Nuclear Nonproliferation: DOE's Program to Assist Weapons	 
Scientists in Russia and Other Countries Needs to Be Reassessed  
(12-DEC-07, GAO-08-189).					 
                                                                 
To address concerns about unemployed or underemployed Soviet-era 
weapons scientists in Russia and other countries, the Department 
of Energy (DOE) established the Initiatives for Proliferation	 
Prevention (IPP) program in 1994 to engage former Soviet weapons 
scientists in nonmilitary work in the short term and create	 
private sector jobs for these scientists in the long term. GAO	 
assessed (1) DOE's reported accomplishments for the IPP program, 
(2) DOE's exit strategy for the program, and (3) the extent to	 
which the program has experienced annual carryovers of unspent	 
funds and the reasons for any such carryovers. To address these  
issues, GAO analyzed DOE policies, plans, and budgets and	 
interviewed key program officials and representatives from 22	 
Russian and Ukrainian institutes.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-189 					        
    ACCNO:   A78828						        
  TITLE:     Nuclear Nonproliferation: DOE's Program to Assist Weapons
Scientists in Russia and Other Countries Needs to Be Reassessed  
     DATE:   12/12/2007 
  SUBJECT:   Federal funds					 
	     Federal procurement				 
	     Funds management					 
	     Nuclear proliferation				 
	     Nuclear weapons					 
	     Performance measures				 
	     Private sector					 
	     Program evaluation 				 
	     Program management 				 
	     Risk management					 
	     Strategic planning 				 
	     Weapons of mass destruction			 
	     Program implementation				 
	     DOE Initiatives for Proliferation			 
	     Prevention Program 				 
                                                                 
	     Russia						 

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GAO-08-189

   

     * [1]Results in Brief
     * [2]Background
     * [3]DOE Has Overstated the Progress Made on Key Performance Meas

          * [4]DOE Has Supplemented the Salaries of Many Scientists in Russ
          * [5]DOE Lacks Necessary Information and a Rigorous, Formalized R
          * [6]DOE Has Overstated the Number of Former Weapons Scientists R
          * [7]DOE Has Not Revised the IPP Program's Performance Metrics to

     * [8]DOE Has Not Developed an Exit Strategy for the IPP Program,

          * [9]Russian Government Officials, Russian and Ukrainian Scientis
          * [10]DOE Has Not Developed Criteria to Determine When Individuals
          * [11]DOE Expanded IPP Efforts to Iraq and Libya and Is Working wi

               * [12]Iraq
               * [13]Libya
               * [14]Global Nuclear Energy Partnership

     * [15]Multiple DOE and Contractor Reviews and Delays in Project Im

          * [16]DOE Has Carried Over Unspent Funds Greater Than the Amount t
          * [17]The IPP Program's Persistent Annual Unspent Balances Have Re
          * [18]DOE Is Implementing a New IPP Program Management System, in

     * [19]Conclusions
     * [20]Recommendations for Executive Action
     * [21]Agency Comments and Our Evaluation
     * [22]Russian Institutes

          * [23]Center for Ecological Research and BioResources Development
          * [24]Gamaleya Scientific Research Institute of Epidemiology and M
          * [25]Institute for Nuclear Research of the Russian Academy of Sci
          * [26]Institute of Applied Physics of the Russian Academy of Scien
          * [27]Institute of Biochemistry and Physiology of Microorganisms
          * [28]Institute of General Physics of the Russian Academy of Scien
          * [29]Krasnaya Zvezda (Red Star)
          * [30]Kurchatov Institute
          * [31]Moscow State University
          * [32]Radiophysical Research Institute
          * [33]Scientific Research Institute of Measuring Systems
          * [34]Afrikantov Experimental Machine Building Design Bureau
          * [35]Soliton-NTT Research Center
          * [36]Russian Federal Nuclear Center--All-Russian Scientific Resear
          * [37]Zelinsky Institute of Organic Chemistry

     * [38]Ukrainian Institutes

          * [39]E.O. Paton Electric Welding Institute
          * [40]International Center for Electron Beam Technology
          * [41]Institute for Metal Physics
          * [42]International Institute of Cell Biology
          * [43]Intertek, Ltd.
          * [44]Kharkov Institute of Physics and Technology
          * [45]State Design Office Yuzhnoye

     * [46]GAO Comments
     * [47]GAO Contact
     * [48]Staff Acknowledgments

          * [49]Order by Mail or Phone

Report to the Chairman, Committee on Homeland Security, House of
Representatives

United States Government Accountability Office

GAO

December 2007

NUCLEAR NONPROLIFERATION

DOE's Program to Assist Weapons Scientists in Russia and Other Countries
Needs to Be Reassessed

GAO-08-189

Contents

Letter 1

Results in Brief 5
Background 9
DOE Has Overstated the Progress Made on Key Performance Measures, Raising
Doubts about the IPP Program's Nonproliferation Benefits 11
DOE Has Not Developed an Exit Strategy for the IPP Program, but Instead
Has Expanded Efforts to Iraq and Libya and Is Using the Program to Support
the Department's Global Nuclear Energy Partnership 22
Multiple DOE and Contractor Reviews and Delays in Project Implementation
Contribute to the IPP Program's Large Balances of Unspent Program Funds 29
Conclusions 37
Recommendations for Executive Action 39
Agency Comments and Our Evaluation 40
Appendix I Scope and Methodology 44
Appendix II Additional Information on the Russian and Ukrainian Institutes
That We Included in Our Fieldwork 50
Appendix III Classification Systems Used to Assess IPP Project
Participants' Knowledge of Weapons of Mass Destruction 58
Appendix IV IPP Projects DOE Reported to Be Commercially Successful 61
Appendix V Comments from the Department of Energy 64
Appendix VI Comments from the Department of State 75
Appendix VII GAO Contact and Staff Acknowledgments 77
Related GAO Products 78

Tables

Table 1: Multistage Process for Assessing IPP Project Participants' WMD
Backgrounds 14
Table 2: CRDF, ISTC, and STCU Weapons Expertise Classification Codes 59
Table 3: DOE Projects Listed as Contributing to Commercial Successes in
DOE's Fiscal Year 2005 IPP Program Annual Report 61

Figures

Figure 1: Appropriations and Unspent Balances for the IPP Program from
Fiscal Years 1998 through 2008 30
Figure 2: ISTC/STCU Payment Process 32
Figure 3: CRDF Payment Process 34

Abbreviations

CRDF: U.S. Civilian Research and Development Foundation: 
DCAA: Defense Contract Audit Agency: 
DOE: Department of Energy: 
EXACT: Expertise Accountability Tool: 
GNEP: Global Nuclear Energy Partnership: 
ILAB: Inter-Laboratory Board: 
IPP: Initiatives for Proliferation Prevention: 
ISTC: International Science and Technology Center: 
NAS: National Academy of Sciences: 
NNSA: National Nuclear Security Administration: 
STCU: Science and Technology Center in Ukraine: 
USIC: United States Industry Coalition: 
WMD: weapons of mass destruction: 

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United States Government Accountability Office
Washington, DC 20548

December 12, 2007

The Honorable Bennie G. Thompson: 
Chairman: 
Committee on Homeland Security: 
House of Representatives:

Dear Mr. Chairman:

During the decades before its dissolution, the Soviet Union produced a
cadre of scientists and engineers whose knowledge and expertise would be
invaluable to countries or terrorist groups trying to develop weapons of
mass destruction (WMD). After the Soviet Union's collapse in 1991, many of
these scientists suffered significant cuts in pay or lost their
government-supported work. The United States and other countries were
concerned that these scientists would sell their expertise to terrorists
or countries of concern, such as Iran, Iraq, and North Korea. To address
this potential proliferation concern, the Department of Energy (DOE)
established the Initiatives for Proliferation Prevention (IPP) program in
1994.^1 The objectives of the IPP program, which is implemented by the
National Nuclear Security Administration (NNSA),^2 are to (1) in the short
term, engage weapons scientists and scientific research and development
institutes located in Russia and other countries of the former Soviet
Union in nonmilitary work by supplementing their existing salaries and (2)
in the long term, create sustainable, private sector jobs for former
weapons scientists. As of April 2007, DOE reported it had supplemented the
salaries of over 16,770 scientists, engineers, and technicians and created
2,790 long-term, private sector jobs in Russia and other countries of the
former Soviet Union.

^1The IPP program was originally called the Industrial Partnering Program
and was established under Pub. L. No. 103-87 S 575, 107 Stat. 972-773
(1993). In 1996, DOE changed the program's name to reflect a greater focus
on and commitment to nonproliferation issues. In 2002, the IPP program and
another similar DOE nonproliferation program, the Nuclear Cities
Initiative, were placed under a common management organization within DOE
and designated the Russian Transition Initiatives. In 2006, the Russian
Transition Initiatives was renamed the Global Initiatives for
Proliferation Prevention and adopted the mission of addressing the
proliferation of WMD expertise globally. Since the program's inception,
North Korea has successfully tested a nuclear weapon, and there are
concerns that Iran has made progress in developing its own nuclear weapons
program.

^2NNSA is a separately organized agency within DOE that was created by the
National Defense Authorization Act for Fiscal Year 2000, Pub. L. No.
106-65, 113 Stat. 953 (1999), with responsibility for the nation's nuclear
weapons, nonproliferation, and naval reactors programs.

Through October 1, 2007, there were 929 draft, active, inactive, and
completed IPP projects involving personnel at about 200 nuclear, chemical,
and biological institutes in Russia and other countries. Many IPP projects
involve more than one institute, and sometimes a single project will
involve institutes in more than one country. Over 80 percent of the
projects are focused on institutes in Russia, and the majority of these
projects involve scientists and institutes specializing in nuclear
weapons-related work. Other countries that currently participate or have
participated in the IPP program include Armenia, Belarus, Georgia,
Kazakhstan, Ukraine, and Uzbekistan.

For each IPP project, DOE requires that at least 65 percent of the
project's funding go to Russia and other countries as payments to
individuals actually working on the project or to the participating
institutes in payment for project-related supplies, equipment, and
overhead. Because the IPP program is not administered through a
government-to-government agreement, as are many other U.S.
nonproliferation programs, DOE distributes funding for IPP projects
through three tax-exempt entities to avoid paying foreign taxes: the
International Science and Technology Center (ISTC) in Russia, the Science
and Technology Center in Ukraine (STCU), and the U.S. Civilian Research
and Development Foundation (CRDF). These organizations transfer IPP funds
directly to the personal bank accounts of IPP project participants in
Russia and other countries. To receive payment for work on IPP projects,
project participants must submit paperwork to these organizations
indicating, among other things, whether they possess WMD experience.

Project proposals under the IPP program are prepared and submitted to DOE
by officials from the participating national laboratories,^3 although a
project may also result from the initiative of a foreign institute or U.S.
company. Each participating DOE national laboratory provides technical and
financial oversight over a set of projects. Partnerships are formed by the
national laboratories between U.S. companies--known as industry
partners--and institutes in Russia and other countries. Industry partners
are engaged in projects through Cooperative Research and Development
Agreements with the participating DOE national laboratories, which require
cost-sharing to develop technologies for commercial application. An
Inter-Laboratory Board (ILAB) serves as the primary coordinating body for
the national laboratories involved in the IPP program. The ILAB
coordinates, reviews, and facilitates the activities of the participating
national laboratories and makes recommendations to DOE on how to implement
the program. Ultimate decision-making authority lies with the DOE
headquarters IPP program office.

^3DOE manages the largest laboratory system of its kind in the world.
Originally created to design and build atomic weapons, DOE's 22
laboratories have expanded their missions to conduct research in many
disciplines--from high-energy physics to advanced computing. The 12
national laboratories that participate in the IPP program are the Argonne,
Brookhaven, Idaho, Lawrence Berkeley, Lawrence Livermore, Los Alamos, Oak
Ridge, National Renewable Energy, Pacific Northwest, Sandia, and Savannah
River National Laboratories and the Kansas City Plant.

To improve the potential of IPP projects to create sustainable jobs in
Russia and other countries, DOE requires that a U.S. industry partner be
identified before it approves and funds a project. A consortium of U.S.
industry partners--the United States Industry Coalition (USIC)--was
established in 1994. To participate in the IPP program, a company must
become a member of USIC and pay dues based on its size. USIC reviews IPP
project proposals for commercial potential and requires that all project
proposals have the basic outline of a business plan for commercializing
the technology involved. In addition, USIC annually surveys its member
companies to determine the commercial results of IPP projects, such as the
number of long-term, private sector jobs created. DOE uses the results of
USIC's surveys to report to the Congress on the number of jobs the IPP
program created.

DOE's IPP program is one of several nonproliferation programs focused on
reducing the potential proliferation risks posed by scientists from Russia
and other countries. Other such programs include the Science Centers
program funded by the U.S. government--under the auspices of the
Department of State (State)--and other nations;^4 CRDF; and a variety of
initiatives primarily focused on biological institutes and implemented by
the Departments of Agriculture, Defense, Health and Human Services, and
State. In addition, from 1998 through 2006, DOE administered the Nuclear
Cities Initiative, whose goal was to create sustainable jobs for weapons
scientists in Russia's closed nuclear cities and to help Russia accelerate
the downsizing of its nuclear weapons complex.^5 The
government-to-government agreement between the United States and Russia
governing this program expired and was not renewed, and, as a result, the
program was terminated in September 2006.

^4The Science Centers, consisting of ISTC and STCU, are intergovernmental
bodies with over 12 contributing member states. The centers were
established to provide peaceful research opportunities to weapons
scientists of the former Soviet Union. For additional information, see
GAO, Weapons of Mass Destruction: State Department Oversight of Science
Centers Program, [50]GAO-01-582 (Washington, D.C.: May 10, 2001).

In 1999, we reviewed the IPP program and made several recommendations to
improve its management, including recommending that DOE (1) obtain more
accurate data on the background and number of scientists participating in
the program, (2) maximize the amount of funds going to former Soviet Union
weapons institutes, and (3) eliminate projects that do not have commercial
potential.^6 The Congress, among other things, subsequently prohibited DOE
from using IPP program funding, available after fiscal year 1999, to
supplement the income of scientists and engineers who (1) are currently
engaged in activities directly related to the design, development,
production, or testing of chemical or biological WMD or a missile system
to deliver such weapons or (2) were not formerly engaged in activities
directly related to the design, development, production, or testing of WMD
or a missile delivery system for such weapons.^7 The Congress also
prohibited DOE from funding any institute or scientist determined by the
Secretary of Energy to have made a scientific or business contact about
WMD with a representative of a "country of proliferation concern."^8

^5Ten closed nuclear cities formed the core of the former Soviet Union's
nuclear weapons complex. Many of the cities are located in geographically
remote locations and were so secret that they did not appear on any
publicly-available maps until 1992. For additional information, see GAO,
Nuclear Nonproliferation: DOE's Efforts to Assist Scientists in Russia's
Nuclear Cities Face Challenges, [51]GAO-01-429 (Washington, D.C.: May 3,
2001).

^6See GAO, Nuclear Nonproliferation: Concerns with DOE's Efforts to Reduce
the Risks Posed by Russia's Unemployed Weapons Scientists,
[52]GAO/RCED-99-54 (Washington, D.C.: Feb. 19, 1999). As a result of our
1999 review, DOE modified the IPP program by implementing requirements to
(1) better categorize the weapons backgrounds of scientists participating
in IPP projects; (2) review projects for potential dual-use technology;
(3) limit funding for DOE national laboratories to no more than 35 percent
for each IPP project; (4) eliminate basic research projects; (5) establish
direct, tax-free payments to participating former Soviet scientists; and
(6) institute audits conducted by the Defense Contract Audit Agency as a
way of verifying proper transfer of IPP program funds and equipment.

^7Pub. L. No. 106-65 S 3136(a)(2).

^8Pub. L. No. 106-65 S 3136(a)(3). As defined by the section, a "country
of proliferation concern" means any country designated as such by the
Director of Central Intelligence for purposes of the IPP program.

In this context, you asked us to review the IPP program. As agreed with
your office, we assessed (1) DOE's reported accomplishments for the IPP
program, (2) DOE's exit strategy for the IPP program, and (3) the extent
to which the IPP program has experienced annual carryover balances of
unspent funds and the reasons for such carryover.

To address these objectives, we examined 207 of the 929 IPP projects. We
selected this judgmental sample of draft, active, inactive, and completed
projects on the basis of a variety of factors, such as geographic
distribution, representation of all participating national laboratories,
and project costs. Of the 207 projects in our sample, we received or were
able to reconstruct information on payments to project participants for 97
projects. We interviewed key officials and analyzed documentation, such as
program guidance, project proposals, and financial information, from DOE
and its contractors at the Argonne, Brookhaven, Idaho, Lawrence Berkeley,
Lawrence Livermore, Los Alamos, Oak Ridge, National Renewable Energy,
Pacific Northwest, Sandia, and Savannah River National Laboratories; the
Kansas City Plant; and Defense and State. We interviewed officials from 15
Russian and 7 Ukrainian institutes that participate in the IPP program. We
also spoke with officials from the Federal Agency for Atomic Energy of the
Russian Federation, which oversees institutes involved in Russia's nuclear
weapons program. Furthermore, we interviewed officials from 14 U.S.
companies that participate in the IPP program to better understand their
perspective on the program's benefits and its implementation. In addition,
we analyzed cost and budgetary information from DOE, DOE's national
laboratories, CRDF, ISTC, and STCU. We interviewed knowledgeable officials
on the reliability of these data, including issues such as data entry,
access, quality control procedures, and the accuracy and completeness of
the data. We determined that these data were sufficiently reliable for the
purposes of this review. Appendix I provides more details on our scope and
methodology, and appendix II provides more detailed information on the
institutes that we visited in Russia and Ukraine. We conducted our review
from October 2006 through December 2007 in accordance with generally
accepted government auditing standards.

Results in Brief

DOE has overstated accomplishments for the 2 critical measures it uses to
assess the IPP program's progress and performance--the number of WMD
scientists receiving DOE support and the number of long-term, private
sector jobs created. First, according to our analysis of 97 IPP projects
involving about 6,450 scientists for whom we had complete payment
information, more than half of the scientists paid by the program never
claimed to have WMD experience. Furthermore, instead of supporting
Soviet-era WMD scientists as a way of minimizing proliferation risks,
officials at 10 nuclear and biological institutes in Russia and Ukraine
told us that IPP program funds help them attract, recruit, and retain
younger scientists and contribute to the continued operation of their
facilities. This is contrary to the original intent of the program, which
was to reduce the proliferation risk posed by Soviet-era weapons
scientists. For example, about 972 of the scientists paid for work on
these 97 projects were born in 1970 or later, making them too young to
have contributed to Soviet-era WMD efforts. Second, although DOE asserts
that through April 2007, the IPP program had helped create 2,790
long-term, private sector jobs in Russia and other countries, we were
unable to substantiate the existence of many of these jobs in our review
of 48 of the 50 projects DOE considers to be commercial successes. For
example, DOE reported that 350 jobs were created at one Russian institute,
but officials from that institute told us that only 160 people had
actually been employed, that most were on a part-time basis, and that they
could not account for jobs that may have been created at other institutes
previously involved in the projects. The validity of the number of jobs
reported to have been created by the IPP program is in doubt because DOE
relies on "good-faith" reporting from U.S. industry partners and
institutes in Russia and other countries and does not independently verify
employment data it receives. Finally, the metrics DOE uses to set IPP
program goals and measure progress are outdated. DOE officials admitted
that the IPP program targets--based on a 1991 assessment of the former
Soviet WMD scientist population--are not sufficient to judge the IPP
program's progress in reducing proliferation risks. However, DOE has not
updated its metrics on the basis of more recent estimates of the WMD
scientist population, and it has not set priorities for the program on the
basis of a comprehensive country-by-country and institute-by-institute
evaluation of proliferation risks. Due to the serious nature of these
findings, we are recommending that DOE perform a comprehensive
reassessment of the IPP program to help the Congress determine whether to
continue to fund the program. We believe this reassessment should include,
at a minimum, a thorough analysis of the proliferation risk posed by
weapons scientists in Russia and other countries, a well-defined
prioritization strategy to more effectively target the scientists and
institutes of highest proliferation concern, and more accurate reporting
of program accomplishments.

