Background Medication Synchronization Medication synchronization is a process whereby a pharmacist aligns the refill dates of two or more of a patient’s medications to a single day each month—referred to as the synchronization date. Patients who are interested in medication synchronization must enroll or opt into the service, if offered at their pharmacy. To initiate medication synchronization, the pharmacist selects an anchor medication to which the other medications are synchronized, and dispenses short fills—that is, a quantity of less than a month’s supply—so that the patient has enough medication until the next synchronization date. Figure 1 illustrates the process by which a pharmacist may synchronize three medications for a patient. Before each synchronization date, the pharmacist generally contacts the patient to determine if the patient has had any changes in his or her medications or medical history. The pharmacist then makes any needed adjustments so that the patient can continue to pick up his or her medications on the synchronization date and avoid disruptions in their medication regimen. Prescription Drug Expenditure and Coverage In 2017, national spending on prescription drugs dispensed by pharmacies totaled over $330 billion. Medicare accounted for over $100 billion and private health plans accounted for over $140 billion of total spending on prescription drugs that year. Medicare provides prescription drug coverage under Part D, a voluntary program in which beneficiaries can elect to enroll. In February 2019, about 45 million or three-fourths of Medicare beneficiaries were enrolled in Part D plans—including stand-alone prescription drug plans and Medicare Advantage prescription drug plans, which combine medical and prescription drug benefits. In comparison, in 2017, about 200 million patients were enrolled in a private health plan that provides prescription drug coverage, among other benefits, according to CMS. Health plans that provide prescription drug coverage interact with both patients and pharmacies. For patients, health plans may vary their benefits with regards to cost-sharing arrangements—such as copayments for medications—and quantity limits for medications covered—such as restricting the dosage or number of refills of a medication provided within a given period of time. For pharmacies, health plans pay pharmacies a share of the medication costs and a dispensing fee for the pharmacies’ administrative costs in preparing and dispensing the medication. Limited Information Suggests the Use of Medication Synchronization Has Increased; Some Studies and Stakeholders Reported Several Potential Benefits and Limitations One Study and Several Stakeholders Suggest the Use of Medication Synchronization Has Increased in Recent Years Limited information available indicates that the use of medication synchronization has increased, but comprehensive data on its use by pharmacies and patients do not exist. Among the 22 peer-reviewed studies we identified, one study reported that the use of medication synchronization increased among pharmacies and patients. Specifically, the study examined survey data on the use of medication synchronization in retail pharmacies and reported that the number of retail pharmacies using medication synchronization increased from 3,324 in 2013 to 5,534 in 2014, a 66 percent increase. In addition, the study found that the number of patients using medication synchronization at these retail pharmacies increased from 124,608 in 2013 to 438,100 patients in 2014. We did not identify other studies that examined the use of medication synchronization. Officials from all five selected pharmacies that reported using medication synchronization told us that their pharmacies have increased their use of medication synchronization, but they generally could not provide us with data on their patients’ use of medication synchronization over time. The pharmacies included three retail pharmacy chains—two large national chains and one mid-size regional chain—one independent pharmacy, and one mail order pharmacy. Officials from four of these pharmacies told us that they started using medication synchronization within the last 5 years; officials from the fifth pharmacy told us that they started using medication synchronization in 2011. For example, officials from the two large retail pharmacy chains, each with about 10,000 pharmacies nationwide, told us that they first piloted medication synchronization to a small number of pharmacies in either 2015 or 2016. One of these chains now uses medication synchronization at all of its pharmacies, and the other is in the process of doing so. Officials from the mid-size retail pharmacy chain stated that they piloted medication synchronization in 2011 with about 2,500 patients enrolled across 50 pharmacies. They have since expanded it to about 83,000 patients across all their more than 90 pharmacies. Seven other stakeholders, including those representing patients and pharmacies, also told us that the use of medication synchronization has increased in recent years, but generally did not provide data on the increase. In addition, officials from an organization representing pharmacies told us that as of 2018, approximately 80 percent of independent pharmacies offered medication synchronization; however, they could not provide data from prior years. Studies and Stakeholders Suggest that Medication Synchronization Can Be Beneficial to Patients, Pharmacies, and Health Plans Limited information exists on the effects of medication synchronization, but available studies and stakeholders indicate several potential benefits, primarily for patients. According to CMS officials, CMS does not have data on the effects of medication synchronization, such as patient medication adherence; other stakeholders we interviewed indicated that such national data do not exist. Seventeen of the 22 peer-reviewed studies we identified evaluated the effects of medication synchronization—14 of these studies evaluated effects for patients and the rest for pharmacies and health plans. However, the data reported by these studies are limited in scope and are not generalizable to broader populations. Twelve of 14 peer-reviewed studies evaluating the potential effects of medication synchronization for patients reported two potential benefits— improved medication adherence or improved medical outcomes. Improved medication adherence. Twelve peer-reviewed studies that evaluated the potential effects of medication synchronization on patients’ adherence reported that medication synchronization improved adherence. For example, nine of the 12 studies compared medication adherence among patients using and not using medication synchronization and found that medication adherence was greater among patients using medication synchronization—one of the most recent studies showed adherence was 3 percent higher for those using medication synchronization. Two studies compared medication adherence among patients before and after using medication synchronization and found that adherence improved after synchronization was started—the most recent of these studies showed an improvement of 2 percent in average adherence after a year of enrollment. The last study reported that 56 percent of patients surveyed stated that they would be more adherent to their medications if their refills were synchronized. In addition, eight of these studies evaluated the effects of medication synchronization for patients with different chronic conditions and found differences by type of chronic condition. According to the studies, medication adherence improves as a result of medication synchronization because it simplifies the refilling process. Improved medical outcomes. One peer-reviewed study reported that medication synchronization may also lead to improved medical outcomes for patients. The study found that rates of hospitalization and emergency department visits and rates of outpatient visits were 9 percent and 3 percent lower, respectively, among patients using medication synchronization compared with those who were not. Stakeholders also cited improved medication adherence and medical outcomes as potential benefits for patients, and also identified additional benefits that may result from medication synchronization. Specifically, 14 of the 15 stakeholders representing patient and pharmacy organizations and selected pharmacies we interviewed said that medication synchronization may help improve patients’ medication adherence, and 12 of these stakeholders said that it may improve patients’ medical outcomes. These stakeholders also indicated other potential benefits for patients: Improved convenience. Medication synchronization improves convenience for patients—for example, by reducing the number of trips patients need to make to the pharmacy or making it easier to manage their medications, according to 10 of the 15 stakeholders representing patient and pharmacy organizations and selected pharmacies. Fewer trips to the pharmacy help to minimize the need for transportation arrangements, which is particularly important for older patients, patients who live in rural areas, and patients who lack reliable transportation. Five of the 10 stakeholders added that medication synchronization simplifies patients’ experience with managing their medications—patients no longer need to keep track of multiple refill dates for all their medications. Under medication synchronization, the pharmacists proactively perform this work and send reminders to the patients. Increased interaction between pharmacists and patients. Seven of 15 stakeholders