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cilities, the strategy must be continued and fully supported in the Stockpile Stewardship FYNSP budget to be effective and affect the future health of the program. Concluding Remarks
In closing, I would like to mention that in addition to the important work we do in Stockpile Stewardship, the NTS conducts several other missions vital to national security. These include the NNSA incident response mission for nuclear emergencies, support to the Defense Threat Reduction Agency to develop technologies for dealing with hardened and deeply buried targets, work in combating terrorism which includes consequence management training for first responders to weapons of mass destruction incidents, and the initiative to develop a National Center for Combating Terrorism. I would
like to thank the Committee for this opportunity to inform you about the important work being performed by the men and women at the Nevada Test Site. We have a long and proud history of supporting the Nation and look forward to continuing our work. I will be happy to take any questions you may have.
STATEMENT OF JOHN T. MITCHELL
PRESIDENT AND GENERAL MANAGER, BWXT Y-12
SUBCOMMITTEE ON MILITARY PROCUREMENT
COMMITTEE ON ARMED SERVICES
U.S. HOUSE OF REPRESENTATIVES
JUNE 12, 2002
Mr. Chairman and Committee Members:
Thank you for the opportunity to update you on Defense Programs activities at the Y-12 National Security Complex in Oak Ridge and to provide you my views on our near-term and long-term ability to meet the challenge of the Stockpile Management Program. We have made considerable progress at Y-12 over the past year, but still face significant challenges in meeting the expectations of the National Nuclear Security Administration (NÑSA) over the long-term. Overview
The past year at Y-12 has been one of renewal and change. Many longstanding challenges have been met head-on and significant progress has been made. New management systems and processes have started to take effect and increased effectiveness and control are clearly visible. Our emphasis on Safety and Security as the cornerstones of our operations have resulted in satisfactorily completing both the Integrated Safety Management Phase II review and the security review performed by the NNSA/DOE Office of Assessments this fiscal year. Both in our response to the events of September 11th and the measurement of our safety, performance, it is clear that the groundwork laid in 2001 has supported improved execution of these key responsibilities.
Y-12 can and will meet the mission requirements to support the stockpile. In preparing for the increasing workload of the next several years, we have had to plan to reactivate many processes that had not been utilized for over two decades. The safety and security standards that we now utilize require some modification to these processes. The planning for this work is well underway and support the detailed needs and schedules for the next several years. The major issues at Y-12 are centered around our long-term capability to upgrade our infrastructure, continue to reactivate the full range of needed capability, and to do so in a cost-effective manner.
Aided by the funding identified through the Facilities and Infrastructure Initiative, we have commenced a long-term plan to consolidate the active functions of Y12 into a reduced footprint through a balanced program. Our approach includes reducing the occupied building inventory, removing unoccupied buildings from the inventory, reusing major facilities where possible and the selective investment in recapitalization where long-term efficiencies result.
We have re-energized the planning and execution of an aggressive technology infusion program at 9-12 to both optimize support for the upcoming defined workload and to assure long-term, safe, secure and efficient modern capabilities to meet the nations security needs. We have started the renewal of the dedicated Y-12 workforce through major increases in college-level recruiting, cooperative university pro
grams and emphasis on increasing the technical and managerial competence level of our workforce. Throughout these focused efforts, we have placed great value on detailed program planning and a project management culture for execution effectiveness. Site-wide integration in resource planning and prioritization has assured a balance in investments and a clear definition of needs versus wants. Infrastructure
BWXT Y-12 has been implementing its strategy for infrastructure improvement, intense planning focused on scientific and manufacturing needs, definition of equipment, facilities and skills, and alignment of technology development. Our goal is to create a consolidated manufacturing footprint, with a central hub of secure operations surrounded by the developmental, technical and other support functions needed to execute the mission.
Y-12 has begun the process of removing non-essential facilities. This removal will make room for beneficial upgrades to the plant and reduce cost for surveillance, analysis, maintenance and security. The Facilities and Infrastructure (F&I) Initiative has been pivotal to our demolition efforts, as well as providing critical support for much-needed maintenance and facility repairs.
