Nuclear Nonproliferation
DOE's Program to Assist Weapons Scientists in Russia and Other Countries Needs to Be Reassessed Gao ID: GAO-08-189 December 12, 2007To address concerns about unemployed or underemployed Soviet-era weapons scientists in Russia and other countries, the Department of Energy (DOE) established the Initiatives for Proliferation Prevention (IPP) program in 1994 to engage former Soviet weapons scientists in nonmilitary work in the short term and create private sector jobs for these scientists in the long term. GAO assessed (1) DOE's reported accomplishments for the IPP program, (2) DOE's exit strategy for the program, and (3) the extent to which the program has experienced annual carryovers of unspent funds and the reasons for any such carryovers. To address these issues, GAO analyzed DOE policies, plans, and budgets and interviewed key program officials and representatives from 22 Russian and Ukrainian institutes.
DOE has overstated accomplishments for the 2 critical measures it uses to assess the IPP program's progress and performance--the number of scientists receiving DOE support and the number of long-term, private sector jobs created. First, although DOE claims to have engaged over 16,770 scientists in Russia and other countries, this total includes both scientists with and without weapons-related experience. GAO's analysis of 97 IPP projects involving about 6,450 scientists showed that more than half did not claim to possess any weapons-related experience. Furthermore, officials from 10 Russian and Ukrainian institutes told GAO that the IPP program helps them attract, recruit, and retain younger scientists who might otherwise emigrate to the United States or other western countries and contributes to the continued operation of their facilities. This is contrary to the original intent of the program, which was to reduce the proliferation risk posed by Soviet-era weapons scientists. Second, although DOE asserts that the IPP program helped create 2,790 long-term, private sector jobs for former weapons scientists, the credibility of this number is uncertain because DOE relies on "good-faith" reporting from U.S. industry partners and foreign institutes on the number of jobs created and does not independently verify the number of jobs reported to have been created. DOE has not developed an exit strategy for the IPP program, even though officials from the Russian government, Russian and Ukrainian institutes, and U.S. companies raised questions about the continuing need for the program. Importantly, a senior Russian Atomic Energy Agency official told GAO that the IPP program is no longer relevant because Russia's economy is strong and its scientists no longer pose a proliferation risk. DOE has not developed criteria to determine when scientists, institutes, or countries should "graduate" from the program. In contrast, the Department of State (State), which supports a similar program to assist Soviet-era weapons scientists, has assessed participating institutes and developed a strategy to graduate certain institutes from its program. Instead of finding ways to phase out the IPP program, DOE has recently expanded the program to include new countries and areas. Specifically, in 2004, DOE began providing assistance to scientists in Iraq and Libya. In addition, the IPP program is working with DOE's Office of Nuclear Energy to develop projects that support the Global Nuclear Energy Partnership--a DOE-led international effort to expand the use of civilian nuclear power. In every fiscal year since 1998, DOE carried over unspent funds in excess of the amount that the Congress provided for the program. For example, as of September 2007, DOE carried over about $30 million in unspent funds--$2 million more than the $28 million that the Congress had appropriated for the IPP program in fiscal year 2007. Two main factors have contributed to this recurring problem--lengthy review and approval processes for paying former Soviet weapons scientists and delays in implementing some IPP projects.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-08-189, Nuclear Nonproliferation: DOE's Program to Assist Weapons Scientists in Russia and Other Countries Needs to Be Reassessed
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Report to the Chairman, Committee on Homeland Security, House of
Representatives:
United States Government Accountability Office:
GAO:
December 2007:
Nuclear Nonproliferation:
DOE's Program to Assist Weapons Scientists in Russia and Other
Countries Needs to Be Reassessed:
GAO-08-189:
GAO Highlights:
Highlights of GAO-08-189, a report to the Chairman, Committee on
Homeland Security, House of Representatives.
Why GAO Did This Study:
To address concerns about unemployed or underemployed Soviet-era
weapons scientists in Russia and other countries, the Department of
Energy (DOE) established the Initiatives for Proliferation Prevention
(IPP) program in 1994 to engage former Soviet weapons scientists in
nonmilitary work in the short term and create private sector jobs for
these scientists in the long term. GAO assessed (1) DOE‘s reported
accomplishments for the IPP program, (2) DOE‘s exit strategy for the
program, and (3) the extent to which the program has experienced annual
carryovers of unspent funds and the reasons for any such carryovers. To
address these issues, GAO analyzed DOE policies, plans, and budgets and
interviewed key program officials and representatives from 22 Russian
and Ukrainian institutes.
What GAO Found:
DOE has overstated accomplishments for the 2 critical measures it uses
to assess the IPP program‘s progress and performance”the number of
scientists receiving DOE support and the number of long-term, private
sector jobs created. First, although DOE claims to have engaged over
16,770 scientists in Russia and other countries, this total includes
both scientists with and without weapons-related experience. GAO‘s
analysis of 97 IPP projects involving about 6,450 scientists showed
that more than half did not claim to possess any weapons-related
experience. Furthermore, officials from 10 Russian and Ukrainian
institutes told GAO that the IPP program helps them attract, recruit,
and retain younger scientists who might otherwise emigrate to the
United States or other western countries and contributes to the
continued operation of their facilities. This is contrary to the
original intent of the program, which was to reduce the proliferation
risk posed by Soviet-era weapons scientists. Second, although DOE
asserts that the IPP program helped create 2,790 long-term, private
sector jobs for former weapons scientists, the credibility of this
number is uncertain because DOE relies on ’good-faith“ reporting from
U.S. industry partners and foreign institutes on the number of jobs
created and does not independently verify the number of jobs reported
to have been created.
DOE has not developed an exit strategy for the IPP program, even though
officials from the Russian government, Russian and Ukrainian
institutes, and U.S. companies raised questions about the continuing
need for the program. Importantly, a senior Russian Atomic Energy
Agency official told GAO that the IPP program is no longer relevant
because Russia‘s economy is strong and its scientists no longer pose a
proliferation risk. DOE has not developed criteria to determine when
scientists, institutes, or countries should ’graduate“ from the
program. In contrast, the Department of State (State), which supports a
similar program to assist Soviet-era weapons scientists, has assessed
participating institutes and developed a strategy to graduate certain
institutes from its program. Instead of finding ways to phase out the
IPP program, DOE has recently expanded the program to include new
countries and areas. Specifically, in 2004, DOE began providing
assistance to scientists in Iraq and Libya. In addition, the IPP
program is working with DOE‘s Office of Nuclear Energy to develop
projects that support the Global Nuclear Energy Partnership”a DOE-led
international effort to expand the use of civilian nuclear power.
In every fiscal year since 1998, DOE carried over unspent funds in
excess of the amount that the Congress provided for the program. For
example, as of September 2007, DOE carried over about $30 million in
unspent funds”$2 million more than the $28 million that the Congress
had appropriated for the IPP program in fiscal year 2007. Two main
factors have contributed to this recurring problem”lengthy review and
approval processes for paying former Soviet weapons scientists and
delays in implementing some IPP projects.
What GAO Recommends:
GAO recommends, among other things, that DOE assess the continuing need
for the IPP program with input from other federal agencies, including
State and the intelligence community. DOE and State generally agreed
with GAO‘s recommendations, although DOE disagreed with the need to
reassess the IPP program. However, the nature, scope, and volume of
problems GAO identified during the course of its review necessitates
such a reassessment to ensure that limited IPP program funds are
directed to the scientists and institutes of highest proliferation
risk.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-189]. For more information, contact Gene
Aloise at (202) 512-3841 or aloisee@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
DOE Has Overstated the Progress Made on Key Performance Measures,
Raising Doubts about the IPP Program's Nonproliferation Benefits:
DOE Has Not Developed an Exit Strategy for the IPP Program, but Instead
Has Expanded Efforts to Iraq and Libya and Is Using the Program to
Support the Department's Global Nuclear Energy Partnership:
Multiple DOE and Contractor Reviews and Delays in Project
Implementation Contribute to the IPP Program's Large Balances of
Unspent Program Funds:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Additional Information on the Russian and Ukrainian
Institutes That We Included in Our Fieldwork:
Appendix III: Classification Systems Used to Assess IPP Project
Participants' Knowledge of Weapons of Mass Destruction:
Appendix IV: IPP Projects DOE Reported to Be Commercially Successful:
Appendix V: Comments from the Department of Energy:
Appendix VI: Comments from the Department of State:
Appendix VII: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Multistage Process for Assessing IPP Project Participants' WMD
Backgrounds:
Table 2: CRDF, ISTC, and STCU Weapons Expertise Classification Codes:
Table 3: DOE Projects Listed as Contributing to Commercial Successes in
DOE's Fiscal Year 2005 IPP Program Annual Report:
Figures:
Figure 1: Appropriations and Unspent Balances for the IPP Program from
Fiscal Years 1998 through 2008:
Figure 2: ISTC/STCU Payment Process:
Figure 3: CRDF Payment Process:
Abbreviations:
CRDF: U.S. Civilian Research and Development Foundation:
DCAA: Defense Contract Audit Agency:
DOE: Department of Energy:
EXACT: Expertise Accountability Tool:
GNEP: Global Nuclear Energy Partnership:
ILAB: Inter-Laboratory Board:
IPP: Initiatives for Proliferation Prevention:
ISTC: International Science and Technology Center:
NAS: National Academy of Sciences:
NNSA: National Nuclear Security Administration:
STCU: Science and Technology Center in Ukraine:
USIC: United States Industry Coalition:
WMD: weapons of mass destruction:
[End of section]
United States Government Accountability Office: Washington, DC 20548:
December 12, 2007:
The Honorable Bennie G. Thompson:
Chairman:
Committee on Homeland Security:
House of Representatives:
Dear Mr. Chairman:
During the decades before its dissolution, the Soviet Union produced a
cadre of scientists and engineers whose knowledge and expertise would
be invaluable to countries or terrorist groups trying to develop
weapons of mass destruction (WMD). After the Soviet Union's collapse in
1991, many of these scientists suffered significant cuts in pay or lost
their government-supported work. The United States and other countries
were concerned that these scientists would sell their expertise to
terrorists or countries of concern, such as Iran, Iraq, and North
Korea. To address this potential proliferation concern, the Department
of Energy (DOE) established the Initiatives for Proliferation
Prevention (IPP) program in 1994.[Footnote 1] The objectives of the IPP
program, which is implemented by the National Nuclear Security
Administration (NNSA),[Footnote 2] are to (1) in the short term, engage
weapons scientists and scientific research and development institutes
located in Russia and other countries of the former Soviet Union in
nonmilitary work by supplementing their existing salaries and (2) in
the long term, create sustainable, private sector jobs for former
weapons scientists. As of April 2007, DOE reported it had supplemented
the salaries of over 16,770 scientists, engineers, and technicians and
created 2,790 long-term, private sector jobs in Russia and other
countries of the former Soviet Union.
Through October 1, 2007, there were 929 draft, active, inactive, and
completed IPP projects involving personnel at about 200 nuclear,
chemical, and biological institutes in Russia and other countries. Many
IPP projects involve more than one institute, and sometimes a single
project will involve institutes in more than one country. Over 80
percent of the projects are focused on institutes in Russia, and the
majority of these projects involve scientists and institutes
specializing in nuclear weapons-related work. Other countries that
currently participate or have participated in the IPP program include
Armenia, Belarus, Georgia, Kazakhstan, Ukraine, and Uzbekistan.
For each IPP project, DOE requires that at least 65 percent of the
project's funding go to Russia and other countries as payments to
individuals actually working on the project or to the participating
institutes in payment for project-related supplies, equipment, and
overhead. Because the IPP program is not administered through a
government-to-government agreement, as are many other U.S.
nonproliferation programs, DOE distributes funding for IPP projects
through three tax-exempt entities to avoid paying foreign taxes: the
International Science and Technology Center (ISTC) in Russia, the
Science and Technology Center in Ukraine (STCU), and the U.S. Civilian
Research and Development Foundation (CRDF). These organizations
transfer IPP funds directly to the personal bank accounts of IPP
project participants in Russia and other countries. To receive payment
for work on IPP projects, project participants must submit paperwork to
these organizations indicating, among other things, whether they
possess WMD experience.
Project proposals under the IPP program are prepared and submitted to
DOE by officials from the participating national laboratories,[Footnote
3] although a project may also result from the initiative of a foreign
institute or U.S. company. Each participating DOE national laboratory
provides technical and financial oversight over a set of projects.
Partnerships are formed by the national laboratories between U.S.
companies--known as industry partners--and institutes in Russia and
other countries. Industry partners are engaged in projects through
Cooperative Research and Development Agreements with the participating
DOE national laboratories, which require cost-sharing to develop
technologies for commercial application. An Inter-Laboratory Board
(ILAB) serves as the primary coordinating body for the national
laboratories involved in the IPP program. The ILAB coordinates,
reviews, and facilitates the activities of the participating national
laboratories and makes recommendations to DOE on how to implement the
program. Ultimate decision-making authority lies with the DOE
headquarters IPP program office.
To improve the potential of IPP projects to create sustainable jobs in
Russia and other countries, DOE requires that a U.S. industry partner
be identified before it approves and funds a project. A consortium of
U.S. industry partners--the United States Industry Coalition (USIC)--
was established in 1994. To participate in the IPP program, a company
must become a member of USIC and pay dues based on its size. USIC
reviews IPP project proposals for commercial potential and requires
that all project proposals have the basic outline of a business plan
for commercializing the technology involved. In addition, USIC annually
surveys its member companies to determine the commercial results of IPP
projects, such as the number of long-term, private sector jobs created.
DOE uses the results of USIC's surveys to report to the Congress on the
number of jobs the IPP program created.
DOE's IPP program is one of several nonproliferation programs focused
on reducing the potential proliferation risks posed by scientists from
Russia and other countries. Other such programs include the Science
Centers program funded by the U.S. government--under the auspices of
the Department of State (State)--and other nations;[Footnote 4] CRDF;
and a variety of initiatives primarily focused on biological institutes
and implemented by the Departments of Agriculture, Defense, Health and
Human Services, and State. In addition, from 1998 through 2006, DOE
administered the Nuclear Cities Initiative, whose goal was to create
sustainable jobs for weapons scientists in Russia's closed nuclear
cities and to help Russia accelerate the downsizing of its nuclear
weapons complex.[Footnote 5] The government-to-government agreement
between the United States and Russia governing this program expired and
was not renewed, and, as a result, the program was terminated in
September 2006.
In 1999, we reviewed the IPP program and made several recommendations
to improve its management, including recommending that DOE (1) obtain
more accurate data on the background and number of scientists
participating in the program, (2) maximize the amount of funds going to
former Soviet Union weapons institutes, and (3) eliminate projects that
do not have commercial potential.[Footnote 6] The Congress, among other
things, subsequently prohibited DOE from using IPP program funding,
available after fiscal year 1999, to supplement the income of
scientists and engineers who (1) are currently engaged in activities
directly related to the design, development, production, or testing of
chemical or biological WMD or a missile system to deliver such weapons
or (2) were not formerly engaged in activities directly related to the
design, development, production, or testing of WMD or a missile
delivery system for such weapons.[Footnote 7] The Congress also
prohibited DOE from funding any institute or scientist determined by
the Secretary of Energy to have made a scientific or business contact
about WMD with a representative of a "country of proliferation
concern."[Footnote 8]
In this context, you asked us to review the IPP program. As agreed with
your office, we assessed (1) DOE's reported accomplishments for the IPP
program, (2) DOE's exit strategy for the IPP program, and (3) the
extent to which the IPP program has experienced annual carryover
balances of unspent funds and the reasons for such carryover.
To address these objectives, we examined 207 of the 929 IPP projects.
We selected this judgmental sample of draft, active, inactive, and
completed projects on the basis of a variety of factors, such as
geographic distribution, representation of all participating national
laboratories, and project costs. Of the 207 projects in our sample, we
received or were able to reconstruct information on payments to project
participants for 97 projects. We interviewed key officials and analyzed
documentation, such as program guidance, project proposals, and
financial information, from DOE and its contractors at the Argonne,
Brookhaven, Idaho, Lawrence Berkeley, Lawrence Livermore, Los Alamos,
Oak Ridge, National Renewable Energy, Pacific Northwest, Sandia, and
Savannah River National Laboratories; the Kansas City Plant; and
Defense and State. We interviewed officials from 15 Russian and 7
Ukrainian institutes that participate in the IPP program. We also spoke
with officials from the Federal Agency for Atomic Energy of the Russian
Federation, which oversees institutes involved in Russia's nuclear
weapons program. Furthermore, we interviewed officials from 14 U.S.
companies that participate in the IPP program to better understand
their perspective on the program's benefits and its implementation. In
addition, we analyzed cost and budgetary information from DOE, DOE's
national laboratories, CRDF, ISTC, and STCU. We interviewed
knowledgeable officials on the reliability of these data, including
issues such as data entry, access, quality control procedures, and the
accuracy and completeness of the data. We determined that these data
were sufficiently reliable for the purposes of this review. Appendix I
provides more details on our scope and methodology, and appendix II
provides more detailed information on the institutes that we visited in
Russia and Ukraine. We conducted our review from October 2006 through
December 2007 in accordance with generally accepted government auditing
standards.
Results in Brief:
DOE has overstated accomplishments for the 2 critical measures it uses
to assess the IPP program's progress and performance--the number of WMD
scientists receiving DOE support and the number of long-term, private
sector jobs created. First, according to our analysis of 97 IPP
projects involving about 6,450 scientists for whom we had complete
payment information, more than half of the scientists paid by the
program never claimed to have WMD experience. Furthermore, instead of
supporting Soviet-era WMD scientists as a way of minimizing
proliferation risks, officials at 10 nuclear and biological institutes
in Russia and Ukraine told us that IPP program funds help them attract,
recruit, and retain younger scientists and contribute to the continued
operation of their facilities. This is contrary to the original intent
of the program, which was to reduce the proliferation risk posed by
Soviet-era weapons scientists. For example, about 972 of the scientists
paid for work on these 97 projects were born in 1970 or later, making
them too young to have contributed to Soviet-era WMD efforts. Second,
although DOE asserts that through April 2007, the IPP program had
helped create 2,790 long-term, private sector jobs in Russia and other
countries, we were unable to substantiate the existence of many of
these jobs in our review of 48 of the 50 projects DOE considers to be
commercial successes. For example, DOE reported that 350 jobs were
created at one Russian institute, but officials from that institute
told us that only 160 people had actually been employed, that most were
on a part-time basis, and that they could not account for jobs that may
have been created at other institutes previously involved in the
projects. The validity of the number of jobs reported to have been
created by the IPP program is in doubt because DOE relies on "good-
faith" reporting from U.S. industry partners and institutes in Russia
and other countries and does not independently verify employment data
it receives. Finally, the metrics DOE uses to set IPP program goals and
measure progress are outdated. DOE officials admitted that the IPP
program targets--based on a 1991 assessment of the former Soviet WMD
scientist population--are not sufficient to judge the IPP program's
progress in reducing proliferation risks. However, DOE has not updated
its metrics on the basis of more recent estimates of the WMD scientist
population, and it has not set priorities for the program on the basis
of a comprehensive country-by-country and institute-by-institute
evaluation of proliferation risks. Due to the serious nature of these
findings, we are recommending that DOE perform a comprehensive
reassessment of the IPP program to help the Congress determine whether
to continue to fund the program. We believe this reassessment should
include, at a minimum, a thorough analysis of the proliferation risk
posed by weapons scientists in Russia and other countries, a well-
defined prioritization strategy to more effectively target the
scientists and institutes of highest proliferation concern, and more
accurate reporting of program accomplishments.
DOE has not developed an exit strategy for the IPP program in Russia
and other countries, although officials from the Russian government,
Russian and Ukrainian institutes, and U.S. companies raised questions
about the continuing need for the IPP program, given economic
improvements in Russia and other countries where DOE provides
assistance. Importantly, a senior Russian Atomic Energy Agency official
told us that the IPP program is no longer relevant because Russia's
economy is strong and its scientists no longer pose a proliferation
risk. However, DOE has not developed criteria to determine when
scientists, institutes, or countries should "graduate" from the IPP
program. In contrast, State, which supports a similar program to assist
weapons scientists in Russia and other countries, has assessed
participating institutes and developed a strategy--using a range of
factors, such as an institute's ability to pay salaries regularly and
to attract funding from other sources--to graduate certain institutes
from its program. Even so, we found that DOE is currently supporting 35
IPP projects at 17 Russian and Ukrainian institutes that State
considers to already have graduated from its program and, therefore, no
longer require U.S. assistance. Instead of finding ways to phase out
the IPP program in the countries of the former Soviet Union, DOE has
recently expanded the program to include new countries and areas as a
way to maintain its relevance as a nonproliferation program.
