[Senate Hearing 107-28]
[From the U.S. Government Publishing Office]




                                                         S. Hrg. 107-28

               HIGH PERFORMANCE COMPUTER EXPORT CONTROLS

=======================================================================




                                HEARING

                               before the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                               __________

                             MARCH 15, 2001

                               __________

      Printed for the use of the Committee on Governmental Affairs


                    U.S. GOVERNMENT PRINTING OFFICE
72-196 cc                   WASHINGTON : 2001
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
         U.S. Government Printing Office, Washington, DC 20402




                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
SUSAN M. COLLINS, Maine              CARL LEVIN, Michigan
GEORGE V. VOINOVICH, Ohio            DANIEL K. AKAKA, Hawaii
PETE V. DOMENICI, New Mexico         RICHARD J. DURBIN, Illinois
THAD COCHRAN, Mississippi            ROBERT G. TORRICELLI, New Jersey
JUDD GREGG, New Hampshire            MAX CLELAND, Georgia
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
                                     JEAN CARNAHAN, Missouri
             Hannah S. Sistare, Staff Director and Counsel
                Mark T. Esper, Professional Staff Member
     Joyce A. Rechtschaffen, Democratic Staff Director and Counsel
              Laurie Rubenstein, Democratic Chief Counsel
                     Darla D. Cassell, Chief Clerk




                            C O N T E N T S

                                 ------                                
                                                                   Page

Opening statements:
    Senator Thompson.............................................     1
    Senator Bennett..............................................     5
    Senator Collins..............................................     6

                               WITNESSES
                        Thursday, March 15, 2001

Susan S. Westin, Ph.D., Managing Director, accompanied by Stephen 
  M. Lord, Assistant Director, and Jeffrey D. Phillips, 
  International Security Analyst, International Affairs and Trade 
  Division, U.S. General Accounting Office:
    Testimony....................................................     9
    Prepared statement...........................................    23
    Questions for the Record submitted by Senator Thompson with 
      responses from Ms. Westin..................................    37

 
               HIGH PERFORMANCE COMPUTER EXPORT CONTROLS

                              ----------                              


                        THURSDAY, MARCH 15, 2001

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:35 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Fred 
Thompson, Chairman of the Committee, presiding.
    Present: Senators Thompson, Collins and Bennett.

             OPENING STATEMENT OF SENATOR THOMPSON

    Chairman Thompson. Good morning. The Committee will come to 
order, please. I would welcome everyone to the hearing this 
morning, of the Committee on Governmental Affairs, to assess 
recent changes to our export control policy with regard to 
high-performance computers. I will have a statement that I will 
make a part of the record, and Senator Bennett, you or any 
others, if you have any statements, we will make those a part 
of the record.
    I think, rather than read my statement, I will just briefly 
state the reason why we are here this morning and a little bit 
of the background. It seems to me like there are two or three 
very important things that are converging here. One is our 
increased concern about proliferation. We can hardly pick up 
the paper nowadays without reading about a new agreement 
between Russia and Iran, something Iraq is doing, or something 
North Korea has done, and wondering whether or not they will 
stop.
    Most serious commentators on the subject say that the 
proliferation of weapons of mass destruction is the biggest 
threat that this country faces. More and more, it has become 
obvious that a couple of the main sources for these items, some 
of which are dual-use items, some of which are missile parts, 
some of which have to do with nuclear technology, some of which 
have to do with nuclear power plants, all of that, bits and 
pieces and parts, some of which we know, a lot of which we 
probably do not know, are coming from China and Russia. We get 
our biannual intelligence reports that remind us time and time 
again, year after year, that proliferation is a very big 
problem; that the world's greatest suppliers of the rogue 
nations are China and Russia.
    Another phenomenon that has taken place is our appreciation 
for the fact that high-performance computers are dual-use 
items, and can play a part in this problem. The Cox Report 
pointed out that it was possible, first of all, that high-
performance computers have many military applications, that it 
is possible that these computers have been diverted for 
unauthorized uses by other countries, which could include the 
following, and they list several things here: Upgrading and 
maintaining nuclear and chemical weapons; equipping mobile 
forces with high-technology weapons; building a modern fleet of 
combat aircraft and submarines; conducting anti-submarine 
warfare; developing a reliable, accurate ballistic cruise 
missile force; improving command and control communications; 
and that there have been instances where the People's Republic 
of China has used high-performance computers for nuclear 
weapons applications, nuclear weapons design, using them to 
improve and maintain their nuclear weapons, and on and on and 
on.
    Recognizing the proliferation problem, and recognizing the 
sensitivity of high-performance computers as one of the things 
that could be used in the proliferation activity, and 
recognizing that one of our major new trading partners, China, 
was doing things with them for the inherent activity of 
improving their nuclear stockpile and so forth. This was 
troublesome to us, and that their side activity of handing off 
technology and other things to rogue nations. As a result, 
Congress, in 1998, as a part of the Defense Authorization Act, 
said that when we as a Nation--the Department of Commerce 
particularly--that when you look at these high-performance 
computer export situations, that Congress needs to be involved 
in the process.
    We use MTOPS levels in this country, and without getting 
into too much detail, it has to do with the computing power of 
these machines. And we have had a regime in this country for 
some time now that related our export policies with regard to 
these high-performance computers to that MTOPS capability. That 
has come under question now and we will be talking about that 
today, but that has been our policy; the idea being that the 
greater the MTOPS level, the greater the power of the machine 
and the more likely it would be for China, for example, to 
utilize this capability--for example, their nuclear weapons 
production enhancement.
    Without testing, it is very important to nuclear weapons 
countries, for example, to be able to simulate tests, improve 
their stockpile, maintain their stockpile. We do that. They do 
that. High-performance computers assist you in doing that; many 
applications that the Cox Report and others have pointed this 
out. So, an additional phenomenon to add to this story is that 
we have greatly liberalized our export policy with regard to 
high-performance computers over the last few years.
    Again, we will get into a discussion of whether or not that 
is wise or not, but there is no question that that has 
happened. Within 1 year, the MTOPS level went from 2,000 to 
85,000 under President Clinton's directives. So, backing up a 
bit, in 1998, Congress, looking at all this, says that when you 
raise those MTOPS levels, you need to make an assessment as to 
what this is doing to national security, if anything. You need 
to make an assessment as to the foreign availability of these 
things. You need to make an assessment and report to Congress 
as to the military applications of high performance computers 
at the increased level.
    In other words, I might have an opinion on whether MTOPS is 
a smart way to go. You might have a different opinion. But 
let's really do an assessment as to the significance of what it 
is that we are about to do. Well, we now have kicked in at the 
85,000 level. Under President Clinton's directives, we no 
longer have the notification requirement that we had before. We 
have abrogated a notice requirement that used to kick in at 
below the MTOPS level.
    Even though you might not need a license to export a high-
performance computer, at least we want to know; we want to be 
able to have an audit trail at a lower level, and that was the 
way we operated up until just recently. The MTOPS levels kicked 
in. The notice requirement will kick in shortly. So now we are 
at the 85,000 level with no notice requirement for any computer 
exports less than the 85,000 MTOPS level. So we are saying at 
that level, Mr. Exporter, we not only do not need you to have a 
license, we do not need to know what you are doing for our 
audit purposes or whatever.
    And this is at a time, incidentally, and the Cox Report 
points this out, that our post-shipment verification situation 
is virtually nil. I think for a long period of time we had one 
post-shipment verification of a Chinese supercomputer. Then, 
there have been some more since then, but they would not even 
let us in there to check for a long period of time. That is the 
background of what we are doing here. With that, the President 
makes his report. The 2001 law required that the GAO take a 
look at the President's report and to give Congress an 
opportunity to look--a very brief opportunity, I might add--
quickly look and see what the GAO says about the President's 
report in order for Congress to have a chance to act if it 
wanted to.
    That is what we are about here today. The President has 
made his report. It is obvious that the President's report does 
not make an assessment as to all of the military applications 
that we know are out there, and it is clear that the 
President's report has not made an adequate determination or 
assessment in terms of the national security implications of 
what has just been done. That is what this is about, within the 
context of a much broader debate that we have had going on for 
some time now and will continue, I'm sure. It is the assessment 
of the President's report in compliance or lack of compliance 
with the 1998 Defense Authorization Act, which required the 
President--you have got the right, Mr. President--to raise 
these MTOPS levels. You have got the right to cut off the 
notice below the 85,000 level, if you want to, but tell 
Congress what the significance of that is, so we are not flying 
blind.
    My conclusion is that we are still flying blind, and that 
we do not have anyone in this Nation who has made an 
independent, unbiased assessment of the significance of our 
greatly liberalized export policy with regard to dual-use items 
and, in particular, high-performance computers. My colleague, 
Senator Bennett, here, will eloquently point out that the genie 
is out of the bottle and everybody has got everything, etc. He 
may be right, but we have 100 folks around here with 100 
different opinions about that. What I am interested in is 
having professionals, having folks who know this stuff to take 
a look at it and make a determination and recommendation to us 
as to whether or not MTOPS are outmoded. If so, what does that 
mean, that we abandon everything? I think clearly not.
    There is a lot of potential other things that we can do. 
Nobody has taken a look at them. So, we continue, because 
nothing is exploding at the moment, we continue to go down the 
same path blindly, each of us, with our various opinions as the 
extent of which we ought to control or decontrol, or regulate 
or deregulate, with industry pounding on our doors every day, 
trying to liberalize export controls further, arguing that 
there is no need to try to control anything, ever, anymore, 
anywhere. We are talking about Tier 3 countries here. If really 
you cannot control anything anymore, why control Tier 4 
countries? Why not go ahead and send computers to Syria and 
Libya, if, in fact, there is nothing we can do at any stage? So 
those are the issues that we have here today.
    [The prepared statement of Chairman Thompson follows:]