DOE has not developed an exit strategy for the IPP program in Russia and
other countries, although officials from the Russian government, Russian
and Ukrainian institutes, and U.S. companies raised questions about the
continuing need for the IPP program, given economic improvements in Russia
and other countries where DOE provides assistance. Importantly, a senior
Russian Atomic Energy Agency official told us that the IPP program is no
longer relevant because Russia's economy is strong and its scientists no
longer pose a proliferation risk. However, DOE has not developed criteria
to determine when scientists, institutes, or countries should "graduate"
from the IPP program. In contrast, State, which supports a similar program
to assist weapons scientists in Russia and other countries, has assessed
participating institutes and developed a strategy--using a range of
factors, such as an institute's ability to pay salaries regularly and to
attract funding from other sources--to graduate certain institutes from
its program. Even so, we found that DOE is currently supporting 35 IPP
projects at 17 Russian and Ukrainian institutes that State considers to
already have graduated from its program and, therefore, no longer require
U.S. assistance. Instead of finding ways to phase out the IPP program in
the countries of the former Soviet Union, DOE has recently expanded the
program to include new countries and areas as a way to maintain its
relevance as a nonproliferation program. Specifically, DOE recently began
providing assistance to scientists in Iraq and Libya. In addition, the IPP
program is working with DOE's Office of Nuclear Energy to develop projects
that support the Global Nuclear Energy Partnership--a DOE-led
international effort to expand the use of civilian nuclear power. DOE has
expanded the IPP program's efforts into these new areas without a clear
mandate from the Congress and has suspended parts of its IPP program
guidance for implementing projects in these new areas. For example, in its
efforts in Libya, DOE is deviating from IPP program guidance and its
standard practice of limiting the amount of IPP program funds spent at the
national laboratories for project oversight to not exceed 35 percent of
the total expenditures. We found that 97 percent of funds DOE spent on
projects in Libya through May 2007 were spent at DOE's national
laboratories for project management and oversight activities. We are
recommending, among other things, that DOE (1) develop a clear exit
strategy for the IPP program, including detailed criteria to determine
when specific countries, institutes, and individuals are ready to graduate
from participation in the IPP program, and (2) seek explicit congressional
authorization to expand IPP efforts outside of the former Soviet Union.

Regarding its management of IPP program funding, DOE has carried over
unspent funds in excess of the amount that the Congress provided for the
IPP program in every fiscal year since 1998. For example, as of September
2007, DOE had carried over about $30 million in unspent funds--$2 million
more than the $28 million that the Congress had appropriated for the IPP
program in fiscal year 2007. Two main factors have contributed to this
recurring problem: (1) lengthy and multilayered review and approval
processes by DOE and its contractors for paying former Soviet weapons
scientists for IPP-related work and (2) long delays in implementing some
IPP projects. Regarding the first factor, payments to supplement the
salaries of scientists in Russia and other countries are often delayed
because they are reviewed by multiple offices within DOE; participating
national laboratories; and the organizations, such as ISTC, that DOE uses
to make tax-free payments to project participants' bank accounts. DOE
officials acknowledged that the lag time between the allocation of funds,
placement of contracts, and payment for deliverables is a problem for the
IPP program. Russian and Ukrainian scientists we interviewed told us that
they regularly experienced delays of 3 months to 1 year in receiving
payments for completed work on IPP projects. In addition, some IPP
projects we reviewed experienced long delays in implementation because of,
among other things, administrative problems and turnover in key project
participants. For example, in 2006, the Russian Customs Service rejected a
testing device needed for one IPP project after it was improperly labeled
when it was shipped from the United States to the participating Russian
institute. As a result, DOE was unable to spend about $245,000 intended
for this project for more than 1 year until the issue was resolved. DOE
and national laboratory officials told us they are attempting to improve
financial oversight over the IPP program, in part, to address concerns
about unspent program funds. To that end, DOE is developing a program
management system, which it expects to fully implement in 2008--14 years
after the start of the program. We are recommending that DOE seek to
reduce the large balances of unspent IPP program funds and streamline the
process through which foreign scientists receive IPP funds by eliminating
unnecessary layers of review.

We provided a draft of this report to DOE and State for comment. DOE
agreed with 8 of our 11 recommendations to improve the overall management
and oversight of the IPP program, noting that a number of changes were
already under way. However, DOE disagreed with 2 recommendations and
neither agreed nor disagreed with 1 recommendation. Specifically, DOE
disagreed that it needs to reassess the IPP program, expressing the view
that a reassessment has already taken place that justified the program's
continued need. We are aware that DOE conducted internal assessments in
2004 and 2006 of its overall efforts to engage WMD scientists in the
former Soviet Union and other countries. However, these assessments did
not evaluate the IPP program exclusively and were conducted at a time when
the IPP program was complemented by and coordinated with a similar DOE
program focused on downsizing facilities and creating new jobs for
personnel in Russia's nuclear cities. This complementary program--the
Nuclear Cities Initiative--has since been canceled. As a result, we
believe these assessments are outdated because the IPP program operates
under a significantly different set of circumstances today than when DOE
conducted its previous internal assessments. Moreover, we believe that the
nature, scope, and volume of problems we identified during the course of
our review necessitates a reassessment of the IPP program to ensure that
limited program funds are directed to the scientists and institutes of
highest proliferation risk. DOE also disagreed with the need to ensure
compliance with the statutory restriction on the percentage of IPP program
funds spent on oversight activities at the DOE national laboratories to no
more than 35 percent. However, we note in our report that DOE is deviating
from its IPP program guidance and standard practices by placing no
restrictions on the amount of IPP program funds that can be spent at DOE
national laboratories for oversight of projects in Libya. In addition,
State concurred with the 1 recommendation directed to both DOE and State.
DOE and State also provided technical comments, which we incorporated in
this report as appropriate.

Background

Historically, IPP projects were placed in one of three categories--Thrust
1, Thrust 2, and Thrust 3. DOE now only supports Thrust 2 projects.
Specifically:

           o Thrust 1 projects were geared toward technology identification
           and verification and focused on "laboratory-to-laboratory"
           collaboration, or direct contact between DOE's national
           laboratories and weapons institutes and scientists in the former
           Soviet Union. These projects had no industry partner and,
           according to DOE, were entered into to quickly engage former
           Soviet weapons scientists and their institutes. DOE funded 447
           Thrust 1 projects, 378 of which were completed. DOE no longer
           supports Thrust 1 projects.

           o Thrust 2 projects involve a U.S. industry partner that agrees to
           share in the costs of the project with DOE to further develop
           potential technologies. The U.S. industry partner is expected to
           match the funds DOE provides, either by providing in-kind support,
           such as employee time and equipment, or by providing cash. Through
           October 2007, there were 479 IPP projects in the Thrust 2
           category.

           o Thrust 3 projects, with the exception of 1 project, did not
           receive any financial support from DOE and were intended to be
           self-sustaining business ventures. DOE no longer supports Thrust 3
           projects. There were only three Thrust 3 projects and the last
           project was completed in 2001.

           All proposed IPP projects are reviewed by DOE's national
           laboratories; the IPP program office; and other agencies,
           including Defense and State, before they are approved for funding.
           Initially, a national laboratory proposes a project for
           consideration. As the national laboratory prepares the proposal,
           the laboratory project manager, generally referred to as the
           "principal investigator," is responsible for including, among
           other things, a list of intended participants and for designating
           the WMD experience for each participant. The proposed participants
           are assigned to one of the following three categories:

           o Category I--direct experience in WMD research, development,
           design, production, or testing;

           o Category II--indirect WMD experience in the underlying
           technologies of potential use in WMD; or

           o Category III--no WMD-relevant experience.

           If the IPP project is approved, DOE transfers funding to the
           project participants using payment mechanisms at CRDF, ISTC, or
           STCU. To be paid by any of these entities, the project
           participants must self-declare whether they possess weapons
           experience and indicate a more specific category of WMD expertise,
           such as basic knowledge of nuclear weapons design, construction,
           and characteristics. The weapons category classifications these
           scientists declare are certified first by the foreign institute's
           director and then by the foreign government ministry overseeing
           the institute. See appendix III for a more detailed list of the
           WMD categories used by DOE, CRDF, ISTC, and STCU.

           After the project passes an initial review within the proposing
           national laboratory, it is further analyzed by the ILAB and its
           technical committees, which then forward the project proposal to
           DOE headquarters for review. DOE, in turn, consults with State and
           other U.S. government agencies on policy, nonproliferation, and
           coordination considerations. The IPP program office at DOE
           headquarters is ultimately responsible for making final decisions,
           including funding, on all projects.
			  
			  DOE Has Overstated the Progress Made on Key Performance Measures,
			  Raising Doubts about the IPP Program's Nonproliferation Benefits

           DOE has not accurately portrayed the IPP program's progress,
           according to our analysis of two key measures used to assess the
           program's performance--the number of WMD scientists receiving DOE
           support and the number of long-term, private sector jobs created.
           Many of the scientists in Russia and other countries that DOE has
           paid through its IPP program did not claim to have WMD experience.
           Furthermore, DOE's process for substantiating the weapons
           backgrounds of IPP project participants has several weaknesses,
           including limited information about the backgrounds of scientists
           proposed for an IPP project. In addition, DOE has overstated the
           rate at which weapons scientists have been employed in long-term,
           private sector jobs because it does not independently verify the
           data it receives on the number of jobs created, relies on
           estimates of job creation, and includes in its count a large
           number of part-time jobs that were created. Finally, DOE has not
           revised the IPP program's performance metrics, which are currently
           based on a 1991 assessment of the threat posed by former Soviet
           weapons scientists.
			  
			  DOE Has Supplemented the Salaries of Many Scientists in Russia and
			  Other Countries Who Did Not Claim Direct Experience with WMD

           A major goal of the IPP program is to engage former Soviet weapons
           scientists, engineers, and technicians, and DOE claims to have
           supplemented the incomes of over 16,770 of these individuals since
           the program's inception. However, this number is misleading
           because DOE officials told us that this figure includes both
           personnel with WMD experience and those without any WMD
           experience. We reviewed the payment records of 97 IPP projects,
           for which information was available and complete, and found that
           54 percent, or 3,472, of the 6,453 participants in these projects
           did not claim to possess any WMD experience in the declarations
           they made concerning their backgrounds. Moreover, project
           participants who did not claim any WMD experience received 40
           percent, or approximately $10.1 million, of the $25.1 million paid
           to personnel on these projects. For example, in 1 project to
           develop a high-power accelerator that was funded for $1 million,
           88 percent, or 66, of the 75 participants who have received
           payments did not claim any previous weapons-related experience.

           On a project-by-project basis, we also found that DOE is not
           complying with a requirement of its own guidance for the IPP
           program--that is, each IPP project must have a minimum of 60
           percent of the project's participants possessing WMD-relevant
           experience prior to 1991 (i.e., Soviet-era WMD experience).
           According to our analysis of the payment records of 97 projects
           for which information was available and complete, we found that 60
           percent, or 58, of the 97 projects did not meet this requirement.
           A factor contributing to this outcome may be a poor understanding
           of the IPP program guidance among the ILAB representatives of the
           12 national laboratories participating in the program. During our
           interviews with national laboratory officials, we heard a range of
           opinions on the appropriate minimum percentage of WMD scientists
           on individual IPP projects. For example, ILAB representatives from
           5 national laboratories indicated that they strive for a minimum
           of 50 percent of WMD scientists on each IPP project; the ILAB
           representative from the Pacific Northwest National Laboratory
           indicated a goal of 55 percent. The ILAB representative from the
           National Renewable Energy Laboratory indicated that he was not
           aware of any DOE policy establishing a minimum percentage of
           participants with WMD backgrounds on an IPP project.

           Finally, many IPP project participants that DOE supports are too
           young to have supported the Soviet Union's WMD programs. Officials
           at 10 of the 22 Russian and Ukrainian institutes we interviewed
           said that IPP program funds have allowed their institutes to
           recruit, hire, and retain younger scientists. We found that 15
           percent, or 972, of the 6,453 participants in the payment records
           of the 97 projects we reviewed were born in 1970 or later and,
           therefore, were unlikely to have contributed to Soviet-era WMD
           efforts. This group of younger participants received approximately
           14 percent, or about $3.6 million, of $25.1 million paid to
           project participants in the 97 projects we reviewed.

           While DOE guidance for the IPP program does not specifically
           prohibit participation of younger scientists in IPP projects, DOE
           has not clearly stated the proliferation risk posed by younger
           scientists and the extent to which they should be a focus of the
           IPP program. The absence of a clear policy on this matter has
           contributed to confusion and lack of consensus among national
           laboratory officials involved in the program about the extent to
           which younger scientists, rather than older, more experienced WMD
           experts, should be involved in IPP projects. For example, the ILAB
           representative at the Argonne National Laboratory told us that it
           would be appropriate to question the participation of personnel
           born in the mid-1960s or later since they most likely lacked
           weapons-related experience. A representative at the Los Alamos
           National Laboratory who has been involved with the IPP program for
           over a decade said that the program should engage
           "second-generation" scientists born in 1980 or later because doing
           so can help create opportunities for "third- and
           fourth-generation" scientists at facilities in Russia and other
           countries in the future. Senior officials at the Lawrence
           Livermore National Laboratory told us that scientists in Russia
           and other countries, regardless of their age or actual experience
           in weapons-related programs, should be included in IPP projects
           because weapons expertise can be passed from one generation to the
           next.
			  
			  DOE Lacks Necessary Information and a Rigorous, Formalized Review
			  Process to Assess the WMD Credentials of IPP Project Participants

           In 1999, we recommended that, to the extent possible, DOE should
           obtain more accurate data on the number and background of
           scientists participating in IPP program projects. DOE told us that
           it has made improvements in this area, including development of a
           classification system for WMD experts, hiring a full-time employee
           responsible for reviewing the WMD experience and backgrounds of
           IPP project participants, and conducting annual project reviews.
           DOE relies heavily on the statements of WMD experience that IPP
           project participants declare when they submit paperwork to receive
           payment for work on IPP projects. However, we found that DOE lacks
           an adequate and well-documented process for evaluating, verifying,
           and monitoring the number and WMD experience level of individuals
           participating in IPP projects.

           According to DOE officials, all IPP projects are scrutinized
           carefully and subjected to at least 8, and in some cases 10,
           stages of review to assess and validate the WMD experience of the
           project participants. Responsibility for verifying the WMD
           experience and backgrounds of IPP project participants rests not
           only with DOE, but with the national laboratories, other federal
           agencies, and the entities responsible for transmitting funding to
           the scientists in Russia and other countries (CRDF, ISTC, or
           STCU). However, the ultimate responsibility for this assessment
           rests with DOE's IPP program office. Table 1 provides an overview
           of the different stages involved in DOE's assessment of IPP
           project participants' WMD backgrounds.

           Table 1: Multistage Process for Assessing IPP Project
           Participants' WMD Backgrounds
			  
			  Stage number Review                                                        
1            Assessment by the national laboratory principal investigator  
2            Assessment by ILAB representatives and ILAB technical         
                committees                                                    
3            Review by ILAB Chairperson                                    
4            Preliminary DOE review                                        
5            U.S. interagency review                                       
6            Approval and certification by DOE                             
7            Validation by project funding mechanism (CRDF, ISTC, or STCU) 
8            Secondary review by DOE following project approval but prior  
                to project implementation                                     
9            End-of-year review by DOE prior to release of 2^nd- or        
                3^rd-year funding (for multiyear projects only)               
10           Audits of selected projects by the Defense Contract Audit     
               Agency          
					
           Source: GAO analysis of DOE data.

           In reviewing project documentation and in our discussions with
           officials responsible for conducting these reviews, we found
           limitations throughout this multistage assessment process.
           Specifically:

           o DOE has limited information to verify the WMD experience of
           personnel proposed for IPP projects because government officials
           in Russia and other countries are reluctant to provide information
           about their countries' scientists. For example, ISTC officials
           told us that the Russian government refuses to provide resumes for
           scientists involved in projects funded by the Science Centers
           program, including IPP projects that use the ISTC payment process;
           while CRDF officials indicated that both the Russian and Ukrainian
           governments have shown increasing resistance to the policy
           requiring the scientists to declare their WMD-related experience.
           Three national laboratory officials stated that it is illegal
           under Russian law to ask project participants about their
           backgrounds, and that instead they make judgments regarding the
           WMD experience of the project participants on the basis of their
           personal knowledge and anecdotal information.

           o Some IPP project proposals may advance from the national
           laboratories for consideration by DOE with insufficient vetting or
           understanding of all personnel who are to be engaged on the
           project. Contrary to the process DOE laid out for the review of
           the WMD scientists' backgrounds, senior representatives at five
           national laboratories told us that they and their project managers
           do not have sufficient time or the means to verify the credentials
           of the proposed project participants. Furthermore, they believe
           that DOE is primarily responsible for substantiating the weapons
           experience of the individuals who are to be engaged in the
           projects.

           o DOE does not have a well-documented process for verifying the
           WMD experience of IPP project participants, and, as a result, it
           is unclear whether DOE has a reliable sense of the proliferation
           risk these individuals pose. DOE's review of the WMD credentials
           of proposed project participants relies heavily on the
           determinations of the IPP program office. We examined the proposal
           review files that the program maintains, and we were unable to
           find adequate documentation to substantiate the depth or
           effectiveness of the program office's review of the WMD experience
           of proposed IPP project participants. DOE officials noted that
           they do not usually check the weapons backgrounds of every
           individual listed in an IPP project proposal, but only the key
           project scientists and a few of the personnel working with them.
           Specifically, in none of the IPP project files that we reviewed
           did we find formal, written documentation analyzing and
           substantiating the WMD backgrounds and proliferation risks of the
           personnel to be engaged in those IPP projects. Each of these files
           did, however, contain a comprehensive formal assessment by DOE's
           Office of International Regimes and Agreements analyzing export
           control issues and compliance with U.S. nonproliferation laws.

           o Officials at the three organizations DOE uses to make tax-free
           payments for IPP projects--CRDF, ISTC, and STCU--also downplayed
           their organizations' ability to validate the backgrounds of the
           scientists participating in IPP projects. CRDF officials stated
           that their organization has not independently validated any of the
           weapons backgrounds of the participating scientists, and they do
           not consider that a responsibility under CRDF's contract with DOE.
           Similarly, ISTC officials told us that their organization cannot
           verify the backgrounds of scientists in projects funded by the
           Science Centers program, including IPP projects that use the ISTC
           payment process, and instead relies on the foreign institute's
           certification of the project participants. Finally, STCU relies on
           the validation provided by the foreign institute's director, and
           verifies this information in annual project reviews during which a
           sample of project participants are interviewed to confirm their
           WMD experience.

           o Because it can be a matter of months or longer between
           development of an IPP project proposal and project implementation,
           the list of personnel who are actually paid on a project can
           differ substantially from the proposed list of scientists. For
           several IPP projects we reviewed, we did not find documentation in
           DOE's project files indicating that the department was notified of
           the change of staff or had assessed the WMD backgrounds of the new
           project participants. For example, 1 IPP project--to discover new
           bioactive compounds in Russia and explore their commercial
           application--originally proposed 27 personnel and was funded at $1
           million. However, 152 personnel were eventually paid under this
           project, and we did not find an updated list of the project
           personnel or any indication of a subsequent review of the
           additional personnel by DOE in the IPP project files. In another
           project to develop straw-fired boilers in Ukraine funded at
           $936,100, DOE reviewed the backgrounds of 18 personnel who were
           part of the project proposal. However, CRDF payment records
           indicated that 24 personnel were subsequently paid on the project,
           only 5 of whom were listed in the original proposal DOE had
           reviewed and approved. As a result, it is unclear whether DOE
           conducts sufficient oversight on changes in the number or
           composition of the workforce involved in IPP projects. For its
           part, CRDF informed us that when an institute requests a change in
           project staff and that change is approved by the participating
           national laboratory, CRDF does not report these changes to DOE,
           but relies on the national laboratory to notify relevant DOE
           officials.

