Senate Armed Services Hearing: Should DOD or DOE set the DOE defense budget request?
On Thursday September 17, the Senate Armed Services held a hearing on matters relating to the budget of the National Nuclear Security Administration (NNSA). This hearing focused on questions surrounding 1) who selects the budget for NNSA and 2) who balances NNSA’s mission versus other defense budget missions (including the EM cleanup budget).
Currently the Secretary of the Department of Energy (DOE) balances the appropriations across DOE offices and sub-agencies (including NNSA, a semi-autonomous agency of DOE). Amounts of appropriations, budget requests, budget increases and decreases are the normal aspects of the funding process, but the crucial component is who is making the decisions about the process, and what are their priorities.
Senate and House Language to Address NNSA Funding:
DOE Secretary Brouillette summarized the original Senate NDAA language as follows:
Sections 1652, 3111-3116, and 3132 of the Senate FY 2021 NDAA would fundamentally alter the Secretary of Energy’s statutory authority with regard to NNSA. Specifically, the Administration strongly opposes the proposed role of the Nuclear Weapons Council (NWC) in the DOE/NNSA annual fiscal year budget process. The Senate Armed Services Committee’s provisions would authorize non-Cabinet-level officials on the NWC to stipulate funding levels to the Secretary of Energy, which the Secretary would then be directed to transmit to the White House Office of Management and Budget (OMB). The new authorization language would also mandate the submission to Congress of executive privileged internal budget deliberations.
The Secretary of Energy oversees the budget process for the entire Department of Energy (DOE), including NNSA. Congress originally assigned the creation and sustainment of the Nation’s nuclear deterrent to the Atomic Energy Commission in 1946 to ensure a balance between resource allocation, military necessity, and civilian control. The Secretary of Energy, coordinating with the Secretary of Defense, plays a critical role in achieving this balance. The NWC already has the authority necessary to support the Secretaries of Defense and Energy in evaluating, coordinating, and prioritizing the nuclear weapons mission.
Further, granting the Department of Defense (DoD) the role of final arbiter of DOE’s annual budget violates DOE’s position as a distinct and equal Cabinet-level agency. Such authority, providing DoD broad control over the NNSA’s budget, restricts the President’s capacity in exercising his responsibility to set budget levels, and subjects the priorities of NNSA to DoD’s discretion, potentially causing setbacks and underfunding of other critically important missions of the NNSA.
Together these provisions eliminate a President’s Cabinet Secretary from managing some of the most sensitive national security programs in the Department, most notably, assuring the viability of the Nation’s nuclear deterrent, yet leaving ultimate responsibility for NNSA’s actions with the Secretary. This, in effect, leaves the Secretary with responsibility for the program, while removing his or her ability to effectively manage it.
Eventually the language in the bill was changed in a manner that would give DOE the final budgetary authority.
The House Appropriations bill increased the NNSA budget this year by $1.3 billion to a total of $18 billion for FY 2021 compared to last fiscal year’s appropriations. In July, the House passed a six-bill appropriations minibus that included Energy and Water. The minibus provides $13.7 billion for weapons activities, $2.24 billion for defense nuclear nonproliferation, and $1.7 for naval reactors. Section 309 specifically lays out that “none of the funds made available by this Act or any other Act making appropriations for energy and water development and related agencies may be used in furtherance of working through the Nuclear Weapons Council to guide, advise, assist, develop, or execute a budget for the National Nuclear Security Administration.”
Senate Armed Services Hearing
The Senate Armed Services hearing focused on NNSA needing more money and NNSA seeking the language that would permit the NWC to have more input into the NNSA budget request.
The hearing featured testimony of NNSA Administrator Lisa Gordon-Hagerty who focused on the relationship between NNSA and DOD and the needs of the critical nuclear weapons program. Chairman James Inhofe of Oklahoma highlighted the importance of coordination between NNSA and DOD to the United States’ nuclear capabilities and highlighted the need of NNSA to meet the military’s requirements. He specifically referenced the importance of Sections 1652, 3111-3116, and 3132 of the Senate FY 2021 NDAA.
Admiral Charles Richard, USN, United States Strategic Command, remarked that “given consistent and stable funding, I am confident that NNSA will continue to meet and address activities.” DOD Under Secretary of Defense for Acquisition and Sustainment Ellen Lord said that in May she instituted “planning guidance that would compel NNSA to share their budget details by September 1 of each year so Nuclear Weapons Counsel (NWC) could review and understand how it pairs with DOD’s proposed budget.”
Chairman Inhofe asked the NNSA Administrator if coordination would improve if each office, NNSA and DOD, better understood the internal workings of the other to which she replied, “it is critical to operate as we have been the past few years with the leadership of the NWC.” Under Secretary Lord remarked that the recent legislation in the House that would both prohibit NNSA from working with DOD in NWC and add the Secretary of Energy to the NWC would make coordination between DOD and NNSA “far less efficient.” She also highlighted that the $2 billion dollar cut to the NNSA budget “would directly impair our ability to deliver on B61-12 and W80-4.” These are two nuclear weapons projects.
Ranking Member Tom Reed (R-New York) also noted budget numbers, remarking that NNSA’s budget surpasses $19 billion for an 18% increase from the previous years’ budget. Senator Reed expressed concern over OMB being a “wildcard” in budget deliberations adding that OMB is not a formal member of the NWC. The priorities of DOD, DOE, OMB, and NNSA “has caused much turmoil this year.”