                 PREPARED STATEMENT OF SENATOR THOMPSON
    Good Morning. Today, the Governmental Affairs Committee is holding 
a hearing on the recent changes to our export control policy with 
regard to high performance computers. These changes were made by former 
President Clinton in January 2001, before he left office.
    High-Performance Computers (or HPCs) represent a special challenge 
for our export control regime, because in many ways they are the King 
of ``dual-use'' technologies--that is, technologies that are subject to 
national security export controls because they are easily usable for 
important civilian purposes as well as dangerous military ones. High 
performance computers are particularly sensitive because they are 
enabling technologies that have important applications to national 
security. HPCs can be used to design more powerful nuclear weapons, 
more capable ballistic missiles, quieter submarines, and high 
performance jet aircraft. Computers are critical to our intelligence 
agencies. They are used in cryptology, reconnaissance satellites, and 
electronic eavesdropping. High performance computers are also key to 
modern warfare. They are used in precision-guided munitions, theater 
missile defense, battle management, and information superiority. In 
short, computers are the technical keystone of our national security 
apparatus; they are also important to our potential adversaries.
    Given the military importance of high performance computers, and 
reports at the time that foreign entities had illegally acquired U.S.-
made HPCs for military purposes, the Congress inserted language into 
the FY 1998 National Defense Authorization Act that was designed to 
strengthen HPC export controls. Among other things, this legislation 
required the administration to provide a report to the Congress on 
three factors when proposing a modification of the export control 
notification thresholds for high performance computers. First, the 
report is to address the availability of high performance computers 
from other countries. Second, it is to address all potential uses of 
military significance at the new control thresholds. And third, the 
report is to assess the impact of such uses on U.S. national security 
interests. It is important to note that the purpose of the law was not 
to fetter international trade or hurt the computer industry, but to 
ensure that the government conducted a thorough assessment of the risks 
and reasons underlying any change to our HPC export control policies.
    Two years later, the Cox Committee stated in its July 1999 report 
that the Peoples' Republic of China was diverting U.S.-built HPCs for 
unlawful military applications. Specifically, it was using American-
made computers to design, model, test, and maintain advanced nuclear 
weapons. The committee clearly stated that ``The illegal diversion of 
HPCs for the benefit of the PRC military is facilitated by the lack of 
effective post-sale verifications of the locations and purposes for 
which the computers are being used. HPC diversion for PRC military use 
is also facilitated by the steady relaxation of U.S. export controls 
over sales of HPCs.'' The committee added that U.S.-origin HPCs had 
been obtained by PRC organizations involved in the research and 
development of missiles, satellites, spacecraft, submarines, and 
military aircraft, to name a few.
    Despite this report and others, the Clinton Administration further 
relaxed export controls on high performance computers. In January 2000, 
the licensing threshold for HPCs was set at 2,000 MTOPS. Over the 
course of a year additional changes were made--including removing 
distinctions between civilian and military end-users--culminating in 
the January 2001 decision to raise the licensing level to 85,000 
MTOPS--over a 40-fold increase in a 12-month period! These changes, and 
others, were made to our HPC export control policies without conducting 
a thorough national security risk assessment. I might add that a risk 
assessment not only would have been the responsible and prudent thing 
to do, it was required by law.
    It also appears that the Clinton Administration couldn't justify 
these changes on economic and commercial grounds. HPCs of similar 
capability are not ``foreign available'' despite industry claims that 
they are ``widely available.'' Additionally, while the administration 
and industry cited computer ``clustering'' and other techniques as 
making computer controls ineffective, we will hear otherwise today from 
the General Accounting Office. Even the Cox Committee reported 2 years 
ago that ``while the PRC might attempt to perform some HPC functions by 
other means, these computer work-arounds remain difficult and 
imperfect.''
    Surprisingly, however, little money appears to be at stake in the 
decisions over HPC export controls to China and other Tier 3 countries. 
Let me be clear. HPCs can be sold license-free to most countries in the 
world. With regard to Tier 3 countries--China, India, the former Soviet 
Union, all of the Middle East, Vietnam, and most of Eastern Europe--
computers under 85,000 MTOPS can be sold license-free. Computers over 
85,000 MTOPS require a license, but even then, over 90% are approved 
for sale. HPCs cannot be exported to any of the rogue states. In short, 
given that sales to tier 3 countries represent less than 10% of all HPC 
sales abroad, and HPC sales don't appear critical to the economic 
health of most U.S. computer companies, it is hard to justify the 
national security risks simply to sell a few hundred more of them to 
China and other ``high risk'' destinations. It is even more difficult 
to believe the computer industry's argument that the U.S. military will 
be harmed if U.S. firms can't reinvest these marginal profits gained 
from Tier 3 sales back into R&D programs that might produce military-
ready ``off the shelf'' technology. According to this line of 
reasoning, the United States must jeopardize its national security in 
order to improve its national security. This makes little sense.
    The bottom line is that the computer industry is not concerned 
about current sales because these sales are not as significant as we 
were led to believe; however, the industry is concerned about future 
sales. Any government efforts to regulate the sale of HPCs on national 
security grounds is summarily and automatically rejected. The problem 
with this approach is that our country faces serious threats today. 
Despite the fact that the Cox Committee identified several alternative 
methods to safeguard U.S.-made HPCs, the bipartisan Deutch Commission 
made several recommendations to strengthen our export control regime, 
and the GAO recently listed nearly a dozen alternatives to the current 
MTOPS metric, we can't seem to find any consensus within the government 
or private sector that export controls on computer hardware are either 
needed or effective. I strongly disagree.
    Given sufficient political will, ingenuity, and leadership, I am 
confident that we can find a system that accommodates commerce while 
protecting our national security. The first step in that process, 
however, is finding an honest broker that can conduct the research, 
present the facts, outline the costs and benefits, and analyze the 
risks to our national security and economic prosperity of each policy 
option. I am confident we will hear from such an honest broker today 
when we hear from the GAO.
    The Committee has been closely involved with nonproliferation 
policy and export control issues for many years. In legislation passed 
by the Congress last year at my urging, the General Accounting Office 
was tasked to assess the President's compliance with the reporting 
requirements outlined in the FY 98 NDAA, and to evaluate the adequacy 
of the stated justification for any proposed changes to HPC export 
controls. This hearing, therefore, will ask the GAO to report on its 
findings pursuant to these taskings.
    I look forward to hearing today, therefore, from our witnesses, who 
can shed some much-needed light on the complex, yet critical, issue of 
high performance computer export controls.