Y-12 has also begun the first major steps in deploying key investments in the future of Y-12. We are beginning the Preliminary Design for High Enriched Uranium Materials Facility, the next major step in improving the storage of the nation's inventory of highly enriched uranium. We also have received approval to begin Preliminary Design of the Purification Prototype Facility, the first element of the Special Materials Capability Program. In addition, Prototype development of a new Beryllium Manufacturing capability is underway and we are ready to begin Conceptual Design for a Production Utilities Project.
Following these projects, we need to move forward on plans to consolidate depleted uranium operations, upgrade enriched uranium operations, relocate Quality Evaluation operations, and upgrade Safeguards & Security systems by reducing the protected area of the plant. There will also be continued emphasis on use of F&I to make critical facility repairs and to continue the Infrastructure Reduction activities to consolidate and disposition excess facilities.
Achieving and sustaining infrastructure improvements within the NNSA funding forecasts continues to be a challenge. The cost to operate aging facilities increases as demands for maintenance and capital replacement expand. Sustainable support will be necessary for Y-12 to meet mission requirements while resolving problems caused by years of deterioration at Y-12. The trade-off between operations, maintenance and capital investments must continue to recognize the long-term interests of Y-12. Technology
Y-12 has begun two important initiatives over the past year that will improve the way technology is introduced in the plant and its missions. The introduction of new technologies must be managed from a different perspective today than was the historic norm for the Production Complex. The stockpile stewardship program may well require a higher level of technology for refurbishment than was required for the original build. When a flaw is identified, the resolution of that flaw will be reverseengineered from test data. The tolerances for that new part can be much more exacting than was originally required. In addition, today's technology introduction may be based on the ability to achieve substantial efficiencies in mission execution. These efficiencies may stem from the introduction of technologies that were not pre, viously available or concepts that were previously discarded based on then-valid mission requirements that are no longer appropriate (e.g., stockpile size).
The first initiative, Technology Roadmapping, has the goal of modernizing the processes, equipment and supporting systems (e.g., computing and information management systems). The roadmap would identify the strategies and direction of the technology program. These strategies would be screened against the time to bring them to the shop floor, cradle-to-grave cost estimate, potential for success and return on investment.
In a second initiative, BWXT Y-12 has begun a technology partnership with the Oak Ridge National Laboratory (ORNL). The technical needs of Y-12 are heavily weighted toward ORNL's R&D agenda (i.e., materials science, modeling/computational science, and instrumentation and control). In these key areas, ORNL provides access to state-of-the-art facilities, leverage for Y-12's development funds and a pathway to the broader technical community-private industry, the science laboratories and academia.
The introduction of technology into Y-12 will be critical to the future economical execution of our mission. Again, the trade-off between operations, technology intro
duction and capital improvement will require a sustained commitment to the long-
BWXT Y-12 is bringing fiscal discipline to Y-12. We have established a centralized planning function to include estimating, schedule planning, resource budgeting, strategic baseline planning, performance measurement & reporting, and systems management. A common tool-set has been established to provide the planners consistent planning software across the Y-12 site.
Using these tools, we have developed schedules and resource requirements for all work activities, including Work Breakdown Structure (WBS) elements, and the estimated costs, schedule, duration, resource loading, and the required earned value protocols for each element. The 10-year baseline is complete covering all major projects planned at Y-12, including future weapons programs, modernization programs, infrastructure reduction projects, and technology development activities.
Currently, we are focusing on several key upgrades to our process. While standard estimating procedures and formats have been established for all work done across the site, we are working to improve the accuracy of our estimates. Also, we are working to improve our production control systems, including the recent completion of a pilot project. The resulting schedules will provide the required integrated planning for preventative maintenance, operations, inventory, and facility maintenance efforts.
