This is the accessible text file for GAO report number GAO-04-662 
entitled 'Nuclear Nonproliferation: DOE's Effort to Close Russia's 
Plutonium Production Reactors Faces Challenges, and Final Shutdown Is 
Uncertain' which was released on June 04, 2004.

This text file was formatted by the U.S. General Accounting Office 
(GAO) to be accessible to users with visual impairments, as part of a 
longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov.

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately.

Report to the Chairman, Subcommittee on Emerging Threats and 
Capabilities, Committee on Armed Services, U.S. Senate: 

June 2004: 

NUCLEAR NONPROLIFERATION: 

DOE's Effort to Close Russia's Plutonium Production Reactors Faces 
Challenges, and Final Shutdown Is Uncertain: 

GAO-04-662: 

GAO Highlights: 

Highlights of GAO-04-662, a report to the Chairman, Subcommittee on 
Emerging Threats and Capabilities, Committee on Armed Services, U.S. 
Senate 

Why GAO Did This Study: 

Russias continued operation of three plutonium production reactors 
poses a serious proliferation threat. The Department of Energys (DOE) 
Elimination of Weapons-Grade Plutonium Production program seeks to 
facilitate the reactors closure by building or refurbishing 
replacement fossil fuel plants. This report (1) describes DOEs efforts 
to manage and implement the program, (2) assesses the challenges DOE 
faces in achieving its goal of shutting down the reactors, and (3) 
identifies DOEs current expenditures and projected program costs.

What GAO Found: 

DOE is financing and managing the construction of two fossil fuel 
plants in Russia that will replace the heat and electricity that will 
be lost with the shutdown of Russias three plutonium production 
reactors. DOE (1) has developed an overall plan to manage its program, 
(2) has selected two U.S. contractors to oversee the construction of 
replacement fossil fuel plants, and (3) is working with its U.S. 
contractors to review specific design and construction plans for the 
plants. DOE officials expressed concern that the number of 
organizations, 17, involved in the program makes coordination difficult 
and has led to delays. Additionally, DOE and U.S. contractor officials 
said that the primary Russian contractor may not have adequate 
experience and currently lacks enough staff to implement its part of 
the program. 

Final shutdown of the reactors is uncertain because DOE faces a number 
of challenges in implementing its program, including (1) ensuring 
Russias commitment to the nonproliferation and safety goals of the 
program, (2) clarifying the existing reactor shutdown agreement, and 
(3) working with Russia to find employment for thousands of Russian 
nuclear workers who will lose their jobs when the reactors are closed. 
Russias rejection of DOEs proposals to reduce the amount of plutonium 
produced by the reactors and to improve the safety of the reactors 
before they are shut down raises serious questions about Russias 
commitment to key program goals. Furthermore, the existing reactor 
shutdown agreement contains shutdown dates that do not reflect DOEs 
planned program schedule. Finally, the challenge of finding employment 
for Russian nuclear workers could undermine the program by creating 
the potential for Russia to continue operating the reactors longer than 
necessary to ensure jobs for the workers. DOE has not developed a plan 
to address this issue.

As of December 31, 2003, DOE had spent $7.8 millionabout 4 percent of 
available funds on planning and developing the program, including 
travel, overhead, project administration, and document translation 
costs. Regarding future program costs, DOE officials told us that they 
expect the projected costs to build the replacement fossil fuel plants 
to be significantly higher than their original estimate of $466 
million, possibly as much as $1 billion. 

Location of Russias Plutonium Production Reactors: 

What GAO Recommends: 

GAO recommends, among other things, that DOE (1) reach agreement with 
Russia on the steps that must be taken to shut down the reactors and 
the conditions necessary to complete the fossil fuel plants; (2) amend 
the reactor shutdown agreement to reflect DOEs revised completion 
dates for the fossil fuel plants; and (3) develop a plan, in 
conjunction with Russia, to address the problem of employing nuclear 
workers who will lose their jobs when the reactors are closed. 

DOE agreed to implement our recommendations. The Department of State 
disagreed with our recommendation that DOE consider seeking funds from 
Russia to construct the fossil fuel plants. DOE plans to seek financial 
support provided that it does not delay the program.

www.gao.gov/cgi-bin/getrpt?GAO-04-662

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gene Aloise at (202) 
512-3841 or aloisee@gao.gov.

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

DOE Has Overall Program Plan in Place, but the Large Number of 
Organizations Involved in the Program Could Delay Progress: 

DOE Faces Challenges in Its Efforts to Shut Down the Reactors, 
Including Obtaining Russia's Support to Implement Key Nonproliferation 
and Safety Initiatives: 

DOE Has Spent Only a Small Portion of Available Program Funds, and 
Total Program Costs Are Likely to Be Significantly Higher Than DOE's 
Original Estimates: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Information About Seversk and Zheleznogorsk: 

Seversk: 

Zheleznogorsk: 

Appendix II: Scope and Methodology

Appendix III: The Plutonium Production Nuclear Fuel Cycle

Appendix IV: Time Line Showing the History of Russias Remaining 
Plutonium Production Reactors and Efforts to Bring About Closure: 

Appendix V: Additional Information About DOEs Management Plan for the 
Program: 

Appendix VI: Description of a Coal-Fired Power Plant: 

Appendix VII: Description of DOEs Planned Nuclear Safety Upgrades: 

Appendix VIII: GAO Technical Analysis of the Safety Problems Associated 
with Russias Three Plutonium Production Reactors: 

Appendix IX: Comments from the Department of Energy: 

Appendix X: Comments from the Department of State: 

Appendix XI: GAO Contact and Staff Acknowledgments: 
Acknowledgments: 

Tables: 

Table 1: Obligations and Expenditures for DOE's Elimination of Weapons-
Grade Plutonium Production Program through December 31, 2003: 

Table 2: DOE's Planned Nuclear Safety Upgrade Projects: 

Figures: 

Figure 1: Location of Russia's Three Plutonium Production Reactors9: 

Figure 2: Organizational Relationships in DOE's Elimination of Weapons-
Grade Plutonium Production Program14: 

Figure 3: Nuclear Fuel Cycle Resulting in the Production of Weapons-
Grade Plutonium: 

Figure 4: Russian Plutonium Production Reactor Time Line42: 

Figure 5: DOE Order 413.3 Project Acquisition Process and Critical 
Decisions: 

Figure 6: Coal-Fired Power Plant: 

Abbreviations: 

CTR: Cooperative Threat Reduction: 

CD: Critical Decision: 

DOD: Department of Defense: 

DOE: Department of Energy: 

OKBM: Experimental Design Bureau for Machine Building: 

IPP: Initiatives for Proliferation Prevention: 

ISTC: International Science and Technology Center: 

MINATOM: Ministry of Atomic Energy of the Russian Federation: 

NSC: National Security Council: 

NCI: Nuclear Cities Initiative: 

OMB: Office of Management and Budget: 

PNNL: Pacific Northwest National Laboratory: 

RTI: Russian Transition Initiatives: 

WGI: Washington Group International: 

Letter June 4, 2004: 

The Honorable Pat Roberts: 
Chairman, Subcommittee on Emerging Threats and Capabilities: 
Committee on Armed Services: 
United States Senate: 

Dear Mr. Chairman: 

Russia's continued operation of three plutonium production reactors, 
which together produce enough weapons-grade plutonium[Footnote 1] each 
year for about 300 nuclear weapons, poses a serious proliferation 
threat. This plutonium--up to 1.2 metric tons produced annually--is 
being added to Russia's already vast stockpile of weapons-usable 
nuclear material. The shutdown of these reactors has been a long-
standing nonproliferation goal of the United States, and efforts to 
secure their closure have continued for over a decade. By 1992, Russia 
had shut down all but 3 of its 13 plutonium production reactors--2 
continue to operate in the closed nuclear city of Seversk and 1 in the 
closed nuclear city of Zheleznogorsk.[Footnote 2] While the primary 
role of plutonium production reactors in the former Soviet Union was to 
produce weapons-grade plutonium, some of the reactors, including the 
three that remain in operation, were also designed to generate heat and 
electricity for nearby cities. Because temperatures in these cities can 
drop to -40 degrees Fahrenheit in winter and the nearly 300,000 
Russians living there depend on the reactors for heat and electricity, 
alternate heat and power sources must be made available before the 
reactors can be shut down.

In addition to producing weapons-grade plutonium, these reactors are 
considered by U.S. and Russian experts to be among the most unsafe in 
the world. These reactors do not have a containment structure, 
generally a steel-lined concrete, dome-like structure that serves as 
the ultimate barrier to the release of radioactive material during an 
accident. Furthermore, the reactors, which were built in the 1960s, 
have exceeded their original estimated operating life by 20 years.

In 1994, Vice President Gore and Russian Prime Minister Chernomyrdin 
signed an agreement whereby Russia pledged to (1) shut down its three 
remaining plutonium production reactors by 2000; (2) not restart any 
other plutonium production reactors that had been shut down prior to 
signing of the agreement; and (3) not use plutonium produced by the 
three reactors in nuclear weapons. At the same time, the United States 
agreed that it would not restart any of its plutonium production 
reactors. However, the 1994 agreement never entered into force[Footnote 
3] because the United States and Russia could not agree upon who would 
pay for alternative sources of heat and electricity to replace the 
reactors. A new agreement, signed by Gore and Chernomyrdin in 1997, 
addressed this problem by committing the United States and Russia to 
share the cost of modifying the cores of the reactors so that they 
could continue to provide heat and electricity while no longer 
producing spent (used) fuel that could be easily converted into 
weapons-grade plutonium. This agreement, which entered into force 
immediately, banned the restart of previously shutdown plutonium 
production reactors, prohibited Russia's use of newly produced 
plutonium in nuclear weapons, and established a monitoring regime under 
which U.S. and Russian personnel regularly inspect previously shutdown 
plutonium production reactors. In addition, under the agreement, U.S. 
representatives verify the quantities of plutonium that have been 
produced by the three Russian reactors since 1997 and determine that 
this material is kept in storage rather than being used in nuclear 
weapons. Also in 1997, the Department of Defense (DOD) was assigned 
formal responsibility for managing the U.S. effort to modify the 
reactors, with technical assistance from the Department of Energy (DOE) 
and its national laboratories. Between fiscal years 1994 and 2001, the 
United States spent approximately $42.5 million to explore the 
feasibility of modifying the reactors.[Footnote 4] However, numerous 
technical and political obstacles slowed the effort to modify the 
reactors, and the program languished.

In 2001, the United States and Russia agreed to pursue another option 
to bring about the closure of the reactors: building or refurbishing 
fossil fuel plants to replace a significant amount of the heat and 
electricity now produced by the reactors. The management of the program 
was transferred from DOD to DOE in December 2002, as the result of a 
review of all U.S. nonproliferation programs led by the National 
Security Council. The National Nuclear Security Administration manages 
DOE's effort, which is known as the Elimination of Weapons-Grade 
Plutonium Production program (hereafter referred to as the 
program).[Footnote 5] In March 2003, the Secretary of Energy and the 
Minister of Atomic Energy of the Russian Federation (MINATOM)[Footnote 
6] signed an amendment to the 1997 agreement, as well as a new 
implementing reactor shutdown agreement between DOE and MINATOM, 
whereby the United States agreed to fund the construction or 
refurbishment of two fossil fuel plants to replace the three plutonium 
production reactors. Russia agreed to shut down all three reactors by 
2006. Specifically, Russia agreed to shut down the reactors as soon as 
the replacement fossil fuel plants are able to provide sufficient heat 
and electricity to the cities of Seversk and Zheleznogorsk.[Footnote 7] 
The agreement also stated that Russia would (1) assume responsibility 
for the fuel, operation, and maintenance of the replacement fossil fuel 
plants and for their commissioning and (2) remain responsible for the 
decommissioning of the plutonium production reactors following their 
shutdown.[Footnote 8]

In this context, you asked us to review DOE's program to help Russia 
shut down these reactors. This report (1) describes DOE's efforts to 
manage and implement the program since it was transferred from DOD, (2) 
assesses the challenges that DOE faces in achieving its goal of 
shutting down the reactors, and (3) identifies DOE's current 
expenditures and projected costs to implement the program. To address 
these objectives, we interviewed U.S. officials from DOE, DOD, and the 
Department of State (State), the Nuclear Regulatory Commission, the 
Pacific Northwest National Laboratory (PNNL), and the National Energy 
Technology Laboratory on matters related to U.S. efforts to secure the 
shutdown of Russia's plutonium production reactors. In September 2003, 
we interviewed officials in Moscow from the Ministry of Atomic Energy 
of the Russian Federation; Rosatomstroi, the primary Russian 
contractor; and Gosatomnadzor, the Russian nuclear regulatory agency. 
In addition, we went to the cities of Seversk and Zheleznogorsk, where 
the plutonium production reactors are currently in operation and 
interviewed scientists, plant managers, city officials, and reactor 
operators. We also analyzed current program cost and expenditure data 
from DOE. More detail on our scope and methodology can be found in 
appendix II. We conducted our work between June 2003 and April 2004 in 
accordance with generally accepted government auditing standards.

Results in Brief: 

Since the program was transferred from DOD in December 2002, DOE (1) 
has developed an overall program plan to manage the construction of the 
two fossil fuel plants that emphasizes project planning, risk 
reduction, and periodic progress reviews by senior DOE officials; (2) 
has selected two U.S. contractors to oversee the construction of the 
replacement fossil fuel plants; and (3) is working with its U.S. 
contractors to review specific design and construction plans for the 
plants. DOE plans to complete plant construction by 2008 in Seversk and 
2011 in Zheleznogorsk. There are 17 organizations involved in managing 
the program, providing technical assistance, and performing support 
tasks. In addition, there are numerous Russian subcontractors who will 
be responsible for manufacturing, supplying, or installing equipment 
for the plants. DOE officials expressed concern that the number of 
organizations involved in the overall management of the program makes 
coordination difficult and has led to delays. For example, at 
Zheleznogorsk, the acquisition of the proposed site for the replacement 
fossil fuel plant was delayed for 9 months because of a dispute over 
the value of the land among the Ministry of Atomic Energy of the 
Russian Federation; the Mining and Chemical Combine, which is 
responsible for operating the reactor; and a local Siberian power 
utility. Additionally, DOE and U.S. contractor officials told us that 
the primary Russian contractor, Rosatomstroi, has not previously worked 
with U.S. contractors on large-scale construction projects and 
currently lacks enough staff to effectively implement its part of the 
program, overseeing the Russian subcontractors. Rosatomstroi officials 
told us that DOE's use of two U.S. contractors to oversee the projects 
is burdensome because it forces them to adapt to different management 
styles and reporting requirements. To help improve program management, 
DOE plans to hire a resident officer in charge of construction who will 
reside in Russia for the duration of the program. The resident 
officer's responsibilities will include (1) ensuring that contractual 
work is carried out, (2) providing daily reviews of contractor 
progress, (3) monitoring the quality of work being performed, and (4) 
assisting in early identification and resolution of problems.

Final shutdown of Russia's three plutonium production reactors is 
uncertain because DOE faces challenges in implementing its program, 
including (1) ensuring Russia's commitment to key nonproliferation and 
safety goals of the program, (2) clarifying the existing reactor 
shutdown agreement, and (3) working with Russia to find employment for 
the thousands of Russian nuclear workers who are currently employed at 
the reactors and related facilities. Regarding these challenges: 

* DOE officials told us that Russia's recent rejection of its proposal 
to reduce the amount of plutonium being produced by the reactors raises 
serious questions about Russia's commitment to the fundamental 
nonproliferation goal of the program. DOE and Russian officials had 
identified options to reduce the reactors output of plutonium, 
including extending the period during the summer when the reactors are 
shut down for maintenance and refueling. However, in November 2003, the 
Ministry of Atomic Energy of the Russian Federation informed DOE that 
it did not wish to pursue this option and instead asked DOE to 
concentrate its efforts on accelerating the completion of the fossil 
fuel plants. DOE also planned to improve the safety of the reactors by 
funding a $21 million effort consisting of 28 safety upgrade projects, 
including fire safety improvements and enhancements to emergency 
electrical power systems. However, in February 2004, the Ministry of 
Atomic Energy rejected DOE's planned assistance for safety upgrades and 
stated that it would undertake its own safety improvements. DOE 
officials told us that they were pessimistic about the likelihood that 
Russia would install any safety upgrades at the reactors.

