Nuclear Nonproliferation: DOE's Efforts to Secure Nuclear	 
Material and Employ Weapons Scientists in Russia (15-MAY-01,	 
GAO-01-726T).							 
								 
The security systems installed by the Department of Energy (DOE) 
are reducing the risk of theft of nuclear material in Russia, but
hundreds of metric tons of nuclear material still lack improved  
security systems. As of February 2001, DOE had installed, at a	 
cost of about $601 million, completed or partially completed	 
systems protecting, among other things, 192 metric tons of the	 
603 metric tons of nuclear material identified at risk of theft. 
These systems, while not as stringent as those installed in the  
United States, are designed to prevent individuals or small	 
groups of criminals from stealing nuclear material. Regarding	 
DOE's Nuclear Cities Initiative (NCI), GAO found that during its 
first two years of operation, the program had limited success.	 
The Department estimates that the program employs about 370	 
people, including many weapons scientists who are primarily	 
working on a part-time basis through research projects sponsored 
by the U.S. national laboratories. With regard to funding, GAO	 
found that a disproportionate amount of the NCI program's funding
has been spent in the U.S. GAO also found that DOE's NCI program 
lacks a plan for the future. DOE agreed with GAO's		 
recommendations to develop a plan that addresses the program's	 
future costs and a time frame with quantifiable performance	 
measures to determine how effectively the program is meeting its 
goals and whether it should be expanded. This testimony 	 
summarized the February report, GAO-01-312, and the May report,  
GAO-01-429.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-726T					        
    ACCNO:   A01006						        
  TITLE:     Nuclear Nonproliferation: DOE's Efforts to Secure Nuclear
             Material and Employ Weapons Scientists in Russia                 
     DATE:   05/15/2001 
  SUBJECT:   Crime prevention					 
	     Nuclear facility security				 
	     Foreign aid programs				 
	     Foreign governments				 
	     International cooperation				 
	     Human resources utilization			 
	     Nuclear proliferation				 
	     DOE Material Protection, Control, and		 
	     Accounting Program 				 
								 
	     DOE Nuclear Cities Initiative			 
	     Russia						 
	     DOE Initiatives for Proliferation			 
	     Prevention Program 				 
								 

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GAO-01-726T
     
Testimony Before the Subcommittee on Emerging Threats and Capabilities,
Committee on Armed Services, U. S. Senate

United States General Accounting Office

GAO For Release on Delivery Expected at 2: 30 p. m., EDT Tuesday, May 15,
2001 NUCLEAR

NONPROLIFERATION DOE's Efforts to Secure Nuclear Material and Employ Weapons
Scientists in Russia

Statement of Ms. Gary L. Jones Director, Natural Resources and Environment

GAO- 01- 726T

Page 1 GAO- 01- 726T

Mr. Chairman and Members of the Committee: We are pleased to be here today
to discuss our reviews of two Department of Energy (DOE) nonproliferation
programs that address important U. S. national security concerns-( 1)
improving the security of hundreds of tons of nuclear material at various
sites throughout Russia and (2) employing weapons scientists in Russia?s 10
closed nuclear cities so that they will not sell sensitive information to
countries or terrorist groups trying to develop weapons of mass destruction.
Both programs are managed by the National Nuclear Security Administration?s
Office of Defense Nuclear Nonproliferation. Our testimony focuses on each of
these programs? impact and future plans. Our statement is based on our
February 28, 2001, report on the Material Protection, Control, and
Accounting (MPC& A) program and our report on the Nuclear Cities Initiative
(NCI) program that is being released today. 1