representing patient and pharmacy organizations and selected pharmacies told us that medication synchronization increases the interaction patients have with their pharmacists, which may help patients better manage their medication regimens and improve their overall health. For example, a stakeholder representing pharmacies said that prior to the medication synchronization date, pharmacies generally contact patients to confirm that their medications should be filled; as part of this outreach, they also inquire about any changes in the patients’ medical history or therapy. If such changes are identified, pharmacists follow up with patients, and their physicians if necessary, to ensure that patients receive refills reflecting any necessary medication changes. In addition, according to some stakeholders, if a consultation is also provided on the medication synchronization date, pharmacists have more opportunities to answer patients’ questions about medication use, provide counseling, and offer patients other auxiliary services. For example, some stakeholders told us that pharmacists may provide screenings for blood pressure and diabetes, or recommend immunizations to patients when they pick up their medications. Because pharmacists regularly assess patients’ medical history in preparing for medication synchronization, they can target patients who may be at high risk for medical problems or immunization-preventable diseases. Regarding pharmacies, some studies and stakeholders identified the following potential benefits of medication synchronization. Operational efficiencies. Three peer-reviewed studies reported that medication synchronization can lead to operational efficiencies. For example, one study reported that medication synchronization can help pharmacists better manage inventory and personnel costs and improve workflow. Nine out of 12 stakeholders representing pharmacy organizations and selected pharmacies also said that medication synchronization can lead to improvements in operational efficiencies. For example, officials from one organization representing pharmacies said that pharmacists save time when they can dispense all of a patient’s medications at one time instead of several times throughout the month. Increased marketability of pharmacies to health plans. According to one peer-reviewed study and five of the 12 stakeholders representing pharmacy organizations and selected pharmacies, the extent to which a pharmacy’s medication synchronization program improves patient care, such as by improving medication adherence, may make the pharmacy more desirable to health plans. For example, according to the study and officials from one organization representing pharmacies, health plans may include pharmacies with highly adherent patients in the plans’ preferred pharmacy networks. Pharmacies in preferred pharmacy networks can offer lower medication prices, attracting more customers. Increased revenue. Three peer-reviewed studies and five of the 12 stakeholders representing pharmacy organizations and selected pharmacies reported that, to the extent that medication synchronization can improve patients’ medication adherence, it can also lead to increased pharmacy revenues generally because of an increase in filled prescriptions. For example, one of the three peer- reviewed studies reported that medication synchronization resulted in an average increase in medication adherence of almost 5 percent over the first 6 months of its use. Similarly, an industry study found that medication synchronization leads to an additional 20 fills per patient per year, and may lead to an average of $1,120 of additional revenue per enrolled patient annually. The three peer-reviewed studies and the industry study did not examine the causes of the increase in prescription fills, but their authors generally attributed the increase to the improved adherence of patients using medication synchronization. Two of the three studies reported that medication synchronization can increase pharmacy revenues generally because of an increase in filled prescriptions. In addition, officials from four stakeholders representing pharmacy organizations and selected pharmacies told us that pharmacies that use medication synchronization can leverage these opportunities to speak with patients and offer additional services, such as immunizations; these services can further help increase pharmacy revenue. Regarding health plans, some studies and stakeholders identified the following potential benefits of medication synchronization. Higher Medicare quality performance scores. Three peer-reviewed studies reported that medication synchronization can potentially improve health plans’ Medicare quality performance scores. CMS assesses the quality performance of Part D plans using information on various measures, such as adherence to medications for diabetes, high cholesterol, or hypertension. Specifically, CMS rates the plans’ performance using a star rating system, which gives each plan a score of between one and five stars, with five stars being the highest rating. Medication adherence measures are triple weighted in the calculation of a plan’s overall rating. Plans with the highest star ratings are rewarded with member enrollment incentives, while plans with lower star ratings are penalized. In addition, Medicare Advantage plans with high ratings may also receive financial bonuses from Medicare. To the extent that there are improvements in beneficiaries’ medication adherence as a result of medication synchronization, health plans may experience improved performance ratings and the commensurate financial benefits. However, only one of the four stakeholders representing health plan organizations and selected health plans indicated improved Medicare quality performance scores as a potential benefit of medication synchronization. Reduced medical costs. Medication synchronization may also benefit health plans by reducing their overall medical costs, according to one peer-reviewed study. The study found that medication synchronization can result in significant savings in medical costs for health plans, despite the increase in medication costs to the health plan. Specifically, the study reported that medical savings per additional dollar spent on medications under medication synchronization ranged from approximately $1 to $37, depending on the medication. According to the study, health plans could potentially experience such reduced medical costs as a result of medication synchronization because when patients are adherent to their medications, they may decrease their utilization of healthcare services. However, only one of the four stakeholders representing health plan organizations and selected health plans cited this as a potential benefit. Studies and Stakeholders also Identified Potential Limitations of Medication Synchronization for Patients, Pharmacies, and Health Plans A small number of studies and several stakeholders indicated that there are some potential limitations associated with medication synchronization. For example, Patients. One peer-reviewed study indicated that medication synchronization may not be beneficial for all patients. Similarly, 14 of the 15 stakeholders representing patient and pharmacy organizations and selected pharmacies said that not every patient may want to use medication synchronization. For example, 12 of the 14 stakeholders said that some patients may not be able to afford paying all copayments for their medications at one time each month, which deters them from using medication synchronization. In addition, one stakeholder said that some patients prefer going to the pharmacy regularly or consider trips to the pharmacy as opportunities for social interaction and may not be interested in medication synchronization. Pharmacies. One peer-reviewed study reported that using medication synchronization is time- and labor-intensive for pharmacies. Specifically, the study reported that almost 60 percent of pharmacists surveyed indicated that implementing medication synchronization involves a significant change in a pharmacy’s workflow. Seven of 12 stakeholders representing pharmacy organizations and selected pharmacies said this was because of several challenges. For example, it may be complicated to set up the initial synchronization, determine the best anchor medication and synchronization date, or adjust patients’ medication synchronization because of changes in their medical needs or therapy. In addition, pharmacists may have to conduct extensive follow-up with health plans because health plans may not be consistent in how they process pharmacies’ claims that involve short fills. For example, private health plans may initially deny coverage of short fills; such denials may require the pharmacist to expend additional resources to follow-up with the health plan to obtain approval for the short fill. Health plans. Officials from the two selected health plans told us that they do not require their Part D network pharmacies to use medication synchronization, nor do they compensate pharmacies for providing these services. While all stakeholders representing health plan organizations and selected health plans said that they view medication synchronization as having the potential to improve patients’ medication adherence and health outcomes, two of these stakeholders noted the lack of data explicitly tying medication synchronization to improved patient medication adherence, medical outcomes, and overall medical costs. A CMS Regulation and Laws in Selected States May Support the Use of Medication Synchronization, Such as By Reducing Patient Cost Sharing