has implemented measures to mitigate further schedule delays.

Evidence: Seversk Monthly Progress and Cost Performance Report ( Feb. 2005) Zheleznogorsk Monthly Progress and Cost Performance Report ( Feb. 2005)