Mr. Chairman, the following summarizes our findings: The security systems
installed by DOE are reducing the risk of theft of nuclear material in
Russia, but hundreds of metric tons of nuclear material still lack improved
security systems. As of February 2001, DOE had installed, at a cost of about
$601 million, completed or partially completed systems protecting, among
other things, 192 metric tons of the 603 metric tons of nuclear material
identified at risk of theft. These systems, while not as stringent as those
installed in the United States, are designed to prevent individuals or small
groups of criminals from stealing nuclear material. Russian officials?
concerns about divulging national security information continue to impede
DOE?s efforts to install systems for several hundred metric tons of nuclear
material at sensitive Russian sites. The program?s continued progress
depends on DOE?s ability to gain access to these sensitive sites and reach
agreement with Russia on reducing the number of sites and buildings where
nuclear material is located and security systems are needed. DOE agreed with
our recommendation to develop options for completing the program on the
basis of the progress made in gaining access to these sites and agreement on
the closure of buildings and sites. Furthermore, while DOE currently does
not have a means to monitor the security systems it is installing to ensure
that they are operating properly

1 Nuclear Nonproliferation: Security of Russia?s Nuclear Material Improving:
Further Enhancements Needed. (GAO- 01- 312, Feb. 28, 2001) and Nuclear
Nonproliferation: DOE?s Efforts to Assist Weapons Scientists in Russia?s
Nuclear Cities Face Challenges

(GAO- 01- 429, May 3, 2001).

Page 2 GAO- 01- 726T

on a continuing basis, the Department has agreed to implement our
recommendation to develop such a system in cooperation with Russia. DOE
estimates that the MPC& A program will be completed in 2020 at a cost of
about $2.2 billion.

Regarding DOE?s Nuclear Cities Initiative, we found that during its first 2
years of operation, the program had limited success. The Department
estimates that the program employs about 370 people, including many weapons
scientists who are primarily working on a part- time basis through research
projects sponsored by the U. S. national laboratories. According to Russian
officials, most of the scientists receiving program funds continue to work
on Russia?s weapons of mass destruction and are also receiving a salary paid
for by the Russian government. About one- half of the program?s projects
focus on such activities as the delivery of medical equipment and school
exchange programs and are not designed to create jobs for weapons
scientists. With regard to funding, we found that a disproportionate amount
of the NCI program?s funding has been spent in the United States. About 70
percent, or about $11.2 million, of the $15.9 million that DOE spent through
December 2000 was spent in the United States- primarily at its national
laboratories- for such items as overhead, labor, equipment, and travel. The
remaining 30 percent was spent for projects and activities in Russia. DOE,
in response to direction provided by the Congress in a conference report on
appropriations for fiscal year 2001, stated that its goal is to spend 51
percent of its program funds in Russia this fiscal year. DOE will have to
more effectively monitor and control the program?s spending to meet this
goal. We also found that DOE?s NCI program lacks a plan for the future. DOE
agreed with our recommendations to develop a plan that addresses the
program?s future costs and a time frame with quantifiable performance
measures to determine how effectively the program is meeting its goals and
whether it should be expanded. DOE has two programs- NCI and the Initiatives
for Proliferation Prevention (IPP)- operating in Russia?s nuclear cities. We
believe that DOE needs to address a fundamental question- does it need two
programs with a shared underlying goal- employing Russian weapons
scientists- and, in some cases, implementing the same kinds of projects? We
recommended that DOE determine if these two programs should be consolidated
into one effort to achieve potential cost savings and other efficiencies.
DOE agreed to review both the IPP and NCI programs with a view toward
consolidation.

In 1995, DOE established the MPC& A program to install improved security
systems for nuclear material at civilian nuclear sites, naval fuel sites,
and nuclear weapons laboratories in Russia. Terrorists and countries seeking
Background

Page 3 GAO- 01- 726T

nuclear weapons could use as little as 25 kilograms of uranium or 8
kilograms of plutonium to build a nuclear weapon. With the dissolution of
the Soviet Union, DOE estimates that Russia inherited 603 metric tons of
highly enriched uranium and plutonium in forms highly attractive to theft.
As of February 2001, DOE had identified 252 buildings at 40 sites that
require nuclear security systems. In addition to installing security
systems, DOE is providing sites with long- term operational assistance
through equipment warranties, operating procedure development, and training.
DOE also has projects under way to help Russia?s Ministry of Atomic Energy
(MINATOM) and nuclear regulatory authority develop (1) a total inventory of
nuclear material, (2) regulations to ensure the effective operation and
maintenance of the systems, and (3) inspection and enforcement systems to
ensure that sites comply with regulations. In addition, DOE is supporting
security improvements for trains and trucks that transport nuclear material
between and within sites and for nuclear material security training centers.