Our review shows that a CMS regulation and laws related to prescription drug coverage in five selected states may support the use of medication synchronization. For example, CMS and the five selected states allow for reduced patient cost sharing for short fills needed to synchronize their medications. CMS does not have a formal medication synchronization program or policy for Medicare; however, a CMS regulation related to prescription drug benefits may support medication synchronization by reducing beneficiary cost sharing for certain amounts dispensed, according to officials. Specifically, CMS issued a regulation that, starting in 2014, required Medicare Part D plans to establish a daily cost-sharing rate (for example, a prorated copayment) when a beneficiary receives less than a month’s supply of a prescription medication—generally referred to as a short fill. According to CMS, the primary goal of the regulation was to reduce medication cost and waste—such as by allowing beneficiaries to initially receive a short fill of a new medication so that they can assess, in consultation with their providers, the efficacy of the medication and any associated adverse side effects. Because short fills may be needed to initially synchronize multiple medications to the same refill date, the prorated copayment may reduce the financial burden on beneficiaries who require these fills, according to CMS officials. In addition, officials from a selected pharmacy and officials from a technology vendor added that from a value perspective, beneficiaries may be reluctant to enroll in medication synchronization if they had to pay a full copayment for less than a month’s supply of medication. For example, as illustrated in figure 2, to initiate medication synchronization for a beneficiary taking three medications, each with a different refill date, the pharmacist may dispense short fills for two of the three medications. In this case, the pharmacist may dispense 8 days’ supply of one medication and 3 days’ supply of another medication. Prior to the regulation, the beneficiary would have paid $45 in copayments for these two short fills, as compared to $7 with prorated copayments—a difference of $38. Selected States The five selected states—Georgia, Illinois, Maine, Texas, and Washington—enacted laws within the last 4 years that may support medication synchronization. Specifically, these laws: Require insurance coverage of short fills. Laws in all five selected states require health plans in their state to provide coverage for medication short fills. These laws may also support medication synchronization by allowing health plans and pharmacies to work around certain plan policies that may impose limits on medication refills. Specifically, officials from a technology vendor told us that some health plans may impose limits on the number of refills that can be dispensed in a month. For example, if a patient is taking five medications and is limited to five refills a month, a short fill would count towards that limit and the patient may not then be able to get all of his or her medications covered by the health plan that month. Such laws allow the health plan and pharmacy to work around these quantity limits so that the patient can receive the needed short fills to synchronize all of his or her medications. Additionally, two states— Maine and Texas—specifically require their health plans to allow pharmacies to override denials related to refilling a prescription too soon. A pharmacy may receive such denials when refilling a prescription after having just filled it—for example, dispensing a short and full refill of a medication too close together. Officials from two selected pharmacies and an organization representing pharmacies told us that such laws also help to reduce the time and resources that pharmacies otherwise would have expended on addressing issues with these drug claims. Require prorated cost sharing for short fills. Like CMS’s regulation, laws in all five selected states require health plans in their state to prorate a patient’s cost sharing, such as a copayment, when the patient receives a short fill of a medication. Officials from four selected pharmacies told us such laws help reduce the financial burden on patients when they first have their medications synchronized. Without such a law, patients would have paid a full copayment for these medications, which may have discouraged or prevented some patients from enrolling in medication synchronization. Prohibit prorated dispensing fees for short fills. Laws in four of the five selected states prohibit health plans in their state from paying pharmacies a prorated dispensing fee for medication short fills. Pharmacies receive a dispensing fee from health plans for each prescription they fill to cover the pharmacies’ administrative costs of preparing and dispensing a fill. The dispensing fee is in addition to the reimbursement pharmacies receive from health plans for the costs of the medications. In states without this law, health plans may prorate the dispensing fee for short fills—that is, pay a lower fee because a smaller quantity of medications (for example, 10 pills rather than 30 pills) is dispensed. Officials from a technology vendor and an organization representing pharmacies told us that ensuring that a health plan pays a full dispensing fee provides an incentive for pharmacies to use medication synchronization. They explained that a pharmacy’s administrative costs of dispensing a medication remains the same, regardless of the quantity dispensed. Require medication synchronization process or policy. Laws in two of the five selected states—Texas and Washington—require health plans in their state to establish a process or policy for providing medication synchronization services. Both states require that, as part of this process or policy, the pharmacist or prescribing physician must ensure that medication synchronization is appropriate or in the best interest of the patient before the process is used. In addition to approval from both the pharmacist and physician, Texas also requires that the health plan and patient approve the medication synchronization plan. Officials from an organization representing pharmacies said that involving all these entities further helps to ensure the appropriateness of medication synchronization for a particular patient. While stakeholders generally told us that these laws have helped to support medication synchronization, they also said that the absence of such laws has not prevented pharmacies from using it in other states. For example, the five selected pharmacies that reported using medication synchronization—including three pharmacy chains—offered these services in at least some states without such laws. Additionally, officials from a selected pharmacy told us that they continue to offer medication synchronization despite receiving a prorated dispensing fee for short fills. Agency Comments We provided a draft of this report to the Department of Health and Human Services (HHS). HHS provided technical comments, which we incorporated as appropriate. We are sending copies of this report to the appropriate congressional committees, the Secretary of HHS, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7114 or CosgroveJ@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. Appendix I: Information about Stakeholders Interviewed Appendix I: Information about Stakeholders Interviewed We interviewed organizations reflecting a range in interests: Six organizations representing pharmacies or pharmacists Three organizations representing patients Two organizations representing health plans One organization representing the pharmaceutical industry 1 We interviewed one organization that specializes in Medicare issues and conducts analysis related to access to and quality of care, among other things. 5 We interviewed selected pharmacies that reported using medication synchronization Two large national retail chains One mid-size regional retail chain One small independent, single-store, retail pharmacy One mail order pharmacy 1 We interviewed a selected large national retail chain pharmacy that reported not using medication synchronization. 2 We interviewed two selected Medicare health plans that offer prescription drug coverage (Part D) that are among the top five Part D plans covering the largest Medicare populations—the combined Medicare Part D enrollment in these two plans totaled almost 14 million—or 31 percent of all Part D beneficiaries, as of August 2018. 2 We interviewed two selected medication synchronization vendors that contract with pharmacies to provide technological support in performing tasks such as identifying patients who would benefit from medication synchronization; determining the anchor medication; and setting up automated reminder to patients, in advance of their prescription refills. We identified these vendors in peer-reviewed studies on medication synchronization or through interviews with stakeholders. 5 We interviewed experts in medication synchronization, identified in peer-reviewed studies on medication synchronization or through interviews with stakeholders. Appendix II: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments In addition to the contact named above, Tim Bushfield, Assistant Director; Pauline Adams, Analyst-in-Charge; George Bogart; Nina Daoud; Krister Friday; Melissa Trinh-Duong Ostergard; and Vikki Porter made key contributions to this report. Bibliography Andrews, S. B., T. R. Marcy, B. Osborn, and L. G. Planas. “The Impact of an Appointment‐Based Medication Synchronization Programme on Chronic Medication Adherence in an Adult Community Pharmacy Population.” Journal of Clinical Pharmacy and Therapeutics, vol. 42, no. 4 (2017): pp. 461-466. Barnes, Brenda, Ana L. 