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Hearing of the Energy and Water Development Subcommittee of the House Appropriations Committee - "National Nuclear Security Administration: Nuclear Nonproliferation and Weapons"


Location: Washington, DC

Chaired by: Rep. Peter Visclosky (D-IN)

Witnesses: Thomas D'agostino, Undersecretary of Energy for Nuclear Security And Administration of NNSA; Garrett Harencak, Principal Assistant Deputy Assistant Administrator for Military Application; Kenneth Baker, Principal Assistant Deputy Administrator of Defense Nuclear Nonproliferation

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REP. VISCLOSKY: Now that Mr. Simpson is here we are ready to go. We'll call the committee to order. Today, we are going to -- (inaudible) -- the budget request for the National Nuclear Security Administration and for the Naval Reactors. In 2010, fiscal year budget request for NNSA is 9.95 (billion dollars) -- (inaudible) -- weapons program about 6.4 billion (dollars) essentially (collapsed ?). Nuclear nonproliferation request was 2.1 billion (dollars) also flat from for the previous year's appropriations if you discount the inclusion of MOX program.

The national security requirements for the 21st century nuclear force in a (threat environment ?) driven by smaller but very serious multiple threats are very different from the national security requirements of -- (inaudible) -- nuclear force that was driven by a -- (inaudible) -- environment -- (inaudible) -- Cold War. We need to transition to a 21st century force as soon as it is economically and technically possible.

I urge the administration to focus on this ambition with a -- (inaudible) -- approach -- (inaudible) -- policy. We are waiting for the nuclear posture review to set the framework of this transition. In the interim, NNSA is deferring the number of basic capital projects -- (inaudible) -- taxpayer funding -- (inaudible) -- decision that may be reversed. Delays of capital improvement projects enable you to focus your resources on maintaining the workforce -- (inaudible) -- fiscally responsible improvement -- (inaudible).

The committee has made clear that we recognize the need for a restructured weapons complex but one commensurate with the size and types of weapons needed in the future based on an overall reevaluation of our nuclear policy in the post-Cold War. The nonproliferation fiscal year 2010 budget request for 2.1 billion (dollars) that continues the progress to reduce the threat of nuclear (nonproliferation ?). Advancing national efforts that would prevent the spread of nuclear weapons globally -- (inaudible) -- important aspects of the NNSA mission -- (inaudible) -- routine (decisions ?) for weapons and materials nonproliferation programs have worked cooperatively to secure and protect nuclear materials are the best way to approach this threat.

Addressing this menace in all of its dimensions ranges from nuclear -- (inaudible) -- developments in nuclear detective technology of nuclear materials in far-flung locations is one strength of the NNSA's nonproliferation programs. Gentleman, I thank you very much for being here and that at this time before recognizing you the chairman would recognize my friend, the ranking member, Mr. Frelinghuysen, from the Garden State.

REP. RODNEY FRELINGHUYSEN (R-NJ): Thank you, Mr. Chairman. Administrator D'Agostino, welcome back to the committee -- (inaudible) -- Harencak and Administrator Baker, thank you for -- for being with us this morning. We're all looking forward to your explanation of the NNSA budget request before us today. I do have some comments. Before I begin, let me make it clear I have great respect for the work of you and your colleagues at the NNSA.

I know and everyone else in the -- (inaudible) -- knows that the budget we'll be considering today was developed under guidelines established by the White House and OMB. In other words, you are following their direction for the most part. However, in my view the budget as submitted by the administration may have significant national security implications. I have some comment and questions along those lines and hope we'll be able to have some frank discussions. Administrator D'Agostino, when you appeared before the committee to explain your position on the complex transformation you asked for our (opinion ?).

The administration needed time, you said, to run its deliberative process. The administration's fiscal year 2010 request for weapons activities seems to reflect the same plea. That request totals 6.324 billion (dollars), a mere 4 billion (dollars) above last year's appropriated request. In your own words, this represents a treading water budget for the program. Frankly, I find this situation troubling. National security matters deserve more than a placeholder budget.

I've got to wonder whether the budget panelists at OMB who put together this request simply do not understand what the weapons activities account really does. If the president is successful, and we want him to be successful in his vision to promote a broad nonproliferation and arms control agenda, this is the account that will actually pay for taking apart those weapons, and if he wants to make sure that the weapons that we have left are really safe and reliable, this is the account that will pay for that too. And in the meantime, this is the budget that ensures that our Navy and Air Force have the reliable weapons that they need to fulfill their obligations to the American people.

And this budget request did not seem to support the president's own initiative or vision. What the administration sees as treading water others will see differently. Your clients in the Navy and Air Force may wonder whether NNSA can fulfill its commitment, and I have doubts in that regard. Their contractors may see this as a sign that even more layoffs are coming to their communities, and your highly- trained weapons specialists -- and we've talked about these remarkable people -- may see this as the last straw and may begin their exodus to more secure employment, and I need to mention -- and do I need to mention the need to recruit the next generation of these very qualified people.

This committee has worked in a bipartisan basis for many years to rationalize activities funded by the weapons activities account. To have that work potentially undone by treading water -- having a treading water budget -- seems unwise. Your nonproliferation budget is not much better, although the request, 2.136 billion (dollars), is 654 million (dollars) above last year's appropriation. You've moved the MOX plan back into this account. The request for MOX and its related projects is 655 million (dollars). In other words, you -- you're increasing the request for the non-MOX proliferation program by 11 million (dollars) compared to last year.

This committee and others before it have been working for years to secure fissile materials overseas that in some cases were secured by only a padlock and part-time guard -- guard with no weapon. Finally, your Naval Reactor's request at a little over a billion dollars is 175 million (dollars) above last year's level. Most of your increase is due to the advance work the Navy needs for the next generation reactors for the OHIO-class submarine. While we may question whether this money is needed this year, I encourage the -- I am encouraged that NNSA is working closely with its client, the Navy, and asking for reasonable resources to fulfill that mission.

Mr. Administrator, you know that I consider the department's work to keep this country safe to be second to nothing. I hope you'll be able to convince me today that this budget request asks for the resources that you need to keep our weapons secure and reliable, to fulfill your commitments to our military and your workforce to make progress on fighting the spread of fissile material overseas. As it stands now, I am concerned with what you propose and I hope that we can find out today exactly your rationale for what you have proposed. But again, I thank you gentlemen for appearing and for the opportunity to make this statement. Thank you, Mr. Chairman.

REP. VISCLOSKY: (Inaudible) -- thank you very much, and before I recognize Mr. D'Agostino -- (inaudible) -- testimony this morning and so would recognize Brigadier General Garrett Harencak. He is the principal assistant deputy administrator for Military Applications. Brigadier General Harencak is the principal assistant deputy administrator for Military Applications in the Office of Defense Programs at the Department of Energy's National Nuclear Security Administration.

Prior to joining NNSA, the general was the commander of the 509th Bomb Wing at Whiteman Air Force Base in Missouri. He has a long and distinguished record of service to this country and obviously is a really smart person because he graduated from the United States Air Force Academy. We also have with us Mr. Ken Baker, who is the principal assistant deputy administrator for NNSA's Office of Defense Nuclear Nonproliferation.

Mr. Baker is the principal assistant deputy administrator for these very important programs. And again, we would point out for those in attendance that he is the recipient of the Defense Distinguished Service Award, Defense Superior Service Award, and two Defense Meritorious Service Awards. He has also received two President's Distinguished (sic) Awards for senior executive service at the Department of Energy and has also made a significant contribution in service to this country. I'm very happy -- (inaudible) -- here.

Mr. D'Agostino and I have a relationship. He has been introduced before but would note again that he is a graduate of Johns Hopkins University as well as the United States Naval Academy. I look forward to congratulating him this fall on Navy victory over -- (inaudible) -- (laughter) -- in football -- (inaudible) -- historic, and again, would point out that his predecessors were all very good men. They were all very able and very intelligent, but from my personal perspective not that we have agreed on every last issue but Tom has been -- (inaudible) -- and we're very happy -- (inaudible) -- to you.

MR. D'AGOSTINO: Thank you.

REP. VISCLOSKY: So with that, I would recognize you for your prepared statement and all of it will be (introduced ?).

MR. D'AGOSTINO: Thank you very much, Mr. Chairman, and Ranking Member Frelinghuysen, and members of the subcommittee. I am Tom D'Agostino, the administrator of the National Nuclear Security Administration. As the chairman pointed out, I am fortunate to have Brigadier General Garrett Harencak with me running the defense program, and Ken Baker running the nonproliferation program. These are the major elements of the NNSA which have a number of other program elements but with these two gentlemen I think we're in good stead as -- (inaudible) -- to get settled out how -- (inaudible) politically -- (inaudible) -- leadership out in the future.

