FY 2004 Annual Report on the Cooperative Threat Reduction Program
(18-JUL-03, GAO-03-1008R).					 
                                                                 
Under section 1308 of the National Defense Authorization Act for 
Fiscal Year 2001 (P.L. 106-398), the Department of Defense is to 
submit an annual report to Congress on its Cooperative Threat	 
Reduction (CTR) program no later than the first Monday in	 
February of each year. The report should include a five-year plan
that discusses the amount and purpose of funding needed over the 
term of the plan and a description of efforts conducted by the	 
United States to ensure that CTR assistance is fully accounted	 
for and used for its intended purposes. The Act requires the	 
Comptroller General to assess this five-year plan and the	 
description of efforts to account for CTR assistance within 90	 
days of the report's submission to Congress. The Department	 
submitted its CTR annual report for fiscal year 2004 to Congress 
on April 18, 2003. We analyzed the 2004 report to determine	 
whether (1) the five-year plan addressed the legislative	 
requirements and presents accurate information, (2) the 	 
accountability section addressed legislative requirements and	 
presents accurate information, and (3) the presentation and	 
usefulness of the CTR annual report could be improved.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-1008R					        
    ACCNO:   A07596						        
  TITLE:     FY 2004 Annual Report on the Cooperative Threat Reduction
Program 							 
     DATE:   07/18/2003 
  SUBJECT:   Accountability					 
	     Federal funds					 
	     Reporting requirements				 
	     Funds management					 
	     Strategic planning 				 
	     DOD Cooperative Threat Reduction Program		 

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GAO-03-1008R

GAO- 03- 1008R Cooperative Threat Reduction Program Annual Report

July 18, 2003 The Honorable John Warner Chairman The Honorable Carl Levin
Ranking Minority Member Committee on Armed Services United States Senate

The Honorable Duncan Hunter Chairman The Honorable Ike Skelton Ranking
Minority Member Committee on Armed Services House of Representatives

Subject: FY 2004 Annual Report on the Cooperative Threat Reduction Program

Under section 1308 of the National Defense Authorization Act for Fiscal
Year 2001 (P. L. 106- 398), the Department of Defense is to submit an
annual report to Congress on its Cooperative Threat Reduction (CTR)
program no later than the first Monday in February of each year. The
report should include a five- year plan that discusses the amount and
purpose of funding needed over the term of the plan and a description of
efforts conducted by the United States to ensure that CTR assistance is
fully accounted for and used for its intended purposes. The Act requires
the Comptroller General to assess this five- year plan and the description
of efforts to account for CTR assistance within 90 days of the report*s
submission to Congress. The Department submitted its CTR annual report for
fiscal year 2004 to Congress on April 18, 2003. 1 We analyzed the 2004
report to determine whether (1) the five- year plan

addressed the legislative requirements and presents accurate information,
(2) the accountability section addressed legislative requirements and
presents accurate information, and (3) the presentation and usefulness of
the CTR annual report could be improved. Attached to this letter are a
series of slides provided to your

1 The CTR annual report for fiscal year 2004 includes a section titled
*cooperative threat reduction (CTR) program implementation plan for FY
2004,* which we refer to as the five- year plan, and a section titled
*accounting for cooperative threat reduction (CTR) program assistance to
states of the former Soviet Union (FSU) conducted during FY 2002,* which
we refer to as the accountability section.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 1008R Cooperative Threat Reduction Program Annual Report

staff presenting our assessment of the CTR annual report submitted for
fiscal year 2004 (see encl. I).

We found that the five- year plan addressed the legislative requirements
by setting forth funding information for the term of the plan and the
purpose of those funds. We also confirmed with project managers that, for
the eight projects we reviewed in detail, the information provided in the
five- year plan was generally accurate. We found that the accountability
section addressed all legislative requirements. It described the condition
and location of CTR- furnished equipment, discussed the status of
contracts and services and the methods used to ensure that CTR aid is used
for the purposes intended, determined whether assistance provided has been
used effectively and efficiently, and described the audits and
examinations planned for the next year. We found that the information was
generally accurate and complete and included the concerns raised in
project trip reports and audit and examinations. However, we noted two
issues where the information was not accurate and complete. First, there
was no discussion of Russia*s plans to store weapon- grade plutonium at
Mayak. CTR funding for this facility was intended only for the storage of
weapon- source fissile material to facilitate the dismantlement of nuclear
weapons. 2 Second, the list of equipment delivered under the CTR program
was incomplete because CTR officials do not have complete records of
equipment delivered before fiscal year 1999.