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Background Microelectronics Production at Sandia The MESA Complex at Sandia comprises multiple production facilities and buildings, which total approximately 400,000 square feet (see fig. 1). In particular, the SiFab Facility, completed in 1988, is the primary production facility for microelectronics integrated into nuclear weapons. The SiFab Facility produces application-specific integrated circuits (ASIC) that are custom-designed to control certain nuclear weapon arming, fuzing, and firing functions. The MESA Complex also includes other buildings, such as the Micro Fabrication Facility, which was completed in 2006 and produces strategic radiation-hardened devices for manipulating electronic signals and electrical power. The physical layouts of these two production facilities center around a series of clean rooms that are designed to maintain an extremely low level of dust and other particulates, which can harm microelectronic functionality. The two facilities contain about 375 pieces of specialized production equipment, some of which cost millions of dollars, and have acid exhaust and liquid waste management systems for handling the byproducts of the production processes. The SiFab Facility produces all of the strategic radiation-hardened ASICs currently used in nuclear weapons. ASICs are produced on wafers—a thin slice of semiconductor material such as silicon—using what is referred to as a complementary metal-oxide semiconductor (CMOS) process technology. The production of ASICs requires hundreds of processing steps, which are completed over multiple weeks. For example, according to Sandia documentation, the production of a specific type of ASIC requires over 600 processing steps over an approximately 26-week period. Microelectronics are produced with characteristic dimensions (or “feature sizes”) measured in nanometers (nm), or one-billionth of one meter. The process technology together with an associated feature size is known as a technology “node.” In general, smaller nodes represent more advanced technologies. The SiFab Facility produces microelectronics at the 350 nm node, and NNSA and Sandia refer to the CMOS production process technology at the 350 nm node as “CMOS7.” Currently, state-of-the-art microelectronics are produced at the 32 nm or below node. For example, the Intel Corporation produces commercial microelectronics at the 14 nm node for use in personal computers and servers. However, such smaller nodes are more challenging to produce and have not been proven to perform at the strategic radiation-hardened level, according to Sandia contractor representatives. Figure 2 shows commercially produced microelectronics on a wafer (left photo) and diced into individual microelectronics parts next to a U.S. dime (right photo). Ongoing and Planned Weapon Modernization Programs and Other Modernization Plans Requiring Microelectronics As shown in table 1, NNSA is undertaking multiple LEPs and weapon modernization efforts, in which Sandia is participating. In addition, the 2018 Nuclear Posture Review calls for NNSA to consider additional weapon programs—specifically, a program to develop a modern nuclear- armed sea-launched cruise missile, and another to develop a new submarine-launched ballistic missile warhead (now referred to as the W93). To develop and produce microelectronics for these efforts, Sandia must (1) conduct research and development activities, (2) finalize the design of microelectronics to meet military requirements specific to the weapon program into which the microelectronics will be integrated, and (3) produce the microelectronics. Sandia must conduct all of these activities years before NNSA delivers a weapon program’s first production unit to DOD. According to Sandia documents and contractor representatives, microelectronics research and development efforts generally begin 10 to 15 years before a weapon program’s first production unit date, while microelectronics production generally begins 3 to 5 years before a first production unit date. DOD is also undertaking modernization efforts related to nuclear weapon delivery platforms, and Sandia is producing microelectronics to support those efforts. Specifically, DOD is responsible for designing and producing the arming and fuzing components on delivery platforms for certain types of nuclear weapons, and Sandia produces some of these components for DOD at the MESA Complex. For example, according to Air Force and Sandia documentation, the Air Force contracted with Sandia to design and produce microelectronics for its Intercontinental Ballistic Missile Fuze Modernization, which will provide a new fuze for use on both the current Minuteman III missile and its replacement, the Ground Based Strategic Deterrent missile. DOE and NNSA Management Approaches for Projects and Programs DOE and NNSA distinguish between projects and programs, and the agencies use different management approaches for each: Projects. DOE’s project management order governs NNSA’s management of capital asset acquisition projects with a total cost greater than $50 million. The order states that capital assets projects have a defined start and end point. Capital assets include land, structures, equipment and intellectual property that are used by the federal government and have an estimated useful life of 2 years or more. The order’s goal includes delivering projects within their original performance baselines (on time and within budget) and fully capable of meeting mission performance and other requirements, such as environmental, safety, and health standards. Programs. As we reported in 2018, DOE has not established a program management policy. However, NNSA issued its own program management policy in February 2019. The policy applies to all NNSA elements and requires them to establish additional program management requirements for respective NNSA programs based on needs, risk, complexity, and stakeholder involvement, among other things. The NNSA policy defines a program in part as an organized set of activities directed toward a common purpose or goal, undertaken or proposed in support of an assigned mission area. In addition, some NNSA offices have issued their own program management directives that are more specific than the NNSA policy. For example, NNSA’s Office of Defense Programs—which is responsible for, among other things, weapon modernization programs, including LEPs, and associated materials and components, such as microelectronics—issued a program management directive in June 2019 that establishes requirements and processes for managing the office’s programs. This directive establishes four program management categories and execution requirements for these categories. These management categories are risk-based and apply different execution requirements commensurate with program risk. Fiscal Year 2020 Funding for Microelectronics Activities at Sandia The MESA Complex’s estimated fiscal year 2020 budget is $283 million, according to Sandia documentation. As shown in figure 3, this funding comes from a variety of sources, because Sandia uses the MESA Complex to meet both NNSA’s and DOD’s nuclear weapon production missions as well as for research and development for those and other federal entities through strategic partnership programs. Sandia documentation states that a portion of the MESA Complex’s budget is obtained from other, non-NNSA federal entities that pay Sandia directly to produce microelectronics for, among other thing, research and development purposes, and this amount of funding fluctuates annually. According to Sandia contractor representatives, the laboratory presents MESA’s budget as an estimate for this reason. Specific funding sources are discussed in greater detail below: NNSA provides about 60 percent (or $168 million) of the MESA Complex’s total estimated budget for fiscal year 2020. Two NNSA offices account for most of the agency’s funding: The Office of Defense Programs accounts for 42 percent (or about $71 million) and is responsible for ensuring the United States maintains a safe, secure, and reliable nuclear stockpile through the application of science, technology, engineering, and manufacturing activities. This funding comes from multiple sub- offices. For example, the Office of Research, Development, Test, and Evaluation provides funding for microelectronics research and development; the Office of Production Modernization provides funding for, among other things, refurbishing microelectronics processing capabilities; and the Office of Stockpile Management provides funding for microelectronics production, according to an NNSA official and NNSA documentation. The Office of Safety, Infrastructure and Operations accounts for 46 percent (or about $78 million), and this office is responsible for ensuring existing facilities are safely operated, effectively managed, and maintained to meet mission needs. DOE’s Strategic Partnership Programs account for about 13 percent (or $36 million) of the MESA Complex’s fiscal year 2020 budget. These programs include research and development projects sponsored by the Air Force and the Defense Advanced Research Projects Agency. DOE’s Laboratory Directed Research and Development work accounts for about 10 percent (or $28 million) of the MESA Complex’s fiscal year 2020 budget. Each of DOE’s 16 contractor-operated laboratories—including Sandia—may direct a portion of the funding they receive