We do appreciate the opportunity to appear before you today, and we sincerely thank you for your support for the NNSA's nuclear security programs as we address challenges -- addressing the Cold War challenges that we've had and more importantly shaping the program for the future. The NNSA is critical to ensuring the security of the United States and its allies. The president's FY 2010 budget request for NNSA is $9.9 billion, an increase of 8.9 percent over the fiscal year 2009 appropriated level. This budget request provides funding to enable NNSA to leverage the science and promote U.S. national security objectives. NNSA programs are on the forefront of a line -- of a number national security endeavors.

First of all, maintaining a safe, secure, and reliable stockpile and the capabilities required to do that; next, accelerating and expanding our efforts here and around the world to reduce the global threat posed by nuclear terrorism, nuclear proliferation, and unsecured nuclear materials; next, providing the U.S. Navy with safe, militarily-effective nuclear propulsion systems; and then finally, supporting U.S. leadership in science and technology.

The President has initiated bold steps putting an end to Cold War thinking to lead to a new international effort to enhance global security. Fiscal year 2010 budget request for NNSA -- (inaudible) -- our first step towards implementation of this new strategy. For Defense Nuclear Nonproliferation programs, increases are requested to expand and respond to opportunities to reduce global nuclear threats. Increases are also requested in the Naval Reactors Program to begin development of the reactor and propulsion system for the next generation of submarine, among other activities.

For programs in the Weapons Activities appropriation, the budget strategy is to maintain capabilities and activities at the current level until the strategic direction is established in the upcoming Nuclear Posture Review. In President Obama's speech in Prague, he indicated his commitment to maintaining a safe, secure, and reliable stockpile while pursuing a vision of a world free from the threat of weapons. The NNSA maintains the unique knowledge and capabilities that are critical to achieving both of these objectives.

Our nonproliferation programs are focused on securing the key ingredients of nuclear weapons, in essence the weapons' usable material and the related equipment and technologies. Supporting NNSA's efforts including the elimination of the Weapons-Grade Plutonium Production Program, which has been working in Russia to shut down Russia's plutonium-production reactors, and the Fissile Materials Disposition Program will provide a disposition path 34 metric tons each of U.S. and Russian excess plutonium.

The NNSA is a recognized leader on these and other nonproliferation initiatives to prevent proliferators or terrorists from acquiring a nuclear weapon. This includes our activities to secure and reduce weapons-grade nuclear materials at sites worldwide, but also our efforts to detect and intercept weapons of mass destructions-related materials in transit. In addition, we will also work fiscal year 2010 to support the president's call to strengthen the Nonproliferation Treaty, support the International Atomic Energy Agency, and strengthen international safeguards inspections.

To implement this comprehensive nonproliferation strategy, we will expand our cooperation with Russia, pursue new partnerships, and work to secure vulnerable nuclear material worldwide in -- around the world in four years. It's a huge challenge -- I'm sure the committee is quite aware of this difficulty in being able to get a -- (inaudible) -- established. NNSA's Global Threat Reduction Initiative and the International Materials Protection and Cooperation Programs will have a major role in the four-year plan. The NNSA is actively participating in the national debate over our nation's nuclear security and nonproliferation strategic framework. This debate is not just about warheads and the size of the stockpile. It includes the inescapable obligation to transform our current Cold War-era nuclear weapons complex into a 21st century Nuclear Security Enterprise that retains the capabilities necessary to meet emerging national security threats and requirements that come from those threats.

In a future with fewer warheads, no nuclear tests, tighter controls on nuclear weapons material worldwide, and effective counteraction of nuclear terrorist threats, science and technology capabilities that you support in NNSA will play an increased role in addressing these challenges. We must ensure that our evolving strategic posture and our nuclear stockpile, nonproliferation, arms control, and counterterrorism programs are melded into one comprehensive strategy that protects America and its allies. Department of Defense has initiated the Nuclear Posture Review, which is scheduled to culminate in a report to Congress early fiscal year 2010. We are actively participating in the Nuclear Posture Review in all of its aspects relating to our nuclear security.

As you are well aware, the Commission on the Strategic Posture of the United States was established by Congress to identify the basic principles for reestablishing a national consensus on strategic policy. The commission has examined the role of deterrence in the 21st century and assessed the role of nuclear weapons in the U.S. national security framework. A final report was issued earlier this month, includes a variety of recommendations -- (inaudible) -- the recommendations as the most appropriate strategic posture for the United States.

I'm familiar with the commission's report, but given the breadth and scope of the commission's recommendations, the secretary and I are still in the process of evaluating the recommendations on that -- (inaudible). In the end, though, the work the strategic commission has done will help to inform the administration as it develops nuclear posture.

As you know, we have made tremendous progress in reducing the size of the stockpile. The stockpile will be less than one-quarter of what it was at the end of the Cold War, the smallest stockpile in more than 50 years. These reductions send the right messages to the rest of the world that the U.S. is committed to Article VI of the nonproliferation treaty, which will help create positive momentum heading into the 2010 Nonproliferation Treaty Review Conference. Each year since the Stockpile Stewardship Program was developed, we've been able to certify the safety, security, and reliability of those warheads without the need to conduct underground tests.

Since 1993, we have acquired a suite of capabilities determined necessary to maintain an effective deterrent. Most recently, the National Ignition Facility will -- has come online. In the end, the key focus is we need to apply these tools to help solve not just the current problems we have in our stockpile, and there are current problems that we have that we're addressing, but more importantly utilizing these tools to develop people that we have in our program and ensure that we're able to solve future problems that we can anticipate all of the -- all of the future problems and we need to be ready to -- to do that.

The challenge for the Stockpile Stewardship Program for the future and will -- (inaudible) -- the end may be to make full and effective use of these tools and capabilities. Following the completion of the Nuclear Posture Review, we will prepare a five-year plan which recapitalizes our infrastructure, retains our scientific, technical, and engineering base, and makes full use of our experimental and supercomputing capabilities.

Chairman Visclosky, numerous external reviews have identified the fragile state of our technical expertise and capabilities -- (inaudible) -- that reside in our people. It's clear to me that our people are our most important resource. We need to retain those skills and capabilities and develop the next generation of scientists, engineers, and technicians needed to perform work in nonproliferation, nuclear counterterrorism, and forensics. We also need the skilled personnel to maintain the stockpile for the foreseeable future without the benefit of underground testing. Mr. Chairman, that concludes my statement. I would be pleased to take any questions that you have.

REP. FRELINGHUYSEN: Let me first echo the chairman's remarks about you, Mr. Administrator, and I thank you for your service. Having you here is -- is reassuring. We -- we appreciate your professionalism and your -- your knowledge. I know, General, you're the -- and (you're man on the block ?) and we're highly appreciative of your service. As I said in my opening remarks, I think all of us on this committee consider the responsibility of the Department of Energy to maintain the safety and security and reliability of our nuclear weapons stockpile. That is the most important thing.

As I look over your budget, I notice that many of the programs that are involved with that responsibility have been held -- held at the same funding level as previous years, although there have been some changes to what we call the subprogram (lives ?). You, obviously taxpayer funding is a -- is a scarce commodity. Can you convince us that the amount of funding that we have in here will provide for that level of reliability? Can you talk about that, the funding we have in this budget?

GEN. HARENCAK: Well, I'd start, sir, and say first off this -- this budget will bring us to an area after the NPR -- (inaudible) -- the (policy ?) decision that we're going to be able to make a much better decision in the future on the transformation. While this budget is -- is flat and as the -- as my boss has said here, we -- it is a kind of a treading water budget, what we have done aggressively in defense programs is ensure that we made changes inside that budget -- that defense posture up to -- to do those important things, to increase -- (inaudible) -- to make sure that what -- what we do have is -- is safe, secure, and reliable but also protecting science which -- which we believe is fundamental no matter what we do.

In my short time here, I've -- I've learned two main things -- one, that this organization is a capability-based organization and -- and regardless of -- of future stockpile size or whatever we have to have that capability, and that capability comes -- comes at a price regardless of how big the stockpile is. So we are being very aggressive that we maintain that capability for whatever may come out of -- out of NPR.