We found that the report lacked a discussion of key strategic planning
elements that could help congressional decision makers in their annual CTR
budget deliberations. Specifically, the report did not include annual
performance goals linked to long- term goals, information on external
factors that could affect the achievement of these goals, and plans for
revising program goals, all of which are

already developed by CTR program managers. Furthermore, the report
provided relevant project information in different locations, making it
difficult to understand the progress and problems of each project.
Therefore, we recommend that, in preparing future CTR annual reports to
Congress, the Secretary of Defense (1) incorporate key federal strategic
planning elements and (2) integrate the fiveyear plan and accountability
sections of the report to provide Congress with all project information in
one location.

We performed our work in Washington, D. C., from April 2003 through July
2003 in accordance with generally accepted government auditing standards.

We provided a draft of this report to Department of Defense (DOD)
officials. DOD provided written comments on the draft of this report,
which are included in Enclosure II. DOD concurred with our recommendation
that future CTR annual reports integrate the five- year plan and
accountability sections of the report. DOD did not, however, concur with
the recommendation that the department

2 See U. S. General Accounting Office, Weapons of Mass Destruction: Effort
to Reduce Russian Arsenals May Cost More, Achieve Less Than Planned, GAO-
NSIAD- 99- 76 (Washington, D. C.: April 1999).

Page 3 GAO- 03- 1008R Cooperative Threat Reduction Program Annual Report

incorporate key federal strategic planning elements in future CTR annual
reports. DOD stated that the legislation does not require reporting on
these elements in the annual report to Congress.

Neither effort proposed by our recommendations is required in the
legislation. However, incorporating the key federal strategic planning
elements and integrating the five- year plan and accountability sections
of the report will improve the presentation and usefulness of future CTR
annual reports to Congress. Furthermore, key federal strategic planning
elements are already included in CTR project management planning
documents. Incorporating these planning elements into the CTR annual
report could help congressional decision makers in their annual CTR budget
deliberations. Incorporating key federal strategic planning elements into
a report that integrates its five- year plan and accountability sections
would strengthen the presentation and usefulness of the annual CTR report
provided to Congress. Therefore, we continue to recommend

that the Secretary of Defense incorporate key federal strategic planning
elements and integrate the five- year plan and accountability sections of
the report.

- - - - - We are sending copies of this report to the Secretary of Defense
and to interested congressional committees. This report will also be
available at no charge on our Web site at http:// www. gao. gov.

If you or your staff have any questions regarding this assessment, please
contact me at (202) 512- 8979. James Shafer, Hynek Kalkus, Monica Brym,
Beth Hoffman Leon, David Maurer, Pierre Toureille, Martin de Alteriis,
Valerie Nowak, and Lynn Cothern also made key contributions to this
report.

Joseph A. Christoff Director, International Affairs and Trade

Enclosures

Enclosure I Page 4 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

1

Cooperative Threat Reduction Annual Report for FY 2004 Briefing to the
Staffs of the Armed Services Committees

Enclosure I Page 5 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

2 Overview

* Background  GAO objectives  Results in brief

 Five- year plan  Accountability section  CTR annual report
presentation  Conclusions  Recommendations

Enclosure I Page 6 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

3 Background

 The National Defense and Authorization Act (NDAA) for fiscal year 2001
requires the Department of Defense to submit an annual CTR report that
sets forth

 the amount and purpose of funding needed over the next 5 years, and  a
description of the audit and examinations (A& E) and other efforts

conducted by the United States to ensure that CTR assistance is fully
accounted for and used for its intended purposes.

 NDAA requires GAO to assess the five- year plan and the accountability
section within 90 days of the annual report*s submission.

Enclosure I Page 7 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

4 Objectives

 Determine whether the five- year plan addresses legislative requirements
and presents accurate information

 Determine whether the accountability section addresses legislative
requirements and presents accurate information

 Identify ways to improve the presentation and usefulness of the CTR
annual report

Enclosure I Page 8 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

5

Scope & Methodology: Five- year plan

 To determine whether the five- year plan addresses legislative
requirements and presents accurate information:  We assessed the plan to
determine if it included the

amount of funds and resources proposed to be provided over the term of the
plan and a description of how those resources will be used.

 We selected eight projects and compared the information presented in the
plan with information from project managers to determine the accuracy of
the data.