    Senator Thompson. Senator Bennett.

              OPENING STATEMENT OF SENATOR BENNETT

    Senator Bennett. Thank you, Mr. Chairman.
    Chairman Thompson. Would you like to state your own case?
    Senator Bennett. Well, my case is not that much different 
from yours. The only other item that I would put on the record 
before we hear from the witnesses is that other countries have 
been involved in the manufacture of these same devices. 
Particularly, when you get into the issue of MTOPS, which are a 
function of the speed and excellence of individual chips--there 
are individual chips being manufactured in France, Japan, 
Germany, and, interestingly, China itself, that have the same 
computing power of some of the chips that we previously sought 
to control.
    Part of the problem facing American manufacturers is that 
if we restrict them from exporting into the world, on the basis 
that some of their products can be used by these rogue 
countries, we also cut them out of competing in the world in 
benign areas, with other countries who have the ability to 
manufacture the same level of capability that we have. The 
Chinese will use their own chips, instead of ours, to do some 
of the things that we might not want them to do. Then, with 
that same manufacturing capability, come into our markets, take 
our markets away from us, and we have, therefore, accomplished 
little or nothing in terms of our concern.
    Aside from putting that statement into the record, Mr. 
Chairman, I agree with you completely that the proliferation of 
weapons of mass destruction is the most serious challenge we 
face in the world today, in terms of our national security, and 
I welcome your initiative in getting the GAO involved in doing 
an analysis and study of this. As I said, we may not be quite 
as far apart as you might think or as we may have appeared to 
be in the past.
    Chairman Thompson. Thank you very much.
    Senator Collins, do you have an opening comment.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you very much, Mr. Chairman. I first 
want to thank you for holding this hearing on this very 
important issue on which you have been a real leader in the 
Senate.
    It is often observed that we live today in the information 
economy, one in which our individual and collective economic 
success depends increasingly upon the ability of computer 
systems to store and retrieve data, to control sophisticated 
manufacturing processes, to perform complex mathematical 
calculations, and to connect us together, seamlessly, without 
regard to the bounds of geography. Ever faster computer 
processing power is, in many respects, the backbone of this 
information economy. As a result, the health of our computer 
industry, which currently leads the world, should be of very 
great concern to all of us. At the same time, however, we 
cannot forget that the very processing speed that makes 
computers so useful in the private sector also makes them 
crucial enabling technologies for advanced military 
developments.
    The atomic bomb was designed by scientists using slide 
rules, and it only took a comparatively primitive computer to 
design the first Stealth bomber. The sophisticated weapons 
systems of tomorrow and the complex command and control schemes 
into which they will all be fitted, however, require state-of-
the-art technology. For countries seriously attempting to take 
advantage of what many military theorists have described as the 
information-driven revolution in military affairs now underway, 
acquiring more and better high-performance computers is an 
absolute necessity. We encourage such developments in potential 
adversary countries only at our great peril. High-performance 
computers are, thus, the classic dual-use technology. They are, 
indeed, useful for numerous legitimate purposes, but they can 
be very dangerous in the wrong hands.
    The same computing power that can model complex atmospheric 
weather patterns on a continental scale, for example, might be 
just as useful in modeling critical aspects of a nuclear 
explosion, perhaps thus helping a country improve its nuclear 
stockpile or develop sophisticated nuclear weapons without 
telltale test explosions.
    This is the source of the real tension in national security 
export control law. To be sure, export control restrictions can 
do real harm to high-tech, highly competitive sectors of our 
economy, by making overseas sales slower, more difficult and 
less certain, ceding ground to our foreign competitors. At the 
same time, however, it is imperative that our understandable 
eagerness to promote commercial sales not lead us to permit 
American companies to help arm actual or potential foreign 
adversaries.
    That is why today's topic is so interesting. We saw the 
actions taken by the previous administration, which I am 
describing in some detail in my statement, and which I would 
ask be put within the record in the interest of time. This is 
clearly a significant issue and it is one that Chairman 
Thompson has been closely involved with for some time. As a 
Member of this Committee myself and as a new Member of the 
Committee on Armed Services, I feel strongly that we can strike 
an appropriate balance.
    So, with that, Mr. Chairman, I would ask that the remainder 
of my statement be included in the record and I look forward to 
the hearing today.
    [The prepared statement of Senator Collins follows:]

                 PREPARED STATEMENT OF SENATOR COLLINS
    It is often observed that we live today in an ``Information 
Economy,'' one in which our individual and collective economic success 
depends increasingly upon the ability of computer systems to store and 
retrieve data, to control sophisticated manufacturing processes, to 
perform complex mathematical calculations, and to connect us seamlessly 
together without regard to the bounds of geography. Ever-faster 
computer processing power is in many respects the backbone of this 
information economy. As a result, the health of our computer industry--
which currently leads the world--should thus be of very great concern 
to all of us.
    At the same time, however, we cannot forget that the very 
processing speed that makes computers so useful in the private sector 
also makes them crucial ``enabling technologies'' for advanced military 
developments. The atom bomb was designed by scientists using slide 
rules, and it took only comparatively primitive computers to design the 
first Stealth bomber. The sophisticated weapons systems of tomorrow and 
the complex command-and-control schemes into which they will be fitted, 
however, require the state of the art. For countries seriously 
attempting to take advantage of what many military theorists describe 
as the information-driven ``Revolution in Military Affairs'' now 
getting underway, acquiring more and better high-performance computers 
is an absolute necessity. We encourage such developments in potential 
adversary countries only at our great peril.
    High-performance computers are thus the classic ``dual-use'' 
technology: They are useful for innumerable legitimate purposes, but 
they can be very dangerous in the wrong hands. The same computing power 
that can model complex atmospheric weather patterns on a continental 
scale, for example, might be just as useful in modeling crucial aspects 
of a nuclear explosion--perhaps thus helping a country improve its 
nuclear stockpile or develop sophisticated thermonuclear weapons 
without tell-tale test explosions.
    This is the source of the real tension behind national security 
export control law. To be sure, export control restrictions can do real 
harm to high-tech, highly-competitive sectors of our economy by making 
overseas sales slower, more difficult, and less certain--ceding ground 
to our foreign competitors. At the same time, however, it is imperative 
that our eagerness to promote commercial sales not lead us to permit 
American companies to help arm actual or potential foreign adversaries.
    This is why today's topic is so interesting. On several occasions, 
the previous administration saw fit to dramatically loosen the export 
control restrictions that govern sales of high-performance computers to 
so-called ``Tier 3'' countries such as Russia and the People's Republic 
of China. Last year, in fact, the Clinton Administration eliminated the 
distinction between ``civilian'' and ``military'' end-users for Tier 3 
computer sales--with the effect that military research laboratories and 
intelligence agencies in these countries can now freely buy American 
computers at the same high performance level at which we permit 
license-free sales for less dangerous end-user such as banks or 
hospitals. Moreover, the performance level of computers available 
without any export license at all has steadily been raised in lockstep 
not with the actual availability of such equipment from foreign 
competitors but rather with the American computer industry's 
anticipated marketing strategy for ever more powerful processors.
    Less than 2 years ago an export license was required in order to 
sell computers to military end-users in a country such as Russia or 
China at performance levels of more than 2,000 Million Theoretical 
Operations Per Second (MTOPS). This, I should emphasize, did not mean 
that sales above that level were barred--merely that in order to sell 
such a computer to such an end-user, one had to obtain permission from 
the U.S. Government, which reserved the right to object on national 
security grounds. As of January this year, however, the export license 
threshold level stood at 28,000 MTOPS. With President Clinton's last 
minute decision on January 18, 2001 to implement yet another loosening 
of export controls, this level is rising to 85,000 MTOPS. That amounts 
to more than a 40-fold increase in less than 2 years! Some of these 
changes, moreover, have been made over the objection of our allies and 
in violation of our government's commitment to observe export licensing 
levels agreed upon by the multilateral Wassenaar Arrangement 
headquartered in Vienna.
    These have been remarkable changes. But have the previous 
administration's dramatic relaxation of computer export controls 
managed to strike an appropriate balance between commerce and security? 
Disturbingly, it is remarkably hard to tell. The unanimously-adopted 
Cox Report of 2 years ago discussed some of these issues in one of its 
chapters, warning of the many military uses to which the PRC is putting 
high-performance computers purchased from the United States. Press 
accounts have also reported the appearance of U.S. machines in Russian 
nuclear weapons design laboratories--an occurrence about which the head 
of Russia's weapons program actually boasted publicly. Remarkably, 
however, a thorough assessment of the national security implications of 
specific decisions to loosen computer export controls has never been 
done.
    This is very troubling. Despite repeated GAO studies and 
Congressional hearings highlighting this fact and urging corrective 
action, not one of the previous administration's repeated relaxations 
of computer export control thresholds was accompanied by a serious 
analysis of the national security implications of the change. 
Fortunately, Congress saw fit last year to require such a national 
security assessment by GAO. Our witnesses today will present us with 
the GAO's findings pursuant to this Congressional requirement.
    According to conference report language adopted late last year, 
Congress expects that GAO will provide an assessment of the adequacy of 
the stated justifications for a change in computer export license 
threshold levels, as well as an evaluation of this change's likely 
impact upon our national security and foreign policy interests, the 
security of our friends and allies, upon multilateral regimes such as 
Wassenaar, and upon our nonproliferation policy. That is quite a tall 
order, but I have great faith in our experts who join us from GAO 
today. This is apparently the first time such factors have ever 
formally been assessed in connection with a change to computer 
licensing rules, so I am pleased that this Committee is providing this 
opportunity for them to testify.
    This is clearly a significant issue, and one with which Chairman 
Thompson has been closely involved for some time. As a Member of this 
Committee for some time, and as a new Member of the Armed Services 
Committee, I feel that it is possible to strike an appropriate balance 
between commerce and security. Today's hearing will contribute to these 
debates in important ways, and should help ensure that these national 
security issues receive the attention they deserve. I look forward to 
hearing the testimony of our witnesses.
    Thank you, Mr. Chairman.