from DOE to scientists who conduct independent research. The statutory limit on this laboratory-directed research and development work is between five to seven percent of funds provided by DOE to the laboratories for national security activities. DOD provides about 6 percent (or $17 million) of the MESA Complex’s fiscal year 2020 budget through Strategic Partnership Programs. According to Sandia documentation, this funding comes directly from the Air Force and Navy to support the production of microelectronics that are integrated into nuclear weapon delivery platforms. Other sources account for about 12 percent (or $34 million) of the MESA Complex’s fiscal year 2020 budget. Among other things, this funding comes from indirect rates applied to all Sandia programs to support the MESA Complex’s management and operations. NNSA Completed Actions over the Past Decade to Sustain Its Microelectronics Capability at Sandia and Identified but Did Not Pursue Alternatives for a New Future Capability Over the past decade, NNSA completed several actions to sustain its existing strategic radiation-hardened microelectronics facilities at Sandia through 2025 while simultaneously identifying future alternatives for its microelectronics capability beyond 2025. In particular, during fiscal years 2012 through 2019, NNSA engaged in a $150 million effort at Sandia to sustain operations at the SiFab Facility through 2025. NNSA pursued this effort in response to a 2010 study conducted by Sandia that identified the need for millions of dollars in funding to sustain the SiFab Facility through 2025. NNSA’s sustainment efforts focused on the following two areas: Infrastructure. NNSA spent about $27 million to complete approximately 25 infrastructure projects that support microelectronics production. For example, NNSA installed two new 20,000-gallon tanks for water storage to improve the facility’s deionized water system, which provides ultra-high purity water for use in certain processing steps. NNSA also replaced a portion of the facility’s acid exhaust system. Equipment. NNSA spent about $123 million on production equipment for two main purposes: (1) to replace aging equipment that Sandia classified as being at high risk of failure; and (2) to refurbish existing equipment and procure equipment that will be used to produce microelectronics once Sandia completes its ongoing effort to convert the production process from using 6-inch silicon wafers to 8-inch wafers. Prior to these equipment investments, the SiFab Facility relied on aging equipment to perform certain processing steps using a manual process. In fiscal year 2018, Sandia refurbished existing equipment and purchased new equipment that is more automated and is intended to increase process reliability. In addition, according to Sandia documentation, Sandia needed to convert its production process to use 8-inch silicon wafers because the commercial sector had increasingly limited maintenance support and service for equipment that processed 6-inch wafers. While NNSA was working with Sandia to sustain the SiFab Facility through 2025, the agency also began identifying and evaluating options for producing microelectronics after 2025, such as constructing a new multibillion-dollar production facility at Sandia. However, because of changes to key assumptions, NNSA decided in November 2018 not to pursue any of the identified alternatives and instead stated that the agency was going to assess options to sustain its current capability at Sandia beyond 2025. See figure 4 for a summary of NNSA’s actions to sustain the SiFab facility and consider alternatives. More specifically, NNSA took the following actions during the past decade to identify alternatives for producing microelectronics beyond 2025: In 2011, NNSA’s Deputy Administrator for Defense Programs requested proposals from the agency’s three nuclear weapons laboratories for flagship experimental science, technology, and engineering facilities to help ensure that NNSA will have the capabilities to address future national security needs. In response, Sandia submitted a proposal to NNSA in 2012 to construct a new, multibillion-dollar microelectronics production facility, called the Center for Heterogeneous Integration, Packaging, and Processes (CHIP2). The Sandia proposal estimated that CHIP2 would take 14 years to design and build at an estimated cost of $2.5 billion. The proposal indicated that the facility would increase microelectronics functionality and trustworthiness by creating a trusted supply chain into the future for design, fabrication, testing, and packaging activities. As a result of the time needed to design and construct CHIP2, investment would still be needed to sustain the MESA SiFab Facility through 2025. NNSA commissioned two studies by The Aerospace Corporation, a federally funded research and development center sponsored by the Air Force, to help the agency evaluate Sandia’s CHIP2 proposal against other potential alternatives, such as contracting with commercial entities to produce microelectronics. These studies, completed in August and September 2014, generally ranked the CHIP2 proposal at or near the top of the alternatives but also stated that CHIP2 did not stand out as a decidedly better option. Nonetheless, in early 2015, NNSA’s Deputy Administrator for Defense Programs issued a memorandum recommending that NNSA pursue the CHIP2 proposal as a formal capital asset project, subject to DOE’s project management order on acquisition of capital assets. In 2016, in accordance with DOE’s project management order, NNSA developed two key documents during the initiation phase of its capital asset project supporting the CHIP2 proposal, which NNSA referred to as the Trusted Microelectronics Capability (TMC) project. NNSA first developed a mission need statement, which is a formal document that identifies a credible performance gap between current capabilities and those needed to achieve the goals stated in the agency’s strategic plan. The mission need should be stated in a way that is solution-neutral. The project’s mission need statement stated that, among other things, after 2025 the SiFab Facility faced a severe risk of equipment and facility failures that could have detrimental impacts on future microelectronics production schedules. The statement noted that continued refurbishment of the SiFab Facility beyond 2025 could result in significant downtime during critical weapon development and production cycles, as the facility was constructed in the 1980s and was not sized for modern microelectronics production equipment and supporting infrastructure. NNSA next developed a requirements document, which describes the ultimate goals the project must satisfy while also identifying key assumptions and constraints. The requirements document identified several key requirements, including that the TMC project must be able to provide NNSA with trusted access to produce microelectronics in support of the agency’s nuclear weapons mission. Between 2016 and 2017, in accordance with DOE’s project management order, NNSA conducted an analysis of alternatives for the TMC project based on achieving NNSA’s mission need statement. Such an analysis identifies, analyzes, and selects a preferred alternative to best meet the mission need by comparing the operational effectiveness, costs, and risks of potential alternatives, according to DOE documentation. During this process, NNSA considered 21 alternatives for meeting the mission need statement, among them the CHIP2 proposal as well as several alternatives that included partnerships with commercial industry and other government production facilities. The final TMC analysis of alternatives report, dated January 2018, did not identify the CHIP2 proposal as a preferred alternative because of the proposal’s high life-cycle costs, high total project cost, and long project schedule. Instead, the report identified two preferred alternatives as best meeting NNSA’s needs: (1) partnering with an existing, government-owned, contractor- operated production facility other than Sandia; and (2) entering into an interagency agreement with DOD and at least one member of the intelligence community, as well as a commercial entity, to design, build, and operate a state-of-the-art production facility. Ultimately, NNSA decided not to pursue either preferred alternative because of changing assumptions. For example, one of NNSA’s key assumptions for the TMC analysis of alternatives was that the SiFab Facility could not remain operational beyond 2025. However, NNSA tasked The Aerospace Corporation to validate this assumption, and in January 2018, The Aerospace Corporation completed a study concluding that the SiFab Facility could remain viable until 2040 with prioritized and well-planned infrastructure repairs and equipment replacements. Another example of changing assumptions concerned the preferred alternative under which NNSA would enter into an interagency agreement with DOD and at least one member of the intelligence community to design, build, and operate a state-of-the-art production facility. This preferred alternative assumed that DOD, the intelligence community, or both, would pay to develop and build the production facility (estimated to cost from $350 million up to $1.2 billion), while NNSA would pay to equip its portion of the production process. The TMC analysis of alternatives report stated that commitment from DOD and the intelligence community would be vital, and that this alternative carried significant execution risks. In January 2018, NNSA documentation stated that this interagency alternative was no