Enclosure I Page 9 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

6 Scope & Methodology: Accountability section

 To determine whether the accountability section addresses legislative
requirements and presents accurate information:  We assessed the section
to determine if it included a

description of the condition and location of CTR- furnished equipment, a
discussion of the status of contracts and services and the methods used to
ensure CTR aid is used for purposes intended, a description of whether
assistance provided has been used effectively and efficiently, and a
description of the

audits and examinations planned for the next year.  We reviewed 14 A& Es
and 133 project management trip reports for FY 2002 to determine if the
section accurately presents concerns raised in these reports.

Enclosure I Page 10 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

7 Scope & Methodology: CTR annual report

presentation To identify ways to improve the presentation and usefulness
of the CTR annual report:

 We compared the FY 2004 CTR report*s content with key planning elements
from the Government Performance and Results Act.

 We assessed how the legislative requirements were presented in the
report.

Enclosure I Page 11 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

8 Results in Brief

 FY 2004 five- year plan  All legislative requirements were addressed 
Information provided in eight sample projects was accurate

 Accountability section  All legislative requirements were addressed 
Information provided was generally accurate and complete

 CTR annual report presentation  Key strategic planning elements are not
incorporated in the report  Project information not provided in one
comprehensive discussion

Enclosure I Page 12 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

9 Principal Findings: Five- year plan addressed

legislative requirements; the information provided was accurate.

 The report provided the amount of funds and resources proposed for the
term of the plan.

 The report stated the purposes for which these proposed funds and
resources will be used.

 The project managers of eight selected projects confirmed that the
project information was accurate as of January 2003.

Enclosure I Page 13 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

10 Principal Findings: Accountability section

addressed all legislative requirements.  Described the condition and
location of CTR- furnished equipment;  Discussed the status of contracts
and services and the methods used to ensure CTR aid is used for purposes
intended;

 Determined whether assistance provided has been used effectively,
efficiently, and for the purpose intended; and  Described the audits and
examinations planned for the next year.

Enclosure I Page 14 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

11 Principal Findings: Accountability section

information was generally accurate and complete.  The information
provided in the report regarding the accountability

of CTR- provided assistance was generally accurate and complete, except
that it

 did not discuss Russia*s plan to store weapons- grade plutonium at
Mayak. CTR funding for this facility was intended only for the storage of
weapon- source fissile material to facilitate the dismantlement of nuclear
weapons.

 did not provide a complete list of equipment delivered; CTR program does
not have complete records of equipment provided before fiscal year 1999.

Enclosure I Page 15 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

12 Principal Findings: CTR annual report did not include key strategic
planning elements.

 The report does not incorporate key federal strategic planning elements
that could help congressional decision makers in their annual CTR budget
deliberation, including  annual performance goals based on objective
measures of results and

linked to long- term goals,  a description of external factors beyond the
agency*s control that could affect achievement of program goals, and 
plans for revising program goals.

 GAO reports cite these factors as important planning elements.  The
report*s five- year plan does not provide these planning

elements; however, they are included in CTR project management planning
documents.

Enclosure I Page 16 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

13 Principal Findings: Project information was not

provided in one comprehensive discussion. Project information is provided
in various locations of the CTR annual report for fiscal year 2004:

 Progress in the past year (FY2002), proposed funding (FY2004- 2009), and
purpose of proposed funds for each project are discussed in the report*s
five- year plan (pp. 8- 41).

 Location, efforts to account for CTR assistance, and past problems
encountered, such as access issues, project delays, and instances of non-
cooperation for each project are discussed in the report*s accountability
section (pp. 42- 99).

For example, the report*s discussion of the SS- 24 propellant disposition
facility project in Ukraine includes

 proposed funding, the purpose of the proposed funds, and a description
of activities carried out in FY 2002 (pp. 18- 19);

 the location of the project, efforts to account for the CTR assistance,
and past problems encountered on the project (p. 64).

Enclosure I Page 17 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

14 Conclusion

 The annual CTR report does not include federal strategic planning
factors and thus does not provide a useful context for understanding how
project and budget plans might be affected in the future.

 Relevant project information is scattered throughout the report making
it difficult to understand the progress and problems of each project.
Consolidating this information in one location will provide readers with a
more accessible presentation of each project.

Enclosure I Page 18 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

15 Recommendation

We recommend that, in preparing future CTR annual reports to congress, the
Secretary of Defense:

(1) incorporate key federal strategic planning elements, such as a
description of annual performance goals linked to long- term goals,
external factors that could affect the achievement of program goals, and
plans for addressing these external factors, and

(2) combine the five- year plan and accountability sections of the report.

Enclosure II Page 19 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

Comments from the Under Secretary of Defense

Enclosure II Page 20 GAO- 03- 1008R Cooperative Threat Reduction Program
Annual Report

(320193)

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