Also, one thing that I've learned in -- in my short time here is that this is really a system. It's a system of systems, and -- and any one decision on any particular (sub bullet ?) would have or could have effects across the -- (inaudible). So it's -- it's not going to be possible just to pick and choose some things and say, well, we're going to do without this and we're not going to do this and -- and then hope that it doesn't have an effect -- (inaudible). Even some of our defense programs things have very real effects on what -- (inaudible). So even outside of defense programs everything we do actually affects the greater system. So I'm --

REP. FRELINGHUYSEN: So you -- you have a fairly high confidence level?


REP. FRELINGHUYSEN: You have enough -- (inaudible)?

GEN. HARENCAK: I have -- I --

REP. FRELINGHUYSEN: Of course, there's a public perception that we haven't really reduced our nuclear stockpile. It's actually -- there's been considerable reductions. I don't think there's a lot of public credit given for what has been done, and in all likelihood, Nuclear Posture Review notwithstanding, that perhaps inherent in what we will see will -- there will be substantial reductions. There's sort of a perception though in some quarters that because the nuclear stockpile has been reduced that somehow there's less money needed for whatever else is needed in terms of making sure of issues of reliability.

GEN. HARENCAK: Exactly, sir. You -- we can't -- can't be further from the truth that as we reduce stockpile -- and we do every day -- I watched a dismantlement yesterday at -- (inaudible). So we continue to reduce the stockpile. Dismantlements have been increased and we're increasing that in -- in this '10 budget. But there -- it's counterintuitive but as we go down we're going to still -- we're -- there isn't a huge savings that come out from the smaller stockpile because this system is capability-based, not capacity.

REP. FRELINGHUYSEN: Can you talk about the reliability issue of our nuclear stockpile? You know, can you -- it's reliable?

GEN. HARENCAK: It is reliable, it is safe, and it's secure and -- but the challenge is to (keep itself ?) in -- in the coming years and that's -- we're committed to do it. This -- this budget guarantees you that it's safe, reliable, and secure. We do have a lot of challenges in the future -- you know, infrastructure and everything else.

REP. FRELINGHUYSEN: It's infrastructure as well as obviously a workforce that is, you know, motivated to continue the type of difficult work and obviously the -- the training of the next generation -- (inaudible).

GEN. HARENCAK: Absolutely, and that's all part of -- part of -- I -- I put that in -- into the -- the human capital aspect of -- of our science. That's (where it resides ?). It absolutely is the foundation for everything else we do.

REP. FRELINGHUYSEN: Okay. Thank you, Mr. Chair.

REP. EDWARDS: Thank you, Mr. Chairman. Mr. Harencak, D'Agostino, General Baker, thank you for what you do every day. The television cameras are probably down the hallway.

Secretary Geithner's testimony in another subcommittee but I agree with Mr. Frelinghuysen that the work you do protecting our country and our families is second to none, and if you're doing your work well, and you do day in and day out, you're not in the news, and that's good news.

Given the statement, Mr. D'Agostino, that you said on Page 6 of your testimony and the fact we know that illicit trafficking in nuclear and other radioactive materials continues, especially in Eastern Europe, the Caucuses, and Central Asia, given that, I salute President Obama for his focus on nuclear nonproliferation programs and over the next four years getting control of all the loose nuclear material throughout the world. But given that, I do want to follow up on Mr. Frelinghuysen's comments in regard to the budget because that's where the -- the rubber meets the road.

I salute you for the significant increases in nonproliferation and international security programs and in the International Nuclear Materials Protection and Cooperation Program. I was disappointed the Senate insisted on a cut in the '09 budget in that. I think we had to take care of that in the supplemental. But I would like to ask first why are you proposing cuts in the Global Threat Reduction Initiative and in the R and D accounts given significance of the nuclear threat? While the probabilities of an attack may be low, the consequences are so horrific we ought to reduce the probabilities as close to zero as possible. Why the cuts in that? Was it because of there is no capacity in those two programs or was it more because you had to set priorities within given budget constraints?

Secondly, I'd like to ask on the Megaports program -- where are we on Megaports and do we have enough agreements in place or if you had additional funding you could move more quickly ahead? And finally, when President Obama meets with President Medvedev on July 6th to talk about the nuclear cooperative program with Russia and United States, if there is an agreement that comes out of that that's significant and has budget implications, would the administration have an account in which it could bring funds or would it have to request supplemental funds in order to implement an agreement?

MR. D'AGOSTINO: (Inaudible) -- take that, Mr. Edwards. Mr. Baker may follow if it -- if (you're okay ?) with any supplemental information. First of all, there has been some changes when you compare to the appropriated level for those accounts that you mentioned. Most of the changes have to do with work that's been completed in the program -- a significant completion. For example, Kazakhstan the -- (inaudible) -- the project on the (past containers ?). Because it's not canned in effect this -- this -- in FY '09 and therefore it presents kind of a precipitous drop-off in -- in the budget. Particularly, though, if we look at -- some -- some of the reductions from '09 are the result of some (professional ?) increases in FY '09 in some of these programs. So as you look across over multiple years you see there is -- there's a slight, you know, slight increase, particularly when you are slight -- so basically a leveling, if you will. So when you look at the work that was completed that is the biggest reason on the drop-off.

Yet another example would be the completion of a project at Pacific Northwest National Laboratory. FY '09 -- (inaudible) -- the last year for that. In the -- (inaudible) -- of Weapons-Grade Plutonium Production Program we completed -- potentially we'll be completing the work on shutting down the reactor.

That being said, however, there are opportunities to do more work. There always is. What we have decided in many cases is not to prejudge the president's meeting necessarily. We recognize that President Obama laid out a fairly aggressive goal. What we're doing right now, and Mr. Baker's folks are kind of right in the middle of this, is developing the detailed four-year plan on what it would actually take to achieve that goal.

We didn't presuppose we knew what it was going to be in FY '10. We said it's going to be more, so we're going to do a little bit more. But my expectation is that the program that this committee will see, that we are developing right now, that we're going to send to the White House in September, a few months away from now, will be significantly different than the program before -- before the public in effect right now in front of you.

So we made the decision not to presuppose that. Certainly, with additional resources we could do more Megaports work, as you know, but for now we felt that the amount of people we have working on this effort we have a balanced approach when going year to year to year on the Megaport work. In order to convert research reactors -- move the -- the last research reactor conversion of HEU from 2018 down to the 2012 time frame, that's going to require significantly more work, and what it'll mean for Mr. Baker is he's going to need more federal employees to do this kind of work.

He's going to need more contractor employees focused on that. We're going to need to be purchasing more equipment, we're going to need to be purchasing more fuel, and then we're going to have to deploy ourselves out to these 100-plus countries -- (inaudible) -- make this happen. It's a huge challenge. I'm -- I want to -- you know, we're in the position now trying to knock down the details of this four-year plan and be ready to make -- make sure the White House is aware of the kind of work that has to happen.

REP. EDWARDS: So to just be clear on that key point, the budget numbers coming out of the administration for fiscal year 2010 were put together before the four-year plan was -- was proposed and the cost implications of it were fully considered. Is that correct?

MR. D'AGOSTINO: That's correct, sir. We -- we've got the -- the president's goal for our program came through not -- not exactly on day one of the administration. By then we were working the budget. What we've got right now -- and I forget, I think it was John -- (inaudible) -- were teeing up the program in effect to be ready for the details that Ken is putting together on the nonproliferation side.

There are increases -- you know, we do have increases in our program, and Ken will describe some of the increases in two of our areas that we have before us. If I could just speak for a second about the upcoming meeting that the president has, and then I'll turn it over to Ken to talk about some of the details in the nonproliferation. The -- the president -- our goals in effect are to take what we talked about -- what the president talked about in Prague and work out the details with Russia on how we will in effect achieve -- achieve these pretty significant goals.

I think it'll be a seminal meeting for the NNSA, for the country. I think it's an opportunity to continue on a very excellent relationship we've had with Russia in this area out into the future. I think what we'll see is a strong -- a strong, you know, bilateral relationship to tackle this problem worldwide and in effect that's exactly what we need to do for global security. I'm looking forward to it and it'll also address a few other concerns -- (inaudible). Ken?

MR. BAKER: Real quickly -- (inaudible) -- Mr. Edwards' -- a lot of Mr. Edwards' -- a cut in the R and D program. We got $85 million more last June than we asked for in the president's budget, and when you take that money plus the -- (inaudible) -- work is done that's why they're -- its level are a little below in the R and D program. The Global Threat Reduction Initiative -- as Mr. D'Agostino says, we had three metric tons of plutonium -- (inaudible) -- in Kazakhstan. We're moving it clear across the country.