DOE?s Nuclear Cities Initiative focuses on weapons scientists in the 10
closed nuclear cities that form the core of Russia?s nuclear weapons
complex. Many of these cities are located in geographically remote locations
and were so secret that they did not appear on any publicly available maps
until 1992. These cities remain high security areas and access to them is
limited. MINATOM manages the nuclear facilities that are located within the
cities and estimates that about 760,000 people live there, including
approximately 122,000 residents who are employed in key nuclear enterprises.
The Russian government has announced its intention to reduce the size of its
nuclear weapons complex, and a critical component of this effort includes
finding new employment opportunities for weapons scientists, engineers,
technicians, and support staff who will lose their jobs from the downsizing
of the complex. Russian officials have identified a need to create 30,000 to
50,000 jobs in the 10 closed nuclear cities over the next several years. DOE
has tasked the national laboratories to play a major role in the program,
which works in conjunction with another DOE program- the Initiatives for
Proliferation Prevention- that also seeks to employ weapons scientists in
several countries, including Russia.

Page 4 GAO- 01- 726T

DOE has installed completed or partially completed security systems in 115
buildings holding about 192 metric tons, or about 32 percent, of the 603
metric tons of weapons- useable nuclear material at risk of theft in Russia.
DOE installed completed systems in 81 buildings protecting about 86 metric
tons (or about 14 percent) of nuclear material. DOE has also installed
partially completed systems known as rapid upgrades in 34 additional
buildings protecting 106 metric tons, or 18 percent of the nuclear material.
Rapid upgrades consist of such things as bricking up windows in storage
buildings; installing strengthened doors, locks, and nuclear container
seals; and establishing controlled access areas around the nuclear material.
Completed systems include such components as electronic sensors, motion
detectors, closed circuit surveillance cameras, central alarm stations to
monitor the cameras and alarms, and computerized material- accounting
systems. By installing rapid upgrades, DOE helps Russian sites establish
basic control over their nuclear material while U. S. project teams finish
installing the security systems.

DOE?s reviews of installed systems and our visits to nine nuclear sites in
Russia indicate that most of the security systems are currently reducing the
risk of theft. DOE has established a panel of experts known as the Technical
Survey Team that examines project documents and meets with project teams to
determine if the installed systems meet departmental guidelines for
effectively reducing the risk of nuclear theft in Russia. From January 1999
through September 2000, the Technical Survey Team reviewed projects for 30
of the 40 sites in Russia. They found that systems at 22 of the sites were
reducing the risk of theft by increasing the ability of the Russian sites to
detect, delay, and respond to an attempted theft or otherwise strengthen
control over their nuclear material. For six of the sites they reviewed,
little or no risk reduction occurred because the systems were not installed
in accordance with the guidelines, the teams did not have sufficient access
to the buildings to install systems, or the systems were installed around
material presenting a low risk of proliferation. For two of the other sites,
it was too soon to tell if the systems reduced risk. DOE is taking steps to
correct these problems.

At the nine sites we visited in Russia where DOE had installed systems, we
observed, among other things,

 storage vaults equipped with strengthened doors, locks, video surveillance
systems, and alarms that can detect and delay thieves as they attempt to
steal nuclear material;

 nuclear material containers equipped with computerized bar codes and
tamper- resistant seals that allow site personnel to perform quick DOE Has
Reduced the

Risk of Theft for About 32 Percent of the Nuclear Material in Russia, but
Hundreds of Metric Tons of Material Remain Unprotected

Page 5 GAO- 01- 726T

inventories of the material and determine whether the containers were
tampered with; and

 nuclear material portal monitors that scan people and vehicles entering
and leaving facilities to ensure that they have not taken nuclear material
from storage locations.