longer viable because other agencies stated they were no longer interested in a potential partnership. Partly as a result of these changes in key assumptions, in November 2018, NNSA wrote in a letter to Congress that it was no longer requesting funding for the TMC and was assessing what investments were needed to extend the operational life of the SiFab Facility to 2040. NNSA Has Decided to Upgrade and Sustain Its Microelectronics Capability at Sandia through 2040, but Its Management Approach Does Not Fully Incorporate Key Controls As part of NNSA’s ongoing approach to managing its strategic radiation- hardened microelectronics activities, the agency plans to upgrade and sustain its microelectronics capability at Sandia through 2040, which it estimates will cost about $1 billion over the next 20 years. NNSA is also in the preliminary stages of identifying and evaluating options for a microelectronics capability beyond 2040. In addition, NNSA is starting to implement a revised management approach, including appointing a coordinator to guide certain aspects of its microelectronics activities. However, NNSA’s approach does not fully incorporate key management controls, such as developing an overarching management plan, which the agency has applied to other important activities. NNSA Plans to Upgrade and Sustain Its Microelectronics Capability at Sandia through 2040 and Is Beginning to Identify Options for a Capability Beyond 2040 In 2019, NNSA made three key decisions related to upgrading and sustaining its microelectronics capability at Sandia through 2040. First, NNSA approved plans to further upgrade its process for producing microelectronics. This upgraded process, called CMOS8, contains some features of the currently employed CMOS7 process, but is a more advanced technology node that also includes many new features, according to Sandia documentation. Second, NNSA approved plans to produce and integrate into future nuclear weapons a more advanced type of microelectronics component called a field programmable gate array (FPGA). According to Sandia documentation, strategic radiation- hardened FPGAs can be produced using the CMOS8 process but not the CMOS7 process. Third, Sandia developed and NNSA approved a plan to identify, prioritize, and provide budget estimates to sustain Sandia’s microelectronics infrastructure and equipment at the MESA Complex over the next 20 years. This plan incorporates NNSA’s decisions to develop the CMOS8 process and produce FPGAs. According to NNSA and Sandia documents, the rationale behind and expected benefits of these three key decisions are as follows: The CMOS8 process will allow Sandia to produce microelectronics at a smaller, more advanced technology node (180nm) compared with the current CMOS7 technology node (350nm). NNSA documentation states that, among other things, the CMOS8 process is expected to produce microelectronics that have twice the processing speed compared with those produced using the CMOS7 process. Such advances are needed to help ensure that future nuclear weapons remain safe, secure, and reliable while operating in increasingly hostile threat environments and that the weapons meet increased performance requirements, according to Sandia documentation. According to NNSA officials, the agency agreed with Sandia’s assessment on implementing the CMOS8 production process based, in part, on findings and recommendations contained in an independent study commissioned by NNSA and completed by multiple entities including The Aerospace Corporation. According to Sandia documentation, while FPGAs have never been used before in a nuclear weapon, they may significantly reduce the cycle time for microelectronics research, development, and production compared with cycle times for ASICs used in nuclear weapons. This reduction may be possible because the ASICs currently used in nuclear weapons are uniquely designed and produced to carry out specific functions, whereas FPGAs can be produced using a common design and then programmed after production (but before insertion into a nuclear weapon) to carry out different functions, according to NNSA officials. Reduced cycle time from FPGAs could alleviate schedule pressure on future weapon modernization programs because cycle times for designing and producing ASICs for LEPs have historically been about 10 years before production of the first weapon, according to Sandia documentation. Sandia’s plan will provide NNSA with the basis for the investment profile needed to sustain the MESA Complex’s infrastructure and equipment through 2040. Because the sustainment effort will last at least 20 years, NNSA officials said that having a long-term planning document that provides a current baseline for the condition of Sandia’s microelectronics infrastructure and equipment, identifies challenges, and recommends specific sustainment activities will be a useful management tool. The plan for extending the life of the MESA Complex at Sandia provides cost and schedule estimates related to sustainment of existing facilities and equipment, as well as installation of new equipment for CMOS8 and development and maturation of the FPGA technology. Overall, the plan calls for spending about $1 billion over the next 20 years. Specifically, the plan identifies spending for the following activities: Sustainment of existing facilities and equipment. The plan identifies about $900 million in spending from fiscal years 2020 through 2040—or about $45 million a year for the next 20 years—to complete identified infrastructure and equipment projects. The plan calls for spending roughly half of the $900 million on projects to upgrade existing infrastructure within the MESA Complex. In particular, Sandia plans to spend about $120 million from fiscal years 2020 through 2024 on projects to improve or upgrade infrastructure within the SiFab Facility that is considered to be in “poor condition” based on information contained in NNSA’s infrastructure condition database. The SiFab Facility is to be the physical location for the majority of production tools for CMOS8. Two of these projects would replace electrical power and distribution equipment at an estimated cost of about $50 million, while another project would replace the facility’s chemical distribution system at an estimated cost of about $5 million. Sandia plans to spend the other half of the $900 million on equipment-related projects. For example, Sandia plans to spend about $85 million from fiscal years 2021 through 2026 on projects to support existing, non-CMOS8 production processes—such as producing transistors in the Micro Fabrication Facility—as well as activities that support microelectronics production, such as laboratory analysis, testing, and packaging. For example, Sandia plans to spend $1.5 million on a computerized tomography machine to support microelectronics testing. Development of CMOS8 and production of FPGAs. The MESA Complex extended life plan identifies about $170 million in spending from fiscal years 2020 through 2027 related to developing, maturing, installing, and implementing the CMOS8 process and the FPGA technology. Sandia contractor representatives told us that the CMOS8 process relies on newer and more advanced equipment to complete critical individual processing steps compared with the current CMOS7 process. As a result, the plan identifies about $70 million (out of the $170 million total) to acquire approximately 30 pieces of equipment, which Sandia will need to install and then qualify their performance. In addition, the plan identifies almost $90 million (out of the $170 million total) for developing and maturing the CMOS8 production process and the FPGA technology. According to Sandia documentation, Sandia plans to begin using the CMOS8 process to produce FPGAs for integration into a future nuclear weapon program at the end of fiscal year 2027. In addition to upgrading and sustaining Sandia’s microelectronics capabilities through 2040, NNSA is in the preliminary stages of identifying and evaluating options to ensure a continued microelectronics capability beyond 2040, according to NNSA officials and documentation. In particular, NNSA has identified the following two key options: NNSA is in the initial stages of identifying and evaluating options to construct a new facility for producing microelectronics by 2040 and beyond. In December 2019, NNSA officials provided us with documentation stating that the agency plans to begin evaluating options for a new microelectronics facility in 2021 with the goal of completing construction in 2030, installing needed equipment in the completed facility by 2033, and qualifying the production process and begin producing microelectronics for integration into nuclear weapons no later than 2035. In NNSA’s fiscal year 2021 budget request, which was released in February 2020, the agency requested funds to begin evaluation and early planning activities for this new microelectronics facility. NNSA is also evaluating whether the agency might be able to leverage a recent investment by DOD in a U.S. commercial microelectronics production facility to help meet NNSA’s microelectronics production needs after 2040. Specifically, DOD announced in October 2019 that it had awarded a contract to a U.S.