It's a $100 million program which will be done this year, so that money's gone. To answer your question -- and the other programs have gone up -- to answer your question on Megaports, with the budget we have this year we'll do 15 more Megaports, which will take us up to a total of 43. There's 100 on the list to -- to be done. If we had more money -- (inaudible) -- how many more Megaports would we do with existent staff -- we can do five more Megaports. With that, sir, is about -- well, it's $80 million. If -- if -- you asked if we could do any more Megaports we can --

REP. EDWARDS: Can you name those ports?

MR. BAKER: Yes, sir. I can. I got it someplace. Here, they're -- they're in -- one of them is in Pakistan, one's in South Africa, Chile, and the other two -- one of them is in Israel and the other one I don't have at the top of my head. But it's five -- to answer your question on -- as Mr. D'Agostino said on administrative budgets, what this administration did, I applaud this president. He has really taken a hold in nonproliferation. He realizes the threat that we're all facing and it's very exciting to see such support at the top as we're getting from the White House on this job.

It will take a lot more money to do the four-year plan. It will take a lot more people.

NNSA is giving us more people -- well, are giving us more people, Mr. D'Agostino -- matter of fact, a total of 32 more people. So this will be in future budgets. You'll see, I think, the budget go up because of this four-year plan that -- that President Obama has. One last thing I'd like to mention to you, just to tell you about some of the work that we've done.

I just came back from the facility that Dr. Condoleezza Rice said was the worst facility she'd ever seen in Russia. It's got thousands of nuclear warheads. I just came back. The facility -- we fixed it up. It looks like Pantex. I was in it. I tried to get the president to go to the site when he goes over there for the summit on the 6th and 7th of July. They don't have --

REP. EDWARDS: What is the site -- (inaudible)?

MR. BAKER: It's called (West 19 ?), which is about two hours -- the number won't tell you much but it's about two hours out in a place called Samara out of Moscow. What we do when we do these sites we have three visits, and I went on the last visit to make sure all the work is completed, and then we pay them the money that's been done. It really, really is impressive. They took me out and showed me the thousands of warheads that we have there, and it's (triple defense ?) and everything else. It would make you proud of the work that the NNSA does and the Russians do together to make these facilities more secure.


REP. ZACH WAMP (R-TN): Thank you, Mr. Chairman. The attendance by the committee members speaks to the importance of this issue. Your presence here, all three of you, reminds me that we -- the president has made a good decision here and that he kept an important team in place as we go forward. I was at the White House last night with a bipartisan group and, frankly, I really thoroughly enjoyed talking to the President and the First Lady and -- (inaudible) -- some of the senior staff there that the attention's been on the domestic agenda, mostly the economy, during the first 100 days, but the fact is the economy goes up, it comes down, it runs in cycles.

The government can cause more problems than they solve from time to time when they intervene, but on this issue -- in global security, foreign policy -- the government is essential -- is absolutely critical, and these are the biggest issues, and this is where the president has the greatest opportunity to do the most good. Nonproliferation activities obviously are -- are a focus. This committee has focused highly on MOX, the problems and the challenges at CMRR, but kind of (quietly ?) in this budget request the -- the design funding for the UPF, Uranium Processing Facility, has been diminished.

The targets for beginning construction have been slid back to 2013. While I have limited time, I would like the administrator who I too respect greatly to talk about the needed investment for us to maintain the deterrent, maintain the capability, support a variety of other important government functions while working on nonproliferation activities. For instance, the UPF has a nonproliferation role. It has a nuclear Navy role. It has a forensic mission.

Can you tell me why these things are important? And I'm asking you, not, frankly, the -- the administration or OMB. I'm asking you why these things are important because the committee sometimes has to increase funding in areas that are vital to maintaining the deterrent and the capability while all pursuing nonproliferation goals.

MR. D'AGOSTINO: Thank you, Mr. Wamp. I'll be glad to answer that. The capability -- let's talk about UPF -- the capabilities that the Uranium Processing Facility will provide essentially are to maintain the capabilities we currently have at Y-12 but do it in a very different way. Do it in a -- I'm not sure if this is on -- do it in a way in fact that focuses on a couple of key things -- a much more cost efficient way.

Right now, our focus is -- for folks that have been down to Bear Creek Valley know that we are dealing with the legacy of the Cold War. We're spread out over a tremendous distance and we're spending a significant amount of money providing security for a very large area because of the amount of highly-enriched uranium that -- that we have. In effect, we think there's a better way on that, and committee support on the highly-enriched uranium materials facility is the first significant and large step towards consolidating the amount of uranium we have in the country at fewer locations -- fewer sites.

The Uranium Processing Facility allows us to in effect get out of Cold War-era building, again, spread out over the complex so what we have is materials storage and all of the hands-on production work that's required. And this is isn't just production work -- (inaudible) -- nuclear weapons. In fact, we need these facilities to disassemble nuclear weapons. That's where our disassembly is going to happen and it'll be happening out over the next 15-plus years because we have a lot of warheads to take apart.

But in essence, I'm interested in driving costs down significantly. We think the move to consolidate our nuclear security footprint and Y-12 is going to save us about over $200 million a year not only in security costs, which are significant, but in operational costs -- not having to move material around that whole valley area. We're going to be able to do it with a much smaller workforce.

So I -- in addition the very important nuclear security role that we have at Y-12, which is maintaining the deterrent, doing the surveillance work that we have, disassembling nuclear weapons, doing nonproliferation, convert -- you know, the research reactor conversion that Ken Baker's program does a lot of that material goes through Tennessee -- getting ready to provide the low-enriched uranium fuel -- all that -- all that work gets done in that area.

So I'm interested in making sure that our workforce is in what I would call environmentally safe, efficient, personnel-safe type of facility and not have to spend money which I currently -- frankly, right now, we've started a new project -- a small project that's called risk -- it's a risk reduction project of Y-12, maintain our current -- (inaudible) -- building. But that's important to do. We have to do that, but it's money that, you know, in effect would be -- in my personal view we'd better spend it in -- in actually getting us set up for the future.

REP. WAMP: (Off mike.)

MR. D'AGOSTINO: Well, you have my assurance that I'm not interested in a policy of neglect and I do recognize that what we have here, as Mr. Frelinghuysen's pointed out, is -- it's a term that I use, which is kind of keeping things from getting worse, fixing what we've got, not losing the scientific capability, keeping our design teams together, moving forward on the design of a couple of key facilities that we have to make without committing to construction until I get the -- the -- the nuclear security policy lined up with the size of the stockpile and, I would add to that, other nuclear security work that we have to do and lining that up with the infrastructure needed to support it.

Now, it's my considered view the general said that we are in effect a -- we're at a capabilities-based level, but what we have to do -- what I have to do is balance, in effect, risk across not only the infrastructure but the national nuclear security programs that we have. In my view, if we do more nuclear security work we're going to need to bring these programs and projects back into the fold from a construction standpoint. I see you will -- I believe you will see that and I apologize for saying wait until the next budget, but because of timing right now my focus was to make sure we don't lose the design -- (inaudible) -- and continue to make progress on this.

REP. WAMP: (Off mike.)

MR. D'AGOSTINO: Well, Naval Reactors will need to -- I mean, the existing facilities are providing the capability that we have right now at increased risk, and so -- and cost -- increased risk and cost -- the question will be, and this is a technical judgment -- the defense board has spoken as -- as you've correctly pointed out -- but I also -- ultimately in the end it's my responsibility or whoever sits in this seat and the general's seat responsibility to take a look at what's happening out on the strategy and policy side, meld that in with requirements, and worry about safety and security and cost at the same time.

The -- the balance came out in this program and I've called this a -- (inaudible) -- a one-year budget, in effect. What we have is a 2010 budget before you. We don't have a 2010 to 2014 budget. We have a one-year budget to keep us going. The focus in this program was to not lose key people.

It's a lot harder to -- and it's not clear that we'll be completely successful in that -- but it's a lot harder to bring people into a program, develop them over time, than it is to build an infrastructure capability, and so our focus was just -- was to -- was to do that.

REP. WAMP: (Off mike) -- a moment here because there's so many people who are going to speak. As the person who's represented Y-12 for 15 years, you won't keep the key people at this budget request for UPF. You won't. And so I hope that Mr. Baker is not right that if the committee raises funding in any level that then next year you say we got more than we asked for so, you know, the baseline didn't increase. But these are important issues.

There is not a more important issue, in my opinion, on -- on maintaining our deterrent as the president rightly pursues peace among the world. But you can't go at that from a position of weakness or a lack of capability. So enough said. Yield back. Thanks, Mr. Chairman.