           The limited information DOE obtains about IPP project participants
           and the weaknesses in DOE's review of the backgrounds of these
           individuals leave the IPP program vulnerable to potential
           misallocation of funds. In our review, we found several examples
           that call into question DOE's ability to adequately evaluate IPP
           project participants' backgrounds before the projects are approved
           and funded. For example:

           o A National Renewable Energy Laboratory official told us he was
           confident that a Russian institute involved in a $250,000 IPP
           project he oversaw to monitor microorganisms under environmental
           stress was supporting Soviet-era biological weapons scientists.
           However, during our visit to the institute in July 2007, the
           Russian project leader told us that neither he nor his institute
           was ever involved in biological weapons research. As a result of
           this meeting, DOE canceled this project on July 31, 2007. DOE's
           cancellation letter stated that the information provided during
           our visit led to this action. It further stated, "it is well
           documented in statute and in the [IPP program's] General Program
           Guidance that our projects must engage Russians, and others, with
           relevant weapons of mass destruction or strategic delivery means
           backgrounds. Violation of this requirement is an extremely serious
           matter."

           o In November 2006, DOE canceled a project in Ukraine intended to
           develop a new type of fuel combustion system, 18 months after
           approving the project and after spending about $76,000. DOE
           canceled this project when it discovered an inadequate number of
           personnel with WMD backgrounds involved in the project and after a
           Defense Contract Audit Agency (DCAA) audit revealed other
           irregularities, including a conflict of interest between the
           primary Ukrainian institute and the U.S. partner company. During
           the interagency review of the project proposal, State officials
           questioned the primary Ukrainian institute's involvement in WMD.
           However, in our review of DOE's project files, we did not find
           evidence that these concerns triggered a more-intensive evaluation
           of this institute by DOE prior to the project's approval.

           o A 2005 DCAA audit found that 90 percent of the participants on
           an IPP project administered by the Pacific Northwest National
           Laboratory lacked WMD experience. This project, which was designed
           to develop improved biological contamination detectors, was funded
           at $492,739. Officials at the national laboratory insisted that
           DCAA "was just plain wrong." DOE and national laboratory officials
           asserted that the project participants were under instruction not
           to discuss their weapons involvement and, on the basis of their
           personal knowledge of the Russian project leader and the
           institute, they believed the project participants constituted a
           proliferation risk. However, according to the payment records we
           reviewed, the Russian project leader and other scientists involved
           in the project were not prevented from declaring their WMD
           backgrounds to CRDF. Such conflicting accounts, the absence of
           clear information, and the judgments made by IPP program officials
           in assessing the proliferation risks posed by IPP project
           participants underscore the difficulties the program faces and the
           possibility that the program is funding personnel who do not
           constitute a proliferation risk.
			  
			  DOE Has Overstated the Number of Former Weapons Scientists Reemployed
			  in Long-term, Private Sector Jobs

           Although a senior DOE official described commercialization as the
           "flagship" of the IPP program, we found that the program's
           commercialization achievements have been overstated and are
           misleading, further eroding the perceived nonproliferation
           benefits of the program. In the most recent annual report for the
           IPP program available at the time of our review,^9 DOE indicated
           that 50 projects had evolved to support 32 commercially successful
           activities.^10 DOE reported that these 32 commercial successes had
           helped create or support 2,790 new private sector jobs for former
           weapon scientists in Russia and other countries.^11 In reviewing
           these projects, we identified several factors that raise concerns
           over the validity of the IPP program's reported commercial success
           and the numbers of scientists employed in private sector jobs. For
           example:

           o The annual survey instrument that USIC distributes to collect
           information on job creation and other commercial successes of IPP
           projects relies on "good-faith" responses from U.S. industry
           partners and foreign institutes, which are not audited by DOE or
           USIC. In 9 of the 32 cases, we found that DOE based its job
           creation claims on estimates or other assumptions. For example, an
           official from a large U.S. company told us that the number of jobs
           it reported to have helped create was his own rough estimate. He
           told us he derived the job total by estimating the amount of money
           that the company was spending at Russian and Ukrainian institutes
           and dividing that total by the average salary for Russian
           engineers in the company's Moscow office.

           o We could not substantiate many of the jobs reported to have been
           created in our interviews with the U.S. companies and officials at
           the Russian and Ukrainian institutes where these commercial
           activities were reportedly developed, due to conflicting
           information and accounts. For example, officials from 1 U.S.
           company we interviewed claimed that 250 jobs at 2 institutes in
           Russia had been created, on the basis of 2 separate IPP projects.
           However, during our visit to the Scientific Research Institute of
           Measuring Systems to discuss one of these projects, we were told
           that the project is still under way, manufacturing of the product
           has not started, and none of the scientists have been reemployed
           in commercial production of the technology. Similarly, during our
           site visit, officials at the Institute of Nuclear Research of the
           Russian Academy of Sciences could not confirm the creation of 350
           jobs they had reported as a result of several IPP projects
           relating to the production of radioisotopes. They indicated that
           no more than 160 personnel were employed at their institute in
           commercial activities stemming from those IPP projects, that most
           of these jobs were only part time, and that they could not account
           for jobs that may have been created at other institutes previously
           involved in the projects.

^9On September 5, 2007, DOE provided us with preliminary data that will be
published in its fiscal year 2006 IPP program annual report. This report
has not yet been issued. As a result, for purposes of this report, we used
the most up-to-date published information available during our review,
which was DOE's Fiscal Year 2005 IPP Program Annual Report.

^10In some cases, more than one IPP project was connected to a commercial
success. See appendix IV for a complete list of the IPP projects reported
by DOE as being commercially successful.

^11We found that DOE made a mathematical error in totaling the number of
new jobs created and in migrating data from the USIC survey to the Fiscal
Year 2005 IPP Program Annual Report. As a result, the actual total of new
jobs that DOE should have reported is 2,780.

           Moreover, we found differing views among DOE and national
           laboratory officials on what constitutes a commercially successful
           IPP project. For example, an Oak Ridge National Laboratory
           official told us an IPP project could be considered a commercial
           success if the project participants become employed full time in a
           private business and are no longer employed by the WMD institute.
           A National Renewable Energy Laboratory official defined
           commercially successful IPP projects as those that lead to new
           products or new production capabilities in the former Soviet Union
           with significant sales in the marketplace. DOE guidance for the
           IPP program does not provide a standard definition or criteria to
           determine whether an IPP project should be judged commercially
           successful. However, in response to our request, DOE offered the
           following definition of a commercially successful IPP project:

           "A product, process, or service is generating revenue from sales
           or other economic value added in the [former Soviet Union] or the
           U.S., based on an IPP project (either completed or ongoing);
           and/or there is a private contractual relationship between the
           U.S. industry partner and the [former Soviet Union] institute
           covering research and development work to be done by the institute
           for the U.S. industry partner growing out of an IPP project."

           The lack of consensus among DOE and national laboratory officials
           involved in the IPP program on a common commercialization
           definition has created confusion and disagreement on which IPP
           projects should be considered commercially successful. For
           example, DOE counted as a commercial success one IPP project
           administered by the Pacific Northwest National Laboratory to
           facilitate biodegradation of oil spills. However, the national
           laboratory officials responsible for this project disagreed with
           DOE's characterization, in part because the project has not
           generated any commercial revenues.

           Furthermore, DOE's broad-based definition of commercialization has
           allowed it to overstate its commercialization accomplishments to
           include part-time jobs created from and revenues derived from
           grants or contract research. Specifically:

           o DOE counts part-time private sector jobs created, even if the
           scientists employed in these part-time jobs also continue to work
           at the former Soviet weapons institute.^12 DOE policy does not
           require scientists employed in a private sector activity resulting
           from an IPP project to sever their relationship with their
           institute. In fact, in our review of the 2,790 jobs created, we
           found that 898, or nearly one third, of these jobs were part-time
           jobs, meaning that the scientists in some cases may still be
           affiliated with the institutes and involved in weapons-applicable
           research.

           o The sources of revenue for some commercially successful IPP
           projects also call into question the long-term sustainability of
           some of the jobs created. DOE reported that $22.1 million in total
           revenue was generated by the foreign institutes or their spin-off
           companies as a result of commercial activities stemming from IPP
           projects. Of this total, approximately $4.5 million, or 20
           percent, consisted of grants (including grants from the Russian
           government); contract research; and other sources of income that
           appear to be of limited duration, that are not based on commercial
           sales, and that may not offer a sustainable long-term source of
           revenue. For example, DOE reported that 510 jobs were created at
           the Kurchatov Institute and other Russian institutes as the result
           of an IPP project to develop thorium-based fuels for use in
           nuclear reactors.^13 However, we found that over 400 of those jobs
           were supported by a separate DOE contract to evaluate the use of
           thorium fuels for plutonium disposition. The Russian project
           participants told us that over 500 workers were supported while
           receiving funding from the 2 DOE sources, but the project is now
           completed, it has not been commercialized, and there are no more
           than 12 personnel currently involved in efforts related to the
           project.
			  
			  DOE Has Not Revised the IPP Program's Performance Metrics to Reflect
			  Updated Threat Information

           The IPP program's long-term performance targets do not accurately
           reflect the size and nature of the threat the program is intended
           to address because DOE is basing the program's performance
           measures on outdated information. DOE has established 2 long-term
           performance targets for the IPP program--to engage 17,000 weapons
           scientists annually by 2015 in either IPP grants or in private
           sector jobs resulting from IPP projects, and to create private
           sector jobs for 11,000 weapons scientists by 2019. However, DOE
           bases these targets on a 16-year-old, 1991 National Academy of
           Sciences (NAS) assessment that had estimated approximately 60,000
           at-risk WMD experts in Russia and other countries in the former
           Soviet Union. DOE derived 17,000 scientists as its share of the
           total target population by subtracting from the NAS estimate the
           number of WMD scientists engaged by other U.S. government and
           international WMD scientist assistance programs (such as State's
           Science Centers program) and making assumptions about attrition
           rates in the former Soviet WMD workforce.

^12According to DOE, there is no IPP program requirement to exclude former
weapons scientists employed on a part-time basis from the total number of
jobs created as a result of IPP projects.

^13Thorium is a naturally occurring radioactive metal, and it is
considered an alternative nuclear fuel to uranium.

           DOE officials acknowledged that the 1991 NAS study does not
           provide an accurate assessment of the current threat posed by WMD
           scientists in Russia and other countries. A 2005 DOE-commissioned
           study by the RAND Corporation estimated that the population of
           unemployed or underemployed weapons scientists in Russia and other
           former Soviet states had decreased significantly. The RAND study
           provided rough revised estimates of the number of WMD scientists
           in the former Soviet Union, and DOE acknowledged in 2006 that the
           target population of WMD experts in the former Soviet Union had
           dropped from the 1991 NAS estimate of 60,000 to approximately
           35,000 individuals. However, DOE has not formally updated its
           performance metrics for the IPP program and, in its fiscal year
           2008 budget justification, continued to base its long-term program
           targets on the 1991 NAS estimate.

           Moreover, DOE's current metrics for the IPP program are not
           complete or meaningful indicators of the proliferation risk posed
           by weapons scientists in Russia and other countries and,
           therefore, do not provide sufficient information to the Congress
           on the program's progress in reducing the threat posed by former
           Soviet WMD scientists. The total number of scientists supported by
           IPP grants or employed in private sector jobs conveys a level of
           program accomplishment, but these figures are broad measures that
           do not describe progress in redirecting WMD expertise within
           specific countries or at institutes of highest proliferation
           concern. DOE has recognized this weakness in the IPP program
           metrics and recently initiated the program's first systematic
           analysis to understand the scope of the proliferation risk at
           individual institutes in the former Soviet Union. DOE believes
           that setting priorities for providing support to foreign
           institutes is necessary because (1) the economies in Russia and
           the other countries of the former Soviet Union have improved since
           the program's inception, (2) former "at-risk" institutes are now
           solvent, and (3) the threat of mass migration of former Soviet
           weapons scientists has subsided. However, DOE believes that a
           concern remains over the "targeted recruitment" of scientists and
           former WMD personnel. DOE officials briefed us on their efforts in
           September 2007, but told us that the analysis is still under way,
           and that it would not be completed until 2008. As a result, we
           were unable to evaluate the results of DOE's assessment.
			  
			  DOE Has Not Developed an Exit Strategy for the IPP Program, but
			  Instead Has Expanded Efforts to Iraq and Libya and Is Using the
			  Program to Support the Department's Global Nuclear Energy Partnership

           Russian government officials, representatives of Russian and
           Ukrainian institutes, and individuals at U.S. companies raised
           questions about the continuing need for the IPP program,
           particularly in Russia, whose economy has improved in recent
           years. However, DOE has yet to develop criteria for phasing-out
           the IPP program in Russia and other countries of the former Soviet
           Union. Meanwhile, DOE is departing from the program's traditional
           focus on Russia and other former Soviet states to engage
           scientists in new countries, such as Iraq and Libya, and to fund
           projects that support a DOE-led initiative on nuclear energy,
           called the Global Nuclear Energy Partnership (GNEP).
			  
			  Russian Government Officials, Russian and Ukrainian Scientists,
			  and U.S. Industry Representatives Questioned the Continuing Need
			  for the IPP Program

           Officials from the Russian government, representatives of Russian
           and Ukrainian institutes, and individuals at U.S. companies who
           have been long-time program participants raised questions about
           the continuing need for the IPP program, given economic
           improvements in Russia and other countries of the former Soviet
           Union. Specifically:

           o A senior Russian Atomic Energy Agency official told us in July
           2007 that the IPP program is no longer relevant because Russia's
           economy is strong and its scientists no longer pose a
           proliferation risk. Additionally, in September 2006, the Deputy
           Head of the Russian Atomic Energy Agency stated that Russia is no
           longer in need of U.S. assistance, and that it is easier and more
           convenient for Russia to pay for its own domestic nuclear security
           projects.

           o Officials from 10 of the 22 Russian and Ukrainian institutes we
           interviewed told us that they do not see themselves or scientists
           at their institutes as a proliferation risk. Russian and Ukrainian
           officials at 14 of the 22 institutes we visited told us that
           salaries are regularly being paid, funding from the government and
           other sources has increased, and there is little danger of
           scientists migrating to countries of concern. However, many of
           these officials said that they are concerned about scientists
           emigrating to the United States and Western Europe, and that IPP
           program funds help them to retain key personnel. Furthermore, many
           of these officials noted that the program was particularly helpful
           during the difficult financial period in the late 1990s.

           o Representatives of 5 of the 14 U.S. companies we interviewed
           told us that, due to Russia's increased economic prosperity, the
           IPP program is no longer relevant as a nonproliferation program in
           that country. Some of these company officials believe that the
           program should be reassessed to determine if it is still needed.

           In economic terms, Russia has advanced significantly since the IPP
           program was created in 1994. Some of the measures of Russia's
           economic strength include the following:

           o massive gold and currency reserves, including more than $113
           billion in a stabilization fund;^14

           o a dramatic decrease in the amount of foreign debt--from about 96
           percent of Russia's gross domestic product in 1999 to about 5
           percent in April 2007; and

           o rapid growth in gross domestic product--averaging about 6
           percent per year from 1998 to 2006.

           In addition, the president of Russia recently pledged to invest
           substantial government resources in key industry sectors,
           including nuclear energy, nanotechnology, and aerospace
           technologies and aircraft production. Many of the Russian
           institutes involved in the IPP program could benefit substantially
           under these planned economic development initiatives, undercutting
           the need for future IPP program support. In fact, officials at
           many of the Russian institutes with whom we spoke told us that
           they hope to receive increased government funding from these new
           presidential initiatives.

           In another sign of economic improvement, many of the institutes we
           visited in Russia and Ukraine appeared to be in better physical
           condition and more financially stable, especially when compared
           with their condition during our previous review of the IPP
           program. In particular, at one institute in Russia--where during
           our 1998 visit we observed a deteriorated infrastructure and
           facilities--we toured a newly refurbished building that featured
           state-of-the-art equipment. Russian officials told us that the
           overall financial condition of the institute has improved markedly
           because of increased funding from the government as well as funds
           from DOE. In addition, one institute we visited in Ukraine had
           recently undergone a $500,000 renovation, complete with a marble
           foyer and a collection of fine art. Furthermore, we found that
           many institutes we visited have been able to develop commercial
           relationships with Russian, U.S., and other international
           companies on their own--outside of the IPP framework--leading to
           increased revenues and commercial opportunities. For example,
           officials at one Russian institute met with us immediately
           following their successful negotiation of a new contract for
           research and development activities with a large international
           energy company. However, DOE officials noted that the economic
           recovery throughout Russia has been uneven, and that DOE believes
           there are many facilities that remain vulnerable. Even so, DOE
           officials told us that their intent is to reorient the IPP program
           from assistance to cooperation, especially in Russia, given the
           recent improvements in that country's economy.
			  
^14Russia's Stabilization Fund was established by resolution of the
Government of Russia on January 1, 2004, to serve as an important tool for
absorbing excessive liquidity; reducing inflationary pressure; and
insulating the economy of Russia from volatility of raw material export
earnings, which was among the reasons of the Russian financial crisis in
1998.

  			  DOE Has Not Developed Criteria to Determine When Individuals or
			  Institutes Should No Longer Receive IPP Funding

           DOE has not developed an exit strategy for the IPP program, and it
           is unclear when the department expects that the program will have
           completed its mission. DOE officials told us in September 2007
           that they do not believe that the program needs to develop an exit
           strategy at this time. However, DOE officials acknowledged that
           the IPP program's long-term goal of finding employment for 17,000
           WMD scientists in Russia and other countries does not represent an
           exit strategy.

           DOE has not developed criteria to determine when scientists,
           institutes, or countries should be "graduated" from the IPP
           program, and DOE officials believe that there is a continued need
           to engage Russian scientists. In contrast, State has already
           assessed participating institutes and developed a strategy--using
           a range of factors, such as the institute's ability to pay
           salaries regularly and to attract funding from other sources--to
           graduate certain institutes from its Science Centers program.
           State and DOE officials told us that the Science Centers and IPP
           programs are complementary and well-coordinated. However, we found
           that the programs appear to have different approaches regarding
           continued U.S. government support at certain institutes.
           Specifically, DOE is currently supporting 35 IPP projects at 17
           Russian and Ukrainian institutes that State considers to already
           be graduated from its Science Centers program and, therefore, no
           longer in need of U.S. assistance. For example, according to State
           documents, beginning in fiscal year 2003, State considered the
           Kurchatov Institute to be graduated from its Science Centers
           program and, according to the Deputy Executive Director of ISTC,
           the institute is financially well-off and no longer needs U.S.
           assistance. However, we found that since fiscal year 2003, DOE has
           funded 6 new IPP projects at the Kurchatov Institute and a related
           spin-off company. DOE officials acknowledged that coordination
           between State and DOE's scientist assistance programs could be
           improved.