    Chairman Thompson. Without objection, it will be made a 
part of the record. Thank you very much, Senator.
    At this time I would like to recognize our panel. We are 
pleased to have three witnesses with us today from the General 
Accounting Office, Dr. Susan Westin, Managing Director of 
International Affairs and Trade Division. She will present the 
GAO's findings with regard to former President Clinton's 
January 2001 changes to the United States high-performance 
computer export control policy.
    Dr. Westin will be joined by Steve Lord, Assistant Director 
of the International Affairs and Trade Division, and Jeff 
Phillips, a senior analyst also in the International Affairs 
and Trade Division. I would like to read the resumes of all you 
folks. It would be extremely impressive, I assure you, if you 
have not already read them, but unless you insist, we will just 
skip those and just say that you are, obviously, highly 
qualified in these very technical, complex areas. We thank you 
for being with us today.
    Dr. Westin, would you please proceed with your testimony?

  TESTIMONY OF SUSAN S. WESTIN,\1\ Ph.D., MANAGING DIRECTOR, 
ACCOMPANIED BY STEPHEN M. LORD, ASSISTANT DIRECTOR, AND JEFFREY 
  D. PHILLIPS, INTERNATIONAL SECURITY ANALYST, INTERNATIONAL 
   AFFAIRS AND TRADE DIVISION, U.S. GENERAL ACCOUNTING OFFICE