While DOE has made progress in installing systems, DOE?s project teams do
not have access to 104 of the 252 buildings requiring improved security
systems. These buildings, located mostly at Russian nuclear weapons
laboratories, contain hundreds of metric tons of nuclear material. MINATOM
is reluctant to grant access to these buildings because of Russian national
security concerns and Russian laws on the protection of state secrets. DOE
officials told us they need access to these buildings to confirm the type of
material to be protected, design systems that provide adequate protection
for the material, ensure that the systems are installed properly, and ensure
that the sites operate the systems properly. DOE recently reached a draft
agreement with MINATOM to provide program personnel with greater access to
sensitive MINATOM sites. According to DOE officials, even with the
agreement, some of the more sensitive MINATOM sites will remain inaccessible
to program personnel but the agreement, when concluded, will allow the
program to further expand its work.

Just installing security systems will not ensure the long- term success of
the MPC& A program. DOE?s Technical Survey Team and our observations provide
only a snapshot of how effectively the installed systems are reducing the
risk of nuclear material theft in Russia. DOE has not established a means to
systematically measure the effectiveness of the security systems that it has
installed at Russian nuclear sites. However, DOE is currently collecting
information from individual sites that would be useful in measuring the new
systems? effectiveness. For example, DOE project teams visit sites and
observe systems that have been installed, and at certain sites, DOE has
contracts with the Russians to collect information on the functioning of
equipment. In addition, before installing security systems, DOE and Russian
site officials conduct vulnerability assessments, which assess the
probability of the existing nuclear security systems at the sites to prevent
nuclear material theft. In commenting on a draft of our report, DOE agreed
with our recommendation to develop a system to monitor, on a long- term
basis, the security systems at nuclear sites in Russia to ensure that they
continue to detect, delay, and respond to attempts to steal nuclear
material.

Page 6 GAO- 01- 726T

From fiscal year 1993 through February 2001, DOE spent about $601 million on
the MPC& A program in Russia. DOE spent about $376 million, or 63 percent of
the $601 million, on installing security systems at Russia?s civilian sites,
nuclear weapons laboratories, the Russian navy?s nuclear fuel sites, and the
Russian navy?s nuclear weapons sites. DOE spent the remainder of the $601
million on, among other things, operational assistance and program
management.

According to DOE, it will complete the MPC& A program in 2020 at a total
cost of $2.2 billion. However, DOE officials told us that the cost estimate
and time frame for completing the program are uncertain because DOE faces
challenges in implementing the program. For example, DOE does not know how
much assistance it will need to provide Russian sites with to operate and
maintain the security systems. Some sites where DOE is installing systems
are in better financial condition and have a greater potential to generate
revenue than other sites and therefore are more likely to have the resources
to maintain the security systems. Other sites will need more DOE assistance
to maintain the systems. Furthermore, because of a lack of access to many
nuclear sites, DOE is not certain about how many buildings will require
security systems or when it will be able to start and complete the
installation of these systems. DOE is also working with Russia to
consolidate nuclear material into fewer buildings and convert the highly
enriched uranium in these buildings into forms that cannot be used in
nuclear weapons. While this effort could reduce the program?s costs by
reducing the number of sites and buildings needing systems, MINATOM has not
yet identified which buildings and sites it plans to close. Our report (GAO-
01- 312) recommends that DOE include in its strategic plan, currently under
development, (1) an estimate of how much assistance is required to sustain
operations at each site on the basis of an analysis of the costs and the
sites? ability to cover these costs and (2) options for completing the
program on the basis of the progress made in gaining access to sensitive
sites and the closure of buildings and sites. DOE concurred with this
recommendation.

During its first 2 years, NCI has had limited success in meeting the
program?s principal objectives- creating jobs for weapons scientists and
helping to downsize Russia?s weapons complex. According to DOE, the program
is employing about 370 people, including many weapons scientists who are
working primarily on a part- time basis through research projects sponsored
by the U. S. national laboratories. About 40 percent of the work was
generated through the Open Computing Center in the closed city of Sarov. The
center?s director told us that the part- time employees DOE Faces

Challenges in Adhering to MPC& A Program?s Cost Projections and Time Frames

DOE?s Nuclear Cities Initiative Projects Have Had Limited Impact

Page 7 GAO- 01- 726T

are also working at the weapons design institute in Sarov on weaponsrelated
activities and are receiving salaries from the institute. The center has had
some success in attracting business investment, and DOE officials estimated
that, with successful marketing to commercial businesses, the center would
be able to employ 500 people by 2005.