           Part of State's exit strategy involves enhancing commercial
           opportunities at some institutes through the Commercialization
           Support Program. This program, which began in October 2005, is
           administered by ISTC with funding from the United States, through
           State's Science Centers program. State aims to facilitate and
           strengthen long-term commercial self-sustainability efforts at
           institutes in Russia and other countries by providing training and
           equipment to help them bring commercially viable technologies to
           market through the Commercialization Support Program. According to
           ISTC officials, 17 commercialization initiatives at institutes in
           Russia have been supported through the program, 2 of which were
           completed as of July 2007. DOE, State, and ISTC officials told us
           the IPP program and the Commercialization Support Program have a
           similar goal of finding commercial opportunities for weapons
           scientists in Russia and other countries of the former Soviet
           Union. According to ISTC officials, a key difference in the
           programs is that the Commercialization Support Program can support
           infrastructure upgrades at foreign institutes, but, unlike the IPP
           program, it is not used to support research and development
           activities. DOE and State officials insisted that the programs are
           complementary, but acknowledged that they need to be better
           coordinated.
			  
			  DOE Expanded IPP Efforts to Iraq and Libya and Is Working with
			  Its Global Nuclear Energy Partnership to Maintain the IPP 
			  Program's Relevance

           DOE recently expanded its scientist assistance efforts on two
           fronts: DOE began providing assistance to scientists in Iraq and
           Libya, and the IPP program is working with DOE's Office of Nuclear
           Energy to develop IPP projects that support GNEP--a DOE-led
           international effort to expand the use of civilian nuclear power.
           These new directions represent a significant departure from the
           IPP program's traditional focus on the former Soviet Union.
           According to a senior DOE official, the expansion of the program's
           scope was undertaken as a way to maintain its relevance as a
           nonproliferation program.

           DOE has expanded the IPP program's efforts into these new areas
           without a clear mandate from the Congress and has suspended parts
           of its IPP program guidance for implementing projects in these new
           areas. Specifically:

           o Although DOE briefed the Congress on its plans, DOE officials
           told us that they began efforts in Iraq and Libya without explicit
           congressional authorization to expand the program outside of the
           former Soviet Union. In contrast, other U.S. nonproliferation
           programs, such as Defense's Cooperative Threat Reduction program,
           sought and received explicit congressional authorization before
           expanding their activities to countries outside of the former
           Soviet Union. DOE officials told us they plan to ask the Congress
           to include such language in future legislation.

           o In Libya, DOE is deviating from IPP program guidance and its
           standard practice of limiting the amount of IPP program funds
           spent at DOE's national laboratories for project oversight to not
           more than 35 percent of total expenditures.

           o Regarding efforts to support GNEP, DOE has suspended part of the
           IPP program's guidance that requires a U.S. industry partner's
           participation, which is intended to ensure IPP projects'
           commercial potential.
			  
			    Iraq

           Since 2004, DOE has been working to identify, contact, and find
           employment for Iraqi scientists in peaceful joint research and
           development projects. DOE's efforts were undertaken at the request
           of State, which has overall responsibility for coordinating
           nonproliferation activities and scientist assistance efforts in
           Iraq. DOE and State coordinate their activities through regular
           meetings and correspondence, participation in weekly
           teleconferences, interagency proposal review meetings, and
           coordination on strategic planning and upcoming events. Through
           May 2007, DOE had spent about $2.7 million to support its
           activities in Iraq. DOE has approved 29 projects, the majority of
           which are administered by Sandia National Laboratories. These
           include projects on radon exposure, radionuclides in the Baghdad
           watershed, and the development of salt tolerant wheat strains.
           However, owing to the uncertain security situation in Iraq, DOE
           and national laboratory officials told us that these are
           short-term projects. Sandia National Laboratory officials
           acknowledged that most of the projects DOE is funding in Iraq have
           no commercialization potential.
			  
			    Libya

           Similarly, DOE expanded its efforts to Libya at the request of
           State.^15 DOE spent about $934,000 through May 2007 to support 5
           projects in Libya, including projects involving water purification
           and desalination. However, DOE is deviating from its IPP program
           guidance and standard practices by placing no restrictions on the
           amount of IPP program funds that can be spent at DOE national
           laboratories for oversight of these projects. DOE limits spending
           at the national laboratories for IPP projects in all other
           countries to comply with section 3136(a)(1) of the National
           Defense Authorization Act for Fiscal Year 2000, which states the
           following: "Not more than 35 percent of funds available in any
           fiscal year after fiscal year 1999 for the IPP program may be
           obligated or expended by the DOE national laboratories to carry
           out or provide oversight of any activities under that program."
           DOE officials acknowledged that more than 35 percent of IPP
           program funds for projects in Libya have been and will continue to
           be spent at the national laboratories. We found that through May
           2007, DOE spent about $910,000 (97 percent) at the national
           laboratories, while spending about $24,000 (3 percent) in Libya.
           In a written response to us on September 7, 2007, DOE noted that
           the IPP program "will continue to operate in Libya on this basis
           [i.e., spending more than 35 percent of funds at the DOE national
           laboratories], while working with our legislative office to
           eliminate any perceived ambiguities [in the law]." DOE informed us
           on October 24, 2007, that these efforts are currently under way.

           DOE officials estimate that about 200 scientists in Libya have WMD
           knowledge and pose a proliferation risk. However, in contrast with
           its activities in Russia and other countries, DOE's focus in Libya
           is not on engaging individual weapons scientists, but rather on
           converting former WMD manufacturing facilities, because, according
           to DOE, the Libyan government has made clear that it will continue
           to pay the salaries of its former WMD scientists and engineers. In
           collaboration with State, DOE is working to help scientists at
           Tajura, formerly the home of Libya's nuclear research center, set
           up and transition to research in seawater desalination and
           analytical water chemistry. DOE and State coordinate on strategic
           planning for and implementation of scientist engagement efforts in
           Libya. According to State, coordination mechanisms include regular
           e-mail correspondences, weekly interagency and laboratory
           teleconferences, and quarterly meetings. DOE officials told us
           they plan to complete their efforts in Libya by 2009.
			  
^15Launched in March 2004, State's Libya Scientist Engagement Program aims
to reduce the risk of WMD expertise proliferation and, simultaneously,
demonstrate Libya's return to the international community by supporting
the transition of former Libyan weapons scientists to civilian careers
that will enhance Libya's economic development.

             Global Nuclear Energy Partnership

           In fiscal year 2007, DOE also expanded the efforts of the IPP
           program to provide support for GNEP--a DOE-led international
           effort to expand the use of civilian nuclear power.^16 In October
           2006, a senior DOE official told us that the department planned to
           use IPP projects to support GNEP as a way to maintain the
           program's relevance as a nonproliferation program. On December 13,
           2006, the IPP program office brought together national laboratory
           experts to propose new IPP projects that could support GNEP.
           Currently, six active or approved IPP projects are intended to
           support GNEP. According to IPP program officials, DOE's Office of
           Nuclear Energy and Office of Science will be providing some
           funding to three of these projects.^17 According to DOE officials,
           because these funds will come from other DOE offices and programs,
           they would not be subject to congressionally mandated limitations
           on the percentage of IPP program funds that can be spent at DOE
           national laboratories. As a result, DOE officials told us they
           plan to use funding provided by the Office of Nuclear Energy and
           the Office of Science to increase the amount spent at DOE national
           laboratories for technical review and oversight of GNEP-related
           IPP projects.

           DOE has suspended some key IPP program guidelines, such as the
           requirement for a U.S. industry partner, for IPP projects intended
           to support GNEP. DOE officials told us that most GNEP-related IPP
           projects do not have immediate commercial potential, but could
           attract industry in the future. Furthermore, they said that
           GNEP-related IPP projects are essentially collaborative research
           and development efforts between Russian institutes and DOE
           national laboratories. DOE has yet to develop separate written
           guidance for GNEP-related IPP projects, but told us it is planning
           to do so. As a result, national laboratory officials we
           interviewed told us that implementing procedures for GNEP-related
           IPP projects has been piecemeal and informal, which has created
           some confusion about how these projects will be managed and
           funded.
			  
^16GNEP, which is managed by DOE's Office of Nuclear Energy, is part of
the department's Advanced Energy Initiative and seeks to develop worldwide
consensus on enabling expanded use of nuclear energy to meet growing
electricity demand. GNEP would achieve its goal by having nations with
secure, advanced nuclear capabilities provide fuel services--fresh fuel
and recovery of used (spent) fuel--to other nations that agree to employ
nuclear energy for power generation purposes only.

^17Specifically, the Office of Nuclear Energy plans to provide $600,000 to
two projects ($300,000 per project) dealing with spent fuel disposition,
and the Office of Science plans to provide funds of an amount yet to be
determined for one project dealing with the environmental consequences of
spent fuel storage.

           Multiple DOE and Contractor Reviews and Delays in Project
			  Implementation Contribute to the IPP Program's Large Balances of
			  Unspent Program Funds

           In every fiscal year since 1998, DOE has carried over unspent
           funds in excess of the amount that the Congress provided for the
           IPP program, primarily because of DOE and its contractors' lengthy
           and multilayered review and approval processes for paying former
           Soviet weapons scientists for IPP-related work and long delays in
           implementing some IPP projects. DOE and national laboratory
           officials told us they are attempting to improve financial
           oversight over the IPP program, in part, to address concerns about
           unspent program funds. To that end, DOE is developing a new
           program management system, which it expects to fully implement in
           2008--14 years after the start of the program.
			  
			  DOE Has Carried Over Unspent Funds Greater Than the Amount the
			  Congress Has Allocated to the IPP Program Each Fiscal Year since
			  1998

           Since fiscal year 1994, DOE has spent about $309 million to
           implement the IPP program, but has annually carried over large
           balances of unspent program funds. DOE officials have recognized
           that unspent funds are a persistent and continuing problem with
           the IPP program. Specifically, in every fiscal year after 1998,
           DOE has carried over unspent funds in excess of the amount that
           the Congress provided for the program the following year. For
           example, as of September 2007, DOE had carried over about $30
           million in unspent funds--$2 million more than the $28 million
           that the Congress had appropriated for the IPP program in fiscal
           year 2007. In fact, as figure 1 shows, for 3 fiscal years--2003
           through 2005--the amount of unspent funds was more than double the
           amount that the Congress appropriated for the program in those
           fiscal years, although the total amount of unspent funds has been
           declining since its peak in 2003.

Figure 1: Appropriations and Unspent Balances for the IPP Program from
Fiscal Years 1998 through 2008

^aAs of November 30, 2007, DOE is operating under a continuing resolution.
As a result, we used projected IPP program budget data, which DOE
officials provided to us in May 2007, to estimate the fiscal year 2008
appropriation for the IPP program shown in this figure.

The IPP Program's Persistent Annual Unspent Balances Have Resulted Primarily
from Multiple Layers of Review and Delays in Project Implementation

Two main factors have contributed to DOE's large and persistent carryover
of unspent funds: the lengthy and multilayered review and approval
processes DOE uses to pay IPP project participants for their work, and
long delays in implementing some IPP projects. DOE identified three
distinct payment processes that it uses to transfer funds to individual
scientists' bank accounts in Russia and other countries--ISTC/STCU, CRDF
subcontract, and CRDF master contract. These three processes involve up to
seven internal DOE offices and external organizations that play a variety
of roles, including reviewing project deliverables, approving funds, and
processing invoices. DOE officials told us that these processes were
originally introduced to ensure the program's fiscal integrity, but they
agreed that it was time to streamline these procedures.

Regarding the first payment process, as figure 2 illustrates, before
payment reaches project participants' bank accounts, it passes from DOE
headquarters (which includes the IPP program office and NNSA's Budget
Office), through DOE's Energy Finance and Accounting Service Center, which
records the obligation of funds. DOE then transfers funding to the Oak
Ridge Financial Service Center, which pays the invoice by transferring
funds to ISTC or STCU. The funds arrive at ISTC or STCU, which disburses
them in quarterly payments to IPP project participants, upon receipt of
project invoices, quarterly technical reports, and documentation from the
participating former Soviet Union institutes that deliverables were sent
to the national laboratories. However, DOE and national laboratory
officials told us that this payment process has limitations. Specifically,
these officials told us that if there is a problem with a deliverable, it
is usually too late for DOE or the participating national laboratory to
request that ISTC or STCU stop the payment to the project participants for
the current quarter.

Figure 2: ISTC/STCU Payment Process

The other two processes that DOE uses to make payments to IPP project
participants involve CRDF. In most cases, DOE administers the CRDF payment
process through a subcontract with the participating national laboratory.
In some rare cases, DOE contracts directly with foreign institutes through
a CRDF "master contract."^18 For projects that use CRDF to process
payments, the entire amount of project funding is first transferred to the
participating national laboratory, where it is placed in two separate
accounts. The first account consists of no more than 30 percent of project
funding for oversight costs incurred by the national laboratory. The
second account has all funding for the foreign project participants, which
is at least 70 percent of project funding.

As figure 3 illustrates, before IPP project participants receive payment
from CRDF, invoices and approvals of deliverables from the national
laboratories, as well as CRDF forms, are sent to DOE headquarters for
approval. DOE headquarters reviews the invoices against the contract and,
if the amounts match, approves them and sends documentation to the DOE
Procurement Office. DOE headquarters also notifies the participating
national laboratory of its approval, and the laboratory sends the funds
listed on the invoices to DOE's Energy Finance and Accounting Service
Center. The DOE Procurement Office approves payment on project invoices
and notifies CRDF and DOE's Energy Finance and Accounting Service Center
that payments should be made. Funds are then transferred from the Energy
Finance and Accounting Service Center to the Oak Ridge Financial Service
Center and then to CRDF. Once CRDF has received the funds and the
necessary approvals from DOE, it makes payments to the project
participants' bank accounts.

^18According to DOE officials, CRDF "master contracts" between DOE and
foreign institutes were only used for 12 projects and are being phased
out. The process is very similar to the CRDF subcontract process shown in
figure 3.

Figure 3: CRDF Payment Process

DOE officials acknowledged the enormity of the problem that the lag time
between the allocation of funds, placement of contracts, and payment for
deliverables creates for the IPP program and told us they are taking steps
to streamline their payment processes. In addition, Russian and Ukrainian
scientists at 9 of the 22 institutes we interviewed told us that they
experienced delays in payments ranging from 3 months to 1 year. Among the
207 projects we reviewed, we found several examples of payment delays. For
example:

           o In one project on the development and testing of a device to
           detect hidden explosives, the Lawrence Livermore National
           Laboratory official who heads the project told us that the U.S.
           industry partner had to pay Russian scientists' salaries until IPP
           funding could be released. Lawrence Livermore officials involved
           in this project noted that delays in payments to project
           participants slowed the project's completion.

           o Officials at another Russian institute told us about two
           projects that experienced payment delays. On the project to
           develop nuclear material container security devices, they had
           shipped a deliverable to Sandia National Laboratories in October
           2006, but it took more than 4 months for them to receive payment.
           On the project to produce a new computer modeling code for use in
           Russian nuclear reactor simulators, Russian institute officials
           told us payments were delayed 3 to 4 months. Officials said that
           when they asked Brookhaven National Laboratory officials about the
           delay, they were told it was due to DOE's complex payment
           processing systems.

           Delays in implementing some IPP projects also contribute to DOE's
           large and persistent carryover of unspent funds. According to
           officials from U.S. industry partners, national laboratories, and
           Russian and Ukrainian institutes, some IPP projects experience
           long implementation delays. As a result, project funds often
           remain as unspent balances until problems can be resolved. For
           example, the ILAB representative from the Argonne National
           Laboratory told us that, in his experience, IPP projects do not
           finish on schedule about 60 percent of the time owing to a variety
           of problems. These problems include implementation issues due to
           administrative problems, the withdrawal or bankruptcy of the U.S.
           industry partner, and turnover in key project participants. In our
           review of 207 IPP projects, we found several examples of projects
           that had experienced implementation delays. For example:

           o One project to produce a low-cost artificial leg for use in
           developing countries had $245,000 in unspent funds as of April
           2007--19 percent of the $1.3 million DOE allocated for the
           project. Because a testing device needed for the project was not
           properly labeled when it was sent from the United States, the
           Russian Customs Service rejected the device. Sandia National
           Laboratory officials told us that this rejection had delayed
           project implementation for nearly 1 year.

           o About 3 years into a project to create banks of chemical
           compounds linked with computer databases for industrial use, the
           project's U.S. industry partner was bought out by a larger
           company. The amount allocated for the project was nearly $1.4
           million. The larger company lost interest in the project, and,
           according to the DOE project manager, the project sat idle for 3
           or 4 years while DOE tried to get the company to take action.
           Ultimately, the project was finished 8 years after it began.

           o Officials at one Russian institute we visited told us another
           IPP project to improve a material to help neutralize radioactive
           waste had experienced delays when the original U.S. industry
           partner went bankrupt, causing the project to be temporarily
           suspended. According to these officials, it took 2 years to find a
           new U.S. industry partner.

           o Brookhaven National Laboratory officials described a delay of
           more than 6 months on a $740,000 project intended to develop new
           pattern recognition software. According to Brookhaven officials,
           these delays were caused by significant personnel turnover at the
           participating Russian institute, mostly through the loss of key
           personnel who found better, higher paying jobs outside of the
           institute.
			  
			  DOE Is Implementing a New IPP Program Management System, in Part,
			  to Address Problems with Large Balances of Unspent Funds

           DOE is implementing a new system designed to better manage IPP
           projects' contracts and finances. DOE officials told us that this
           action was undertaken in response to a recommendation we made in
           2005 to improve the management and internal controls at NNSA.
           Specifically, we recommended in our August 2005 report, among
           other things, that NNSA's program managers maintain quick access
           to key contract records, such as deliverables and invoices that
           relate to management controls, regardless of whether the records
           are located at a national laboratory or headquarters.^19 Following
           our 2005 report, in 2006, DOE initiated an extensive review of IPP
           financial and procurement procedures at participating national
           laboratories. DOE and national laboratory officials told us that
           representatives from the IPP program office visited all of the
           participating national laboratories, except for the Kansas City
           Plant, and worked with each laboratory's financial department to
           find ways to reduce unspent funds.^20 DOE officials told us that,
           as a result, they were able to redirect about $15 million in
           unspent program funds for immediate use on existing IPP projects.

^19GAO, Nuclear Nonproliferation: Better Management Controls Needed for
Some DOE Projects in Russia and Other Countries, [53]GAO-05-828
(Washington, D.C.: Aug. 29, 2005).

           In addition, DOE officials said that they have imposed new
           management controls to address project delays and reduce balances
           of unspent funds. These controls include implementing a management
           reengineering plan and enforcing control mechanisms, called
           "sunset" provisions, which require national laboratory officials
           to justify continuing any IPP project that experiences an
           implementation delay of 6 to 8 months. DOE has also begun to
           implement its new Expertise Accountability Tool (EXACT), a project
           and information management system that it launched in October
           2006. DOE expects to fully implement the EXACT system in 2008-- 14
           years after the start of the IPP program. According to DOE
           officials, EXACT will allow instant sharing of IPP project data
           between DOE and the participating national laboratories. DOE
           officials believe that the EXACT system will allow the IPP program
           office to better monitor and oversee the progress of IPP projects
           at the national laboratories, including reviews of IPP project
           participants' WMD backgrounds and tracking unspent funds at the
           national laboratories.
			  