    Ms. Westin. Yes, thank you, Senator. Mr. Chairman, I ask 
that my entire written statement be put into the hearing 
record, but I will just summarize my remarks.
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    \1\ The prepared statement of Ms. Westin appears in the Appendix on 
page 23.
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    Chairman Thompson. Without objection.
    Ms. Westin. I am pleased to be here today to discuss export 
control issues for high-performance computers. As you know, 
export controls continue to be a contentious part of our 
national security debate. Over the past several years, there 
has been continuing congressional concern over the rationale 
for revising these controls, and their effect on our national 
security.
    U.S. policy with respect to the export of high-performance 
computers seeks to balance the national interest in promoting 
economic growth in trade against the essential national 
security requirement to prevent the proliferation of 
technologies related to weapons of mass destruction, missiles, 
and advanced conventional weapons. The United States has long 
controlled the export of high-performance computers to 
sensitive destinations, such as Russia and China. Recent 
technological advancements in computing power have been rapid. 
The regulations for high-performance computer control 
thresholds are currently based on a computer's composite 
theoretical performance, as measured in millions of theoretical 
operations per second, or MTOPS.
    We recently reported that the growing ability of other 
countries to cluster lower performance computers has made the 
current computer export control system ineffective in limiting 
countries of concern from obtaining high-performance computing 
capabilities for military applications. In that report, we also 
reported that MTOPS is an outdated and invalid means for 
determining whether individual high-performance computers 
should be licensed for export.
    On January 10, 2001, President Clinton announced a 
significant relaxation in export control licensing and 
notification thresholds for high-performance computers, and a 
proposal to eliminate almost all controls on exports of 
computer hardware. Today, I will first discuss our evaluation 
of the President's justification for changing the computer 
control thresholds. I will then turn to our evaluation of the 
support of the President's policy proposal to shift the 
emphasis of controls from hardware to software controls. 
Finally, I will discuss some of the implications of these 
changes.
    The main message of my testimony this morning is that the 
inadequate justification for the relaxation of export controls 
for high-performance computers demonstrates the need for a 
comprehensive study of export controls. As we have previously 
recommended, a panel of experts is needed to conduct a 
comprehensive assessment of available options to address 
weaknesses of computer export controls, as well as to determine 
what U.S. countermeasures might be necessary to respond to 
computer-related enhancements of military or proliferation 
capabilities in sensitive countries.
    Turning to the first point, the President's January 2001 
changes in the export control thresholds for high-performance 
computer exports are not adequately justified. While the 
President's report recognizes that high-performance computing 
capabilities will become increasingly available to other 
countries through computer clustering, the report fails to 
address all militarily significant uses for computers at the 
new thresholds, and assess the national security impact of such 
uses as required by law. The inadequacies of the President's 
report are further compounded by continued use of a flawed 
measure, MTOPS, for assessing computer performance.
    Second, the President's policy proposal for relaxed U.S. 
computer controls also is not adequately supported. Although 
the new policy was based on a conclusion that computer hardware 
exports can no longer be controlled, the Executive Branch has 
failed to adequately assess alternative control options. In 
addition, the new policy would focus more attention on using 
new software controls to protect U.S. national security 
interests, even though such controls have yet to be identified 
and developed.
    Finally, we identified several implications of the changes 
to the control thresholds and the proposed change in U.S. 
computer export control policy related to increased risk for 
U.S. national security. I would like to emphasize three of 
these implications. The first implication is that the 
inadequacies of the President's justifications again 
demonstrate the need for a comprehensive study of the issues 
involved. In our December 2000 report on high-performance 
computers, we recommended that Executive Branch agencies 
comprehensively assess ways of addressing the shortcomings of 
computer export controls, including the development of new 
performance measures and of countering the negative effects on 
U.S. national security of increased availability of high-
performance computing. Although the Departments of Defense and 
Commerce did not agree with this recommendation, we believe 
this recommended course of action is still valid. Without such 
a comprehensive study, the United States will not be prepared 
to fully assess and mitigate the risks that it may face by 
revising U.S. high-performance export controls.
    The second implication is that the new rules effectively 
eliminate prior U.S. Government review of any computer exports 
below the licensing threshold to sensitive countries. The 
National Defense Authorization Act of 1998 requires computer 
exporters to notify the Commerce Department in advance of any 
proposed high-performance computer exports to sensitive 
countries, such as China, Russia and India that pose a concern 
for military or proliferation reasons.
    Since the threshold for notifications was set lower than 
the threshold for licensing, it served as a tripwire for 
triggering advanced U.S. Government review of exports to 
potentially sensitive end-users. Under this procedure, 
exporters must apply for a license if any Executive Branch 
agency in the licensing process objects to a proposed computer 
export. Next week, the threshold for notification takes effect 
at 85,000 MTOPS. This will be the first time that the 
notification threshold is the same as the licensing threshold 
for computer exports to sensitive countries.
    In the past, the notification threshold lower than the 
licensing threshold allowed the U.S. Government to deny or 
defer some exports, or make other exports conditional on 
additional safeguards. There were over 3,700 notifications of 
intent to export computers between February 1998 and September 
2000. Of the 204 notifications that required subsequent license 
applications, 165 were not approved, while the remaining 39 
were approved with conditions. Reasons for non-approval 
included concerns over end-users.
    Admittedly, only a small percentage of the notifications 
were not approved for licenses to export. Commerce and Defense 
officials point to this small percentage as evidence that the 
notification process has not been useful. However, we are not 
able to assess the significance of the non-approved licenses, 
in part because of lack of the national security analysis of 
the impact of these exports to sensitive countries.
    The third implication is the U.S. Government will have to 
rely more heavily on computer vendors to know your customers, 
and assess their intentions to use computers for proliferation 
purposes. Past evidence has shown this reliance may be 
misplaced. In summary, we recognize the need for U.S. policy on 
the export of sensitive technology to balance economic and 
trade interests against national security interest. However, 
the justification for relaxing the export controls did not 
address all computer uses of military significance, to which 
high-performance computers could be applied at the new 
thresholds, and did not assess the national security impact of 
such uses. The lack of justification makes it difficult to 
determine if the appropriate balance between economic interest 
and national security interests has been achieved.
    Mr. Chairman, Members of this Committee, this concludes my 
prepared remarks. My colleagues and I will be pleased to 
respond to any questions you may have.
    Chairman Thompson. Thank you, Dr. Westin. I appreciate that 
very much and I especially appreciate GAO's attention to this 
in a short period of time. The legislative framework that we 
set up for your getting involved and doing this was short, and 
our review period is short. In fact, I think we have to act by 
tomorrow as a Congress, and I think the whole process is very 
deficient in my mind, but it is what it is, and you are doing 
your part and we are trying to do ours.
    Let me see if I can basically summarize your testimony and 
see if I am accurate. First, is that with regard to three basic 
requirements under the 1998 Defense Authorization Act, that two 
of those requirements were not fulfilled, or were deficient in 
the President's report; that is, the requirement to assess the 
military applications and the other requirement to assess the 
national security implications. Is that basically correct?
    Ms. Westin. That is right, the justifications that were to 
be included, according to the NDAA, were not there.
    Chairman Thompson. All right. Also, next week will be the 
first time that the notification level is the same as the 
license level at 85,000 MTOPS. Is that correct?
    Ms. Westin. That is right.
    Chairman Thompson. And you point out the significance of 
that, in that in times past notification has been lower, and we 
have been able, as a country, to catch some, presumably, that 
should not be approved that, otherwise, would have been 
approved had it not been for a lower notification level. You 
mentioned 165, I believe, licenses were denied that otherwise, 
presumably, would have been approved.
    Ms. Westin. Yes, Senator, 165 were not approved. I think it 
is 12 that were outright denied and the others were returned 
without action.
    Chairman Thompson. Sometimes I think that is done for 
national security purposes and people do not want to talk 
about, in too much detail, why they are doing what they are 
doing. They just do not get their license. You also say that 
you believe that the MTOPS metric is no longer very useful in 
making these determinations, primarily, as I take it, because 
of the clustering capability that countries have now. Is that 
basically correct? I know I am paraphrasing.
    Ms. Westin. That is basically right, that it is an outdated 
measure.
    Chairman Thompson. It is an outdated measure. I am also 
correct, though, in concluding that you are not suggesting 
that, therefore, we should have no measure, or that we should 
have no control; are you?
    Ms. Westin. No, definitely, that is not part of our 