REP. VISCLOSKY: I'm going to recognize Mr. Salazar in a second, but I guess this would be appropriate time to, Mr. D'Agostino, ask you about the Nuclear Posture Review and the (UDR ?). There's been a number of comments and give and take here this morning about the budget, somewhat indicating that it's passive, it's one year, we're not looking ahead, there may not be enough money.

For the last couple years, it's no state secret that this committee has been very aggressive -- (inaudible) -- in pushing the administration past and present for having a policy on (nuclear weapon treaty ?) that made sense in this era, and not just as far as the possession of nuclear weapons themselves but how conventional weapons play into our defense -- how (nonkinetic ?) needs play into our defense and then have that define where we need to go as far as the types and numbers of weapons and the complex -- (inaudible).

Yesterday, and Mr. Frelinghuysen was there, we had Secretary of Defense Gates up here before the Defense Subcommittee and asked a question about the NPR and the UDR and was heartened that he had -- he attached urgency in moving ahead with some of the decision making process -- (inaudible) -- but indicated at least for planning purposes for the '11 budget he wanted to have some decision in place so they could start having those embedded in that (timetable of ?) the budget as opposed to it comes out in January, the budget -- (inaudible).

I -- I formulate that -- just that's kind of where I am and -- and my question is I'm assuming you could -- (inaudible) -- is not simply going to be a litany and a list -- here's where we are, here's where we're going to be, but that there will be more texture to it and that the compelling questions we've been asking for the last couple years will to some larger extent be at best -- (inaudible) -- that in those off-year budgets. Just for a few minutes and I hate to say it but I think it's probably appropriate to ask.

MR. D'AGOSTINO: Certainly, sir. I'd be glad to.

REP. VISCLOSKY: (Inaudible.)

MR. D'AGOSTINO: Absolutely. As someone who's testified before this committee for a number of years now, I'm very aware of the committee's views and, frankly, the logic behind establishing a -- making sure we have consensus on a strategy, how that strategy defines and protects programs -- (inaudible) -- need to support that strategy and how the infrastructure supports the program that supports the strategy -- getting that linkage together, recognizing that we can't do things in series. There's going to be -- (inaudible). There has to be some overlap because otherwise, you know, we'll be (knocking up this ?) until the year 2030. And our desire is to -- is to be expeditious about moving forward because we do all -- all do believe these are very important to our nation.

The questions that were asked and put forth in the committee's conference report language a number of -- two years ago, I believe, are forefront in my mind that need to be answered at the end. This Nuclear Posture Review needs to be different, I believe, than last -- (inaudible) -- previous Nuclear Posture Review that can't be a coffee table cookbook -- coffee table book, you know, where you just sit it out there, it looks pretty.

It's got to have some detail to it. I'm particularly interested in driving that level of detail in my role in forming the Nuclear Posture Review because I know that if I'm here next year I will need to -- I will be defending that document, defending that policy, and explaining how it shapes that program.

So I am particularly energized in providing as much detail as I can. I can -- I will tell -- say the following anecdote, if I could, and that is I spent a number of time -- a bit -- quite a bit of time with my staff in formulating what questions do I think the Nuclear Posture Review needs to have in addition to what the committee put forward, and we came up with a list of about 28 different questions as well. And so we want -- we're going to -- I'm working hard to put detail into this. I believe what we're going -- there's a bit of a time crunch, of course, as you pointed on wanting to make it shape our FY '11 budget.

I think what we will get is enough information done towards the end of the summer period, early fall, so I can get that budget shaped and get it nailed down, and then when the details come out publicly, if you will -- it's a public document -- later on this year -- I think it's December 2010 is the current goal -- is to have all of those pieces clearly identified, all those questions that asked clearly identified. That's my -- that's my charge is to get that kind of detail into that document and explicitly addressed, not implicitly addressed.

REP. VISCLOSKY: Well, and I appreciate this. A good report has value. But I do think we're at a tipping point here as far as looking ahead and your timetable -- (inaudible) -- because, again, money is at some point limited as far as (our universe ?) and if something is going to go by the board or there's something new that we do have to (allocate ?) -- (inaudible) -- later that will certainly help the (disposition and the process ?). We'll appreciate your -- (inaudible) -- there. Mr. Salazar?

REP. JOHN SALAZAR (D-CO): Well, thank you, Mr. Chairman. It's -- thank you very much for being here, all of you. I'd like to talk a little bit about something that's pretty close to home in Los Alamos National Laboratory. In July of 2008, the GAO recommended that Los Alamos National Laboratory develop a comprehensive strategy plan for laboratory security, and they addressed actually five issues.

One of them, they asked that you address all previously- identified security breaches for weaknesses; number two, that it contains specific and objective measures for developing and implementing solutions to address the previously-identified security weaknesses; number three, that it takes an integrated view of physical and cyber security; and number four, that it focuses on improved security program effectiveness; and number five, that it provides for periodic reviews and assessment of strategic plan to ensure LANL identifies any additional security risks and addresses them. Have all these things been done? There's five questions in there I guess.

MR. D'AGOSTINO: Sure. Not -- they're not all completed. No, sir. What the laboratory's approach right now -- our approach, in effect, is to take a look at those integrated -- start off with the integrated physical and -- and cyber review is to bring those pieces together. I'll give you an -- maybe the best thing to do is illustrate an example of how we're moving forward.

The laboratory is spread out over 43 square miles. It in effect -- I mean, it's a pretty big -- pretty big piece of territory, if you will, and it's comprised of capabilities that are -- that are pocketed over -- over that period of space. In the past, what had been done is to -- each end of the individual organizations or departments, if you will, that ran their activities, whether it was the high explosive activities or filling the detonators or doing the x-ray work that had to be done, maintained their own physical -- maintained their own set of documents, classified documents -- discs, documents -- capabilities that all required protection.

That -- that was then. This is now. What we're trying to do and what we have done is implemented what we call a Red Network that allows a lot fewer documents to be had across the laboratory, and the laboratory has reduced its classified holdings significantly by -- by -- by many tens of thousands of documents. The same thing on what we called accountable -- (inaudible) -- and paper documents.

REP. SALAZAR: I'm sorry.

Paper --

MR. D'AGOSTINO: Yes, sir. Paper documents as well as -- more than paper documents though as well as what we call accountable classified removable electronic media. In other words, discs -- hard discs that are removed that are put in safes, floppy discs that have classified information on them. We're getting away from that. We want to go to a -- (inaudible) -- in progress on going to a completely discless environment. And so these documents were kept in rooms we call vault-type rooms which are in essence rooms that are safes, if you will, and they've had document custodians.

The laboratory had over 140 of these rooms, which is crazy to think about that -- that many vault-type rooms. Think about how many opportunities we have to have security problems, not just having the guards around the rooms but in effect, losing material. And so they've made appreciable progress in the last year and a half. We've taken away 43 of those rooms and we're going to consolidate to pockets of what we call super vault-type rooms with professional document custodians -- not scientists but document custodians that are in charge of doing that -- and then while we transition to have all of this material online in a separate classified area so it accomplishes both the physical and these cyber elements of the GAO's recommendations.

You know, there -- there's a lot more that has to happen on the security side at Los Alamos. Brad Peterson (ph), who I recently brought on board within the past year, used to run the inspections and oversight area for security, both physical and cyber in the department. I brought him in to run the security organization for the NNSA because I recognized he had the best experience. He's seen it all. He literally has seen it all with respect to physical and cyber security. He's aware of the GAO recommendations and he's -- he's working his way through some improvements. I don't have all of the details on what we've done on the other four elements you described. If I could take that for the record I'd be happy to -- to provide that.

REP. SALAZAR: Okay. Thank you, Mr. Chairman.

REP. : Thank you, Mr. Chairman, and thank you all for being here today. A couple of questions about the budget. First, the increase in the defense nuclear nonproliferation budget is primarily a paper increase, isn't it, because of the movement of the MOX facility into that -- into that line in the budget? So other than that, it's pretty much a flat budget. When we look at that, what are the pension liabilities that are being faced by your contractors and are any of those taken into account in this budget and -- because I -- I ask that because in -- in some of the other budgets that I've looked at in the Department of Energy there are increases in a particular line which makes it look like it's going up, and it is, but much of the -- the increase is for the pension liability issue that we have to address, and so the overall budget to actually do the work is down. Is that the case in your -- how does the pension liability issue stand in your department?

MR. D'AGOSTINO: Okay. I'll -- I'll take that, if I could, because it's a little bit broader just nonproliferation.

REP. : Right.