Specifically, DOE recently began providing assistance to scientists in
Iraq and Libya. In addition, the IPP program is working with DOE's
Office of Nuclear Energy to develop projects that support the Global
Nuclear Energy Partnership--a DOE-led international effort to expand
the use of civilian nuclear power. DOE has expanded the IPP program's
efforts into these new areas without a clear mandate from the Congress
and has suspended parts of its IPP program guidance for implementing
projects in these new areas. For example, in its efforts in Libya, DOE
is deviating from IPP program guidance and its standard practice of
limiting the amount of IPP program funds spent at the national
laboratories for project oversight to not exceed 35 percent of the
total expenditures. We found that 97 percent of funds DOE spent on
projects in Libya through May 2007 were spent at DOE's national
laboratories for project management and oversight activities. We are
recommending, among other things, that DOE (1) develop a clear exit
strategy for the IPP program, including detailed criteria to determine
when specific countries, institutes, and individuals are ready to
graduate from participation in the IPP program, and (2) seek explicit
congressional authorization to expand IPP efforts outside of the former
Soviet Union.
Regarding its management of IPP program funding, DOE has carried over
unspent funds in excess of the amount that the Congress provided for
the IPP program in every fiscal year since 1998. For example, as of
September 2007, DOE had carried over about $30 million in unspent
funds--$2 million more than the $28 million that the Congress had
appropriated for the IPP program in fiscal year 2007. Two main factors
have contributed to this recurring problem: (1) lengthy and
multilayered review and approval processes by DOE and its contractors
for paying former Soviet weapons scientists for IPP-related work and
(2) long delays in implementing some IPP projects. Regarding the first
factor, payments to supplement the salaries of scientists in Russia and
other countries are often delayed because they are reviewed by multiple
offices within DOE; participating national laboratories; and the
organizations, such as ISTC, that DOE uses to make tax-free payments to
project participants' bank accounts. DOE officials acknowledged that
the lag time between the allocation of funds, placement of contracts,
and payment for deliverables is a problem for the IPP program. Russian
and Ukrainian scientists we interviewed told us that they regularly
experienced delays of 3 months to 1 year in receiving payments for
completed work on IPP projects. In addition, some IPP projects we
reviewed experienced long delays in implementation because of, among
other things, administrative problems and turnover in key project
participants. For example, in 2006, the Russian Customs Service
rejected a testing device needed for one IPP project after it was
improperly labeled when it was shipped from the United States to the
participating Russian institute. As a result, DOE was unable to spend
about $245,000 intended for this project for more than 1 year until the
issue was resolved. DOE and national laboratory officials told us they
are attempting to improve financial oversight over the IPP program, in
part, to address concerns about unspent program funds. To that end, DOE
is developing a program management system, which it expects to fully
implement in 2008--14 years after the start of the program. We are
recommending that DOE seek to reduce the large balances of unspent IPP
program funds and streamline the process through which foreign
scientists receive IPP funds by eliminating unnecessary layers of
review.
We provided a draft of this report to DOE and State for comment. DOE
agreed with 8 of our 11 recommendations to improve the overall
management and oversight of the IPP program, noting that a number of
changes were already under way. However, DOE disagreed with 2
recommendations and neither agreed nor disagreed with 1 recommendation.
Specifically, DOE disagreed that it needs to reassess the IPP program,
expressing the view that a reassessment has already taken place that
justified the program's continued need. We are aware that DOE conducted
internal assessments in 2004 and 2006 of its overall efforts to engage
WMD scientists in the former Soviet Union and other countries. However,
these assessments did not evaluate the IPP program exclusively and were
conducted at a time when the IPP program was complemented by and
coordinated with a similar DOE program focused on downsizing facilities
and creating new jobs for personnel in Russia's nuclear cities. This
complementary program--the Nuclear Cities Initiative--has since been
canceled. As a result, we believe these assessments are outdated
because the IPP program operates under a significantly different set of
circumstances today than when DOE conducted its previous internal
assessments. Moreover, we believe that the nature, scope, and volume of
problems we identified during the course of our review necessitates a
reassessment of the IPP program to ensure that limited program funds
are directed to the scientists and institutes of highest proliferation
risk. DOE also disagreed with the need to ensure compliance with the
statutory restriction on the percentage of IPP program funds spent on
oversight activities at the DOE national laboratories to no more than
35 percent. However, we note in our report that DOE is deviating from
its IPP program guidance and standard practices by placing no
restrictions on the amount of IPP program funds that can be spent at
DOE national laboratories for oversight of projects in Libya. In
addition, State concurred with the 1 recommendation directed to both
DOE and State. DOE and State also provided technical comments, which we
incorporated in this report as appropriate.
Background:
Historically, IPP projects were placed in one of three categories--
Thrust 1, Thrust 2, and Thrust 3. DOE now only supports Thrust 2
projects. Specifically:
* Thrust 1 projects were geared toward technology identification and
verification and focused on "laboratory-to-laboratory" collaboration,
or direct contact between DOE's national laboratories and weapons
institutes and scientists in the former Soviet Union. These projects
had no industry partner and, according to DOE, were entered into to
quickly engage former Soviet weapons scientists and their institutes.
DOE funded 447 Thrust 1 projects, 378 of which were completed. DOE no
longer supports Thrust 1 projects.
* Thrust 2 projects involve a U.S. industry partner that agrees to
share in the costs of the project with DOE to further develop potential
technologies. The U.S. industry partner is expected to match the funds
DOE provides, either by providing in-kind support, such as employee
time and equipment, or by providing cash. Through October 2007, there
were 479 IPP projects in the Thrust 2 category.
* Thrust 3 projects, with the exception of 1 project, did not receive
any financial support from DOE and were intended to be self-sustaining
business ventures. DOE no longer supports Thrust 3 projects. There were
only three Thrust 3 projects and the last project was completed in 2001.
All proposed IPP projects are reviewed by DOE's national laboratories;
the IPP program office; and other agencies, including Defense and
State, before they are approved for funding. Initially, a national
laboratory proposes a project for consideration. As the national
laboratory prepares the proposal, the laboratory project manager,
generally referred to as the "principal investigator," is responsible
for including, among other things, a list of intended participants and
for designating the WMD experience for each participant. The proposed
participants are assigned to one of the following three categories:
* Category I--direct experience in WMD research, development, design,
production, or testing;
* Category II--indirect WMD experience in the underlying technologies
of potential use in WMD; or:
* Category III--no WMD-relevant experience.
If the IPP project is approved, DOE transfers funding to the project
participants using payment mechanisms at CRDF, ISTC, or STCU. To be
paid by any of these entities, the project participants must self-
declare whether they possess weapons experience and indicate a more
specific category of WMD expertise, such as basic knowledge of nuclear
weapons design, construction, and characteristics. The weapons category
classifications these scientists declare are certified first by the
foreign institute's director and then by the foreign government
ministry overseeing the institute. See appendix III for a more detailed
list of the WMD categories used by DOE, CRDF, ISTC, and STCU.
After the project passes an initial review within the proposing
national laboratory, it is further analyzed by the ILAB and its
technical committees, which then forward the project proposal to DOE
headquarters for review. DOE, in turn, consults with State and other
U.S. government agencies on policy, nonproliferation, and coordination
considerations. The IPP program office at DOE headquarters is
ultimately responsible for making final decisions, including funding,
on all projects.
DOE Has Overstated the Progress Made on Key Performance Measures,
Raising Doubts about the IPP Program's Nonproliferation Benefits:
DOE has not accurately portrayed the IPP program's progress, according
to our analysis of two key measures used to assess the program's
performance--the number of WMD scientists receiving DOE support and the
number of long-term, private sector jobs created. Many of the
scientists in Russia and other countries that DOE has paid through its
IPP program did not claim to have WMD experience. Furthermore, DOE's
process for substantiating the weapons backgrounds of IPP project
participants has several weaknesses, including limited information
about the backgrounds of scientists proposed for an IPP project. In
addition, DOE has overstated the rate at which weapons scientists have
been employed in long-term, private sector jobs because it does not
independently verify the data it receives on the number of jobs
created, relies on estimates of job creation, and includes in its count
a large number of part-time jobs that were created. Finally, DOE has
not revised the IPP program's performance metrics, which are currently
based on a 1991 assessment of the threat posed by former Soviet weapons
scientists.
DOE Has Supplemented the Salaries of Many Scientists in Russia and
Other Countries Who Did Not Claim Direct Experience with WMD:
A major goal of the IPP program is to engage former Soviet weapons
scientists, engineers, and technicians, and DOE claims to have
supplemented the incomes of over 16,770 of these individuals since the
program's inception. However, this number is misleading because DOE
officials told us that this figure includes both personnel with WMD
experience and those without any WMD experience. We reviewed the
payment records of 97 IPP projects, for which information was available
and complete, and found that 54 percent, or 3,472, of the 6,453
participants in these projects did not claim to possess any WMD
experience in the declarations they made concerning their backgrounds.
Moreover, project participants who did not claim any WMD experience
received 40 percent, or approximately $10.1 million, of the $25.1
million paid to personnel on these projects. For example, in 1 project
to develop a high-power accelerator that was funded for $1 million, 88
percent, or 66, of the 75 participants who have received payments did
not claim any previous weapons-related experience.
On a project-by-project basis, we also found that DOE is not complying
with a requirement of its own guidance for the IPP program--that is,
each IPP project must have a minimum of 60 percent of the project's
participants possessing WMD-relevant experience prior to 1991 (i.e.,
Soviet-era WMD experience). According to our analysis of the payment
records of 97 projects for which information was available and
complete, we found that 60 percent, or 58, of the 97 projects did not
meet this requirement. A factor contributing to this outcome may be a
poor understanding of the IPP program guidance among the ILAB
representatives of the 12 national laboratories participating in the
program. During our interviews with national laboratory officials, we
heard a range of opinions on the appropriate minimum percentage of WMD
scientists on individual IPP projects. For example, ILAB
representatives from 5 national laboratories indicated that they strive
for a minimum of 50 percent of WMD scientists on each IPP project; the
ILAB representative from the Pacific Northwest National Laboratory
indicated a goal of 55 percent. The ILAB representative from the
National Renewable Energy Laboratory indicated that he was not aware of
any DOE policy establishing a minimum percentage of participants with
WMD backgrounds on an IPP project.
Finally, many IPP project participants that DOE supports are too young
to have supported the Soviet Union's WMD programs. Officials at 10 of
the 22 Russian and Ukrainian institutes we interviewed said that IPP
program funds have allowed their institutes to recruit, hire, and
retain younger scientists. We found that 15 percent, or 972, of the
6,453 participants in the payment records of the 97 projects we
reviewed were born in 1970 or later and, therefore, were unlikely to
have contributed to Soviet-era WMD efforts. This group of younger
participants received approximately 14 percent, or about $3.6 million,
of $25.1 million paid to project participants in the 97 projects we
reviewed.
While DOE guidance for the IPP program does not specifically prohibit
participation of younger scientists in IPP projects, DOE has not
clearly stated the proliferation risk posed by younger scientists and
the extent to which they should be a focus of the IPP program. The
absence of a clear policy on this matter has contributed to confusion
and lack of consensus among national laboratory officials involved in
the program about the extent to which younger scientists, rather than
older, more experienced WMD experts, should be involved in IPP
projects. For example, the ILAB representative at the Argonne National
Laboratory told us that it would be appropriate to question the
participation of personnel born in the mid-1960s or later since they
most likely lacked weapons-related experience. A representative at the
Los Alamos National Laboratory who has been involved with the IPP
program for over a decade said that the program should engage "second-
generation" scientists born in 1980 or later because doing so can help
create opportunities for "third-and fourth-generation" scientists at
facilities in Russia and other countries in the future. Senior
officials at the Lawrence Livermore National Laboratory told us that
scientists in Russia and other countries, regardless of their age or
actual experience in weapons-related programs, should be included in
IPP projects because weapons expertise can be passed from one
generation to the next.
DOE Lacks Necessary Information and a Rigorous, Formalized Review
Process to Assess the WMD Credentials of IPP Project Participants:
In 1999, we recommended that, to the extent possible, DOE should obtain
more accurate data on the number and background of scientists
participating in IPP program projects. DOE told us that it has made
improvements in this area, including development of a classification
system for WMD experts, hiring a full-time employee responsible for
reviewing the WMD experience and backgrounds of IPP project
participants, and conducting annual project reviews. DOE relies heavily
on the statements of WMD experience that IPP project participants
declare when they submit paperwork to receive payment for work on IPP
projects. However, we found that DOE lacks an adequate and well-
documented process for evaluating, verifying, and monitoring the number
and WMD experience level of individuals participating in IPP projects.
According to DOE officials, all IPP projects are scrutinized carefully
and subjected to at least 8, and in some cases 10, stages of review to
assess and validate the WMD experience of the project participants.
Responsibility for verifying the WMD experience and backgrounds of IPP
project participants rests not only with DOE, but with the national
laboratories, other federal agencies, and the entities responsible for
transmitting funding to the scientists in Russia and other countries
(CRDF, ISTC, or STCU). However, the ultimate responsibility for this
assessment rests with DOE's IPP program office. Table 1 provides an
overview of the different stages involved in DOE's assessment of IPP
project participants' WMD backgrounds.
Table 1: Multistage Process for Assessing IPP Project Participants' WMD
Backgrounds:
Stage number: 1;
Review: Assessment by the national laboratory principal investigator.
Stage number: 2;
Review: Assessment by ILAB representatives and ILAB technical
committees.
Stage number: 3;
Review: Review by ILAB Chairperson.
Stage number: 4;
Review: Preliminary DOE review.
Stage number: 5;
Review: U.S. interagency review.
Stage number: 6;
Review: Approval and certification by DOE.
Stage number: 7;
Review: Validation by project funding mechanism (CRDF, ISTC, or STCU).
Stage number: 8;
Review: Secondary review by DOE following project approval but prior to
project implementation.
Stage number: 9;
Review: End-of-year review by DOE prior to release of 2[nd] - or 3rd-
year funding (for multiyear projects only).
Stage number: 10;
Review: Audits of selected projects by the Defense Contract Audit
Agency.
Source: GAO analysis of DOE data.
[End of table]
In reviewing project documentation and in our discussions with
officials responsible for conducting these reviews, we found
limitations throughout this multistage assessment process. Specifically:
* DOE has limited information to verify the WMD experience of personnel
proposed for IPP projects because government officials in Russia and
other countries are reluctant to provide information about their
countries' scientists. For example, ISTC officials told us that the
Russian government refuses to provide résumés for scientists involved
in projects funded by the Science Centers program, including IPP
projects that use the ISTC payment process; while CRDF officials
indicated that both the Russian and Ukrainian governments have shown
increasing resistance to the policy requiring the scientists to declare
their WMD-related experience. Three national laboratory officials
stated that it is illegal under Russian law to ask project participants
about their backgrounds, and that instead they make judgments regarding
the WMD experience of the project participants on the basis of their
personal knowledge and anecdotal information.
* Some IPP project proposals may advance from the national laboratories
for consideration by DOE with insufficient vetting or understanding of
all personnel who are to be engaged on the project. Contrary to the
process DOE laid out for the review of the WMD scientists' backgrounds,
senior representatives at five national laboratories told us that they
and their project managers do not have sufficient time or the means to
verify the credentials of the proposed project participants.
Furthermore, they believe that DOE is primarily responsible for
substantiating the weapons experience of the individuals who are to be
engaged in the projects.
* DOE does not have a well-documented process for verifying the WMD
experience of IPP project participants, and, as a result, it is unclear
whether DOE has a reliable sense of the proliferation risk these
individuals pose. DOE's review of the WMD credentials of proposed
project participants relies heavily on the determinations of the IPP
program office. We examined the proposal review files that the program
maintains, and we were unable to find adequate documentation to
substantiate the depth or effectiveness of the program office's review
of the WMD experience of proposed IPP project participants. DOE
officials noted that they do not usually check the weapons backgrounds
of every individual listed in an IPP project proposal, but only the key
project scientists and a few of the personnel working with them.
Specifically, in none of the IPP project files that we reviewed did we
find formal, written documentation analyzing and substantiating the WMD
backgrounds and proliferation risks of the personnel to be engaged in
those IPP projects. Each of these files did, however, contain a
comprehensive formal assessment by DOE's Office of International
Regimes and Agreements analyzing export control issues and compliance
with U.S. nonproliferation laws.
* Officials at the three organizations DOE uses to make tax-free
payments for IPP projects--CRDF, ISTC, and STCU--also downplayed their
organizations' ability to validate the backgrounds of the scientists
participating in IPP projects. CRDF officials stated that their
organization has not independently validated any of the weapons
backgrounds of the participating scientists, and they do not consider
that a responsibility under CRDF's contract with DOE. Similarly, ISTC
officials told us that their organization cannot verify the backgrounds
of scientists in projects funded by the Science Centers program,
including IPP projects that use the ISTC payment process, and instead
relies on the foreign institute's certification of the project
participants. Finally, STCU relies on the validation provided by the
foreign institute's director, and verifies this information in annual
project reviews during which a sample of project participants are
interviewed to confirm their WMD experience.
* Because it can be a matter of months or longer between development of
an IPP project proposal and project implementation, the list of
personnel who are actually paid on a project can differ substantially
from the proposed list of scientists. For several IPP projects we
reviewed, we did not find documentation in DOE's project files
indicating that the department was notified of the change of staff or
had assessed the WMD backgrounds of the new project participants. For
example, 1 IPP project--to discover new bioactive compounds in Russia
and explore their commercial application--originally proposed 27
personnel and was funded at $1 million. However, 152 personnel were
eventually paid under this project, and we did not find an updated list
of the project personnel or any indication of a subsequent review of
the additional personnel by DOE in the IPP project files. In another
project to develop straw-fired boilers in Ukraine funded at $936,100,
DOE reviewed the backgrounds of 18 personnel who were part of the
project proposal. However, CRDF payment records indicated that 24
personnel were subsequently paid on the project, only 5 of whom were
listed in the original proposal DOE had reviewed and approved. As a
result, it is unclear whether DOE conducts sufficient oversight on
changes in the number or composition of the workforce involved in IPP
projects. For its part, CRDF informed us that when an institute
requests a change in project staff and that change is approved by the
participating national laboratory, CRDF does not report these changes
to DOE, but relies on the national laboratory to notify relevant DOE
officials.
The limited information DOE obtains about IPP project participants and
the weaknesses in DOE's review of the backgrounds of these individuals
leave the IPP program vulnerable to potential misallocation of funds.
In our review, we found several examples that call into question DOE's
ability to adequately evaluate IPP project participants' backgrounds
before the projects are approved and funded. For example:
* A National Renewable Energy Laboratory official told us he was
confident that a Russian institute involved in a $250,000 IPP project
he oversaw to monitor microorganisms under environmental stress was
supporting Soviet-era biological weapons scientists. However, during
our visit to the institute in July 2007, the Russian project leader
told us that neither he nor his institute was ever involved in
biological weapons research. As a result of this meeting, DOE canceled
this project on July 31, 2007. DOE's cancellation letter stated that
the information provided during our visit led to this action. It
further stated, "it is well documented in statute and in the [IPP
program's] General Program Guidance that our projects must engage
Russians, and others, with relevant weapons of mass destruction or
strategic delivery means backgrounds. Violation of this requirement is
an extremely serious matter."
* In November 2006, DOE canceled a project in Ukraine intended to
develop a new type of fuel combustion system, 18 months after approving
the project and after spending about $76,000. DOE canceled this project
when it discovered an inadequate number of personnel with WMD
backgrounds involved in the project and after a Defense Contract Audit
Agency (DCAA) audit revealed other irregularities, including a conflict
of interest between the primary Ukrainian institute and the U.S.
partner company. During the interagency review of the project proposal,
State officials questioned the primary Ukrainian institute's
involvement in WMD. However, in our review of DOE's project files, we
did not find evidence that these concerns triggered a more-intensive
evaluation of this institute by DOE prior to the project's approval.