			  Conclusions

           In our view, the purpose and need for the IPP program must be
           reassessed. We believe that DOE has failed to clearly articulate
           the current threat posed by WMD scientists in Russia and other
           countries and has not adjusted the IPP program to account for the
           changed economic landscape in the region and improved conditions
           at many of the institutes involved in the program. Instead, DOE
           has continued to emphasize a broad strategy of engagement with
           foreign scientists and institutes, much as it did more than a
           decade ago, and it has not developed comprehensive plans for
           focusing on the most at-risk individuals and institutes or for
           developing an end-game for the program. We believe that DOE's
           inability to establish a clear exit strategy for the IPP program
           has contributed to a perception among foreign recipients that the
           program is essentially open-ended, represents an indefinite
           commitment of U.S. support, and serves as a useful marketing tool
           to attract and retain young scientists who might otherwise
           emigrate to the United States or other western countries.
			  
^20According to DOE officials, the Kansas City Plant was not visited
because it did not have any issues with unspent funds.

           We believe that it is time for DOE to reassess the program to
           explain to the Congress how the program should continue to operate
           in the future or to discuss whether the program should continue to
           operate at all. Without a reassessment of the program's
           objectives, metrics, priorities, and exit strategy, the Congress
           cannot adequately determine at what level and for how long the
           program should continue to be supported. We believe that such a
           reassessment presents DOE with an opportunity to refocus the
           program on the most critical remaining tasks, with an eye toward
           reducing the program's scope, budget, and number of participating
           organizations.

           Beyond reassessing the continuing need for the IPP program, a
           number of management problems are negatively affecting the
           program. Specifically:

           o The fact that DOE has paid many scientists who claimed no WMD
           expertise is particularly troubling and, in our view, undermines
           the IPP program's credibility as a nonproliferation program. The
           lack of documentation of DOE's review of IPP project participants
           also raises concerns.

           o DOE does not have reliable data on the commercialization results
           of IPP projects or a clear definition of what constitutes a
           commercially successful IPP project, preventing it from providing
           the Congress with a more accurate assessment of the program's
           results and purported benefits.

           o Regarding its efforts to expand the IPP program, DOE's projects
           in Iraq and Libya represent a significant departure from the
           program's original focus on the countries of the former Soviet
           Union. While there may be sound national security reasons for
           expanding efforts to these countries, we are concerned that,
           unlike other federal agencies, DOE did not receive explicit
           authorization from the Congress before expanding its program
           outside of the former Soviet Union. Furthermore, in its efforts in
           Libya, DOE is not adhering to its own guidance restricting the
           percentage of IPP program funds that can be spent at DOE's
           national laboratories on oversight activities.

           o The lack of clear, written guidance for IPP projects intended to
           support GNEP has led to confusion among national laboratory
           officials who implement the IPP program.

           o Regarding the financial state of the IPP program, DOE's
           long-standing problem with large balances of unspent program funds
           raises serious concerns about DOE's ability to spend program
           resources in a timely manner and about the method DOE uses to
           develop requests for future budgets. Reform of the complex payment
           system used by the IPP program to pay foreign scientists could
           help address some of these concerns.

           o Because Russian scientists and institutes benefit from the IPP
           program, it seems appropriate that DOE should seek to take
           advantage of Russia's improved economic condition to ensure a
           greater commitment to jointly held nonproliferation objectives.

           o The absence of a joint plan between DOE's IPP program and ISTC's
           Commercialization Support Program, which is funded by State,
           raises questions about the lack of coordination between these two
           U.S. government programs that share similar goals of finding
           peaceful commercial opportunities for foreign WMD scientists.
			  
			  Recommendations for Executive Action

           We recommend that the Secretary of Energy, working with the
           Administrator of the National Nuclear Security Administration,
           reassess the IPP program to justify to the Congress the continued
           need for the program. Such a reassessment should, at a minimum,
           include a thorough analysis of the proliferation risk posed by
           weapons scientists in Russia and other countries; a well-defined
           strategy to more effectively target the scientists and institutes
           of highest proliferation concern; more accurate reporting of
           program accomplishments; and a clear exit strategy for the IPP
           program, including specific criteria to determine when specific
           countries, institutes, and individuals are ready to graduate from
           participation in the IPP program. This reassessment should be done
           in concert with, and include input from, other federal agencies,
           such as State; the U.S. intelligence community; officials in host
           governments where IPP projects are being implemented; the U.S.
           business community; and independent U.S. nongovernmental
           organizations.

           If DOE determines that the program is still needed, despite the
           increased economic prosperity in Russia and in light of the
           general trend toward cost-sharing in U.S. nonproliferation
           programs in that country, we recommend that the Secretary of
           Energy, working with the Administrator of the National Nuclear
           Security Administration, seek a commitment for cost-sharing from
           the Russian government for future IPP projects at Russian
           institutes.

           To address a number of management issues that need to be resolved
           so that the IPP program operates more effectively, we recommend
           that the Secretary of Energy, working with the Administrator of
           the National Nuclear Security Administration, immediately take the
           following eight actions:

           o establish a more rigorous, objective, and well-documented
           process for verifying the WMD backgrounds and experiences of
           participating foreign scientists;

           o develop more reliable data on the commercialization results of
           IPP projects, such as the number of jobs created;

           o amend IPP program guidance to include a clear definition of what
           constitutes a commercially successful IPP project;

           o seek explicit congressional authorization to expand IPP efforts
           outside of the former Soviet Union;

           o for IPP efforts in Libya, ensure compliance with the statutory
           restriction on the percentage of IPP program funds spent on
           oversight activities at the DOE national laboratories to no more
           than 35 percent;

           o develop clear and specific guidance for IPP projects that are
           intended to support GNEP;

           o streamline the process through which foreign scientists receive
           IPP funds by eliminating unnecessary layers of review; and

           o seek to reduce the large balances of unspent funds associated
           with the IPP program and adjust future budget requests
           accordingly.

           Finally, we recommend that the Secretaries of Energy and State,
           working with the Administrator of the National Nuclear Security
           Administration, develop a joint plan to better coordinate the
           efforts of DOE's IPP program and ISTC's Commercialization Support
           Program, which is funded by State.
			  
			  Agency Comments and Our Evaluation

           DOE and State provided written comments on a draft of this report,
           which are presented in appendixes V and VI, respectively. DOE
           agreed with 8 of our 11 recommendations to improve the overall
           management and oversight of the IPP program, including augmenting
           the department's process for reviewing the WMD backgrounds of IPP
           project participants and developing more reliable data on the
           commercialization results of IPP projects. DOE disagreed with 2 of
           our recommendations and neither agreed nor disagreed with 1
           recommendation. In addition, State concurred with our
           recommendation to improve coordination between DOE's IPP program
           and ISTC's Commercialization Support Program, which is funded by
           State. DOE and State also provided technical comments, which we
           incorporated in this report as appropriate.

           In its comments on our draft report, DOE raised concerns about our
           characterization of the IPP program's accomplishments,
           requirements, and goals. DOE stated that we did not acknowledge
           actions the department was undertaking during the course of our
           review and asserted that our report does not provide a balanced
           critique of the IPP program because we relied on an analysis of a
           judgmental sample of IPP projects to support our findings. DOE
           also disagreed with our general conclusion and recommendation that
           the IPP program needs to be reassessed. In addition, DOE did not
           concur with our recommendation that the department ensure
           compliance with the statutory restriction on the percentage of IPP
           program funds spent on oversight activities at the DOE national
           laboratories to no more than 35 percent. DOE neither agreed nor
           disagreed with our recommendation that the department seek a
           commitment for cost-sharing from the Russian government for future
           IPP projects at Russian institutes.

           DOE is incorrect in its assertions that we failed to acknowledge
           actions it was undertaking during the course of our review, and
           that our report does not provide a balanced critique of the IPP
           program. Our report acknowledges actions DOE is taking to improve
           program management, such as the development of a new program and
           financial management system. Our review identified numerous
           problems and raised concerns about the IPP program's scope,
           implementation, and performance that we believe should be
           addressed by DOE as part of a reassessment of the IPP program.
           However, DOE disagreed with our recommendation that the IPP
           program needs to undergo such a reassessment and noted in its
           comments that the department believes it has already conducted
           such an assessment of the program. We were aware that such broad
           internal reviews took place in 2004 and 2006, but these
           assessments were conducted not of the IPP program exclusively, but
           rather of all DOE efforts to assist weapons scientists, including
           a complementary DOE program to assist workers in Russia's nuclear
           cities that has since been canceled. As a result, we believe these
           assessments are outdated because the IPP program operates under a
           significantly different set of circumstances today than when DOE
           conducted its previous internal assessments.

           Finally, DOE disagreed with our recommendation that the department
           ensure compliance with the statutory restriction on the percentage
           of IPP program funds spent on oversight activities at the DOE
           national laboratories to no more than 35 percent. We believe DOE
           has misconstrued our recommendation concerning its funding of
           projects in Libya. We did not recommend, nor did we mean to imply,
           that DOE should allocate 65 percent of total project funds to
           Libya for projects in that country. Instead, our recommendation
           urges the department to ensure that it complies with existing
           statutory restrictions on the percentage of IPP funds that can be
           spent on oversight activities by DOE national laboratories.
           Specifically, as DOE notes, section 3136 of the National Defense
           Authorization Act for Fiscal Year 2000 provides that not more than
           35 percent of funds available in any fiscal year for the IPP
           program may be spent by DOE national laboratories to provide
           oversight of program activities. DOE's IPP guidance and its
           standard practice have been to implement this provision of law on
           a project-by-project basis, so that no more than 35 percent of the
           funds for each project are spent by national laboratories.
           However, with respect to projects in Libya, DOE is deviating from
           its IPP guidance by placing no restrictions on the amount of IPP
           program funds that can be spent at DOE national laboratories for
           oversight of projects in Libya. We found that 97 percent of funds
           DOE spent on projects in Libya through May 2007 were spent at
           DOE's national laboratories for project management and oversight.
           (See app. V for DOE's comments and our responses.)

           As agreed with your office, unless you publicly announce the
           contents of this report earlier, we plan no further distribution
           until 30 days from the report date. At that time, we will send
           copies of this report to interested congressional committees; the
           Secretaries of Energy and State; the Administrator, National
           Nuclear Security Administration; and the Director, Office of
           Management and Budget. We will also make copies available to
           others upon request. In addition, this report will be made
           available at no charge on the GAO Web site at http://www.gao.gov.

           If you or your staff have any questions about this report, please
           contact me at (202) 512-3841 or [email protected]. Contact points
           for our Offices of Congressional Relations and Public Affairs may
           be found on the last page of this report. Major contributors to
           this report are included in appendix VII.

           Sincerely yours,

           Gene Aloise
			  Director, Natural Resources and Environment
			  
			  Appendix I: Scope and Methodology

           To review the Initiatives for Proliferation Prevention (IPP)
           program, we interviewed key officials and analyzed documentation,
           such as program guidance, project proposals, and financial
           information from the Departments of Energy (DOE), Defense, and
           State (State). We also interviewed representatives from each of
           the 12 national laboratories--the Argonne, Brookhaven, Idaho,
           Lawrence Berkeley, Lawrence Livermore, Los Alamos, National
           Renewable Energy, Oak Ridge, Pacific Northwest, Sandia, and
           Savannah River National Laboratories and the Kansas City
           Plant--that participate in the IPP program. Our interviews focused
           on general program plans, strategies, and policies as well as
           issues associated with specific IPP projects. We also interviewed
           and reviewed documentation provided by the U.S. Civilian Research
           and Development Foundation (CRDF) in Arlington, Virginia; the
           International Science and Technology Center (ISTC) in Moscow,
           Russia; and the Science and Technology Center in Ukraine (STCU) in
           Kyiv, Ukraine. We analyzed cost and budgetary information from
           DOE, DOE's national laboratories, CRDF, ISTC, and STCU.
           Furthermore, we interviewed knowledgeable officials on the
           reliability of these data, including issues such as data entry,
           access, quality control procedures, and the accuracy and
           completeness of the data. We determined that these data were
           sufficiently reliable for the purposes of this review.

           We visited Russia and Ukraine to discuss the implementation of the
           IPP program with officials and personnel involved in IPP projects.
           While in Russia and Ukraine, we interviewed officials from 15
           Russian and 7 Ukrainian institutes that participate in the IPP
           program. We met with officials from the Federal Agency for Atomic
           Energy of the Russian Federation, which oversees institutes
           involved in Russia's nuclear weapons program. We also spoke with
           officials from the U.S. embassies in Moscow and Kyiv.

           Furthermore, we interviewed officials from 14 U.S. companies that
           participate in the IPP program to better understand their
           perspectives on the program's goals, benefits, and challenges, and
           the results of specific projects for which they have served as
           industry partners. We interviewed the principal staff of the U.S.
           Industry Coalition, which represents companies that participate in
           the IPP program. We also met with 5 nongovernmental experts who
           have followed developments in the IPP and related nonproliferation
           programs to get their views on the program.

           To assess the reported accomplishments of the IPP program, we
           judgmentally selected for in-depth review 207 IPP projects,
           including draft, active, inactive, and completed projects, in the
           Thrust 1, Thrust 2, and Thrust 3 categories. These 207 projects
           represented over 22 percent of the 929 total IPP projects through
           September 2007. Of the projects that we reviewed, 180 were with
           Russia, 21 were with Ukraine, 3 were with Kazakhstan, and 3 were
           with Armenia.^1 Because these projects were a judgmental sample,
           the findings associated with them cannot be applied generally to
           the IPP program as a whole.

           We used the IPP information system to identify and select IPP
           projects. This database, also referred to by DOE as the "Lotus
           Notes" system, was developed and maintained by the Los Alamos
           National Laboratory and is considered the program's project
           proposal management system. The system contains data on all IPP
           projects, from draft proposals to completed projects, and includes
           such information as the project description, statement of work,
           information on participating scientists in the former Soviet Union
           and the U.S. industry partner, and financial expenditures. DOE
           notified us that it was developing a new IPP project management
           database, known as the Expertise Accountability Tool (EXACT), and
           that some IPP project information contained in Lotus
           Notes--especially pertaining to project expenditures and the
           number of scientists supported--might not be current, accurate, or
           complete. However, DOE officials told us that the EXACT system was
           not available during our project selection phase, and that it
           would not contain information on completed IPP projects. As a
           result, we used the Lotus Notes database to make our project
           selection.

           We selected projects on the basis of a number of criteria, such as
           project status, project funding, the type of institute involved in
           the project, geographic distribution, national laboratory
           representation, and the claimed commercial success of the project.
           We also received and used recommendations from DOE on criteria to
           consider in selecting projects for review.

           The status and dollar size of IPP projects were significant
           considerations in our project selection. For example, we focused
           primarily on active projects--that is, Thrust 2 projects that were
           approved, funded, or under way--regardless of their dollar value.
           We also considered draft and inactive Thrust 2 projects where
           proposed funding was over $800,000, as well as completed Thrust 1
           and Thrust 2 projects that spent over $250,000. We also selected
           projects for review across a variety of institutes in the former
           Soviet Union, including facilities with backgrounds in nuclear,
           chemical, biological, and missile research and development.
			  
^1Some projects involved multiple collaborating institutes and, in some
cases, involved institutes in more than one country. We categorized
projects by country according to the host country where the lead institute
was located.

           The foreign countries and institutes where we planned to conduct
           fieldwork also played a significant role in our project selection.
           Time and cost constraints, as well as Russian government
           restrictions on access to some facilities, limited the number and
           types of sites we were able to visit. We concentrated on projects
           at institutes in Russia and Ukraine because over 90 percent of all
           IPP projects are in these two countries. We focused on IPP
           projects at institutes in the Russian cities of Moscow, Nizhny
           Novgorod, and Sarov because these cities ranked high in our
           analysis of several variables, including the total number of IPP
           projects, the number of projects supporting commercial activities,
           and the total amount of funding proposed in IPP projects in those
           locations.^2 We also focused on projects in the Ukrainian cities
           of Kyiv, because over 54 percent of IPP projects in Ukraine are
           there, and Kharkiv, because of its relative proximity to Kyiv and
           the number of projects there. We selected institutes in the
           Russian and Ukrainian cities for site visits on the basis of
           several criteria, including the total number of projects, the
           number of active projects, the type of institute, and the number
           of projects commercialized at each location.

           We also selected projects administered by each of the national
           laboratories and the Kansas City Plant that participate in the
           program as well as projects managed by DOE headquarters. The
           selected projects included 18 projects at Argonne, 22 at
           Brookhaven, 8 at Idaho, 18 at Lawrence Berkeley, 33 at Lawrence
           Livermore, 14 at Los Alamos, 11 at National Renewable Energy, 12
           at Oak Ridge, 41 at Pacific Northwest, 15 at Sandia, and 2 at
           Savannah River; 9 projects at the Kansas City Plant; as well as 4
           projects managed by DOE headquarters.

           The commercial success of an IPP project also played an important
           role in its selection. For example, we selected for review all 50
           projects that DOE indicated as having led to commercially
           successful ventures identified in its Fiscal Year 2005 IPP Program
           Annual Report. We were able to review 48 of the 50 commercially
           successful projects with the sponsoring national laboratory,
           Russian or Ukrainian institute, or industry partner or some
           combination of these three entities. We also reviewed 11 IPP
           projects that had been identified as commercially successful in
           prior year annual reports, but that were not addressed in the
           fiscal year 2005 report.
			  
^2Because Sarov is a closed Russian nuclear city to which DOE officials
told us we were not likely to be granted access by the Russian government,
relevant IPP project managers traveled from Sarov to meet with us in
Nizhny Novgorod.

           To assess the nonproliferation impact of the IPP program, we
           requested and evaluated available information on the personnel at
           institutes in the countries of the former Soviet Union
           participating in the projects we selected for review. To determine
           the percentage of personnel without weapons of mass destruction
           (WMD) experience, we added the total number of project personnel
           who did not claim prior WMD experience--based on the WMD
           experience codes the project personnel self-declared to one of the
           three IPP payment systems--and divided this figure against the
           total number of project participants. We followed a similar
           process to calculate the percentage of older personnel versus
           younger personnel. We classified workers born in 1970 or later as
           younger workers because they were unlikely to have contributed to
           Soviet-era WMD programs. We also calculated the total amount of
           funds paid to these four different categories of
           participants--those claiming WMD experience, those who did not,
           older workers, and younger participants. In some cases, birth
           dates were not available for some participants in the
           documentation we received; in those instances, those individuals
           and the payments made to them were tracked in separate categories.

           We collected this information by providing officials at each of
           the 12 participating national laboratories with a template,
           requesting that the laboratory project leader provide information
           on the personnel involved in each project in our sample, including
           each participant's full name, institute affiliation, date of
           birth, WMD experience, and amount paid under the project. In
           instances where we did not receive complete information from the
           laboratories, we used payment records and other information on IPP
           project participants maintained by the three payment
           mechanisms--CRDF, ISTC, and STCU--to complete data missing from
           the templates, or to reconstruct payment records for the project
           participants in cases where the national laboratory did not
           provide any information on the project participants. Because of
           potential data reliability concerns raised by CRDF on older IPP
           projects for which it processed payments, we consulted with CRDF
           representatives and received recommendations on specific projects
           that we should exclude from our analysis.