conclusion, nor, Senator, are we concluding that 85,000 MTOPS 
is an appropriate level or not an appropriate level. Our 
analysis was to look at the justifications that were behind 
changing these export control levels.
    Chairman Thompson. Justification in these two important 
categories simply are not there. We are continuing to 
liberalize our export policy without the knowledge of the 
national security impact it might have, or without an 
assessment as to all of the military applications that such a 
raising of MTOPS-level licensing might have.
    Ms. Westin. That is right.
    Chairman Thompson. I think it is important to remind 
ourselves, too, that when we are talking about 85,000 MTOPS, 
that does not mean anybody is cut off at 85,000. That just 
means that when you get below 85,000, you do not even have to 
have a license, but when you get to the 85,000 and above, 90-
something percent of the license applications--I think that is 
correct--are approved. The Cox Report suggested several 
alternative ways of measuring these computers, in terms of 
their significance. The Deutch report had several possible 
suggestions. Your report in December of last year had almost a 
dozen possible suggestions as to different ways that we could 
possibly control or have a control regime, which would really 
keep the stuff we wanted out of the bad guys' hands, or 
potential bad guys, in terms of end-users--I am not talking 
about countries necessarily--that there were options out there, 
but that nobody has really sat down and gone through and made a 
determination as to which one of these might be viable and 
which ones might not be; is that correct?
    Ms. Westin. That is right, and we include ourselves in 
that, Senator. GAO did not do that.
    Chairman Thompson. Nobody has done that. We are flying 
blind, essentially, with regard to that. Some of those 
suggested possibilities are hardware-type solutions, counting 
of processors instead of MTOPS, things of that nature; but 
suffice it to say, there are a variety of suggestions out there 
from Cox to Deutch to GAO, things that are on the table, that 
knowledgeable people have said, ``We might ought to take a look 
at this. This might work.''
    All kinds of ideas are out there. None of us are wed 
forever to the MTOPS criteria or anything else. We just know 
that whatever the criteria is, it is becoming more and more 
liberal. It went from 2,000 MTOPS to 85,000 MTOPS in 1 year. 
The notice requirement has been liberalized, shall we say, or 
there is less and less notice, less time for Congress--Congress 
used to have 6 months to review this. Now we have 60 days.
    Ms. Westin. 60 days.
    Chairman Thompson. Everything is being pushed toward more 
high-performance computers out the door to Russia and China. As 
I said, we might conclude, someday, that we might as well do 
that and we might as well go ahead to give them to Iran and 
Iraq, while we are at it, but we were not there yet, because 
nobody, including the President, even though the law required 
it, has made a national security assessment or an assessment of 
all the military applications that might have significance in 
terms of the MTOPS level being raised. Is that essentially 
correct, a summary?
    Ms. Westin. Yes, that is a good summary, Senator.
    Chairman Thompson. I noticed here in your September 1998 
report on export controls, national security issues and foreign 
availability for high-performance computer exports, GAO has 
done a lot of good work in this area. It is unfortunately under 
the radar screen. Nobody pays a whole lot of attention to it 
now, except the people in the business, but it is very 
important and one of the things that you have looked at is how 
we stand in comparison to other countries.
    I noticed here on page four, it said, ``Based on EAA's 
description of foreign availability, we found that subsidiaries 
of U.S. companies dominate overseas sales of high-performance 
computers.'' According to U.S. high-performance computer 
exporters, there were no instances where U.S. companies had 
lost sales to foreign high-performance computer vendors in Tier 
3 countries. We also obtained information on the capability of 
certain Tier 3 countries to build their own high-performance 
computers, and found it to be limited. Tier 3 countries are not 
as capable of producing machines of comparable quantity and of 
comparable quality and power as major high-performance computer 
supply countries.
    I think that one of the issues we are going to have to deal 
with as a Congress is that even acknowledging the world is a 
smaller place, and many of the technological genies are 
certainly out of the bottle, is there anything to be derived 
from still trying to keep certain things out of the hands of 
certain people for certain lengths of time, with a full 
concession that maybe eventually everybody will have 
everything? If not, why not send it to Saddam Hussein right now 
and make the profit off of it and put it back into our system, 
so that we can strengthen our own system over here? Obviously, 
nobody would advocate that. Where I think we come to is that 
there is something to be said for certain reasonable 
restrictions that comport with reality, but that, if nothing 
else, slows down this process that, among other things, has 
caused us to conclude we need a national missile defense 
system. That is the debate we are having here and I think you 
have made an important contribution to it. Thank you.
    Senator Bennett.
    Senator Bennett. Thank you, Mr. Chairman.
    Thank you, Dr. Westin. I agree, absolutely, there must be 
careful study of this, further study of it. The primary 
challenge in this world is how rapidly it is changing. A report 
that comes out is obsolete almost as fast as the product that 
it examines. Let me share with you and the Committee a press 
release that came out on the 1st of February, so it is 45 days 
old now, a company I had never heard of until this was called 
to my attention, called Juno Online Services. Are you familiar 
with that? Are any of you familiar with that?
    Ms. Westin. Yes, I have my chief scientist here and he is 
familiar with that.
    Senator Bennett. Here is what it says, and is pretty 
staggering in its implications: ``Preliminary studies recently 
completed by the company suggest that if the computers of all 
of Juno's active free subscriber base were simultaneously 
working on a single computational problem, they would together 
represent the world's fastest supercomputer and might approach 
or break the petahertz barrier.'' I have never heard of the 
petahertz barrier, but things keep coming at us in this world 
all the time--that is a hypothetical effective processor speed 
in the order of a billion megahertz.
    Then you go on in the press release, and this is 
fascinating to contemplate, it says, ``Applications will run as 
screen savers on the computers of participating subscribers 
when their machines would otherwise be idle, performing 
calculations when the computer is on, but not in use.'' Now, I 
have a screen saver on my computer that shows the beautiful 
scenery of the State of Utah and changes every few seconds from 
one magnificent vista to the next, but that is obviously not 
taxing the computer very much to put those pictures up there. 
So, apparently, if I am connected with Juno, while my screen 
saver is on, they will get in and use the computing power to 
work on this problem. It says Juno's free, basic service may 
ultimately be required to make their unused computing power 
available to the project as a condition for using that service. 
In other words, if you subscribe to Juno, you have to say while 
we have our screen saver up, you have access to the computing 
power in our computer, and Juno has enough subscribers that 
altogether, they would represent computing power greater than 
the world's existing supercomputer, the biggest supercomputer. 
This is an idea that is 45 days old as far as the public is 
concerned.
    I bring this up to illustrate how rapidly everything is 
changing. This is a circumstance that was not in the debate 
when the Congress met in the year 2000. We did not have any 
concept--at least I did not have any concept--I do not know 
about my colleagues, but I did not have any kind of concept 
that this kind of connection could even be conceived of, let 
alone discussed in early 2001 as a legitimate situation. 
Whether or not Saddam Hussein would somehow plug into this and 
take advantage of it, without anything being exported at all, 
no physical box ever shows up in Iraq, he just makes an 
electronic connection with a subscriber somewhere, and then 
makes use of it, is a further demonstration of how badly we 
need the study that you are talking about, and it needs to be 
an ongoing study; that the conclusions arrived at by July of 
this year will be obsolete by October of this year.
    Maybe that is an issue, Mr. Chairman, we should raise with 
Condoleeza Rice as an ongoing thing in the National Security 
Council. I have talked to her about the whole issue of critical 
infrastructure protection, because I think that the next war 
will not be fought with kinetic weapons. It will be fought with 
computers. If I were somebody who wished this country ill, I 
would not try to take on the U.S. military, because I would 
lose. Instead, I would hire the best hackers I could find, and 
say let's find a way to get into the telephone system and shut 
down the Fed wire, so that the American economy comes to its 
knees overnight, because no checks can clear, no money can pass 
and so on.
    I think that is where the next war is being fought, and I 
was delighted that Condoleeza Rice not only understood that, 
but she had thought very deeply about it and was ahead of me. 
That is all a little humbling, for a Senator, to have somebody 
come to your office, and you are going to raise an issue, and 
have that individual know more about the issue than you do.
    I think your recommendation here is a very sound one and we 
clearly need to pay attention to it, and the only amendment I 
would add is the one I have suggested, that it not just be a 
single date and the report issued and then you go onto other 
things; that we find some way that this is an ongoing 
assessment, because the Juno announcement demonstrates how 
rapidly moving and changing everything is all of the time. Now, 
if you have any comment or reaction to that, I would be happy 
to hear it.
    Ms. Westin. Senator, I was going to say that I think you 
really have given an excellent example that does back our 
recommendation, because our recommendation for this expert 
panel is really twofold; to address any weaknesses in export 
control measures--but I think what your example was pointing 
to--to make a determination of what U.S. countermeasures are 
necessary to deal with these weaknesses.
    It may very well be that advances in technology are 
occurring so quickly that there is not going to be a good 