MR. D'AGOSTINO: The -- we do feel we're going to have a pension -- likely to run into a pension problem. We don't know. Well, we -- well, we start off -- every January we do an assessment. In fact, we did an assessment this past January and found out that we were short in fiscal year 2009 -- (inaudible) -- so we did -- we did -- we moved -- we -- we addressed that problem in '09 and as a result of that as we were developing the 2010 budget we made an appeal for and received support from the White House to provide an additional $122 million in this 9.9 (billion dollars) that you have in front of you, sir, to address that. It's addressed in two areas. One area it's addressed in is in Naval Reactors, which I won't get the number exactly right -- it's on the order of 50 (million dollars) to $60 million or so -- the Naval Reactors piece. It goes directly into various accounts within the naval reactor program. The other area that there's an increase is in weapons activity account, largely managed by General Harencak and that's in, pardon me for being too specific, but there's an RTBF account, right? Within the weapons activity account there's an RTBF line and within that line there's an institutional site support line and there's about $60 million or so. That kind of gives you the $122 total for the NNSA. We think for 2010 that this will cover a significant share of the expected liability in 2010, maybe not all of it, but, again, we're guessing what the stock market's going to be next January.

REP. : Right.

MR. D'AGOSTINO: And given my performance -- (laughs) -- my performance hasn't been too good in that area, but we've gone a pretty significant step towards addressing the expected liability in 2010. We still are out potentially up to $160 million, but that's assuming we know what happens next January and we don't, so we made kind of a big step in the right direction to address the pension liabilities. It probably doesn't cover it all, but we don't know. When we find out next January -- we're going to do the financial actuarial drill next January. We will reevaluate. We'll make sure we talk to the committee staff and let them know what we think their liabilities and concerns are.

REP. : So overall in the budget about $122 billion is meant --

MR. D'AGOSTINO: $122 million.

REP. : Excuse me, million is meant to address the pension liability. I know it hasn't got that bad yet, it's in the billions, but--(laughs) --

(Cross talk.)

REP. : I do appreciate that.

REP. : Would the gentleman yield for a minute?

REP. : Sure.

REP. : If I could just add onto Mr. Simpson's observation, could you talk for a minute about the work of others and any additional liability that that may be creating for the agency?

REP. : Do you want me to do that now or --

REP. : Sure.

REP. : In conjunction?

REP. : Yeah, go ahead.

REP. : If you want to, answer it, but if you have something off the top of your head, that would be great.

MR. D'AGOSTINO: Okay. Work for others has gone up in the National Nuclear Security Administration. It's -- for an example, it's a significant share of Sandia's portfolio, in effect. There are activities that are anywhere from six months to three years, solved another agency's particular problem -- the intelligence community, Department of Defense, Department of Homeland Security, FBI, and others, for that matter, other intelligence groups in the Defense Department, so that has gone up because they've been able to capitalize on the investment that we, the committee, the country has made over 50 years worth of investments, and in protecting our deterrent and dealing with nuclear security issues.

I'm very keen on liability. I'm concerned about liabilities because I've seen instances in the past where we have been having to deal with a legacy, work for others' problem. I won't name the agency, but it's not fair, but we had one at Sandia, for example, where we had some sodium debris bed material that had been laden with some highly enriched uranium and my desire was to, in effect, take all the Category 1 and 2 nuclear material out of Sandia to reduce our security costs and that was the last chunk of material and I said, "Well, where did this come from? Whose program was it? Why are we doing this?" And it turned out it was a legacy from a work for others project, so one of the elements of the review process is to make sure that we understand and either accept or reject the long-term liability. So, I won't. Now, that's right, sir.

But I think as with any process, whether it's run by a private company or a government organization, it's subjected to technical judgment.

Somebody makes the decision I'm going to agree to take this project on, or not. I think what we have -- this is the thing that we are working on right now with the lab directors and plant managers is how do we think about work for others in a different way than we have in the past? In the past it was kind of a marginal -- something that was done off to the side and if this work is going to continue to increase, then I need to get some partnership from these other federal agencies to agree to work with us on this long-term liability problem, the details that the secretary has actually challenged me to get something to him by the end of this month on that front.

REP. : I thank the gentleman for yielding.


One other -- a couple other issues. One of them is back to the MOX facility. I don't want to beat a dead horse, but I guess it's not a dead horse. It's a living horse. (Laughs.) It's a growing horse. The negotiations with Duke Energy over fuel have gone by the wayside. Do we have anybody that's lined up to purchase any of the fuels that are made by MOX? If not, what's the likelihood that we might get some, and in that same view, as long as you're talking about that, the disassembly and conversion facility. We're going to start constructing that; that's supposed to be a feed stock into the MOX facility. Is it going to be in line on time? If not, what's going to be the feed stock for the MOX facility if we don't get the PDCF constructed in time and where does all that stand down there, if you would.

MR. : First of all, Mr. Simpson, on the contractor, we have three candidates and one of them is Duke, that could take over this contract, so we're working on it right now.

REP. SIMPSON: Along that same line, do we subsidize the cost of the MOX fuel in order to use it as opposed to buying low --

MR. : Yes, sir, we did with Duke, but that contract's over, so whether it be renegotiated next time, and we'll see how that comes out.


MR. : To answer your question on the timeline, the timeline with the PDCF and MOX, we have enough plutonium to take us to 2021. The pit disassembly plant's got to be on in 2021. We have 9.8 metric tons, some of it at Los Alamos, the rest of it at Savannah River, so we have enough feed stock when the MOX facility comes on to keep it running until 2021. In 2021, the pit disassembly plant has got to be up and running or we don't have any more feed stock to burn.

REP. SIMPSON: Okay, thank you.

REP. : One brief question I'll ask and then we'll have more time later, right?

REP. : As you know, we've had some negotiations with and back and forth between NNSA and the INL on building 651 and special nuclear materials consolidation. Where are we on that and any idea when -- as I understand it, we're kind of all on the same page now?

MR. : Yeah, we're largely on the same page. Joe Kroll, who runs the nuclear weapons counter-terrorism group, who is working with John Grossenbach, Rear Admiral John Grossenbach, who's running the laboratory and the site office manager to set up, you know, how we would use the facility and what material. One of my goals was the less, if we're going to move nuclear material, we want to know that it's going to be there a mission.

REP. : Right.

MR. : And that we're not moving excess material. Every time material is out and about in transit, there's the vulnerability piece that it makes -- I don't have much hair -- it starts to stand up on end. (Laughs.)

REP. : But consolidation of this material makes security and stuff a lot easier, doesn't it?

MR. : Yes, but what I don't want to do is create new, larger groups of material, so if we have an area that already has that security footprint for another program, for NE, for example, what have you, we ought to take advantage of it.

REP. : Right.

MR. : But, if not, I don't want to create a new security site because all of the advantages I get out of shrinking the Y12 problem or denuking whether it's Livermore or Sandia will go out the window.

MR. : Right. But given that we're all on approximately the same page now and the committee has kind of insisted that we do this and they've actually put in funding for it, and I think in the '08 and '07 and '09 budget, something like that.

REP. : Yeah.

MR. : NNSA hasn't released it's site upgrade facility and so forth, in fact has wanted to reprogram that and the committee has kind of refused to allow that to happen, so now that we're all on the same page, any idea when those funds will be released to the site for the upgrades in the facility?

MR. : I would be guessing if I tried to answer that. I'd like to take that for the record and get back to you on a specific date and maybe some more of the specifics about what it would be used for.

REP. : Okay.

MR. : That way you'll have that in writing.

REP. : Appreciate it. Thank you.

MR. : Yes, sir.

REP. : Thank you, Mr. Chairman.

REP. LINCOLN DAVIS (D-TN): Mr. Chairman, thank you. In my real life, I'm a farmer and a contractor and as I finished a project I was always happy when I saw a short waitlist, or what we call a punch list, to finish the particular project that I was working on. And I would take that punch list and I would prepare the workers in what we had to do to finish the work that was necessary for that building to be occupied and to make someone happy or satisfied or provide a place for someone to live or whatever. If it was a bridge, to be sure the bridge was safe for folks to travel across.

Obviously, that helped me somewhat when I became a congressman. It seems we're always working with a punch list on unfinished business, unfinished things that need to be done. I'm glad that's the case because I don't know if you ever finish everything, but I've traveled some and I've observed a lot of unfinished things in the world. One of the areas that I visited most recently, and you perhaps have been there, as well, has been facilities at Y-12. Having a father who went through an ordeal of having bone cancer from prostate cancer, I know that in Oak Ridge the medical isotope production there helped him be able to get nuclear medicine that at least made the quality of life for him his last few days at least more comfortable.