* The existing reactor shutdown agreement does not specify the steps 
and period of time needed to complete the shutdown of the reactors, or 
the specific requirements that must be met to license and commission 
the replacement fossil fuel plants. Additionally, DOE and State 
officials told us that the shutdown dates in the agreement will have to 
be revised to reflect DOE's most recent planned construction schedule 
for the fossil fuel plants.

* DOE officials said that helping Russia find jobs for the thousands of 
nuclear workers who are currently employed at the reactors and related 
facilities and will be displaced when the reactors are shut down will 
be a major challenge. Although DOE officials told us that a failure to 
find jobs for these workers could threaten the success of the program, 
DOE has not developed a plan to coordinate the shutdown of the reactors 
with other DOE and State efforts designed to find employment for 
Russian nuclear workers.

As of December 31, 2003, DOE had spent $7.8 million, or about 4 percent 
of available funds, to begin work on planning and developing the 
program, including travel, overhead, project administration, and 
document translation costs. To date, DOE has had a slow rate of 
spending on program activities, which has led to a large balance of 
unobligated and unspent program funds. DOE officials expect the 
program's obligations and expenditures to increase significantly when 
the Seversk project moves from the design phase to the construction 
phase near the end of fiscal year 2004 and the Zheleznogorsk project 
moves into the construction phase in the second quarter of fiscal year 
2005.

Additionally, DOE officials told us that they expect the costs to build 
the replacement fossil fuel plants to be significantly higher than 
their original estimates. The total cost to build the replacement 
fossil fuel plants, which DOE had earlier projected to be $466 million, 
remains uncertain, in part, because this estimate is based on Russian 
cost projections that DOE has not yet validated. However, according to 
DOE officials, the actual construction costs for the plants are likely 
to be significantly higher than the original estimate and may be as 
much as $1 billion, because of a number of factors, including the high 
rate of inflation in Russia and higher than projected Russian labor 
costs. DOE and its contractors are currently reviewing the Russian cost 
projections and revising the preliminary cost estimate to reflect 
changes to the projects' schedule and scope. DOE plans to bear full 
financial responsibility for building the replacement fossil fuel 
plants, which will be designed and built by Russia. DOE, State, and 
National Security Council officials told us that the United States did 
not insist that Russia commit financial resources to building the 
plants out of concern that Russia might be unable to fulfill its 
financial obligations to the program, which would delay the shutdown of 
the reactors. Because the United States has agreed to fully fund the 
costs of the replacement plants, Russia has little incentive to control 
construction costs.

This report makes recommendations to improve the management of the 
program and increase its chance for success. Among other things, it 
recommends that DOE (1) reach agreement with Russia on the steps that 
must be taken to permanently shut down the reactors and what specific 
requirements must be met to complete the replacement fossil fuel 
plants, (2) amend the reactor shutdown agreement to reflect DOE's 
revised completion dates for the fossil fuel plants, (3) develop a plan 
and take steps to formally coordinate its program with existing DOE and 
Department of State programs to employ Russian nuclear workers, and (4) 
consider seeking financial support from Russia to construct the fossil 
fuel plants.

We provided draft copies of this report to the Departments of Energy 
and State for their review and comment. DOE agreed to implement our 
recommendations. State agreed with all of our recommendations except 
one that DOE should consider seeking financial support from Russia to 
construct replacement fossil fuel plants. DOE also expressed concern 
with our conclusion regarding this matter. Both agencies stated that 
relying on Russia to fund critical program elements would pose a 
significant risk. However, DOE agreed to pursue obtaining additional 
financial support from Russia provided it does not delay the program.

Background: 

During the Cold War, the United States and the Soviet Union built a 
total of 27 nuclear reactors to produce weapons-grade plutonium for 
nuclear weapons. Although all nuclear reactors produce plutonium as a 
byproduct of their operation, plutonium production reactors are 
specifically designed to produce a concentrated isotope of plutonium 
that is more readily used in nuclear weapons. (See app. III for 
additional information about the plutonium production nuclear fuel 
cycle.) The United States constructed 14 plutonium production reactors 
of which only one, the N-reactor at Hanford, Washington, produced 
electricity in addition to weapons-grade plutonium. This reactor was 
shut down in 1987 for safety upgrades following the Chernobyl accident 
and never resumed operation. The United States had shut down all of its 
plutonium production reactors by 1989.

The Soviet Union built 13 plutonium production reactors, and all but 3 
have been shut down. (For a time line showing the history of these 
reactors and efforts to bring about their closure, see app. IV.) The 
three remaining reactors began operating between 1964 and 1968, and 
U.S. and Russian nuclear experts told us that these reactors are among 
the most dangerous in the world due to their age and poor design. In 
addition, the reactors lack safety features such as a containment 
structure, which is generally a steel-lined concrete, dome-like 
structure that serves as a barrier to the release of radioactive 
material during an accident. The lack of containment presents a greater 
risk for the two reactors at Seversk because, unlike the reactor at 
Zheleznogorsk, which is located inside a mountain, the Seversk reactors 
are above ground. Figure 1 shows the location of the Russian reactors.

Figure 1: Location of Russia's Three Plutonium Production Reactors: 

[See PDF for image]

[End of figure]

According to Russian officials in Seversk, the two reactors currently 
provide about 70 percent of the heat and electricity for the city's 
residents. However, the reactors have the capacity to produce more heat 
and electricity than is needed to meet the demands of Seversk's 
residents, and both heat and electricity have been sold to the nearby 
city of Tomsk since 1973. Officials in Zheleznogorsk told us that the 
reactor there provides 60 percent of the city's heat and 98 percent of 
its electricity. The amounts of replacement heat and electricity that 
the United States and Russia agreed to in the March 2003 reactor 
shutdown agreement are less than what is currently provided by the 
reactors, but Russian officials from both cities told us the agreed 
upon amounts would be sufficient to meet their needs once the reactors 
are shut down.

Commissioned in the mid-1960s, the three reactors have continued to 
operate although, according to Russian officials, they were originally 
designed to have an operating life of 20 years. Officials from Russia's 
nuclear regulatory agency, Gosatomnadzor, told us that since the 1960s, 
there have been at least three serious accidents and several minor 
incidents at one of the Seversk reactors. For example, in 1966, a 
coolant pipe ruptured, resulting in the release of contaminants into 
the atmosphere near the reactor site. Subsequently, the same reactor 
experienced a partial meltdown that damaged part of the core. Finally, 
in 1999, the reactor experienced another serious incident when spent 
fuel was ejected onto the top of the reactor.

DOE Has Overall Program Plan in Place, but the Large Number of 
Organizations Involved in the Program Could Delay Progress: 

Since the program was transferred from DOD to DOE in December 2002, DOE 
(1) has developed an overall program plan to manage the construction of 
the fossil fuel plants, (2) has selected two U.S. contractors to 
oversee work on the replacement fossil fuel plants, and (3) is working 
with its U.S. contractors to review design and construction plans for 
the plants. DOE plans to complete refurbishment of the plant in Seversk 
by 2008 and construction of the plant in Zheleznogorsk by 2011. 
However, U.S. and Russian officials expressed concern that the large 
number of U.S. and Russian organizations, 17, involved in the overall 
management of the program makes coordination difficult and has led to 
delays. Additionally, DOE and U.S. contractor officials told us that 
the primary Russian contractor, Rosatomstroi, has not previously worked 
with U.S. contractors on large-scale construction projects and 
currently lacks enough staff to effectively implement its part of the 
program, overseeing the Russian subcontractors, which could lead to 
delays.

DOE Developed an Overall Plan to Manage the Program, Hired Contractors, 
and Is Reviewing Specific Design and Construction Plans for the Fossil 
Fuel Plants: 

DOE has developed an overall management plan for its program that (1) 
emphasizes detailed project planning, (2) seeks to identify project 
risks, and (3) develops alternative strategies to reduce risks. The 
program management elements in DOE's plan are detailed in DOE order 
413.3, which the department uses for construction projects and the 
acquisition of capital assets in the United States. Under DOE order 
413.3, the program will move through five critical decision points, the 
major stages of design and construction, upon the approval of DOE's 
Deputy Secretary. These critical decisions are formal determinations 
that allow the project to proceed to the next phase and commit 
additional resources. Critical decisions are required during the 
planning and execution of a project, for example, before beginning 
conceptual design,[Footnote 9] before starting construction, and when 
beginning operations. (For more detailed information about DOE's 
management plan, see app. V.): 

DOE has also selected two U.S. contractors to oversee work on the two 
plants. In mid-2003, DOE awarded contracts to (1) Washington Group 
International (WGI) to oversee Russia's refurbishment of an existing 
fossil fuel plant at Seversk and (2) Raytheon Technical Services 
(Raytheon) to oversee Russia's construction of a new fossil fuel plant 
at Zheleznogorsk. These contracts cover the preliminary design phase of 
the projects. DOE plans to evaluate the performance of both contractors 
at the conclusion of the preliminary design phase. According to DOE, an 
extension or new contract would be required to cover the final design 
phase, construction, and closeout phases. In addition, DOE employs the 
National Energy Technology Laboratory, a DOE national laboratory that 
has historically focused on the development of advanced technologies 
related to coal and natural gas, to accomplish various management 
support tasks.

Finally, DOE, together with its contractors, is reviewing the detailed 
design and construction plans that Russian subcontractors are 
developing for the fossil fuel plants at Seversk and Zheleznogorsk. At 
Seversk, DOE plans to refurbish an existing fossil fuel plant, which 
was built in 1953. To meet the heat and electricity production levels 
specified in the March 2003 agreement, DOE plans to replace one boiler 
(boilers burn coal to produce heat and steam); upgrade the plant's 12 
existing boilers to improve their efficiency and performance; and 
replace three turbine-generators, which use the steam produced by the 
boilers to generate electricity. (See app. VI for more information 
about the operation of coal-fired power plants.) In addition, DOE plans 
to improve the infrastructure at the plant by, among other things, 
enhancing the coal-handling system and improving the plant's water 
chemistry system. DOE plans to complete the refurbishment of the fossil 
fuel plant at Seversk by 2008. At Zheleznogorsk, DOE plans to construct 
a new fossil fuel power plant that is powered by coal to meet the heat 
and electricity production levels specified in the March 2003 
agreement. This new plant is scheduled for completion in 2011. Since 
the plants are being built to Russian standards, DOE plans to use 
Russian environmental, safety, and health standards in the construction 
of the fossil fuel plants rather than U.S. standards. However, in 
addition to satisfying all Russian regulations, DOE's contractors are 
responsible for identifying potential environmental concerns resulting 
from emissions at the plants and comparing the Russian environmental 
standards with applicable international standards.

Concerns Exist About the Large Number of Program Participants and the 
Primary Russian Contractor's Lack of Experience and Staff: 

We identified 17 U.S. and Russian organizations that are participating 
in the program. In total, these organizations have a variety of roles 
and responsibilities, including setting policy and direction, providing 
technical assistance, and managing and overseeing the program. In 
addition, there are numerous Russian subcontractors who will be 
responsible for supplying, manufacturing, or installing equipment for 
the replacement fossil fuel plants. Specifically, in addition to DOE, 
the U.S. organizations participating in the program include the 
following: 

* The National Nuclear Security Administration, a separately organized 
agency within DOE that oversees the program;

* Washington Group International is DOE's primary integrating 
contractor for refurbishing the Seversk replacement fossil fuel plant;

* Raytheon Technical Services is DOE's primary integrating contractor 
for building the Zheleznogorsk plant. Raytheon has subcontracted some 
of its work to the U.S. construction firm Fluor;

* The National Energy Technology Laboratory performs various management 
support tasks for DOE and has two primary subcontractors, Energy and 
Environmental Solutions and Concurrent Technologies Corporation, which 
provide management support to DOE's program. Additionally, Concurrent 
Technologies Corporation subcontracts some work on the program to 
Parsons; and: 

* PNNL had been the lead contractor for DOE's planned Nuclear Safety 
Upgrades Project. Though this project was cancelled in February 2004, 
PNNL will still have limited participation in developing a reactor 
shutdown plan.

In addition to MINATOM, numerous Russian participants in the program 
include the following: 

* Rosatomstroi, the primary Russian contractor working for MINATOM on 
building the replacement fossil fuel plants;

* Tvel-Finance supports WGI on the Seversk fossil fuel plant project 
and is a subcontractor to Rosatomstroi;

* The Siberian Chemical Combine in Seversk operates the two reactors 
there and owns the fossil fuel plant that DOE plans to refurbish;

* Tomsk Teploelectroproekt is a subcontractor to Rosatomstroi and is 
responsible for developing the refurbishment design for the replacement 
fossil fuel plant at Seversk;

* The Mining and Chemical Combine operates the reactor in 
Zheleznogorsk; and: 

* The Experimental Design Bureau for Machine Building (OKBM) was 
involved in the development of many of DOE's planned safety upgrades 
for the reactors and is involved in developing the reactor shutdown 
plan.

Figure 2 shows the relationships between key program participants.

Figure 2: Organizational Relationships in DOE's Elimination of Weapons-
Grade Plutonium Production Program: 

[See PDF for image] 

[A] Other Russian subcontractors include additional design institutes 
and manufacturers of parts and equipment for the replacement fossil 
fuel plants.

[End of figure] 

DOE officials told us that the numerous organizations involved in 
managing this complex program makes coordination difficult and has led 
to delays. For example, at Zheleznogorsk, the acquisition of the 
proposed site to build the replacement fossil fuel plant was delayed 
for 9 months because a dispute over the value of the land among 
MINATOM; the Mining and Chemical Combine, which is responsible for 
operating the reactor; and a local Siberian power utility. Raytheon 
officials told us that the project experienced a "day-to-day" slippage 
while the land acquisition issue remained unresolved. To improve 
program management, DOE plans to hire a resident officer in charge of 
construction who will reside in Russia for the duration of the program. 
Specifically, the resident officer's responsibilities will include (1) 
ensuring that contractual work is carried out, (2) providing daily 
reviews of contractor progress, (3) monitoring the quality of work 
being performed, and (4) assisting in early identification and 
resolution of construction problems.

DOE and U.S. contractor officials also told us that the primary Russian 
contractor, Rosatomstroi, has not previously worked with U.S. 
contractors on large-scale construction projects and does not currently 
have staff to effectively implement its part of the program, which may 
lead to additional program delays. Rosatomstroi was created in 2002 and 
has a limited budget and little authority to make decisions on behalf 
of the Russian government without the approval of MINATOM. Because 
MINATOM designated Rosatomstroi as the primary Russian integrating 
contractor, DOE must rely on Rosatomstroi to manage Russia's part of 
the program, which includes overseeing the numerous Russian 
subcontractors. Rosatomstroi officials told us in September 2003 that 
they had 8 employees dedicated to the program but that they plan to add 
about 40 additional staff as the Seversk and Zheleznogorsk fossil fuel 
plant projects progress from the design phase to construction. 
Officials from both U.S. contractors said that one of their most 
difficult initial tasks has been to mentor Rosatomstroi personnel on 
project management and Western business practices. WGI officials told 
us that this task has taken much-needed time away from other planning 
aspects of the Seversk project. For their part, Rosatomstroi officials 
expressed concern that DOE's use of two U.S. integrating contractors to 
provide day-to-day project oversight is burdensome because it forces 
them to adapt to different management systems and reporting 
requirements.