- owned-and-operated microelectronics commercial production facility to, among other things, enhance its radiation-hardened microelectronics production process to meet DOD’s microelectronic needs for systems (such as satellites) that operate in environments with increased radiation levels. Over the next two years, the U.S. commercial microelectronics production facility plans to adapt its current production process and develop a new process that will produce microelectronics at a smaller node, according to DOD documentation. According to NNSA officials we interviewed in February 2020, NNSA and DOD are in preliminary discussions to determine if NNSA could make additional investments in this same facility to potentially produce strategic radiation-hardened microelectronics for integration into nuclear weapons. NNSA officials said that there was no firm timeframe for making an investment decision because such a decision would need to be made after the microelectronics facility begins producing microelectronics at the smaller node. NNSA Is Starting to Implementing a Revised Microelectronics Management Approach, but This Approach Does Not Fully Incorporate Key Management Controls NNSA is starting to implement a revised approach to managing its microelectronics activities. During our initial interviews with NNSA officials in early 2019, they stated that NNSA had not established a formal management structure to oversee the agency’s microelectronics activities. Instead, they said that NNSA had delegated primary responsible for overseeing such activities to two officials within NNSA’s Office of Defense Programs, who both served in multiple positions and had other duties within the office. According to these officials, once NNSA formally canceled the TMC project in November 2018, management efforts were focused on making initial determinations on the actions and budget estimates needed to sustain NNSA’s existing microelectronics capability at Sandia until 2040. These efforts included coordinating with multiple NNSA offices—such as the Office of Safety, Infrastructure and Operations—to understand their future microelectronics needs and requirements and to review draft MESA Complex sustainment documentation prepared by Sandia. However, officials from NNSA’s Office of Defense Programs told us that in late 2019 they determined that a more coordinated management approach would better position NNSA to oversee microelectronics activities and make informed budgetary and programmatic decisions. Specifically, NNSA officials stated that in November 2019 the Office of Defense Programs created and filled a new full-time microelectronics coordinator position within a sub-office, the Office of Research, Development, Test, and Evaluation. The microelectronics coordinator told us that NNSA has not yet finalized an official position description for the coordinator role. However, the coordinator said that the position will primarily be responsible for developing the CMOS8 process and the FPGA technology and integrating the research and development activities of the Office of Research, Development, Test, and Evaluation with another sub-office, the Office of Production Modernization. In addition, officials from NNSA’s Office of Defense Programs and Office of Safety, Infrastructure and Operations told us that they continue to use other existing processes to manage microelectronics activities at Sandia. For example, these officials said that they use the annual planning, programming, budgeting, and evaluation process, along with the annual work authorization process, to coordinate across NNSA offices on budgetary matters and work activities associated with microelectronics activities at Sandia. As part of these processes, agency officials told us that they issue annual implementation plans to direct the work of Sandia contractors related to microelectronics activities. NNSA officials then monitor the contractors’ progress toward completing the identified scope of work and work activities. For example, NNSA officials said that they conduct monthly meetings with contractor representatives to review status and financial reports. They also said that they hold mid-year and end-of-year program reviews with contractor representatives. To help management achieve desired results—such as ensuring a continued microelectronics capability—federal agencies design, implement, and operate internal controls, which comprise the plans, methods, policies, and procedures used to fulfill an entity’s mission, goals, and objectives. Federal standards for internal control state that management should, among other things: design control activities, such as by developing policies, procedures, techniques, and mechanisms that enforce management’s directives, to achieve objectives and respond to risk; and establish an organizational structure, assign responsibility, and delegate authority to achieve the entity’s objectives. NNSA has implemented internal controls at the agency level, in part, by developing and implementing directives that provide an organizational structure for the agency to plan, execute, control, and assess its programs and projects while also assigning responsibility and delegating authority for key management roles. For example, one purpose of NNSA’s 2019 program management directives is to increase management efficiency and effectiveness by, among other things, clearly defining management responsibilities and authorities. In addition, DOE’s project management order for the acquisition of capital assets lists principles for successful project execution such as disciplined, up-front planning; line management accountability; and effective implementation of all management systems (such as risk and performance management) supporting the project. In particular and as applicable to front-end planning, NNSA’s and DOE’s directives related to program and project management both include the following controls: Appointment of a federal manager, who is vested with the authority to carry out assigned responsibilities to meet program or project milestones on schedule and on budget, who manages the coordination of deliverables between the multiple entities (such as different program offices) involved, and who is responsible and accountable for planning, implementing, and executing a program or project, which includes responsibility for developing an overarching management plan; An overarching management plan, which establishes the procedures to define, execute, and monitor a program or project, as well as establishing specific requirements in a variety of areas—such as cost estimating, an integrated schedule, performance management, and risk management—to use to develop a baseline and against which to measure and monitor; A mission need statement, which identifies a credible gap between current capabilities and those needed to achieve the goals stated in the strategic plan; and A requirements document that describes the ultimate goals the program or project must satisfy while also identifying key assumptions and constraints. However, while some in NNSA and at Sandia have recognized the need to coordinate microelectronics activities to effectively carry them out and meet specific goals by specific dates, as evidenced by the hiring of a coordinator, Office of Defense Programs leadership have not fully developed controls to better manage and coordinate its microelectronics activities. Specifically, NNSA does not have or has not fully developed the following: Federal manager with coordination or oversight authority. NNSA has not established a federal management position with the authority and accountability to better coordinate or oversee NNSA’s microelectronics activities. Instead, as described above, agency officials told us that NNSA’s Office of Defense Programs established a coordinator position—within a sub-office, the Office of Research, Testing, Development and Evaluation—in November 2019 to help guide the agency’s efforts to develop the CMOS8 process and the FPGA technology, among other things. Moreover, in May 2020, NNSA stated that senior leadership within the Office of Defense Programs have not endorsed the formal role of a microelectronics coordinator and that the coordinator’s role and responsibilities are currently under review. NNSA also stated that the coordinator has not been given authority to manage an annual budget for microelectronics activities and that it was unlikely that such authority would be granted. This statement stands in contrast to earlier statements made to us that the coordinator would have responsibility for an annual budget of about $50 million, subject to future appropriations. Management plan. NNSA has not developed an overarching management plan to guide and coordinate the agency’s microelectronics activities. Instead, NNSA officials from the Office of Defense Programs and the Office of Safety, Infrastructure and Operations told us that the agency is in the very early stages of developing a NNSA plan that will incorporate key decisions and approaches outlined in the Sandia’s 20-year MESA sustainment plan, among other things. While NNSA officials are still evaluating the specific contents of this plan, they said that the plan may outline specific roles and responsibilities for each NNSA office involved in microelectronics, describe how these offices will interact with the microelectronics coordinator, and provide options for future microelectronics technology development efforts. However, it is unclear whether the document will define the planning approach, procedures, and processes that NNSA will use to ensure coordinated management in multiple areas and across multiple offices, such as developing cost estimates, an integrated schedule, and performance metrics. Agency officials said that this plan, when finalized, will provide a useful tool for coordinating various aspects of NNSA’s microelectronics activities, but they did not provide an estimated date for when the plan will be completed. Mission