           Among the 207 IPP projects we reviewed, no payments had yet been
           made on 42 projects and 14 projects were inactive. Of the
           remaining 151 IPP projects in our sample, we determined that 54
           projects were too old for evaluation, because DOE did not collect
           rosters of individual project participants before 2000, or that
           sufficient and reliable information on the project participants
           was not readily available. Thus, our review of the backgrounds of
           the participants was conducted on 97 of the 207 projects in our
           sample.

           To assess the commercial results of IPP projects, we reviewed 48
           of the 50 projects that contributed to the commercial successes
           presented in DOE's fiscal year 2005 annual report for the IPP
           program, which was the most recent report available at the time of
           our review. DOE provided us with the list of IPP projects
           associated with those commercial successes, and we reviewed and
           evaluated the raw data collected by the U.S. Industry Coalition
           for each of those projects in its 2005 commercial success survey,
           which DOE used as the basis for the commercial successes cited in
           its fiscal year 2005 IPP annual report. In addition, for the 48
           commercially successful projects we reviewed, we interviewed
           representatives from the sponsoring national laboratory, Russian
           or Ukrainian institute, or industry partner or some combination of
           these three entities to understand the commercial activities and
           other details associated with these projects. Specifically, we (1)
           met or conducted telephone interviews with 12 companies involved
           in the commercially successful projects, (2) interviewed
           representatives at the national laboratories for 46 of the 50
           projects reported to be commercially successful, and (3) visited 6
           of the institutes in Russia and Ukraine where IPP projects were
           reported to have been commercialized.

           To assess the IPP program's future, we interviewed DOE and
           national laboratory officials. We also assessed State's planned
           exit strategy for its Science Centers program. We discussed
           State's strategy with DOE, State, and ISTC officials. Regarding
           the IPP program's expansion, we met with officials and reviewed
           documentation from DOE, State, and the Lawrence Livermore,
           National Renewable Energy, and Sandia National Laboratories
           concerning the engagement of former weapons scientists in Iraq and
           Libya. Regarding the program's support to the Global Nuclear
           Energy Partnership, we reviewed documents and interviewed
           officials from the IPP program office, DOE national laboratories,
           and DOE's Office of Nuclear Energy.

           To assess the extent to which the IPP program has had annual
           carryover balances of unspent funds and the reasons for such
           carryover, we obtained financial data from DOE's IPP program
           office, DOE's National Nuclear Security Administration's (NNSA)
           budget and finance office, and the national laboratories
           participating in the program. We discussed and reviewed these data
           with budget and program analysts at the IPP program office and
           NNSA's budget and finance office. In addition, we interviewed
           knowledgeable officials on the reliability of these data,
           including issues such as data entry, access, quality control
           procedures, and the accuracy and completeness of the data. We
           determined that these data were sufficiently reliable for the
           purposes of this review.

           We conducted our review from October 2006 through December 2007 in
           accordance with generally accepted government auditing standards.
			  
			  Appendix II: Additional Information on the Russian and Ukrainian
			  Institutes That We Included in Our Fieldwork

           During our review of the DOE's IPP program, we interviewed
           officials from 15 institutes in Russia and 7 in Ukraine in July
           2007.
			  
			  Russian Institutes

           In July 2007, we met with Russian scientists and officials from
           institutes in Moscow, Nizhny Novgorod, Pushchino, and Troitsk,
           Russia, to discuss draft, active, inactive, and completed IPP
           projects.
			  
			  Center for Ecological Research and BioResources Development

           The Center for Ecological Research and BioResources Development
           was established in 2000 through a $1.5 million grant from the IPP
           program. It focuses on the discovery of novel bioactive compounds,
           biodiversity collection and identification, and environmental
           bioremediation. The center comprises 9 research institutes and is
           connected with 30 laboratories, with about 300 scientists. The
           center's role is to coordinate the activities of the member
           institutes, organize workshops and visits, consult on the
           administration of IPP projects, provide report editing and
           translation, perform financial reporting and examinations, and
           export biomaterials to the United States and elsewhere. The center
           has shipped over 50,000 biological samples. We discussed 5 IPP
           projects, including 2 completed, 2 active, and 1 draft project.
           When we discussed IPP projects with the center, representatives
           from 2 partner institutes--the Institute of Biochemistry and
           Physiology of Microorganisms and the Scientific Center for Applied
           Microbiology and Biotechnology--were also present.
			  
			  Gamaleya Scientific Research Institute of Epidemiology and Microbiology

           The Gamaleya Scientific Research Institute of Epidemiology and
           Microbiology was founded in 1891 for research into infectious
           diseases in humans and manufactures more than 40 different
           pharmaceutical products, including a tuberculosis vaccine.
           Gamaleya officials told us that the institute employs 800 staff,
           including 120 scientists and 680 technicians and administrative
           personnel. We visited the institute during our first audit of the
           IPP program in 1999. We spoke with Gamaleya officials about 3
           completed IPP projects. The institute is involved in marketing a
           veterinary drug and is just starting to market an antiparasite
           drug for honeybees. The third project is expected to produce a
           marketable product in 2 to 3 years.
			  
			  Institute for Nuclear Research of the Russian Academy of Sciences

           The Institute for Nuclear Research of the Russian Academy of
           Sciences, with branches in Moscow and Troitsk, was founded in 1970
           to further development of fundamental research activities in the
           field of atomic, elementary particle, and cosmic ray physics and
           neutrino astrophysics. The institute, with a staff of about 1,300
           specialists, was formed from 3 nuclear laboratories of the P.N.
           Lebedev Institute of Physics of the former Soviet Union's National
           Academy of Sciences. About 600 people work in the Troitsk branch
           of the institute. We spoke with institute officials at this branch
           about 5 IPP projects--4 completed and 1 active. During the first
           audit of DOE IPP programs, in 1999, we visited the Moscow branch
           of this institute.
			  
			  Institute of Applied Physics of the Russian Academy of Sciences

           The Institute of Applied Physics of the Russian Academy of
           Sciences in Nizhny Novgorod became an independent research
           facility in 1977. During this time, its primary focus was working
           with transmitting and detecting waves through different matters;
           in practical terms, this included work for the Soviet military on
           radar tracking of missiles and supporting Russian missile defense,
           materials science applications in radioelectronic equipment, and
           submarine detection using radar. Institute officials told us that
           since the beginning of the 1990s, the institute has reduced its
           staff from about 2,000 employees, to roughly 1,100. However, it
           has retained a large number of top-level researchers despite the
           fact that defense orders plummeted to zero. Officials told us that
           the institute was in good shape today, has adapted to the changing
           environment, and has created several successful spin-off
           companies. We discussed 4 IPP projects with institute officials--1
           completed, 1 active, and 2 draft.
			  
			  Institute of Biochemistry and Physiology of Microorganisms

           The Institute of Biochemistry and Physiology of Microorganisms is
           1 of 4 research institutes that make up the Center for Ecological
           Research and BioResources Development. This institute is not a
           weapons institute and never had a role in the Soviet biological
           weapons program. However, institute officials noted that some
           scientists at the institute had come from other institutes that
           were involved in biological warfare research. The institute is
           home to the "All Russia Biological Culture Collection." We
           discussed 3 IPP projects--1 completed, 1 active, and 1 draft--with
           officials from the institute. These were 3 of the 4 IPP projects
           we discussed at the Center for Ecological Research and
           BioResources Development.
			  
			  Institute of General Physics of the Russian Academy of Sciences

           The Institute of General Physics of the Russian Academy of
           Sciences was founded in 1983 by Nobel Prize winner Academician
           A.M. Prokhorov, who headed it until 1998 and now serves as the
           institute's honorary director. The institute began as Division "A"
           of the Lebedev Physical Institute. It currently consists of 13
           research departments and 5 research centers: (1) natural sciences,
           (2) laser materials and technologies, (3) wave research, (4) fiber
           optics, and (5) physical instrumentation. The institute has a
           staff of 1,264, including 600 researchers. Its principal research
           areas encompass quantum electronics and optics, solid state
           physics, micro- and nanoelectronics, integral and fiber optics,
           plasma physics and photoelectronics, radio physics and acoustics,
           laser medicine, and ecology. We discussed 6 IPP projects with
           institute officials--4 completed and 2 active.
			  
			  Krasnaya Zvezda (Red Star)

           Krasnaya Zvezda was established in 1972 to combine other
           organizations that employed designers, developers, and
           manufacturers of space-based nuclear power systems. Krasnaya
           Zvezda officials told us that they continue to do some
           defense-related work. However, the institute now mostly focuses on
           the civilian sector and work on civilian nuclear energy projects,
           including radioactive waste management at civilian nuclear power
           plants. The financial situation has been relatively steady over
           the past years and officials anticipate that with the
           reorganization of the Federal Agency for Atomic Energy of the
           Russian Federation, Krasnaya Zvezda will be involved in many
           future civilian nuclear energy contracts. Krasnaya Zvezda
           maintains a close relationship with the Kurchatov Institute. We
           discussed 5 IPP projects-- 3 completed and 2 draft--with Krasnaya
           Zvezda officials.
			  
			  Kurchatov Institute

           The Kurchatov Institute is one of Russia's leading nuclear
           research institutes. Through the mid-1950s, defense activities
           represented more than 80 percent of the institute's budget. By
           1965, the defense portion had been reduced to about 50 percent,
           and, although Kurchatov has scientists who were involved with
           nuclear weapons programs in the past, today there are virtually no
           defense-related contracts. The institute conducts research on
           controlled thermonuclear fusion, plasma physics, solid state
           physics, and superconductivity. It designs nuclear reactors for
           the Russian Navy, the Russian icebreaker fleet, and space
           applications. Nuclear experts from the Kurchatov Institute have
           helped set up and operate Soviet-exported research reactors,
           including one at Libya's Tajura nuclear research center. In
           addition, the Kurchatov Institute is the subcontractor for DOE's
           Material Protection, Control, and Accounting program with the
           Russian Navy and icebreaker fleet. We discussed 10 IPP projects
           with Kurchatov officials--7 completed and 3 active. In 1999, we
           visited the Kurchatov Institute during our first audit of DOE's
           IPP program.
			  
			  Moscow State University

           One of the oldest Russian institutions of higher education, Moscow
           State University was established in 1755. According to DOE and
           national laboratory officials, Moscow State University departments
           of physics, chemistry, and biology were involved in research
           related to WMD. Specifically, according to DOE, when the Soviet
           Ministry of Defense needed certain expertise or research done, it
           called upon individuals at academic institutions, such as Moscow
           State University. We discussed 1 project DOE subsequently canceled
           and 1 draft IPP project with Moscow State University officials.
			  
			  Radiophysical Research Institute
			  
           The Radiophysical Research Institute of the Ministry of Education
           and Science was founded in 1956 in Nizhny Novgorod. Since then
           outreach efforts have been directed toward (1) supporting research
           in the fields of natural sciences and astronomy and (2) expanding
           interest in research work in such areas as astronomy, solar
           physics, the relationship between the Sun and the Earth, and the
           associated geophysics. We spoke with an official from the
           Radiophysical Research Institute, who was present during our
           interview with officials from the Scientific Research Institute of
           Measuring Systems. We discussed 1 project that ended in 2002 with
           this official.
			  
			  Scientific Research Institute of Measuring Systems

           The Scientific Research Institute of Measuring Systems in Nizhny
           Novgorod, Russia, was established in 1966 to develop and produce
           electronics to support industry enterprises, including nuclear
           power plants as well as nuclear research and developments. Today,
           the institute researches, designs, and manufactures computer and
           semiconductor equipment, mostly for use in the Russian energy
           industry. The institute also develops and manufactures software
           and control systems for gas lines, and thermal and nuclear power
           stations. We discussed 3 IPP projects with officials--1 active and
           2 completed projects.
			  
			  Afrikantov Experimental Machine Building Design Bureau

           The State Unitary Enterprise I.I. Afrikantov Experimental Machine
           Building Design Bureau was founded in 1947 as a component of the
           Gorky Machine Building Plant Design Bureau to create equipment for
           nuclear industry. Later, as the mission expanded to the creation
           of various nuclear reactors, the design bureau was separated from
           the Gorky Machine Building Plant. Currently, the Afrikantov
           Experimental Machine Building Design Bureau employs about 3,400
           staff and is one of the lead design organizations in the industry,
           supporting a large scientific and production center for nuclear
           power engineering. Since the 1960s, the institute has been the
           chief designer of ship-based reactor plants and fast neutron
           reactors. One of the institute's significant achievements is the
           creation of innovative integral reactors with natural and forced
           coolant circulation. The institute actively participates in the
           creation of nuclear power installations abroad and has scientific
           and technical cooperative arrangements with the International
           Atomic Energy Agency, and national laboratories and companies in
           China, France, India, Japan, South Korea, and the United States.
           We discussed 2 draft IPP projects with officials from the
           institute.
			  
			  Soliton-NTT Research Center

           Soliton is a private company that was spun off from the Kurchatov
           Institute in the early 1990s. Soliton was formed by scientists
           from the Kurchatov Institute to convert defense technologies to
           civil purposes and to commercialize these technologies. Before
           working for Soliton, many Soliton employees were involved in
           weapons-related activities at the Kurchatov Institute, and most
           still retain some ties to Kurchatov. Soliton has official
           permission to use scientists from other institutes as part of the
           effort to commercialize former weapons laboratories. Soliton was
           organized so that small-scale nonweapons projects could be
           undertaken using the talents of several weapons scientists from a
           variety of institutes. We discussed 6 IPP projects with Soliton
           officials--5 completed and 1 active.
			  
			  Russian Federal Nuclear Center--All-Russian Scientific Research
			  Institute of Experimental Physics

           In 1946, the Soviet government established the All-Russian
           Scientific Research Institute of Experimental Physics in Sarov,
           where the first Soviet nuclear bomb was designed and assembled. In
           Soviet times, the institute's mission included the design of
           nuclear warheads and the development of experimental and prototype
           warheads. Today, the safety and reliability of the Russian nuclear
           stockpile are the institute's primary missions. According to
           information provided by the institute, since 1990, it has
           increasingly developed international collaboration in unclassified
           science and technology areas. The institute employs about 24,000
           people, approximately half of whom are scientists or engineers,
           and is the largest research institution in Russia that
           successfully handles defense, science, and national economic
           problems. Under the current nuclear testing moratorium, nuclear
           weapons research and development activities are concentrated at
           computational and theoretical, design, and test divisions of the
           institute. During our earlier audit of DOE's IPP program, we
           interviewed officials from this institute in 1998. We discussed 10
           IPP projects--5 active and 5 completed--with institute officials.
			  
			  Zelinsky Institute of Organic Chemistry

           The Zelinsky Institute of Organic Chemistry of the Russian Academy
           of Sciences, founded in 1934, is one of the world's largest
           scientific centers in the fields of organic chemistry, organic
           catalysis, and chemistry of biologically active compounds. It
           employs about 600 people, although it had over 1,300 at its peak
           in the 1980s. In addition, about 150 students are engaged in
           graduate studies at the institute. Officials told us that until
           the early 1990s, the institute was involved in some
           defense-related activities, but it has not been involved in any
           WMD-related work since the early 1990s. The institute mostly
           worked on research related to high explosives and solid rocket
           fuel (not chemical weapons). We discussed 3 IPP projects--2
           completed and 1 canceled--with institute officials.
			  
			  Ukrainian Institutes

           While in Ukraine, we met with representatives from 7 institutes
           based in Dnipropetrovsk, Kharkiv, and Kyiv and discussed 18 IPP
           projects with scientists and institute officials.
			  
			  E.O. Paton Electric Welding Institute

           The E.O. Paton Electric Welding Institute was founded in 1934, and
           has become one of the largest research institutes in the world,
           with about 8,000 employees (3,000 at the headquarters in Kyiv).
           The institute is a multidisciplinary scientific and technical
           complex involved in fundamental and applied research in the field
           of welding and related technologies; development of technologies,
           materials, equipment, and control systems; rational welded
           structures and parts; and methods and means for diagnostics and
           nondestructive testing. The institute undertakes research in all
           phases of electric welding and certain specialized related
           processes, such as brazing, explosive forming, electrometallurgy,
           and friction welding. The institute's work covers welding of
           virtually all metals and alloys as well as ceramics in thicknesses
           varying from submicron to tens of centimeters. The institute also
           develops welding equipment, manufactures pilot plants, and
           develops welding consumables. We discussed 7 IPP projects--4
           completed and 3 active--with E.O. Paton officials and Pratt and
           Whitney Kyiv employees at 3 Paton facilities in Kyiv.
			  
			  International Center for Electron Beam Technology

           The International Center for Electron Beam Technology is a
           spin-off institute from the E.O. Paton Welding Institute and is
           located nearby in Kyiv. The center derives more than half of its
           funding from IPP funds and was created in the early 1990s by Paton
           employees specifically to take on projects with international
           organizations. According to institute officials, they do not
           receive any funding for their activities from the Ukrainian
           government. However, they also told us that financially, their
           situation is much better than 14 years ago, but that all of their
           research equipment is out of date. All of the IPP funds are used
           to pay scientists' salaries, and they do not have other funds for
           new equipment. We discussed 2 IPP projects--1 completed and 1
           active--during the interview.
			  
			  Institute for Metal Physics

           The Institute for Metal Physics is part of the Ukrainian Academy
           of Sciences and employs about 600 staff--about half researchers
           and half support staff. The number of staff is down from a peak of
           1,600 in Soviet times but has been stable for the past 5 to 6
           years, according to institute officials. These officials told us
           that during the Soviet era, about 80 percent of the institute's
           work was related to missile delivery systems. The institute became
           completely divorced from weapons work in the mid 1980s. Today,
           virtually all work is commercial. During our visit, we discussed 1
           active IPP project.
			  
			  International Institute of Cell Biology

           The International Institute of Cell Biology is a nonprofit entity
           founded in 1992 by the Ukrainian Academy of Sciences. The
           International Institute of Cell Biology employs about 150 people,
           about one third of whom have doctorates. It is closely affiliated
           with the Institute of Cell Biology and Genetic Engineering,
           founded in 1988, and the Institute of Microbiology and Virology
           founded in 1928. The Institute of Cell Biology and Genetic
           Engineering is one of the key laboratories involved with plant
           genetic engineering in the former Soviet Union and offers
           substantial expertise in tissue culture initiation, preservation
           and maintenance, and gene transfer and expression. The Institute
           of Microbiology and Virology, with about 300 scientists, hosts the
           second largest collection of microorganisms in the countries of
           the former Soviet Union. The official we interviewed told us that
           the Institute of Microbiology and Virology was involved in defense
           efforts involving biological agents during Soviet times.
           Researchers from both of these institutes were involved in the
           International Institute of Cell Biology's work with the IPP
           program. The deputy director told us that there has been a
           significant brain drain over the years. Over the last 15 years, 50
           scientists left the institute and went to western-oriented
           countries, such as Germany and Australia. We discussed 1 completed
           IPP project. However, the deputy director told us that he is
           planning to apply for 2 more projects in the future.
			  
			  Intertek, Ltd.

           Registered as a private company in 2000, Intertek, Ltd., was
           founded by a man who was a professor of Aircraft Engines and
           Technology at the National Aerospace University in Kharkiv until
           2004. We discussed an IPP project, at the draft stage, with
           Intertek's director and a representative from a partner institute,
           the State Design Office Yuzhnoye. The director told us that
           Intertek currently employs about 15 people and would expand to 40
           if the IPP project starts up. Most of the staff would be drawn
           from the National Aerospace University in Kharkiv.
			  