Despite their efforts to develop a sound management structure, DOE 
officials told us that successful program implementation ultimately 
depends on Russia's commitment and cooperation. A recent assessment of 
DOE's program by the Office of Management and Budget (OMB) reinforces 
the need for Russia's cooperation to improve the program's chances for 
success.[Footnote 10] OMB pointed out that DOE must rely on Russia to 
create conditions that will not limit the effectiveness and efficiency 
of the program to shut down the reactors. Furthermore, OMB stated that 
Russia's creation of these conditions is largely out of DOE's control 
and is a potential flaw in the structure of the program. However, a 
Department of State official told us that he believes Russia has every 
incentive to cooperate in the program because shutting down the 
reactors and obtaining replacement heat and electricity sources is in 
Russia's interest.

DOE Faces Challenges in Its Efforts to Shut Down the Reactors, 
Including Obtaining Russia's Support to Implement Key Nonproliferation 
and Safety Initiatives: 

Final shutdown of Russia's three plutonium production reactors is 
uncertain because DOE faces challenges in implementing its program. 
Perhaps the most important of these challenges is ensuring Russia's 
commitment to key aspects of the program. Russia's recent rejection of 
DOE's initiatives to reduce the amount of plutonium being produced by 
the reactors and to improve the safety of the reactors prior to their 
shutdown raises serious questions about Russia's commitment to the 
fundamental nonproliferation and safety goals of the program. A second 
challenge DOE faces is that the existing reactor shutdown agreement 
does not specify the steps needed to complete the shutdown of the 
reactors and the specific requirements that must be met to license and 
commission the replacement fossil fuel plants. Furthermore, the 
agreement contains shutdown dates that are not realistic. Finally, 
thousands of Russian nuclear workers who are currently employed at the 
reactors and related facilities will be displaced when the reactors are 
closed. Although DOE officials told us that a failure to find jobs for 
these workers could threaten the success of the program, DOE has not 
developed a plan to coordinate the shutdown of the reactors with other 
DOE and Department of State efforts designed to find employment for 
Russian nuclear workers.

Russia Rejected DOE's Proposal to Reduce the Amount of Plutonium 
Produced by the Reactors in the Interim before They Are Shut Down: 

The main nonproliferation goal of DOE's program is to stop Russia's 
production of weapons-grade plutonium. Because closure of the reactors 
will not occur until the fossil fuel plants are built and suitable heat 
and electricity sources are provided, DOE and MINATOM discussed interim 
measures to reduce the amount of plutonium produced by the reactors 
before they are shut down, as well as measures to accelerate the 
reactors' shutdown. According to DOE officials, Russia's support for 
this initiative would have clearly signaled a commitment to the 
nonproliferation goal of the program. In July 2003, DOE and Russian 
officials identified three options to reduce the reactors' output of 
plutonium while the replacement fossil fuel plants are being built: (1) 
extending the period during the summer when the reactors are shut down 
for maintenance and refueling, (2) shutting down one of the two 
reactors at Seversk once the refurbishment of the fossil fuel plant 
reaches an agreed-upon level of completion, and (3) shutting down the 
reactor at Zheleznogorsk before the fossil fuel plant is completed but 
after it is able to supply an adequate amount of heat to the city. DOE 
believed that pursuing all of the reduction options could reduce the 
amount of weapons-grade plutonium produced by the reactors before their 
planned shutdown dates by up to 25 percent, or one-third metric ton, 
annually.

DOE officials told us that the first option, extending summer outage 
periods, held the greatest promise for reducing plutonium production at 
the earliest possible date, which DOE believed could occur in the 
summer of 2004. Russian reactor officials in Zheleznogorsk told us that 
extending summer outage periods would be the easiest option to reduce 
the production of plutonium. Because the initiative to reduce the 
production of plutonium is outside the scope of DOE's program to build 
replacement fossil fuel plants, DOE obtained funding from the 
Department of State's Nonproliferation and Disarmament Fund to support 
the estimated $380,000 cost of studying the three plutonium production 
reduction options.[Footnote 11] DOE also planned to solicit 
participation from other countries to help fund these efforts.

In November 2003, the First Deputy Minister of MINATOM stated in a 
letter to DOE that Russia no longer wanted to explore the possibility 
of reducing the amount of plutonium produced while the reactors 
continue to operate and that pursuing such options could affect the 
time frame of closing the reactors. According to the letter, "[Russia 
does] not find it worthwhile to waste efforts on a project for reducing 
plutonium production prior to the permanent shutdown of the reactors." 
The letter also stated that Russia's main objective was to shut down 
the reactors as soon as possible. In response to the letter, DOE is no 
longer pursuing extending summer outages at the reactors as an option 
for reducing the amount of plutonium produced. A Department of State 
official told us that Russia's decision to reject this proposal was 
likely based on its security concerns about providing U.S. personnel 
with access to the reactors for the purpose of monitoring and verifying 
the reduced amount of plutonium that would be produced.

In December 2003, MINATOM requested that DOE fund a study to examine 
the possibility of shutting down one of the Seversk reactors prior to 
the completion of the replacement fossil fuel plant. To achieve the 
early closure of one of the reactors, MINATOM proposed that the 
refurbishment of the Seversk plant could be accelerated through the 
advanced procurement of certain major components such as the boiler. 
However, unlike extending the summer outage periods, this option could 
not be implemented in mid-2004.

DOE Canceled Its $21 Million Program to Improve the Safety of the 
Reactors after Russia Rejected DOE's Proposed Assistance: 

As part of the reactor shutdown agreement, DOE pledged to improve the 
safe operation of the reactors; and to accomplish this goal, DOE 
planned to fund a $21 million effort, consisting of 28 safety upgrade 
projects--such as fire safety system improvements, enhancements to 
emergency electrical power systems, and risk assessments. DOE selected 
PNNL to oversee the installation of the safety projects. DOE's original 
plan called for work on the upgrade projects, including design work and 
contracting activities, to take place during a 24-month period--
beginning in mid-2003 and ending by mid-2005--in order to maximize the 
benefits of the safety enhancements before the reactors are shut down. 
(See app. VII for a summary of DOE's planned safety upgrade projects.): 

However, the start of the program was delayed for several months 
because the United States and Russia were unable to agree on the amount 
of background information that Russia required of U.S. workers to 
submit for Russia's national security review purposes before they would 
be granted access to the reactors. In February 2004, the failure to 
resolve this issue led MINATOM to reject DOE's planned assistance to 
improve the safety of the reactors and instead to say it would 
undertake necessary safety improvements on its own. As a result, DOE 
officials told us they were canceling the safety upgrade project and 
are considering several options to transfer the remaining unspent 
project funds to other program areas, including accelerating the 
completion of the replacement fossil fuel plant at Zheleznogorsk.

DOE's Assistant Deputy Administrator, Office of International Nuclear 
Safety and Cooperation, told us that he was very pessimistic that 
Russia would perform the safety upgrades. Additionally, he noted that 
even if Russia decides to install the upgrades, they may not be of 
sufficient quality or quantity to reduce the risk posed by the 
reactors' continued operation. A PNNL program official also expressed 
doubt that Russia would pursue upgrading the reactors. He noted that 
without DOE's planned safety upgrades, the reactors would continue to 
deteriorate until they are finally shut down. None of the reactors 
would be licensed for operation in the United States or Western 
countries because they lack modern safety controls, and at least one 
reactor has experienced structural damage causing obstructions in the 
channels where control rods are inserted in case the reactor must be 
shut down in an emergency. The control rods are devices used to control 
the rate of nuclear reactions in a reactor. In the view of the PNNL 
official, it is likely that all three reactors have experienced such 
damage.

The deteriorating safety conditions present a greater danger at the two 
Seversk reactors than at Zheleznogorsk, because unlike the 
Zheleznogorsk reactor, the reactors at Seversk are located above 
ground. Furthermore, one of the Seversk reactors has experienced 
multiple accidents, including one that resulted in the expulsion of 
fuel elements onto the top of the reactor in 1999. Based on our 
analysis, the reactors are showing the wear of having been run for a 
very long time at a high output. The danger that these reactors present 
is the risk of a catastrophic reactor failure--such as a loss of 
coolant accident--which would result in a fire expelling the highly 
enriched uranium fuel and its fission byproducts such as plutonium and 
strontium-90, all of which are highly toxic and carcinogenic. The 
danger from such a fire is that radioactive particles would be 
dispersed and breathed into the body, causing either kidney damage from 
particles of uranium or cancer from particles of strontium-90 and 
plutonium. (For our technical analysis of the safety problems posed by 
the reactors, see app. VIII.): 

Regardless of the safety condition of the reactors, Russian officials 
stated that they plan to run the reactors until replacement energy is 
provided to the residents of Seversk and Zheleznogorsk. Because winter 
temperatures in the region of the cities can reach -40 degrees 
Fahrenheit, officials from Gosatomnadzor told us that they would 
continue issuing operating licenses to the reactors each year unless a 
"calamity" occurred.

The Reactor Shutdown Agreement Does Not Clearly Specify What Is 
Required to Shut Down the Reactors and Contains Unrealistic Shutdown 
Dates: 

Although the current agreement calls on Russia to shut down the 
reactors when the replacement fossil fuel plants produce a certain 
amount of heat and electricity, it does not specify what steps are 
needed to shut down the reactors;[Footnote 12] how long it will take to 
shut down the reactors; or the process for and time required to license 
and commission the replacement fossil fuel plants. DOE indicated that 
agreeing on these issues and developing a specific plan of action to 
complete the program is critical to success. As a result, DOE initiated 
discussions with Russia to develop a reactor shutdown plan that will 
detail the activities needed to shut down the reactors and commission 
the fossil fuel plants. Additionally, the reactor shutdown plan will 
analyze expenses associated with shutting down the reactors.

Further, the current agreement contains shutdown dates that are 
unrealistic and do not reflect DOE's planned completion dates for the 
replacement fossil fuel plants. Under the March 2003 agreement, the 
United States and Russia agreed that the two reactors in Seversk and 
the reactor in Zheleznogorsk would stop producing plutonium by December 
31, 2005, and December 31, 2006, respectively. However, according to 
DOE, Department of State, and Russian officials, these dates are no 
longer realistic because DOE does not plan to complete the replacement 
fossil fuel plant in Seversk until 2008 or the plant in Zheleznogorsk 
until 2011. Russian officials have reiterated that they will not shut 
down the reactors until the agreed-upon replacement power and heat 
generating capacity are provided by the United States. DOE and 
Department of State officials told us that the current agreement would 
be amended to reflect DOE's planned schedule for the completion of the 
fossil fuel plants once project designs are completed. Failure to 
secure specific agreement on these changes could put program success at 
risk as it has for other U.S. nonproliferation efforts.

Specifically, in the past, some U.S. nonproliferation efforts that were 
dependent on Russian cooperation have been canceled or adversely 
affected in part because of a lack of specific agreements and 
coordination between relevant U.S. and Russian organizations. Notable 
examples include two large-scale construction projects in Russia that 
were managed by DOD under the Cooperative Threat Reduction (CTR) 
program--a facility to dispose of liquid propellant used to fuel 
Russian ballistic missiles at Krasnoyarsk and the Fissile Material 
Storage Facility at Mayak.[Footnote 13] In both cases, DOD did not 
secure specific provisions in the agreements that addressed all program 
risks to the projects.

* In 1993, DOD agreed to help Russia dispose of liquid propellant used 
to fuel Russian ballistic missiles and eventually agreed to finance the 
construction of a disposal facility. In February 2002, after $96 
million had been spent on the project, DOD officials learned that 
Russia had used the liquid propellant in its space program but had 
failed to notify DOD. As a result, DOD canceled construction of the 
facility and terminated the project. The DOD Inspector General found 
that Russia used the rocket fuel without DOD's knowledge because the 
agreements with Russia did not require it to provide the fuel to DOD 
for disposal and did not provide DOD with access rights over the fuel's 
storage.[Footnote 14]

* In another case, the United States agreed to build a storage facility 
in Mayak, Russia, for fissile materials, including highly enriched 
uranium and plutonium. However, the agreement did not provide DOD with 
rights to verify the source of the fissile material to be stored in the 
facility, nor did it specify the amount or type of fissile material 
Russia was required to deposit in the facility. By July 2003, DOD had 
spent $372.8 million on fissile material containers and the design and 
construction of the facility. However, in July 2003, MINATOM notified 
DOD that Russia would store only 25 metric tons of plutonium at the 
facility, while converting its highly enriched uranium into low 
enriched uranium to sell to the United States for use in civilian 
nuclear power plants. As a result, only one-fourth of the facility's 
storage capacity will be used.[Footnote 15]

The DOD Inspector General concluded that for future CTR projects, 
implementing agreements should be negotiated that would "require Russia 
to provide the United States with all the necessary resources to assure 
that assistance is used for intended purposes." As a result of 
congressional concern and in response to recommendations from the DOD 
Inspector General, the CTR program has taken several steps to protect 
the investment of U.S. funds and improve program oversight, including 
replacing good faith obligations from Russia with specific legal 
commitments before proceeding with any current or future CTR projects.

DOE Has Not Developed a Plan to Coordinate the Shutdown of the Reactors 
with Other U.S. Efforts to Employ Thousands of Displaced Russian 
Nuclear Workers: 

DOE officials told us that worker transition issues at Seversk and 
Zheleznogorsk have the potential to undermine efforts to shut down the 
reactors and present major challenges for the program. In July 2002, 
Russia's First Deputy Minister of Atomic Energy said that the most 
"acute" problem in downsizing Russia's nuclear weapons complex was at 
Zheleznogorsk, where the closure of the reactor would lead to the loss 
of 5,000 to 7,000 jobs in a city where other employment opportunities 
are limited. He also predicted that the closure of the two reactors in 
Seversk would lead to the loss of 5,000 to 6,000 additional jobs. 
Russian officials from both Seversk and Zheleznogorsk told us that 
finding jobs for displaced workers is their highest priority. Although 
these officials recognize that Russia is primarily responsible for 
employing these workers, they are seeking assistance from the United 
States to help address this problem.

Since many Russian nuclear workers have highly specialized experience 
manufacturing and processing weapons-grade nuclear material, their 
unemployment poses a significant proliferation risk because they might 
sell sensitive nuclear information to terrorists or countries of 
concern. Specifically, many nuclear workers in Seversk and 
Zheleznogorsk possess knowledge and skills in machining nuclear 
material and manufacturing nuclear weapons. Since 2001, Congress has 
appropriated about $40 million each year to support DOE's efforts to 
assist Russia in finding employment for its displaced nuclear workers 
through the Russian Transition Initiatives (RTI) program. The RTI 
program is comprised of two nonproliferation programs, the Nuclear 
Cities Initiative (NCI), which currently has some projects in 
Zheleznogorsk, and the Initiatives for Proliferation Prevention (IPP), 
which has a few projects in both cities. Both the NCI and IPP programs 
seek to prevent the proliferation of nuclear weapons knowledge from 
unemployed Russian nuclear weapons scientists--a problem known as 
"brain drain."[Footnote 16] As directed by the Congress, the NCI 
program works in 3 of Russia's 10 closed nuclear cities: Snezhinsk, 
Sarov, and Zheleznogorsk. The IPP program can work in all of the closed 
nuclear cities. From 1999 to 2003, the NCI program spent about $15.7 
million on 23 projects in Zheleznogorsk. During the same period the IPP 
program sponsored one project in Zheleznogorsk costing about $1.8 
million and one project in Seversk that cost $1.2 million. However, NCI 
has not initiated any new projects since September 2003 because the 
government-to-government agreement guiding the program expired. The 
agreement has not been renewed because the United States and Russia 
have not agreed upon legal protections regarding liability claims that 
could be brought against the United States, its contractors, and their 
employees.

DOE's office that administers the reactor shutdown program (Office of 
International Nuclear Safety and Cooperation) and the DOE office that 
is responsible for the RTI program (Office of Nonproliferation and 
International Security) have begun to coordinate their efforts, which 
include attending regular meetings and planning for joint trips to the 
cities. However, as of April 2004, DOE had not developed a plan to 
formally coordinate the department's program to facilitate the shutdown 
of the reactors with the ongoing DOE efforts to help Russia find 
employment for its displaced nuclear workers. DOE officials from both 
program offices told us they are starting to draft a joint action plan 
to address Russian workforce transition issues related to the shutdown 
of the plutonium production reactors. In addition, DOE is working with 
Swiss officials to organize an international conference to discuss 
potential employment projects at Seversk and Zheleznogorsk.

