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 Mr. Chairman and members of the Strategic Forces Subcommittee.

 Thank you for the opportunity to testify on the Defense Program activities at the Oak Ridge, Tennessee, Y-12 Plant.

 I want to talk about the importance of manufacturing in today's Nuclear Weapons Complex, our accomplishments in Fiscal Year 1997, and discuss both the present and future manufacturing challenges for the nuclear weapons complex.

 One of the objectives of the Department of Energy (DOE) Strategic Plan is to retain confidence in our nuclear stockpile and its performance indefinitely without nuclear testing. The Y-12 Plant mission is to perform surveillance, assessment, and the remanufacture of all uranium, lithium and secondary components in the nuclear stockpile. This role is critical since the Oak Ridge Y-12 Plant continues to provide major components and assemblies in every weapon of the active stockpile. Y-12 is America's place to make things nobody else can make! While science and technology are the foundation of our weapons program, weapons components are the heart of it. Needless to say, without high- quality weapons parts that can be certified, our nuclear stockpile will lose the credibility required to remain an effective deterrent.

 The Stockpile Stewardship Program is the means by which the Nation will maintain the safety and reliability of its strategic nuclear weapon deterrent under a Comprehensive Test Ban Treaty (CTBT). We have confidence in our stockpile now because of past testing and the quality of our weapons design and manufacturing. The early stages of the Stockpile Stewardship Program have enabled us to know more and more about our weapons. However, as with every program of the size and complexity of Stockpile Stewardship, it is important to look not just at the present and the near term (the next 2-3 years), but also the long term (3 years and beyond). Stockpile Stewardship is working well now in the near term and has the potential to work over the long term. I feel that long-term success will depend on the ability of the DOE, Department of Defense (DoD), the laboratories, the production plants and Congress to provide the right balance of focus, direction and resources to understand the condition of an aging nuclear weapon stockpile that will, for the first time in our experience, increasingly exceed design lifetime requirements.

 This balance includes many elements such as: near-term versus a long-term investment strategy, use of existing infrastructure versus modernization, infusion of technology versus production requirements, balance between labs and plants and science and manufacturing. For several years now Congress has recognized the need to continue the balance between and among these elements. Many people in the DOE, in Congress and elsewhere have again recognized that manufacturing of quality components is a vital element of our nuclear deterrence strategy.

 We have a nuclear arsenal which is aging and shrinking, but one which we must continue to keep 100 percent reliable. The policy decision to build no new nuclear weapons has resulted in the need to significantly extend the lifetime of existing units in the enduring stockpile. Additionally, the U.S. position to stop nuclear testing makes continuing certification a significant technical challenge to both the labs and the plants. We in the nuclear production complex have a triple responsibility to: 

For over 50 years Y-12 has provided vital advanced manufacturing support for the ongoing mission of the Nuclear Weapon Complex. In doing so, Y-12 has become a unique, world-class precision manufacturing facility, unmatched in its combination of capabilities. It incorporates all facets of the manufacturing process from concept through production, quality control, and recycling of the waste streams. This breadth and depth of capabilities, characterized by the integrated application of world-class knowledge, expertise and equipment, is not duplicated anywhere in America.

 Over the past year, the Y-12 Plant provided considerable support to Stockpile Stewardship. The Plant met all of its deliverables on time or early, and ended the fiscal year under budget. The B61-11 earth penetrator was delivered early and completed ahead of schedule. The W87 Life Extension Program milestones are on schedule to support delivery. We manufactured 11 flight and ground test assemblies, and disassembled 15 units under the stockpile surveillance program. Y-12 received about 100 Safe Secure Transport shipments from Pantex returning weapons assemblies for disassembly. We disassembled 130 percent of the scheduled weapons, and refurbished over 700 containers for Pantex to continue their dismantlement activities.

 In addition, we have continued to be outstanding stewards of the taxpayers dollars. An aggressive effort by our employees resulted in a reduction of Y-12 overhead costs by 11 percent in FY 1997 and an additional 10 percent in FY 1998, achieving an overall 31 percent reduction of overhead since FY 1995. These savings have occurred in an atmosphere of reduced overall funding. Total funding at Y-12 has been reduced by 22 percent from FY 1992 to FY 1997, and today the production plants comprise about 24 percent of the DOE Defense Programs budget.

 We are at a critical juncture that will determine the long-term success of Stockpile Stewardship. Although there have been considerable near-term results, success in the long term is dependent on our ability to maintain the Nation's ability to remanufacture necessary components in an aging stockpile. To do this, we must support long-term modernization of our production facilities in balance with our science and technology requirements. Continued support from DOE, DoD and Congress for plant modernization is essential.

 The Department of Energy has instituted the Stockpile Life Extension Program (SLEP), a new stockpile maintenance management strategy that will determine what design and manufacturing activities will be required to maintain the stockpile in a safe and reliable condition. Y-12 and the other production plants strongly support SLEP as an effort to identify, prioritize and manage the efforts of the Nuclear Weapons Complex to maintain the stockpile. In addition we support the goals of the Enhanced Surveillance Program (ESP) to integrate the best technical talents of the labs and the plants to address aging phenomena and effects on the stockpile.