* A 2005 DCAA audit found that 90 percent of the participants on an IPP
project administered by the Pacific Northwest National Laboratory
lacked WMD experience. This project, which was designed to develop
improved biological contamination detectors, was funded at $492,739.
Officials at the national laboratory insisted that DCAA "was just plain
wrong." DOE and national laboratory officials asserted that the project
participants were under instruction not to discuss their weapons
involvement and, on the basis of their personal knowledge of the
Russian project leader and the institute, they believed the project
participants constituted a proliferation risk. However, according to
the payment records we reviewed, the Russian project leader and other
scientists involved in the project were not prevented from declaring
their WMD backgrounds to CRDF. Such conflicting accounts, the absence
of clear information, and the judgments made by IPP program officials
in assessing the proliferation risks posed by IPP project participants
underscore the difficulties the program faces and the possibility that
the program is funding personnel who do not constitute a proliferation
risk.
DOE Has Overstated the Number of Former Weapons Scientists Reemployed
in Long-term, Private Sector Jobs:
Although a senior DOE official described commercialization as the
"flagship" of the IPP program, we found that the program's
commercialization achievements have been overstated and are misleading,
further eroding the perceived nonproliferation benefits of the program.
In the most recent annual report for the IPP program available at the
time of our review,[Footnote 9] DOE indicated that 50 projects had
evolved to support 32 commercially successful activities.[Footnote 10]
DOE reported that these 32 commercial successes had helped create or
support 2,790 new private sector jobs for former weapon scientists in
Russia and other countries.[Footnote 11] In reviewing these projects,
we identified several factors that raise concerns over the validity of
the IPP program's reported commercial success and the numbers of
scientists employed in private sector jobs. For example:
* The annual survey instrument that USIC distributes to collect
information on job creation and other commercial successes of IPP
projects relies on "good-faith" responses from U.S. industry partners
and foreign institutes, which are not audited by DOE or USIC. In 9 of
the 32 cases, we found that DOE based its job creation claims on
estimates or other assumptions. For example, an official from a large
U.S. company told us that the number of jobs it reported to have helped
create was his own rough estimate. He told us he derived the job total
by estimating the amount of money that the company was spending at
Russian and Ukrainian institutes and dividing that total by the average
salary for Russian engineers in the company's Moscow office.
* We could not substantiate many of the jobs reported to have been
created in our interviews with the U.S. companies and officials at the
Russian and Ukrainian institutes where these commercial activities were
reportedly developed, due to conflicting information and accounts. For
example, officials from 1 U.S. company we interviewed claimed that 250
jobs at 2 institutes in Russia had been created, on the basis of 2
separate IPP projects. However, during our visit to the Scientific
Research Institute of Measuring Systems to discuss one of these
projects, we were told that the project is still under way,
manufacturing of the product has not started, and none of the
scientists have been reemployed in commercial production of the
technology. Similarly, during our site visit, officials at the
Institute of Nuclear Research of the Russian Academy of Sciences could
not confirm the creation of 350 jobs they had reported as a result of
several IPP projects relating to the production of radioisotopes. They
indicated that no more than 160 personnel were employed at their
institute in commercial activities stemming from those IPP projects,
that most of these jobs were only part time, and that they could not
account for jobs that may have been created at other institutes
previously involved in the projects.
Moreover, we found differing views among DOE and national laboratory
officials on what constitutes a commercially successful IPP project.
For example, an Oak Ridge National Laboratory official told us an IPP
project could be considered a commercial success if the project
participants become employed full time in a private business and are no
longer employed by the WMD institute. A National Renewable Energy
Laboratory official defined commercially successful IPP projects as
those that lead to new products or new production capabilities in the
former Soviet Union with significant sales in the marketplace. DOE
guidance for the IPP program does not provide a standard definition or
criteria to determine whether an IPP project should be judged
commercially successful. However, in response to our request, DOE
offered the following definition of a commercially successful IPP
project:
"A product, process, or service is generating revenue from sales or
other economic value added in the [former Soviet Union] or the U.S.,
based on an IPP project (either completed or ongoing); and/or there is
a private contractual relationship between the U.S. industry partner
and the [former Soviet Union] institute covering research and
development work to be done by the institute for the U.S. industry
partner growing out of an IPP project."
The lack of consensus among DOE and national laboratory officials
involved in the IPP program on a common commercialization definition
has created confusion and disagreement on which IPP projects should be
considered commercially successful. For example, DOE counted as a
commercial success one IPP project administered by the Pacific
Northwest National Laboratory to facilitate biodegradation of oil
spills. However, the national laboratory officials responsible for this
project disagreed with DOE's characterization, in part because the
project has not generated any commercial revenues.
Furthermore, DOE's broad-based definition of commercialization has
allowed it to overstate its commercialization accomplishments to
include part-time jobs created from and revenues derived from grants or
contract research. Specifically:
* DOE counts part-time private sector jobs created, even if the
scientists employed in these part-time jobs also continue to work at
the former Soviet weapons institute.[Footnote 12] DOE policy does not
require scientists employed in a private sector activity resulting from
an IPP project to sever their relationship with their institute. In
fact, in our review of the 2,790 jobs created, we found that 898, or
nearly one third, of these jobs were part-time jobs, meaning that the
scientists in some cases may still be affiliated with the institutes
and involved in weapons-applicable research.
* The sources of revenue for some commercially successful IPP projects
also call into question the long-term sustainability of some of the
jobs created. DOE reported that $22.1 million in total revenue was
generated by the foreign institutes or their spin-off companies as a
result of commercial activities stemming from IPP projects. Of this
total, approximately $4.5 million, or 20 percent, consisted of grants
(including grants from the Russian government); contract research; and
other sources of income that appear to be of limited duration, that are
not based on commercial sales, and that may not offer a sustainable
long-term source of revenue. For example, DOE reported that 510 jobs
were created at the Kurchatov Institute and other Russian institutes as
the result of an IPP project to develop thorium-based fuels for use in
nuclear reactors.[Footnote 13] However, we found that over 400 of those
jobs were supported by a separate DOE contract to evaluate the use of
thorium fuels for plutonium disposition. The Russian project
participants told us that over 500 workers were supported while
receiving funding from the 2 DOE sources, but the project is now
completed, it has not been commercialized, and there are no more than
12 personnel currently involved in efforts related to the project.
DOE Has Not Revised the IPP Program's Performance Metrics to Reflect
Updated Threat Information:
The IPP program's long-term performance targets do not accurately
reflect the size and nature of the threat the program is intended to
address because DOE is basing the program's performance measures on
outdated information. DOE has established 2 long-term performance
targets for the IPP program--to engage 17,000 weapons scientists
annually by 2015 in either IPP grants or in private sector jobs
resulting from IPP projects, and to create private sector jobs for
11,000 weapons scientists by 2019. However, DOE bases these targets on
a 16-year-old, 1991 National Academy of Sciences (NAS) assessment that
had estimated approximately 60,000 at-risk WMD experts in Russia and
other countries in the former Soviet Union. DOE derived 17,000
scientists as its share of the total target population by subtracting
from the NAS estimate the number of WMD scientists engaged by other
U.S. government and international WMD scientist assistance programs
(such as State's Science Centers program) and making assumptions about
attrition rates in the former Soviet WMD workforce.
DOE officials acknowledged that the 1991 NAS study does not provide an
accurate assessment of the current threat posed by WMD scientists in
Russia and other countries. A 2005 DOE-commissioned study by the RAND
Corporation estimated that the population of unemployed or
underemployed weapons scientists in Russia and other former Soviet
states had decreased significantly. The RAND study provided rough
revised estimates of the number of WMD scientists in the former Soviet
Union, and DOE acknowledged in 2006 that the target population of WMD
experts in the former Soviet Union had dropped from the 1991 NAS
estimate of 60,000 to approximately 35,000 individuals. However, DOE
has not formally updated its performance metrics for the IPP program
and, in its fiscal year 2008 budget justification, continued to base
its long-term program targets on the 1991 NAS estimate.
Moreover, DOE's current metrics for the IPP program are not complete or
meaningful indicators of the proliferation risk posed by weapons
scientists in Russia and other countries and, therefore, do not provide
sufficient information to the Congress on the program's progress in
reducing the threat posed by former Soviet WMD scientists. The total
number of scientists supported by IPP grants or employed in private
sector jobs conveys a level of program accomplishment, but these
figures are broad measures that do not describe progress in redirecting
WMD expertise within specific countries or at institutes of highest
proliferation concern. DOE has recognized this weakness in the IPP
program metrics and recently initiated the program's first systematic
analysis to understand the scope of the proliferation risk at
individual institutes in the former Soviet Union. DOE believes that
setting priorities for providing support to foreign institutes is
necessary because (1) the economies in Russia and the other countries
of the former Soviet Union have improved since the program's inception,
(2) former "at-risk" institutes are now solvent, and (3) the threat of
mass migration of former Soviet weapons scientists has subsided.
However, DOE believes that a concern remains over the "targeted
recruitment" of scientists and former WMD personnel. DOE officials
briefed us on their efforts in September 2007, but told us that the
analysis is still under way, and that it would not be completed until
2008. As a result, we were unable to evaluate the results of DOE's
assessment.
DOE Has Not Developed an Exit Strategy for the IPP Program, but Instead
Has Expanded Efforts to Iraq and Libya and Is Using the Program to
Support the Department's Global Nuclear Energy Partnership:
Russian government officials, representatives of Russian and Ukrainian
institutes, and individuals at U.S. companies raised questions about
the continuing need for the IPP program, particularly in Russia, whose
economy has improved in recent years. However, DOE has yet to develop
criteria for phasing-out the IPP program in Russia and other countries
of the former Soviet Union. Meanwhile, DOE is departing from the
program's traditional focus on Russia and other former Soviet states to
engage scientists in new countries, such as Iraq and Libya, and to fund
projects that support a DOE-led initiative on nuclear energy, called
the Global Nuclear Energy Partnership (GNEP).
Russian Government Officials, Russian and Ukrainian Scientists, and
U.S. Industry Representatives Questioned the Continuing Need for the
IPP Program:
Officials from the Russian government, representatives of Russian and
Ukrainian institutes, and individuals at U.S. companies who have been
long-time program participants raised questions about the continuing
need for the IPP program, given economic improvements in Russia and
other countries of the former Soviet Union. Specifically:
* A senior Russian Atomic Energy Agency official told us in July 2007
that the IPP program is no longer relevant because Russia's economy is
strong and its scientists no longer pose a proliferation risk.
Additionally, in September 2006, the Deputy Head of the Russian Atomic
Energy Agency stated that Russia is no longer in need of U.S.
assistance, and that it is easier and more convenient for Russia to pay
for its own domestic nuclear security projects.
* Officials from 10 of the 22 Russian and Ukrainian institutes we
interviewed told us that they do not see themselves or scientists at
their institutes as a proliferation risk. Russian and Ukrainian
officials at 14 of the 22 institutes we visited told us that salaries
are regularly being paid, funding from the government and other sources
has increased, and there is little danger of scientists migrating to
countries of concern. However, many of these officials said that they
are concerned about scientists emigrating to the United States and
Western Europe, and that IPP program funds help them to retain key
personnel. Furthermore, many of these officials noted that the program
was particularly helpful during the difficult financial period in the
late 1990s.
* Representatives of 5 of the 14 U.S. companies we interviewed told us
that, due to Russia's increased economic prosperity, the IPP program is
no longer relevant as a nonproliferation program in that country. Some
of these company officials believe that the program should be
reassessed to determine if it is still needed.
In economic terms, Russia has advanced significantly since the IPP
program was created in 1994. Some of the measures of Russia's economic
strength include the following:
* massive gold and currency reserves, including more than $113 billion
in a stabilization fund;[Footnote 14]
* a dramatic decrease in the amount of foreign debt--from about 96
percent of Russia's gross domestic product in 1999 to about 5 percent
in April 2007; and:
* rapid growth in gross domestic product--averaging about 6 percent per
year from 1998 to 2006.
In addition, the president of Russia recently pledged to invest
substantial government resources in key industry sectors, including
nuclear energy, nanotechnology, and aerospace technologies and aircraft
production. Many of the Russian institutes involved in the IPP program
could benefit substantially under these planned economic development
initiatives, undercutting the need for future IPP program support. In
fact, officials at many of the Russian institutes with whom we spoke
told us that they hope to receive increased government funding from
these new presidential initiatives.
In another sign of economic improvement, many of the institutes we
visited in Russia and Ukraine appeared to be in better physical
condition and more financially stable, especially when compared with
their condition during our previous review of the IPP program. In
particular, at one institute in Russia--where during our 1998 visit we
observed a deteriorated infrastructure and facilities--we toured a
newly refurbished building that featured state-of-the-art equipment.
Russian officials told us that the overall financial condition of the
institute has improved markedly because of increased funding from the
government as well as funds from DOE. In addition, one institute we
visited in Ukraine had recently undergone a $500,000 renovation,
complete with a marble foyer and a collection of fine art. Furthermore,
we found that many institutes we visited have been able to develop
commercial relationships with Russian, U.S., and other international
companies on their own--outside of the IPP framework--leading to
increased revenues and commercial opportunities. For example, officials
at one Russian institute met with us immediately following their
successful negotiation of a new contract for research and development
activities with a large international energy company. However, DOE
officials noted that the economic recovery throughout Russia has been
uneven, and that DOE believes there are many facilities that remain
vulnerable. Even so, DOE officials told us that their intent is to
reorient the IPP program from assistance to cooperation, especially in
Russia, given the recent improvements in that country's economy.
DOE Has Not Developed Criteria to Determine When Individuals or
Institutes Should No Longer Receive IPP Funding:
DOE has not developed an exit strategy for the IPP program, and it is
unclear when the department expects that the program will have
completed its mission. DOE officials told us in September 2007 that
they do not believe that the program needs to develop an exit strategy
at this time. However, DOE officials acknowledged that the IPP
program's long-term goal of finding employment for 17,000 WMD
scientists in Russia and other countries does not represent an exit
strategy.
DOE has not developed criteria to determine when scientists,
institutes, or countries should be "graduated" from the IPP program,
and DOE officials believe that there is a continued need to engage
Russian scientists. In contrast, State has already assessed
participating institutes and developed a strategy--using a range of
factors, such as the institute's ability to pay salaries regularly and
to attract funding from other sources--to graduate certain institutes
from its Science Centers program. State and DOE officials told us that
the Science Centers and IPP programs are complementary and well-
coordinated. However, we found that the programs appear to have
different approaches regarding continued U.S. government support at
certain institutes. Specifically, DOE is currently supporting 35 IPP
projects at 17 Russian and Ukrainian institutes that State considers to
already be graduated from its Science Centers program and, therefore,
no longer in need of U.S. assistance. For example, according to State
documents, beginning in fiscal year 2003, State considered the
Kurchatov Institute to be graduated from its Science Centers program
and, according to the Deputy Executive Director of ISTC, the institute
is financially well-off and no longer needs U.S. assistance. However,
we found that since fiscal year 2003, DOE has funded 6 new IPP projects
at the Kurchatov Institute and a related spin-off company. DOE
officials acknowledged that coordination between State and DOE's
scientist assistance programs could be improved.
Part of State's exit strategy involves enhancing commercial
opportunities at some institutes through the Commercialization Support
Program. This program, which began in October 2005, is administered by
ISTC with funding from the United States, through State's Science
Centers program. State aims to facilitate and strengthen long-term
commercial self-sustainability efforts at institutes in Russia and
other countries by providing training and equipment to help them bring
commercially viable technologies to market through the
Commercialization Support Program. According to ISTC officials, 17
commercialization initiatives at institutes in Russia have been
supported through the program, 2 of which were completed as of July
2007. DOE, State, and ISTC officials told us the IPP program and the
Commercialization Support Program have a similar goal of finding
commercial opportunities for weapons scientists in Russia and other
countries of the former Soviet Union. According to ISTC officials, a
key difference in the programs is that the Commercialization Support
Program can support infrastructure upgrades at foreign institutes, but,
unlike the IPP program, it is not used to support research and
development activities. DOE and State officials insisted that the
programs are complementary, but acknowledged that they need to be
better coordinated.
DOE Expanded IPP Efforts to Iraq and Libya and Is Working with Its
Global Nuclear Energy Partnership to Maintain the IPP Program's
Relevance:
DOE recently expanded its scientist assistance efforts on two fronts:
DOE began providing assistance to scientists in Iraq and Libya, and the
IPP program is working with DOE's Office of Nuclear Energy to develop
IPP projects that support GNEP--a DOE-led international effort to
expand the use of civilian nuclear power. These new directions
represent a significant departure from the IPP program's traditional
focus on the former Soviet Union. According to a senior DOE official,
the expansion of the program's scope was undertaken as a way to
maintain its relevance as a nonproliferation program.
DOE has expanded the IPP program's efforts into these new areas without
a clear mandate from the Congress and has suspended parts of its IPP
program guidance for implementing projects in these new areas.
Specifically:
* Although DOE briefed the Congress on its plans, DOE officials told us
that they began efforts in Iraq and Libya without explicit
congressional authorization to expand the program outside of the former
Soviet Union. In contrast, other U.S. nonproliferation programs, such
as Defense's Cooperative Threat Reduction program, sought and received
explicit congressional authorization before expanding their activities
to countries outside of the former Soviet Union. DOE officials told us
they plan to ask the Congress to include such language in future
legislation.
* In Libya, DOE is deviating from IPP program guidance and its standard
practice of limiting the amount of IPP program funds spent at DOE's
national laboratories for project oversight to not more than 35 percent
of total expenditures.
* Regarding efforts to support GNEP, DOE has suspended part of the IPP
program's guidance that requires a U.S. industry partner's
participation, which is intended to ensure IPP projects' commercial
potential.
Iraq:
Since 2004, DOE has been working to identify, contact, and find
employment for Iraqi scientists in peaceful joint research and
development projects. DOE's efforts were undertaken at the request of
State, which has overall responsibility for coordinating
nonproliferation activities and scientist assistance efforts in Iraq.
DOE and State coordinate their activities through regular meetings and
correspondence, participation in weekly teleconferences, interagency
proposal review meetings, and coordination on strategic planning and
upcoming events. Through May 2007, DOE had spent about $2.7 million to
support its activities in Iraq. DOE has approved 29 projects, the
majority of which are administered by Sandia National Laboratories.
These include projects on radon exposure, radionuclides in the Baghdad
watershed, and the development of salt tolerant wheat strains. However,
owing to the uncertain security situation in Iraq, DOE and national
laboratory officials told us that these are short-term projects. Sandia
National Laboratory officials acknowledged that most of the projects
DOE is funding in Iraq have no commercialization potential.
Libya:
Similarly, DOE expanded its efforts to Libya at the request of
State.[Footnote 15] DOE spent about $934,000 through May 2007 to
support 5 projects in Libya, including projects involving water
purification and desalination. However, DOE is deviating from its IPP
program guidance and standard practices by placing no restrictions on
the amount of IPP program funds that can be spent at DOE national
laboratories for oversight of these projects. DOE limits spending at
the national laboratories for IPP projects in all other countries to
comply with section 3136(a)(1) of the National Defense Authorization
Act for Fiscal Year 2000, which states the following: "Not more than 35
percent of funds available in any fiscal year after fiscal year 1999
for the IPP program may be obligated or expended by the DOE national
laboratories to carry out or provide oversight of any activities under
that program." DOE officials acknowledged that more than 35 percent of
IPP program funds for projects in Libya have been and will continue to
be spent at the national laboratories. We found that through May 2007,
DOE spent about $910,000 (97 percent) at the national laboratories,
while spending about $24,000 (3 percent) in Libya. In a written
response to us on September 7, 2007, DOE noted that the IPP program
"will continue to operate in Libya on this basis [i.e., spending more
than 35 percent of funds at the DOE national laboratories], while
working with our legislative office to eliminate any perceived
ambiguities [in the law]." DOE informed us on October 24, 2007, that
these efforts are currently under way.