			  Kharkov Institute of Physics and Technology

           Kharkov Institute of Physics and Technology, one of the oldest and
           largest centers for physical science in Ukraine, was created in
           1928 to research nuclear and solid-state physics. The institute,
           located in Kharkiv, Ukraine, currently has 2,500 employees, down
           from about 6,500 employees before 1991. Many young specialists
           left during the difficult financial period of the late 1990s for
           Brazil, Canada, France, Germany, Israel, the Netherlands, Sweden,
           the United Kingdom, and the United States. Institute officials are
           not aware of any specialists who have either left Ukraine for a
           country of concern or provided any information to such a country.
           Since 2004, the institute has been under the Ukrainian Academy of
           Sciences and is Ukraine's lead organization on scientific programs
           for nuclear and radiation technologies. The institute's economic
           condition has significantly improved over the past 10 years. It is
           receiving more direct funding from the Ukrainian federal budget
           and also receives grants from U.S. and European programs.
           Assistance partners include STCU and IPP. IPP funding makes up no
           more than 2 percent of the total budget. We discussed 6 IPP
           projects--1 draft, 2 active, and 3 completed--with institute
           officials.
			  
			  State Design Office Yuzhnoye

           The State Design Office Yuzhnoye in Dnipropetrovsk was founded in
           1954 for researching and engineering space and rocket technology.
           The institute has designed and manufactured many varieties of
           ballistic missile complexes, and designed and launched 70 types of
           spacecraft. Once Ukraine gained its independence in 1991,
           Yuzhnoye, the sole Soviet missile design facility located outside
           of the Russian Federation, discontinued its work on ballistic
           missiles. However, since 1994, Yuzhnoye personnel, under a
           contract with the Russian Strategic Rocket Forces, have continued
           to provide a wide range of services aimed at extending the service
           life of those missile complexes still in use. In addition, the
           institute has diversified its production to include agricultural
           machinery, such as combines; a line of food processing
           accessories; and trolleys. We met with an official from Yuzhnoye
           during our interview with Intertek, Ltd., and discussed 1 draft
           IPP project on which the 2 institutes are collaborating.
			  
			  Appendix III: Classification Systems Used to Assess IPP Project
			  Participants' Knowledge of Weapons of Mass Destruction

           This appendix provides information on the classification systems
           DOE and the three entities that make IPP project payments to
           recipients in Russia and other countries use to classify the WMD
           expertise of the personnel participating in an IPP project.

           DOE, for example, classifies personnel into one of three
           categories:

                        1. Direct experience in WMD design, production, or
                        testing.
                        2. Experience in research and development of WMD
                        underlying technology.
                        3. No WMD-relevant experience.

           DOE also requires that a preponderance of staff working on its
           projects have had WMD-relevant experience before 1991 (i.e., fall
           in categories 1 or 2 above). According to DOE, "the meaning of
           `preponderance' is taken to be 60 percent, as a bare minimum. Two
           thirds would be better, and anything above that better still."

           There is no consistent approach to categorizing the proposed
           project personnel by the national laboratories in the lists they
           submit in the proposal to DOE for review. In some cases, the
           proposed personnel are categorized using the DOE classifications.
           But in other cases, the individuals in the project proposal are
           classified using weapons experience codes of the intended payment
           mechanism. Some IPP project proposals classify personnel using
           both the DOE categories and the payment system codes.

           Each of the three payment entities have similar but slightly
           different lists of weapons experience codes that personnel on an
           IPP project use to designate their relevant WMD background. See
           table 2 for the weapons codes used by CRDF, ISTC, and STCU, by
           general type of weapons expertise.

Table 2: CRDF, ISTC, and STCU Weapons Expertise Classification Codes

General weapons        CRDF weapons        ISTC weapons        STCU weapons expertise  
expertise category     expertise codes     expertise codes     codes                   
Biological                                 3.1: Design and     1.3: Mass destruction   
                       C1: Design and      performance of      weapon--bacteriological 
                       performance of      missile warheads                            
                       missile warheads    and rockets for                             
                       and rockets for     delivery of                                 
                       delivery of         biological weapons                          
                       biological weapons                                              
                                           3.2: Biopolymer                             
                       C2: Biopolymer      production related                          
                       production related  to biological                               
                       to biological       warhead                                     
                       warhead             capabilities                                
                       capabilities                                                    
                                           3.3: Dissemination                          
                       C3: Dissemination   of biological                               
                       of biological       weapon agents                               
                       weapon agents                                                   
                                           3.4: Basic                                  
                       C4: Basic knowledge knowledge of                                
                       of biological       biological weapons                          
                       weapons design and  design and their                            
                       their effect on the effect on the human                         
                       human system        system                                      
Chemical                                   2.1: Design and     1.2: Mass destruction   
                       B1: Design and      performance of      weapon--chemical        
                       performance of      missile warheads                            
                       missile warheads    and rockets for                             
                       and rockets for     delivery of                                 
                       delivery of         chemical weapons                            
                       chemical weapons                                                
                                           2.2: Materials,                             
                       B2: Materials,      facilities, and                             
                       facilities, and     performance                                 
                       performance         processes needed                            
                       processes needed    for the production                          
                       for the production  of chemical weapon                          
                       of chemical weapon  agents and their                            
                       agents and their    key precursors                              
                       key precursors                                                  
                                           2.3: Dissemination                          
                       B3: Dissemination   of chemical weapon                          
                       of chemical weapon  agents                                      
                       agents                                                          
                                           2.4: Basic                                  
                       B4: Basic knowledge knowledge of                                
                       of chemical weapons chemical weapons                            
                       design and their    design and their                            
                       effect on the human effect on the human                         
                       system              system                                      
Missile/Anti-Ballistic A1: Design,         1.1: Design,        2.1: Delivery           
Missile Systems        construction, and   construction, and   systems--missile        
                       performance of air, performance of air, technologies            
                       space, surface, and space, surface, and                         
                       underwater-launched underwater-launched 2.2: Delivery           
                       missiles. Materials missiles. Materials systems--guiding        
                       and technologies    and technologies    systems                 
                       for these missiles. for these missiles.                         
                       Production of       Production of       2.3: Delivery           
                       engines, fuels,     engines, fuels,     systems--others         
                       composites,         composites,                                 
                       integrated          integrated          3.1: Anti-Ballistic     
                       elements,           elements,           Missile                 
                       radioelectronic     radioelectronic     systems--recognition    
                       equipment, and      equipment, and      systems                 
                       different testing   different testing                           
                       devices for         devices for         3.2: Anti-Ballistic     
                       missiles            missiles            Missile                 
                                                               systems--guiding        
                       A2: Techniques for  1.2: Techniques for systems                 
                       guidance and        guidance and                                
                       control of missiles control of missiles 3.3: Anti-Ballistic     
                       from launching to   from launching to   Missile systems--others 
                       impact. Includes    impact. Includes                            
                       optical guidance,   optical guidance,                           
                       television          television                                  
                       guidance, wire      guidance, wire                              
                       guidance, present   guidance, present                           
                       and terminal        and terminal                                
                       guidance, internal  guidance, internal                          
                       guidance, command   guidance, command                           
                       guidance, and       guidance, and                               
                       homing guidance     homing guidance                             
                                                                                       
                       A3: Missile         1.3: Missile                                
                       handling and        handling and                                
                       launching,          launching,                                  
                       including           including                                   
                       transportation,     transportation,                             
                       storage, and        storage, and                                
                       preparation for     preparation for                             
                       launching; air,     launching; air,                             
                       space, surface, and space, surface, and                         
                       underwater          underwater                                  
                       launching and       launching and                               
                       support equipment   support equipment                           
                       and technologies;   and technologies;                           
                       checkout equipment  checkout equipment                          
                       and procedures;     and procedures;                             
                       guided missile      guided missile                              
                       ranges              ranges                                      
                                                                                       
                       A4: Techniques and  1.4: Techniques and                         
                       systems for         systems for                                 
                       tracking missiles   tracking missiles                           
                       as defensive        as defensive                                
                       measures. Can be    measures. Can be                            
                       from surface        from surface                                
                       installations or    installations or                            
                       air and space-borne air and space-borne                         
                       platforms           platforms                                   
General weapons        CRDF weapons        ISTC weapons        STCU weapons expertise  
expertise category     expertise codes     expertise codes     codes                   
Nuclear                D1: Basic knowledge 4.1: Basic          1.1: Mass destruction   
                       of nuclear weapons  knowledge of        weapon--nuclear         
                       design,             nuclear weapons                             
                       construction,       design,                                     
                       characteristics,    construction,                               
                       and the effect on   characteristics,                            
                       the human system    and the effect on                           
                                           the human system                            
                       D2: Design,                                                     
                       construction, and   4.2: Design,                                
                       performance of      construction, and                           
                       missile warheads    performance of                              
                       for delivery of     missile warheads                            
                       nuclear weapons     for delivery of                             
                                           nuclear weapons                             
                       D3: Design,                                                     
                       construction, and   4.3: Design,                                
                       performance of the  construction, and                           
                       equipment and       performance of the                          
                       components of       equipment and                               
                       Uranium and         components for                              
                       Plutonium           Uranium and                                 
                       separation          Plutonium                                   
                                           separation                                  
                       D4: Design,                                                     
                       construction, and   4.4: Design,                                
                       performance of the  construction, and                           
                       equipment connected performance of the                          
                       with heavy water    equipment connected                         
                       production          with heavy water                            
                                           production                                  
                       D5: Design,                                                     
                       construction, and   4.5: Design,                                
                       performance of the  construction, and                           
                       equipment for       performance for                             
                       development of      development of                              
                       detonators          detonators                                  
                                                                                       
                       D6: Design,         4.6: Design,                                
                       construction, and   construction, and                           
                       performance of      performance of                              
                       explosive           explosive                                   
                       substances and      substances and                              
                       related equipment   related equipment                           
                                                                                       
                       D7: Design,         4.7: Design,                                
                       construction, and   construction, and                           
                       performance of the  performance of the                          
                       equipment and       equipment and                               
                       components for      components for                              
                       nuclear testing     nuclear testing                             
                                                                                       
                       D8: Design,         4.8: Design,                                
                       construction,       construction,                               
                       performance, and    performance, and                            
                       operation of        operation of                                
                       production-type     production-type                             
                       nuclear reactors    nuclear reactors                            
                       for fissile and     for fissile and                             
                       tritium-content     tritium-content                             
                       materials           materials                                   
                       production          production                                  
                       (breeding)          (breeding)                                  
                                                                                       
                       D9: Design,         4.9: Design,                                
                       construction, and   construction, and                           
                       performance of      performance of                              
                       nuclear reactors    nuclear reactors                            
                       and units for       and units for                               
                       submarine and for   submarine and for                           
                       military space      military space                              
                       programs            programs                                    
Other                  E1: Design,         5.1: Design,        1.4: Mass destruction   
                       construction, and   construction, and   weapon--others          
                       performance of      performance of                              
                       powerful laser      powerful laser      4: Other weapons        
                       facilities for      facilities for                              
                       military            military                                    
                       applications        applications                                
                                                                                       
                       E2: Design,         5.2: Design,                                
                       construction, and   construction, and                           
                       performance of      performance of                              
                       accelerator         accelerator                                 
                       facilities for      facilities for                              
                       military            military                                    
                       applications in     applications in                             
                       space programs      space programs                              
                                                                                       
                       E3: Other                                                       
No Weapons Experience  No code for         No code for         0: Non-former weapon    
                       personnel not       personnel not       scientist               
                       claiming weapons    claiming weapons                            
                       experience          experience                                  

Sources: CRDF, ISTC, and STCU.

Appendix IV: IPP Projects DOE Reported to Be Commercially Successful

Table 3 provides information on the 50 IPP projects DOE indicated as
contributing to commercial successes in its Fiscal Year 2005 IPP Program
Annual Report.

Table 3: DOE Projects Listed as Contributing to Commercial Successes in
DOE's Fiscal Year 2005 IPP Program Annual Report

                                                    Lead DOE                        
                 Project                            national     Lead foreign       
Project title    number(s)        U.S. companies    laboratory   institute(s)       
Nanophase        LANL-T2-0148-RU  Argonide          Los Alamos   Institute of       
Powders                           Corporation                    Petroleum          
                 LANL-T2-0190-RU                                 Chemistry and      
                                                                 Institute of       
                                                                 Strength Physics   
                                                                 and Materials      
                                                                 Science, Russia    
Ceramic          NREL-T2-0200-RU  Argonide          National     Institute of       
Nanofibers                        Corporation       Renewable    Strength Physics   
                 NREL-T2-0200a-RU                   Energy       and Materials      
                                                                 Science, and State 
                                                                 Research Center of 
                                                                 Virology and       
                                                                 Biotechnology,     
                                                                 Russia             
Positron         LANL-T2-0164-RU  Technology        Los Alamos   Institute of       
Emission                          Commercialization              Nuclear Research,  
Tomography       LANL-T2-0193-RU  International                  Russia             
                                                                                    
                 LANL-T3-0400-RU                                                    
Positron         BNL-T2-0306-RU   Technology        Brookhaven   Institute of       
Emission                          Commercialization              Nuclear Research,  
Tomography                        International                  Russia             
Molybdenum-99    ANL-T2-0210A-RU  Technology        Argonne      Kurchatov          
from Solution                     Commercialization              Institute of       
Reactor                           International                  Atomic Energy,     
                                                                 Russia             
Ferrolectric     NREL-T2-0191-RU  Paratek Microwave National     St. Petersburg     
Phase Shifters                                      Renewable    Electrotechnical   
for Cellular and NREL-T2-0208-RU                    Energy       University, Russia 
Personal                                                                            
Communications                                                                      
Systems Phased                                                                      
Array Antenna                                                                       
Soil and Water   ORS-T2-0078-RU   Stable Earth      Oak Ridge    Electro-Physical   
Remediation at                    Technology,                    and Acoustic       
Contaminated                      Electro-Physical               Technologies,      
Sites Using                       and Acoustic                   Ltd., Russia       
Humosorb                          Technologies,                                     
                                  Ltd.                                              
Land Mine        SNL-T2-0194-RU   Stolar Research   Sandia       Spektr-Konversia,  
Detectors                         Corporation                    Russia             
Radar Mapping of KCP-T2-0225-RU   Stolar Research   Kansas City  Measuring Systems  
Geologic                          Corporation       Plant        Research           
Structures from                                                  Institute, Russia  
Drills                                                                              
Electron Beam    LBNL-T1-0017-RU  Phygen            Lawrence     All-Russian        
Welding                           Corporation       Berkeley     Scientific         
                 LBNL-T2-0110-RU                                 Research Institute 
                                                                 of Inorganic       
                 LBNL-T2-0110A-RU                                Materials--Siberia 
                                                                 Branch, Institute  
                                                                 of High Current    
                                                                 Electronics, and   
                                                                 Tomsk State        
                                                                 University of      
                                                                 Control Systems    
                                                                 and                
                                                                 Radioelectronics,  
                                                                 Russia             
Thorium Power    BNL-T2-0074-RU   Thorium Power     Brookhaven   Kurchatov          
Cycle                             Company                        Institute of       
                 BNL-T2-0074a-RU                                 Atomic Energy and  
                                                                 Electrostal,       
                 BNL-T2-0074b-RU                                 Russia             
Software         LLNL-T2-0236-RU  No Partner        Lawrence     Kurchatov          
Developer                                           Livermore    Institute of       
Training         DOEH-T2-0003-RU                    and DOE      Atomic Energy,     
                                                    Headquarters Russia             
Copper-Beryllium LANL-T2-0195-KZ  RWE Nukem, Inc.   Los Alamos   Ulba Metallurgical 
Alloy                             and Brush-Wellman              Plant, Kazakhstan  
Uranium Dioxide  BNL-T2-0308-KZ   RWE Nukem, Inc.   Brookhaven   Ulba Metallurgical 
Powder                            and Global                     Plant, Kazakhstan  
                                  Nuclear Fuels                                     
Needleless       KCP-T2-0221-RU   Felton            Kansas City  Chemical           
Injectors                         International,    Plant        Automatics Design  
                                  Inc.                           Bureau, Russia     
Turbine Airfoil  ORS-T2-0204-UA   Pratt and         Oak Ridge    Paton Electric     
Repair                            Whitney/United                 Welding Institute, 
                                  Technologies                   Ukraine            
                                  Corporation                                       
Unique Russian   ORS-T2-0107-RU   Rustec, Inc.      Oak Ridge    Association of     
Crusher Design                                                   Centers for        
for Metal        ORS-T2-0180-RU                                  Engineering and    
Recycling                                                        Automation, Russia 
Stable Isotopes  LLNL-T2-0234-RU  Spectra Gases     Lawrence     Kurchatov          
Carbon-13 and                                       Livermore    Institute of       
Oxygen-18 for                                                    Atomic Energy,     
Medical                                                          Moscow, Russia     
Applications                                                                        
Electrochemical  BNL-T2-0307-RU   Fenix Technology  Brookhaven   Ural Process       
Process for                       International                  Engineering, Ltd., 
Removal of Heavy                                                 and the            
Metals from                                                      All-Russian        
Wastewater                                                       Scientific         
                                                                 Research Institute 
                                                                 of Technical       
                                                                 Physics, Russia    
Linear Ion       BNL-T1-0012-RU   No Partner        Brookhaven   Institute of       
Source                                                           Electrophysics,    
                 BNL-T1-0012a-RU                                 Russia             
Step-by-Step     SNL-T1-0084-RU   No Partner        Sandia       Chelyabinsk State  
Deformation of                                                   University of      
Metal Alloys                                                     Technology, Russia 
Crop Protection  PNNL-T2-0194-UA  Dupont            Pacific      Ukraine Institute  
Products                                            Northwest    of Organic         
                 PNNL-T2-0195-RU                                 Chemistry,         
                                                                 Ukraine, and       
                                                                 Experimental Plant 
                                                                 for the Design and 
                                                                 Manufacturing of   
                                                                 Scientific         
                                                                 Equipment, Russia  
Crop Protection  LBNL-T2-0193-RU  Dupont            Lawrence     State Research     
Products                                            Berkeley     Center of Virology 
                                                                 and Biotechnology, 
                                                                 Russia             
Explosives       BNL-T2-0320-RU   Brookhaven        Brookhaven   Budker Institute   
Detection and                     Technology Group               of Nuclear         
Other Proton                                                     Problems, Russia   
Beam Based                                                                          
Applications                                                                        
Biodegradation   PNNL-T2-0202-RU  Dye Seed Ranch    Pacific      JSC BioKhimMash,   
of Oil Spills                                       Northwest    Russia             
Recombinant      PNNL-T2-0217-RU  New Horizons      Pacific      Gamaleya Institute 
Luciferase for                    Diagnostics       Northwest    of Epidemiology    
Photometric                                                      and Microbiology,  
Detectors                                                        and Moscow State   
                                                                 University, Russia 
Biosensors for   PNNL-T2-0203-RU  New Horizons      Pacific      State Research     
Detection of                      Diagnostics       Northwest    Institute of       
Neurotoxins                                                      Organic Chemistry  
                                                                 and Technology,    
                                                                 and Moscow State   
                                                                 University, Russia 
Laser Diode      BNL-T2-0318-RU   Canberra Aquila   Brookhaven   General Physics    
Spectroscopy                                                     Institute, Russia  
Comprehensive    BNL-T2-0131-RU   Canberra Aquila   Brookhaven   General Physics    
Asset Tracking                                                   Institute, Russia  
                 BNL-T2-0131a-RU                                                    
                                                                                    
                 BNL-T2-0131b-RU                                                    
                                                                                    
                 BNL-T2-0314-RU                                                     
Chemical         PNNL-T2-0246-RU  Freescale         Pacific      Kintech Kinetic    
Kinetics                          Semiconductor,    Northwest    Technologies,      
Software for                      Inc.                           Russia^a           
Reactor and                                                                         
Process Design                                                                      
Proprietary      One project      Not Disclosed     Pacific      Not Disclosed      
Information                                         Northwest                       
Proprietary      Three projects   Not Disclosed     Lawrence     Not Disclosed      
Information                                         Livermore                       
                                                    and Pacific                     
                                                    Northwest                       

Source: GAO analysis of DOE and U.S. Industry Coalition data.

aKintech Kinetic Technologies is a spin-off company of the Kurchatov
Institute of Atomic Energy.

