NUCLEAR MATERIAL

Agencies Have Sound 

Procedures for 

Managing Exchanges 

but Could Improve 

Inventory Monitoring 

Report to Congressional Requesters

September 2016

GAO-16-713

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-713, a report to 

congressional requesters

September 2016

NUCLEAR MATERIAL

Agencies Have Sound Procedures for 

Managing Exchanges but Could Improve 

Inventory Monitoring

What GAO Found

In the United States, from October 1, 2003, through November 30, 2015, there 

were 817 exchanges of nuclear material that carried obligations to foreign 

partners under nuclear cooperation agreements. These exchanges allowed the 

obligated nuclear material to be transferred between U.S. facilities without 

physically moving it. For example, if a facility had a certain amount of obligated 

nuclear material and another facility had at least the same amount and type of 

unobligated material (which is not subject to the same conditions as obligated 

material), the facilities could exchange the obligations on their material so that 

each facility had a portion of both types of material without physically moving it. 

• Numbers of exchanges. Of the 817 exchanges, 802 were conducted by 

Nuclear Regulatory Commission (NRC)-licensed facilities—private 

companies and other entities involved in commercially producing nuclear 

energy. Of the remaining exchanges, 14 were conducted by contractors that 

run Department of Energy (DOE) laboratories and weapons-production sites, 

and 1 by an NRC licensee that does both commercial and DOE work. 

• Reasons for exchanges. NRC licensees said they conducted exchanges 

primarily to meet their utility customer demand, as well as to avoid the high 

costs and safety risks associated with physically transporting nuclear 

material. DOE contractors said they conducted exchanges primarily to avoid 

physically moving nuclear material stored at a specific site.

DOE and NRC have procedures to ensure accurate tracking and reporting of 

data on obligation exchanges through the Nuclear Materials Management and 

Safeguards System (NMMSS). GAO tested elements of these procedures and 

generally found them to be reliable. But, GAO identified two issues that may 

impact the agencies’ ability to effectively monitor nuclear material inventories. 

• First, some facilities have carried negative obligation balances for extended 

periods. A negative obligation balance occurs when a facility conducts an 

exchange without having enough of a given material in its physical inventory 

to cover the exchange. In certain circumstances, negative balances may 

place the United States at risk of noncompliance with nuclear agreements. 

Negative balances have occurred because DOE and NRC have not 

addressed this issue in documented guidance on when facilities may carry 

such balances, which is inconsistent with federal internal control standards.

• Second, while unobligated low-enriched uranium (LEU) could be used to 

correct any future negative obligation balances, the U.S. inventory of it is 

declining and NMMSS does not have an early-warning monitoring capability 

to alert DOE when the inventory is particularly low. Federal internal control 

standards state that agencies should establish activities to monitor internal 

control systems and evaluate the results, but DOE officials said that the LEU 

inventory is currently sufficient and no early warning capability is needed. 

Without developing such a capability in NMMSS, DOE officials cannot know 

when the inventory of unobligated LEU becomes so low that supplies may 

not be available to correct negative obligation balances, thereby putting the 

United States at risk of not complying with its nuclear agreements.

View GAO-16-713. For more information, 

contact David C. Trimble at (202) 512-3841 or 

trimbled@gao.gov.

Why GAO Did This Study

The United States must generally 

account for nuclear material it has 

obtained under nuclear cooperation 

agreements with foreign partners. The 

agreements generally impose certain 

conditions, including that the material 

be used for peaceful purposes. 

Material subject to such conditions is 

called “obligated.” The United States 

relies on NMMSS to track obligated 

material and to help demonstrate U.S. 

compliance with agreements. Material 

not subject to agreement conditions is 

called “unobligated.” Some forms of 

uranium, such as LEU, are used to 

maintain the nuclear weapons in the 

U.S. stockpile, but the U.S. inventory of 

unobligated LEU is declining. 

GAO was asked to review the practice 

of obligation exchanges and the 

reliability of certain NMMSS data. This 

report examines (1) the number of 

obligation exchanges in the United 

States since 2003, and the reasons for 

them, and (2) how DOE and NRC 

ensure such exchanges are accurately 

tracked and reported through NMMSS. 

GAO analyzed NMMSS data and 

agency documents and interviewed 

agency officials, DOE contractors, and 

NRC licensees, among other steps.