DOE officials estimate that about 200 scientists in Libya have WMD
knowledge and pose a proliferation risk. However, in contrast with its
activities in Russia and other countries, DOE's focus in Libya is not
on engaging individual weapons scientists, but rather on converting
former WMD manufacturing facilities, because, according to DOE, the
Libyan government has made clear that it will continue to pay the
salaries of its former WMD scientists and engineers. In collaboration
with State, DOE is working to help scientists at Tajura, formerly the
home of Libya's nuclear research center, set up and transition to
research in seawater desalination and analytical water chemistry. DOE
and State coordinate on strategic planning for and implementation of
scientist engagement efforts in Libya. According to State, coordination
mechanisms include regular e-mail correspondences, weekly interagency
and laboratory teleconferences, and quarterly meetings. DOE officials
told us they plan to complete their efforts in Libya by 2009.
Global Nuclear Energy Partnership:
In fiscal year 2007, DOE also expanded the efforts of the IPP program
to provide support for GNEP--a DOE-led international effort to expand
the use of civilian nuclear power.[Footnote 16] In October 2006, a
senior DOE official told us that the department planned to use IPP
projects to support GNEP as a way to maintain the program's relevance
as a nonproliferation program. On December 13, 2006, the IPP program
office brought together national laboratory experts to propose new IPP
projects that could support GNEP. Currently, six active or approved IPP
projects are intended to support GNEP. According to IPP program
officials, DOE's Office of Nuclear Energy and Office of Science will be
providing some funding to three of these projects.[Footnote 17]
According to DOE officials, because these funds will come from other
DOE offices and programs, they would not be subject to congressionally
mandated limitations on the percentage of IPP program funds that can be
spent at DOE national laboratories. As a result, DOE officials told us
they plan to use funding provided by the Office of Nuclear Energy and
the Office of Science to increase the amount spent at DOE national
laboratories for technical review and oversight of GNEP-related IPP
projects.
DOE has suspended some key IPP program guidelines, such as the
requirement for a U.S. industry partner, for IPP projects intended to
support GNEP. DOE officials told us that most GNEP-related IPP projects
do not have immediate commercial potential, but could attract industry
in the future. Furthermore, they said that GNEP-related IPP projects
are essentially collaborative research and development efforts between
Russian institutes and DOE national laboratories. DOE has yet to
develop separate written guidance for GNEP-related IPP projects, but
told us it is planning to do so. As a result, national laboratory
officials we interviewed told us that implementing procedures for GNEP-
related IPP projects has been piecemeal and informal, which has created
some confusion about how these projects will be managed and funded.
Multiple DOE and Contractor Reviews and Delays in Project
Implementation Contribute to the IPP Program's Large Balances of
Unspent Program Funds:
In every fiscal year since 1998, DOE has carried over unspent funds in
excess of the amount that the Congress provided for the IPP program,
primarily because of DOE and its contractors' lengthy and multilayered
review and approval processes for paying former Soviet weapons
scientists for IPP-related work and long delays in implementing some
IPP projects. DOE and national laboratory officials told us they are
attempting to improve financial oversight over the IPP program, in
part, to address concerns about unspent program funds. To that end, DOE
is developing a new program management system, which it expects to
fully implement in 2008--14 years after the start of the program.
DOE Has Carried Over Unspent Funds Greater Than the Amount the Congress
Has Allocated to the IPP Program Each Fiscal Year since 1998:
Since fiscal year 1994, DOE has spent about $309 million to implement
the IPP program, but has annually carried over large balances of
unspent program funds. DOE officials have recognized that unspent funds
are a persistent and continuing problem with the IPP program.
Specifically, in every fiscal year after 1998, DOE has carried over
unspent funds in excess of the amount that the Congress provided for
the program the following year. For example, as of September 2007, DOE
had carried over about $30 million in unspent funds--$2 million more
than the $28 million that the Congress had appropriated for the IPP
program in fiscal year 2007. In fact, as figure 1 shows, for 3 fiscal
years--2003 through 2005--the amount of unspent funds was more than
double the amount that the Congress appropriated for the program in
those fiscal years, although the total amount of unspent funds has been
declining since its peak in 2003.
Figure 1: Appropriations and Unspent Balances for the IPP Program from
Fiscal Years 1998 through 2008:
[See PDF for image]
This figure is a combination line and vertical bar graph depicting
appropriations and unspent balances for the IPP Program from fiscal
years 1998 through 2008. The vertical axis of the graph represents
dollars in millions from 0 to 70. The horizontal axis of the graph
represents fiscal years 1998 to 2008[A]. The line in the graph depicts
unspent at start of the fiscal year, while the vertical bars depict
either appropriated balances or estimated appropriations. The following
values are approximated from the graph (dollars in millions):
Fiscal year: 1998;
Unspent at start of fiscal year: $30;
Appropriated: $30.
Fiscal year: 1999;
Unspent at start of fiscal year: $36;
Appropriated: $22.
Fiscal year: 2000;
Unspent at start of fiscal year: $35;
Appropriated: $20.
Fiscal year: 2001;
Unspent at start of fiscal year: $40;
Appropriated: $24.
Fiscal year: 2002;
Unspent at start of fiscal year: $48;
Appropriated: $35.
Fiscal year: 2003;
Unspent at start of fiscal year: $65;
Appropriated: $20.
Fiscal year: 2004;
Unspent at start of fiscal year: $60;
Appropriated: $22.
Fiscal year: 2005;
Unspent at start of fiscal year: $53;
Appropriated: $22.
Fiscal year: 2006;
Unspent at start of fiscal year: $48;
Appropriated: $24.
Fiscal year: 2007;
Unspent at start of fiscal year: $33;
Appropriated: $28.
Fiscal year: 2008;
Unspent at start of fiscal year: $30;
Estimated appropriation: $16.
Source: GAO analysis of DOE data.
[A] As of November 30, 2007, DOE is operating under a continuing
resolution. As a result, we used projected IPP program budget data,
which DOE officials provided to us in May 2007, to estimate the fiscal
year 2008 appropriation for the IPP program shown in this figure.
[End of figure]
The IPP Program's Persistent Annual Unspent Balances Have Resulted
Primarily from Multiple Layers of Review and Delays in Project
Implementation:
Two main factors have contributed to DOE's large and persistent
carryover of unspent funds: the lengthy and multilayered review and
approval processes DOE uses to pay IPP project participants for their
work, and long delays in implementing some IPP projects. DOE identified
three distinct payment processes that it uses to transfer funds to
individual scientists' bank accounts in Russia and other countries--
ISTC/STCU, CRDF subcontract, and CRDF master contract. These three
processes involve up to seven internal DOE offices and external
organizations that play a variety of roles, including reviewing project
deliverables, approving funds, and processing invoices. DOE officials
told us that these processes were originally introduced to ensure the
program's fiscal integrity, but they agreed that it was time to
streamline these procedures.
Regarding the first payment process, as figure 2 illustrates, before
payment reaches project participants' bank accounts, it passes from DOE
headquarters (which includes the IPP program office and NNSA's Budget
Office), through DOE's Energy Finance and Accounting Service Center,
which records the obligation of funds. DOE then transfers funding to
the Oak Ridge Financial Service Center, which pays the invoice by
transferring funds to ISTC or STCU. The funds arrive at ISTC or STCU,
which disburses them in quarterly payments to IPP project participants,
upon receipt of project invoices, quarterly technical reports, and
documentation from the participating former Soviet Union institutes
that deliverables were sent to the national laboratories. However, DOE
and national laboratory officials told us that this payment process has
limitations. Specifically, these officials told us that if there is a
problem with a deliverable, it is usually too late for DOE or the
participating national laboratory to request that ISTC or STCU stop the
payment to the project participants for the current quarter.
Figure 2: ISTC/STCU Payment Process:
[See PDF for image]
This figure is a flowchart of the STC/STCU Payment Process. The
following data is depicted:
Payments:
DOE Headquarters:
Payment: Less than or equal to 30 percent of total, paid to DOE
national laboratories.
Payment: Former Soviet Union project funds, greater than or equal to 70
percent of total, paid to:
* DOE Energy Finance and Accounting Service Center;
* DOE Oak Ridge Financial Service Center;
* ISTC/STCU, Quarterly payments to scientists;
* Foreign project participants.
Product or deliverable:
Foreign project participants sends product or deliverable to DOE
national laboratories.
Quarterly technical reports, report of payment, and/or invoices:
Foreign project participants send quarterly technical report and
invoices to ISTC/STCU;
ISTC/STCU send report of payment to DOE Headquarters;
ISTC/STCU forwards the quarterly technical report to DOE national
laboratories.
Source: GAO analysis of DOE data.
[End of figure]
The other two processes that DOE uses to make payments to IPP project
participants involve CRDF. In most cases, DOE administers the CRDF
payment process through a subcontract with the participating national
laboratory. In some rare cases, DOE contracts directly with foreign
institutes through a CRDF "master contract."[Footnote 18] For projects
that use CRDF to process payments, the entire amount of project funding
is first transferred to the participating national laboratory, where it
is placed in two separate accounts. The first account consists of no
more than 30 percent of project funding for oversight costs incurred by
the national laboratory. The second account has all funding for the
foreign project participants, which is at least 70 percent of project
funding.
As figure 3 illustrates, before IPP project participants receive
payment from CRDF, invoices and approvals of deliverables from the
national laboratories, as well as CRDF forms, are sent to DOE
headquarters for approval. DOE headquarters reviews the invoices
against the contract and, if the amounts match, approves them and sends
documentation to the DOE Procurement Office. DOE headquarters also
notifies the participating national laboratory of its approval, and the
laboratory sends the funds listed on the invoices to DOE's Energy
Finance and Accounting Service Center. The DOE Procurement Office
approves payment on project invoices and notifies CRDF and DOE's Energy
Finance and Accounting Service Center that payments should be made.
Funds are then transferred from the Energy Finance and Accounting
Service Center to the Oak Ridge Financial Service Center and then to
CRDF. Once CRDF has received the funds and the necessary approvals from
DOE, it makes payments to the project participants' bank accounts.
Figure 3: CRDF Payment Process:
[See PDF for image]
This figure is a flowchart of the CRDF Payment Process. The following
data is depicted:
Payments:
DOE Headquarters: U.S. and former Soviet Union project funds (100
percent of total), paid to DOE national laboratories (less than 30
percent of funds used for U.S. expenses);
DOE national laboratories: Funds sent from account greater than 70
percent of project funds to DOE Energy Finance and Accounting Service
Center;
DOE Energy Finance and Accounting Service Center: sends funds to DOE
Oak Ridge Financial Service Center;
DOE Oak Ridge Financial Service Center: send funds to CRDF;
CRDF: sends funds to Foreign project participants.
Approval letter, invoices, and CRDF forms:
DOE Headquarters: sent to DOE Procurement Office;
DOE Procurement Office: sent to DOE Energy Finance and Accounting
Service Center and CRDF;
DOE national laboratories: sent to DOE Headquarters.
Invoice for deliverable and CRDF forms:
Foreign project participants: sent to DOE national laboratories.
Product or deliverable:
Foreign project participants: sent to DOE national laboratories.
Source: GAO analysis of DOE data.
[End of figure]
DOE officials acknowledged the enormity of the problem that the lag
time between the allocation of funds, placement of contracts, and
payment for deliverables creates for the IPP program and told us they
are taking steps to streamline their payment processes. In addition,
Russian and Ukrainian scientists at 9 of the 22 institutes we
interviewed told us that they experienced delays in payments ranging
from 3 months to 1 year. Among the 207 projects we reviewed, we found
several examples of payment delays. For example:
* In one project on the development and testing of a device to detect
hidden explosives, the Lawrence Livermore National Laboratory official
who heads the project told us that the U.S. industry partner had to pay
Russian scientists' salaries until IPP funding could be released.
Lawrence Livermore officials involved in this project noted that delays
in payments to project participants slowed the project's completion.
* Officials at another Russian institute told us about two projects
that experienced payment delays. On the project to develop nuclear
material container security devices, they had shipped a deliverable to
Sandia National Laboratories in October 2006, but it took more than 4
months for them to receive payment. On the project to produce a new
computer modeling code for use in Russian nuclear reactor simulators,
Russian institute officials told us payments were delayed 3 to 4
months. Officials said that when they asked Brookhaven National
Laboratory officials about the delay, they were told it was due to
DOE's complex payment processing systems.
Delays in implementing some IPP projects also contribute to DOE's large
and persistent carryover of unspent funds. According to officials from
U.S. industry partners, national laboratories, and Russian and
Ukrainian institutes, some IPP projects experience long implementation
delays. As a result, project funds often remain as unspent balances
until problems can be resolved. For example, the ILAB representative
from the Argonne National Laboratory told us that, in his experience,
IPP projects do not finish on schedule about 60 percent of the time
owing to a variety of problems. These problems include implementation
issues due to administrative problems, the withdrawal or bankruptcy of
the U.S. industry partner, and turnover in key project participants. In
our review of 207 IPP projects, we found several examples of projects
that had experienced implementation delays. For example:
* One project to produce a low-cost artificial leg for use in
developing countries had $245,000 in unspent funds as of April 2007--19
percent of the $1.3 million DOE allocated for the project. Because a
testing device needed for the project was not properly labeled when it
was sent from the United States, the Russian Customs Service rejected
the device. Sandia National Laboratory officials told us that this
rejection had delayed project implementation for nearly 1 year.
* About 3 years into a project to create banks of chemical compounds
linked with computer databases for industrial use, the project's U.S.
industry partner was bought out by a larger company. The amount
allocated for the project was nearly $1.4 million. The larger company
lost interest in the project, and, according to the DOE project
manager, the project sat idle for 3 or 4 years while DOE tried to get
the company to take action. Ultimately, the project was finished 8
years after it began.
* Officials at one Russian institute we visited told us another IPP
project to improve a material to help neutralize radioactive waste had
experienced delays when the original U.S. industry partner went
bankrupt, causing the project to be temporarily suspended. According to
these officials, it took 2 years to find a new U.S. industry partner.
* Brookhaven National Laboratory officials described a delay of more
than 6 months on a $740,000 project intended to develop new pattern
recognition software. According to Brookhaven officials, these delays
were caused by significant personnel turnover at the participating
Russian institute, mostly through the loss of key personnel who found
better, higher paying jobs outside of the institute.
DOE Is Implementing a New IPP Program Management System, in Part, to
Address Problems with Large Balances of Unspent Funds:
DOE is implementing a new system designed to better manage IPP
projects' contracts and finances. DOE officials told us that this
action was undertaken in response to a recommendation we made in 2005
to improve the management and internal controls at NNSA. Specifically,
we recommended in our August 2005 report, among other things, that
NNSA's program managers maintain quick access to key contract records,
such as deliverables and invoices that relate to management controls,
regardless of whether the records are located at a national laboratory
or headquarters.[Footnote 19] Following our 2005 report, in 2006, DOE
initiated an extensive review of IPP financial and procurement
procedures at participating national laboratories. DOE and national
laboratory officials told us that representatives from the IPP program
office visited all of the participating national laboratories, except
for the Kansas City Plant, and worked with each laboratory's financial
department to find ways to reduce unspent funds.[Footnote 20] DOE
officials told us that, as a result, they were able to redirect about
$15 million in unspent program funds for immediate use on existing IPP
projects.
In addition, DOE officials said that they have imposed new management
controls to address project delays and reduce balances of unspent
funds. These controls include implementing a management reengineering
plan and enforcing control mechanisms, called "sunset" provisions,
which require national laboratory officials to justify continuing any
IPP project that experiences an implementation delay of 6 to 8 months.
DOE has also begun to implement its new Expertise Accountability Tool
(EXACT), a project and information management system that it launched
in October 2006. DOE expects to fully implement the EXACT system in
2008--14 years after the start of the IPP program. According to DOE
officials, EXACT will allow instant sharing of IPP project data between
DOE and the participating national laboratories. DOE officials believe
that the EXACT system will allow the IPP program office to better
monitor and oversee the progress of IPP projects at the national
laboratories, including reviews of IPP project participants' WMD
backgrounds and tracking unspent funds at the national laboratories.
Conclusions:
In our view, the purpose and need for the IPP program must be
reassessed. We believe that DOE has failed to clearly articulate the
current threat posed by WMD scientists in Russia and other countries
and has not adjusted the IPP program to account for the changed
economic landscape in the region and improved conditions at many of the
institutes involved in the program. Instead, DOE has continued to
emphasize a broad strategy of engagement with foreign scientists and
institutes, much as it did more than a decade ago, and it has not
developed comprehensive plans for focusing on the most at-risk
individuals and institutes or for developing an end-game for the
program. We believe that DOE's inability to establish a clear exit
strategy for the IPP program has contributed to a perception among
foreign recipients that the program is essentially open-ended,
represents an indefinite commitment of U.S. support, and serves as a
useful marketing tool to attract and retain young scientists who might
otherwise emigrate to the United States or other western countries.
We believe that it is time for DOE to reassess the program to explain
to the Congress how the program should continue to operate in the
future or to discuss whether the program should continue to operate at
all. Without a reassessment of the program's objectives, metrics,
priorities, and exit strategy, the Congress cannot adequately determine
at what level and for how long the program should continue to be
supported. We believe that such a reassessment presents DOE with an
opportunity to refocus the program on the most critical remaining
tasks, with an eye toward reducing the program's scope, budget, and
number of participating organizations.
Beyond reassessing the continuing need for the IPP program, a number of
management problems are negatively affecting the program. Specifically:
* The fact that DOE has paid many scientists who claimed no WMD
expertise is particularly troubling and, in our view, undermines the
IPP program's credibility as a nonproliferation program. The lack of
documentation of DOE's review of IPP project participants also raises
concerns.
* DOE does not have reliable data on the commercialization results of
IPP projects or a clear definition of what constitutes a commercially
successful IPP project, preventing it from providing the Congress with
a more accurate assessment of the program's results and purported
benefits.
* Regarding its efforts to expand the IPP program, DOE's projects in
Iraq and Libya represent a significant departure from the program's
original focus on the countries of the former Soviet Union. While there
may be sound national security reasons for expanding efforts to these
countries, we are concerned that, unlike other federal agencies, DOE
did not receive explicit authorization from the Congress before
expanding its program outside of the former Soviet Union. Furthermore,
in its efforts in Libya, DOE is not adhering to its own guidance
restricting the percentage of IPP program funds that can be spent at
DOE's national laboratories on oversight activities.
* The lack of clear, written guidance for IPP projects intended to
support GNEP has led to confusion among national laboratory officials
who implement the IPP program.
* Regarding the financial state of the IPP program, DOE's long-standing
problem with large balances of unspent program funds raises serious
concerns about DOE's ability to spend program resources in a timely
manner and about the method DOE uses to develop requests for future
budgets. Reform of the complex payment system used by the IPP program
to pay foreign scientists could help address some of these concerns.
* Because Russian scientists and institutes benefit from the IPP
program, it seems appropriate that DOE should seek to take advantage of
Russia's improved economic condition to ensure a greater commitment to
jointly held nonproliferation objectives.
* The absence of a joint plan between DOE's IPP program and ISTC's
Commercialization Support Program, which is funded by State, raises
questions about the lack of coordination between these two U.S.
government programs that share similar goals of finding peaceful
commercial opportunities for foreign WMD scientists.
Recommendations for Executive Action:
We recommend that the Secretary of Energy, working with the
Administrator of the National Nuclear Security Administration, reassess
the IPP program to justify to the Congress the continued need for the
program. Such a reassessment should, at a minimum, include a thorough
analysis of the proliferation risk posed by weapons scientists in
Russia and other countries; a well-defined strategy to more effectively
target the scientists and institutes of highest proliferation concern;
more accurate reporting of program accomplishments; and a clear exit
strategy for the IPP program, including specific criteria to determine
when specific countries, institutes, and individuals are ready to
graduate from participation in the IPP program. This reassessment
should be done in concert with, and include input from, other federal
agencies, such as State; the U.S. intelligence community; officials in
host governments where IPP projects are being implemented; the U.S.
business community; and independent U.S. nongovernmental organizations.
If DOE determines that the program is still needed, despite the
increased economic prosperity in Russia and in light of the general
trend toward cost-sharing in U.S. nonproliferation programs in that
country, we recommend that the Secretary of Energy, working with the
Administrator of the National Nuclear Security Administration, seek a
commitment for cost-sharing from the Russian government for future IPP
projects at Russian institutes.