need statement and requirements document. NNSA has not developed a current mission need statement or a current program requirement document. In 2016, as required by DOE’s project management order on the acquisition of capital assets, NNSA issued a formal mission need statement and a requirements document to guide its assessment of the cancelled TMC project (as described earlier in this report). However, agency officials told us that these 2016 documents are no longer applicable to NNSA’s current approach to sustaining its microelectronics capability and evaluating options to ensure a continued capability after 2040. NNSA officials said that they intend to establish an updated set of requirements to guide the agency’s future microelectronics capability, and that they will consider these requirements in establishing a future mission need statement. However, NNSA officials did not provide a timeframe for finalizing these documents. NNSA officials acknowledged the importance of using management controls and that the controls described above would be useful, but they could not identify any specific DOE or NNSA directives, government-wide guidance, or best practices that they follow to manage their microelectronics activities. Instead, they offered three reasons why the agency has not implemented a more coordinated and robust set of management controls to oversee the agency’s microelectronics activities: Microelectronics production has historically been managed as a component production effort by an LEP, which is led by an NNSA program manager within the Office of Defense Programs who coordinates directly with other NNSA offices and Sandia contractors. Because NNSA has not designed microelectronics as a formal program, the requirements contained in the agency’s program management directives are not binding on microelectronics activities. NNSA officials said that the multiple projects (identified in the MESA Complex extended life plan) to upgrade and sustain the microelectronics capabilities at Sandia through 2040—at an estimated cost of over $1 billion over 20 years—will not be subject to DOE’s project management order, as these projects are for sustainment and not for new facility construction. According to officials from NNSA’s Office of Safety, Infrastructure, and Operations, infrastructure investments are being planned and managed as maintenance and repair efforts. NNSA officials told us that the agency’s current efforts provide the necessary structure for NNSA to oversee and manage its microelectronics capability. However, NNSA has recognized the importance of implementing a more coordinated and robust set of management controls for other important activities within its nuclear security mission that similarly have not been treated in the past as specific programs. For example, as we reported in June 2019, while NNSA historically managed its high-explosive capability without a formal mechanism to coordinate activities across multiple programs, it recently implemented a more robust set of management controls to oversee its high-explosive activities. Specifically, in 2018 NNSA appointed an enterprise manager to help coordinate these activities. NNSA also encouraged the enterprise manager to adopt, where appropriate, the program management controls contained in an NNSA directive on managing nuclear weapon life extension and strategic materials programs. Subsequently, the enterprise manager issued a strategic plan that provided an organizational structure for the agency’s high explosives capability. By taking a similar approach to its management of microelectronics activities and incorporating a more coordinated and robust set of management controls, the agency would have increased assurance that its planned microelectronics activities are clearly defined, efficiently executed, and effectively monitored. Conclusions NNSA’s ability to produce unique microelectronics for nuclear weapons is essential to ensuring a credible U.S. nuclear deterrent. Producing such microelectronics is a complex task, and NNSA is limited in its ability to partner with the commercial sector for such production. Over the next two decades, NNSA will undertake an expensive and ambitious approach to upgrade and sustain its existing microelectronics production facilities and capabilities. Specifically, NNSA plans to spend about $1 billion over the next 20 years to, among other things, upgrade its process to produce a new type of microelectronic component that has never been integrated into a nuclear weapon. In addition, NNSA officials said that the agency will need to identify and analyze options for a continued capability after 2040, and that effort could begin as early as 2021. To increase its management and oversight of the agency’s microelectronics activities, NNSA has taken some positive steps such as appointing a microelectronics coordinator within the Office of Defense Programs and approving certain long-term planning documents. However, in contrast to other NNSA activities, including programs and projects, NNSA has not fully developed a coordinated and robust set of management controls to oversee its microelectronics activities. For example, NNSA has not established an overarching management plan to manage and coordinate the cost, schedule, and risks associated with its microelectronics activities. By incorporating a more coordinated and robust set of management controls, NNSA would have increased assurance that its planned microelectronics activities are clearly defined, efficiently executed, and effectively monitored. Recommendation for Executive Action The NNSA Administrator should incorporate additional management controls to better oversee and coordinate NNSA’s microelectronics activities. Such management controls could include investing the microelectronics coordinator with increased responsibility and authority, developing an overarching management plan, and developing a mission need statement and a microelectronics requirements document. (Recommendation 1) Agency Comments and Our Evaluation We provided a draft of this report to DOD and NNSA for review and comment. DOD did not provide any comments. In its written comments, reproduced in appendix I, NNSA neither agreed nor disagreed with our recommendation but provided three main comments. First, NNSA stated that by December 2020 the agency plans to complete a strategic management plan that will more clearly articulate the integration of management controls for the various components of its microelectronics activities. NNSA stated that it believes this action is consistent with our recommendation. We are encouraged by this planned action and will evaluate the completed strategic management plan to determine if it meets the intent of our recommendation. Second, NNSA stated that our report did not clearly convey the differences between the management of microelectronics and other weapons or materials programs and did not include all aspects of its microelectronics activities (such as the procurement of commercial off the shelf components) in our audit’s scope. In response, we added references to the various aspects of NNSA’s microelectronics activities and clarified that our report focuses on NNSA’s strategic radiation- hardened microelectronics activities at Sandia’s MESA Complex. As stated in the report, we focused on this specific aspect of NNSA’s microelectronics mission because of the language in the Senate committee report accompanying a bill for the National Defense Authorization Act for Fiscal Year 2019, which included a provision for us to review NNSA’s efforts to recapitalize its strategic radiation-hardened microelectronics design and production capacity. We also focused on this specific aspect of NNSA’s mission because the fiscal year 2020 Stockpile Stewardship and Management Plan lists the continued production of strategic radiation-hardened microelectronics as one of four key challenges to the agency’s nuclear stockpile mission. Third, NNSA stated that our audit did not include an assessment of management controls for the range of activities that work together to ensure the effectiveness of microelectronics planning and execution. However, our report identifies and describes these management controls, and as part of our work we considered how these controls work together. In addition and as stated above, NNSA intends to complete a strategic management plan to more clearly articulate the integration of its various microelectronics management controls, which is especially important as the agency invests about $1 billion dollars over the next 20 years while simultaneously needing to meet microelectronics production deliverables for multiple nuclear weapon modernization programs. NNSA also provided technical comments, which we incorporated in our report as appropriate. We are sending copies of this report to the appropriate congressional committees, the Secretary of Energy, the Secretary of Defense, and other interested parties. In addition, this report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-3841 or at bawdena@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. Appendix I: Comments from the National Nuclear Security Administration Appendix II: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments Allison B. Bawden at (202) 512-3841 or bawdena@gao.gov In addition to the contact named above, Jason Holliday (Assistant Director), Patrick Bernard (Analyst in Charge), and Alisa Carrigan made key contributions to this report. Also contributing to this report were Jonathan Felbinger, Juan Garay, Lisa Gardner, Cindy Gilbert, Cynthia Norris, and Dan C. Royer.