What GAO Recommends

GAO recommends that DOE and NRC 

(1) clarify in guidance when facilities 

may carry negative obligation balances 

and (2) develop an early-warning 

monitoring capability in NMMSS to 

alert DOE when the inventory of 

unobligated LEU is particularly low. 

DOE and NRC neither agreed nor 

disagreed with GAO’s 

recommendations but stated that they 

have ongoing efforts that may address 

GAO’s recommendations.
Page i GAO-16-713 Nuclear Material

Letter 1

Background 7

Over 800 Obligation Exchanges Have Taken Place Since October 

2003, and Most Were Conducted for Commercial Reasons 14

DOE and NRC Have Procedures for Accurate Tracking and 

Reporting of Obligation Exchanges, but Conditions Exist That 

May Affect Agencies’ Abilities to Use NMMSS to Demonstrate 

Compliance With Nuclear Cooperation Agreements 19

Conclusions 27

Recommendations for Executive Action 28

Agency Comments and Our Evaluation 28

Appendix I Comments from the Department of Energy 32

Appendix II Comments from the Nuclear Regulatory Commission 34

Appendix III GAO Contact and Staff Acknowledgments 35

Figures

Figure 1: Example of How Obligations on Uranium May Be Added 

at Various Stages of the Nuclear Fuel Cycle 11

Figure 2: Example of an Obligation Exchange Involving Nuclear 

Material 12

Figure 3: Number of Obligation Exchanges from October 1, 2003, 

through November 30, 2015 16

Contents
Page ii GAO-16-713 Nuclear Material

Abbreviations

DOE Department of Energy

EURATOM European Atomic Energy Community

HEU highly enriched uranium

IAEA International Atomic Energy Agency

LEU low-enriched uranium

NMMSS Nuclear Materials Management and 

Safeguards System 

NNSA National Nuclear Security Administration

NRC Nuclear Regulatory Commission

TVA Tennessee Valley Authority 

USEC USEC Inc.

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-16-713 Nuclear Material

441 G St. N.W.

Washington, DC 20548

September 23, 2016

The Honorable Edward J. Markey

Ranking Member 

Committee on Environment and Public Works

Subcommittee on Superfund, Waste Management, 

and Regulatory Oversight

United States Senate 

The Honorable Michael C. Burgess

House of Representatives

The United States must generally account for nuclear material—such as 

uranium and plutonium—that has been obtained under agreements for 

peaceful nuclear cooperation between the United States and its foreign 

partners.1 Under these agreements, the U.S. government tracks the 

amounts, locations, and uses of imported nuclear material and 

periodically reports this information to its foreign partners. The 

agreements generally impose certain terms and conditions on transfers of 

nuclear material and equipment, including adequate physical protection, 

application of safeguards, and peaceful use.2 Material and equipment 

subject to such conditions are referred to as “obligated,” or carrying a 

foreign obligation. Material and equipment not subject to such conditions 

are referred to as “unobligated,” or not carrying a foreign obligation. The 

 1

Under Section 123 of the Atomic Energy Act, the United States had 22 agreements for 

peaceful nuclear cooperation in force as of June 2016 with foreign countries, the 

European Atomic Energy Community (EURATOM), the International Atomic Energy 

Agency (IAEA), and Taiwan. EURATOM is composed of the 28 countries of the European 

Union. The IAEA is an independent international organization that is affiliated with the 

United Nations—it has the dual mission of promoting the peaceful uses of nuclear energy 

and verifying that nuclear technologies and materials intended for peaceful purposes are 

not diverted to weapons development efforts. The parties to the Taiwan agreement are the 

American Institute in Taiwan and the Taipei Economic and Cultural Representative Office 

in the United States. In this report, we refer to the countries, EURATOM, IAEA, and 

Taiwan as partners.

2

Peaceful use provisions generally state that material, equipment, and components 

subject to the agreements will not be used for any nuclear explosive device, for research 

on or development of any nuclear explosive device, or for any military purposes. 

Letter
Page 2 GAO-16-713 Nuclear Material

agreements’ peaceful use provisions mean that foreign-obligated nuclear 

material in the United States cannot be used for military purposes. To 

enable it to demonstrate to its foreign partners that foreign-obligated 

nuclear material is used in compliance with peaceful use provisions, the 

U.S. government relies on the Nuclear Materials and Management 

Safeguards System (NMMSS) as its system to track such material and 

report material balances to foreign partners.