To address a number of management issues that need to be resolved so
that the IPP program operates more effectively, we recommend that the
Secretary of Energy, working with the Administrator of the National
Nuclear Security Administration, immediately take the following eight
actions:
* establish a more rigorous, objective, and well-documented process for
verifying the WMD backgrounds and experiences of participating foreign
scientists;
* develop more reliable data on the commercialization results of IPP
projects, such as the number of jobs created;
* amend IPP program guidance to include a clear definition of what
constitutes a commercially successful IPP project;
* seek explicit congressional authorization to expand IPP efforts
outside of the former Soviet Union;
* for IPP efforts in Libya, ensure compliance with the statutory
restriction on the percentage of IPP program funds spent on oversight
activities at the DOE national laboratories to no more than 35 percent;
* develop clear and specific guidance for IPP projects that are
intended to support GNEP;
* streamline the process through which foreign scientists receive IPP
funds by eliminating unnecessary layers of review; and:
* seek to reduce the large balances of unspent funds associated with
the IPP program and adjust future budget requests accordingly.
Finally, we recommend that the Secretaries of Energy and State, working
with the Administrator of the National Nuclear Security Administration,
develop a joint plan to better coordinate the efforts of DOE's IPP
program and ISTC's Commercialization Support Program, which is funded
by State.
Agency Comments and Our Evaluation:
DOE and State provided written comments on a draft of this report,
which are presented in appendixes V and VI, respectively. DOE agreed
with 8 of our 11 recommendations to improve the overall management and
oversight of the IPP program, including augmenting the department's
process for reviewing the WMD backgrounds of IPP project participants
and developing more reliable data on the commercialization results of
IPP projects. DOE disagreed with 2 of our recommendations and neither
agreed nor disagreed with 1 recommendation. In addition, State
concurred with our recommendation to improve coordination between DOE's
IPP program and ISTC's Commercialization Support Program, which is
funded by State. DOE and State also provided technical comments, which
we incorporated in this report as appropriate.
In its comments on our draft report, DOE raised concerns about our
characterization of the IPP program's accomplishments, requirements,
and goals. DOE stated that we did not acknowledge actions the
department was undertaking during the course of our review and asserted
that our report does not provide a balanced critique of the IPP program
because we relied on an analysis of a judgmental sample of IPP projects
to support our findings. DOE also disagreed with our general conclusion
and recommendation that the IPP program needs to be reassessed. In
addition, DOE did not concur with our recommendation that the
department ensure compliance with the statutory restriction on the
percentage of IPP program funds spent on oversight activities at the
DOE national laboratories to no more than 35 percent. DOE neither
agreed nor disagreed with our recommendation that the department seek a
commitment for cost-sharing from the Russian government for future IPP
projects at Russian institutes.
DOE is incorrect in its assertions that we failed to acknowledge
actions it was undertaking during the course of our review, and that
our report does not provide a balanced critique of the IPP program. Our
report acknowledges actions DOE is taking to improve program
management, such as the development of a new program and financial
management system. Our review identified numerous problems and raised
concerns about the IPP program's scope, implementation, and performance
that we believe should be addressed by DOE as part of a reassessment of
the IPP program. However, DOE disagreed with our recommendation that
the IPP program needs to undergo such a reassessment and noted in its
comments that the department believes it has already conducted such an
assessment of the program. We were aware that such broad internal
reviews took place in 2004 and 2006, but these assessments were
conducted not of the IPP program exclusively, but rather of all DOE
efforts to assist weapons scientists, including a complementary DOE
program to assist workers in Russia's nuclear cities that has since
been canceled. As a result, we believe these assessments are outdated
because the IPP program operates under a significantly different set of
circumstances today than when DOE conducted its previous internal
assessments.
Finally, DOE disagreed with our recommendation that the department
ensure compliance with the statutory restriction on the percentage of
IPP program funds spent on oversight activities at the DOE national
laboratories to no more than 35 percent. We believe DOE has
misconstrued our recommendation concerning its funding of projects in
Libya. We did not recommend, nor did we mean to imply, that DOE should
allocate 65 percent of total project funds to Libya for projects in
that country. Instead, our recommendation urges the department to
ensure that it complies with existing statutory restrictions on the
percentage of IPP funds that can be spent on oversight activities by
DOE national laboratories. Specifically, as DOE notes, section 3136 of
the National Defense Authorization Act for Fiscal Year 2000 provides
that not more than 35 percent of funds available in any fiscal year for
the IPP program may be spent by DOE national laboratories to provide
oversight of program activities. DOE's IPP guidance and its standard
practice have been to implement this provision of law on a project-by-
project basis, so that no more than 35 percent of the funds for each
project are spent by national laboratories. However, with respect to
projects in Libya, DOE is deviating from its IPP guidance by placing no
restrictions on the amount of IPP program funds that can be spent at
DOE national laboratories for oversight of projects in Libya. We found
that 97 percent of funds DOE spent on projects in Libya through May
2007 were spent at DOE's national laboratories for project management
and oversight. (See app. V for DOE's comments and our responses.)
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to interested congressional committees; the Secretaries of Energy and
State; the Administrator, National Nuclear Security Administration; and
the Director, Office of Management and Budget. We will also make copies
available to others upon request. In addition, this report will be made
available at no charge on the GAO Web site at [hyperlink
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-3841 or aloisee@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. Major contributors to this report are
included in appendix VII.
Sincerely yours,
Signed by:
Gene Aloise:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Scope and Methodology:
To review the Initiatives for Proliferation Prevention (IPP) program,
we interviewed key officials and analyzed documentation, such as
program guidance, project proposals, and financial information from the
Departments of Energy (DOE), Defense, and State (State). We also
interviewed representatives from each of the 12 national laboratories-
-the Argonne, Brookhaven, Idaho, Lawrence Berkeley, Lawrence Livermore,
Los Alamos, National Renewable Energy, Oak Ridge, Pacific Northwest,
Sandia, and Savannah River National Laboratories and the Kansas City
Plant--that participate in the IPP program. Our interviews focused on
general program plans, strategies, and policies as well as issues
associated with specific IPP projects. We also interviewed and reviewed
documentation provided by the U.S. Civilian Research and Development
Foundation (CRDF) in Arlington, Virginia; the International Science and
Technology Center (ISTC) in Moscow, Russia; and the Science and
Technology Center in Ukraine (STCU) in Kyiv, Ukraine. We analyzed cost
and budgetary information from DOE, DOE's national laboratories, CRDF,
ISTC, and STCU. Furthermore, we interviewed knowledgeable officials on
the reliability of these data, including issues such as data entry,
access, quality control procedures, and the accuracy and completeness
of the data. We determined that these data were sufficiently reliable
for the purposes of this review.
We visited Russia and Ukraine to discuss the implementation of the IPP
program with officials and personnel involved in IPP projects. While in
Russia and Ukraine, we interviewed officials from 15 Russian and 7
Ukrainian institutes that participate in the IPP program. We met with
officials from the Federal Agency for Atomic Energy of the Russian
Federation, which oversees institutes involved in Russia's nuclear
weapons program. We also spoke with officials from the U.S. embassies
in Moscow and Kyiv.
Furthermore, we interviewed officials from 14 U.S. companies that
participate in the IPP program to better understand their perspectives
on the program's goals, benefits, and challenges, and the results of
specific projects for which they have served as industry partners. We
interviewed the principal staff of the U.S. Industry Coalition, which
represents companies that participate in the IPP program. We also met
with 5 nongovernmental experts who have followed developments in the
IPP and related nonproliferation programs to get their views on the
program.
To assess the reported accomplishments of the IPP program, we
judgmentally selected for in-depth review 207 IPP projects, including
draft, active, inactive, and completed projects, in the Thrust 1,
Thrust 2, and Thrust 3 categories. These 207 projects represented over
22 percent of the 929 total IPP projects through September 2007. Of the
projects that we reviewed, 180 were with Russia, 21 were with Ukraine,
3 were with Kazakhstan, and 3 were with Armenia.[Footnote 21] Because
these projects were a judgmental sample, the findings associated with
them cannot be applied generally to the IPP program as a whole.
We used the IPP information system to identify and select IPP projects.
This database, also referred to by DOE as the "Lotus Notes" system, was
developed and maintained by the Los Alamos National Laboratory and is
considered the program's project proposal management system. The system
contains data on all IPP projects, from draft proposals to completed
projects, and includes such information as the project description,
statement of work, information on participating scientists in the
former Soviet Union and the U.S. industry partner, and financial
expenditures. DOE notified us that it was developing a new IPP project
management database, known as the Expertise Accountability Tool
(EXACT), and that some IPP project information contained in Lotus
Notes--especially pertaining to project expenditures and the number of
scientists supported--might not be current, accurate, or complete.
However, DOE officials told us that the EXACT system was not available
during our project selection phase, and that it would not contain
information on completed IPP projects. As a result, we used the Lotus
Notes database to make our project selection.
We selected projects on the basis of a number of criteria, such as
project status, project funding, the type of institute involved in the
project, geographic distribution, national laboratory representation,
and the claimed commercial success of the project. We also received and
used recommendations from DOE on criteria to consider in selecting
projects for review.
The status and dollar size of IPP projects were significant
considerations in our project selection. For example, we focused
primarily on active projects--that is, Thrust 2 projects that were
approved, funded, or under way--regardless of their dollar value. We
also considered draft and inactive Thrust 2 projects where proposed
funding was over $800,000, as well as completed Thrust 1 and Thrust 2
projects that spent over $250,000. We also selected projects for review
across a variety of institutes in the former Soviet Union, including
facilities with backgrounds in nuclear, chemical, biological, and
missile research and development.
The foreign countries and institutes where we planned to conduct
fieldwork also played a significant role in our project selection. Time
and cost constraints, as well as Russian government restrictions on
access to some facilities, limited the number and types of sites we
were able to visit. We concentrated on projects at institutes in Russia
and Ukraine because over 90 percent of all IPP projects are in these
two countries. We focused on IPP projects at institutes in the Russian
cities of Moscow, Nizhny Novgorod, and Sarov because these cities
ranked high in our analysis of several variables, including the total
number of IPP projects, the number of projects supporting commercial
activities, and the total amount of funding proposed in IPP projects in
those locations.[Footnote 22] We also focused on projects in the
Ukrainian cities of Kyiv, because over 54 percent of IPP projects in
Ukraine are there, and Kharkiv, because of its relative proximity to
Kyiv and the number of projects there. We selected institutes in the
Russian and Ukrainian cities for site visits on the basis of several
criteria, including the total number of projects, the number of active
projects, the type of institute, and the number of projects
commercialized at each location.
We also selected projects administered by each of the national
laboratories and the Kansas City Plant that participate in the program
as well as projects managed by DOE headquarters. The selected projects
included 18 projects at Argonne, 22 at Brookhaven, 8 at Idaho, 18 at
Lawrence Berkeley, 33 at Lawrence Livermore, 14 at Los Alamos, 11 at
National Renewable Energy, 12 at Oak Ridge, 41 at Pacific Northwest, 15
at Sandia, and 2 at Savannah River; 9 projects at the Kansas City
Plant; as well as 4 projects managed by DOE headquarters.
The commercial success of an IPP project also played an important role
in its selection. For example, we selected for review all 50 projects
that DOE indicated as having led to commercially successful ventures
identified in its Fiscal Year 2005 IPP Program Annual Report. We were
able to review 48 of the 50 commercially successful projects with the
sponsoring national laboratory, Russian or Ukrainian institute, or
industry partner or some combination of these three entities. We also
reviewed 11 IPP projects that had been identified as commercially
successful in prior year annual reports, but that were not addressed in
the fiscal year 2005 report.
To assess the nonproliferation impact of the IPP program, we requested
and evaluated available information on the personnel at institutes in
the countries of the former Soviet Union participating in the projects
we selected for review. To determine the percentage of personnel
without weapons of mass destruction (WMD) experience, we added the
total number of project personnel who did not claim prior WMD
experience--based on the WMD experience codes the project personnel
self-declared to one of the three IPP payment systems--and divided this
figure against the total number of project participants. We followed a
similar process to calculate the percentage of older personnel versus
younger personnel. We classified workers born in 1970 or later as
younger workers because they were unlikely to have contributed to
Soviet-era WMD programs. We also calculated the total amount of funds
paid to these four different categories of participants--those claiming
WMD experience, those who did not, older workers, and younger
participants. In some cases, birth dates were not available for some
participants in the documentation we received; in those instances,
those individuals and the payments made to them were tracked in
separate categories.
We collected this information by providing officials at each of the 12
participating national laboratories with a template, requesting that
the laboratory project leader provide information on the personnel
involved in each project in our sample, including each participant's
full name, institute affiliation, date of birth, WMD experience, and
amount paid under the project. In instances where we did not receive
complete information from the laboratories, we used payment records and
other information on IPP project participants maintained by the three
payment mechanisms--CRDF, ISTC, and STCU--to complete data missing from
the templates, or to reconstruct payment records for the project
participants in cases where the national laboratory did not provide any
information on the project participants. Because of potential data
reliability concerns raised by CRDF on older IPP projects for which it
processed payments, we consulted with CRDF representatives and received
recommendations on specific projects that we should exclude from our
analysis.
Among the 207 IPP projects we reviewed, no payments had yet been made
on 42 projects and 14 projects were inactive. Of the remaining 151 IPP
projects in our sample, we determined that 54 projects were too old for
evaluation, because DOE did not collect rosters of individual project
participants before 2000, or that sufficient and reliable information
on the project participants was not readily available. Thus, our review
of the backgrounds of the participants was conducted on 97 of the 207
projects in our sample.
To assess the commercial results of IPP projects, we reviewed 48 of the
50 projects that contributed to the commercial successes presented in
DOE's fiscal year 2005 annual report for the IPP program, which was the
most recent report available at the time of our review. DOE provided us
with the list of IPP projects associated with those commercial
successes, and we reviewed and evaluated the raw data collected by the
U.S. Industry Coalition for each of those projects in its 2005
commercial success survey, which DOE used as the basis for the
commercial successes cited in its fiscal year 2005 IPP annual report.
In addition, for the 48 commercially successful projects we reviewed,
we interviewed representatives from the sponsoring national laboratory,
Russian or Ukrainian institute, or industry partner or some combination
of these three entities to understand the commercial activities and
other details associated with these projects. Specifically, we (1) met
or conducted telephone interviews with 12 companies involved in the
commercially successful projects, (2) interviewed representatives at
the national laboratories for 46 of the 50 projects reported to be
commercially successful, and (3) visited 6 of the institutes in Russia
and Ukraine where IPP projects were reported to have been
commercialized.
To assess the IPP program's future, we interviewed DOE and national
laboratory officials. We also assessed State's planned exit strategy
for its Science Centers program. We discussed State's strategy with
DOE, State, and ISTC officials. Regarding the IPP program's expansion,
we met with officials and reviewed documentation from DOE, State, and
the Lawrence Livermore, National Renewable Energy, and Sandia National
Laboratories concerning the engagement of former weapons scientists in
Iraq and Libya. Regarding the program's support to the Global Nuclear
Energy Partnership, we reviewed documents and interviewed officials
from the IPP program office, DOE national laboratories, and DOE's
Office of Nuclear Energy.
To assess the extent to which the IPP program has had annual carryover
balances of unspent funds and the reasons for such carryover, we
obtained financial data from DOE's IPP program office, DOE's National
Nuclear Security Administration's (NNSA) budget and finance office, and
the national laboratories participating in the program. We discussed
and reviewed these data with budget and program analysts at the IPP
program office and NNSA's budget and finance office. In addition, we
interviewed knowledgeable officials on the reliability of these data,
including issues such as data entry, access, quality control
procedures, and the accuracy and completeness of the data. We
determined that these data were sufficiently reliable for the purposes
of this review.
We conducted our review from October 2006 through December 2007 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Additional Information on the Russian and Ukrainian
Institutes That We Included in Our Fieldwork:
During our review of the DOE's IPP program, we interviewed officials
from 15 institutes in Russia and 7 in Ukraine in July 2007.
Russian Institutes:
In July 2007, we met with Russian scientists and officials from
institutes in Moscow, Nizhny Novgorod, Pushchino, and Troitsk, Russia,
to discuss draft, active, inactive, and completed IPP projects.
Center for Ecological Research and BioResources Development:
The Center for Ecological Research and BioResources Development was
established in 2000 through a $1.5 million grant from the IPP program.
It focuses on the discovery of novel bioactive compounds, biodiversity
collection and identification, and environmental bioremediation. The
center comprises 9 research institutes and is connected with 30
laboratories, with about 300 scientists. The center's role is to
coordinate the activities of the member institutes, organize workshops
and visits, consult on the administration of IPP projects, provide
report editing and translation, perform financial reporting and
examinations, and export biomaterials to the United States and
elsewhere. The center has shipped over 50,000 biological samples. We
discussed 5 IPP projects, including 2 completed, 2 active, and 1 draft
project. When we discussed IPP projects with the center,
representatives from 2 partner institutes--the Institute of
Biochemistry and Physiology of Microorganisms and the Scientific Center
for Applied Microbiology and Biotechnology--were also present.
Gamaleya Scientific Research Institute of Epidemiology and Microbiology:
The Gamaleya Scientific Research Institute of Epidemiology and
Microbiology was founded in 1891 for research into infectious diseases
in humans and manufactures more than 40 different pharmaceutical
products, including a tuberculosis vaccine. Gamaleya officials told us
that the institute employs 800 staff, including 120 scientists and 680
technicians and administrative personnel. We visited the institute
during our first audit of the IPP program in 1999. We spoke with
Gamaleya officials about 3 completed IPP projects. The institute is
involved in marketing a veterinary drug and is just starting to market
an antiparasite drug for honeybees. The third project is expected to
produce a marketable product in 2 to 3 years.
Institute for Nuclear Research of the Russian Academy of Sciences:
The Institute for Nuclear Research of the Russian Academy of Sciences,
with branches in Moscow and Troitsk, was founded in 1970 to further
development of fundamental research activities in the field of atomic,
elementary particle, and cosmic ray physics and neutrino astrophysics.
The institute, with a staff of about 1,300 specialists, was formed from
3 nuclear laboratories of the P.N. Lebedev Institute of Physics of the
former Soviet Union's National Academy of Sciences. About 600 people
work in the Troitsk branch of the institute. We spoke with institute
officials at this branch about 5 IPP projects--4 completed and 1
active. During the first audit of DOE IPP programs, in 1999, we visited
the Moscow branch of this institute.
Institute of Applied Physics of the Russian Academy of Sciences:
The Institute of Applied Physics of the Russian Academy of Sciences in
Nizhny Novgorod became an independent research facility in 1977. During
this time, its primary focus was working with transmitting and
detecting waves through different matters; in practical terms, this
included work for the Soviet military on radar tracking of missiles and
supporting Russian missile defense, materials science applications in
radioelectronic equipment, and submarine detection using radar.
Institute officials told us that since the beginning of the 1990s, the
institute has reduced its staff from about 2,000 employees, to roughly
1,100. However, it has retained a large number of top-level researchers
despite the fact that defense orders plummeted to zero. Officials told
us that the institute was in good shape today, has adapted to the
changing environment, and has created several successful spin-off
companies. We discussed 4 IPP projects with institute officials--1
completed, 1 active, and 2 draft.
Institute of Biochemistry and Physiology of Microorganisms:
The Institute of Biochemistry and Physiology of Microorganisms is 1 of
4 research institutes that make up the Center for Ecological Research
and BioResources Development. This institute is not a weapons institute
and never had a role in the Soviet biological weapons program. However,
institute officials noted that some scientists at the institute had
come from other institutes that were involved in biological warfare
research. The institute is home to the "All Russia Biological Culture
Collection." We discussed 3 IPP projects--1 completed, 1 active, and 1
draft--with officials from the institute. These were 3 of the 4 IPP
projects we discussed at the Center for Ecological Research and
BioResources Development.
Institute of General Physics of the Russian Academy of Sciences:
The Institute of General Physics of the Russian Academy of Sciences was
founded in 1983 by Nobel Prize winner Academician A.M. Prokhorov, who
headed it until 1998 and now serves as the institute's honorary
director. The institute began as Division "A" of the Lebedev Physical
Institute. It currently consists of 13 research departments and 5
research centers: (1) natural sciences, (2) laser materials and
technologies, (3) wave research, (4) fiber optics, and (5) physical
instrumentation. The institute has a staff of 1,264, including 600
researchers. Its principal research areas encompass quantum electronics
and optics, solid state physics, micro-and nanoelectronics, integral
and fiber optics, plasma physics and photoelectronics, radio physics
and acoustics, laser medicine, and ecology. We discussed 6 IPP projects
with institute officials--4 completed and 2 active.