Additionally, the United States and several other countries fund the 
International Science and Technology Center (ISTC) program.[Footnote 
17] This program supports science centers in Russia and Ukraine and 
focuses on paying nuclear, chemical, and biological weapons scientists 
to conduct peaceful research in a variety of areas, such as developing 
new anticancer drugs, improving nuclear safety, and enhancing 
environmental cleanup techniques. The Department of State is 
responsible for implementing the program on behalf of the U.S. 
government and chairs an interagency group that conducts a policy 
review of all project proposals submitted for funding. As of March 
2004, ISTC had three active projects in Seversk and Zheleznogorsk. 
According to DOE officials, DOE has not coordinated with the ISTC 
program on workforce issues related to the shutdown of the plutonium 
production reactors. They noted that DOE views the shutdown effort as a 
departmental initiative although DOE plans to seek support from other 
countries in its efforts to find employment opportunities for displaced 
workers. Department of State officials told us that clearer agreement 
on the problem and a coordinated U.S. government approach was needed 
before the ISTC could be used to address worker displacement issues at 
Seversk and Zheleznogorsk. They also stated that they are prepared to 
use the ISTC program in coordination with other U.S. efforts to address 
the problem.

DOE Has Spent Only a Small Portion of Available Program Funds, and 
Total Program Costs Are Likely to Be Significantly Higher Than DOE's 
Original Estimates: 

As of December 31, 2003, DOE had spent $7.8 million, about 4 percent of 
the funds available, to begin work on planning and developing the 
program. In addition, DOE officials told us that they expect the final 
cost of the program to be significantly higher than their initial 
estimate. DOE's slow rate of spending on program activities has led to 
about $179.1 million in unobligated and unspent funds. Furthermore, the 
cost to build the replacement fossil fuel plants, which DOE had 
projected to be $466 million, is uncertain because the estimate is 
based on Russian cost projections that DOE has not yet validated. 
According to DOE officials, the actual construction costs for the 
plants are likely to be significantly higher than the original 
estimate, possibly as much as $1 billion. DOE and its contractors are 
currently revising the preliminary estimate to reflect changes in the 
projects' schedule and scope.

DOE's Slow Rate of Spending on the Program Has Led to a Large Balance 
of Unspent and Unobligated Funds: 

As of December 31, 2003, DOE had unobligated funds totaling $137.9 
million and an additional $41.2 million that has been obligated, but 
not yet spent. Together, these funds represent DOE's total carryover 
balance of $179.1 million, which represent about 96 percent of the 
funds available for the program. As table 1 shows, through December 31, 
2003, DOE had received $186.9 million in funding for the program but 
had only spent about $7.8 million of these available funds to begin 
work on planning and developing the program. Specifically, DOE 
indicated that these funds were mainly spent on planning and developing 
the program and include travel, overhead, project administration, and 
document translation costs.

Table 1: Obligations and Expenditures for DOE's Elimination of Weapons-
Grade Plutonium Production Program through December 31, 2003: 

Dollars in millions.

Recipient of funding: DOE/Non-project specific[B]; 
Funds available[A]: $139.7; 
Unobligated funds: $137.9; 
Funds obligated: $1.8; 
Funds obligated but not spent: $0.8; 
Funds obligated and spent: $1.0.

Recipient of funding: National Energy; 
Technology Laboratory; 
Funds available[A]: $8.5; 
Unobligated funds: $0; 
Funds obligated: $8.5; 
Funds obligated but not spent: $5.3; 
Funds obligated and spent: $3.2.

Recipient of funding: Pacific Northwest; 
National Laboratory[C]; 
Funds available[A]: $21.5; 
Unobligated funds: $0; 
Funds obligated: $21.5; 
Funds obligated but not spent: $20.1; 
Funds obligated and spent: $1.4.

Recipient of funding: Washington Group International; 
Funds available[A]: $3.9; 
Unobligated funds: $0; 
Funds obligated: $3.9; 
Funds obligated but not spent: $2.8; 
Funds obligated and spent: $1.1.

Recipient of funding: Raytheon Technical Services; 
Funds available[A]: $13.3; 
Unobligated funds: $0; 
Funds obligated: $13.3; 
Funds obligated but not spent: $12.2; 
Funds obligated and spent: $1.1.

Total; 
Funds available[A]: $186.9; 
Unobligated funds: $137.9; 
Funds obligated: $49.0; 
Funds obligated but not spent: $41.2; 
Funds obligated and spent: $7.8. 

Source: DOE.

Note: Figures have been rounded.

[A] The total funds available for the program includes $50 million in 
newly appropriated fiscal year 2004 funding, but excludes any general 
reductions and rescissions which had not been incorporated as of 
December 2003.

[B] The DOE/Non-project specific category includes efforts for 
crosscutting activities (i.e., technical support activities) and funds 
available at headquarters not yet sent to the field for a specific 
project or task.

[C] Funds available for PNNL include $4.0 million appropriated to the 
International Nuclear Safety Program in a fiscal year 2002 emergency 
supplemental appropriation (P.L. 107-206) but supports the program 
objectives for the Nuclear Safety Upgrades Project. In February 2004, 
DOE cancelled its planned Nuclear Safety Upgrades Project at the 
request of Russia. DOE is examining options for using the unspent 
funding for this effort in other program areas.

[End of table]

According to DOE officials, three major factors account for DOE's 
current carryover balances: 

* After management of the program was transferred from DOD to DOE in 
December 2002, DOE received $74 million in unspent program funding from 
DOD. These funds were in addition to DOE's appropriations for the 
program.

* According to DOE and U.S. industry officials, large-scale 
construction projects require "front end" funding because construction 
projects are executed over several years. DOE officials expect the 
program's obligations and expenditures to increase significantly when 
the Seversk project moves from the design phase to the construction 
phase near the end of fiscal year 2004 and the Zheleznogorsk project 
moves into the construction phase in the second quarter of fiscal year 
2005.

* Difficulties and unforeseen delays are frequently associated with 
doing work in Russia.

Large carryover balances are not uncommon for DOE nonproliferation 
programs in Russia. In March 2003, DOE reported that its nuclear 
nonproliferation programs had a total carryover balance of almost $460 
million. DOE indicated that the large carryover amounts were due to 
difficulties in negotiating and executing contracts with Russia and the 
multiyear nature of these programs.

Despite the program's large carryover balance, DOE has requested an 
additional $50.1 million for the program in fiscal year 2005. 
Specifically, the request includes $39.5 million for the Seversk fossil 
fuel plant construction, about $9.6 million for the Zheleznogorsk 
plant, and $1 million for technical support activities. In addition, 
DOE's fiscal year 2005 budget projects the annual budget requests for 
fiscal years 2006 through 2009 to be between $56 million and $66.9 
million.

Total Cost to Build the Replacement Fossil Fuel Plants May Be as Much 
as $1 Billion: 

In April 2003, DOE estimated that it would cost $466 million to build 
the replacement fossil fuel plants. DOE estimated that the plant at 
Seversk would cost about $172 million and the Zheleznogorsk plant would 
cost approximately $295 million.[Footnote 18] However, because DOE's 
estimates are based on Russian cost projections developed between 2000 
and 2001, which DOE has not validated, the final cost to build the 
replacement fossil fuel plants is uncertain. According to DOE 
officials, revised cost estimates are currently being developed by 
DOE's contractors and are likely to be significantly higher than the 
original estimate, possibly totaling as much as $1 billion. For 
example, the original estimate did not include the costs of U.S. and 
Russian integrating contractors. Several other factors contributing to 
the projected cost increase include the high rate of inflation in 
Russia, higher than expected Russian labor and overhead rates, and 
unanticipated problems with the design plans for both plants. For 
example, DOE officials told us that the initial cost estimates for the 
Seversk plant were based on an existing Russian design for the 
refurbishment, which DOE believed to be at an advanced stage. However, 
after DOE and WGI began examining the design documents, they found that 
much of the design was incomplete. As a result, Russian contractors 
will perform additional design work, which will contribute to increased 
project costs. As more of the design work is completed, refined overall 
cost and schedule estimates will be developed for the plants. According 
to DOE, firm cost estimates will be provided to the Congress by the end 
of 2004.

DOE plans to fund the entire cost of the replacement fossil fuel 
plants, which will be based on a Russian design and constructed by 
Russian contractors. DOE, Department of State, and National Security 
Council (NSC) officials told us that the United States did not insist 
that Russia commit resources to building the plants when the March 2003 
reactor shutdown agreement was signed. NSC and Department of State 
officials noted that the United States was concerned that Russia would 
not be able to fund its part of the effort, and it did not want the 
program to be subject to the unpredictability of the Russian budgetary 
process, which could delay the program. The Department of State 
official also noted that the U.S. government decided that the U.S. 
interest in pursuing the objective of the earliest possible shutdown of 
the reactors overrode its interest in a potentially fairer allocation 
of costs for building the replacement fossil fuel plants. DOE officials 
pointed out that Russia will be responsible for the maintenance and 
operation of the plants once they are completed and that Russia is 
sacrificing some electricity production capacity because the 
replacement fossil fuel plants will not produce as much electricity as 
the reactors. DOE considers these Russian efforts as "in-kind" 
contributions.

Cost increases and schedule delays are not uncommon for U.S. 
nonproliferation programs in Russia. For example, the United States has 
had difficulties with past major construction projects in Russia, such 
as the Chemical Weapons Disposal Facility at Shchuch'ye, and many of 
these projects have experienced dramatic cost increases, significant 
delays, or other major setbacks.[Footnote 19] At Shchuch'ye, DOD is 
assisting Russia by building a chemical weapons destruction facility. 
As a result of changes in the project's scope and other factors, the 
estimated cost for the project increased from about $750 million to 
about $1.04 billion. Congressional concern over Russia's financial 
commitment to the project led to a congressional mandate that Russia 
commit at least $25 million annually toward its chemical weapons 
destruction activities.

Conclusions: 

DOE's effort to secure the shutdown of Russia's three plutonium 
production reactors is a critical nonproliferation program because it 
seeks to eliminate the production of weapons-grade plutonium. However, 
implementing this complex and technically challenging program is 
becoming an increasingly risky undertaking for DOE. Some actions that 
Russia has taken raise serious questions about its commitment to the 
nonproliferation and safety-related goals of DOE's program. We believe, 
as do some DOE officials, that Russia could have demonstrated good 
faith by reducing the amount of plutonium produced by the reactors in 
the period before they are shut down. This could have been accomplished 
by extending the amount of time the reactors are shut down for 
maintenance during the summer months--a proposal that Russian officials 
told us could be easily accomplished. However, Russia informed DOE that 
it had no interest in pursuing this opportunity. While Russia's 
unwillingness to consider this proposal represents a setback, we 
believe that extending the summer outage periods for the reactors 
furthers U.S. nonproliferation objectives and would meet an important 
national security goal. In addition, DOE was willing to spend over $20 
million to improve the safety of these reactors, which have been 
characterized as being among the most unsafe reactors operating today. 
In this case, Russia also rejected DOE's planned assistance to improve 
the reactors' safety and claims that it will make its own safety 
improvements. We believe that the continued operation of these 
reactors, given their current age and condition, presents a significant 
and growing safety risk. Without implementing DOE's proposed safety 
upgrades, the safety risks posed by the reactors will continue to 
increase dramatically.

Although the existing agreement between DOE and Russia's Ministry of 
Atomic Energy governing the shutdown of Russia's plutonium production 
reactors provides a general framework for cooperation, there are no 
guarantees that the reactors will be shut down within DOE's projected 
time frames. Furthermore, the agreement does not specify what steps 
must be taken to shut down the reactors and what specific requirements 
must be met to certify the completion of the replacement fossil fuel 
plants. Without defining these steps and specific requirements, DOE 
will be unable to develop accurate estimates for the true scope and 
cost of its program or be able to determine more precisely when the 
reactors will be shut down. The history of U.S.-Russian 
nonproliferation activities has demonstrated that some well-
intentioned programs have had limited success because the agreements 
governing them lacked specificity or oversight was inadequate. The 
lessons of the past should be carefully considered as DOE moves forward 
with its program. Furthermore, the existing time frames for shutting 
down the reactors reflected in the agreement are neither accurate nor 
achievable. DOE, Department of State, and Russian officials recognize 
that the shutdown dates in the agreement are unrealistic and will need 
to be revised to reflect DOE's schedule for the completion of the 
fossil fuel plants. Because of the history of failed efforts to secure 
the reactors' closure and the inability to achieve previously agreed 
upon shutdown dates for these reactors, we believe it would be in the 
best interests of the United States to revise the agreement in order to 
have increased assurances that the reactors will be permanently shut 
down.

A major consequence of DOE's program to assist Russia's closure of the 
reactors will be the displacement of thousands of Russian nuclear 
workers who are currently employed at the reactors and related 
facilities. Many of these workers have received specialized training in 
the manufacture and reprocessing of weapons-grade nuclear material and 
could pose a serious proliferation risk if unemployed because they 
might sell sensitive nuclear information to terrorists or countries of 
concern. This looming problem, if left unaddressed, has the potential 
to undermine the program. Although DOE has started to coordinate the 
reactor shutdown program with the department's other efforts to employ 
Russian nuclear workers--specifically the Russian Transition 
Initiatives--it has not developed a plan to coordinate these two 
nonproliferation programs. Moreover, there is no overall U.S. 
government strategy that would integrate the Department of State's 
International Science and Technology Center program with DOE's programs 
to employ Russian weapons scientists, particularly in the cities where 
the reactors will be shut down. A jointly planned effort could 
strengthen U.S. nonproliferation efforts by leveraging resources and 
expertise between these programs. Such a plan could also identify other 
options to support employment opportunities in the two cities, 
including seeking financial support from other countries.

Estimated costs to construct the replacement fossil fuel plants are 
expected to increase dramatically. With the total cost for the program 
expected to be as much as $1 billion, DOE's program has taken on 
greater financial risk and will require a more substantial investment 
of resources. Because the United States has agreed to fully fund the 
costs of the replacement plants, Russia has little incentive to control 
construction costs. Russia would be more likely to show fiscal 
restraint if it were responsible for funding a portion of the 
construction projects. In the final analysis, this program will provide 
Russia with significant capital assets that Russia would have had to 
finance itself if not for the assistance of the United States. 
Additionally, DOE's approximately $179 million balance of unobligated 
and unspent program funding raises concerns, especially in light of the 
department's request for an additional $50.1 million in fiscal year 
2005. Although DOE officials believe that these carryover balances are 
justified, it is highly unlikely that DOE will be able to spend its 
entire available program funding by the end of fiscal year 2004 because 
construction at both plants is not expected to begin until at least 
fiscal year 2005.

Recommendations for Executive Action: 

To help achieve important U.S. nonproliferation objectives, we 
recommend that the Secretary of Energy and the Administrator of the 
National Nuclear Security Administration continue efforts to reduce the 
amount of plutonium produced by the reactors as an interim measure 
before they are permanently shut down. Specifically, the Secretary and 
the Administrator should continue to pursue the option of extending 
summer outage periods at the reactors as a way to realize the immediate 
nonproliferation benefits of reduced plutonium production in Russia.

To increase the chances for program success by clarifying the existing 
reactor shutdown agreement, we recommend that the Secretary of Energy, 
working with the Administrator of the National Nuclear Security 
Administration and Secretary of State, do the following: 

* reach agreement with Russia on the steps that must be taken to 
permanently shut down the reactors and the specific requirements that 
must be met to complete the replacement fossil fuel plants;

* identify any additional costs that may surface as a result of 
refining the scope of work associated with shutting down the reactors 
and completing the replacement fossil fuel plants and revise cost and 
schedule estimates for the program accordingly; and: 

* amend the March 2003 reactor shutdown agreement as soon as 
practicable to accurately reflect DOE's more realistic shutdown dates 
for Russia's three plutonium production reactors.