NMMSS is managed by the Department of Energy’s (DOE) National 

Nuclear Security Administration (NNSA), a separately organized agency 

within DOE that is responsible for the management and security of the 

nation’s nuclear weapons, nonproliferation, and naval reactors programs.3

Jointly funded by DOE and the Nuclear Regulatory Commission (NRC), 

the nuclear regulatory body of the United States,4 NMMSS is the U.S. 

government’s official database for tracking nuclear material inventories, 

material balances, and transactions in the United States.5 The United 

States relies on NMMSS to track nuclear material as it is imported to, 

exported from, or moved within the United States and to process about 1 

million transaction records each year. Approximately 420 commercial 

nuclear and government entities submit data to NMMSS on 17 different 

nuclear materials, including those that can be used in industrial and 

medical applications as well as the types of uranium and plutonium that 

can be used directly to manufacture nuclear explosives. These entities 

include facilities licensed by NRC, which are private companies involved 

in the commercial production of and research on nuclear energy, as well 

 3

NMMSS is managed by NNSA’s Office of Nuclear Materials Integration and is operated 

by a DOE contractor at department headquarters in Germantown, MD. 

4

According to DOE officials, DOE contributes about 56 percent of the annual $4 million 

operating costs, and NRC contributes the remaining 44 percent.

5

According to DOE and NRC documents, “inventory” refers to a physical determination of 

the quantity of nuclear material at a given facility at a given point in time. “Material 

balance” refers to the comparison of beginning inventory plus receipts of nuclear material

with ending inventory plus shipments of nuclear material plus measured discards for a 

specific time interval. “Transaction” refers to any recorded change affecting a facility’s 

nuclear material inventory, such as the physical movement of nuclear material or 

adjustment of obligation balances. 
Page 3 GAO-16-713 Nuclear Material

as academic institutions.6 DOE laboratories and weapons production 

sites also submit data to NMMSS; these laboratories and sites are 

responsible for military uses of nuclear material and are owned by the 

U.S. government but managed and operated by contractors. 

One type of transaction conducted by both NRC licensees and DOE 

contractors, and recorded in NMMSS, is known as an “obligation 

exchange.” An obligation exchange involves the transfer between entities 

of the obligations on nuclear material without physical movement of the 

material.7 For example, Facility A may have a certain amount of material 

physically located on its site, all of which is obligated. Facility B may have 

an equal amount of material physically located on its site, all of which is 

unobligated. In an obligation exchange between the two facilities, rather 

than Facility A physically transferring a portion of its obligated material to 

Facility B in exchange for the same amount of unobligated material, the 

two facilities can exchange the obligations on the material, so that each 

facility now has a portion of obligated and a portion of unobligated 

material. The total amounts of nuclear material at each facility do not 

change, and no material is physically moved, but the conditions on the 

use of the material have changed.

According to DOE documents, the United States has a vital national 

security need for unobligated low-enriched uranium (LEU), which is used 

in the production of tritium—a key isotope used in nuclear weapons.8

DOE reported in October 2015 that obtaining tritium is its “most pressing 

 6

These facilities may be licensed by NRC or by states. The Atomic Energy Act authorizes 

NRC to enter into agreements with states (called agreement states) so that the states 

assume, and the NRC relinquishes, regulatory authority over specified radioactive 

materials. 42 U.S.C. § 2021(b) (2015).

7

Obligation exchanges may also occur within facilities, but those are not reported to 

NNMMS and are outside the scope of our work. Because nuclear materials, such as 

uranium and plutonium, are considered by the industry to be fungible—that is, being of a 

nature that is easily exchangeable—the obligation exchange is made within nuclear 

material inventory records, and no physical material is actually moved. Per DOE and NRC 

guidance, facilities are encouraged to conduct obligation exchanges for like types and 

quantities of nuclear material. 

8

Isotopes are varieties of a given chemical element with the same number of protons but 

different numbers of neutrons. Tritium is a radioactive isotope of hydrogen. 
Page 4 GAO-16-713 Nuclear Material

defense mission need.”9 As long as the United States relies on nuclear 

weapons, DOE requires a continuous supply of LEU to produce tritium. 