measure for controlling the export of computers, which is why I 
think the second part of the recommendation, as I have said, is 
equally important, to determine what countermeasures are we 
going to take. It all does hinge on having an analysis of the 
military uses of high-performance computers, and what impact 
these uses have on our national security interest.
    Senator Bennett. The only other comment I would make, Mr. 
Chairman, that I would like the panel's reaction to, when Dr. 
Hamre testified in a hearing on the Export Controls Act, he was 
no longer the Deputy Secretary of Defense, but testified in his 
position as the President of CSIS, but he talked about his own 
transition on this issue, how, as an official of the Department 
of Defense, he was firmly opposed to export of any of these 
items. And then he said he woke up one night and realized that 
what is happening around the world, in terms of other countries 
developing these capabilities, could mean a situation where the 
United States might be dependent on a foreign manufacturer, 
because the foreign manufacturer would have access to markets 
that the American manufacturer would not.
    He said I began to change my position pretty clearly 
because I did not want to run the risk of American 
manufacturers falling behind foreign manufacturers, so that we 
might eventually, at DOD, have to turn to a foreign source. 
Would you comment on that or give us your reactions to that?
    Mr. Phillips. That is a legitimate concern. There is 
another trend, a market trend, that in some ways contradicts 
that. In the computer area the trend has been toward DOD 
acquiring more mass-market commercially available components 
and systems, and relying less and less on specially designed, 
specially built computers. As a result, it may be that at some 
point DOD will be relying on foreign suppliers, at any rate, 
because those commercially available mass-market systems that 
they are getting will become more and more available from 
everybody.
    The idea that by keeping the U.S. computer industry 
competitive overseas is going to allow money to come back and 
be reinvested in R&D, may well be true. But the kind of high-
end, state-of-the-art systems that DOD used to be getting from 
the more traditional computer companies, like Cray and Silicon 
Graphics, it is moving away from, into the more commercially 
available lower-end systems and linking those together.
    Senator Bennett. Yes, because where the competition is 
coming is in the lower-end, where you are seeing French 
machines and Japanese machines competing with the Americans, 
and it is not a question of the money coming back to fund R&D. 
It is a question of the company drying up because they cannot 
get market share.
    Mr. Phillips. Well, at this point, based on the last work 
that we did, the market share situation still fairly well 
favors the United States.
    Senator Bennett. That is true, and Dr. Hamre wants to keep 
it that way.
    Chairman Thompson. I might add, do you have any figures on 
the high-performance computer sales to Tier 3 countries?
    Mr. Phillips. We do not have any updated numbers on those, 
but----
    Senator Bennett. From any source, if I might add, Mr. 
Chairman, not just American sales, but any sales.
    Mr. Phillips. I will start with U.S. sales. You can think 
of them as a sort of inverted pyramid. The vast majority of 
U.S. sales has been to the European countries--and of course, 
in the United States--to the Tier 1 countries, then to the Tier 
2 countries, Tier 3 sales as a relative proportion of overall 
sales, has been very, very small. I think we talked about five 
or six percent as of a few years ago. Tier 3 has been a growing 
market, but I think those ratios are still fairly constant.
    As far as overseas suppliers, the Japanese are usually 
considered our next biggest competitors, and we have an 
arrangement with them where they are supposed to report to us 
any sales of their high-performance computers to Tier 3 
countries. We have been told by the State Department that they 
have received no reports in the past several years, perhaps as 
many as 5 years, of sales to Tier 3 countries.
    Senator Bennett. Thank you, Mr. Chairman. My time has 
expired.
    Chairman Thompson. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Dr. Westin, like the Chairman, I am very troubled by the 
fact that the GAO found that the Clinton Administration failed 
to conduct a serious national security analysis before making 
the decision to loosen national security export controls upon 
high-performance computers. Does the GAO know why the 
administration failed to conduct the kind of in-depth review 
that many in Congress urged be conducted?
    Ms. Westin. Senator, if the officials from the Defense 
Department and Commerce Department were here, I am sure they 
would tell you they disagree with us. They would say that the 
justification was adequate in the President's report. We look 
at what was written in the law, and the law says for the second 
and third requirements, the President's report should include a 
list of all the militarily significant uses of high-performance 
computers, and conduct an analysis of the impact on national 
security of all of these uses. That was clearly not there.
    In the written statement, we have given a few examples of 
things we would have expected to be included in having a 
national security impact of those examples.
    Senator Collins. Just for the record, GAO's finding is that 
the Clinton Administration failed to comply with the legal 
requirement to conduct a thorough review of the national 
security implications; is that correct?
    Ms. Westin. Yes.
    Senator Collins. Could you give us some idea of what kinds 
of military uses computers at the 85,000 MTOPS level could be 
put to, for those of us who are not as expert in this area as 
the Senator from Utah? For example, could they be used in 
nuclear weapons design? Are they powerful enough to process 
radar or other sensor information from multiple sources, in 
order to help a country build up its air defense system against 
stealth aircraft? Could you give us some idea of what the 
potential military uses of computers at that level could be, 
Mr. Phillips?
    Mr. Phillips. There are several--again, we can base this in 
part on the studies that DOD and Commerce commissioned in 1995 
and 1998, which did have a list of about 194 known militarily 
significant applications at that time. At about 85,000 MTOPS or 
so, they talk about global ocean modeling and weather 
forecasting. They talk about on-board data processing for UAVs 
(Unmanned Aerial Vehicles).
    There are physics simulations, three-dimensional modeling, 
three-dimensional simulations of submarines, submarine 
modeling. There are a number of things on that list which we 
understand, has grown since then in militarily useful 
applications. So there are a lot more than what are on that 
list at different levels.
    Senator Collins. With regard to the examples that I gave of 
probably helping to develop nuclear weapons design, probably 
the answer to that is yes; is that fair?
    Mr. Phillips. Nuclear weapons design, typically, can be 
done at fairly low levels. We reported in 1998, based on 
Department of Energy information, that a country like China 
could use computers as low as, I believe, 6,000 or 7,000 MTOPS, 
to help design new nuclear warhead designs.
    Senator Collins. So, at 85,000 MTOPS, we are talking about 
very powerful computers, then.
    Mr. Phillips. Right, and the kinds of uses that would lend 
itself to are stockpile stewardship uses, that the United 
States is trying to be able to simulate without nuclear weapons 
testing.
    Senator Collins. Does the GAO know how the Clinton 
Administration arrived at the 85,000 MTOPS level, Mr. Lord?
    Mr. Lord. Sure. The Department of Defense officials we met 
with indicated they extrapolated--or they projected through the 
end of this year what they thought the foreign availability was 
going to be. So, basically by December of this year, according 
to their calculations, Tier 3 countries would be able to 
achieve that capability. They had some modeling. We have not 
looked at their assumptions in great detail, but that was their 
analysis at the Department of Defense--with clustering, they 
could achieve that capability. So, they have a unit over there 
who performed those calculations.
    Senator Collins. As I recall, there was previous GAO 
testimony before this Committee that suggested that the levels 
were set, not by ascertaining what was actually available from 
foreign computer makers, but rather according to what new 
processors U.S. manufacturers might hope to be able to market, 
but did not currently market at the time the decision was 
announced. Mr. Phillips, is that accurate?
    Mr. Phillips. That is correct. The process, until this last 
go-around, was that the administration would contact the 
vendors and identify, within about a 6-month period, what their 
production schedules would be for the next state-of-the-art 
processors. Then they would base their projections on the MTOPS 
levels of those processors and different configurations.
    Senator Collins. So, in some ways, this is a prospective--
--
    Mr. Phillips. Right, they have intended it to be that way. 
Their reasoning has been they wanted the export control system 
to not lag behind the technical capabilities that the companies 
could achieve.
    Senator Collins. Dr. Westin, the United States helped to 
build, and concurrently participates in, a multilateral export 
control regime that is called Wassenaar. As I understand it, 
under that multilateral system, there is a requirement for 
export license controls on high-performance computers; is that 
correct?
    Ms. Westin. To the Tier 3 countries, right.
    Senator Collins. To the Tier 3 countries.
    Ms. Westin. I will let Jeff clarify that.
    Mr. Phillips. They do not normally have tiers of countries 
in Wassenaar. It is not a system where there is a requirement, 
per se. Wassenaar attempts to have common standards, common 
guidelines, common control lists among its members, but it is 
left to the national discretion of the countries to put into 
their own laws and regulations the standards that Wassenaar 
agrees to.
    Senator Collins. Given those common controls and that 
cooperative regime, I am curious whether the United States 
consulted with the members of Wassenaar, for example, with our 
NATO allies or with the Japanese, before announcing that 
decontrol measure in January 2001. Do you know whether there 
was consultation?
    Mr. Phillips. We have talked to the State Department about 
that. I am not quite sure of the sequence, whether they were 
consulted ahead of time or were told that this is the decision 
we are about to make. They did notify in December 2000 at a 
regular session of Wassenaar, at which the United States was 
convincing Wassenaar to go along with the more recent U.S. 
