GAO urges NNSA to formalize line-item criteria in M&O contracts

The Government Accountability Office's report GAO-26-108409 finds the National Nuclear Security Administration has not consistently applied contract line items in its management and operating (M&O) contracts and recommends that the agency document criteria and lessons learned for their use. The two recommendations target the Associate Administrator for NNSA's Office of Partnership and Acquisition Services.

Since introducing individual contract line item numbers in 2014, NNSA has applied separate line items to only five of its 21 capital-asset projects with approved performance baselines as of June 2026. Those projects include two at the Uranium Processing Facility, two at the Savannah River Plutonium Processing Facility, and the Power Sources Capability project at Sandia National Laboratories. NNSA officials said they are considering adding at least two additional construction projects at one site as separate line items.

Officials and M&O contractor representatives said line items can increase procurement transparency and enable distinct contractor fee plans and performance evaluations for high-risk, high-value work, but they also require additional administrative effort. The agency has not documented the criteria - such as total cost, complexity, or dedicated appropriations - used to decide when a deliverable merits a separate line item, nor has it fully captured lessons learned from its limited experience.

The review was mandated by Senate Report 118-188, accompanying S. 4638, the National Defense Authorization Act for Fiscal Year 2025, which directed GAO to assess NNSA's use of line items and their impact on contract oversight. GAO evaluated NNSA's contracts against Department of Energy acquisition policy and internal-control standards.

NNSA has acknowledged the recommendations and indicated it will develop policy or guidance to define the line-item determination process and will assess and document lessons learned. Both recommendations remain open pending agency action.