As I look at all of the areas that we're engaged in at the UPF, the uranium enrichment there at Y-12, I see an old, old building that was built about the time the Manhattan Project started, somewhere around the forties.

And I know back then we made some mistakes and many of the folks who live in that area are enduring some of those mistakes today through health conditions and others, but we now have a lot of research and a lot of data that says this is what we need. And so I look at a baseline that we've established for the planned operational date for a new facility at Y-12, I believe by 2018.

I look at this year's budget and I see even the planning for that building that has been cut back to $54 million when it should have been roughly $117 million, (hope wise ?)-- obviously as requested by those at Y-12 that we could at least have (dollar faith ?) -- to start up work. You look at this as well, that's just about his own area.

MR. : Yeah.

REP. DAVIS: It's all parochial and we all have local issues, but my belief is this is more than just a local issue. Congressman Wamp has obviously asked some serious questions to you that I would have been interested in asking. I have some others I'd like to ask. You've been there. What is the condition of 9212 facility there at Y- 12? And, secondly, is this facility viable for long-term enrichment uranium or mission capability?

MR. : If I could, I'd like to answer that and I'd also like General Harencak to answer you. He was just at Y-12 Monday. If I could, sir.

REP. DAVIS: Amazing place, isn't it?

MR. : Yes, sir, it is. I think you're right, it's more than just local issues. It's a national security issue. I have been there a number of times. The condition is not good. It's safe, but only safe because we're spending money, quite frankly, every year.

REP. DAVIS: How much extra would you say?

MR. : We have a nuclear risk reduction project, I believe, in the tens of millions of dollars.

MR. : Two hundred and some-odd million, I believe in safety and security.

MR. : We would save by building, once the facility is completed, we believe we'd be able to save about $200 million a year based on our current Y-12 budget, but there's a long way to go before we actually get there. I do believe that the buildings are safe now, but this is not a long-term solution. Fixing Cold War era facilities, and I would say early Cold War era facilities, maintaining them. In fact, limping them along is not a good long-term solution. We know it's not a good long-term solution. What we have in the 2010 budget right now is an effort to continue the planning work necessary to ultimately get to the right design, not focus on not having any major impacts. Certainly it's not per the original plan that we had up to last year, but it's an effort to, in effect, continue to move forward slowly but not presume the outcome of the nuclear posture review because the committee's made it clear to me that there is a certain sequence that it would like to see.

However, that being said, I'm very confident that once the nuclear posture review is completed and it defines the total scope of the nuclear security work that has to be done, not just weapons work. Frankly, it's also the dismantlement work, the nonproliferation work, the reactor conversion work, the Naval Nuclear Propulsion work that needs to be done. Then if we move to the right kind of bedrock, if you will, to move forward expeditiously on the facilities. Now, I'll have to balance that, of course, with the whole overall program, and that's something I'm keenly aware that Garrett Harencak and I are going to need to do that probably within the next three months, frankly, as we build our FY-11 programming budget for the president and ultimately submit it to you, sir, next January. But it is not a viable long-term solution, but I'd like the general, if you will, to maybe provide some more recent observations and plus a fresh look, having been all over the Air Force and around the world, he can give you his impressions, sir.

GEN. HARENCAK: Yes, sir. First let me say I fully agree with you. It is safe now. However, no way can you see that building where you're wearing a hard hat because you actually need it that that is a long-term solution. These are great Americans working doing a wonderful job there, but we've got to give them a better facility to do the very important work that they do. That's my best military advice. Having seen that they are doing a fantastic job, but when you see the old machinery, you see what they're doing, you realize how important the UPF will be for future.

Now, that being said, we, of course, have to balance our budget proposals. I will tell you that we've already made significant savings in the design in that new UPF in -- especially structural. We've learned very valuable lessons from the structure that is there now that we're going to take, so we believe that the design has actually got better just in the couple of years that we do it. As I talked earlier about system to system I'm convinced UPF is a key part of that. We cannot continue long-term to operate in the present facility such a key area as uranium processing or without it, so we want to maintain flexibility as we go looking on and that's what the design team -- Ted Cherry and his great people there are very mindful that they're going to design a facility that will be flexible enough to give us the capability regardless of what comes down, and that's really what we want to be careful that we do.

And I'm a hundred percent sure that we won't get it a hundred percent right. We're going to have to make some decisions on the capacity of that facility based on what we believe we'll need to do, so what we're trying to do is design flexibility in it, sir.

REP. DAVIS: I was chosen as a contractor on many occasions because I had the staff, the workers, the professionals, the technical skills to be able to complete and perform on time and under budget for the individuals who chose my construction company. Are you concerned that we may lose some of the technical skill that we have? Are those folks who are actually, as we see this, if we actually are not able to have the $117 billion necessary to continue this baseline planning that we have to complete this project, hopefully by 2018, are you concerned that we may lose some of those highly skilled and technical individuals? I am.

GEN. HARENCAK: Yes sir, and as I got my briefing on Monday on this, that was my very first question. Can we keep those highly skilled people that will make that decision, that will get us 98 percent correct on the future size and capacity of this building. And I'm convinced that we have done everything we can in this budget to maintain, that these people are committed to it. I do agree with you, Mr. Davis, though, we do have to be very, very careful and we have to keep our eye on that ball constantly, that we don't drop this and that that capability doesn't lose us because it will cost us a gazillion dollars to bring it back.

REP. DAVIS: My concern is we may be fumbling now and it is my hope that as we go through the appropriations process that we can -- would you advise us to take another look at this amount that you've requested, that maybe we should raise that limit just a little bit up to where it would match the baseline, at least continue the design and planning for the new structure? Because as I look at it, we're talking about roughly a $2 billion cost if we can start reasonably soon. That would be right at ten years' savings that we completely pay for this, plus have a safer work environment and a more secure facility, and I'm just wondering if we should -- if you've had any, as they say back home, any recapitulations about your request and should we try to engage in maybe increasing those dollars?

GEN. HARENCAK: Well, I tell you what, sir. I think my boss wants to answer that. So we'll listen to him.

MR. : I'm listening. Well, sir, I probably won't be as direct as you might like, but what I do want to say is, what we've got is a budget that doesn't comport to the plan that we presented to you last year. We've got a program that works to not grow the design teams more but keep the design moving forward. What I'm looking to do was take the output of not only this strategic commission that came out, more importantly, when I get a better idea of how much uranium work I'm going to ultimately end up getting on the left side, you know, from Mr. Baker here coming in as a result of the president's goals of securing material in four years, that's going to mean a lot more work, frankly, for the program. I think that's going to drive where we need to go, and as you know, there's a certain amount of a tradeoff here. We have a couple of large facilities that are teed up under this organization and ultimately we will present to the committee.

The plutonium capability at Los Alamos has a different set of problems and they are different and in the end it's going to require --

REP. DAVIS: But isn't that basically the lab where they're doing research you're talking about?

MR. : There is researchers, analytical chemistry and material characterization research that has to be done on the plutonium side. Just like the Y-12 capability, that is the place where we feel the nation's going to be able to do the forensics work that it's going to need out into the future and maintain our plutonium expertise, just like FY-12 on the uranium side. So there is a really tough choice ahead for the administration when we come forward. Because I've also reduced the plutonium program, frankly, as well, and have brought those back to a level, after talking with Mr. Harencak and the plant managers and the lab directors on how can I slow things down enough to the point where I don't get the horse too far out ahead of the requirement.

In the end, the nation's going to need both of those capabilities. It's going to need the plutonium and it's going to need the uranium capability; it's going to need to be in a safe area. I think the president's budget presents balance of what we had to operate within to do that. Obviously more resources allow us to -- (inaudible) -- and one thing I've always noticed on large projects is the more work you do up front in planning -- you know this, sir, probably better than I do, the more work you do up front and knowing what your requirements are, the better chance you have of hitting your mark on cost, scope and schedule. And, in fact, that's why we have so much money spent in on both of these projects up front, to do that.

REP. DAVIS: Were you given an opportunity during the writing of the American Economic Recovery and Reinvestment Act, some folks would call that a stimulus bill, but it's -- were you given an opportunity to make requests for this type of facility because in some cases those dollars have been used to actually substitute for some of the basic budget needs for this year. Were you given that opportunity and basically did not request or --

MR. : We provided to the administration, as the president looked at the portfolio of activities, a set of these were put forward. I don't know if this one specifically was, frankly. I do know that we had some from the NSA.

REP. DAVIS: Thanks, and I thought I had the filibuster until Mr. Chairman got back. I yield back my time.