Krasnaya Zvezda (Red Star):
Krasnaya Zvezda was established in 1972 to combine other organizations
that employed designers, developers, and manufacturers of space-based
nuclear power systems. Krasnaya Zvezda officials told us that they
continue to do some defense-related work. However, the institute now
mostly focuses on the civilian sector and work on civilian nuclear
energy projects, including radioactive waste management at civilian
nuclear power plants. The financial situation has been relatively
steady over the past years and officials anticipate that with the
reorganization of the Federal Agency for Atomic Energy of the Russian
Federation, Krasnaya Zvezda will be involved in many future civilian
nuclear energy contracts. Krasnaya Zvezda maintains a close
relationship with the Kurchatov Institute. We discussed 5 IPP projects-
-3 completed and 2 draft--with Krasnaya Zvezda officials.
Kurchatov Institute:
The Kurchatov Institute is one of Russia's leading nuclear research
institutes. Through the mid-1950s, defense activities represented more
than 80 percent of the institute's budget. By 1965, the defense portion
had been reduced to about 50 percent, and, although Kurchatov has
scientists who were involved with nuclear weapons programs in the past,
today there are virtually no defense-related contracts. The institute
conducts research on controlled thermonuclear fusion, plasma physics,
solid state physics, and superconductivity. It designs nuclear reactors
for the Russian Navy, the Russian icebreaker fleet, and space
applications. Nuclear experts from the Kurchatov Institute have helped
set up and operate Soviet-exported research reactors, including one at
Libya's Tajura nuclear research center. In addition, the Kurchatov
Institute is the subcontractor for DOE's Material Protection, Control,
and Accounting program with the Russian Navy and icebreaker fleet. We
discussed 10 IPP projects with Kurchatov officials--7 completed and 3
active. In 1999, we visited the Kurchatov Institute during our first
audit of DOE's IPP program.
Moscow State University:
One of the oldest Russian institutions of higher education, Moscow
State University was established in 1755. According to DOE and national
laboratory officials, Moscow State University departments of physics,
chemistry, and biology were involved in research related to WMD.
Specifically, according to DOE, when the Soviet Ministry of Defense
needed certain expertise or research done, it called upon individuals
at academic institutions, such as Moscow State University. We discussed
1 project DOE subsequently canceled and 1 draft IPP project with Moscow
State University officials.
Radiophysical Research Institute:
The Radiophysical Research Institute of the Ministry of Education and
Science was founded in 1956 in Nizhny Novgorod. Since then outreach
efforts have been directed toward (1) supporting research in the fields
of natural sciences and astronomy and (2) expanding interest in
research work in such areas as astronomy, solar physics, the
relationship between the Sun and the Earth, and the associated
geophysics. We spoke with an official from the Radiophysical Research
Institute, who was present during our interview with officials from the
Scientific Research Institute of Measuring Systems. We discussed 1
project that ended in 2002 with this official.
Scientific Research Institute of Measuring Systems:
The Scientific Research Institute of Measuring Systems in Nizhny
Novgorod, Russia, was established in 1966 to develop and produce
electronics to support industry enterprises, including nuclear power
plants as well as nuclear research and developments. Today, the
institute researches, designs, and manufactures computer and
semiconductor equipment, mostly for use in the Russian energy industry.
The institute also develops and manufactures software and control
systems for gas lines, and thermal and nuclear power stations. We
discussed 3 IPP projects with officials--1 active and 2 completed
projects.
Afrikantov Experimental Machine Building Design Bureau:
The State Unitary Enterprise I.I. Afrikantov Experimental Machine
Building Design Bureau was founded in 1947 as a component of the Gorky
Machine Building Plant Design Bureau to create equipment for nuclear
industry. Later, as the mission expanded to the creation of various
nuclear reactors, the design bureau was separated from the Gorky
Machine Building Plant. Currently, the Afrikantov Experimental Machine
Building Design Bureau employs about 3,400 staff and is one of the lead
design organizations in the industry, supporting a large scientific and
production center for nuclear power engineering. Since the 1960s, the
institute has been the chief designer of ship-based reactor plants and
fast neutron reactors. One of the institute's significant achievements
is the creation of innovative integral reactors with natural and forced
coolant circulation. The institute actively participates in the
creation of nuclear power installations abroad and has scientific and
technical cooperative arrangements with the International Atomic Energy
Agency, and national laboratories and companies in China, France,
India, Japan, South Korea, and the United States. We discussed 2 draft
IPP projects with officials from the institute.
Soliton-NTT Research Center:
Soliton is a private company that was spun off from the Kurchatov
Institute in the early 1990s. Soliton was formed by scientists from the
Kurchatov Institute to convert defense technologies to civil purposes
and to commercialize these technologies. Before working for Soliton,
many Soliton employees were involved in weapons-related activities at
the Kurchatov Institute, and most still retain some ties to Kurchatov.
Soliton has official permission to use scientists from other institutes
as part of the effort to commercialize former weapons laboratories.
Soliton was organized so that small-scale nonweapons projects could be
undertaken using the talents of several weapons scientists from a
variety of institutes. We discussed 6 IPP projects with Soliton
officials--5 completed and 1 active.
Russian Federal Nuclear Center--All-Russian Scientific Research
Institute of Experimental Physics:
In 1946, the Soviet government established the All-Russian Scientific
Research Institute of Experimental Physics in Sarov, where the first
Soviet nuclear bomb was designed and assembled. In Soviet times, the
institute's mission included the design of nuclear warheads and the
development of experimental and prototype warheads. Today, the safety
and reliability of the Russian nuclear stockpile are the institute's
primary missions. According to information provided by the institute,
since 1990, it has increasingly developed international collaboration
in unclassified science and technology areas. The institute employs
about 24,000 people, approximately half of whom are scientists or
engineers, and is the largest research institution in Russia that
successfully handles defense, science, and national economic problems.
Under the current nuclear testing moratorium, nuclear weapons research
and development activities are concentrated at computational and
theoretical, design, and test divisions of the institute. During our
earlier audit of DOE's IPP program, we interviewed officials from this
institute in 1998. We discussed 10 IPP projects--5 active and 5
completed--with institute officials.
Zelinsky Institute of Organic Chemistry:
The Zelinsky Institute of Organic Chemistry of the Russian Academy of
Sciences, founded in 1934, is one of the world's largest scientific
centers in the fields of organic chemistry, organic catalysis, and
chemistry of biologically active compounds. It employs about 600
people, although it had over 1,300 at its peak in the 1980s. In
addition, about 150 students are engaged in graduate studies at the
institute. Officials told us that until the early 1990s, the institute
was involved in some defense-related activities, but it has not been
involved in any WMD-related work since the early 1990s. The institute
mostly worked on research related to high explosives and solid rocket
fuel (not chemical weapons). We discussed 3 IPP projects--2 completed
and 1 canceled--with institute officials.
Ukrainian Institutes:
While in Ukraine, we met with representatives from 7 institutes based
in Dnipropetrovsk, Kharkiv, and Kyiv and discussed 18 IPP projects with
scientists and institute officials.
E.O. Paton Electric Welding Institute:
The E.O. Paton Electric Welding Institute was founded in 1934, and has
become one of the largest research institutes in the world, with about
8,000 employees (3,000 at the headquarters in Kyiv). The institute is a
multidisciplinary scientific and technical complex involved in
fundamental and applied research in the field of welding and related
technologies; development of technologies, materials, equipment, and
control systems; rational welded structures and parts; and methods and
means for diagnostics and nondestructive testing. The institute
undertakes research in all phases of electric welding and certain
specialized related processes, such as brazing, explosive forming,
electrometallurgy, and friction welding. The institute's work covers
welding of virtually all metals and alloys as well as ceramics in
thicknesses varying from submicron to tens of centimeters. The
institute also develops welding equipment, manufactures pilot plants,
and develops welding consumables. We discussed 7 IPP projects--4
completed and 3 active--with E.O. Paton officials and Pratt and Whitney
Kyiv employees at 3 Paton facilities in Kyiv.
International Center for Electron Beam Technology:
The International Center for Electron Beam Technology is a spin-off
institute from the E.O. Paton Welding Institute and is located nearby
in Kyiv. The center derives more than half of its funding from IPP
funds and was created in the early 1990s by Paton employees
specifically to take on projects with international organizations.
According to institute officials, they do not receive any funding for
their activities from the Ukrainian government. However, they also told
us that financially, their situation is much better than 14 years ago,
but that all of their research equipment is out of date. All of the IPP
funds are used to pay scientists' salaries, and they do not have other
funds for new equipment. We discussed 2 IPP projects--1 completed and 1
active--during the interview.
Institute for Metal Physics:
The Institute for Metal Physics is part of the Ukrainian Academy of
Sciences and employs about 600 staff--about half researchers and half
support staff. The number of staff is down from a peak of 1,600 in
Soviet times but has been stable for the past 5 to 6 years, according
to institute officials. These officials told us that during the Soviet
era, about 80 percent of the institute's work was related to missile
delivery systems. The institute became completely divorced from weapons
work in the mid 1980s. Today, virtually all work is commercial. During
our visit, we discussed 1 active IPP project.
International Institute of Cell Biology:
The International Institute of Cell Biology is a nonprofit entity
founded in 1992 by the Ukrainian Academy of Sciences. The International
Institute of Cell Biology employs about 150 people, about one third of
whom have doctorates. It is closely affiliated with the Institute of
Cell Biology and Genetic Engineering, founded in 1988, and the
Institute of Microbiology and Virology founded in 1928. The Institute
of Cell Biology and Genetic Engineering is one of the key laboratories
involved with plant genetic engineering in the former Soviet Union and
offers substantial expertise in tissue culture initiation, preservation
and maintenance, and gene transfer and expression. The Institute of
Microbiology and Virology, with about 300 scientists, hosts the second
largest collection of microorganisms in the countries of the former
Soviet Union. The official we interviewed told us that the Institute of
Microbiology and Virology was involved in defense efforts involving
biological agents during Soviet times. Researchers from both of these
institutes were involved in the International Institute of Cell
Biology's work with the IPP program. The deputy director told us that
there has been a significant brain drain over the years. Over the last
15 years, 50 scientists left the institute and went to western-oriented
countries, such as Germany and Australia. We discussed 1 completed IPP
project. However, the deputy director told us that he is planning to
apply for 2 more projects in the future.
Intertek, Ltd.
Registered as a private company in 2000, Intertek, Ltd., was founded by
a man who was a professor of Aircraft Engines and Technology at the
National Aerospace University in Kharkiv until 2004. We discussed an
IPP project, at the draft stage, with Intertek's director and a
representative from a partner institute, the State Design Office
Yuzhnoye. The director told us that Intertek currently employs about 15
people and would expand to 40 if the IPP project starts up. Most of the
staff would be drawn from the National Aerospace University in Kharkiv.
Kharkov Institute of Physics and Technology:
Kharkov Institute of Physics and Technology, one of the oldest and
largest centers for physical science in Ukraine, was created in 1928 to
research nuclear and solid-state physics. The institute, located in
Kharkiv, Ukraine, currently has 2,500 employees, down from about 6,500
employees before 1991. Many young specialists left during the difficult
financial period of the late 1990s for Brazil, Canada, France, Germany,
Israel, the Netherlands, Sweden, the United Kingdom, and the United
States. Institute officials are not aware of any specialists who have
either left Ukraine for a country of concern or provided any
information to such a country. Since 2004, the institute has been under
the Ukrainian Academy of Sciences and is Ukraine's lead organization on
scientific programs for nuclear and radiation technologies. The
institute's economic condition has significantly improved over the past
10 years. It is receiving more direct funding from the Ukrainian
federal budget and also receives grants from U.S. and European
programs. Assistance partners include STCU and IPP. IPP funding makes
up no more than 2 percent of the total budget. We discussed 6 IPP
projects--1 draft, 2 active, and 3 completed--with institute officials.
State Design Office Yuzhnoye:
The State Design Office Yuzhnoye in Dnipropetrovsk was founded in 1954
for researching and engineering space and rocket technology. The
institute has designed and manufactured many varieties of ballistic
missile complexes, and designed and launched 70 types of spacecraft.
Once Ukraine gained its independence in 1991, Yuzhnoye, the sole Soviet
missile design facility located outside of the Russian Federation,
discontinued its work on ballistic missiles. However, since 1994,
Yuzhnoye personnel, under a contract with the Russian Strategic Rocket
Forces, have continued to provide a wide range of services aimed at
extending the service life of those missile complexes still in use. In
addition, the institute has diversified its production to include
agricultural machinery, such as combines; a line of food processing
accessories; and trolleys. We met with an official from Yuzhnoye during
our interview with Intertek, Ltd., and discussed 1 draft IPP project on
which the 2 institutes are collaborating.
[End of section]
Appendix III: Classification Systems Used to Assess IPP Project
Participants' Knowledge of Weapons of Mass Destruction:
This appendix provides information on the classification systems DOE
and the three entities that make IPP project payments to recipients in
Russia and other countries use to classify the WMD expertise of the
personnel participating in an IPP project.
DOE, for example, classifies personnel into one of three categories:
1. Direct experience in WMD design, production, or testing.
2. Experience in research and development of WMD underlying technology.
3. No WMD-relevant experience.
DOE also requires that a preponderance of staff working on its projects
have had WMD-relevant experience before 1991 (i.e., fall in categories
1 or 2 above). According to DOE, "the meaning of 'preponderance' is
taken to be 60 percent, as a bare minimum. Two thirds would be better,
and anything above that better still."
There is no consistent approach to categorizing the proposed project
personnel by the national laboratories in the lists they submit in the
proposal to DOE for review. In some cases, the proposed personnel are
categorized using the DOE classifications. But in other cases, the
individuals in the project proposal are classified using weapons
experience codes of the intended payment mechanism. Some IPP project
proposals classify personnel using both the DOE categories and the
payment system codes.
Each of the three payment entities have similar but slightly different
lists of weapons experience codes that personnel on an IPP project use
to designate their relevant WMD background. See table 2 for the weapons
codes used by CRDF, ISTC, and STCU, by general type of weapons
expertise.
Table 2: CRDF, ISTC, and STCU Weapons Expertise Classification Codes:
General weapons expertise category: Biological;
CRDF weapons expertise codes:
C1: Design and performance of missile warheads and rockets for delivery
of biological weapons;
C2: Biopolymer production related to biological warhead capabilities;
C3: Dissemination of biological weapon agents;
C4: Basic knowledge of biological weapons design and their effect on
the human system;
ISTC weapons expertise codes:
3.1: Design and performance of missile warheads and rockets for
delivery of biological weapons;
3.2: Biopolymer production related to biological warhead capabilities;
3.3: Dissemination of biological weapon agents;
3.4: Basic knowledge of biological weapons design and their effect on
the human system;
STCU weapons expertise codes:
1.3: Mass destruction weapon” bacteriological.
General weapons expertise category: Chemical;
CRDF weapons expertise codes:
B1: Design and performance of missile warheads and rockets for delivery
of chemical weapons;
B2: Materials, facilities, and performance processes needed for the
production of chemical weapon agents and their key precursors;
B3: Dissemination of chemical weapon agents;
B4: Basic knowledge of chemical weapons design and their effect on the
human system;
ISTC weapons expertise codes:
2.1: Design and performance of missile warheads and rockets for
delivery of chemical weapons;
2.2: Materials, facilities, and performance processes needed for the
production of chemical weapon agents and their key precursors;
2.3: Dissemination of chemical weapon agents;
2.4: Basic knowledge of chemical weapons design and their effect on the
human system;
STCU weapons expertise codes:
1.2: Mass destruction weapon”chemical.
General weapons expertise category: Missile/Anti-Ballistic Missile
Systems;
CRDF weapons expertise codes:
A1: Design, construction, and performance of air, space, surface, and
underwater-launched missiles. Materials and technologies for these
missiles. Production of engines, fuels, composites, integrated
elements, radioelectronic equipment, and different testing devices for
missiles;
A2: Techniques for guidance and control of missiles from launching to
impact. Includes optical guidance, television guidance, wire guidance,
present and terminal guidance, internal guidance, command guidance, and
homing guidance;
A3: Missile handling and launching, including transportation, storage,
and preparation for launching; air, space, surface, and underwater
launching and support equipment and technologies; checkout equipment
and procedures; guided missile ranges;
A4: Techniques and systems for tracking missiles as defensive measures.
Can be from surface installations or air and space-borne platforms;
ISTC weapons expertise codes:
1.1: Design, construction, and performance of air, space, surface, and
underwater-launched missiles. Materials and technologies for these
missiles. Production of engines, fuels, composites, integrated
elements, radioelectronic equipment, and different testing devices for
missiles;
1.2: Techniques for guidance and control of missiles from launching to
impact. Includes optical guidance, television guidance, wire guidance,
present and terminal guidance, internal guidance, command guidance, and
homing guidance;
1.3: Missile handling and launching, including transportation, storage,
and preparation for launching; air, space, surface, and underwater
launching and support equipment and technologies; checkout equipment
and procedures; guided missile ranges;
1.4: Techniques and systems for tracking missiles as defensive
measures. Can be from surface installations or air and space-borne
platforms;
STCU weapons expertise codes:
2.1: Delivery systems”missile technologies;
2.2: Delivery systems”guiding systems;
2.3: Delivery systems”others;
3.1: Anti-Ballistic Missile systems”recognition systems;
3.2: Anti-Ballistic Missile systems”guiding systems;
3.3: Anti-Ballistic Missile systems”others.
General weapons expertise category: Nuclear;
CRDF weapons expertise codes:
D1: Basic knowledge of nuclear weapons design, construction,
characteristics, and the effect on the human system;
D2: Design, construction, and performance of missile warheads for
delivery of nuclear weapons;
D3: Design, construction, and performance of the equipment and
components of Uranium and Plutonium separation;
D4: Design, construction, and performance of the equipment connected
with heavy water production;
D5: Design, construction, and performance of the equipment for
development of detonators;
D6: Design, construction, and performance of explosive substances and
related equipment;
D7: Design, construction, and performance of the equipment and
components for nuclear testing;
D8: Design, construction, performance, and operation of production-type
nuclear reactors for fissile and tritium-content materials production
(breeding);
D9: Design, construction, and performance of nuclear reactors and units
for submarine and for military space programs;
ISTC weapons expertise codes:
4.1: Basic knowledge of nuclear weapons design, construction,
characteristics, and the effect on the human system;
4.2: Design, construction, and performance of missile warheads for
delivery of nuclear weapons;
4.3: Design, construction, and performance of the equipment and
components for Uranium and Plutonium separation;
4.4: Design, construction, and performance of the equipment connected
with heavy water production;
4.5: Design, construction, and performance for development of
detonators;
4.6: Design, construction, and performance of explosive substances and
related equipment;
4.7: Design, construction, and performance of the equipment and
components for nuclear testing;
4.8: Design, construction, performance, and operation of production-
type nuclear reactors for fissile and tritium-content materials
production (breeding);
4.9: Design, construction, and performance of nuclear reactors and
units for submarine and for military space programs;
STCU weapons expertise codes:
1.1: Mass destruction weapon”nuclear.
General weapons expertise category: Other;
CRDF weapons expertise codes:
E1: Design, construction, and performance of powerful laser facilities
for military applications;
E2: Design, construction, and performance of accelerator facilities for
military applications in space programs;
E3: Other;
ISTC weapons expertise codes:
5.1: Design, construction, and performance of powerful laser facilities
for military applications;
5.2: Design, construction, and performance of accelerator facilities
for military applications in space programs;
STCU weapons expertise codes:
1.4: Mass destruction weapon”others;
4: Other weapons.
General weapons expertise category: No Weapons Experience;
CRDF weapons expertise codes: No code for personnel not claiming
weapons experience;
ISTC weapons expertise codes: No code for personnel not claiming
weapons experience;
STCU weapons expertise codes:
0: Non-former weapon scientist.
Sources: CRDF, ISTC, and STCU.