 We have embarked on the first Stockpile Life Extension Program, the life extension program for the Peacekeeper missile warhead. I expect these SLEP programs to continue as long as we depend upon nuclear weapons, and to remain at the core of our confidence in the stockpile. As Dr. Reis testified to Congress last October: " We know that eventually we will have to replace just about every part in every weapon." We must be prepared to do so.

 The SLEP strategy results in an increased workload at Y-12 and the other production plants, with requirements for additional flight test units, increased stockpile surveillance and the manufacture/remanufacture of critical components. The ongoing challenge for the DOE and the production plants, in FY 1998 and beyond, is to match these increasing requirements with adequate funding for both the production needs and for maintenance of the infrastructure. In addition, while the workload is increasing, we are moving to a production complex that is smaller, more flexible and which uses the best and most affordable practices and ideas industry and Government can offer. As this change occurs, it is important that we institute a process that periodically assesses our capability to remanufacture the needed weapons stockpile components, including actually making and certifying replacement parts.

 In responding to an operational stand down in September 1994, Y-12 has successfully undertaken a major program to change our culture from an experience-based environment to a procedural compliance-based environment, along the lines of Integrated Safety Management and the approach of ISO 9000. Y-12 has resumed normal operations in four of the five major mission areas. DOE is now preparing to conduct an Operational Readiness Review, the final certification, for the manufacturing areas of our Enriched Uranium Operations (EUO). Casting, rolling, and machining operations have already resumed on test materials and will resume shortly using enriched uranium. We have approached the EUO resumption with an innovative Process-Based Restart, which establishes operational rigor appropriate to the risk of operations and makes the restart period shorter and more cost effective while not compromising safety.

 In addition to the production workload, we need to concentrate on four other important areas: People, Core Competencies, Physical Plant and Equipment, and Cooperation.

 PEOPLE - Our people are our most important asset. The downsizing to date in Y-12 continues to perpetuate a work force that will not sustain our technical competence past the next 5 to 10 years. Eighty-two percent of the Y-12 work force is over 40 years old. Therefore, we must continue development of our people and begin recruitment to maintain world-class strength in our essential core competencies. In our bargaining units the problem is severe. The average age is 49 years old. Twenty percent of my machinists are over 55 years old. In some special skill areas there are only one or two workers who have actually operated special processes or repaired essential equipment. We must move out to create apprenticeship programs to ensure that we don't lose critical skills as key people retire. It has been refreshing to see that the production plants have been added to the Congressional critical skills study led by retired Admiral Chiles. This study is due to Congress early next calendar year.

 CORE COMPETENCIES - Core competencies are and must be maintained to ensure Y-12 secondary components in the enduring stockpile can be repaired, replaced, or remanufactured. With our declining budgets, we must also accomplish this at a minimum cost to the Departments of Energy and Defense. Some, but not all, of these competencies are met through weapons rework, the manufacture of flight test assemblies, disassembly of secondaries returned from Pantex, and evaluations under the Stockpile Surveillance program. The Oak Ridge Centers for Manufacturing Technology (ORCMT) continues to focus on maintaining core competencies through development and process tasks that leverage defense programs dollars with funding from other sources such as Work for Others.

 The benefits of maintaining core competency work were vividly demonstrated on several occasions over the past year. In one instance, personnel were immediately available to respond to manufacture complex tooling for the W87 Stockpile Life Extension Program. In another, metrology and advanced controller experts were able to solve equipment reconstruction problems that would have prevented certification and delivery of critical weapons components. Neither of these personnel groups would have been sustained by the weapons workload alone within Y-12.

 The DoD, other federal agencies, and private sector businesses have also benefited significantly from this effort. The Oak Ridge National Laboratory and the world-class manufacturing technology of Y-12 provide a tremendous synergy of research, development and production. Y-12 continues to solve tough manufacturing problems for national security and industry that cannot be solved anywhere else in the nation. In addition, the Y-12 Plant continues to produce manufacturing prototypes for DoD and other customers, transforming complex hardware concepts into precision prototypes. In 1997, Congress designated Y-12 as the National Prototype Center. A superb example of this effort is the "Hospital-in-a Box" that was produced by the National Prototype Center at Y-12 for the U.S. Army and Marine Corps. This technological improvement to battlefield medical care has the potential to reduce military battlefield deaths by 20 percent.

 PHYSICAL PLANT AND EQUIPMENT - High priority production requirements and limited budgets have resulted in a continued underfunding of infrastructure maintenance and improvement. Y-12 is, in essence, a factory with standard industrial infrastructure consisting of 582 structures. It is a small city with 14 miles of paved roads, 12 miles of secondary roads, 4 miles of railroad track, a 4-boiler coal-fired steam plant, 22 miles of overhead steam lines, 10 miles of 161-kV transmission lines, 20 miles of treated water piping, 19 miles of sanitary sewer lines, 38 miles of storm drain lines, 967 acres of mowed grounds, and 770 licensed vehicles. Manufacturing companies in industry put about 7-9 percent of funding into maintenance and improvements in infrastructure. In recent years, the Y-12 investment in infrastructure has been about � of 1 percent. As a result, many essential systems and structures in the plant remain in service despite significant deterioration and obsolescence. While the restart of operations over the past two years has upgraded essential systems and machinery in most production areas, we still lag behind our goal to establish a production plant that can efficiently meet DOE requirements in the most cost-effective manner. We risk losing the cutting edge that will provide the necessary assurance of product reliability and safety to support Stockpile Stewardship. We must upgrade and cost effectively maintain our physical plant infrastructure and equipment to assure a sound, safe, and credible capacity for the future.