However, according to DOE officials, the domestic supply of unobligated 

LEU is declining, in part because the United States lost its sole supplier of 

unobligated LEU in May 2013. At that time, a former government-owned 

corporation—created in 1992 as the United States Enrichment 

Corporation and then privatized in 1998—ceased enriching uranium at 

the Paducah Gaseous Diffusion Plant.10 As of 2015, the majority of LEU

in the United States carried foreign obligations, and DOE officials stated 

that this material could not be used for tritium production.11 According to 

DOE officials, only unobligated LEU can be used for tritium production. 

 9

DOE, Tritium and Enriched Uranium Management Plan Through 2060, Report to 

Congress (Washington D.C.; October 2015). 

10In 1992, the United States Enrichment Corporation was established as a government 

corporation to, among other things, take over operations of DOE’s enrichment facilities, 

which included the Paducah Gaseous Diffusion Plant in Paducah, Kentucky. In 1998, the

United States Enrichment Corporation was privatized under the USEC Privatization Act 

and became a subsidiary of the newly created USEC Inc. From 1998 until 2013, DOE 

relied exclusively on USEC to enrich the LEU needed to produce tritium. However, USEC 

ceased enrichment operations at the Portsmouth, Ohio, and Paducah plants in 2001 and 

2013, respectively, citing high production costs. In September 2014, following Chapter 11 

bankruptcy proceedings, USEC Inc. changed its name to Centrus Energy Corp. For the 

purposes of this report, we will refer to the company as United States Enrichment 

Corporation when discussing events prior to privatization, USEC Inc. (USEC) when 

discussing events between privatization and September 2014, and we will refer to the 

company as Centrus Energy Corp. when discussing events after September 2014. We 

have previously reported on financial and other transactions involving DOE and USEC 

and their relationship since the company was privatized. See GAO, Department of Energy: 

Enhanced Transparency Could Clarify Costs, Market Impact, Risk, and Legal Authority to 

Conduct Future Uranium Transactions, GAO-14-291 (Washington, D.C.: May 9, 2014) and 

GAO Department of Energy: Transactions Involving USEC Inc. Since 1998, GAO-15-730

(Washington, D.C.: Sept. 10, 2015).

11The only enrichment facility in the United States is the URENCO USA facility, which is 

located in New Mexico. This facility is owned and operated by Louisiana Energy Services, 

a subsidiary of URENCO, which is a consortium of companies owned or controlled by the 

British and Dutch governments and by two German utilities. The LEU produced by 

URENCO is enriched using foreign technology and is foreign obligated. There are no 

United States-owned enrichment facilities or foreign-owned enrichment facilities that use 

U.S. technology operating outside of the United States.
Page 5 GAO-16-713 Nuclear Material

This position is based on both law and policy considerations, and we 

examined this issue in a 2014 report.12

The U.S. government relies on NMMSS as its accounting system for 

tracking and reporting of foreign obligated material.13 Specifically, 

NMMSS data is used to produce annual obligation inventory reports for 

the United States to provide to its foreign partners. The annual obligation 

inventory reports enable the United States to demonstrate compliance 

with its nuclear cooperation agreements and provide assurance to foreign 

partners that their nuclear material is being used only for peaceful 

purposes, according to NNSA officials. 

Questions have been raised about the practice of obligation exchanges, 

including about the reliability and integrity of certain NMMSS data, which 

are used to demonstrate compliance with nuclear cooperation 

agreements. You asked us to review the practice of obligation exchanges 

and the reliability of certain NMMSS data. This report examines (1) the 

number of exchanges involving foreign obligated nuclear material that 

have taken place in the United States since 2003 and the reasons for the 

exchanges and (2) how DOE and NRC ensure accurate tracking and 

reporting of obligation exchanges through NMMSS.

For both objectives, we reviewed the text of U.S. agreements for peaceful 

nuclear cooperation (nuclear cooperation agreements). We also reviewed 

portions of the administrative arrangements for implementing these 

agreements that relate to obligation accounting and reporting for four key 

U.S. nuclear trading partners: Australia, Canada, the European Atomic 

Energy Community (EURATOM), and Japan.14 To determine how many 

exchanges involving foreign obligated nuclear material have taken place 

in the United States since 2003, as well as the reasons for the 

 12GAO, Department of Energy: Interagency Review Needed to Update U.S. Position on 

Enriched Uranium That Can Be Used for Tritium Production, GAO-15-123, (Washington, 

D.C.: Oct. 14, 2014). 

13DOE and NRC are the key agencies that use NMMSS data for domestic safeguards, 

tracking nuclear materials, satisfying international commitments, and supporting licensing 

and inspection activities, among other purposes.