Although some jobs have been created, about one- half of the 26 NCI projects
are not designed to create jobs for weapons scientists. Instead, these
projects focus on, among other things, such activities as the delivery of
medical equipment and school exchange programs. DOE officials told us that
these community development projects are needed to make the nuclear cities
more attractive to business investment. However, Russian officials have
criticized the projects because they do not create jobs for weapons
scientists, which they believe is the primary goal of NCI and the 1998
agreement between the United States and Russia. Furthermore, none of the
industry officials we spoke with said that they would be more likely to
invest in the nuclear cities because of municipal and social improvements in
the nuclear cities.

Eight of the program?s projects are designed to develop sustainable
commercial ventures, but only one of these has successfully created jobs.
Numerous factors have contributed to the limited success of the NCI
projects. Some projects have been canceled or delayed because of the lack of
Russian support and cooperation. Other reasons for these projects? lack of
success include poor economic conditions in Russia, the remote location and
restricted status of the nuclear cities, and the lack of an entrepreneurial
culture among weapons scientists. Furthermore, DOE and national laboratory
officials have told us that the Department?s project selection process has
been inconsistent and ?ad hoc.? According to the program director, projects
were approved for funding without a comprehensive review process in order to
implement the program quickly and engage the Russians. In January 2001, DOE
issued new program guidance that includes more detail on project selection
and approval. For example, the new guidance will give preference to those
projects with the strongest prospects for early commercial success and those
in which the start- up costs are shared with other U. S. government
agencies, Russian partners, and/ or private entities. While the guidance, if
effectively implemented, will address the problems with DOE?s inadequate
projectselection process, it remains unclear to us why DOE took over 2 years
to develop these procedures when similar procedures already existed under
the IPP program.

Page 8 GAO- 01- 726T

Despite the numerous problems we found with the NCI projects, the program
has made some strides. For example, according to DOE officials, one of the
most successful projects involves the conversion of weapons assembly
buildings at the Avangard weapons facility in Sarov into production space
for commercial ventures, including the proposed establishment of a kidney
dialysis manufacturing facility. The program has helped facilitate the
relationship between a Western business and the Russian weapons institute,
and DOE has allocated about $1.5 million to support this effort.

Interestingly, Mr. Chairman, the most successful commercial effort we
observed in the nuclear cities involved a major U. S. computer firm that
employs former weapons scientists in Sarov. This effort, which began about 7
years ago, has been undertaken without U. S. government assistance and now
employs about 100 scientists. When we visited the software operation in
September 2000, we were told that the employees work full- time and that
their salaries are up to three times what they had been paid at the weapons
institute.

From fiscal year 1999 through December 2000, the expenditures for NCI
totaled about $15.9 million. Of that amount, about $11.2 million (or 70
percent) was spent in the United States, and about $4.7 million (or 30
percent) was spent for projects and activities in Russia. The U. S. national
laboratories? costs to implement the program represented the bulk of the
funds spent in the United States and included such items as overhead, labor,
equipment, and travel. In fact, 75 percent of the funds spent by the
laboratories were for overhead and labor costs. DOE officials told us that
laboratory expenditures, although significant, were part of startup costs
for NCI. They noted that the program has taken longer to start up because of
the economic problems facing Russia and the barriers involved in trying to
start new businesses and related activities in the nuclear cities. DOE
officials told us that they were concerned about the amount of funds spent
by the laboratories to administer the program- particularly the overhead
costs- and have taken steps to reduce these costs such as by managing some
projects directly from headquarters. These officials also told us that
laboratory costs will be reduced and that the laboratories? role will
diminish as commercial investors develop business contacts in the nuclear
cities as a result of the program.