To maximize the benefits of related U.S. nonproliferation efforts, we 
recommend that the Secretary of Energy and the Administrator of the 
National Nuclear Security Administration do the following: 

* Create a specific plan and take steps to formally coordinate DOE's 
program to assist Russia's closure of the three plutonium production 
reactors with the department's efforts to find jobs for displaced 
Russian nuclear workers through the Russian Transition Initiatives. 
Such a plan should be coordinated with Russia and should include 
strategies for obtaining assistance from other countries in finding 
employment for these workers.

* Take the lead in developing a comprehensive plan that focuses on 
integrating U.S. efforts to employ Russian nuclear workers in the 
cities of Seversk and Zheleznogorsk. The plan should be developed in 
conjunction with the Secretary of State. Such a plan should consider 
ways to better ensure that future projects funded by DOE and the 
Department of State in Seversk and Zheleznogorsk are clearly focused on 
finding jobs for Russian workers who will be displaced once the 
plutonium production reactors and related facilities are closed.

To help defray the escalating costs of DOE's program to shut down 
Russia's plutonium production reactors, we recommend that the Secretary 
of Energy and the Administrator of the National Nuclear Security 
Administration consider seeking financial support from Russia to 
construct the replacement fossil fuel plants. To the extent possible, 
these contributions should not be limited to in-kind contributions such 
as building materials, labor, or the value of land.

To address concerns about large carryover balances of program funding, 
we recommend that the Secretary of Energy and the Administrator of the 
National Nuclear Security Administration: 

* monitor funding requirements to ensure that funds are obligated in a 
timely manner and: 

* determine whether future funding requirements need to be reduced in 
light of the slow rate of spending to date on the program.

Agency Comments and Our Evaluation: 

We provided the Departments of Energy and State with draft copies of 
this report for their review and comments. DOE's and State's written 
comments are presented as appendixes IX and X, respectively.

DOE's National Nuclear Security Administration said the draft report 
provided a balanced evaluation of its program to shut down Russia's 
three plutonium production reactors. DOE agreed to implement our 
recommendations. The Department of State agreed with all of our 
recommendations except one that DOE should consider seeking financial 
support from Russia to construct the replacement fossil fuel plants. 
DOE also expressed concern with our conclusion regarding this matter. 
Both agencies stated that relying on Russia to fund critical program 
elements would delay the program, something they did not want to risk. 
These concerns notwithstanding, we continue to believe that DOE should 
look for opportunities to have Russia fund a portion of the 
construction projects as a way to contain costs, which are expected to 
increase dramatically. DOE plans to pursue obtaining financial support 
from Russia provided that it does not delay the program. We agree with 
this approach.

Both agencies also disagreed with our conclusion that Russia's 
rejection of key initiatives to reduce the amount of plutonium produced 
by the reactors and to improve their safety before they are shut down 
signals Russia's lack of commitment to the nonproliferation and safety 
goals of the program. Both agencies stated that Russia rejected these 
initiatives primarily due to its security concerns about granting U.S. 
officials access to the reactors. In our report, we recognized that 
Russia's security concerns may have played a role in rejecting the 
extension of summer outages at the reactors as an option for reducing 
plutonium production. However, in a November 2003 letter from MINATOM 
to DOE, Russia did not cite security concerns as a reason for rejecting 
the proposal. In fact, as we noted in the report, MINATOM stated that 
"[Russia does] not find it worthwhile to waste efforts on a project for 
reducing plutonium production prior to the permanent shutdown of the 
reactors." Instead, MINATOM claimed that it wanted to focus on the 
earliest possible shutdown of the reactors. As we noted in our report, 
both U.S. and Russian officials told us that extending summer outages 
to reduce the current production of weapons-grade plutonium held great 
promise and would be an easy option to implement. Furthermore, in its 
comments, DOE stated that it was disappointed in Russia's rejection of 
the proposal to study ways to reduce the amount of plutonium produced 
by the reactors as an interim step before they are shut down.

Regardless of Russia's basis for rejecting the proposal, it should be 
noted that the long-standing and ultimate U.S. goal of this program is 
to reduce and eliminate the production of weapons-grade plutonium in 
Russia as quickly as possible. From the U.S. perspective, shutting down 
these reactors is a major nonproliferation objective, and the United 
States is committing significant resources to this effort. Thus, it 
seems reasonable to us that Russia should reciprocate and show its 
commitment to the fundamental nonproliferation tenets of this program. 
Finally, although DOE and State objected to our characterization of the 
implications of Russia's decision to reject key DOE initiatives, both 
agencies agreed with our recommendation that seeking summer outages as 
a way to reduce plutonium production should continue to be pursued.

With regard to the reactors' safety, we noted in the report that they 
are among the most unsafe in the world and that DOE was prepared to 
provide a substantial amount of assistance to improve their safety. 
Russia's rejection of the assistance, regardless of the reasons, raises 
serious concerns about its commitment to ensuring the reactors' safe 
operation until they can be shut down. As we noted in the report, DOE 
and national laboratory officials expressed doubt about whether Russia 
would perform sufficient safety upgrades on its own.

State also objected to what it believed to be our conclusion that final 
shutdown of the reactors is uncertain because the reactor shutdown and 
implementing agreements are insufficiently clear regarding the steps to 
permanently and irreversibly shut down the reactors. We believe that 
State in its written response to our draft report has mischaracterized 
our conclusion. Specifically, our report cites the lack of clarity in 
the agreement as one of several challenges that DOE faces that could 
affect final shutdown. While State disagreed with our conclusion, it 
agreed with our recommendation that DOE should reach agreement with 
Russia on the steps that must be taken to shut down the reactors and 
the specific requirements needed to certify the completion of the 
fossil fuel plants. State also believes that we overstated the 
implications of the agreement's lack of accurate shutdown dates. 
However, State acknowledged that the deadlines for reactor shutdown in 
the agreement are no longer consistent with current plans and agreed 
with our recommendation to revise the dates.

State also disagreed with our conclusion that worker transition issues 
have the potential to undermine the program. However, as we noted in 
our report, Russian officials we spoke with considered the employment 
of displaced workers as their highest priority and DOE officials 
acknowledged this as a major concern. Furthermore, DOE and State agreed 
with our recommendations to address this problem.

DOE and State also provided technical comments, which we incorporated 
in the report where appropriate.

We are sending copies of this report to the Secretary of Energy; the 
Administrator, National Nuclear Security Administration; the Secretary 
of State; the Director, Office of Management and Budget; and interested 
congressional committees. We will also make copies available to others 
upon request. In addition, this report will be available at no charge 
on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions concerning this report, I can 
be reached at 202-512-3841 or aloisee@gao.gov. Major contributors to 
this report are included in appendix XI.

Sincerely yours,

Signed by: 

Gene Aloise: 
Acting Director, Natural Resources and Environment: 

[End of section]

Appendixes: 

[End of section]

Appendix I: Information About Seversk and Zheleznogorsk: 

This appendix provides information about the cities of Seversk and 
Zheleznogorsk, the two cities in Russia where the plutonium production 
reactors are located.

Seversk: 

Formerly known as Tomsk-7, the closed city of Seversk is located 
approximately 2,000 miles east of Moscow and about 9 miles northwest of 
Tomsk, a major industrial city in western Siberia. As of January 2000, 
the city had approximately 119,000 residents. In addition to plutonium 
production, a number of other nuclear related activities have been 
carried out in Seversk, including the fabrication of uranium and 
plutonium weapons components. Recently, Seversk was selected to be the 
site for a planned facility that will dispose of 34 metric tons of 
Russia's weapons-grade plutonium by converting it into mixed oxide 
fuel. The planned conversion facility will be built with Department of 
Energy funding. Nonnuclear activities at the city include an oil 
refinery operation.

Seversk is the location of the Siberian Chemical Combine, which is 
responsible for operating the plutonium production reactors. 
Construction of the Siberian Chemical Combine facilities began in 1949; 
and on July 26, 1953, the first output of enriched uranium-235 was 
produced. Since its inception, the Siberian Chemical Combine has housed 
the Siberian Atomic Power Station; a chemical separation plant; 
facilities for plutonium processing, blending, and pit fabrication; an 
enrichment plant; and nuclear waste management facilities. The first of 
the plutonium production reactors at Seversk came online in 1955, and 
by the 1970s five such reactors were operating at the site. Three of 
the reactors were shut down in the early 1990s. The city's two 
remaining weapons-grade plutonium production reactors began operation 
in 1965 and 1968 and continue to provide heat and electricity to 
Seversk and the neighboring city of Tomsk. Currently, the Siberian 
Chemical Combine employs about 15,000 workers, most of whom are highly 
skilled nuclear experts.

Zheleznogorsk: 

Zheleznogorsk is located approximately 2,500 miles east of Moscow and 
about 35 miles north of the city of Krasnoyarsk. As of early 2000, the 
city had a population of 103,000. Formerly known as Krasnoyarsk-26, the 
city was built to house the employees of the Mining and Chemical 
Combine, a complex engaged in producing and processing weapons-grade 
plutonium. Both the city and the Mining and Chemical Combine are 
located on the east bank of the Yenisei River in Siberia. In 1996, the 
residents of Zheleznogorsk voted to remain a closed city in an attempt 
to maintain the clean, village-like quality amidst harsher, more 
environmentally damaged towns. Since the end of the Cold War, the 
technical workforce in Zheleznogorsk has dropped; and the city is now 
in difficult financial straits. Zheleznogorsk has tried to diversify 
its economy through forays into satellite building and television 
assembly.

The three plutonium production reactors operated by the Mining and 
Chemical Combine were built in a huge cavern approximately 250 meters 
beneath a mountain. Over 60,000 prisoners were forced to excavate the 
chambers containing the reactors when work began in 1950, but in 1953 
over 100,000 military construction workers replaced these prisoners. 
Two of the reactors began operating in 1958 and 1961 but were both shut 
down in 1992. A third plutonium production reactor, active since 1964, 
still functions to provide heat and electricity to the city. The Mining 
and Chemical Combine currently employs about 9,500 workers who in 
addition to plutonium production are involved in other nuclear-related 
activities, including the stockpiling of plutonium.

[End of section]

Appendix II: Scope and Methodology: 

We performed our review of DOE's Elimination of Weapons-Grade Plutonium 
Production program at DOE's offices in Germantown, Maryland; DOE 
headquarters in Washington, D.C.; the Defense Threat Reduction Agency 
in Ft. Belvoir, Virginia; the Department of State (State) in 
Washington, D.C.; the National Security Council in Washington, D.C.; 
the Nuclear Regulatory Commission in Rockville, Maryland; and Moscow, 
Seversk, and Zheleznogorsk, Russia.

To assess the progress of DOE's recent efforts to shut down Russia's 
three remaining plutonium production reactors, we reviewed documents 
and had discussions with officials from the Department of Defense 
(DOD); DOE; State; the National Security Council; the Nuclear 
Regulatory Commission; the Pacific Northwest National Laboratory 
(PNNL); the National Energy Technology Laboratory; the U.S. Trade and 
Development Agency; DOE's U.S. contractors--Washington Group 
International (WGI) and Raytheon Technical Services (Raytheon); and a 
number of nongovernmental entities, including nonproliferation and 
fossil fuel experts. In September 2003, we visited Russia to interview 
Russian officials and to see the sites for the replacement fossil fuel 
plants DOE plans to fund. While in Moscow, we spoke with officials from 
the Ministry of Atomic Energy of the Russian Federation; Rosatomstroi; 
the Kurchatov Institute, a leading Russian nuclear design institute; 
and Gosatomnadzor, the Russian nuclear regulatory agency. These 
officials provided Russia's views of DOE's program to build replacement 
fossil fuel plants and its efforts to shut down the reactors. We 
visited Zheleznogorsk and spoke with officials from the Mining and 
Chemical Combine, the city government, the planned fossil fuel plant, 
and the operators of the reactor. We toured the site of the planned 
fossil fuel plant and observed the current condition of the buildings 
at the site. We visited Seversk and interviewed officials from the 
Siberian Chemical Combine, the city government, operators of the 
reactors, and operators of the existing fossil fuel plant that DOE 
plans to refurbish. We toured the site of the existing fossil fuel 
plant and observed its current condition.

To assess DOE's management of the program we examined documents from 
DOE and DOE's U.S. contractors--WGI and Raytheon. We interviewed 
officials from DOE's Office of Engineering and Construction Management 
and from the Elimination of Weapons-Grade Plutonium Production program. 
In addition, while in Russia, we obtained views on DOE's management of 
the program from a number of Russian officials from the Ministry of 
Atomic Energy of the Russian Federation; Rosatomstroi; the Kurchatov 
Institute; Gosatomnadzor; the Mining and Chemical Combine; the Siberian 
Chemical Combine; and the city governments of Zheleznogorsk and 
Seversk.

To identify challenges DOE faces in implementing its program, we 
examined documents from DOE, the Nuclear Regulatory Commission, PNNL, 
the National Energy Technology Laboratory, DOE's U.S. contractors--WGI 
and Raytheon, and several nongovernmental entities including 
nonproliferation and fossil fuel experts. To describe the proposed 
upgrades DOE planned to fund to improve the safety of the reactors 
while replacement fossil fuel plants were being built, we reviewed 
documents from DOE, the Nuclear Regulatory Commission, and PNNL. We 
also interviewed nuclear safety officials from DOE, the Nuclear 
Regulatory Commission, the Department of State, and PNNL.

To determine the amount of money spent on U.S. efforts to eliminate 
weapons-grade plutonium production in Russia prior to the program's 
transfer from DOD to DOE in December 2002, we analyzed documents and 
spoke with officials from DOE, DOD, the Department of State's 
Nonproliferation and Disarmament Fund, the U.S. Trade and Development 
Agency, PNNL, and the Nuclear Regulatory Commission. Dollar amounts for 
the historical spending on these efforts were adjusted to constant 
fiscal year 2003 dollars to reflect trends in inflation over time. 
Because they are being used for background purposes only, we did not 
assess the reliability of these historical data.

To determine how much DOE had spent through December 31, 2003 on its 
efforts to eliminate weapons-grade plutonium production in Russia and 
DOE's projected costs to implement the program, we reviewed DOE's cost 
and schedule estimates for the replacement fossil fuel plants, 
interviewed appropriate agency officials, and posed a number questions 
to DOE to determine the reliability of the financial data provided to 
us. We determined that the data were sufficiently reliable for the 
purposes of this report based on work we performed to assure the data's 
reliability. Specifically, we (1) met numerous times with program 
officials to discuss these data in detail; (2) obtained from key 
database officials responses to a series of questions focused on data 
reliability covering issues such as data entry access, internal control 
procedures, and the accuracy and completeness of the data; and (3) 
added follow-up questions whenever necessary.

We conducted our review between June 2003 and April 2004 in accordance 
with generally accepted government auditing standards.

[End of section]

Appendix III: The Plutonium Production Nuclear Fuel Cycle: 

Plutonium is a byproduct of the nuclear fuel cycle and is produced by 
all nuclear reactors. Weapons-grade plutonium, however, contains a high 
content of plutonium-239, which is the most suitable isotope for use in 
nuclear weapons. Plutonium of this type is formed in the Russian 
production reactors as a component of highly radioactive spent reactor 
fuel. Although at this point the plutonium is relatively protected 
against proliferation because it is diluted and surrounded by the 
highly radioactive spent fuel, it cannot be safely stored for long 
periods in this form at the "wet storage" areas at the reactors to 
preclude corrosion and cracking in the aluminum fuel cladding. The 
plutonium is taken to another facility where it is chemically separated 
from the spent fuel in an operation called "reprocessing." There is 
also an optimal time to reprocess the spent nuclear fuel: reprocess too 
soon and the fuel is highly radioactive, reprocess too late and the 
fuel can contaminate the spent fuel pool. Although the reprocessed fuel 
requires containment and is easily incorporated into weapons, it is 
also relatively easier and less expensive to store than spent fuel. 
Figure 3 illustrates the plutonium production cycle.