[End of table]
[End of section]
Appendix IV: IPP Projects DOE Reported to Be Commercially Successful:
Table 3 provides information on the 50 IPP projects DOE indicated as
contributing to commercial successes in its Fiscal Year 2005 IPP
Program Annual Report.
Table 3: DOE Projects Listed as Contributing to Commercial Successes in
DOE's Fiscal Year 2005 IPP Program Annual Report:
Project title: Nanophase Powders;
Project number(s): LANL-T2-0148-RU; LANL-T2-0190-RU;
U.S. companies: Argonide Corporation;
Lead DOE national laboratory: Los Alamos;
Lead foreign institute(s): Institute of Petroleum Chemistry and
Institute of Strength Physics and Materials Science, Russia.
Project title: Ceramic Nanofibers;
Project number(s): NREL-T2-0200-RU; NREL-T2-0200a-RU;
U.S. companies: Argonide Corporation;
Lead DOE national laboratory: National Renewable Energy;
Lead foreign institute(s): Institute of Strength Physics and Materials
Science, and State Research Center of Virology and Biotechnology,
Russia.
Project title: Positron Emission Tomography;
Project number(s): LANL-T2-0164-RU; LANL-T2-0193-RU; LANL-T3-0400-RU;
U.S. companies: Technology Commercialization International;
Lead DOE national laboratory: Los Alamos;
Lead foreign institute(s): Institute of Nuclear Research, Russia.
Project title: Positron Emission Tomography;
Project number(s): BNL-T2-0306-RU;
U.S. companies: Technology Commercialization International;
Lead DOE national laboratory: Brookhaven;
Lead foreign institute(s): Institute of Nuclear Research, Russia.
Project title: Molybdenum-99 from Solution Reactor;
Project number(s): ANL-T2-0210A-RU;
U.S. companies: Technology Commercialization International;
Lead DOE national laboratory: Argonne;
Lead foreign institute(s): Kurchatov Institute of Atomic Energy,
Russia.
Project title: Ferrolectric Phase Shifters for Cellular and Personal
Communications Systems Phased Array Antenna;
Project number(s): NREL-T2-0191-RU; NREL-T2-0208-RU;
U.S. companies: Paratek Microwave;
Lead DOE national laboratory: National Renewable Energy;
Lead foreign institute(s): St. Petersburg Electrotechnical University,
Russia.
Project title: Soil and Water Remediation at Contaminated Sites Using
Humosorb;
Project number(s): ORS-T2-0078-RU;
U.S. companies: Stable Earth Technology, Electro-Physical and Acoustic
Technologies, Ltd.;
Lead DOE national laboratory: Oak Ridge;
Lead foreign institute(s): Electro-Physical and Acoustic Technologies,
Ltd., Russia.
Project title: Land Mine Detectors;
Project number(s): SNL-T2-0194-RU;
U.S. companies: Stolar Research Corporation;
Lead DOE national laboratory: Sandia;
Lead foreign institute(s): Spektr-Konversia, Russia.
Project title: Radar Mapping of Geologic Structures from Drills;
Project number(s): KCP-T2-0225-RU;
U.S. companies: Stolar Research Corporation;
Lead DOE national laboratory: Kansas City Plant;
Lead foreign institute(s): Measuring Systems Research Institute,
Russia.
Project title: Electron Beam Welding;
Project number(s): LBNL-T1-0017-RU; LBNL-T2-0110-RU; LBNL-T2-0110A-RU;
U.S. companies: Phygen Corporation;
Lead DOE national laboratory: Lawrence Berkeley;
Lead foreign institute(s): All-Russian Scientific Research Institute of
Inorganic Materials--Siberia Branch, Institute of High Current
Electronics, and Tomsk State University of Control Systems and
Radioelectronics, Russia.
Project title: Thorium Power Cycle;
Project number(s): BNL-T2-0074-RU; BNL-T2-0074a-RU; BNL-T2-0074b-RU;
U.S. companies: Thorium Power Company;
Lead DOE national laboratory: Brookhaven;
Lead foreign institute(s): Kurchatov Institute of Atomic Energy and
Electrostal, Russia.
Project title: Software Developer Training;
Project number(s): LLNL-T2-0236-RU; DOEH-T2-0003-RU;
U.S. companies: No Partner;
Lead DOE national laboratory: Lawrence Livermore and DOE Headquarters;
Lead foreign institute(s): Kurchatov Institute of Atomic Energy,
Russia.
Project title: Copper-Beryllium Alloy;
Project number(s): LANL-T2-0195-KZ;
U.S. companies: RWE Nukem, Inc. and Brush-Wellman;
Lead DOE national laboratory: Los Alamos;
Lead foreign institute(s): Ulba Metallurgical Plant, Kazakhstan.
Project title: Uranium Dioxide Powder;
Project number(s): BNL-T2-0308-KZ;
U.S. companies: RWE Nukem, Inc. and Global Nuclear Fuels;
Lead DOE national laboratory: Brookhaven;
Lead foreign institute(s): Ulba Metallurgical Plant, Kazakhstan.
Project title: Needleless Injectors;
Project number(s): KCP-T2-0221-RU;
U.S. companies: Felton International, Inc.;
Lead DOE national laboratory: Kansas City Plant;
Lead foreign institute(s): Chemical Automatics Design Bureau, Russia.
Project title: Turbine Airfoil Repair;
Project number(s): ORS-T2-0204-UA;
U.S. companies: Pratt and Whitney/United Technologies Corporation;
Lead DOE national laboratory: Oak Ridge;
Lead foreign institute(s): Paton Electric Welding Institute, Ukraine.
Project title: Unique Russian Crusher Design for Metal Recycling;
Project number(s): ORS-T2-0107-RU; ORS-T2-0180-RU;
U.S. companies: Rustec, Inc.;
Lead DOE national laboratory: Oak Ridge;
Lead foreign institute(s): Association of Centers for Engineering and
Automation, Russia.
Project title: Stable Isotopes Carbon-13 and Oxygen-18 for Medical
Applications;
Project number(s): LLNL-T2-0234-RU;
U.S. companies: Spectra Gases;
Lead DOE national laboratory: Lawrence Livermore;
Lead foreign institute(s): Kurchatov Institute of Atomic Energy,
Moscow, Russia.
Project title: Electrochemical Process for Removal of Heavy Metals from
Wastewater;
Project number(s): BNL-T2-0307-RU;
U.S. companies: Fenix Technology International;
Lead DOE national laboratory: Brookhaven;
Lead foreign institute(s): Ural Process Engineering, Ltd., and the All-
Russian Scientific Research Institute of Technical Physics, Russia.
Project title: Linear Ion Source;
Project number(s): BNL-T1-0012-RU; BNL-T1-0012a-RU;
U.S. companies: No Partner;
Lead DOE national laboratory: Brookhaven;
Lead foreign institute(s): Institute of Electrophysics, Russia.
Project title: Step-by-Step Deformation of Metal Alloys;
Project number(s): SNL-T1-0084-RU;
U.S. companies: No Partner;
Lead DOE national laboratory: Sandia;
Lead foreign institute(s): Chelyabinsk State University of Technology,
Russia.
Project title: Crop Protection Products;
Project number(s): PNNL-T2-0194-UA; PNNL-T2-0195-RU;
U.S. companies: Dupont;
Lead DOE national laboratory: Pacific Northwest;
Lead foreign institute(s): Ukraine Institute of Organic Chemistry,
Ukraine, and Experimental Plant for the Design and Manufacturing of
Scientific Equipment, Russia.
Project title: Crop Protection Products;
Project number(s): LBNL-T2-0193-RU;
U.S. companies: Dupont;
Lead DOE national laboratory: Lawrence Berkeley;
Lead foreign institute(s): State Research Center of Virology and
Biotechnology, Russia.
Project title: Explosives Detection and Other Proton Beam Based
Applications;
Project number(s): BNL-T2-0320-RU;
U.S. companies: Brookhaven Technology Group;
Lead DOE national laboratory: Brookhaven;
Lead foreign institute(s): Budker Institute of Nuclear Problems,
Russia.
Project title: Biodegradation of Oil Spills;
Project number(s): PNNL-T2-0202-RU;
U.S. companies: Dye Seed Ranch;
Lead DOE national laboratory: Pacific Northwest;
Lead foreign institute(s): JSC BioKhimMash, Russia.
Project title: Recombinant Luciferase for Photometric Detectors;
Project number(s): PNNL-T2-0217-RU;
U.S. companies: New Horizons Diagnostics;
Lead DOE national laboratory: Pacific Northwest;
Lead foreign institute(s): Gamaleya Institute of Epidemiology and
Microbiology, and Moscow State University, Russia.
Project title: Biosensors for Detection of Neurotoxins;
Project number(s): PNNL-T2-0203-RU;
U.S. companies: New Horizons Diagnostics;
Lead DOE national laboratory: Pacific Northwest;
Lead foreign institute(s): State Research Institute of Organic
Chemistry and Technology, and Moscow State University, Russia.
Project title: Laser Diode Spectroscopy;
Project number(s): BNL-T2-0318-RU;
U.S. companies: Canberra Aquila;
Lead DOE national laboratory: Brookhaven;
Lead foreign institute(s): General Physics Institute, Russia.
Project title: Comprehensive Asset Tracking;
Project number(s): BNL-T2-0131-RU; BNL-T2-0131a-RU; BNL-T2-0131b-RU;
BNL-T2-0314-RU;
U.S. companies: Canberra Aquila;
Lead DOE national laboratory: Brookhaven;
Lead foreign institute(s): General Physics Institute, Russia.
Project title: Chemical Kinetics Software for Reactor and Process
Design;
Project number(s): PNNL-T2-0246-RU;
U.S. companies: Freescale Semiconductor, Inc.;
Lead DOE national laboratory: Pacific Northwest;
Lead foreign institute(s): Kintech Kinetic Technologies, Russia[A].
Project title: Proprietary Information;
Project number(s): One project;
U.S. companies: Not Disclosed;
Lead DOE national laboratory: Pacific Northwest;
Lead foreign institute(s): Not Disclosed.
Project title: Proprietary Information;
Project number(s): Three projects;
U.S. companies: Not Disclosed;
Lead DOE national laboratory: Lawrence Livermore and Pacific Northwest;
Lead foreign institute(s): Not Disclosed.
Source: GAO analysis of DOE and U.S. Industry Coalition data.
[A] Kintech Kinetic Technologies is a spin-off company of the Kurchatov
Institute of Atomic Energy.
[End of table]
[End of section]
Appendix V: Comments from the Department of Energy:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
Department of Energy:
National Nuclear Security Administration:
Washington, DC 20585:
November 21, 2007:
Mr. Gene Aloise:
Director:
Natural Resources and Environment:
U.S. Government Accountability Office:
Washington, D.C. 20548:
Dear Mr. Aloise:
The National Nuclear Security Administration (NNSA) appreciates the
opportunity to review the Government Accountability Office's (GAO)
draft report, GAO-08-189, "Nuclear Nonproliferation: DOE's Program to
Assist Weapons Scientists in Russia and Other Countries Needs to Be
Reassessed." We understand that GAO conducted this audit at the request
of the House's Committee on Homeland Security to determine generally
the accomplishments for the audited program.
The NNSA disagrees with the general conclusion as stated by GAO that
leads to a program reassessment and justification of the program. We
agree with the perceived intent of GAO that it is always important to
review the goals of a program to ensure relevance. In that regard, NNSA
does agree with GAO and wants to make a special note that the Global
Initiatives for Proliferation Prevention (GIPP) program went through a
complete justification assessment at the request of the Administrator.
The Administrator has determined that the program is justified and
continues to support the program to Congress as evidenced in the annual
budget planning and programming cycle. In that regard we consider that
we have answered GAO's basic recommendation to reassess and justify the
program. With regard to the other recommendations to: [See comment 1]
* Establish a more rigorous, objective, and well-documented process for
verifying the WMD backgrounds and experiences of participating foreign
scientists.
We agree that the review process needs better documentation. We will,
however, continue to include the informed judgments of our Laboratory
experts, particularly those who have, or had in the past, direct access
to foreign institutes and personnel.
* Develop more reliable data on the commercialization results of IPP
projects, such as the number of jobs created.
We agree with the benefit of improved data collection. As we explained
to the auditors, the metric that was used is a metric that was
developed for a since terminated program. We will establish and
implement a more relevant metric.
*Amend IPP program guidance to include a clear definition of what
constitutes a commercially successful IPP project.
We will include the definition in our guidance in the future.
* Seek explicit congressional authorization to expand IPP efforts
outside the former Soviet Union.
We are already in the process of seeking congressional authorization to
expand our efforts outside the Former Soviet Union. (Note: This could
also be considered a validation of the program justification).
* For IPP efforts in Libya, ensure compliance with the statutory
restriction on the percentage of IPP program funds spent on oversight
activities at the DOE national laboratories to no more than 35%.
NNSA does not concur with this recommendation. The reasons for our
disagreement were explained previously to GAO management.
* Develop clear and specific guidance for IPP projects that are
intended to support GNEP.
NNSA agrees that it is prudent to have clear guidance when the results
of one program support the goals of another. Since GNEP is an evolving
initiative, it is premature for us to develop IPP project guidance.
However, once the GNEP initiative is mature enough, NNSA will consider
any appropriate actions that may support the GNEP initiative.
* Streamline the process through which foreign scientists receive IPP
funds by eliminating unnecessary layers of review.
NNSA will certainly streamline appropriately the overall process for
funding foreign scientists.
* Seek to reduce large balances of unspent funds associated with the
IPP program and adjust future budget requests accordingly
We have reduced our uncosted balances over the past two years, with
ambitious targets for the future. The Department takes this problem
seriously, as evidenced by the commitment to streamlining the GIPP
payment process and establishing a more detailed financial and program
tracking database.
NNSA also has general comments because we do not believe that the body
of this report substantiates the critical claims and observations. For
example:
* The GAO questions the level and number of WMD experts engaged on GIPP
projects. GAO bases its analysis on responses to questions posed to
officials at Russian and Ukrainian institutes. National Laboratory
experts explained to GAO teams that U.S. agencies place limited weight
on WMD information obtained from direct questioning of institute
personnel. In fact, DOE, the State Department and the Defense Contract
Audit Agency (DCAA), which GIPP brought on board in 2003 to audit
projects in Russia and the FSU, agreed in 2006 that WMD-related
questions are counter-productive in the course of a financial audit.
[See comment 2]
* The GAO implies that DOE ignored State Department concerns about the
lack of WMD expertise at a primary institute in Ukraine. As noted in
the project documentation, the WMD scientist teams were drawn from
other institutes involved in the project and not from the primary
institute. We regret that GAO's draft report implies that State did not
concur in this project, which was never the case. [See comment 3]
* The GAO states that only a minority of former Soviet project
participants have WMD experience, based on review of a select number of
project payment records. Financial information on all projects,obtained
from GIPP's payment agents, indicates that a majority of project
participants have WMD experience and have received the majority of
grant payments. [See comment 4]
* The GAO describes a Russian institute that cited figures for jobs
generated by a GIPP project that were much lower than GIPP numbers. Two
DOE representatives present at the meeting observed GAO decline an
offer by the institute to obtain further documentation, including jobs
at partner institutions involved in the project. DOE has since
confirmed the original GIPP numbers. [See comment 5]
* An anecdote about a lavish refurbishment of a Ukrainian institute –
intended to demonstrate that GIPP is funding solvent institutes – omits
that the funding was donated by a former institute scientist who became
successful in the West. This information was conveyed to the GAO while
the audit was taking place. We therefore find it unsettling that GAO
uses this example to comment on the economic circumstances at the
institute in question, or with respect to former Soviet institutes in
general. [See comment 6]
* The GAO indicates that Russian and Ukrainian institute personnel
state that GIPP is no longer needed. The GAO posed the question as
whether institutes would prefer a scientist cooperation program that
did not have a nonproliferation objective or the need to include WMD
scientists. When asked this way, some institute personnel naturally
stated a preference for the less restrictive alternative. However,
other personnel also endorsed GIPP as a nonproliferation program. We
regret that this and other endorsements of GIPP as a nonproliferation
program were excluded from the draft report, and we believe that the
report's objectivity suffers as a result. [See comment 7]
The Department is also concerned with the GAO's inaccurate portrayal of
GIPP requirements. For example:
* The GAO notes that GIPP grant recipients have not cut ties with their
home institutes. This is not a program requirement, and in fact the
overwhelming majority of the former Soviet institutes in which GIPP is
active are no longer connected with weapons work. Of the 27 institutes
GAO visited in Russia and Ukraine, only one remains involved with
weapons work. [See comment 8]
* The GAO criticizes the program statistics that account for part-time
employment of former Soviet scientists. There is no program requirement
to discount part-time employment. Whether employment is full or part
time, the critical matter is whether the former WMD scientist is
employed and tied to a civilian activity. [See comment 9]
* The GAO raises concerns that GIPP projects involve Russian and
Ukrainian project participants too young to have had prior WMD
expertise. There is no program restriction on engagement of younger
scientists. They are sometimes needed to achieve a project's scientific
and commercial objectives and to therefore attract the former WMD
scientists. [See comment 10]
With respect to strategic planning and management, we acknowledge the
need to give greater consideration to developing an "exit strategy" in
Russia and improving outdated metrics. However, in other areas, a
fuller accounting would have provided a better basis and a more
complete picture for reaching conclusions with respect to GIPP. For
example:
* The GAO notes in its draft report that "DOE is developing a program
management system, which it expects to fully implement in 2008 – 14
years after the start of the program." In fact, despite GAO's
implication that there is no IPP management system, a system has been
in place for well over a decade. GAO analysts were briefed on these
systems in detail, and in fact used the existing system extensively
throughout this audit, as well as previous audits. [See comment 11]
* The GAO is critical of the program's fiscal management, noting
historically high uncosted balances. It is important to note, however,
that, notwithstanding multi-year projects and contract obligations that
on average result in higher uncosted balances, GIPP uncosted balances
have been reduced by over 50% in the past two fiscal years and continue
to trend downward. [See comment 12]
* The GAO recommends that State and DOE better coordinate the
implementation of their commercialization initiatives and respective
exit strategies. The two Departments have briefed each other, commented
on, influenced, and drawn from each others' reprioritization and
drawdown efforts. Consistent with GAO's recommendation, the Department
plans to raise with State colleagues the possibility of a "joint plan"
for commercialization. [See comment 13]
Concerning engagement with non-FSU partners, the GAO recommends that
DOE allocate 65% of project funds to Libya for projects in that
country. As the Department has noted, the FY2000 National Defense
Authorization Act, which places a 35% limit on expenses for DOE
national laboratories, applies to the program as a whole, not to
specific projects or countries. The 35% limit was enacted to ensure
that a maximum of funds would reach former Soviet scientists in need of
salary support. Such a requirement does not pertain to Libya, given
that Libya funds its own scientists involved in cooperative projects.
The wisdom of funneling 65% of program funds to Libya is also open to
question. Congress has been briefed on the program's increasingly
global mission, including activity in Iraq and Libya. [See comment 14]
NNSA believes that the draft report contains useful recommendations and
points out the fact that our own actions were underway during the
course of the audit and were not acknowledged in the report. In
addition, while the GAO notes that because the projects it reviewed
"were a judgmental sample" and therefore "the findings associated with
them cannot be applied generally to the IPP program as a whole," we
regret that this standard does not appear to have been consistently
adhered to, leading to an imbalanced critique of the program.
Nevertheless, this report can be useful if it helps to spur the
implementation of constructive program changes. [See comment 15]
Should you have any questions about this response, please contact
Richard Speidel, Director, Policy and Internal Controls Management.
Sincerely,
Signed by:
Michael C. Kane:
Associate Administrator for Management and Administration:
cc: Will Toby, Deputy Administrator for Defense Nuclear
Nonproliferation:
David Boyd, Senior Procurement Executive:
Karen Boardman, Director, Service Center:
The following are GAO's comments on the Department of Energy's letter
dated November 21, 2007.