MR. : Thank you, Mr. Chairman. As has been noted, the number of warheads in the stockpile continues to go down, which is a good thing, but obviously it becomes more important to have life extension on the existing stockpile, and with the reliable replacement warhead being set aside, the issue of reliability, I think, becomes extremely important to make sure that the president knows that they have a reliable stockpile, God forbid, if it was necessary.

Why don't you explain for the committee how important NIF is going to be in certifying that the stockpile is reliable and is there sufficient resources available at the present time to make sure that NIF is operating at its optimal level?

MR. : NIF will actually be critical towards addressing a couple of key points. There's clearly our desire. We talked a little bit earlier about maintaining the best scientists in this country to deal with these issues, not just the stockpile but nonproliferation, intelligence analysis, forensics and the like, and this will be an incredible part of being able to maintain that capability, but more importantly the reason why we felt we needed and we received your support for the design, development and construction, and ultimately use of this facility was because there were some very specific classified problems that we felt that this was the only facility that will be able to allow us to examine those regions that none of the other facilities could do.

We're talking about regions of burning, which is a physics term, if you will, of burning hydrogen in its essence, fusing hydrogen and creating that element of what happens inside a nuclear warhead in a laboratory. The data that's going to come out of that is going to allow us to explore issues that we might have with aging. If there is a crack, for example, because the high explosive is obviously not a metal and it ages just like everything else does, and a crack develops, does that cause an issue with respect to the shapes, very important shapes that we need to examine? We can only examine that in a laboratory with something like the National Ignition Facility and we would use that information to put into our computer codes and to model what might happen out over time. I'd be happy to provide you, sir, with the classified briefing --

REP. DAVIS: But, saying that, do you believe you have the resources available in this budget to make sure that the facility is operating at the level it should be?

MR. : Yes. This budget will operate that facility and NIF is already, I would call it oversubscribed, if you will. We have enough experiments to keep us busy for the next six years, although we have in 2010, the most important thing about this budget in 2010 is it provides the resources we feel that we need in order to conduct the ignition experiment, the first ignition experiment.

REP. DAVIS: One other quick question. President Obama has indicated he doesn't intend to pursue Yucca Mountain as a long-term repository for high level waste. And, as you know, today designated by law as that high level waste repository, the budget request includes $98.4 million for defense nuclear waste disposal. Why does the budget request include this funding, given the president indicated he does not intend to pursue Yucca Mountain?

MR. : Well --

REP. DAVIS: Did you think you'd get away without asking a question about Yucca Mountain, Mr. Chairman?

(Cross talk.)

MR. : Well, recognizing I am the president's representative here, this is not my program, but, well, the approach the secretary has put forth is to bring together a group of people to address the high level waste question. I've talked to the secretary about the NNSA implications, state of Idaho, if you will, on what we do with the new naval reactors material that we have in Idaho and the ultimate disposal of that is important to the state, so my sense is when talking to the secretary is that our approach is to bring together this blue ribbon panel of people. I provided some names of folks that I feel, from potentially the national security side of this problem, to add to that group because it ultimately has to be an integrated solution.

REP. DAVIS: Well, I know in the interest of time this waste, as you know, continues to accumulate.

MR. : Right.

REP. DAVIS: In itself is a national security problem and I would hope that the committee can pursue this down the road, but there aren't very many places to put this waste, as you know, and it's certainly a political issue that you probably don't want to get involved in, but thank you, Mr. Chairman. I appreciate your --

REP. VISCLOSKY: If the gentleman would yield?

REP. DAVIS: I yield.

REP. VISCLOSKY: On the NIF, the amount of money for NIF is maintained at the same level, is that right?

MR. : Yes, sir, that's right. What we did was --

REP. VISCLOSKY: But that comes from an overall directed stockpile account, doesn't it?

MR. : It comes from two accounts. One is the experiment --(inaudible) -- account with funds. The other one is some of the base operations in the ICF (ph) line --

REP. VISCLOSKY: So it sort of gets back to my initial comment, you know, that fund has been reduced, I think what, by $76 million?

MR. : The DSW, Directed Stockpile Work account has been reduced, some of it is a result of completion.

Nothing to do with this, but of the B61 life extension work that just finished in FY-09. It does not exist in that particular LAP. In '10, we're starting another B61 activity. Also, there were some increases in the DSW account for dismantlement, so it ends up being --

REP. VISCLOSKY: So is there or is there not an impact on the work that needs to be continued to dismantle the weapons?

MR. : There is actually an increase in the wet work to be done dismantle weapons, not by a tremendous amount. It's about a $4 million increase after the comparables have been done and on the NIF, we undertook some changes, my organization did, in the last few months to move resources into the science, into the NIF account in order to make sure that we weren't continuing to decrease. We were not on the right trend as far as science and technology, and this budget served to stem that trend and stop it from getting worse.

REP. VISCLOSKY: I thank the gentleman for yielding. Thank you.

(Off mike.)

REP. : You'd never do that, Mr. Chairman, I know. I do have a couple of quick questions and one that I probably would be willing to submit. One of the things I want to talk to you about, the president campaigned on changing the way government runs and making it run more efficiently, and I know that was a very important component of his campaign for a lot of people who helped put him in office. And I think it's our responsibility to help kind of further that agenda. I want to talk to you about commodity procurement, I want to talk to you about third party financing, and I want to talk to you about horizontal combination of contracts. T

The first is the commodity procurements. You know, there's a lot of respects where each site has different requirements, but there are some opportunities -- one of the examples is the armor piercing ammunition for our protective forces. The ammunition's the same, but each site buys their own in small lots now, which increases the cost, unlike the Department of Defense, it buys it in huge quantities. Is there any reason why you can't purchase that jointly and are there other opportunities where we can do that? I think this is low- hanging fruit. This is stuff we can take care of, so --

MR. : Yes, sir. Absolutely. You hit the nail right on the head. We had four strategies for moving forward into the future. The first one was to transform the stockpile. The second was to transform the infrastructure that supports that. The third one you're referring to is, operate in a more integrated fashion, change the way we do business, in other words. Brad Peterson has looked at not just the ammunition but on the protective vests, the equipment that the organization uses.

As you probably know, we have different models of approaches on security contracting and that has led to a lot of homegrown solutions across the complex. Brad Peterson is -- because I'm going to be -- he knows this is coming. He's pushing towards how does he consolidate not just the equipment purchases but have more common training, you know, (inaudible) protocol because, heaven forbid we have to move security forces around the country to take care of a particular problem, but if we have to, we want them to be one unit and --

REP. : Can you provide us a list of five or ten or 15, you know, opportunities that we have to push this along?

MR. : Absolutely.

REP. : Okay

MR. : I'd be happy to. We have a good list.

REP. : I appreciate that and then, quickly, the third party financing as far as Y-12, for example. You have two administrative buildings built with outside funding and then leased back.

MR. : Right.

REP. : And, you know, we're going to have to pay for that at some point. I know it diminishes your up front costs, but it seems like we'd pay more in the long run. Is that true or not true, and what's to be gained by the current way of doing it?

MR. : What's to be gained -- first to answer your question on the Y-12, the exact numbers, I'd like to take that for the record. I do know we've looked at 20 and 25 year looks, at the resources requirement and felt that the business case worked out well. There are probably two main gains, if you will, as a result of using this approach versus having the government go through a traditional government procurement process. One is speed. And there's an example -- we'll provide you the details on the difference in time at Y-12, but the other one is a little bit more subtle and, frankly, you know, I would approach it the following way, particularly in a world where we can't predict exactly where we're going with respect to the size of our infrastructure, how changes of future presidents may end up shaping our infrastructure.

You know, there's a part of me that says why would I want to buy a liability of a 50-year liability on a big building if I think I might need it for the next 20 years and I can get out of it, and as the stockpile gets smaller, as the requirements change. And there's a real opportunity, frankly, that doesn't relate to Y-12 but maybe it's a Kansas City plan, as we look forward to doing this, you know, could things get changed enough so that 20 years from now we may not need it?

Well, the third party finance approach provides an elegant way for the government to reduce its liability and work with the private sector in a way that it's kind of nice, but I'm attracted by that benefit.

Well, I'd be happy to give you the details for the record on the other question, sir.

REP. : Okay. Thank you. We've got to go vote. We will be back. We have two subsequent votes, five minutes each, so it shouldn't be that long and we have refreshments up here. We have coffee, Mr. Baker, we've got the whole --

MR. BAKER: Okay. Thank you.


(Note: The committee adjourned without returning from the recess.)


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