Appendix V: Comments from the Department of Energy

Note: GAO comments supplementing those in the report text appear at the
end of this appendix.

See comment 1.

See comment 7.

See comment 6.

See comment 5.

See comment 4.

See comment 3.

See comment 2.

See comment 13.

See comment 12.

See comment 11.

See comment 10.

See comment 9.

See comment 8.

See comment 15.

See comment 14.

The following are GAO's comments on the Department of Energy's letter
dated November 21, 2007.

GAO Comments

           1. We are aware that DOE conducted internal assessments in 2004
           and 2006 of its overall efforts to engage WMD scientists in the
           former Soviet Union and other countries. However, these
           assessments did not evaluate the IPP program exclusively and were
           conducted at a time when the IPP program was complemented by and
           coordinated with a similar DOE program focused on downsizing
           facilities and creating new jobs for personnel in Russia's nuclear
           cities. This complementary program--the Nuclear Cities
           Initiative--has since been canceled. As a result, the IPP program
           operates under a significantly different set of circumstances
           today than when DOE conducted its previous internal assessments.
           Moreover, we note that some recommendations and action items from
           DOE's previous internal assessments, such as the development of an
           exit strategy, have not been implemented. Finally, during our
           review and as discussed in this report, we found numerous
           shortcomings and problems with the IPP program. We made a number
           of recommendations for improving the program, many of which DOE
           agreed with, including issues that should be addressed in the
           context of a program reassessment, such as the need to develop a
           program exit strategy. For these reasons, we are recommending that
           DOE undertake a fundamental reassessment of the IPP program, in
           concert with other agencies, to determine the continuing value of
           and need for the program.
           2. DOE has incorrectly characterized how we collected information
           and conducted our analysis of the participants on IPP projects.
           Contrary to DOE's assertion, we did not base our analysis of this
           issue on responses to questions we posed directly to officials at
           Russian and Ukrainian institutes. We used data and statements
           provided directly by DOE program officials to determine the total
           number of former Soviet weapons scientists, engineers, and
           technicians the program has engaged since its inception. Regarding
           the level and number of WMD experts involved in individual IPP
           projects, as explained in the scope and methodology section of our
           draft report, we used a number of methods for assessing these
           totals, including analyzing data provided by project managers at
           the national laboratories; reviewing payment records provided by
           CRDF, ISTC, and STCU; and assessing the reliability of data we
           received.
           3. DOE has incorrectly asserted that we implied that DOE and State
           did not concur on the project in question, and that DOE ignored
           State's concerns regarding the primary Ukrainian institute's
           involvement in WMD. We used this case as an example of how DOE's
           limited ability to assess the proposed participants on an IPP
           project can lead to misallocation of funding. In our view, a more
           thorough evaluation of the entities involved in the project by DOE
           during its proposal review might have uncovered the
           conflict-of-interest issues between the primary Ukrainian
           institute and the industry partner discovered by the Defense
           Contract Audit Agency after the project was under way and funds
           had been spent.
           4. Our finding was based on an in-depth review of the personnel
           involved in 97 IPP projects, representing over 6,450 individuals,
           or over 38 percent of the total personnel DOE has reported to have
           engaged through the IPP program. We have no way of assessing the
           accuracy, reliability, or validity of DOE's assertion that a
           majority of IPP project participants have WMD experience. However,
           we are skeptical that the department was able to conduct a
           thorough analysis of all IPP project payment records during the
           time it took to review and comment on our draft report.
           5. During our visit to the Russian institute in question,
           institute officials told us that they were not the source for the
           reported job creation figure and could not substantiate the total
           number of jobs created as a result of the IPP projects we asked
           about. For this reason, we declined the institute official's offer
           to obtain further documentation regarding the number of jobs
           created at other institutes involved in these projects. Although
           DOE claims to have received additional information from this
           institute to corroborate the number of jobs reported to have been
           created, DOE did not provide this information to us. As a result,
           we cannot determine the reliability or accuracy of DOE's claim
           that the number of jobs it had reported as created is correct.
           6. We have accurately described what we observed during our visit
           to the Ukrainian institute in question. Based on our observations,
           this institute clearly was not in dire financial straits or in
           poor physical condition like some of the institutes in the former
           Soviet Union we have visited in the past. The donation of funding
           to improve the physical condition of the institute has no material
           bearing on the facts that we presented in our draft report.
           7. DOE has mischaracterized our findings and our process for
           evaluating the continued need for the program. As we pointed out
           in our draft report, officials at 10 of the 22 Russian and
           Ukrainian institutes we visited stated that they did not believe
           they or the other scientists at their institutes posed a
           proliferation risk, while officials at 14 of the 22 institutes
           also attested to the financial stability of their facilities.
           Moreover, a senior Russian Atomic Energy Agency official told us,
           in the presence of IPP program officials, in July 2007 that the
           program is no longer relevant. DOE asserted that we did not
           include endorsements of the program in our draft report. However,
           we do state that many officials at the Russian and Ukrainian
           institutes we visited noted that the program was especially
           helpful during the period of financial distress in the late 1990s.
           8. DOE misstates the number of institutes that we included in our
           fieldwork in Russia and Ukraine. The correct number is 22.
           Regarding DOE's comment, our draft report clearly stated that DOE
           policy does not require IPP project participants reemployed in
           peaceful activities to cut ties to their home institute. However,
           more than one institute we visited stated that they are still
           involved in some weapons-related work, and many institutes remain
           involved in research and technology development that could be
           applied to WMD or delivery systems for WMD. We do not believe it
           is possible for DOE to verify the full extent and intended purpose
           of all activities at the institutes where the IPP program is
           engaged. Moreover, we believe that DOE misrepresents the IPP
           program's accomplishments by counting individuals who have been
           reemployed in private sector jobs but also are employed by their
           institutes and, therefore, may still be involved in
           weapons-related activities. In our view, the reemployment of
           former weapons scientists into new long-term, private sector
           jobs--one of the primary metrics DOE uses to measure progress of
           the IPP program--implies that these individuals have terminated
           their previous employment at the institutes and are dedicated
           solely to peaceful commercial activities outside of their
           institutes.
           9. While there is no IPP program requirement to exclude former
           weapons scientists employed on a part-time basis from the total
           number of jobs created as a result of IPP projects, DOE's reported
           job creation total fails to delineate between part-time and
           full-time jobs. By not more clearly distinguishing the number of
           jobs created in each category, this metric is misleading and also
           misrepresents the program's accomplishments regarding the
           employment of weapons scientists in commercial activities.
           However, we have added information to our report that states that
           there is no IPP program requirement to exclude former weapons
           scientists employed on a part-time basis from the total number of
           jobs created as a result of IPP projects.
           10. Our draft report stated that the IPP program does not prohibit
           participation of younger scientists in IPP projects. In our view,
           however, DOE has a mistaken and naive impression of how institutes
           in the former Soviet Union view the benefits of allowing younger
           scientists to participate in the IPP program. DOE believes that
           participation of some younger generation scientists on IPP
           projects must be permitted to successfully implement projects.
           This practice has the unintended consequence of allowing former
           Soviet Union institutes to use the IPP program as a long-term
           recruitment tool for younger scientists and, thereby, may
           perpetuate the proliferation risk posed by scientists at these
           institutes. As we stated in our draft report, officials at 10 of
           the 22 institutes we visited in Russia and Ukraine said that the
           IPP program has allowed their institutes to recruit, hire, and
           retain younger scientists. In our view, this is contrary to the
           original intent of the program, which was to reduce the
           proliferation risk posed by Soviet-era weapons scientists. That is
           why, among other reasons, we are recommending that DOE conduct a
           reassessment of the IPP program that includes a thorough analysis
           of the proliferation risk posed by weapons scientists in Russia
           and other countries, a well-defined strategy to more effectively
           target the scientists and institutes of highest proliferation
           concern, more accurate reporting of program accomplishments, and a
           clear exit strategy for the program.
           11. DOE incorrectly characterized our description of its program
           management system. Specifically, we stated in the draft report
           "DOE and national laboratory officials told us they are attempting
           to improve financial oversight over the IPP program, in part, to
           address concerns about unspent program funds. To that end, DOE is
           developing a new program management system, which it expects to
           fully implement in 2008--14 years after the start of the program."
           Throughout our review, numerous DOE and national laboratory
           officials expressed concern about the existing systems that DOE
           used to manage IPP projects. Our description of DOE's planned
           implementation of its new program management system is accurate.
           12. DOE officials concurred with our recommendation of reducing
           large balances of unspent funds and adjusting future budget
           requests accordingly. The data we present are based on DOE's own
           financial reporting and accurately reflect the state of the
           program's uncosted balances (unspent funds) over the last 10
           years. We noted in our draft report that the program's uncosted
           balances are declining, but, as DOE officials acknowledge,
           uncosted balances remain a serious problem for the IPP program.
           13. We are pleased that DOE concurs with our recommendation to
           improve coordination between the department's IPP program and
           ISTC's Commercialization Support Program, which is funded by
           State. In its comments, State also concurred with this
           recommendation.
           14. We believe DOE has misconstrued our recommendation concerning
           its funding of projects in Libya. We did not recommend, nor did we
           mean to imply, that DOE should allocate 65 percent of project
           funds to Libya for projects in that country. Instead, our
           recommendation urges the department to ensure that it complies
           with existing statutory restrictions on the percentage of IPP
           funds that can be spent on oversight activities by DOE national
           laboratories. Specifically, as DOE notes, section 3136 of the
           National Defense Authorization Act for Fiscal Year 2000 provides
           that not more than 35 percent of funds available in any fiscal
           year for the IPP program may be spent by DOE national laboratories
           to provide oversight of program activities. As our report
           indicates, DOE's IPP guidance and its standard practice have been
           to implement this provision of law on a project-by-project basis,
           so that no more than 35 percent of the funds for each project are
           spent by national laboratories. Our point in our report and in our
           recommendation is that, with respect to projects in Libya, DOE has
           not followed its IPP guidance restricting national laboratory
           expenditures. Instead, we found that 97 percent of funds DOE spent
           on projects in Libya through May 2007 were spent at DOE's national
           laboratories for project management and oversight. In this regard,
           we note that DOE concurred with our recommendation that the
           department seek explicit congressional authorization to expand IPP
           efforts outside of the former Soviet Union. In seeking such
           authorization, DOE may wish to clarify the nature of other
           restrictions on the program, such as those set forth in section
           3136 of the National Defense Authorization Act for Fiscal Year
           2000.
           15. DOE has mistakenly asserted that our selection of projects for
           review served as the sole basis for our conclusions and
           recommendations. As we explained in the draft report's scope and
           methodology section, the selection and evaluation of a sample of
           IPP projects was one of several analytical tools we employed
           during our review. We not only conducted an in-depth assessment of
           over 200 IPP projects, but also met multiple times with DOE
           officials; analyzed program plans, policies, and procedures;
           interviewed representatives at each of the 12 national
           laboratories involved in the program; interviewed staff of the
           U.S. Industry Coalition and 14 U.S. industry partner companies
           with long-standing participation in the program; and had
           discussions with numerous recipients of IPP program assistance at
           22 institutes in Russia and Ukraine. We also met several times
           with State officials who are responsible for funding a similar
           program; interviewed and assessed information provided by
           officials at CRDF, ISTC, and STCU; and met with nongovernmental
           experts familiar with the program. As further noted in our draft
           report, to develop our judgmental sample of 207 projects we used
           project selection criteria supplied by DOE and considered a
           variety of factors--such as project status, project funding, type
           and location of institutes where projects have been implemented,
           and a project's commercial success--to ensure we addressed a broad
           cross-section of IPP projects. This comprehensive approach,
           consistent with generally accepted government auditing standards,
           served as the foundation for our assessment which was fair,
           balanced, and objective. Our extensive review identified
           legitimate questions concerning the IPP program's scope,
           implementation, and performance that we believe should be
           addressed during the course of the fundamental reassessment of the
           program recommended in our draft report.

Appendix VI: Comments from the Department of State

Appendix VII: GAO Contact and Staff Acknowledgments

GAO Contact

Gene Aloise, (202) 512-3841 or [email protected]

Staff Acknowledgments

In addition to the contact named above, Glen Levis (Assistant Director),
R. Stockton Butler, David Fox, Preston Heard, and William Hoehn made key
contributions to this report. Other technical assistance was provided by
David Maurer; Carol Herrnstadt Shulman; Jay Smale, Jr.; and Paul Thompson.

Related GAO Products

Nuclear Nonproliferation: Better Management Controls Needed for Some DOE
Projects in Russia and Other Countries. [54]GAO-05-828 . Washington, D.C.:
August 29, 2005.

Weapons of Mass Destruction: Nonproliferation Programs Need Better
Integration. [55]GAO-05-157 . Washington, D.C.: January 28, 2005.

Nuclear Nonproliferation: DOE's Effort to Close Russia's Plutonium
Production Reactors Faces Challenges, and Final Shutdown Is Uncertain.
[56]GAO-04-662 . Washington, D.C.: June 4, 2004.

Nuclear Nonproliferation: DOE's Efforts to Secure Nuclear Material and
Employ Weapons Scientists in Russia. [57]GAO-01-726T . Washington, D.C.:
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Weapons of Mass Destruction: State Department Oversight of Science Centers
Program. [58]GAO-01-582 . Washington, D.C.: May 10, 2001.

Nuclear Nonproliferation: DOE's Efforts to Assist Weapons Scientists in
Russia's Nuclear Cities Face Challenges. [59]GAO-01-429 . Washington,
D.C.: May 3, 2001.

Biological Weapons: Effort to Reduce Former Soviet Threat Offers Benefits,
Poses New Risks. [60]GAO/NSIAD-00-138 . Washington, D.C.: April 28, 2000.

Nuclear Nonproliferation: Concerns with DOE's Efforts to Reduce the Risks
Posed by Russia's Unemployed Weapons Scientists. [61]GAO/RCED-99-54 .
Washington, D.C.: February 19, 1999.

(360770)

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Highlights of [69]GAO-08-189 , a report to the Chairman, Committee on
Homeland Security, House of Representatives

December 2007

NUCLEAR NONPROLIFERATION

DOE's Program to Assist Weapons Scientists in Russia and Other Countries
Needs to Be Reassessed

To address concerns about unemployed or underemployed Soviet-era weapons
scientists in Russia and other countries, the Department of Energy (DOE)
established the Initiatives for Proliferation Prevention (IPP) program in
1994 to engage former Soviet weapons scientists in nonmilitary work in the
short term and create private sector jobs for these scientists in the long
term. GAO assessed (1) DOE's reported accomplishments for the IPP program,
(2) DOE's exit strategy for the program, and (3) the extent to which the
program has experienced annual carryovers of unspent funds and the reasons
for any such carryovers. To address these issues, GAO analyzed DOE
policies, plans, and budgets and interviewed key program officials and
representatives from 22 Russian and Ukrainian institutes.

[70]What GAO Recommends

GAO recommends, among other things, that DOE assess the continuing need
for the IPP program with input from other federal agencies, including
State and the intelligence community. DOE and State generally agreed with
GAO's recommendations, although DOE disagreed with the need to reassess
the IPP program. However, the nature, scope, and volume of problems GAO
identified during the course of its review necessitates such a
reassessment to ensure that limited IPP program funds are directed to the
scientists and institutes of highest proliferation risk.

DOE has overstated accomplishments forthe 2 critical measures it uses to
assess the IPP program's progress and performance--the number of
scientists receiving DOE support and the number of long-term, private
sector jobs created. First, although DOE claims to have engaged over
16,770 scientists in Russia and other countries, this total includes both
scientists with and withoutweapons-related experience. GAO's analysis of
97 IPP projects involving about 6,450 scientists showed that more than
half did not claim to possess any weapons-related experience. Furthermore,
officials from 10 Russian and Ukrainian institutes told GAO that the IPP
program helps them attract, recruit, and retain younger scientists who
might otherwise emigrate to the United States or other western countries
and contributes to the continued operation of their facilities. This is
contrary to the original intent of the program, which was to reduce the
proliferation risk posed by Soviet-era weapons scientists. Second,
although DOE asserts that the IPP program helped create 2,790 long-term,
private sector jobs for former weapons scientists, the credibility of this
number is uncertain because DOE relies on "good-faith" reporting from U.S.
industry partners and foreign institutes on the number of jobs created and
does not independently verify the number of jobs reported to have been
created.

DOE has not developed an exit strategy for the IPP program, even though
officials from the Russian government, Russian and Ukrainian institutes,
and U.S. companies raised questions about the continuing need for the
program. Importantly, a senior Russian Atomic Energy Agency official told
GAO that the IPP program is no longer relevant because Russia's economy is
strong and its scientists no longer pose a proliferation risk. DOE has not
developed criteria to determine when scientists, institutes, or countries
should "graduate" from the program. In contrast, the Department of State
(State), which supports a similar program to assist Soviet-era weapons
scientists, has assessed participating institutes and developed a strategy
to graduate certain institutes from its program. Instead of finding ways
to phase out the IPP program, DOE has recently expanded the program to
include new countries and areas. Specifically, in 2004, DOE began
providing assistance to scientists in Iraq and Libya. In addition, the IPP
program is working with DOE's Office of Nuclear Energy to develop projects
that support the Global Nuclear Energy Partnership--a DOE-led
international effort to expand the use of civilian nuclear power.

In every fiscal year since 1998, DOE carried over unspent funds in excess
of the amount that the Congress provided for the program. For example, as
of September 2007, DOE carried over about $30 million in unspent funds--$2
million more than the $28 million that the Congress had appropriated for
the IPP program in fiscal year 2007. Two main factors have contributed to
this recurring problem--lengthy review and approval processes for paying
former Soviet weapons scientists and delays in implementing some IPP
projects.

References

Visible links
  50. http://www.gao.gov/cgi-bin/getrpt?GAO-01-582
  51. http://www.gao.gov/cgi-bin/getrpt?GAO-01-429
  52. http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-99-54
  53. http://www.gao.gov/cgi-bin/getrpt?GAO-05-828
  54. http://www.gao.gov/cgi-bin/getrpt?GAO-05-828
  55. http://www.gao.gov/cgi-bin/getrpt?GAO-05-157
  56. http://www.gao.gov/cgi-bin/getrpt?GAO-04-662
  57. http://www.gao.gov/cgi-bin/getrpt?GAO-01-726T
  58. http://www.gao.gov/cgi-bin/getrpt?GAO-01-582
  59. http://www.gao.gov/cgi-bin/getrpt?GAO-01-429
  60. http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-00-138
  61. http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-99-54
  62. http://www.gao.gov/
  63. http://www.gao.gov/
  64. http://www.gao.gov/fraudnet/fraudnet.htm
  65. mailto:[email protected]
  66. mailto:[email protected]
  67. mailto:[email protected]
  68. http://www.gao.gov/cgi-bin/getrpt?GAO-08-189
  69. http://www.gao.gov/cgi-bin/getrpt?GAO-08-189
*** End of document. ***