$8 billion in NNSA Carry Causes Concern
NNSA Administrator Lisa Gordon-Hagerty testified to the carryover balances explaining that NNSA ended FY 2019 with $8 billion. The Administrator noted that “carryover balances reflect the complexity of executing multi-billion-dollar projects, many of which require schedules of five years or more. Carryover balances can accrue in earlier years as procurement and contract management decisions are executed. Throughout execution of these multi-billion-dollar projects, carryover balances provide contingency and responsiveness needed to keep projects on schedule.”
Earlier this year Rep. Marcy Kaptur (D-Ohio), chair of the House Appropriations Energy and Water Subcommittee, expressed concern over the unspent $8 billion in appropriations from 2019. Rep. Kaptur submitted a report, H-Rept. 116-449, that reads “the Committee is concerned that the Department is not considering carryover balances, particularly within Infrastructure and Operations, in its budget formulation process. The NNSA shall submit to the Committee not later than 60 days after enactment of this Act a plan to reduce its carryover balances to applicable thresholds by the end of fiscal year 2021.”
Back in a February 2020 House Armed Services Subcommittee hearing, Chairman Adam Smith (D-Washington) raised questions over the $2.5 billion added to the NNSA budget request while there is $8 billion in balances currently within the NNSA. “If we got $8 billion hanging out in there that we haven’t spent as planned, I question the wisdom of grabbing $2.5 billion to add to that,” he said. Others throughout the hearing expressed concerns over reneging on the submarine building plans to divert money to NNSA.
This unclear question of who influences the budget was similarly raised in the Senate NDAA released in June that included a provision allowing for Pentagon officials to determine the size and makeup of the NNSA budget.
Increases in Budget Require a Balance of Priorities
Over the past few years, there have been continuous increases in the budget for DOE (including NNSA). In a July 2020 GAO report, “DOE’s 2021 budget estimate for nuclear modernization activities for FYs 2021-2025 is $81 billion - $15 billion more than its 2020 budget estimate for the same period.” GAO expressed that these increases may come at the expense of other national defense programs. One of the reasons cited for giving more control of the budget to the NWC was that they would have a narrower focus than the Energy Secretary and would have different priorities.
However, the question that should then be asked is “When increasing defense programs (such as for nuclear modernization within the NNSA budget), does that money come from another defense program?” Other defense programs may be impacted unless the overall budget increases by a significant sum. For example, last year funds to build a submarine were cancelled to fund NNSA. At the Senate NDAA hearing, Senators from Connecticut and Virginia expressed concerns such as this and priorities in the budget.
Another example includes the proposed cuts to the defense environmental cleanup funding released in President Trump’s FY 21 budget that were rationalized by Secretary Brouillette saying “the reductions in our budget are taken primarily from what we refer to as carryover funding.” NNSA continues to see budget increases despite having large amounts of carryover funding, much of which is unobligated while the Office of Environmental Management, whose budget is being cut by $1.2 billion, is being asked to use their carryover funds to offset the cut.
A balancing of priorities within the budget was a concern also raised by Senator Martin Heinrich (D-NM). During the Senate Armed Services budget hearing last week, Senator Heinrich questioned Administrator Gordon-Hagerty about the environmental cleanup program. The Senator expressed concern over the FY 21 budget request for cleanup that contained several notable cuts, Los Alamos included. He raised the question that since environmental cleanup is uniquely a DOE responsibility, not an NNSA responsibility, how will the department balance the budget priorities to ensure that we are meeting those obligations in the future and make sure cleanup priorities as well as the priorities of maintaining the deterrent are met. Administrator Gordon-Hagerty confirmed that the Energy Secretary manages the budget for the entire Department of Energy and takes advisement on both budget and program requests from undersecretaries.
Defense Secretary Concern About NNSA Having a Sufficient Budget – Asking for Input on the NNSA Budget Request Through the NWC
On September 11, Defense Secretary Mark Esper sent a letter to the Senate Armed Services Committee and the House Armed Services Committee expressing concern about both the House appropriations bill and House NDAA. Secretary Esper noted that “the Energy and Water Development provisions in H.R. 7617 would do grave damage to the nuclear deterrent mission by underfunding NNSA's nuclear weapons activities by $2 billion in FY 2021.” He also highlighted in the House appropriations bill, “provisions in H.R. 7617 curtail the ability of DoD and DOE/NNSA to coordinate and align our nuclear weapons programs and their funding through the NWC.” Regarding aspects of the House passed NDAA and appropriations, Esper commented that if left, certain provisions affecting DOD, DOE, and NNSA put US nuclear modernization at risk. His comments centered on both the budgetary aspects and priorities of NNSA and DOD.
In July, ECA released a “Winners and Losers in the NDAA” article that maps out budgetary language in both the House and Senate versions of the annual defense bill and illustrates the complicated interaction between DOE and NNSA for budget and priorities.
For defense environmental cleanup, both bills recommend lower amounts than were appropriated in FY 2020, but both are still higher than the administration’s request for $4.9 billion this year. The Senate bill authorizes $5 billion, and the House bill authorizes $5.7 billion. These amounts represent 20% and 8% cuts to the EM cleanup budget, respectively.
As a reminder, the Senate and House appropriators ultimately decide on the amount to spend each year as recommendations from the agencies and the request from the President are recommendations and requests.
All of this information taken together highlights an issue for the Administration –between DOE and DOD, who will shape the NNSA nuclear weapons budget request and the rest of DOE’s defense budget?