changes. Levels were changed in August to 28,000 MTOPS. Either 
late December or January, the State Department made it known to 
Wassenaar that the U.S. was going to raise the levels up to 
85,000 MTOPS.
    Senator Collins. So it went from 28,000 MTOPS to 85,000 
MTOPS in a period of 6 months or so.
    Mr. Phillips. Less than 6 months.
    Senator Collins. Less than 6 months. Are you aware of 
reports that there was friction with our allies, who adhered to 
the regime because of the United States moving unilaterally in 
this area?
    Mr. Phillips. Yes, we have heard things--and this is sort 
of secondhand information--but the State Department officials 
have told us that there was some concern among the members of 
Wassenaar. I cannot say it was because they did not want, 
necessarily, the levels to change, but at least they were 
concerned because the levels had recently changed and, now, in 
such a short time, were being changed again to a rather high 
level.
    Senator Collins. Thank you very much. I very much 
appreciate GAO's excellent work in this area. Thank you, Mr. 
Chairman.
    Chairman Thompson. Thank you very much, Senator Collins. 
Let me add to that report, Senator Collins, if I may. Some of 
us went over and talked to our Wassenaar allies last year, 
about this very thing, and I can add to your assessment. You 
are getting your information from the State Department. It 
sounds like they have been pretty candid with you, and I just 
want to back that up. Folks that we talked to over there were 
pretty consistent in being concerned that the United States, 
after having so many of us complain about our efforts to get us 
out of COCOM, and how that Wassenaar was not tight enough, and 
there were no under-cutting rules or anything like that. It was 
much too loose.
    Here we are, in their eyes, always pushing the envelope in 
terms of high-performance computers, and I think we are doing 
it strictly to get a competitive advantage. I can verify that 
the ones we talked to were not pleased with it at all and they 
think we are quite hypocritical in complaining to want to have 
control of sensitive items and have a multilateral approach to 
it on the one hand and continue to push the envelope past where 
they are willing or capable, I guess, of going on the other 
hand.
    Let me get back to another point, and maybe we can take 
advantage of your expertise while we have you here, in more of 
a technical area. It seems to me from what I have read, from 
the work that the GAO has done and others, that the computing 
power of these high-performance computers obviously is very 
important. If you string that power together, you get more 
power. But there are two things that seems to me like we need 
to say about that.
    First, is that clustering at the 70,000 MTOPS level does 
not give you the same situation or the capability as having a 
high-performance computer at the 70,000 MTOPS level, because 
clustering is more difficult to operate. It is more difficult 
to maintain. The power is not exactly the same. The application 
is different. Is that a correct assessment?
    Ms. Westin. Yes, as I understand it, Senator, not all 
applications will run the same on a high-performance computer 
that is 70,000 MTOPS, as opposed to a system where the 
computers have been clustered to achieve the 70,000 MTOPS 
level.
    Chairman Thompson. As a matter-of-fact, is it not true 
that, as far as we can determine, the clustering ceiling, as 
best we can determine, is at about the 70,000 MTOPS level 
capability?
    Mr. Phillips. Yes, that is with the caveat that is using 
mass-market commercially available components. That is how we 
have tried to address the question. There are higher levels, 
sometimes considerably higher levels of performance you can 
achieve through clusters, that have been achieved. But that 
higher level sometimes is reached using items that would be 
controlled by export controls or would be proprietarily 
controlled.
    Chairman Thompson. All right. So, if they are able to get--
a clustering country is able to get a higher MTOPS level 
computer, they can cluster more?
    Mr. Phillips. That is possible.
    Chairman Thompson. We are at the 70,000 MTOPS cluster level 
with the caveat, and we are about to decontrol altogether at 
the 85,000 MTOPS level. We are decontrolling at a level higher 
than what we believe they can cluster at right now.
    Mr. Phillips. That is correct. The projections we have seen 
from the Defense Department are based on projections of 
availability in the last quarter of 2001, not now.
    Chairman Thompson. The second thing it seems to me we can 
say about this is that while the power--and this is used in 
layman's terms, but hopefully, one of the things we can do is 
help the general public understand this better, and I am a heck 
of a lot closer to the general public than I am an expert on 
this stuff. While the computing power is very important and 
stringing it together is very important, and is evidently 
unlimited, it seems to me like there is a big difference 
between that and a military application, for example--that how 
you use that state of facts that has just been described, in 
terms of application, in terms of your ability to maintain it, 
in terms of your ability to repair it--the software that you 
use--it seems to me, from all I can tell, that there is an 
awful lot of stuff that goes into an ultimate ability to have, 
say, a battlefield application other than just the raw power of 
the computer; is that not correct? Could you elaborate on that 
somewhat?
    Mr. Phillips. Again, depending on the application, 
sometimes you want enhanced graphics capability, sometimes you 
want enhanced communications capability. If you are dealing 
with real-time or near real-time command and control 
communications capabilities, clearly, you need to have real-
time or near real-time computing. You have to have that 
processing done when you need it, as opposed to research and 
development projects, which is what most high-performance 
computers have traditionally been used for. There is 
flexibility in R&D in waiting longer for your results with a 
clustered system than you might otherwise have needed with a 
vendor-supplied system.
    Chairman Thompson. In terms of all of that, the 
applications and so forth, can anyone in Tier 3 or Tier 4 
countries touch the United States in terms of that ability 
right now?
    Mr. Phillips. We have not done any recent work on that, but 
traditionally their computing capabilities have been lower, 
sometimes considerably lower, than the U.S. capabilities.
    Chairman Thompson. You are talking about not just the power 
of the MTOPS power, but all of the applications and all of that 
we have been talking about. You made another distinction, and 
that is in terms of the usefulness of, say, using clusters and 
things of that nature; that if you are in an R&D application, 
that timing is not that important. You can wait longer for more 
results and so forth. But if you are in a battlefield 
application, you have got to have results pretty quickly. So 
when--it is not just if you get the capability; it is when you 
get the capability might be very important. Is that a correct 
assessment?
    Mr. Phillips. That is right.
    Chairman Thompson. Senator Bennett, do you have anything?
    Senator Bennett. Mr. Chairman, I have nothing further, but 
I appreciate the panel and your expertise, and I think, Mr. 
Chairman, you were on the right track again on this last series 
of questions, because it is not just the box. You can have the 
box and it can have all of this capability, and if you do not 
have the intellectual capability to program it properly or use 
it properly, you are going to be in real trouble.
    The only other comment that I would make--that comes to me 
as I sit here and listen to this. I remember my interview with 
General Horner, who was the head of the Air Force war in the 
Gulf War, and then became the Commanding General of the Space 
Command, he told me something that I think applies here, that I 
found fascinating. He said the Gulf War was the first war 
fought from space. All of the command and control was done from 
space. They used satellites to direct tanks. He said we so 
filled up all of the military satellites that we had to go out 
and lease space on commercial satellites, because we did not 
have enough space. Then with a grin he said one of the 
commercial satellites we leased was leasing the other half of 
its capability to Saddam Hussein. I think that is kind of a 
precursor of what we are going to be seeing here.
    Again, back to Juno. They may end up--somebody comes in and 
says they want to buy ``X'' amount of time and they turn out to 
be buying it for and on behalf of somebody else, but the main 
protection we have in America is not just the ability to 
produce a better box, but all of the other things, Mr. 
Chairman, that you were going through that have an impact on 
how the box is used. Again, I am grateful to the panel and for 
the expertise.
    Chairman Thompson. Thank you, Senator, for your expertise. 
I think you are right, implicitly, in what you have always 
said, and that is that among the important things, probably the 
most important thing has to do with our ability to run faster 
as a Nation, that the world does not stand still, and we have 
to continue to run faster and outstrip the other guys. The 
question here is whether or not we want to assist them to run 
faster, too, even though they are going to be behind us or 
whether or not we can do some things that might slow them down 
a bit.
    I hope this has not been a session to beat up on the prior 
administration. I am hopeful that we can look forward from 
here, and that the current administration, can, over a period 
of time, when they are able to get all the people in that they 
need to get--I can only imagine what they are going through 
over there in trying to get their people confirmed and so 
forth--will take these issues into consideration and conduct a 
thorough national security risk assessment. Get some people 
together, take a little time, start from scratch. If MTOPS 
needs to go, let it go, but look and see what else is 
available. Instead of concentrating on the hardware, maybe 
concentrate on the software. Maybe there are other things that 
we can do, or if we are just to throw up our hands and 
decontrol everything to everybody, let us do it on top of the 
table and quit claiming that we have an expert control system, 
when really we do not have any system at all, because whatever 
we can manufacture, we are going to exceed that MTOPS level 
under the assumption everybody is going to get it.
    At least we can do it honestly and after having made an 
assessment, and I believe that they will do that and that is 
basically, I think, all we can ask.
    Thank you very much for being with us. The Committee is 
adjourned.
    [Whereupon, at 10:52 a.m., the Committee was adjourned.]




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