Figure 3: Nuclear Fuel Cycle Resulting in the Production of Weapons-
Grade Plutonium: 

[See PDF for image] 

[End of figure] 

[End of section]

Appendix IV: Time Line Showing the History of Russia's Remaining 
Plutonium Production Reactors and Efforts to Bring About Closure: 

Figure 4: Russian Plutonium Production Reactor Time Line: 

[See PDF for image]

[End of figure]

[End of section]

Appendix V: Additional Information About DOE's Management Plan for the 
Program: 

Figure 5 shows the project acquisition process and critical decision 
(CD) points used in the DOE order 413.3 program management structure, 
which DOE has adopted for the program.

Figure 5: DOE Order 413.3 Project Acquisition Process and Critical 
Decisions: 

[See PDF for image]

[A] To the degree appropriate to initiate construction as scheduled.

[End of figure]

As figure 5 shows, the five CD points are: (1) CD-0, approve mission 
need; (2) CD-1, approve preliminary baseline range; (3) CD-2, approve 
performance baseline; (4) CD-3, approve start of construction; and (5) 
CD-4, approve start of operation or project closeout. Figure 5 also 
shows the prerequisite documentation and project milestones, such as 
the acquisition and project execution plans, which must be provided 
before critical decision approval can be granted. DOE officials believe 
that this management approach will help improve program oversight and 
accountability. The fossil fuel plant construction projects at Seversk 
and Zheleznogorsk gained approval of mission need (CD-0) from the 
Deputy Secretary of Energy in December 2002. DOE officials told us that 
the Seversk project would proceed to CD-1 in April/May 2004 and to CD-
2 near the end of fiscal year 2004. The Zheleznogorsk project is 
expected to move to CD-1 in August 2004 and to CD-2 in the second 
quarter of fiscal year 2005.

[End of section]

Appendix VI: Description of a Coal-Fired Power Plant: 

This appendix describes how electricity and heat are produced by a 
coal-fired power plant. Although the plant described is not identical 
to ones that will be constructed in Russia, the description is generic 
and can generally be applied to all coal-fired power plants. Figure 6 
shows how electricity is produced by a coal-fired power plant.

Figure 6: Coal-Fired Power Plant: 

[See PDF for image]

[End of figure]

Coal is pulverized into a fine powder as it leaves the coal bin. That 
powder is blown into a boiler where it is ignited. The walls of the 
boiler contain miles of tubing, through which water is circulated. Heat 
from the burning coal turns the water into steam. The steam passes 
through piping to a turbine. The steam is directed against blades of 
the turbine causing it to spin. The turbine shaft turns, rotating the 
generator, which creates electricity. After the steam is directed 
against the blades, it goes to a condenser beneath the turbine. Cool 
water in the condenser turns the steam back into water. The water is 
pumped back into the boiler tubes to be heated into steam again. Large 
fans blow air into the boiler to support the combustion of coal. Some 
of the air is directed to the pulverizer where it helps dry the coal 
and carry it to the boiler. Coal ash drops to the bottom of the boiler 
for disposal. Hot gases escape from inside the boiler. Impurities are 
removed from these gases through scrubbing systems before they are 
released through the stack.

[End of section]

Appendix VII: Description of DOE's Planned Nuclear Safety Upgrades: 

As part of the March 2003 reactor shutdown agreement signed by DOE and 
the Ministry of Atomic Energy of the Russian Federation, DOE pledged to 
improve the safe operation of Russia's three remaining plutonium 
production reactors until they can be shut down. Prior to Russia's 
decision to reject DOE assistance to improve the safety of the 
reactors, DOE had allocated $21 million to support 28 safety upgrade 
projects including fire safety system improvements, enhancements to 
emergency electrical power systems, and risk assessments. DOE planned 
to complete the safety upgrades within 24 months in order to improve 
the safety of the reactors during their remaining lifetime. To oversee 
the safety upgrade projects, DOE selected PNNL, which had managed prior 
efforts under DOD to modify the reactors' cores and was thus familiar 
with the reactors and their design and safety problems.

DOE selected the safety upgrade projects after determining that none of 
them would extend the operating life of the reactors. DOE chose the 28 
projects out of a larger list of 40 projects that Russian reactor 
officials submitted. According to DOE and PNNL officials, some of the 
reactor upgrades that Russia initially proposed were rejected because 
they were potentially life extending or would require too much time to 
implement. For example, DOE rejected Russian upgrades to improve the 
primary coolant pipes of the reactors due to concerns that such 
improvements would be life extending.

Table 2 provides information about each of DOE's planned upgrades to 
improve the safety of Russia's three plutonium production reactors.

Table 2: DOE's Planned Nuclear Safety Upgrade Projects: 

Dollars in thousands.

Project name: Control and Protection System; 
Location: Zheleznogorsk ADE-2[A]; 
Estimated cost: $$1,090; 
Responsible Russian organization: Mining and Chemical Combine; 
Project description: Upgrade the sensors and scram logic for the 
Control and Protection System to improve the scram reliability upon 
demand.

Project name: Emergency Electrical Power Supply; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $650; 
Responsible Russian organization: Mining and Chemical Combine; 
Project description: Improve reliability of the Emergency Electrical 
Power Supply System by replacing aging batteries.

Project name: Graphite Stack Stabilization; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $1,290; 
Responsible Russian organization: Mining and Chemical Combine; 
Project description: Stabilize graphite stack by ensuring the control 
rods will insert rapidly during a scram.

Project name: Strain Gauge Monitoring System; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $520; 
Responsible Russian organization: Mining and Chemical Combine; 
Project description: Add a strain gauge monitoring system to fuel 
channel connections (or "goose necks") to ensure against progressive 
degradation in selected primary system components.

Project name: Fire protection for Emergency Electrical Power Supply; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $970; 
Responsible Russian organization: Mining and Chemical Combine; 
Project description: Improve reliability Emergency Electrical Power 
Supply System by replacing deteriorating electrical insulation.

Project name: Safety Analysis Report chapter 4 and system reliability; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $410; 
Responsible Russian organization: OKBM; 
Project description: Perform accident analysis on the upgraded reactor 
plant as required for a Safety Analysis Report.

Project name: Safety Analysis Report additional chapters; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $500; 
Responsible Russian organization: OKBM; 
Project description: Develop other Safety Analysis Report chapters to 
obtain a complete report for the upgraded plant.

Project name: Emergency communications; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $390; 
Responsible Russian organization: Mining and Chemical Combine; 
Project description: Replace obsolete emergency communications 
equipment with a modern system capable of reliably functioning in the 
event of an accident.

Project name: Emergency Core Cooling System; 
Location: Seversk ADE-4; 
Estimated cost: $900; 
Responsible Russian organization: Kurchatov Institute & OKBM; 
Project description: Improve the response of the Emergency Core 
Cooling System by allowing rapid access to the emergency water 
inventory and by properly allocating this inventory in the event of a 
loss of coolant accident.

Project name: Subcritical Reactivity Monitoring System; 
Location: Seversk ADE-4; 
Estimated cost: $640; 
Responsible Russian organization: Siberian Chemical Combine & Kurchatov Institute; 
Project description: Install a subcritical reactivity monitoring system 
to monitor subcritical reactivity of reactor during refueling outages 
to prevent unplanned reactor power additions.

Project name: Safety Analysis Report chapter 4; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $260; 
Responsible Russian organization: OKBM; 
Project description: Perform accident analysis on the upgraded reactor 
plant as required for a Safety Analysis Report.

Project name: Safety Analysis Report additional chapters; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $510; 
Responsible Russian organization: OKBM; 
Project description: Develop Safety Analysis Report chapters to obtain 
a complete report for the upgraded plant.

Project name: Probabilistic Risk Assessment; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $310; 
Responsible Russian organization: OKBM; 
Project description: Modify Probabilistic Risk Assessment to reflect 
the reactor plant with safety upgrades.

Project name: Probabilistic Risk Assessment; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $310; 
Responsible Russian organization: OKBM; 
Project description: Modify Probabilistic Risk Assessment to reflect 
the reactor plant with safety upgrades.

Project name: Safety Code Verification Testing; 
Location: All three reactors (ADE-2, ADE-4, & ADE-5); 
Estimated cost: $710; 
Responsible Russian organization: OKBM; 
Project description: Perform cold experiments to benchmark safety 
codes on the actual configurations that will be found in accidents.

Project name: Safety Computer Codes; 
Location: All three reactors (ADE-2, ADE-4, & ADE-5); 
Estimated cost: $390; 
Responsible Russian organization: OKBM; 
Project description: Obtain modern codes and employ them in accident 
analyses required for chapter 4 of the Safety Analysis Report.

Project name: Emergency Core Cooling System Valve Replacement and Loop 
Separation; 
Location: Seversk ADE-4; 
Estimated cost: $2,320; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Upgrade reactor-cooling systems to reduce 
vulnerability to loss of coolant accidents resulting from major 
boundary failures.

Project name: Emergency Core Cooling System Equipment Procurement; 
Location: Seversk ADE-5; 
Estimated cost: $900; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Procure equipment needed for upgrade of Emergency
Core Cooling System of ADE-5.

Project name: Emergency Electrical Power Supply; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $610; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Improve reliability of the Emergency Electrical 
Power Supply System by replacing aging batteries and eliminating 
accident-prone environments.

Project name: Control and Protection System; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $770; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Improve the reliability of the control and 
protection system to allow more reliable detection of over-power 
transients.

Project name: Fire Protection for Emergency Electrical Power Supply; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $640; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Improve the reliability of the Emergency 
Electrical Power Supply System by replacing deteriorating electrical 
insulation.

Project name: Passive Protection Systems; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $320; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Verify the performance of passive protection 
devices to ensure that they will function as required in an accident 
situation.

Project name: Accident Management Manuals; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $340; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Upgrade Accident Management Manuals to improve 
operator response.

Project name: Process Ventilation System; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $2,830; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Upgrade Process Ventilation System so that it has 
the capacity to retain airborne fission products in the event of fuel 
melting and multiple fuel channel ruptures.

Project name: Emergency communications; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $250; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Replace obsolete emergency communications 
equipment with a modern system capable of reliably functioning in the 
event of an accident.

Project name: Ejected fuel element shielding removal; 
Location: Seversk ADE-4 and ADE-5; 
Estimated cost: $260; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Remove iron shot used to cover four ejected fuel 
elements from a 1999 fuel loading accident.

Project name: Emergency Core Cooling System review; 
Location: Seversk ADE-4 and ADE- 5; 
Estimated cost: $130; 
Responsible Russian organization: Siberian Chemical Combine; 
Project description: Review the design and operation of the N-Reactor 
Emergency Core Cooling System to develop insights into preferred 
operating approaches.

Project name: Accident Management Manuals; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $290; 
Responsible Russian organization: Mining and Chemical Combine; 
Project description: Upgrade Accident Management Manuals to improve 
operator response.

Project name: Accident Steam Dump System; 
Location: Zheleznogorsk ADE-2; 
Estimated cost: $1,800; 
Responsible Russian organization: Mining and Chemical Combine; 
Project description: Upgrade system to increase capacity of steam 
rejection system to ensure against steam over- pressures and mechanical 
damage to primary piping under accident conditions. 

Source: DOE.

[A] The Russian acronym used to identify the three remaining plutonium 
production reactors is "ADE." ADE-2 refers to the reactor at 
Zheleznogorsk and ADE-4 and ADE-5 refer to the reactors at Seversk.

[End of table]

[End of section]

Appendix VIII: GAO Technical Analysis of the Safety Problems Associated 
with Russia's Three Plutonium Production Reactors: 

Russia's three remaining weapons-grade plutonium production reactors 
are among the most dangerous reactors currently operating in the world. 
All three of the reactors were built using old designs derived from the 
original reactor run by Enrico Fermi in the 1940s. According to 
officials from MINATOM, the Russian nuclear regulatory agency 
Gosatomnadzor, and the Kurchatov Institute--the leading civilian 
nuclear research institute in Russia--the reactors must be shut down by 
2010.[Footnote 20] However, the reactor managers at Seversk believed 
that the continuous repairs to the reactors over the years are 
increasing the operating life and that further safety upgrades could 
allow the reactors to operate until 2014. In our view, all three 
reactors are showing the wear of having been run for a very long time 
at very high output, and all have had accidents--some as recently as 5 
years ago.

The safety risks posed by these reactors are a function of three 
factors: (1) all three reactors have been running at a very high 
output, producing both high temperatures and high neutron flux (the 
number of neutrons passing through a sphere one square-centimeter in 
cross-section during a unit of time) for their entire lives; (2) all 
three reactors have run approximately twice as long as they were 
originally designed to operate; and (3) none of these reactors meet 
current reactor safety standards. The danger that these reactors 
present is the risk of a catastrophic reactor failure--such as a loss 
of coolant accident--which would result in a fire expelling the highly 
enriched uranium fuel and its fission byproducts such as plutonium and 
strontium-90, all of which are highly toxic and carcinogenic. The 
danger from such a fire is that radioactive particles would be 
dispersed and breathed into the body, causing either kidney damage from 
particles of uranium or cancer from particles of strontium-90 and 
plutonium.

All three reactors are designed to run at rated power, which is the 
original power output level of a reactor in terms of temperature output 
(t), and electrical output (e). According to Gosatomnadzor, the rating 
for the reactors is 800 megawatts (t) each. A Gosatomnadzor official 
informed us that the reactors could run at 20 percent higher than their 
original rating, or at 960 megawatts (t), and that the reactors had run 
at an elevated level during a 20-year period. In our opinion, 
Gosatomnadzor's estimates are probably conservative because, based on 
the amount of fuel that can be used by the reactors and the fuel type 
that has been used, each reactor has the ability to run at a power 
level up to 2,500 megawatts (t) and has been run at a power level of at 
least 2,000 megawatts. If these reactors were originally designed to 
run at 800 megawatts (t), then they may have run at three times their 
original design rating. This will definitely shorten the operating life 
of the reactors, which makes their continued operation risky.

Russian officials that we met disagree over both the original life 
spans of the reactors and how much longer the reactors can be operated 
before the risk of a catastrophic failure becomes too high. According 
to officials from MINATOM, Gosatomnadzor, and the Kurchatov Institute, 
the original life span for each of the reactors was 25 years. However, 
according to the operators of the three Russian reactors, the original 
reactor life spans are 20 years. All three reactors have operated for 
approximately 40 years, or roughly twice as long as originally 
designed. Gosatomnadzor confirmed that the design life is a function 
of: (1) the graphite cladding--which forms the outer, protective layer 
of the fuel elements and (2) the steel containment that surrounds the 
core. If it is assumed that the reactors have operated at 2,500 
megawatts (t) for 20 years, then the original design life of 20 years 
could be reduced by up to 10 years, since the super heating of the 
graphite and the high neutron flux at the core center will cause much 
higher degradation than if the reactors were run at their rated power 
levels for their entire lives. These two factors will make the 
integrity of both the graphite cladding and the steel containment 
highly questionable and will increase the risk of a catastrophic 
failure of the reactors.

None of the reactors meets current Russian, U.S., or international 
safety standards because they lack modern safety controls and are 
therefore dependent on direct operator intervention for both monitoring 
and safety. MINATOM, Gosatomnadzor, and the Kurchatov Institute told us 
that the personnel working at the reactors pose a safety threat because 
the quality of the reactor staff is weakening due to attrition and old 
age. According to Gosatomnadzor, the average age of reactor workers is 
50, and the reactors are experiencing an increased number of temporary 
emergency shutdowns due to operator error, not the technology itself. 
Conversely, reactor officials at Seversk were concerned that the 
attrition of older workers will result in the loss of the knowledge and 
the ability of people that have become familiar with the reactors over 
many years. Although the Russian organizations disagree over the cause 
of the increased rate of accidents, there is a consensus that workforce 
attrition will have an impact on the safe operation of the reactors 
because it is likely that the reactor workers are the first and last 
line of defense against reactor accidents.