These initiatives provide managers the visibility to effectively manage cost, control scope and maintain schedule commitments. We are working hard to assure that the resources placed in our care are well spent on activities of highest importance to our mission. Workforce
Y-12 is taking action to assure the technical base is available to carry out its mission in the future. We have defined our critical skill needs and initiated the hiring of entry level, technical talent to prepare them to be tomorrow's leaders. In order to attract the best talent, we have initiated cooperative education programs, including the establishment of internal mentors to maximize the benefit of their time at Y-12. We are now developing a program of partnerships with universities in the region and preliminary response to the concept of these partnerships has been enthusiastic. Our objective is to assure the best people are attracted to Y-12 as a vibrant workplace whose mission is important to national security.
Safety is the responsibility of all employees and important to everyone. BWXT Y-
Y-12 continues to meet the direct needs of the nuclear weapons program with
While Y-12 has made major steps forward in the past year, there is still a long road ahead to achieve long-term, sustainable capabilities to meet national security needs with confidence, including management Leadership and execution effectiveness. Consistent, balanced funding support for operations, technology introduction and infrastructure re-capitalization will be required. Consistent, timely and visible definition of program requirements will be needed as well as commitment to stand behind initiatives and investments until they are completed and have produced the expected results. Y-12 must continue to be fully supported in all areas for it to continue to meet long-term national security needs.
John Mitchell, President and General Manager, BWXT Y-12
As President and General Manager of BWXT Y-12, John guides all Y-12. operations to ensure that the site fulfills its missions while maintaining the highest standards of safety, quality, and efficiency: Previously, John led the Nevada Test Site to achieve key program milestones while diversifying the site's missions, improving its safety performance, and maximizing productivity. John joined Bechtel after a 31-year career in the Navy, where he managed strategic nuclear we ons systems and retired as a Rear Admiral. He earned an MS in Physics and a BS in Electrical Engineering.
STATEMENT OF DAVID S. DOUGLASS
HOUSE ARMED SERVICES
U.S. HOUSE OF REPRESENTATIVES
JUNE 12, 2002
Mr. Chairman, my name is Dave Douglass. I am president of Honeywell Federal Manufacturing & Technologies, which manages the National Nuclear Security Administration's (NNSA) facility in Kansas City, Missouri, and facilities supporting transportation safeguard activities in Albuquerque, New Mexico. Thank you for this opportunity to update you on the Kansas City Plant and share my perspective on the stockpile stewardship program and our capability to maintain the stockpile.
The Kansas City Plant today is an active, safe, secure, and reliable facility that serves as one of our country's most unique and valued national security assets. Our diversity of sophisticated, complex and leading-edge manufacturing capabilities is equaled by few facilities in the country, and the fact that these capabilities are housed under one roof in a secure environment is rivaled by no other manufacturer in the world. We are a unique, one-of-a-kind, national security asset.
The non-nuclear components we produce comprise 85 percent of the parts manufactured within the nuclear weapons complex, as well as 85 percent of the components that constitute a nuclear weapon. We bring to the nuclear weapons complex and our nation expertise in science-based manufacturing; Six Sigma continuous improvement techniques; supply chain management; e-business systems; sophisticated electronic, mechanical, and rubber and plastics manufacturing; and a consistent reputation as one of the NNSA's highest-rated contractors.
With the help, and support of this Committee and Congress over the past four years, we have begun to address issues impacting our talent pipeline and critical skill needs, infrastructure deficiencies and recapitalization concerns at the Kansas City Plant. Over the last 18 months, we have used the additional funding provided by Congress to hire 300 people, keep our critical skills filled at a 99-percent level, and meet urgent infrastructure and recapitalization needs, including equipment upgrades, critical roofing repairs, and renovations to air handling systems in our production areas. In each case, we were able to use Congressional funding to focus on the highest priorities, however unglamorous they may have been. At the same time, we maintained world-class performance in product delivery, quality and safety performance. Using our Six Sigma processes, we have doubled the output and yields on critical W87 components, ensuring uninterrupted supply to the Pantex Plant. We have also established a foundation for new technologies, such as LiGA, which is a revolutionary miniaturization capability, to meet expectations of our national laboratory and NNSA customers. The Stockpile Management Restructuring Initiative (SMRI) to reduce the plant's footprint and improve operational efficiency continues to be ahead of schedule and under budget.