GAO Comments:
1. We are aware that DOE conducted internal assessments in 2004 and
2006 of its overall efforts to engage WMD scientists in the former
Soviet Union and other countries. However, these assessments did not
evaluate the IPP program exclusively and were conducted at a time when
the IPP program was complemented by and coordinated with a similar DOE
program focused on downsizing facilities and creating new jobs for
personnel in Russia's nuclear cities. This complementary program--the
Nuclear Cities Initiative--has since been canceled. As a result, the
IPP program operates under a significantly different set of
circumstances today than when DOE conducted its previous internal
assessments. Moreover, we note that some recommendations and action
items from DOE's previous internal assessments, such as the development
of an exit strategy, have not been implemented. Finally, during our
review and as discussed in this report, we found numerous shortcomings
and problems with the IPP program. We made a number of recommendations
for improving the program, many of which DOE agreed with, including
issues that should be addressed in the context of a program
reassessment, such as the need to develop a program exit strategy. For
these reasons, we are recommending that DOE undertake a fundamental
reassessment of the IPP program, in concert with other agencies, to
determine the continuing value of and need for the program.
2. DOE has incorrectly characterized how we collected information and
conducted our analysis of the participants on IPP projects. Contrary to
DOE's assertion, we did not base our analysis of this issue on
responses to questions we posed directly to officials at Russian and
Ukrainian institutes. We used data and statements provided directly by
DOE program officials to determine the total number of former Soviet
weapons scientists, engineers, and technicians the program has engaged
since its inception. Regarding the level and number of WMD experts
involved in individual IPP projects, as explained in the scope and
methodology section of our draft report, we used a number of methods
for assessing these totals, including analyzing data provided by
project managers at the national laboratories; reviewing payment
records provided by CRDF, ISTC, and STCU; and assessing the reliability
of data we received.
3. DOE has incorrectly asserted that we implied that DOE and State did
not concur on the project in question, and that DOE ignored State's
concerns regarding the primary Ukrainian institute's involvement in
WMD. We used this case as an example of how DOE's limited ability to
assess the proposed participants on an IPP project can lead to
misallocation of funding. In our view, a more thorough evaluation of
the entities involved in the project by DOE during its proposal review
might have uncovered the conflict-of-interest issues between the
primary Ukrainian institute and the industry partner discovered by the
Defense Contract Audit Agency after the project was under way and funds
had been spent.
4. Our finding was based on an in-depth review of the personnel
involved in 97 IPP projects, representing over 6,450 individuals, or
over 38 percent of the total personnel DOE has reported to have engaged
through the IPP program. We have no way of assessing the accuracy,
reliability, or validity of DOE's assertion that a majority of IPP
project participants have WMD experience. However, we are skeptical
that the department was able to conduct a thorough analysis of all IPP
project payment records during the time it took to review and comment
on our draft report.
5. During our visit to the Russian institute in question, institute
officials told us that they were not the source for the reported job
creation figure and could not substantiate the total number of jobs
created as a result of the IPP projects we asked about. For this
reason, we declined the institute official's offer to obtain further
documentation regarding the number of jobs created at other institutes
involved in these projects. Although DOE claims to have received
additional information from this institute to corroborate the number of
jobs reported to have been created, DOE did not provide this
information to us. As a result, we cannot determine the reliability or
accuracy of DOE's claim that the number of jobs it had reported as
created is correct.
6. We have accurately described what we observed during our visit to
the Ukrainian institute in question. Based on our observations, this
institute clearly was not in dire financial straits or in poor physical
condition like some of the institutes in the former Soviet Union we
have visited in the past. The donation of funding to improve the
physical condition of the institute has no material bearing on the
facts that we presented in our draft report.
7. DOE has mischaracterized our findings and our process for evaluating
the continued need for the program. As we pointed out in our draft
report, officials at 10 of the 22 Russian and Ukrainian institutes we
visited stated that they did not believe they or the other scientists
at their institutes posed a proliferation risk, while officials at 14
of the 22 institutes also attested to the financial stability of their
facilities. Moreover, a senior Russian Atomic Energy Agency official
told us, in the presence of IPP program officials, in July 2007 that
the program is no longer relevant. DOE asserted that we did not include
endorsements of the program in our draft report. However, we do state
that many officials at the Russian and Ukrainian institutes we visited
noted that the program was especially helpful during the period of
financial distress in the late 1990s.
8. DOE misstates the number of institutes that we included in our
fieldwork in Russia and Ukraine. The correct number is 22. Regarding
DOE's comment, our draft report clearly stated that DOE policy does not
require IPP project participants reemployed in peaceful activities to
cut ties to their home institute. However, more than one institute we
visited stated that they are still involved in some weapons-related
work, and many institutes remain involved in research and technology
development that could be applied to WMD or delivery systems for WMD.
We do not believe it is possible for DOE to verify the full extent and
intended purpose of all activities at the institutes where the IPP
program is engaged. Moreover, we believe that DOE misrepresents the IPP
program's accomplishments by counting individuals who have been
reemployed in private sector jobs but also are employed by their
institutes and, therefore, may still be involved in weapons-related
activities. In our view, the reemployment of former weapons scientists
into new long-term, private sector jobs--one of the primary metrics DOE
uses to measure progress of the IPP program--implies that these
individuals have terminated their previous employment at the institutes
and are dedicated solely to peaceful commercial activities outside of
their institutes.
9. While there is no IPP program requirement to exclude former weapons
scientists employed on a part-time basis from the total number of jobs
created as a result of IPP projects, DOE's reported job creation total
fails to delineate between part-time and full-time jobs. By not more
clearly distinguishing the number of jobs created in each category,
this metric is misleading and also misrepresents the program's
accomplishments regarding the employment of weapons scientists in
commercial activities. However, we have added information to our report
that states that there is no IPP program requirement to exclude former
weapons scientists employed on a part-time basis from the total number
of jobs created as a result of IPP projects.
10. Our draft report stated that the IPP program does not prohibit
participation of younger scientists in IPP projects. In our view,
however, DOE has a mistaken and naïve impression of how institutes in
the former Soviet Union view the benefits of allowing younger
scientists to participate in the IPP program. DOE believes that
participation of some younger generation scientists on IPP projects
must be permitted to successfully implement projects. This practice has
the unintended consequence of allowing former Soviet Union institutes
to use the IPP program as a long-term recruitment tool for younger
scientists and, thereby, may perpetuate the proliferation risk posed by
scientists at these institutes. As we stated in our draft report,
officials at 10 of the 22 institutes we visited in Russia and Ukraine
said that the IPP program has allowed their institutes to recruit,
hire, and retain younger scientists. In our view, this is contrary to
the original intent of the program, which was to reduce the
proliferation risk posed by Soviet-era weapons scientists. That is why,
among other reasons, we are recommending that DOE conduct a
reassessment of the IPP program that includes a thorough analysis of
the proliferation risk posed by weapons scientists in Russia and other
countries, a well-defined strategy to more effectively target the
scientists and institutes of highest proliferation concern, more
accurate reporting of program accomplishments, and a clear exit
strategy for the program.
11. DOE incorrectly characterized our description of its program
management system. Specifically, we stated in the draft report "DOE and
national laboratory officials told us they are attempting to improve
financial oversight over the IPP program, in part, to address concerns
about unspent program funds. To that end, DOE is developing a new
program management system, which it expects to fully implement in 2008-
-14 years after the start of the program." Throughout our review,
numerous DOE and national laboratory officials expressed concern about
the existing systems that DOE used to manage IPP projects. Our
description of DOE's planned implementation of its new program
management system is accurate.
12. DOE officials concurred with our recommendation of reducing large
balances of unspent funds and adjusting future budget requests
accordingly. The data we present are based on DOE's own financial
reporting and accurately reflect the state of the program's uncosted
balances (unspent funds) over the last 10 years. We noted in our draft
report that the program's uncosted balances are declining, but, as DOE
officials acknowledge, uncosted balances remain a serious problem for
the IPP program.
13. We are pleased that DOE concurs with our recommendation to improve
coordination between the department's IPP program and ISTC's
Commercialization Support Program, which is funded by State. In its
comments, State also concurred with this recommendation.
14. We believe DOE has misconstrued our recommendation concerning its
funding of projects in Libya. We did not recommend, nor did we mean to
imply, that DOE should allocate 65 percent of project funds to Libya
for projects in that country. Instead, our recommendation urges the
department to ensure that it complies with existing statutory
restrictions on the percentage of IPP funds that can be spent on
oversight activities by DOE national laboratories. Specifically, as DOE
notes, section 3136 of the National Defense Authorization Act for
Fiscal Year 2000 provides that not more than 35 percent of funds
available in any fiscal year for the IPP program may be spent by DOE
national laboratories to provide oversight of program activities. As
our report indicates, DOE's IPP guidance and its standard practice have
been to implement this provision of law on a project-by-project basis,
so that no more than 35 percent of the funds for each project are spent
by national laboratories. Our point in our report and in our
recommendation is that, with respect to projects in Libya, DOE has not
followed its IPP guidance restricting national laboratory expenditures.
Instead, we found that 97 percent of funds DOE spent on projects in
Libya through May 2007 were spent at DOE's national laboratories for
project management and oversight. In this regard, we note that DOE
concurred with our recommendation that the department seek explicit
congressional authorization to expand IPP efforts outside of the former
Soviet Union. In seeking such authorization, DOE may wish to clarify
the nature of other restrictions on the program, such as those set
forth in section 3136 of the National Defense Authorization Act for
Fiscal Year 2000.
15. DOE has mistakenly asserted that our selection of projects for
review served as the sole basis for our conclusions and
recommendations. As we explained in the draft report's scope and
methodology section, the selection and evaluation of a sample of IPP
projects was one of several analytical tools we employed during our
review. We not only conducted an in-depth assessment of over 200 IPP
projects, but also met multiple times with DOE officials; analyzed
program plans, policies, and procedures; interviewed representatives at
each of the 12 national laboratories involved in the program;
interviewed staff of the U.S. Industry Coalition and 14 U.S. industry
partner companies with long-standing participation in the program; and
had discussions with numerous recipients of IPP program assistance at
22 institutes in Russia and Ukraine. We also met several times with
State officials who are responsible for funding a similar program;
interviewed and assessed information provided by officials at CRDF,
ISTC, and STCU; and met with nongovernmental experts familiar with the
program. As further noted in our draft report, to develop our
judgmental sample of 207 projects we used project selection criteria
supplied by DOE and considered a variety of factors--such as project
status, project funding, type and location of institutes where projects
have been implemented, and a project's commercial success--to ensure we
addressed a broad cross-section of IPP projects. This comprehensive
approach, consistent with generally accepted government auditing
standards, served as the foundation for our assessment which was fair,
balanced, and objective. Our extensive review identified legitimate
questions concerning the IPP program's scope, implementation, and
performance that we believe should be addressed during the course of
the fundamental reassessment of the program recommended in our draft
report.
[End of section]
Appendix VI: Comments from the Department of State:
United States Department of State:
Assistant Secretary for Resource Management and Chief Financial
Officer:
Washington, D.C. 20520:
November 19, 2007:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, NW:
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report,
"Nuclear Nonproliferation: DOE's Program to Assist Weapons Scientists
in Russia and Other Countries Needs to Be Reassessed," GAO Job Code
360770.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Linda Bernstein, Science Centers Program Coordinator, Bureau of
International Security and Nonproliferation, at (202) 736-7976.
Sincerely,
Signed by:
Bradford R. Higgins:
cc: GAO ” Glen Levis:
ISN ” Andrew Semmel:
State/OIG ” Mark Duda:
Department of State Comment on GAO Draft Report:
Nuclear Nonproliferation: DOE's Program to Assist Weapons Scientists in
Russia and Other Countries Needs to Be Reassessed (GAO-08-189, Job Code
360770):
Thank you for allowing the Department of State the opportunity to
provide comments on the recommendation in the draft report Nuclear
Nonproliferation: DOE's Program to Assist Weapons Scientists in Russia
and Other Countries Needs to Be Reassessed.
Regarding the recommendation (page 44) to work with the Administrator
of the National Nuclear Security Administration, and the Secretary of
Energy, to develop a joint plan to better coordinate the efforts of
DOE's IPP Program and the ISTC's Commercialization Support Program:
The Department of State and the Department of Energy concur with the
recommendation to more closely coordinate these program elements and
will consult with DOE on implementing this recommendation.
[End of section]
Appendix VII: GAO Contact and Staff Acknowledgments:
GAO Contact:
Gene Aloise, (202) 512-3841 or aloisee@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Glen Levis (Assistant
Director), R. Stockton Butler, David Fox, Preston Heard, and William
Hoehn made key contributions to this report. Other technical assistance
was provided by David Maurer; Carol Herrnstadt Shulman; Jay Smale, Jr.;
and Paul Thompson.
[End of section]
Related GAO Products:
Nuclear Nonproliferation: Better Management Controls Needed for Some
DOE Projects in Russia and Other Countries. GAO-05-828. Washington,
D.C.: August 29, 2005.
Weapons of Mass Destruction: Nonproliferation Programs Need Better
Integration. GAO-05-157. Washington, D.C.: January 28, 2005.
Nuclear Nonproliferation: DOE's Effort to Close Russia's Plutonium
Production Reactors Faces Challenges, and Final Shutdown Is Uncertain.
GAO-04-662. Washington, D.C.: June 4, 2004.
Nuclear Nonproliferation: DOE's Efforts to Secure Nuclear Material and
Employ Weapons Scientists in Russia. GAO-01-726T. Washington, D.C.: May
15, 2001.
Weapons of Mass Destruction: State Department Oversight of Science
Centers Program. GAO-01-582. Washington, D.C.: May 10, 2001.
Nuclear Nonproliferation: DOE's Efforts to Assist Weapons Scientists in
Russia's Nuclear Cities Face Challenges. GAO-01-429. Washington, D.C.:
May 3, 2001.
Biological Weapons: Effort to Reduce Former Soviet Threat Offers
Benefits, Poses New Risks. GAO/NSIAD-00-138. Washington, D.C.: April
28, 2000.
Nuclear Nonproliferation: Concerns with DOE's Efforts to Reduce the
Risks Posed by Russia's Unemployed Weapons Scientists. GAO/RCED-99-54.
Washington, D.C.: February 19, 1999.
[End of section]
Footnotes:
[1] The IPP program was originally called the Industrial Partnering
Program and was established under Pub. L. No. 103-87 § 575, 107 Stat.
972-773 (1993). In 1996, DOE changed the program's name to reflect a
greater focus on and commitment to nonproliferation issues. In 2002,
the IPP program and another similar DOE nonproliferation program, the
Nuclear Cities Initiative, were placed under a common management
organization within DOE and designated the Russian Transition
Initiatives. In 2006, the Russian Transition Initiatives was renamed
the Global Initiatives for Proliferation Prevention and adopted the
mission of addressing the proliferation of WMD expertise globally.
Since the program's inception, North Korea has successfully tested a
nuclear weapon, and there are concerns that Iran has made progress in
developing its own nuclear weapons program.
[2] NNSA is a separately organized agency within DOE that was created
by the National Defense Authorization Act for Fiscal Year 2000, Pub. L.
No. 106-65, 113 Stat. 953 (1999), with responsibility for the nation's
nuclear weapons, nonproliferation, and naval reactors programs.
[3] DOE manages the largest laboratory system of its kind in the world.
Originally created to design and build atomic weapons, DOE's 22
laboratories have expanded their missions to conduct research in many
disciplines--from high-energy physics to advanced computing. The 12
national laboratories that participate in the IPP program are the
Argonne, Brookhaven, Idaho, Lawrence Berkeley, Lawrence Livermore, Los
Alamos, Oak Ridge, National Renewable Energy, Pacific Northwest,
Sandia, and Savannah River National Laboratories and the Kansas City
Plant.
[4] The Science Centers, consisting of ISTC and STCU, are
intergovernmental bodies with over 12 contributing member states. The
centers were established to provide peaceful research opportunities to
weapons scientists of the former Soviet Union. For additional
information, see GAO, Weapons of Mass Destruction: State Department
Oversight of Science Centers Program, GAO-01-582 (Washington, D.C.: May
10, 2001).
[5] Ten closed nuclear cities formed the core of the former Soviet
Union's nuclear weapons complex. Many of the cities are located in
geographically remote locations and were so secret that they did not
appear on any publicly-available maps until 1992. For additional
information, see GAO, Nuclear Nonproliferation: DOE's Efforts to Assist
Scientists in Russia's Nuclear Cities Face Challenges, GAO-01-429
(Washington, D.C.: May 3, 2001).
[6] See GAO, Nuclear Nonproliferation: Concerns with DOE's Efforts to
Reduce the Risks Posed by Russia's Unemployed Weapons Scientists, GAO/
RCED-99-54 (Washington, D.C.: Feb. 19, 1999). As a result of our 1999
review, DOE modified the IPP program by implementing requirements to
(1) better categorize the weapons backgrounds of scientists
participating in IPP projects; (2) review projects for potential dual-
use technology; (3) limit funding for DOE national laboratories to no
more than 35 percent for each IPP project; (4) eliminate basic research
projects; (5) establish direct, tax-free payments to participating
former Soviet scientists; and (6) institute audits conducted by the
Defense Contract Audit Agency as a way of verifying proper transfer of
IPP program funds and equipment.
[7] Pub. L. No. 106-65 § 3136(a)(2).
[8] Pub. L. No. 106-65 § 3136(a)(3). As defined by the section, a
"country of proliferation concern" means any country designated as such
by the Director of Central Intelligence for purposes of the IPP
program.
[9] On September 5, 2007, DOE provided us with preliminary data that
will be published in its fiscal year 2006 IPP program annual report.
This report has not yet been issued. As a result, for purposes of this
report, we used the most up-to-date published information available
during our review, which was DOE's Fiscal Year 2005 IPP Program Annual
Report.
[10] In some cases, more than one IPP project was connected to a
commercial success. See appendix IV for a complete list of the IPP
projects reported by DOE as being commercially successful.
[11] We found that DOE made a mathematical error in totaling the number
of new jobs created and in migrating data from the USIC survey to the
Fiscal Year 2005 IPP Program Annual Report. As a result, the actual
total of new jobs that DOE should have reported is 2,780.
[12] According to DOE, there is no IPP program requirement to exclude
former weapons scientists employed on a part-time basis from the total
number of jobs created as a result of IPP projects.
[13] Thorium is a naturally occurring radioactive metal, and it is
considered an alternative nuclear fuel to uranium.
[14] Russia's Stabilization Fund was established by resolution of the
Government of Russia on January 1, 2004, to serve as an important tool
for absorbing excessive liquidity; reducing inflationary pressure; and
insulating the economy of Russia from volatility of raw material export
earnings, which was among the reasons of the Russian financial crisis
in 1998.
[15] Launched in March 2004, State's Libya Scientist Engagement Program
aims to reduce the risk of WMD expertise proliferation and,
simultaneously, demonstrate Libya's return to the international
community by supporting the transition of former Libyan weapons
scientists to civilian careers that will enhance Libya's economic
development.
[16] GNEP, which is managed by DOE's Office of Nuclear Energy, is part
of the department's Advanced Energy Initiative and seeks to develop
worldwide consensus on enabling expanded use of nuclear energy to meet
growing electricity demand. GNEP would achieve its goal by having
nations with secure, advanced nuclear capabilities provide fuel
services--fresh fuel and recovery of used (spent) fuel--to other
nations that agree to employ nuclear energy for power generation
purposes only.
[17] Specifically, the Office of Nuclear Energy plans to provide
$600,000 to two projects ($300,000 per project) dealing with spent fuel
disposition, and the Office of Science plans to provide funds of an
amount yet to be determined for one project dealing with the
environmental consequences of spent fuel storage.
[18] According to DOE officials, CRDF "master contracts" between DOE
and foreign institutes were only used for 12 projects and are being
phased out. The process is very similar to the CRDF subcontract process
shown in figure 3.
[19] GAO, Nuclear Nonproliferation: Better Management Controls Needed
for Some DOE Projects in Russia and Other Countries, GAO-05-828
(Washington, D.C.: Aug. 29, 2005).
[20] According to DOE officials, the Kansas City Plant was not visited
because it did not have any issues with unspent funds.
[21] Some projects involved multiple collaborating institutes and, in
some cases, involved institutes in more than one country. We
categorized projects by country according to the host country where the
lead institute was located.
[22] Because Sarov is a closed Russian nuclear city to which DOE
officials told us we were not likely to be granted access by the
Russian government, relevant IPP project managers traveled from Sarov
to meet with us in Nizhny Novgorod.
[End of section]
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