 To maintain mission-ready manufacturing processes, we have identified the following capital and operating expense-funded requirements:

 Manufacturing Modernization - To ensure that cost-effective and reliable manufacturing capabilities are maintained, equipment upgrades, aging equipment replacements, and process system improvements must continue to be supported. Some examples include:

 Precision machining and measurement equipment supporting the reduced manufacturing footprint need to be upgraded with technologically advanced controllers. Equipment control systems, including electrical services, will be replaced due to age and the high cost of maintaining obsolete equipment. Some of these units have been upgraded to support the W87 LEP, but additional upgrades are required to meet expected SLEP Program.

 Process equipment required to meet Stockpile Management requirements, such as furnaces, dissolvers and hood exhausts, need to be modernized.

Process support systems, including hydraulic, vacuum, and ventilation systems which have reached the end of their cost-effective service life will be retrofitted, upgraded, or replaced, both to reduce operating costs and to remain compliant with environmental requirements. These systems are essential to SLEP.

Two cooling towers and their associated water distribution headers must be replaced in order to provide necessary support to manufacturing process requirements.

 Infrastructure Modernization - A modernized, cost-effective manufacturing capability must be supported by a parallel effort in facilities, utility systems, and other site infrastructure that supports the downsized manufacturing footprint. The Department of Energy invested about $1.5 Billion in Y-12 in the early to mid-1980s. About half of that upgrade went to site infrastructure and the rest to manufacturing upgrades. Infrastructure investment was essentially eliminated as weapons production was completed, and additional investment is necessary.

 Required upgrades and replacements, evaluated on a life-cycle cost basis, include the following examples:

 Steam distribution system replacements to reduce maintenance costs on system components and corrective maintenance associated with corrosion and steam leaks in aging systems. Similar conditions exist in the industrial gas and utility distribution systems.

Roof replacements in key manufacturing and support buildings. Repairs are continual and no longer cost effective on several roof systems that have exceeded their useful lives but must be maintained until the building is dispositioned.

Humidity control systems required for quality evaluation and component assembly must be replaced. Kathabar systems, which supply humidity-controlled air, and their support structures must be upgraded or replaced due to the corrosive nature of kathene.

 Preventive Maintenance Program (PM) - To provide assurance that current infrastructure and equipment conditions do not further deteriorate and assure that future upgrades in structures and equipment are properly maintained, an aggressive preventive maintenance program must be implemented. Key elements include:

 A program that is directed at major operating areas of the plant and is based on strategic facility plans; i.e., making decisions on critical systems and equipment that must be part of a PM program. Our initial focus will be in the enriched uranium, depleted uranium, special materials, and disassembly operations areas.

The PM program will also include the use of predictive maintenance, often called "condition monitoring." This involves the use of several technologies to monitor the condition of structures, systems, and components, to identify trends that equipment is approaching unacceptable performance. Condition monitoring systems are well understood, have been developed in the Y-12 Work For Others program for outside customers, and can be adapted to fulfill Y-12 requirements.

COOPERATION - In order to be cost efficient in today's reduced funding environment, we must have successful partnering and sharing of technology and skills between all parts of the Nuclear Weapons Complex. Cooperation between the plants and the labs has increased significantly, resulting in a stronger team. Examples of this are the number of personnel exchanges, joint partnerships and greatly improved communications between organizations. A joint plant-laboratory team as a part of the Accelerated Strategic Computing Initiative (ASCI) has electronically compiled nuclear test device data for 20 of the top 40 laboratory priorities. Teams jointly developed nondestructive laser sampling techniques and laser cutting processes for weapons components.

 Y-12 is pleased to be participating in a collaborative effort with the Los Alamos and Lawrence Livermore National Laboratories in the Enhanced Surveillance Program. This integrated technical program is an integral part of assuring the safety and reliability of a nuclear weapons stockpile which is aging beyond design expectations and previous experience.

 Y-12 and the design labs are currently engaged in a collaborative effort to develop and apply advanced technologies through the Advanced Design and Production Technologies (ADaPT) Program, with goals of streamlining both the business and technical interface between the facilities and applying new manufacturing technologies to reduce cost and improve flexibility.

In summary, Mr. Chairman, Stockpile Stewardship is working today and is the right course for the future. The Oak Ridge Y-12 Plant continues to deliver high quality components in support of the country's defense. DOE, DoD, and Congress must continue to balance the essential laboratory science and technology needs of the program with the ability to manufacture needed weapon components. The maintenance of modern production facilities to attract, retain, and develop experienced skilled workers and technical staff such that any component in the stockpile can be remanufactured is essential.