[End of section]

Appendix IX: Comments from the Department of Energy: 

National Nuclear Security Administration:

Department of Energy 
National Nuclear Security Administration 
Washington, DC 20585:

MAY 13 2004:

Mr. Gene Aloise:
Acting Director: 
Natural Resources and Environment 
General Accounting Office:
441 G St, NW: 
Washington, D.C. 20548:

Dear Mr. Aloise:

The National Nuclear Security Administration (NNSA) appreciates the 
opportunity to have reviewed the General Accounting Office's (GAO) 
draft report, "NUCLEAR NONPROLIFERATION: DOE's Effort to Close Russia's 
Plutonium Production Reactors Faces Challenges, and Final Shutdown Is 
Uncertain." We understand that the Chairman, Subcommittee on Emerging 
Threats and Capabilities, Senate Committee on Armed Services, requested 
GAO to (1) determine what progress has been made toward achieving the 
goal of shutting down these reactors and assess if the dates for the 
planned shut down are achievable and realistic; (2) determine what 
obstacles the program faces that could delay the implementation and 
completion of the program and what measures the NNSA plans to use to 
address such obstacles; (3) assess the budget, management, planning and 
implementation of the program; and (4) assess the extent to which any 
safety upgrades provided by NNSA for these reactors may prolong their 
life, thereby possibly delaying their shut down.

Based on your work you have concluded that we should reach agreement 
with the Russians on the steps that must be taken to permanently shut 
down the reactors and the conditions necessary to complete the fossil 
fuel plants; amend the reactor shutdown agreement to reflect our 
revised completion dates for the fossil fuel plants; and to develop a 
plan in conjunction with the Russians, to address the problem of 
employing nuclear workers who will lose their jobs when the reactors 
are closed.

The Department agrees with several of the recommendations and is moving 
forward with implementation. We are starting work with the Russians on 
a Reactor Shutdown Plan, which will tie Russian steps toward permanent 
shutdown of the three remaining plutonium production reactors to 
specific milestones in the construction of the fossil fuel replacement 
plants. Another action is working both internally and with potential 
international partners to address the concern about displaced workers. 
At Seversk, the 
situation is particularly acute in that actions may need to start as 
early as next year if the Russians agree to an early shutdown of one of 
the Seversk reactors once a mutually agreed stage of construction is 
reached. Please be aware also that Ambassador Brooks is putting 
pressure on all programs within the National Nuclear Security 
Administration to reduce uncosted balances. If events proceed as 
planned, major construction should begin at Seversk in FY 2005. This 
would allow us to obligate and begin costing a significant portion of 
the Project's remaining funds. However, I do caution that, in order for 
the Project to move forward on the aggressive schedule planned, the 
requested funding needs to be provided by Congress.

There are two major points where we disagree with the position stated 
in the draft Report and request that you consider our concerns during 
your final reviews. The first point is the conclusion reached that 
Russia's reluctance to consider extending the summer outage to reduce 
plutonium production and their assumption of the responsibility for the 
nuclear safety upgrades calls into question their commitment to non-
proliferation. As you will see in our enclosed detailed comments, we do 
not share this view. In fact, a cogent argument can be made to draw the 
opposite conclusion. They did not want to consider the extended summer 
option because they thought it would detract from the effort to 
complete the fossil construction and resulting reactor shutdown as soon 
as possible. They also are still holding out the possibility that one 
reactor at Seversk may be shutdown early as referenced above. We see 
the Russian assumption of the nuclear safety work with mixed emotions. 
On the one hand, I am confident that our experts would have provided 
upgrades of known quality and capability. On the other hand, your 
Report argues for more Russian contributions to the Project and this is 
such an effort on their part. Their assumption of this work will not 
impact the fossil construction schedule.

Our other concern, that we should seek further Russian cost sharing, is 
a concern, particularly if it is in areas, which have schedule 
implications. One of their contributions is the Zheleznogorsk site. As 
your Report notes, this was a long, difficult process, which caused 
delays for our side. We are also concerned that we cannot delay the 
schedule on this critical nonproliferation project while negotiating 
and awaiting cash contributions for the program. While we will explore 
this consideration, we will also evaluate the risk of this alternative 
to the schedule adherence and overall cost effectiveness for the U.S. 
tax payer.

As stated, we have enclosed detailed comments related to this draft 
report. Technical questions may be answered by Dr. James Turner or Mr. 
Kenneth Chancey.

Should you have any questions related to this response, please contact 
Richard Speidel, Director, Policy and Internal Controls Management at 
202-586-5009.

Sincerely,

Signed by: 

Michael C. Kane: 
Associate Administrator for Management and Administration:

Enclosure:

cc: Deputy Administrator for Defense Nuclear Nonproliferation, NA-20:

NNSA's Comments on GAO Draft Report; NUCLEAR NONPROLIFERATION: DOE's 
Effort to Close Russia's Plutonium Production Reactors Faces 
Challenges, and Final Shutdown is Uncertain (GAO-04-662):

In summary, DOE finds the draft report to be a balanced evaluation of 
its Elimination of Weapons Grade Production (EWGPP) Program and the 
challenges faced in shutting down the last three plutonium production 
reactors in the Russian Federation. DOE takes issues, however, with 
certain conclusions in the report; its concerns on these conclusions 
are also detailed below.

RESPONSES TO RECOMMENDATIONS (pages 35/36).

Recommendation 1. Continue to pursue the option of extending summer 
outage periods at the reactors as a way to realize the immediate 
nonproliferation benefits of reduced plutonium production in Russia.

DOE Response. DOE was disappointed that Russia rejected a proposal to 
study ways to reduce the amount of plutonium produced by the reactors 
in the interim before they are shut down. As discussed elsewhere in the 
draft report (page 19), DOE had obtained funds to finance a study of 
three options for reducing near-term plutonium production. We believe 
that the primary reason that Russian officials rejected the proposal 
was that verifying production reduction would require at least limited 
access by DOE representatives to the nuclear facilities. DOE will seek 
clarification from Russian representatives regarding the access issue 
and investigate ways to mitigate Russian concerns with the hope of 
reaching agreement for extending summer outages. In any case, DOE will 
continue to pursue the proposal for early Russian shutdown of one of 
the Seversk reactors once an agreed stage of refurbishment of the 
fossil plant is completed and operating.

Recommendation 2. Reach agreement with Russia on the steps that must be 
taken to permanently shutdown the reactors and the specific 
requirements must be met to complete the replacement fossil fuel 
plants.

DOE Response. DOE has reached agreement with OKBM (the Russian reactor 
design agent), to conduct a technical and economic study of shutdown 
requirements for the three reactors. The study will tie completion of 
these requirements to milestones in the fossil projects. The contract 
for OKBM is currently being reviewed through the Russian interagency 
process. We expect to initiate the study by early summer and to have it 
completed by early fall 2004. This study will include engineering 
assessments of radiation systems, instrumentation and control 
equipment, metal structures, and concrete and graphite components. It 
will also verify closure techniques for specific systems. Lastly, it 
will contain a schedule of milestones for the shutdown process that can 
be tied to construction and 
refurbishment of the replacement fossil fuel plants and cost estimates 
for shutdown options. GAO acknowledges DOE's progress on the reactor 
shutdown issue later in the draft report (page 23). DOE also plans to 
develop a workforce transition plan directly with FAAE.

Recommendation 3. Identify any additional costs that may surface as a 
result of refining the scope of work associated with shutting down the 
reactors and completing the replacement fossil fuel plants and revise 
cost and schedule estimates for the program accordingly.

DOE Response. As discussed in the draft report (page 13), DOE is using 
DOE Order 413.3 to conduct the program. This process requires projects 
to go through a series of five critical decision points. As part of 
this process, program management is developing final cost estimates for 
construction of the Zheleznogorsk plant and refurbishment of the 
Seversk plant. As these estimates are refined, senior Department 
management will be advised and program documentation modified 
appropriately.

Recommendation 4. Amend the March 2003 reactor shutdown agreement as 
soon as practicable to accurately reflect DOE's more realistic shutdown 
dates for Russia's three plutonium production reactors.

DOE Response. DOE will seek to modify the reactor shutdown implementing 
arrangement to reflect revised completion dates once project designs 
are completed. This effort will be conducted in conjunction with 
Department of State. GAO acknowledges that DOE and State Department 
officials plan such action later in the draft report (page 23). It 
should be noted that at the conclusion of negotiations on the 
Implementing Agreement both sides were explicitly aware that the dates 
were "placeholders" and would be updated once sufficient information 
was available.

Recommendation 5. Create a specific plan and take steps to formally 
coordinate DOE's program to assist Russia's closure of the three 
plutonium production reactors with the Department's effort to find jobs 
for displaced Russian nuclear workers through the Russian Transition 
Initiatives.

DOE Response. The DOE offices responsible for the EWGPP Program and the 
Russian Transition Initiatives (RTI) established a Coordinated Working 
Group in November 2003 and are finalizing a joint plan to coordinate 
efforts to identify projects that will assist with workforce transition 
in the cities of Seversk and Zheleznogorsk, while also helping to 
transition the economies of those cities away from their reliance on 
WMD related activities. Specific efforts are discussed in the response 
to Recommendation 6.

Recommendation 6. Take the lead in developing a comprehensive plan that 
focuses on integrating U.S. efforts to employ Russian nuclear workers 
in the cities of Seversk and Zheleznogorsk.

DOE Response. DOE recognizes that Russian officials believe that 
finding work for displaced nuclear workers is their highest priority 
(page 25). To this end, EWGPP and NNSA's Russian Transition Initiatives 
(RTI) are finalizing a joint coordination plan to ensure that as EWGPP 
program milestones are met, the worker transition challenge is 
addressed in a systematic and comprehensive way. The first priority of 
this plan will be to establish a U.S>-Russian joint committee that will 
include representation from the closed cities. This committee would 
focus on data collection with respect to the number of displaced 
workers, the timing for their displacement, their skills, their weapons 
knowledge, and other key demographic information. This plan will be the 
blueprint to guide the establishment of a significant RI presence in 
Seversk, and a ramp-up of RTI activity in Zheleznogorsk. This plan will 
outline how DOE will build and apply its unique technical expertise and 
experience in downsizing and in pursuing infrastructure transformation 
in the close cities to ensure a smooth transition in the two cities 
DOE is also sponsoring an international participation initiative that 
will provide Russian organizations the opportunity to develop and 
present projects to the international community for sponsorship. As 
stated later in the draft report (page 26), DOE has arranged for the 
Government of Switzerland to host a conference of interested 
participants in October 2004. This effort is being coordinated with the 
Russian Transition Initiatives program . We expect that Russian 
organizations will present about 25 project proposals to 10 to 15 
countries at the Swiss conference. This type of initiative was 
previously used successfully by the Department in obtaining support for 
closure of the Kazakhstan BN-350 Breeder Reactor.

In addition to these Departmental activities, one of EWGPP's 
contractors has enlisted the support of an international management 
consultant to evaluate commercial projects in the Zheleznogorsk region 
to provide jobs for displaced workers.

Recommendation 7. Consider seeking financial support from Russia to 
construct the replacement fossil fuel plants.

DOE Response. As stated in the draft report (page 31), DOE is concerned 
that relying on Russian financial support for the program will delay 
accomplishment of the critical nonproliferation goal of shutting down 
the three production reactors at the earliest opportunity. However, 
program management will address the issue with Russian officials to 
determine if greater contributions can be obtained. It should be noted 
that the Federal Agency for Atomic Energy (the successor to MinAtom) is 
already making significant contributions. For example, the Agency 
acquired the Zheleznogorsk site and is performing the nuclear safety 
upgrades.

Recommendation 8. Monitor funding requirements to ensure that funds are 
obligated in a timely manner.

DOE Response. Program management is acutely aware of Congressional 
concern about obligation and expenditure rates. The EWGPP Program 
currently has a substantial amount of unobligated funds because (1) $74 
million was transferred with the Program when it was transferred from 
DOD and (2) the projects have not reached the construction phase. 
Initiation of the construction phase of the Seversk project by years 
end will reduce unobligated balances in the short term in FY05 and 
uncosted balances thereafter.

Recommendation 9. Determine whether future funding requirements need to 
be reduced in light of the slow rate of spending to date on the 
program.

DOE response. As discussed in the draft report (pages 9, 27 & 30), the 
cost estimate for the two projects has risen substantially from the 
original estimate of $466 million. This is primarily due to Russian 
inflation since the estimate was developed in 2001. More importantly, 
to meet the aggressive shutdown schedule, particularly for Seversk, DOE 
does not believe that there will be an opportunity to reduce future 
funding requirements. However, DOE will equally aggressively pursue 
cost savings opportunities, which do not adversely affect the schedule.

OTHER COMMENTS AND CLARIFICATIONS:

Draft report statement 1. Russia's recent rejection of its proposal to 
reduce the amount of plutonium being produced by the reactors raises 
serious questions about its commitment to the nonproliferation goal of 
the program (draft report pages 7, 18, 20, & 32).

DOE comment. DOE does not draw the same conclusion GAO does from these 
actions. As discussed in the response to recommendation 1, we believe 
that the primary reason for the Russian action was concern over DOE 
access to nuclear facilities rather than a commitment to the 
nonproliferation goal of the program. This opinion is supported by the 
Russian decision to reject the DOE offer to fund nuclear safety 
upgrades that would have also required access to restricted facilities.

In addition, as stated in the draft report, the Russian letter 
rejecting the plutonium production initiative expressed concern about 
the diversion of resources from the primary goal of building the fossil 
fuel replacement plants. We believe that this reflects Russian 
impatience with the pace of the program as it has moved from a core 
conversion project to a fossil fuel project and from DOD to DOE. One 
Regional Governor may have stated it best when he told one of the U.S. 
contractors that "I have provided you with a site, when are you going 
to start construction?" In summary, we do not see evidence of a lack of 
commitment to nonproliferation goals as much as concerns about socio-
economic issues.

Draft report statement 2. DOE plans to bear full financial 
responsibility for building the replacement fossil fuel plants, which 
will be designed and built by Russia (draft report pages 9&31).

DOE comment. As cited in the draft report, the cost estimate for the 
program has increased substantially from the original estimate of $466 
million. As a result, DOE is in the process of soliciting financial 
support from several nations for the Zheleznogorsk fossil fuel plant. 
To this end, a request for legislative authority to accept direct 
contributions was included in the Department's FY 2005 budget 
submission.

Draft report statement 3. DOE's Assistant Deputy Administrator, Office 
of International Nuclear Safety and Cooperation, told us that he was 
very pessimistic that Russia would perform the (nuclear) safety 
upgrades.

DOE comment. The official quoted would like to clarify. He meant that 
he does not believe that Russian upgrades will be as proactive and 
comprehensive as the PNNL proposal.

Draft report statement 3. NNSA's Assistant Deputy Administrator, Office 
of International Nuclear Safety and Cooperation, told us that he was 
very pessimistic that Russia would perform the (nuclear) safety 
upgrades.

NNSA comment. The official quoted would like to clarify. He meant that 
he does not believe that Russian upgrades will be as proactive and 
comprehensive as the PNNL proposal.

[End of section]

Appendix X: Comments from the Department of State: 

United States Department of State: 
Assistant Secretary and Chief Financial Officer:
Washington, D. C. 20520:

Ms. Jacqueline Williams-Bridgers: 
Managing Director:

International Affairs and Trade:
General Accounting Office: 
441 G Street, N.W. 
Washington, D.C. 20548-0001:

MAY 17 2004:

Dear Ms. Williams-Bridgers:

We appreciate the opportunity to review your draft report, "NUCLEAR 
NONPROLIFERATION: DOE's Effort to Close Russia's Plutonium Production 
Reactors Faces Challenges and Final Shutdown is Uncertain," GAO Job 
Code 360357.

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report.

If you have any questions concerning this response, please contact 
Michael Stafford, U.S. Negotiator, Bureau of Nonproliferation, at 
(202) 647-0258.

