[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.
---------------------------------------------------------------------------
     \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.

                          ____________________