The $4.7 million in expenditures for Russia included contracts with Russian
organizations to buy computers and other equipment, a small business bank
loan program, and various community development Majority of Nuclear

Cities Program Funds Have Been Spent in the United States

Page 9 GAO- 01- 726T

projects. Furthermore, MINATOM officials made it clear to us, during our
September 2000 visit to Russia, that they were dissatisfied with the amount
of program funds that had been spent in Russia. The First Deputy Minister of
MINATOM told us that it was his understanding that DOE planned to spend the
majority of program funds in Russia and wanted to know what happened to
these funds. He said that the lack of progress in the program increases the
negative views of the program held by various Russian government officials,
who allege that the program is a way for the United States to gain access to
weapons data in Russia?s nuclear cities.

In response to direction provided by the Congress in a conference report on
DOE?s fiscal year 2001 appropriations, DOE stated that its goal is to spend
at least 51 percent of its program funds in Russia during this fiscal year.
DOE will have to more effectively monitor and control the program?s spending
to meet this goal. Regarding future program expenditures, the Department has
not developed a plan that addresses the program?s future costs and a time
frame with quantifiable performance measures to determine how effectively
the program is meeting its goals and when and if the program should expand
beyond the three nuclear cities. In 1999, DOE officials believed that the
total funding level for NCI could reach $600 million over a 5- year period.
However, the program?s director told us that because the program had not
received expected funding levels during its first years of operation, he is
uncertain about the program?s future costs and time frames.

DOE has two programs operating in Russia?s nuclear cities- the Nuclear
Cities Initiative and the Initiatives for Proliferation Prevention- that
share a common underlying goal- to employ Russia?s weapons scientists in
nonmilitary work. We believe that DOE needs to address a fundamental
question- does it need two programs operating in Russia?s nuclear cities
with a shared goal and, in some cases, the same types of projects? The
operation of these two similar programs has led to some duplication of
effort, such as two sets of project review procedures and several similar
types of projects. Both programs provide Russia?s nuclear cities with funds
and since 1994, DOE has spent over $13 million on about 100 IPP projects in
five nuclear cities, including the three nuclear cities participating in
NCI- Sarov, Snezhinsk, and Zheleznogorsk. One U. S. national laboratory
official told us that there was not a clear distinction between the two
programs, and other laboratory officials noted that some projects have been
proposed for funding under both programs, have been shifted from one program
to another, or have received funding from both programs. The IPP program
director told us that although he did not believe that the Duplication Has

Occurred in the Operation of DOE?s Two Programs in Russia?s Nuclear Cities

Page 10 GAO- 01- 726T

two programs were duplicative, there is a potential for duplication to occur
because both have a common approach for creating jobs in the nuclear cities.
Both programs reside within DOE?s Office of Defense Nuclear
Nonproliferation, National Nuclear Security Administration; have adjoining
offices; and share staff to perform budget, travel, and secretarial
functions.

Our work shows that some of the failures of NCI?s commercial development
projects might have been avoided if DOE had a common project approval
process and incorporated some of the elements of the IPP project selection
process from the onset of the NCI program. Furthermore, most of NCI?s
initial commercial development projects would not likely have been approved
under the IPP program?s more rigorous approval process. This is because,
unlike the IPP program, NCI did not require that projects have industry
partners or demonstrate commercial viability until January 2001, when
program guidance was issued. In addition, NCI has recently (1) begun to
develop a more systematic process, as IPP already has, for obtaining the
views of business or industry experts on commercial development and (2)
adopted practices established under the IPP program regarding the funding of
projects. In commenting on a draft of our report being released today, DOE
agreed to review both programs with a view toward consolidation.

Mr. Chairman, this concludes our testimony. We would be happy to respond to
any questions that you or other Members of the Committee may have.

Contact and Acknowledgement

For further information on this testimony, please contact Ms. Gary L. Jones
at (202) 512- 3841. Individuals making key contributions to this testimony
included Gene Aloise, Charles Bolton, Ross Campbell, Joseph Cook, Glen
Levis, and Joseph O. McBride.

(360079)
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