Sincerely, 

Signed by: 

Christopher B. Burnham

cc: GAO - Glen Levis 
NP - Andrew Semmel 
State/OIG - Mark Duda 
State/H - Paul Kelly:

Department of State Comments on GAO Draft Report NUCLEAR 
NONPROLIFERATION: DOE's Effort to Close Russia's Plutonium Production 
Reactors Faces Challenges, and Final Shutdown is Uncertain (GAO-04-662, 
GAO Job Code 360357):

The Department of State appreciates the opportunity to review and 
comment on the draft report "Nuclear Nonproliferation: DOE's Effort to 
Close Russia's Plutonium Production Reactors Faces Challenges, and 
Final Shutdown is Uncertain." State believes that certain key 
conclusions in the report are either exaggerated or unwarranted, and 
further believes that the report does not support a judgment that final 
shutdown of the reactors is at risk. State does support all but one of 
the report's recommendations, however, and notes that it is already 
working with the Department of Energy and the Russian Federation to 
implement the steps that GAO recommends. Regarding the one 
recommendation State does not support, that the U.S. seek financial 
support from Russia to construct the replacement fossil fuel plants, we 
continue to believe that, if pursued, this would delay the realization 
of the program's overarching goal --shutdown of the reactors. Instead, 
we are seeking financial support from other countries.

State objects most strenuously to GAO's conclusion that, because the 
Russians: (1) declined to pursue extended outages of the three reactors 
during the summer months prior to their shutdown (which would have 
reduced the amount of plutonium produced before shutdown), and (2) 
declined U.S. assistance for safety upgrades at the reactors prior to 
their shutdown, this indicates a lack of Russian commitment to the 
nonproliferation and safety-related goals of the program, thereby 
making the program "an increasingly risky undertaking."

* In drawing this conclusion, GAO emphasizes only selected parts of each 
Russian decision, providing an incomplete and misleading picture. While 
declining extended summer outages, the Russians at the same time agreed 
to pursue early shutdown of two of the three reactors, which would 
likewise serve the nonproliferation goal of reducing the amount of 
plutonium produced. Similarly, while they declined DOE assistance for 
safety upgrades, the Russians said they would finance safety upgrades 
themselves.

* Furthermore, GAO's conclusion that the Russian decisions reflected a 
lack of commitment to nonproliferation and safety is based on 
speculation by unidentified DOE technicians, whose views are not shared 
by either the State Department or DOE policy-level officials who dealt 
directly with the Russians on these policy issues. The preponderance of 
evidence, in our view, indicates strongly that the Russian decisions 
were motivated by their concerns about opening operating plutonium 
production reactors to U.S. officials to monitor implementation of 
summer outages or safety upgrades. The Russians consider such reactors 
to be highly sensitive national security facilities. Thus, we believe 
these decisions reflect Russian security considerations rather than 
their attitude toward nonproliferation or safety. In fact, the Russians 
continue to support those nonproliferation and safety-related elements 
that would not require monitoring of operating reactors, i.e., early 
shutdown and Russian-funded safety upgrades.

* Finally, and most importantly, the key to the program's success is the 
Russian commitment to the agreed outcome --shutdown of the reactors - -
not whether they may or may not share our reasons for that:

commitment. On this score, there are important reasons to remain 
confident in the Russian commitment. First, Russia does not need the 
plutonium produced by the reactors; in fact, we have been monitoring 
all such plutonium produced since 1995 to ensure that it remains in 
storage and unused. Second, the Russians themselves bear the greatest 
risk that these extremely unsafe reactors will suffer a catastrophic 
accident, a danger they take seriously, as we do. Third, absent this 
program, Russia would be hard-pressed to find the resources to provide 
alternative means of heat and electricity to the surrounding 
communities when the reactors would eventually be forced to shut down 
due to graphite stack deterioration. Therefore, implementation of the 
program is strongly in Russia's interests. Furthermore, the 1997 
agreement that established the program, the Plutonium Production 
Reactor Agreement (PPRA), was signed at the highest levels of the two 
governments and linked to the Cooperative Threat Reduction (CTR) 
program. The consequences of any Russian decision to renege on the 
commitments therein, which would threaten the entire range of CTR 
assistance (approximately $1 billion per year) and more, serve as a 
powerful disincentive for such a prospect. Russian actions to date to 
implement this program reinforce our belief that they remain strongly 
committed to achieving the agreed outcome.

State also objects to GAO's conclusion that final shutdown of the 
reactors is uncertain because the PPRA and its implementing agreement 
are insufficiently clear regarding the steps to be taken to permanently 
and irreversibly shut them down. The agreements are very explicit in 
obligating the Russians to shut the reactors down as soon as the 
replacement heat and electrical capacity is available, and in 
specifying deadlines for completion of these actions. Specific steps to 
complete creation of the replacement capacities and to effect the 
shutdown are appropriately specified in contracts and other 
implementation plans, and DOE is working with the Russians now to 
formulate these documents. This effort is clearly governed by the 
obligations and deadlines included in the agreements. As for ensuring 
irreversibility, the PPRA is quite clear on the steps to be taken. It 
specifies that, immediately upon their shutdown, the reactors will be 
covered by the monitoring regime applied to the currently shutdown 
reactors. This regime includes placement of seals on critical areas 
throughout the reactors that would have to be broken before the 
reactors could be restarted, and annual monitoring of the reactors to 
ensure that the seals remain intact and that no other steps have been 
taken toward a reactor restart. This regime has been applied to the 
currently shutdown reactors since 1997 with great success in order to 
ensure that their shutdown is irreversible, and we are confident that 
it will work equally well with the final three reactors.

State acknowledges that the deadlines for reactor shutdown currently 
specified in the agreements are no longer consistent with current 
plans, but believes GAO has greatly overstated the implications of this 
fact. When the currently specified deadlines were agreed upon by the 
U.S. and Russia in 2000, they represented our best estimate of the 
earliest dates when replacement fossil plants could be completed. We 
purposely chose ambitious deadlines to ensure that later dates did not 
become an excuse for delaying the program. The Russians and we also 
agreed that, as implementation plans were fleshed out, we would amend 
the agreements to revise the deadlines if it became apparent that the 
specified dates could not be achieved. The Russians and we plan to do 
so once designs are completed, which will give us a firmer basis for 
projecting completion dates. To do so sooner would only make likely 
that we would have to repeat the process once the designs were 
complete. The current situation is thus one that was foreseen by both 
sides, and both sides have agreed to the process of adjustment. There 
is absolutely no reason, therefore, to believe that this is anything 
but a routine adjustment made during program implementation.

State also believes GAO is mistaken when it claims that worker 
displacement has the potential to undermine the program. Russia signed 
the PPRA at the highest level knowing that workers would be displaced 
by shutdown of the reactors and acknowledging that it was ultimately a 
Russian responsibility to address this problem. The U.S. has offered 
assistance, both through existing U.S. programs and by helping the 
Russians to seek aid from other countries, but the Russians have never 
tried to shift the ultimate responsibility from their own shoulders. It 
is clear to both sides that any attempt by Russia to use worker 
displacement as an excuse to renege on their PPRA commitments would 
constitute noncompliance with the agreement and trigger consequences, 
as described above, that would far exceed the cost of dealing with 
displaced workers.

Finally, State disagrees with the GAO recommendation that the U.S. 
consider seeking financial support from Russia to construct the fossil 
fuel plants. As GAO was told, we considered at the program's inception 
various ways in which Russia could provide support, and we concluded 
that any reliance on Russian funding for program elements that were 
critical to the construction schedule was bound to produce delays. This 
was because our long history of cooperation with Russia on related 
projects had shown that Russian funds were invariably provided either 
late or in amounts lower than promised, or both. In this case, that 
would mean that shutdown of the reactors --the overarching purpose of 
this effort --would be delayed. We concluded that avoiding such delays 
was more important than seeking what would surely be limited Russian 
cost-sharing. Instead, we agreed with the Russians that Russia would 
assume responsibility for actions that would not affect the 
construction schedule, including provision of infrastructure, 
decommissioning and dismantlement of the reactors after they were shut 
down, and operation and maintenance of the fossil plants once they were 
completed. State continues to believe that this course best serves our 
interests.

Instead of seeking direct Russian cost-sharing, DOE and State have 
begun efforts, as directed by Congress, to seek cost-sharing by other 
nations, particularly those participating in the Global Partnership on 
Nonproliferation. The highest priority for such participation is 
funding to accelerate completion of the fossil plant, and thus shutdown 
of the reactor, at Zheleznogorsk. It is clear, however, that this 
funding would only accelerate the schedule if it could be provided 
without the delays that would occur if participating nations had to 
negotiate their own bilateral agreements with Russia. To avoid this, 
DOE would need to be able to accept the contributed funds directly and 
channel them to the project through the existing DOE-Minatom 
implementing agreement. DOE is currently not able legally to accept 
funding from sources outside the U.S. government for this program in 
this manner. Thus, legislative relief is needed. Without it, the funds 
would have to go through an entity such as the European Bank for 
Reconstruction and Development, which would use part of the money for 
overhead costs, a charge likely to discourage other countries from 
contributing. With legislative relief, DOE would be able to apply the 
full amount to the program.

DOE has proposed to Congress legislation that would give it the 
necessary authority, applicable only for this program and this purpose. 
State strongly supports the DOE proposal and believes that it is 
critical to realizing the paramount goal of this program: the earliest 
possible shutdown of the Russian reactors.

State supports GAO's other recommendations, and the Administration is 
taking or planning the following actions:

* As part of the implementation process, DOE and Minatom are currently 
developing a plan that fleshes out the specific steps that will be 
taken to put the fossil plants into operation and, simultaneously, 
effect shutdown of the reactors, in accordance with the obligations and 
deadlines specified in the PPRA and its implementing agreement.

* State plans to negotiate an amendment to the PPRA, per our agreement 
with the Russians, to reflect the new projected completion dates for 
the fossil plants, once the plant designs are completed. We anticipate 
that this will occur within the next year.

* State and DOE plan to develop a coordinated effort among the relevant 
programs, including the Russian Transition Initiatives program and the:

International Science and Technology Center program, to assist Russia 
in addressing the worker displacement problem. In addition, State and 
DOE will continue helping Russia in its efforts to seek other 
international aid for this purpose.

[End of section]

Appendix XI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Jim Shafer, 202-512-3841.

Acknowledgments: 

In addition to the individual listed above, R. Stockton Butler, Nancy 
Crothers, Glen Levis, Steve Rossman, and Keith Rhodes, GAO's Chief 
Technologist, made key contributions to this report.

(360357): 

FOOTNOTES

[1] Weapons-grade plutonium consists of at least 90 percent of the 
isotope plutonium-239. 

[2] Ten 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. In 1992, Russia 
changed the names of the closed cities to which we refer in this 
report: Tomsk-7 became known as Seversk, and Krasnoyarsk-26 became 
known as Zheleznogorsk. For more information on Seversk and 
Zheleznogorsk, see appendix I.

[3] An agreement enters into force the moment all provisions become 
legally binding on its parties. 

[4] The total funding for U.S. efforts to eliminate weapons-grade 
plutonium production in Russia between fiscal years 1994 and 2001 
includes funds provided by DOD, DOE, the U.S. Trade and Development 
Agency, and the Department of State's Nonproliferation and Disarmament 
Fund. The total funding amount has been adjusted to constant fiscal 
year 2003 dollars.

[5] The National Nuclear Security Administration is a separately 
organized agency within DOE that was created in October 1999 with 
responsibility for the nation's nuclear weapons, nonproliferation, and 
naval reactors programs.

[6] MINATOM was downgraded to a noncabinet level agency within the 
Russian bureaucracy in March 2004 by order of the President of Russia. 
Oversight of its operation of defense-related nuclear enterprises was 
transferred to the Ministry of Defense and oversight of its civilian 
nuclear activities was transferred to the newly created Ministry of 
Industry and Energy. DOE officials told us they thought this 
reorganization would not affect the program.

[7] According to the agreement, the two reactors at Seversk will be 
permanently shut down when DOE provides assistance to supply heat and 
electricity at a maximum capacity of up to 1560 gigacalories of steam 
generation per hour and up to 235 megawatts of electricity generation. 
Shutdown of the Zheleznogorsk reactor is to occur when DOE provides 
assistance to supply heat and electrical capacity of up to 660 
gigacalories of steam generation per hour and up to 117 megawatts of 
electricity generation. A gigacalorie is a thermal energy measurement 
equal to one billion calories. A megawatt is a measurement of 
electrical power equal to one million watts. 

[8] Decommissioning of a nuclear power plant is the process of closing 
down a facility followed by reducing residual radioactivity to a level 
that permits the release of property for unrestricted use.

[9] Conceptual design is the concept for meeting a mission need. The 
conceptual design process requires a mission need as an input. Concepts 
for meeting the need are explored and alternatives considered arriving 
at the set of alternatives that are technically viable, affordable, and 
sustainable.

[10] Department of Energy PART [Program Assessment Rating Tool] 
Assessments, Office of Management and Budget (Washington, D.C.: 
February 2004). We recently reported on the Office of Management and 
Budget's Program Assessment Rating Tool in Performance Budgeting: 
Observations on the Use of OMB's Program Assessment Rating Tool for the 
Fiscal Year 2004 Budget, GAO-04-174 (Washington, D.C.: January 2004).

[11] The Department of State's Nonproliferation and Disarmament Fund 
sponsors specific projects that address high-priority opportunities to 
halt the proliferation of weapons of mass destruction and other related 
nonproliferation problems. 

[12] Under the 1997 Plutonium Production Reactor Agreement, once the 
reactors are shut down, they will be sealed and inspected annually by 
U.S. officials to ensure that they remain permanently shut down.

[13] The CTR program was authorized by Congress in 1991. Under this 
authorization, DOD provides assistance to nations of the former Soviet 
Union to (1) destroy their weapons of mass destruction, (2) safely 
store and transport the weapons in connection with their destruction, 
and (3) reduce the risk of the proliferation of such weapons.

[14] Cooperative Threat Reduction: Cooperative Threat Reduction Program 
Liquid Propellant Disposition Project; DOD-2002-154: Department of 
Defense, Office of the Inspector General (Arlington, VA: September 30, 
2002).

[15] Cooperative Threat Reduction: Cooperative Threat Reduction 
Construction Projects; DOD-2004-039; Department of Defense, Office of 
the Inspector General (Arlington, VA: December 18, 2003).

[16] For more information, see U.S. General Accounting Office, Nuclear 
Nonproliferation: Concerns With DOE's Efforts to Reduce the Risks Posed 
by Russia's Unemployed Weapons Scientists, GAO/RCED-99-54 (Washington, 
D.C.: February 19, 1999) and Nuclear Nonproliferation: DOE's Efforts to 
Assist Weapons Scientists in Russia's Nuclear Cities Face Challenges, 
GAO-01-429 (Washington, D.C.: May 3, 2001).

[17] For more information, see U.S. General Accounting Office, Weapons 
of Mass Destruction: State Department Oversight of Science Centers 
Project, GAO-01-582 (Washington, D.C.: May 10, 2001). 

[18] DOE's cost estimates for the replacement fossil fuel plants have 
been rounded. 

[19] We reported on problems with the Shchuch'ye facility in April 
1999. For more detailed information, please see U.S. General Accounting 
Office, Weapons of Mass Destruction: Effort to Reduce Russian Arsenals 
May Cost More, Achieve Less Than Planned, GAO/NSIAD-99-76 (Washington, 
D.C.: April 1999).

[20] DOE officials believe that the 2010 date is administrative and 
provided documentation that indicated the reactors could operate until 
2024.

GAO's Mission: 

The General Accounting Office, the investigative arm of Congress, 
exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability.

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains 
abstracts and full-text files of current reports and testimony and an 
expanding archive of older products. The Web site features a search 
engine to help you locate documents using key words and phrases. You 
can print these documents in their entirety, including charts and other 
graphics.

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order 
GAO Products" heading.

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. General Accounting Office

441 G Street NW,

Room LM Washington,

D.C. 20548: 

To order by Phone: 

Voice: (202) 512-6000: 

TDD: (202) 512-2537: 

Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470: 

Public Affairs: 

Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.

General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.

20548: