[Congressional Record Volume 143, Number 9 (Wednesday, January 29, 1997)]
[Senate]
[Pages S793-S801]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BOMBING OF THE KHOBAR TOWERS
Mr. BRYAN. Mr. President, I rise today because of strong concerns I
have related to the Air Force's evaluation of the events surrounding
the tragic Khobar Towers bombing in Saudi Arabia. The Air Force has not
yet released its official report on these events, but it has been
widely reported that the Air Force will recommend no disciplinary
action against any officer in relation to this incident. Mr. President,
I do not understand this recommendation.
As you will recall, shortly before 10 p.m. on the evening of Tuesday,
June 25, 1996, a fuel truck pulled up to the perimeter of a Khobar
Towers' complex in Dharan, Saudi Arabia. This complex housed almost
3,000 airmen of the 4404th Wing, as well as military personnel from the
United Kingdom, France, and Saudi Arabia. Air Force guards spotted the
truck and immediately began an effort to evacuate the building.
Unfortunately, before they could succeed, a large explosion occurred
that destroyed the face of Building 131, killing 19 American
servicemembers and seriously injuring hundreds more.
In the immediate aftermath of the explosion the members of our Armed
Forces acted heroically, restoring order and providing aid to those who
had been injured. In less than 3 days the 4404th Air Wing had recovered
and was once again flying its mission over the skies of southern Iraq.
This bombing and a Riyadh, Saudi Arabia, bombing in November 1995
that killed five Americans, raised a number of fundamental questions
regarding the threat of terrorism to United States
[[Page S794]]
forces deployed overseas and the priority of force security among those
military commanders charged with responsibility for providing that
security. Secretary of Defense Perry took an important step in
addressing these questions by establishing an independent task force to
examine the facts and circumstances surrounding the bombing. This task
force was led by Gen. Wayne A. Downing, a highly respected and
distinguished retired four-star general.
The findings of the Downing report were significant and wide ranging.
They covered force security standards and policies, intelligence,
threat assessments, and United States-Saudi cooperation. Secretary
Perry took these findings seriously and as a result has announced major
changes in our approach to force protection. Unfortunately, in a number
of areas it appears the Air Force has chosen to disregard the Downing
task force findings.
The contrast between the Downing report and the Air Force's apparent
findings, and I use the term ``apparent findings'' because at this
point, Mr. President, the official report has not yet been released,
finding 19 of the Downing report states ``The chain of command did not
provide adequate guidance and support to the Commander, 4404th Wing.''
Finding 20 states ``The Commander, 4404th Wing did not adequately
protect his forces from terrorist attack.'' Did not adequately protect
his forces from terrorist attack. Yet the Air Force has apparently
concluded that every person in the chain of command met standards of
performance and acted with due care and reasonably. Furthermore, the
Downing report details the information available on the terrorist
threat against our forces in the Khobar Towers. The Downing report
states that the Khobar Towers had been described as a soft target,
critical target and a specific site of concern. In addition, the
Downing report notes that there was a series of 10 suspicious incidents
in the preceding 90 days surrounding this complex that indicated the
possibility of a terrorist threat. In contrast, the Air Force has
reportedly found that the chain of command considered the threats, in
view of the information known at the time, and acted with due care and
prudently. This judgment by the Air Force, in my opinion, is
inexplicable.
Mr. President, the wing commander of the 4404th Wing, General
Schwalier, has been scheduled for a promotion from brigadier general to
two-star rank of major general. Now, I understand that hindsight is 20/
20, yet I cannot ignore the findings of the Downing task force. For
this reason, I have written a letter to the Secretary of the Air Force
expressing strong concerns regarding this appointment. The Downing task
force makes clear that General Schwalier did have command
responsibility and authority for force protection of his personnel in
the 4404th Wing while he could not have been expected to know the
precise nature of the terrorist attack, the Downing report does raise a
number of concerns regarding the priority of force protection under
General Schwalier.
For example, in light of the terrorist threat, a number of additional
measures could have substantially reduced the threat from a terrorist
attack. The windows facing out from the complex, Building 131, could
have been coated with a shatterproof substance known as Mylar. Airmen
with outside rooms could have been moved into the interior of the
complex. That was the area that was most exposed, Mr. President.
Finally, a higher priority could have been placed at moving the
perimeter fence farther away from housing quarters. When difficulties
with the Saudi Government halted plans to move the fence, the matter
should have been taken up and reported up the chain of command.
According to the Downing report, these steps were not taken. General
Schwalier concentrated solely on the threat of a penetrating bomb
attack and failed to address other kinds of terrorist attack. He failed
to correct vulnerabilities he could have corrected, and for those
vulnerabilities he could not correct by himself General Schwalier
failed to raise the issues up the chain of command or coordinate with
the host nation.
Mr. President, I do not believe that the Downing report was
unreasonable or looking for scapegoats.
This task force took an independent, forthright, and tough look at
the threat of terrorism and how we can respond to that threat in the
future. I have no doubt this tough assessment will save U.S. lives in
the future. In the same way, the Air Force must also take a tough look
at its responsibilities to protect its forces from this new threat. And
in this instance, Mr. President, I am afraid the Air Force has failed
to do so. I urge the Secretary of the Air Force to reconsider the Air
Force's conclusions regarding this horrible and tragic incident.
Mr. President, I thank you. I yield the floor.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. GLENN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Hagel). Without objection, it is so
ordered.
The Senator from Ohio is recognized for 10 minutes.
DOE Property and Asset Management
Mr. GLENN. Today I am releasing a report, prepared at my direction by
the minority staff of the Governmental Affairs Committee, on property
and asset management at the Department of Energy. The report, aptly
titled ``Lost and Still Missing,'' discusses at some length the chronic
personal property management problems at the Department, problems that
have resulted in the loss of millions of dollars worth of taxpayer-
purchased equipment. Recently, DOE has made some progress in tackling
this problem, but much more needs to be done.
For many years, missing property and equipment and poor inventory
controls have been a major problem at the Department of Energy.
Estimates by the IG and GAO of the value of lost and unaccounted for
equipment have ranged from tens of millions to hundreds of millions of
taxpayer dollars. Missing equipment includes computers, furniture,
machine tools, electric pumps, and cameras, plus more exotic items like
semi- and flatbed trailers, electronic switchgear, nuclear fuel
reprocessing equipment and technology, diesel engines, cranes and
armored personnel carriers.
So we are not talking about a few missing pencils and paper clips.
These are costly items. And all too often it appears that this material
just flies out of DOE inventory and disappears into thin air.
Furthermore, equipment in working order and usable supplies have been
sold as surplus for a small fraction of their market value. Other
equipment has been left outdoors to be ruined by the elements.
Finally, many of the missing items are national security sensitive
and did not go through proper demilitarization and declassification
procedures.
Our review also found that the problem of missing property and poor
inventory controls is not unique to any one DOE site, but is prevalent
at numerous sites, including, among others, the Portsmouth Gas
Centrifuge Enrichment Plant, the Rocky Flats Plant, the Idaho National
Engineering Laboratory, Sandia National Laboratories, Los Alamos
National Laboratory, the Fernald Environmental Restoration Corporation,
and Oak Ridge National Laboratory. The specific problems at each site
are discussed at length in the report. Some go back a couple of years,
others are more recent. Let me give you a few examples.
Rocky Flats, CO--GAO identified $29 million in missing equipment.
Missing items included: a semi-trailer, a boat, forklifts, furnaces,
over 1,800 pieces of computer equipment, and 8 armored personnel
carriers. The armored personnel carriers are a story in their own
right. DOE initially donated the 8 carriers to a military museum, but
did not demilitarize them. The museum gave one of the carriers away,
which was subsequently resold twice before winding up in the hands of a
man who supplies props to Hollywood movie studios. Since then, DOE has
repossessed the vehicles.
Idaho National Engineering Laboratory--DOE sold as surplus national
security sensitive nuclear fuel reprocessing equipment to a scrap
dealer for $154,000 who then tried to sell it to a
[[Page S795]]
British company. Once the Department discovered its mistake, it bought
back the equipment for $475,000. A separate sale to the same individual
included between 25 and 50 personal computers whose hard drives were
not sanitized in accordance with Department and GSA regulations.
Unfortunately because INEL's records were so poor, it was not possible
to determine exactly how many computers were sold, or, more
importantly, whether they contained national security sensitive or
restricted data.
Sandia, NM--An on-site inspection by the inspector general revealed
that computers, machine tools, furniture, and rolls of cable were left
outside for long periods of time. When Sandia officials tried to reuse
the equipment, they discovered that it had been ruined by the elements.
Other equipment had been improperly mixed with radiologically-
contaminated items.
Portsmouth, OH--Equipment valued at $35 million was sold for less
than $2 million. DOE's own documents indicate that some of this
equipment may be nuclear proliferation sensitive. This includes
technology used in the enrichment of uranium.
Why do these problems exist? It is a simple two-word answer. Poor
management.
In some cases, the Department failed to provide effective policy, or
negotiated management and operating contracts that did not meet its own
regulations on property management; in others, the field offices failed
to provide adequate oversight, especially in the development and review
of property management systems. These failures have been compounded by
antiquated property tracking systems with poor records, lack of proper
training for employees charged with property management, wide
variations in local policies that implement Department regulations,
and, for one site at least--Rocky Flats--a failure, both in the field
and at headquarters, to follow up on cases where there was reason to
suspect theft.
The main reason for the Department's pervasive and decades-long
problems with property management likely lies in its perception of the
importance of its national security mission. This perception has
resulted in the downgrading in importance of more routine
responsibilities, such as proper accounting, custodianship, and
disposal of equipment and other personal property. As one high-ranking
Department official was quoted in the Washington Post: ``When it's the
life and death of civilization, people start being sloppy about some
other things.'' That statement is grandiloquent excess at best, and
utter nonsense as an excuse for poor management. In any case, the
Department must finally recognize that its cold war mission is over.
Now more than ever, the taxpayers are demanding cost-effective
Government.
In and of themselves the personal property problems discussed in the
report are significant and deserve management attention. The importance
of addressing these problems is further compounded because DOE is just
beginning to address long-term downsizing issues associated with the
changes from its cold war mission. For example, within the next 10
years, DOE's installed capacity to produce and test nuclear weapons
will be reduced to 10 percent of its cold war level. As a result DOE
will need to dispose of thousands of fixed assets--including buildings,
real property, vehicles, equipment, precious metals, fuel, et cetera.
To manage this asset disposition process efficiently, DOE will need to
carefully take to heart the lessons learned from the personal property
management problems discussed in this report.
Recently the Department has taken encouraging and good faith efforts
to correct some of these deficiencies, including the renegotiation of
the personal property requirements in both new and existing M and O
contracts, and implementing guidance and regulations on the handling of
proliferation sensitive property. However, these efforts must be
continued and expanded.
The report contains a number of recommendations on ways to improve
personal property management. Our principal recommendation is that the
Department establish a centralized Office of Property and Asset
Management that would report directly to the Secretary. Currently,
personal property, real property, and asset management responsibilities
are spread across too many offices, both at headquarters and in the
field, and that is one reason why the Department has such a problem. No
one is accountable.
I will be taking this and the other recommendations up with
Secretary-designee Pena as he goes through the confirmation process. I
am sending letters today to both Chairman Murkowski and Ranking Member
Bumpers of the Energy Committee in the hope that they will address the
matter during confirmation hearings. This issue needs to be addressed
at the highest level, not relegated to the bureaucratic backwaters as
all too often has happened in the past.
In closing, our review is based on reports from the General
Accounting Office and the DOE inspector general, documents obtained
from the Department, interviews with Department officials, committee
hearing records, press accounts and official DOE responses to questions
that both the staff and I addressed to the Department. We have copies
of the full report for those who would like it, and they could request
it from my office.
I ask unanimous consent the report be printed in the Record.
There being no objection, the report was ordered to be printed in the
Record, as follows:
Lost and Still Missing . . .
Managing Property, Equipment and Assets at the Department of Energy
(A report by the Minority Staff of the Senate Governmental Affairs
Committee)
Introduction
For many years, the Department of Energy has had serious
problems managing property and equipment at its different
sites. These problems have been the subject of numerous GAO
and IG reports as well as hearings by the Governmental
Affairs Committee. Estimates of the value of missing and
unaccounted for equipment have ranged from tens to hundreds
of millions of taxpayer dollars. Missing equipment includes
computers, furniture, machine tools, electric pumps and
cameras, plus more exotic items like semi and flatbed
trailers, electronic switchgear, diesel engines, nuclear fuel
reprocessing equipment, cranes and armored personnel
carriers. Equipment in working order and usable supplies have
been lost, stolen, sold as surplus for a small fraction of
their market value, left outside to be ruined by the
elements, and mixed with radiologically contaminated items.
At the direction of Senator John Glenn, Ranking Member of
the Governmental Affairs Committee, the Minority Staff of the
Committee conducted a review of property management at the
Department of Energy. Our review is based on reports from the
General Accounting Office and the DOE Inspector General,
documents from the Department, interviews with Department
officials, hearings records, press accounts and official DOE
responses to questions that the staff and Sen. Glenn
addressed to the Department and Secretary Hazel O'Leary.
Our review found that the problem of missing property and
poor inventory controls is not unique to any one DOE site,
but has been found at numerous sites, including, among
others, the Portsmouth, Ohio Gas Centrifuge Enrichment Plant,
the Rocky Flats Plant, the Idaho National Engineering
Laboratory, Sandia National Laboratories, Los Alamos National
Laboratory, the Fernald Environmental Restoration
Corporation, and Oak Ridge National Laboratory. These site-
specific problems are examined at length later in this
report. The report will also summarize steps taken by the
Department to correct its problems as well as suggest further
steps that we believe could help prevent these problems from
recurring in future years.
The lessons learned from past personal property management
problems are doubly important because the Department is
currently embarking on a large scale asset disposition
program. This program is necessary in order to meet budget
reduction targets and to dispose of unneeded property,
equipment and inventory. Quite simply, the needs of the
Department and nation have changed since the end of the Cold
War. For example, current DOE plans will result in a nuclear
weapons complex that has one-tenth the installed capacity
that existed just a few years ago. As a result, the
Department will need to dispose of thousands of fixed assets,
including real property, buldings, equipment, vehicles,
precious metals, fuel, etc. Some legislative authority will
likely be necessary to accomplish the Department's goals for
this program. While this program is a logical and potentially
cost saving one for the Department to undertake, our report
strongly recommends that DOE's ailing property management
system be reformed and overhauled so as to prevent past
property management abuses from happening again in the
future. To that end, the report makes a number of specific
recommendations on property mangement reforms.
[[Page S796]]
Contributing Factors to DOE Property Management Problems
Many deficiencies in the management practices of the
Department of Energy have led to missing and unaccounted for
property. But all together it's a product of bad management.
In some instances, the Department failed to provide effective
policy, or signed management and operating contracts that did
not meet the Department's own regulations on property
management. In others, the Field Offices failed to provide
adequate oversight, especially (but not only) in the
development and review of site-based property management
systems. These failures have been compounded by inadequate
guidance on how to implement policies, inadequate funding for
property management, antiquated property tracking systems,
poor property records, lack of proper training for employees
charged with property management, wide variations in local
policies that implement Department regulations, and, for one
site at least (Rocky Flats), a failure, both in the field and
at Headquarters, to follow up on cases where there was reason
to suspect theft.
Perhaps the root reason for the Department's pervasive and
decades-long problem with property management lies in its
perception of the overwhelming importance of its national
security mission. This perception led to downgrading the
importance of proper accounting, custodianship, and
disposal of equipment and other personal property. As a
highly placed Department executive said to the Washington
Post: ``When it's the life and death of civilization,
people start being sloppy about some other things.'' But
if that reason ever had merit, it does not now. Nor do we
think that it was ever an adequate reason for such abuses
as selling off no longer needed equipment for a small
fraction of its market value.
Recent DOE Actions to Correct Problems
Recently the Department has taken encouraging and good
faith efforts to correct some of these deficiencies. Property
management has been given greater emphasis during the
renegotiation of some DOE contracts. For example, the current
contract at Rocky Flats contain provisions that assign
personal responsibility to employees and establish corporate
liability for property under their control. The Department
has completed wall-to-wall inventories at some sites,
including Los Alamos, Hanford, and INEL. However, there
appears to be little consistency between each site's
inventory practices.
Further, in November, 1994, DOE issued new interim
guidelines both for the control of high risk personal
property and on export control and nonproliferation. The high
risk property guidelines have been refined several times
since then, most recently in March, 1996. These regulations
require controls be developed to safeguard against the
inadvertent transfer or disposal of equipment or information
that represents a high risk because of nuclear proliferation
or national security concerns or because of environmental,
health or safety hazards. (These regulations were revisited
following a particularly embarrassing property incident at
the INEL, discussed below.)
The Department is also taking steps to deal with training
needs at the sites and field offices and the pressing need
for good, consistent information, two themes that recur in
the many GAO and IG reports on DOE property management
problems. In January 1996, the Department established a
Process Improvement Team to review training needs at the
field offices and among its contractors; the Team will make
recommendations on standardized courses. Also in January
1996, the field offices formed a team to review a new
property management system (PRISM (Enhanced)) that could be
used Department-wide, bringing a much-needed consistency to
property management efforts.
Finally, a promising (if long-overdue) step is the approval
of a number of property management systems in the past two
and a half years. Approval of a property management system
involves headquarters review to determine whether a
contractor's property management system complies with
applicable regulations. Whereas in January 1994, only seven
of the 20 major contractors involved in defense related
activities had property management systems approved by DOE,
our latest information is that all but one system has been
approved.
However, unaccounted for property and equipment remains a
serious problem at numerous DOE sites. Furthermore, as
mentioned above, the Department recently announced an asset
disposition and sale program aimed at realizing $110,000,000
by September 30, 2003. As the Department downsizes over the
next few years, there is a danger that taxpayer dollars will
be further wasted, unless vigorous property management
becomes not only a policy at Department Headquarters, but an
ethic and a practice at all sites, among all employees and
contractors. This is much easier said than done. The
Department itself remarked, in response to the 1996 Inspector
General's audit of DOE's arms and military-type equipment:
``. . ..while Department regulations are adequate, compliance
is an issue.'' Secretary O'Leary has offered her own
assessment that ``. . .correcting deficiencies of the past is
a continuous and long-term effort.''
Additional Factors Affecting DOE Property Management
On-going efforts by the Department and the Congress to
privatize DOE operations such as the Elk Hills Naval
Petroleum Reserve (recently put on hold) and a number of the
Power Marketing Administrations will place increase pressure
on DOE's existing property management systems. Congress has
also set criteria in law for DOE to transfer excess equipment
to assist educational institutions and non-profit
organizations, as well as the local economic development
efforts of communities negatively impacted by downsizing. For
these privatization and technology transfer efforts to
succeed without substantial waste, we believe that the
Department must focus increased attention on asset and
property management.
The technology transfer and economic development assistance
efforts of the Department require more than accurate
inventories. They require that the field offices and the site
contractors understand the procedures under the three acts
governing such transfers, especially how to balance the
interests of the Department against those of eligible
potential recipients outside the Department. The Department
has set up programs under the Stevenson-Wydler Technology
Innovation Act of 1980, as amended, and the Department of
Energy Science Education Act. These programs also include the
Used Energy-Related Laboratory Equipment Grant Program and
the Math and Science Equipment Gift Program. Furthermore,
under the FY1994 Defense Authorization Act (P.L. 103-160),
the Department has authority to transfer or lease excess
Department-owned personal property to private businesses in
order to support economic development initiatives that could
mitigate the effects of closing or restructuring Departmental
facilities. Here, there continue to be misunderstandings and
conflicts between the claims of the Department and the claims
of local development proponents. Policy and practice need to
be clarified at both the field and headquarters levels to
ensure that equipment transfers comply with the law and
contribute to economic and technological development while
also protecting the taxpayer's interest in what is often very
valuable equipment. Such guidance will be crucial as the
Department continues its downsizing efforts.
Management Attention Must Include Accountability
Notwithstanding the steps the Department has already taken,
we believe that further actions are necessary to raise the
priority of effective property management and assure
taxpayers that loss and mismanagement of valuable property
will not occur. Approved property management systems are a
necessary first step, but they must be implemented by well-
trained people who are working with modern systems in an
environment that supports their efforts both actively and
tacitly. Taxpayers expect a common-sense approach to managing
property that goes beyond regulations, procedures and the
latest technology. Although they certainly help, policies,
procedures and technologies in and of themselves cannot
ensure that abuses will not take place. The committment and
knowledge of individuals do count.
More appropriately, the DOE should hold its staff and
contractors accountable for the property they use. At the
contractor level, the quality of property management should
factor heavily into contractor renewal decisions; poor
property management should result in fines or penalties or
delay or reduction of award fees. At the individual level,
poor property management should be grounds for disciplinary
action, demotion, or even dismissal. This applies to both
supervisory and working-level personnel, both in the field
and at headquarters. Conversely, exemplary property
management should be rewarded. And responsibility should lie
not only with the field offices and the sites, but with
individual DOE program managers.
An analysis of property management problems at various of
DOE sites follows.
Discussion of Past DOE Property Management Problems by Site
Portsmouth, Ohio--Gas Centrifuge Enrichment Plant
A January 1995 DOE Inspector General audit (Case
No.I93CN015) \1\ prepared at the request of Sen. Glenn
revealed that property DOE originally spent $177 million to
acquire, and which the IG estimates had a market value of $35
million, was given away for a total of $2 million. This
property and equipment came from the Gas Centrifuge
Enrichment Plant (GCEP) facility which had been closed by
DOE. The IG's report points out that poor inventory controls
contributed to this outrageous waste of taxpayer dollars. How
this situation developed is a complicated story that took
place over a number of years. Still, the outcome shows that
the Department made a number of mistakes and errors that have
left it vulnerable to a loss of a significant dollar amount
of equipment.
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\1\ See list of references, at the end of the report.
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In 1985, DOE terminated the GCEP Program at Portsmouth.
Many of the assets of that program subsequently became
surplus. DOE began to inventory the surplus equipment and
establish a database. An official in charge of the inventory
effort and subsequently interviewed by the IG labeled the
database a ``best-guess effort'' to identify one million
pieces of equipment spread over 25 acres. DOE then searched
for interested parties who might wish to make use of the
equipment. On November 20, 1987, DOE entered into an
agreement with AlChemIE, Inc. to transfer equipment and
technology to the
[[Page S797]]
company for the purpose of using it to enrich non-fissile
isotopes for medical, industrial, and research applications.
The agreement stipulated that AlChemIE: remove the equipment
at its sole expense; pay the Department a 2 percent annual
royalty over 20 years on gross sales generated by the isotope
production facility; and, deposit $2 million in an escrow
account. AlChemIE and DOE also agreed on an inventory list of
equipment to be transferred, a list that later proved to be
incomplete and inaccurate. Prior to entering the agreement,
DOE received an opinion from the Department of Justice that
the agreement did not violate anti-trust law.
However, AlChemie needed a license from the Nuclear
Regulatory Commission (NRC) authorizing it to possess gas
centrifuge equipment--equipment with national security
implications given its potential application in the
development of nuclear weapons--before it could construct the
facility. But the NRC did not approve the license. On June
20, 1989, AlChemIE filed for bankruptcy and became insolvent
by August 14, 1990. At that time, the IG estimated that
equipment with an acquisition value of $46 million had been
transferred to AlChemIE.
AlChemIE had secured $2.25 million in escrow monies through
five personal loans from the Anderson County Bank in
Tennessee to five individuals representing the company. With
AlChemIE now bankrupt, Anderson County Bank assumed title for
the remaining equipment secured through the escrow account.
On November 28, 1990, the bank sold title to the equipment to
John Smelser, a former executive with AlChemIE and now
president of JHS, Inc., an equipment scrap and salvage
company.
This escrow account raised questions among state banking
authorities. As reported by the Oakridger and the Knoxville
Journal on February 6, 1991, the U.S. Attorney indicted
former bank president William Arowood, attorney Elbert
Cooper, and John Smelser for conspiring to defraud Anderson
County Bank of $150,000 from the escrow account.
Subsequently, Mr. Arowood and Mr. Cooper were found to be
guilty of bank fraud while Mr. Smelser was found to be
innocent.
In the interim, Mr. Smelser had pursued litigation against
the Department for access to equipment he claimed was owed
him from the agreement with AlChemie. After 14 months they
settled, signing a January 23, 1992 agreement giving Mr.
Smelser further access to the equipment as had been listed
previously in the AlChemIE agreement. Still, a number of
items of equipment remained in dispute and Mr. Smelser
claimed that he had been wrongfully denied those items. An
internal DOE memo noted that many of the items on the list
had either been: 1) lost; 2) transferred to GSA; 3) were
classified or contaminated; 4) had two ID numbers; or 5)
otherwise were not available. The memo concluded ``that
DOE's position, should the dispute be litigated, was
weak.'' So DOE entered into another agreement with Mr.
Smelser on June 10, 1993. However, this agreement widened
the scope of available equipment and appeared to give Mr.
Smelser carte blanche to take any surplus equipment he
wanted. The agreement gave him access to surplus equipment
property yards at Paducah, Kentucky and Oak Ridge,
Tennessee in addition to Portsmouth. According to the IG,
the agreement's wording was vague and non-specific, for
example, granting Mr. Smelser ``all unclassified,
uncontaminated loose items on third floor storage area''
and ``all unclassified, uncontaminated items that are not
required to support building operations.'' The agreement
also waived the first $100,000 in disposal costs incurred
by DOE in removing the equipment, with Mr. Smelser to
reimburse the Department for costs that exceeded that
figure.
Sen. Glenn wrote the Department in 1995, asking them a
number of questions about the missing equipment and their
agreement with Mr. Smelser (Sen. Glenn's letter and the
Department's response can be made available upon request).
The response from Donald Pearman, Associate Deputy Secretary
for Field Management, noted that the final agreement with Mr.
Smelser expired on June 10, 1994. However, the letter also
points out that Mr. Smelser owes DOE $487,228 for fees
associated with removing equipment from the site, and that
Mr. Smelser claims DOE did not provide all the equipment he
was entitled to remove. As a result, there is pending
litigation, still in the discovery process as of December of
1996, between DOE and Mr. Smelser. Mr. Smelser has filed a
claim for $503,266,375 (i.e., more than a half billion
dollars), and the Department has filed a counterclaim for
$492,208 plus interest for removal services it rendered to
Mr. Smelser.
Not only are inventory controls necessary for prudent
fiscal management, they are also critical for environment,
safety and health purposes, as well as for enforcing our
nonproliferation policies, which ensure appropriate controls
over equipment and technology that could be applied to the
production of nuclear weapons. Department documents and
correspondence with Mr. Smelser show that access to, and
disposal of, contaminated or classified equipment were on-
going issues in the relationship. Moreover, there appears to
be some confusion as to the impact of the disposition of the
GCEP property from a non-proliferation perspective. The IG's
report (page 7) states:
``the OIG has not identified, nor has any reason to
believe, that any contaminated or classified equipment was
released to AlChemIE or Mr.Smelser. It appears that the
Department is complying with these procedures with respect to
Mr. Smelser. The classified Program material never left the
site at Portsmouth; therefore, U.S. Export Control Rules
governing export of sensitive nuclear technology/equipment
did not apply.''
However, a report from DOE's Deputy Assistant Secretary for
Security Evaluations to the Under Secretary entitled,
``Release of Nuclear-Related Property and Associated
Documentation by the Department of Energy since 1989,'' (page
12) dated December, 1994 is much less comforting:
``The only identified release of possibly nuclear-related,
export-controlled property via technology transfer came about
through an out-of-court settlement. . . This case involved
the release of a large number of equipment items to a single
individual by Oak Ridge and Portsmouth. . . during the period
1989 through June 1993. As a result of the out-of-court
settlement, and in addition to the gas centrifuge equipment,
all excess property from Oak Ridge and Portsmouth from June
1993 and June 1994 was released to this same individual. None
of the approximately 325,000 line items released between 1989
and June 1994 were reviewed for export control. Therefore, it
is possible that export-controlled items were part of this
release. Although neither classified equipment nor critical
process information was released, the large number of items
associated with the gas centrifuge enrichment process,
together with the excess property items (June 1993 through
June 1994), makes this release potentially sensitive from a
nonproliferation perspective.'' (Emphasis added.)
When Sen. Glenn asked the Department in his April 25, 1995
letter to comment on the apparent discrepancy between the
IG's report and the December 1994 report to the Under
Secretary, the Department responded that there appears to be
no discrepancy. In response to a further inquiry, the
Department responded in May, 1996 that all equipment declared
surplus from the GCEP facility was reviewed prior to release
to assure that the equipment was unclassified equipment, and
that unclassified equipment is not subject to export
control regulations.
We note that this response cannot be reconciled with
earlier statements from the Department. The issue is not only
whether the equipment was classified or unclassified. Nor is
the issue confined to just this site. As Secretary O'Leary
pointed out in an internal memorandum of August 3, 1994 about
the sale of surplus equipment at the Idaho National
Engineering Laboratory:
``Apparently, the decisions. . ..were based on whether or
not the equipment and related documentation was unclassified.
This is an inadequate form of control because a great deal of
nuclear production processes have been unclassified for
several years. A more appropriate form of control would
utilize information regarding the proliferation sensitivity
of the equipment, materials and related documentation.''
Thus, we recommend that DOE be asked to review, for export
control purposes, the equipment it does know was deemed
surplus from the GCEP facility. Specifically, would any of
the items released to Mr. Smelser, if exported, require
either: (a) a validated license from the Department of
Commerce; or (b) an authorization from the DOE; or (c) an
export license from the NRC?
The GCEP saga is only one in a long list of DOE sites with
chronically-ill personal property management systems. Other
problem sites include Rocky Flats, the Idaho National
Engineering Laboratory, Los Alamos, Sandia, the Central
Training Academy, Fernald and Oak Ridge.
Rocky Flats, Colorado
The DOE site at Rocky Flats has had persistent problems
managing personal property. In 1993, the Inspector General
reported (DOE/IG-0329) that a 1991 inventory conducted by the
site contractor found 5,900 pieces of government equipment
with an acquisition cost of over $33 million unaccounted for
or missing from the site, presumably either lost or stolen. A
subsequent GAO report (GAO/RCED-94-77) summarized the 1991
inventory, and stated that the missing or unaccounted for
equipment included about 1,400 items of computer equipment,
plus lathes, drill presses, hoists, furnaces, laboratory
equipment, forklifts, a photo-copier and a boat. The IG also
criticized management at Rocky Flats for storing sensitive
items such as computer equipment outdoors in the open air,
and commingling equipment potentially contaminated with
radioactivity with uncontaminated items. In its 1994 report
(GAO/RCED-94-77), GAO noted that a follow-up inventory,
completed in 1993, found $12.8 million in equipment missing
from the site and another $16.5 million that could not be
physically located, for a total of $29.3 million. Missing
items included: a semi-trailer, forklifts, cameras, desks,
radios, typewriters, a wide variety of laboratory and shop
equipment such as balances and lathes, and over 1,800 pieces
of computer equipment such as monitors and keyboards. As of
October, 1995, DOE considered that only $4.5 million of
property was missing or could not be physically located.
However, in a December 1995 report (GAO/RCED-96-39), GAO
notes that DOE has written off $20.8 million in missing or
unlocated property. This equipment presumably is lost
forever.
A July 1995 GAO report (GAO/OSI-95-4) examined the
likelihood that theft contributed to the inability of DOE and
the site contractor to account for the millions of dollars of
missing equipment at Rocky Flats. GAO concluded that the
extent to which theft has
[[Page S798]]
been a factor is unknown, because of poor property management
practices and inadequate records. GAO also concluded that
poor management practices, such as characterizing possibly
stolen equipment as missing without undertaking an
investigation, contributed to an environment that allowed
theft. GAO further noted that Rocky Flats did not always
report suspected theft to DOE, and that DOE did not always
report suspected thefts to the DOE Inspector General or to
the FBI, as regulations require. GAO cited the Motor Vehicle
Maintenance Shop as a place where automotive parts and
supplies were easily stolen. DOE reports that physical
security of property has been upgraded at Rocky Flats and
that cases of possible theft are receiving better review.
The December 1995 GAO report notes that DOE has made
improvements in management of personal property at Rocky
Flats. For example, DOE has incorporated specific performance
measures into its new site management contract that address
many of the identified problems with property management. DOE
has also established a computerized tracking system and
allocated 2 FTEs and 2 support contractors to operate it.
Because a large percentage of the data in the tracking system
is inaccurate, DOE has made updating and correcting these
records a priority task for FY96. Still, it seems unlikely
that Rocky Flats will ever recover many of these missing
items.
On May 15, 1995 the Associated Press reported the story of
how David Wang, a collector of military vehicles who leases
them as props to Hollywood movie studios, obtained an armored
personnel carrier surplused from the site. (The story built
on a May 5 news release from DOE reporting the recovery of
the vehicle and seven others.) The carrier bought by Mr. Wang
was one of eight previously donated by Rocky Flats to a
military museum in Anderson, Indiana to be displayed for
historical purposes. Rocky Flats officials were supposed to
de-militarize the vehicles in accordance with DOE
regulations, but they did not. The museum owner gave this
vehicle away and it was subsequently resold twice before
winding up in Mr. Wang's hands. One of the middlemen in the
transaction, John Ferrie, when asked about the paperwork and
procedures for obtaining the carrier, was quoted as saying,
``It's kind of a handshake business.''
As noted above, DOE seized back the vehicles. An
investigation is currently underway to determine any criminal
wrongdoing. A June 1996 follow up GAO report (GAO RCED-96-
149R) found that physical controls and accounting procedures
for firearms, ammunition, and other military equipment at
Rocky Flats had improved.
Management of Arms and Military Equipment at Several DOE Sites
In a February 1996 report (DOE/IG-0385), the IG concluded
that DOE has more weapons (handguns, shotguns, rifles,
submachine guns, light anti-tank guns, howitzers, armored
cars, and tanks) than are necessary for security purposes.
The IG also found that weapons are not accurately accounted
for, inventory documentation is not always correct, and
property management regulations were violated in the lending
of weapons to other organizations. Further, the report shows
that problems with armored vehicles are not isolated to Rocky
Flats, but occur at other sites as well. Highlights of the
report follow.
``Oak Ridge: Site officials could account for only seven
out of ten armored vehicles. After IG review, DOE discovered
documentation showing the location of two of the three
missing vehicles. About 66 weapons were unaccounted for: 50
had dropped off the inventory, and 16 had been transferred
off-site, but officials were unable to say where. All 66 were
eventually located. Three M-16s and six M-14s were loaned to
local police five years ago without proper approval. (DOE
regulations allow loans for one year, or longer if the head
of the field organization approves.)
``INEL: One out of two armored vehicles were missing with
no knowledge of its whereabouts. The IG found no
documentation to support disposal or transfer.
``Los Alamos: The IG discovered several faulty entries on
the inventory database. Six items listed as guns were radar,
spray paint, or gas guns. An item labeled a vehicle tanker
was an M-60 tank; another item labeled as a rifle was an 8-
inch naval gun. The IG found a 20 mm machine gun that was not
listed on the database. Two TOW launchers and one Russian
rocket launcher were found in a bunker; none of the three
were listed on the database.
``Hanford: Eight light armored personnel carriers were
donated to a military museum. No documentation was found to
show whether the vehicles had been demilitarized. Site
officials loaned 24 rifles and shotguns to a local law
enforcement department nine years ago. Information on the
status of the loan agreement could not at first be found, but
Richland eventually determined that a subsequent 1992
contract covered the firearms.
``Savannah River: Several years ago, 4,000 rounds of
ammunition were lost and not recovered. Savannah River was
unable to provide documentation that showed the
demilitarization codes for four armored personnel carriers
transferred as excess property to a Federal agency and a
local law enforcement department.
``Sandia: The site averaged nearly 6 weapons per security
officer. The IG observed 29 tanks, 4 howitzers, and 1 armored
personnel carrier on site, all transferred from DOD. None of
the items were on the inventory, and none had documents
justifying their need or use.''
In the February 1996 report, the IG made a number of
specific recommendations for corrective action, including
that DOE's Office of Nonproliferation and National Security
conduct a ``needs study'' to 1) determine what arms and
weapons are necessary and 2) identify unneeded arms for
excess or destruction. In addition, the IG recommended that
wall-to-wall inventories of arms be conducted at the sites;
that reconciliation of inventory be updated; and that a
formal process be established through a Memorandum of
Understanding to transfer unneeded arms to an approved
disposal site. In their comments on the IG report, DOE
management concurred with the IG's recommendations and
stated that they have either taken action, or are planning
to take action, to resolve the issues raised in the
report.
On March 1, 1996 Sen. Glenn wrote the Department asking for
their response to the specific recommendations in the IG
report. On April 26, 1996 the Secretary replied, agreeing
that the Department had more military equipment than needed,
and gave the recent changes in the Department's missions as
the cause. Secretary O'Leary stated that the Department is
working with the Department of Justice to arrange for the
transfer of much of DOE's excess weapons and protective force
equipment to local law enforcement agencies. The Secretary
cited a number of actions the Department is taking in
response to the IG report, including requiring designated
personnel to attend the Defense Demilitarization Program
conducted by the U.S. Army Logistics Management College. The
Secretary acknowledged that further improvements are needed,
particularly in inventory control and records management.
Idaho National Engineering Laboratory
(A) Fuel processing restoration project property
A situation eerily reminiscent of the sale of equipment
from the Portsmouth GCEP facility occurred in 1993 at DOE's
INEL facility. In April 1992, because of a diminished need
for reprocessed uranium, the Secretary of Energy terminated
the Fuel Processing Restoration (FPR) program at INEL. The
termination left DOE and the M&O contractor with nearly $54
million in property to be either used in other ways or
disposed. The equipment included, among other things:
specially designed vessels for nuclear fuel reprocessing,
sheet metal, reinforcing steel, pipe fittings, computers,
power tools, portable welders, flat bed trailers, heavy duty
shop equipment, and office equipment.
A 1995 IG audit (WR-B-96-04) of $21.2 million of this
property found that at least $4.2 million was not accurately
accounted for and excessing procedures were not followed. The
IG found that Westinghouse was responsible for $3.58 million
of this equipment, while MK-Ferguson was responsible for
$655,000. In addition, the Department procured at least
$43,000 worth of property and equipment which duplicated that
which was already available from the unneeded FPR property
inventory.
The IG also found that only a small percentage (44 of
1,490) of items excessed outside the Lab were ever entered
into the Department's system for excess property. According
to the IG, Westinghouse project management would send lists
of available property to contact points at other DOE
facilities on an ad hoc basis, instead of using the
established, Department-wide disposal system. As a result of
using this informal system, property was not made available
to all elements of the Department nor to other Federal
agencies. Potential customers did not know that unneeded
property was available and a lot of that property has gone
unclaimed. Further the IG identified 2,700 stock items which
had neither been identified for redistribution nor as excess.
The IG concludes that: ``Although we were able to physically
locate most of the property, the lack of property
accountability rendered the property readily susceptible to
undetected theft or loss.''
One subset of the FPR property has become notorious. The
case first became public when the Wall Street Journal
reported it in August 1994. In April 1993, after
approximately $22 million of the FPR property was distributed
within the DOE community through Westinghouse's and MK-
Ferguson's informal process, and another $13 million or so
retained by INEL, most of the remaining property (with an
acquisition cost of about $18 million) was transferred to
INEL's managing contractor, EG&G, for disposal outside the
Department. EG&G advertised the equipment for sale in June
1993 in the Commerce Business Daily. On July 12, 1993, much
of the equipment was purchased by Mr. Tom Johansen, of
Frontier Car Corral/Frontier Salvage in Pocatello, Idaho. Mr.
Johansen paid $154,000 for equipment originally purchased by
DOE for $10 million.
The equipment Mr. Johansen purchased consisted of 57 large
components to the fuel reprocessing system, including slab
tanks, annular tanks, decanters, separation columns, and
evaporators with external tube sheet heat exchangers. A
subsequent DOE investigation found that, for countries that
wish to reprocess nuclear fuel for use in a weapons program,
acquiring this equipment could shorten the time necessary to
develop and implement a reprocessing operation. For countries
without advanced metal manufacturing industries, acquiring
this equipment
[[Page S799]]
could lead to a significant time savings, according to the
DOE report.
Soon after purchasing the equipment, Mr. Johansen received
copies of architectural engineering design drawings
associated with the facility through a FOIA request. On
August 24, 1993 the DOE was informed by the State Department
that Mr. Johansen was seeking to market his equipment to
British Nuclear Fuels, a private, foreign company. The State
Department also contacted the NRC who on August 25, 1993
advised Mr. Johansen that he would require an NRC license to
export the equipment. By September 1993 DOE advised their own
employees to be aware of nuclear proliferation concerns
involving surplus property. The September notification
notwithstanding, in January 1994 Mr. Johansen obtained from
DOE's INEL office additional technical documents associated
with the equipment, including radiographs and blueprints, and
a world-wide directory of nuclear facilities.
During the next 12 months, as DOE began to fully realize
the implications of this sale, the Department began
negotiating with Mr. Johansen to obtain the equipment and the
documents that had been sold or given to him. Eventually the
Department paid Mr. Johansen $475,000 and took steps to
ensure that the equipment would not be used for nuclear
purposes. Most of the equipment was turned into scrap and
sold, though some of it has been turned into art by an Idaho
artist.
Following the Journal's articles in August 1994 and
subsequent Congressional inquiries, the Department initiated
an internal review of the matter. That report entitled ``The
Sale of Reprocessing Equipment at the Idaho National
Engineering Laboratory'' dated September 2, 1994 found that
there existed within the Department:
``. . .[an] apparent lack of vigilance at all levels for
the potential impacts of releasing sensitive, nuclear fuel
reprocessing equipment and information to the public. Another
disturbing development was that the sale was facilitated by a
number of DOE and DOE contractor employees located in Idaho
and at DOE Headquarters, whose activities, though possibly
well meaning, were contrary to the best interests of the
Department. The Department's failure to provide effective
policy in this area is of particular concern in light of
Congressional pressure to implement legislation on export
controls and the fact that a draft order on export controlled
information has existed since 1988.''
The report goes on to conclude: ``Although actual damage in
this case may be limited, the incident resulted in an
appearance of ineptitude on the part of Departmental
elements. More importantly, system breakdowns of this type
could have more severe consequences in other similar
situation where the equipment and documents involved may be
extremely sensitive or even classified.''
As a result of the Idaho sale, the Department reviewed all
sales and releases to the public of nuclear-related property
and information since 1989, issued new guidelines both on
export control and nonproliferation and on the control of
high-risk personal property and ordered the Operations and
Field Offices to put a moratorium on release of equipment or
materials until they certified in writing that procedures
were in place to implement the new policies.
(B) Computer equipment
During the Governmental Affairs Committee's review of the
INEL/Johansen affair, we discovered that in addition to
buying surplus nuclear reprocessing equipment, Mr.Johansen
also obtained more mundane, but potentially as disturbing,
surplus equipment from INEL. It was alleged to the Committee
that Johansen had obtained a number of surplus computers, and
that some of these computers contained national security
sensitive or restricted data. Sen. Glenn asked the General
Accounting Office to investigate this allegation, and their
report, ``Department of Energy Procedures Lacking to Protect
Computerized Data'' (GAO/AIMD-95-118), was delivered to him
in June 1995.
GAO discovered that INEL had sold at least 25, and possibly
as many as 50, surplus personal computers to Mr Johansen.
Unfortunately because INEL's records were so poor, it was not
possible to determine exactly how many computers were sold,
or, more importantly, whether they contained national
security sensitive or restricted data. GAO reported that a
review by the DOE Idaho Operations Chief Information Office
concluded that some of the computers sold to the salvage
dealer may have contained sensitive data, but did not
determine how many. The review reached this conclusion
primarily because DOE's contractors involved in excessing
computers with sensitive data possibly stored on the hard
drives did not have written procedures explaining how to
properly remove such data.
Of the 25 computers which Mr. Johansen was confirmed to
have purchased, GAO was only able to receive positive
assurance that 11 of them were not used to process classified
or sensitive data. GAO examined 4 computers directly and
found that they contained numerous data files related to
DOE's spent nuclear fuel and radioactive waste management
program, but these files were not found to be sensitive.
The General Services Administration has issued a
government-wide regulation (entitled FIRMR Bulletin C-22)
which applies to DOE and directs agencies to develop internal
procedures to ensure the proper disposition of sensitive
automated equipment, including personal computers. This
regulation applies to contractors acting on behalf of the
government as well. While DOE circulated FIRMR Bulletin C-22
to its field and operations offices, it has not ensured that
these procedures are being fully implemented. And, as noted
above, DOE contractors do not have procedures that instruct
them on how to properly dispose of excess ADP equipment; thus
DOE cannot ensure that all excess computers are properly
``sanitized''. This has been a common theme at INEL, as well
as at other sites. While DOE's formal policies and rules
exist on paper and are often sufficient as policies, they are
not being implemented at the working or ground level.
This incident points to a potential gap throughout the DOE
system regarding surplus computers. The Department should
take immediate steps to implement procedures to ensure that
surplus computers are properly sanitized of classified,
restricted or sensitive data. In the absence of a more formal
policy, the default policy of the DOE should be to sanitize
all computers before they are surplused, thus ensuring that
the inadvertant release of sensitive data will occur.
In response to the GAO report, DOE issued two memoranda to
its operations and field offices asking them to ensure
implementation of procedures to sanitize surplus computers at
all sites, to review their procedures for sanitizing surplus
computers and to make necessary changes to bring them into
conformity with the appropriate regulations. In addition,
during FY96, DOE committed to provide guidance to its sites
on Bulletin C-22 and to issue the new Information Systems
Protection Program Manual and Guidelines.
Sandia and Los Alamos, New Mexico
In a 1994 report (DOE/IG-0343), the IG reported equipment
with a value of $389,000 missing at Sandia. The IG testified
at a March 17, 1994 hearing held by the Senate Governmental
Affairs Committee that computer equipment, machine tools,
furniture and rolls of cable were left outside in the open
for extended periods of time. When Sandia officials tried to
re-use some of this equipment, they discovered that it was
useless, ruined from over-exposure to the elements. Other
equipment was improperly mixed with radiologically-
contaminated items.
Furthermore, the IG found that a number of excess property
items, reported as being in good working order by their
property custodians, were listed as salvage or scrap after
being declared excess. Some were computers, which their
property custodian had thought were to be sent to the
University of New Mexico. Instead, the equipment went to the
outdoor lay down yards, marked ``salvage'' or ``scrap.''
The new Sandia Management and Operating Contract between
DOE and the new contractor follows DOE property regulations
more closely than did the old contract. The DOE Albuquerque
Operations Office took a number of steps to remedy the flaws
identified by the IG's investigation, including the review of
Sandia's property management system, which DOE initially
disapproved in August, 1994. Sandia then revised its property
management system, which was conditionally approved in
December, 1995, with the next review scheduled for April,
1997.
At Los Alamos, a 1993 IG report (DOE/IG-0338) estimated
that the lab could not account for as much as $100 million in
personal property, including computers, x-ray machines, and
oscilloscopes. The IG estimated that another $207 million
might be inaccurately inventoried, and that $62 million could
not be inventoried. The IG identified four reasons for such
poor property management: (1) Los Alamos users did not follow
required procedures when moving property; (2) Los Alamos did
not hold employees financially liable and personally
accountable for missing, damaged or destroyed property; (3)
Los Alamos's database did not maintain accurate information;
and (4) Los Alamos did not ensure that loans of personal
property to employees and others were adequately justified.
In addition, the Albuquerque Operations Office failed to
monitor Los Alamos's handling of personal property in
accordance with Department regulations.
The Department disagreed with the $100 million estimate of
unaccounted-for property, but acknowledged that Los Alamos's
data base was so inaccurate that it could not validate the
estimate from the database. During the audit, Los Alamos
conducted a wall-to-wall inventory of personal property.
Following the reconciliation of the wall-to-wall inventory,
Los Alamos requested, and DOE approved, a write-off of nearly
$10 million in acquisition value of equipment.
The Albuquerque Operations Office and Los Alamos have taken
a number of corrective actions to respond directly to the
four deficiencies noted above. In addition, Los Alamos's
property management system, in a status of ``Disapproved'' in
January, 1994, has since been approved. Finally, DOE reports
that Los Alamos's inventory trends have substantially
improved.
Central Training Academy (CTA), New Mexico
In a August 1, 1991 hearing held by the Committee on
Governmental Affairs, we learned that the Department and its
site contractor may have been using wiretaps and surveillance
equipment to covertly monitor whistleblowers at Hanford.
Subsequently, on August 13, 1991, the Undersecretary of
Energy ordered that all surveillance
[[Page S800]]
equipment stored at the various DOE sites be transferred to
CTA (a DOE training facility for security and other
activities) until such time as legal and logistical
arrangements could be made to transfer this property to
Federal, state, or local law enforcement agencies. Items
containing either secret audio or visual (or both) recorders
included sprinkler heads, radios, speakers, a notebook
binder, a pencil sharpener, an envelope, and a baseball cap,
among others. Further, DOE's Director of the Office of
Intelligence and National Security issued a memorandum on
November 9, 1993 affirming Department policy prohibiting
``the conduct of surveillance activities and the possession
and/or use of surveillance equipment for any purpose.''
Exceptions could only be made for ``law enforcement agencies/
elements operating under . . . court order.'' In sum, DOE was
to be getting out of the surveillance business.
Over three years after the Undersecretary's directive
sending surveillance equipment to the CTA for temporary
storage, a December 1994 IG report (DOE/IG-0365) stated that
none of the equipment had been transferred to Federal, state,
or local law enforcement, nor were there any arrangements to
make such transfers as had been ordered by the
Undersecretary. Further, the CTA's inventory records were
incomplete. There were no records or receipts for more than
100 pieces of surveillance equipment stored at CTA. Finally,
the IG noted a April 20, 1994 memo from the Director, Office
of Safeguards and Security to its field personnel. The memo
stated the Department might be able to achieve an agreement
to obtain ``a telephonic court order'' to use the equipment
in a ``security emergency condition'', in which case the CTA
``will be requested to return to you specific Special
Response Team equipment currently in storage.'' This memo
seemingly contradicts both the 1991 and 1993 directive.
In April, 1995, the Department responded to the IG report,
stating that the CTA technical surveillance equipment (TSE)
had been inventoried and then transferred to the FBI and the
National Park Service and that no TSE remained at the CTA.
The Department position further stated: ``The Director,
Office of Nonproliferation and National Security will not
authorize the general, unrestricted use of covert
surveillance operations and equipment.'' We note the
Department's renunciation of ``general, unrestricted use'' of
covert surveillance, but we strongly recommend that DOE be
asked to clearly and precisely explain the circumstances
under which it thinks it would be entitled to engage in
covert surveillance.
Fernald, Ohio
A February 1993 IG report (DOE/IG-0320) found that the
outgoing Fernald contractor did not dispose of excess
government equipment properly. Public sales of surplus
equipment were not advertised, minimum prices were not
established, and cash collection was not adequately
controlled. The contractor also mixed radiologically
contaminated equipment with uncontaminated equipment, which
meant that the commingled equipment had to be classified as
low level waste and sent to the Nevada Test Site for
disposal. The net result of these improper practices,
according to the IG, was that DOE incurred unnecessary costs
and lost revenues of over $117,000 and equipment with a net
book value of over $245,000 was improperly disposed of. Upon
review, the DOE contracting officer allowed these costs. The
bigger concern was that DOE would be vulnerable to larger
losses as Fernald disposed of $27.8 million in excess
equipment during site cleanup. Accordingly, the Fernald Field
Office suspended sales of excess equipment until DOE approved
proper sales procedures. Fernald submitted a property control
system encompassing sales of property, which was approved in
July, 1995. Fernald has resumed sales of excess property.
Other problems, as well as some progress, were found at
Fernald. In 1993, Fernald, in its first complete physical
inventory since the 1950s, identified $2.3 million in missing
equipment, and in 1994, identified and declared more than $5
million of personal property as excess. These were good
steps. However, a November 1994 IG report (ER-B-95-02) found
that Fernald, under a new contractor, had incurred costs of
$642,000 for purchase and storage of furniture in excess of
needs. Further costs were incurred because of damage from
mishandling. Moreover, storage practices placed supply items
at risk of radiological contamination and inventory records
were inaccurate. The IG also found that Fernald employees
lacked the training to properly account for Government
property. Fernald and the Ohio Field Office committed to a
number of steps to respond to these problems.
Oak Ridge, Tennessee
A 1994 GAO analysis (GAO/RCED-94-249R) of property
management activities at Oak Ridge found that the site prime
contractor, Martin Marietta, had no system to monitor
subcontractor use and possession of government-owned
equipment. As a result, neither DOE and nor the prime
contractor know which subcontractors have government
property, what property they have, and how much its value is.
Further, the prime contractor has not moved to implement a
system that tracks and accounts for property held by its
subcontractors, even though this problem has been
consistently raised in DOE reviews since at least 1988. DOE
concurred with the GAO findings, and directed the Oak Ridge
Operations Office to develop a corrective action plan, which
DOE Headquarters would review. The problem of inadequate
oversight of subcontractors by the prime contractor is likely
to occur at sites other than Oak Ridge.
Recommendations
Given the findings of this report, the history of property
mismanagement at DOE, continued downsizing, existing legal
requirements and directives, and the planned asset
disposition program, the staff recommends that the Department
take the following steps to improve its property management
program.
(1) Create an Office of Property and Asset Management (OPAM).
This is our principal recommendation. We urge the
establishment of a policy-level office based in Washington
with authority to oversee field activity. As has been noted
throughout this report, fragmented and poorly coordinated
property management policies and practices have lead to many
abuses in the field. If done properly, centralization of this
responsibility should help prevent future abuses. The Office
would report directly to the Secretary.
The mission and responsibilities of this policy-level
office would be to:
(1) coordinate the implementation of the various internal
property management initiatives;
(2) coordinate policy response to the legal property
management directives (i.e. Stevenson-Wydler, Federal
Property Act, Defense Authorization Act requirements, and any
future asset disposition legislation);
(3) track and provide top-level management for asset sales;
(4) develop consistent, department-wide inventory practices
and procedures that includes review and feedback procedures
on current property management systems;
(5) consolidate existing personal property, real property,
and asset management programs into one HQ office;
(6) develop long term (5, 10 year) property and asset
management plans;
(7) conduct property and asset management oversight of
field and program offices;
(8) establish property management perfomance standards as
part of personnel evaluations for appropriate personnel;
(9) develop and recommend changes to accounting systems to
better track and manage property and assets;
(10) search for and evaluate new technologies that may be
used to better inventory and track personal property; and
(11) establish training courses and programs on sound
property management policies and procedures;
The Office should also work closely with the DOE offices in
charge of nonproliferation, national security and export
controls to ensure that property with national security
implications are disposed of properly. The Office should also
consult and coordinate with the DOE environmental management
programs to ensure that contaminated property is
appropriately controlled. Furthermore, the Office should
establish appropriate procedures to meet the requirements and
further the missions of economic development and technology
transfer, in cooperation with the Office of Worker and
Community Transition and the Office of Technology
Utilization.
(2) Review existing property management rules, orders and guidance
Through the OPAM, the Department should review existing
rules, orders and guidance concerning the control of personal
property, and issue new rules, or strengthen or clarify
existing rules, as appropriate, pertaining to the following:
Demilitarization procedures for appropriate equipment;
sanitization of data contained on computers; export controls
over nonproliferation or national security sensitive items;
decontamination and disposal procedures for environmentally-
contaminated property; reporting and investigative procedures
when theft is a possibility; and priorities and procedures
governing release of equipment for economic development,
educational and other non-Departmental purposes. The Office
should report annually to Congress on the results of this
review.
(3) Improve and coordinate property management oversight with the
General Services Agency (GSA)
DOE and GSA should jointly develop a plan to exercise more
rigorous oversight over DOE's disposal of property in
accordance with the Federal Property Act and, within one
year, report to the Governmental Affairs Committee on its
plan and the results of the plan.
(4) Incorporate strong property management principles in DOE contracts
DOE should continue to incorporate performance-based
standards in personal property management as new M & O
contracts are awarded, and extend those standards to
subcontractor management of equipment. DOE should evaluate
how well each principal management and operating contractor
oversees its subcontractors who maintain and operate
government equipment. It should explore contractual methods
of linking M&O's performance (and payment) to their
subcontractors property management performance.
(5) Hold contractor and civil service personnel accountable for
property management abuses
DOE should take appropriate disciplinary action against DOE
and field personnel responsible for the most egregious abuses
in
[[Page S801]]
disposal of personal property. It should modify DOE personnel
procedures and practices to hold DOE field and line personnel
accountable for future implementation of effective personal
property systems as well as develop incentive system to
reward and encourage innovative property management
successes.
(6) Allocate additional resources for property management
Where cost effective, DOE and Congress should dedicate more
resources and FTEs to personal property management at both
headquarters and in the field.
(7) Report to Congress
We recognize that DOE is taking several of the steps we are
recommending, and we wish both to commend DOE for its
initiative, and to reinforce the importance of those actions.
We recommend that DOE report back in writing in one year to
the Congress, and in particluar to the Governmental Affairs
Committee, on the consideration given to, and the
implementation of, the recommendations contained in this
report. DOE's report to Congress should emphasize observed
and measurable improvements in property management resulting
from these efforts.
Conclusion
The Department has made encouraging efforts to correct the
problems and abuses detailed in this report. Still, we
believe the Department can and must do more. That's why this
report includes specific recommendations--including the
creation of an Office of Property and Asset Management--for
corrective measures DOE should take as part of a
comprehensive plan to remedy its chronic property management
problems. These measures do not need legislation to be
implemented, but, if the Department ignores them, we may
recommend that they be incorporated into legislation.
The proposed Office of Property and Asset Management will
force the Department to address the issue of personal
property disposal as it downsizes, and to ensure such
disposal is done in the best interest of the taxpayer. The
Department has announced that it plans to save $14 billion
over 5 years from downsizing and budget reductions and that
sales of surplus assets are expected to generate at least
$110 million by September 30, 2003. However, without further
improvements in personal property management, and without the
sustained higher priority for property management that the
Office proposed in this report will provide, it is likely
that we will continue to see abuses take place as the
Department implements its downsizing plan.
REFERENCES
Portsmouth, Ohio--Gas Centrifuge Enrichment Plant
Case No.I93CN015 Administrative Report to Management,
Office of Inspector General; (January 3, 1995).
(No number) Release of Nuclear-Related Property and
Associated Documentation by the Department of Energy since
1989; (Deputy Assistant Secretary For Security Evaluations,
DOE; December 1994).
Rocky Flats, Colorado
DOE/IG-0329, Inspection of Management of Excess Personal
Property at Rocky Flats; (May 1993).
GAO/RCED-94-77, The Property Management System at the Rocky
Flats Plant in Inadequate; (March 1994).
GAO/OSI-95-4, Poor Property Management Allowed
Vulnerability to Theft at Rocky Flats; (July 1995).
GAO/RCED-96-39, Property Management Has Improved at DOE's
Rocky Flats Site; (December 1995).
GAO/RCED-96-149R, Military Equipment at Rocky Flats; (June
1996).
Management of Arms and Military Equipment
DOE/IG-0385, Special Audit Report on the Department of
Energy's Arms and Military-Type Equipment (February 1996).
Idaho National Engineering Laboratory
(No number) The Sale of Reprocessing Equipment at the Idaho
National Engineering Laboratory; (Deputy Assistant Secretary/
Security Evaluation, DOE; September 2, 1994).
GAO/AIMD-95-118, Department of Energy Procedures Lacking
to Protect Computerized Data; (June 1995).
WR-B-96-04, Audit of Fuel Processing Restoration Property
(October 1995).
Sandia and Los Alamos, New Mexico
DOE/IG-0338, Audit of Personal Property Management at Los
Alamos National Laboratory (December 1993).
DOE/IG-0343, The Inspection of the Management of Excess
Personal Property at Sandia National Laboratory, Albuquerque,
New Mexico (March 1994).
Central Training Academy (CTA), New Mexico
DOE/IG-0365, Report on the Inspection of the Status of the
Disposal of Technical Surveillance Equipment at the Central
Training Academy Albuquerque, New Mexico; (December 1994).
Fernald, Ohio
DOE/IG-0320, Disposal of Excess Capital Equipment at the
Fernald Environmental Management Project--Fernald, Ohio;
(February 1993).
ER-B-95-02, Report on Audit of Property Management at
Fernald Environmental Restoration Management Corporation;
(November 1994).
Oak Ridge, Tennessee
GAO/RCED-94-249R, Department of Energy's Property
Management (July 1994).
Background on Several Sites
DOE/IG-0344, Summary Report on the Department of Energy's
Management of Personal Property; (March 1994).
GAO/RCED-94-154FS, Status of DOE's Property Management
Program (April 1994).
Mr. GLENN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Gregg). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. CRAIG. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________