National Nuclear Security Administration: Use of Line Items in Management and Operating Contracts Could Be Improved

Executive Summary

The GAO found that the National Nuclear Security Administration (NNSA) has only minimally used individual contract line items in its management and operating (M&O) contracts to separate deliverables — five of NNSA’s 21 capital asset projects with approved performance baselines as of June 2026 have separate line items, with a small number completed previously and additional projects under consideration. NNSA’s large modernization program (about $200 billion planned over the next decade) and its near-$24 billion M&O spend in fiscal year 2025 mean M&O contract structuring has broad programmatic and budgetary importance. Examples of projects already managed with separate line items include the Uranium Processing Facility (Y-12 National Security Complex), Savannah River Plutonium Processing Facility (Savannah River Site), and the Power Sources Capability (Sandia National Laboratories).

GAO and interviewed stakeholders identified both benefits (improved transparency, separate contractor fee plans, discrete performance evaluations) and drawbacks (additional administrative resources). NNSA has not documented criteria for when to use line items nor fully captured lessons learned. As a result, contractors in the affected market segments should expect likely changes to contract administration and oversight: increased use of line items for high‑value/high‑risk work, more granular fee and performance arrangements, and greater requirements for procurement-data tracking and reporting. Contractors should review their capabilities to support separate fee structures, discrete performance metrics, and enhanced reporting tied to M&O contract line items.

Impact Matrix

Nuclear Security

• Risk Level: Critical
• Opportunity: Greater ability to bid or propose discrete work scopes within M&O contracts where NNSA separates high‑value or high‑risk capital projects into individual line items. Specific NAICS codes and vehicles from inputs: M&O Contracts; NAICS examples in inputs relevant to this segment include 541330.
• Timeline: Next decade (NNSA plans nearly $200 billion in modernization efforts); Timeline for policy changes TBD pending source review.
• Action Required: Inventory current capabilities to support discrete project accounting and separate fee/performance arrangements; prepare proposals and compliance documentation aligned to M&O contract line items; engage NNSA program and contracting offices where possible to stay informed on upcoming line‑item decisions.
• Competitive Edge: Build demonstrable processes for tranche‑level cost, schedule, and performance reporting that can be offered as a value-add when competing for M&O line‑item work.

Construction

• Risk Level: High
• Opportunity: Construction-focused work on capital asset projects may be increasingly structured as separate line items, creating opportunities to pursue clearly scoped construction packages or subcontract awards. Relevant NAICS codes in inputs: 236220, 237990, 237110.
• Timeline: Timeline TBD pending source review. Ongoing examples in summary indicate some construction projects already use separate line items.
• Action Required: Ensure readiness to bid on segmented construction scopes, adapt subcontract pricing to accommodate separate fee and performance evaluation structures, and strengthen systems for tracking cost and schedule by line item.
• Competitive Edge: Offer modular delivery and line‑item cost controls (e.g., fixed-price packages or milestone‑based delivery proposals) to match the contracting office’s desire for discrete oversight.

Facilities Management

• Risk Level: High
• Opportunity: M&O contractors and facilities management subcontractors may see line‑item segmentation for capital projects and operations that enables targeted performance assessments and separate fee plans. NAICS and vehicle references from inputs: M&O Contracts; 541330; 541380.
• Timeline: Timeline TBD pending source review.
• Action Required: Upgrade internal reporting to produce line‑item‑level metrics; align service and maintenance contracts to support separable deliverables; estimate administrative cost impacts of supporting multiple fee/performance tracks.
• Competitive Edge: Demonstrate systems that provide near real‑time, line‑item performance dashboards and independent verification capabilities.

Research and Development

• Risk Level: Medium
• Opportunity: R&D work within M&O contracts could be broken out to allow distinct performance metrics and funding visibility, creating clearer scopes for proposals and subcontracting. Relevant NAICS from inputs include 541715 and 541690.
• Timeline: Timeline TBD pending source review.
• Action Required: Prepare to map R&D efforts to discrete line items, document deliverable‑level milestones, and support separate evaluation criteria.
• Competitive Edge: Propose deliverable‑based R&D packages with clear technical success criteria and cost controls suited to line‑item oversight.

Defense

• Risk Level: Medium
• Opportunity: Defense‑oriented contractors engaged through NNSA M&O contracts may be able to win clearly scoped tasks as line items that align with nuclear security modernization priorities. Agency references in inputs: DOE, NNSA.
• Timeline: Timeline TBD pending source review.
• Action Required: Monitor NNSA communications and GAO/DOE publications for guidance on line‑item policy shifts; align compliance and security practices to support discrete oversight.
• Competitive Edge: Align past performance examples to line‑item accountability (e.g., demonstrated results on high‑risk/high‑value tasks).

Engineering Services

• Risk Level: Medium
• Opportunity: Engineering firms can capture work that is separated into dedicated line items for capital projects, offering engineering design, oversight, and technical assurance on a per‑item basis. Applicable NAICS in inputs: 541330, 541380.
• Timeline: Timeline TBD pending source review.
• Action Required: Ensure capability to price and staff discrete engineering deliverables and to report technical progress at the line‑item level.
• Competitive Edge: Offer standardized engineering deliverables and independent verification packages that align with NNSA’s line‑item oversight needs.

Program Management

• Risk Level: High
• Opportunity: Program management firms can provide line‑item specific fee plans, performance evaluation support, and lessons‑learned capture services as NNSA moves toward documented criteria and standardized practices. NAICS referenced in inputs related to administrative and management support: 541611, 541618, 541990, 541330. Vehicle: M&O Contracts.
• Timeline: Timeline TBD pending source review. NNSA is noted in inputs as likely to establish documented criteria and document lessons learned.
• Action Required: Build or scale capabilities for line‑item fee plan development, discrete performance evaluation frameworks, and lessons‑learned documentation services; quantify administrative overhead impacts.
• Competitive Edge: Market turnkey services that reduce NNSA administrative burden (e.g., ready‑to‑deploy fee and evaluation templates tied to line‑item deliverables).

Cross-Segment Implications

• Separating capital projects into line items will create tighter coupling between Construction, Engineering Services, Facilities Management, and Program Management: discrete construction scopes will require aligned engineering design, facilities operations planning, and program‑level fee/performance structures.
• Increased transparency and separate fee/performance arrangements will cascade administrative and reporting requirements across suppliers and subcontractors, raising demand for program management and data‑tracking services.
• Documentation of lessons learned and potential establishment of formal criteria by NNSA (as noted in inputs) will tend to standardize contracting practices across the Nuclear Security and Defense segments, affecting how R&D and engineering work are scoped and evaluated within M&O contracts.