Despite the progress that has been made, issues remain as we prepare for the sizable workload brought by the upcoming life extension programs. We continue to seek your support in addressing on-going, long-term issues facing the Kansas City Plant and the entire nuclear weapons enterprise.
Mr. Chairman, as both a taxpayer and a contractor, I believe we should be held accountable to the highest standards of performance. This includes driving efficiency improvements throughout our organization to ensure that the greatest value for the investment has been achieved. To this end, Honeywell has implemented a number
of efficiency improvements at the NNSA's Kansas City Plant that embrace commercial best practices and ensure ever-increasing value for NNSA investments.
My boss at Honeywell holds FM&T and me to the same standards of performance as all Honeywell commercial businesses. For us, this includes achieving 6 percent year-over-year improvement in productivity, qualifying for and maintaining ISO quality and environmental system certifications, implementing cost-saving digitization applications, achieving safety metrics that are significantly better than national or NNSA standards, and training employees in the use of continuous improvement tools such as Six Sigma. All 2,000 of our salaried associates are Six Sigma Green Belt certified, plus more than 150 of our employees are certified in Six Sigma Black Belt productivity tools. Furthermore, when we were awarded the contract to continue operating the Kansas City Plant in 2000, we committed we would achieve $25 million in efficiency improvements at the Kansas City Plant in the first two years of the contract. Last year, our first year, we achieved $20 million. By the end of this year, we fully expect to meet and far exceed the remaining $5 million commitment.
Achieving these efficiency improvements means we must set stretch goals for ourselves, such as digitizing 90 percent of our core business processes by FY2004. For example, we are one of only 30 Fortune 1000 companies that has implemented a fully integrated e-procurement solution, which includes electronic solicitation as well as cataloging capabilities that allow Kansas City Plant requisitioners to shop discounted price agreements for products and services. This new application streamlines the procurement process and capitalizes on partner relationships that optimize value for government spending. Our sense of urgency was exemplified by our 26 day implementation plan, and our sense of value is demonstrated by measuring the return on investment. To date, we have posted 160 electronic solicitations, including reverse auctions, valued at $68 million with realized savings of over $7 million. Our next phase will be to provide customer and supplier portals to streamline business operations further.
As part of our vision of the Kansas City Plant as a multi-mission, national security asset, we have grown our Work-for-Others program by 42 percent in two years. Other government agencies, including military, law enforcement and intelligence organizations, are finding increasing value in our combination of advanced technology solutions and a high-security environment. Our robust Work-for-Others program helps offset overhead costs and retain critical-skill associates by offering them new technical challenges. This value benefits both the government and the taxpayer.
A natural question is: If we have derived these millions of dollars of efficiency improvements, why do we require sustained funding support? It is well documented that the Department of Energy made a conscious decision in the 1990s to focus investment on science and defer investment in production. Our efficiency improvements during this decade gave us some flexibility to balance critical near-term needs with longer-term investment needs, thus maintaining this 60-year-old facility in relatively good condition. However, the average annual investment rate of 2.4 percent of the total value of the plant and equipment compared to an industry standard of 5 percent created a substantial backlog of infrastructure needs. It is this backlog that continues to impact present operating efficiencies adversely, risking our ability to support the stockpile over the long-term.
The Facilities and Infrastructure Recapitalization Program (FIRP) has clearly begun to aid us in reducing our backlog. The chart indicates we require $65 million a year to sustain the Kansas City Plant infrastructure. Limited funding over the last decade has pushed our backlog into the next five years. Thus, FIRP is critical to the Kansas City Plant to work down the deferred maintenance. I strongly endorse continued support of this effort.