14According to DOE officials, nuclear material entering the United States is likely to have 

an obligation from one or more of these partners, which are significant producers of 

nuclear material. 
Page 6 GAO-16-713 Nuclear Material

exchanges, we examined NMMSS data on obligation exchanges 

conducted by DOE sites and NRC-licensed facilities from October 1, 

2003, through November 30, 2015.15 We identified eight NRC-licensed 

facilities that conducted obligation exchanges during this period and 

interviewed representatives from each of those facilities. We also 

identified the two DOE sites that conducted obligation exchanges during 

this period and interviewed officials from those sites. 

To determine how DOE and NRC ensure accurate tracking and reporting 

of obligation exchanges through NMMSS, we took the following steps: 

• We analyzed DOE and NRC documents that describe the 

requirements for obligation exchanges, including those on data entry 

and reporting procedures. 

• We obtained and reviewed NMMSS data on obligation exchanges, 

including shipment and receipt data of obligated material for each 

DOE and NRC facility that had conducted an obligation exchange 

during this period. We compared these data with NMMSS inventory 

records and checked for differences. 

• We visited two U.S. facilities holding foreign obligated material—a 

uranium enrichment facility and a fuel fabrication facility—and 

interviewed representatives from these facilities on their nuclear 

material accounting procedures and obligation exchange activity.

• We interviewed NNSA and NRC officials, and current and former 

NMMSS officials, to identify any limitations in NMMSS’s data. 

• We interviewed DOE and contractor representatives from DOE sites 

to learn about their obligation exchange activity as well as 

representatives from NRC-licensed facilities from different stages of 

the nuclear fuel cycle, to learn about the commercial issues that drive 

obligation exchanges. In addition, we interviewed representatives 

from organizations that either promote or consult on the nuclear 

industry to get a general understanding of obligation exchanges.

• We interviewed officials from the Tennessee Valley Authority (TVA), a 

government corporation and the nation’s largest public power 

 15We selected October 1, 2003, as the starting point because this was the date obligation 

accounting began in NMMSS. We reviewed data through November 30, 2015, as it was 

the date of the most recent data available at the time of our review. 
Page 7 GAO-16-713 Nuclear Material

company, to learn about its involvement in obligation exchanges and 

its steps to preserve unobligated LEU.

We assessed the reliability of NMMSS obligation exchange data by (1) 

performing electronic testing of required data elements; (2) reviewing 

existing information about the data and the system that produced them; 

and (3) interviewing agency officials knowledgeable about the data. We 

found the data to be sufficiently reliable for the purposes of our review. 

We conducted this performance audit from June 2015 to September 2016 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

This section describes the legal framework for obligation accounting, the 

uranium market and how obligations on uranium may be added at various 

stages of the nuclear fuel cycle, the mechanics of obligation exchanges, 

and the national security need for unobligated LEU.

The United States has negotiated nuclear cooperation agreements under

section 123 of the Atomic Energy Act of 1954, as amended, with nuclear 

trading partners worldwide. These agreements establish obligations 

governing how nuclear material and equipment subject to the agreements 

are to be used. The United States had 22 nuclear cooperation 

agreements in force as of June 2016.16

 16As of June 2016, the United States had 22 nuclear cooperation agreements in force with 

the following foreign partners: Argentina, Australia, Brazil, Canada, China, Egypt, 

EURATOM, IAEA, India, Indonesia, Japan, Kazakhstan, Morocco, Russia, South Africa, 

South Korea, Switzerland, Taiwan, Turkey, Ukraine, the United Arab Emirates, and 

Vietnam. EURATOM consists of 28 member states: Austria, Belgium, Bulgaria, Croatia, 

Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, 

Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, 

Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.

Background 

Legal Framework for 

Obligation Accounting
Page 8 GAO-16-713 Nuclear Material

Once a nuclear cooperation agreement has been negotiated, U.S. 

government officials may negotiate an administrative arrangement that 

provides procedures for implementing the agreement, including details

about accounting for foreign obligated material. Administrative 

arrangements with foreign partners may require DOE to produce annual 

reports on inventories of obligated material. For example, under the 

administrative arrangements for Australia, Canada, and EURATOM, the 

reports are to be conducted at the country level, not by facility. According 

to DOE documents, this is generally the case with its foreign partners. 

The annual obligation inventory reports summarize the import and export 

of foreign obligated material into and out of the United States in a given 

year. NMMSS produces summary information for these reports, which 

contain aggregated data for foreign obligation balances at all U.S. 

facilities by calendar year.17 After NMMSS generates data for the annual 

obligation inventory reports, NNSA provides these reports to U.S. foreign 

partners. These foreign partners use the reports to periodically reconcile 

their accounting records with those of the United States. 

Other regulations, orders, guidance and an international agreement 

govern the accounting and reporting of nuclear material as well. For 

example, a DOE order and NRC regulations establish requirements for 

nuclear material control and accounting and the reporting of nuclear 

materials to NMMSS. The DOE order provides direction on the 

procedures that DOE contractors are to use in submitting data on certain 

quantities of 17 DOE-owned reportable nuclear materials.18 NRC 

regulations require NRC licensees to submit data to NMMSS on certain 

 17Most annual obligation inventory reports do not contain data on the number of obligation 

exchanges involving foreign obligated material. For example, a report may specify how 

much Canada-obligated material was held in the United States but not how many 

obligation exchanges involving Canada-obligated material were conducted in the United 

States. 

18The 17 reportable materials are: americium-241, americium-243, californium, curium, 

depleted uranium, deuterium, enriched lithium, enriched uranium, natural uranium, 

neptunium-237, plutonium-238, plutonium-239-241, plutonium-242, thorium, tritium, 

uranium-233, and uranium in cascade—which refers to uranium that is being processed 

through uranium enrichment equipment. While NMMSS tracks 17 nuclear materials, it 

tracks foreign obligations for only 6: depleted uranium, enriched uranium, natural uranium, 

plutonium, thorium, and uranium-233.
Page 9 GAO-16-713 Nuclear Material

quantities of some of these nuclear materials.19 In addition, the United 

States has an agreement with the International Atomic Energy Agency 

(IAEA) on the safeguard of nuclear material, which requires the United 

States to maintain a system of accounting and control over certain 

nuclear material. Through the application of safeguards, IAEA seeks to 

verify that nuclear material subject to safeguards is not diverted to nuclear 

weapons or other proscribed purposes. 

Uranium is a commodity that is necessary for commercial nuclear power. 

The market is global, and the vast majority of the uranium used to fuel 

U.S. commercial nuclear reactors is mined abroad. According to a 2016 

U.S. Energy Information Administration,20 report, in 2015, only 6 percent 

of the 57 million pounds of uranium delivered to fuel U.S. nuclear reactors 

was of U.S. origin.21 Of the remaining 94 percent, 47 percent originated in 

Australia or Canada; 37 percent originated in Kazakhstan, Russia, or 

Uzbekistan; and the remaining 10 percent originated in Bulgaria, the 

Czech Republic, Malawi, Namibia, Niger, or South Africa.22

After being mined, uranium undergoes a number of additional processing 

steps to become nuclear fuel for commercial reactors. These steps make 

up the nuclear fuel cycle. Obligations on nuclear material may be added 

at various stages in the cycle (see fig. 1). For example, if uranium is 

mined and milled in Australia and is then shipped to Canada, it may carry 

an Australian obligation. If the uranium goes through conversion at a plant 

 19NRC licensees are directed to report certain quantities of eight nuclear materials to 

NMMSS: depleted uranium, enriched uranium, natural uranium, plutonium, plutonium-238, 

thorium, uranium-233, and uranium in cascade. 

20The Energy Information Administration is an agency within DOE that collects, analyzes, 

and disseminates independent and impartial statistical and analytical energy information. 

21U.S. Energy Information Administration, 2015 Uranium Marketing Annual Report

(Washington, D.C.: May 2016). 

22Not all of the natural uranium entering the United States is obligated. Some uraniumproducing countries, such as Uzbekistan and Namibia, do not have nuclear cooperation 

agreements with the United States. As a result, uranium entering the United States from 

these countries is unobligated. In addition, according to NRC officials, countries with 

nuclear cooperation agreements can send material to the United States outside the 

requirements of the nuclear cooperation agreement, thereby providing unobligated 

material. Countries that have done so include Kazakhstan and Russia, according to DOE 

officials.

Uranium Market and How 

Obligations on Uranium 

May Be Added at Various 

Stages of the Nuclear Fuel 

Cycle
Page 10 GAO-16-713 Nuclear Material

using Canadian technology and is then shipped to Europe, it may carry a 

Canadian obligation. If the uranium is enriched at a plant using European 

technology and is then shipped to Japan, it may carry an obligation from 

EURATOM. Finally, if the uranium undergoes fuel fabrication at a plant 

using Japanese technology before export to a final user in the United 

States, it may carry a Japanese obligation. By the end of the process, the 

uranium may carry obligations to Australia, Canada, EURATOM, and 

Japan. Figure 1 illustrates how obligations may be added to uranium at 

various stages of the nuclear fuel cycle.23 Such obligations are tracked in 

NMMSS while the material remains in the United States.

 23Examples provided are illustrative only. We did not analyze the terms of any nuclear 

cooperation agreements entered into by Australia, Canada, EURATOM, or Japan other 

than those entered into with the United States. 
Page 11 GAO-16-713 Nuclear Material

Figure 1: Example of How Obligations on Uranium May Be Added at Various Stages of the Nuclear Fuel Cycle

Note: EURATOM is composed of the 28 countries of the European Union.

To conduct an obligation exchange and record the transaction in 

NMMSS, both the facility “shipping” the obligation and the facility 

“receiving” the obligation must submit a DOE/NRC Form 741, “Nuclear 

Mechanics of Obligation 

Exchanges
Page 12 GAO-16-713 Nuclear Material

Material Transaction Report,” to NMMSS.24 The shipper’s transaction 

report and the receiver’s transaction report should contain the same data. 

Following an obligation exchange, each facility will have the same total 

amount of a given material type, such as LEU, as it had before the 

exchange, but it will have different proportions of obligated and 

unobligated material (see fig. 2).

Figure 2: Example of an Obligation Exchange Involving Nuclear Material 

 24Specifically, Nuclear Material Transaction Reports, which DOE and NRC both refer to by 

the number of the old paper form, 741, must be submitted for inventory adjustments of 1 

kilogram or more of certain source material, such as uranium, or 1 gram or more of certain 

special nuclear material, such as enriched uranium or plutonium. Different requirements 

may apply to different materials.
Page 13 GAO-16-713 Nuclear Material

Tritium is a key radioactive isotope used to enhance the power of nuclear 

weapons in the U.S. stockpile.25 Tritium is produced in nuclear reactors, 

and NNSA supports a program that produces tritium from LEU to help 

meet stockpile demands. NNSA’s tritium program requires that only 

unobligated LEU be used in reactors to produce tritium. The reactors that 

are under agreement to produce tritium for DOE belong to TVA, a 

government corporation, and, according to DOE, LEU fuel loaded into 

TVA reactors for tritium production must consist entirely of LEU that is 

unobligated.26

It is DOE’s responsibility to ensure that TVA is supplied with unobligated 

fuel to support tritium production. DOE maintains an inventory of 

unobligated LEU. However, the United States lost its sole supplier of 

unobligated LEU when USEC ceased uranium enrichment operations in 

2013.27 In 2014, NNSA projected that unobligated LEU fuel for tritium 

production would last through 2027.28 NNSA has since identified several 

actions that could extend that projected date from 2038 to 2041.29 These 

actions include “downblending” highly enriched uranium (HEU)30 from 

dismantled weapons to produce unobligated LEU, as well as conducting 

 25Tritium has a relatively short half-life of 12 years (it decays at a rate of about 5.5 percent 

per year), and it must be periodically replenished in existing weapons. 

26To produce tritium, stainless steel rods containing lithium aluminate and zirconium are 

irradiated in TVA’s Watts Bar 1 commercial nuclear power reactor. 

27The company had been developing next-generation uranium enrichment technology, 

called the American Centrifuge. The future of the company’s planned enrichment facility—

the only enrichment facility that would have been able to produce unobligated LEU—is 

uncertain. DOE announced that it would not fund the company’s demonstration of 

American Centrifuge technology at the American Centrifuge Plant in Piketon, Ohio, after 

September 30, 2015. Since then, the company has been demobilizing the demonstration 

project and reducing its workforce at the plant.

28DOE, National Nuclear Security Administration, Tritium Readiness Subprogram Tritium 

Production Fuel Supply Plan, May 2014.

29DOE, Tritium and Enriched Uranium Management Plan Through 2060. 

30HEU is used both in nuclear weapons and in the reactors that power the U.S. Navy’s 

aircraft carriers and submarines. The United States has not had a domestic capability to 

produce HEU since 1992 and instead meets national security needs using an inventory of 

HEU that was enriched prior to 1992. According to DOE, based on mission requirements, 

DOE’s current HEU allocations are sufficient to meet naval propulsion national security 

demands through 2064. 

National Security Need for 

Unobligated LEU 
Page 14 GAO-16-713 Nuclear Material

obligation exchanges to preserve unobligated LEU.31 According to DOE, 

to meet defense mission requirements in the future, the United States will 

eventually need to reestablish the capability to produce unobligated LEU. 

In the meantime, NNSA and TVA have been working together to identify 

actions to preserve DOE’s remaining quantities of unobligated LEU.32

From October 1, 2003, through November 30, 2015, 817 obligation 

exchanges took place in the United States, and most were conducted to 

meet commercial customer demand. The majority (98 percent) of these 

exchanges involved NRC-licensed commercial facilities; the rest were 

conducted by DOE contractors. NRC licensees told us they generally 

conducted exchanges to meet customer demand for material with 

obligations from certain countries and to avoid the need to physically 

transport uranium. DOE contractors told us they conducted a number of 

obligation exchanges primarily to accommodate the closure of the vault 

where the material was being stored.

 31HEU can be “downblended” by mixing it with depleted, natural, or LEU to produce a new 

product that has a lower concentration of uranium-235. According to DOE officials, NNSA 

is currently downblending a fixed amount of HEU that has been identified as excess to 

nuclear weapon requirements. The balance of unobligated HEU and LEU changes based 

on the rate of downblending and consumption by naval propulsion reactors and tritium 

production reactors. According to DOE officials, NNSA continually evaluates 

programmatic requirements, budgets, and material processing capabilities to determine if 

additional HEU should be declared excess to weapon requirements and made available 

for other priorities such as production of tritium and manufacture of naval fuel. The specific 

allocations of unobligated materials made available to support these national security 

needs would be based on an evaluation of the quality of the material; the costs associated 

with downblending a national asset that the U.S. government cannot currently produce; 

and the impacts to the schedule for, and cost of, developing a new enrichment facility.

32These actions are described in TVA’s Obligation Preservation Action Plan, which 

describes actions that are to be taken or considered related to obligation management in 

support of NNSA’s Tritium Program. 

Over 800 Obligation 

Exchanges Have 

Taken Place Since 

October 2003, and 

Most Were 

Conducted for 

Commercial Reasons
Page 15 GAO-16-713 Nuclear Material

According to NMMSS data, there were 817 exchanges of foreign 

obligated nuclear material in the United States from October 1, 2003, 

through November 30, 2015.33 The majority of these obligation 

exchanges were between commercial nuclear facilities and involved 

particular material types and certain types of obligations. Specifics on the 

exchanges follow. 

• Of the 817 obligation exchanges, 802 (98 percent) were conducted by 

NRC-licensed commercial nuclear facilities;34 14 were conducted by 

DOE contractors; and 1 was conducted by an NRC licensee that 

conducts work both for commercial purposes and for DOE. 

• The majority (99 percent) of the obligations exchanged involved LEU 

or natural uranium, and the remaining 1 percent consisted of two 

obligation exchanges involving plutonium and two involving depleted 

uranium.

• The majority (99 percent) of obligation exchanges involved facilities 

exchanging obligated for unobligated material.35 The remaining 1 

percent involved facilities exchanging obligated material for obligated 

material.

 33Apart from these 817 obligation exchanges, which were tracked in NMMSS, we found 

that there were additional obligation exchanges conducted by NRC licensees and DOE 

contractors outside of NMMSS. NMMSS records only cover “inter-facility” obligation 

exchanges—that is, the transfer of obligations between different facilities—which requires 

the submission of a DOE/NRC Form 741, “Nuclear Material Transaction Report.”

However, some NRC licensees reported that they conduct “intra-facility” obligation 

exchanges, in which obligations are transferred within the same facility but across different 

customer accounts. Because the “intra-facility” obligation exchanges are not reported to 

NMMSS, we were unable to determine the number or frequency of these exchanges. We 

were told by one NRC licensee that these exchanges happen frequently.

34For the purposes of our analysis, the Paducah and Portsmouth gaseous diffusion plants, 

which are shuttered uranium enrichment facilities, were categorized as NRC-licensed 

facilities. When the Energy Policy Act of 1992 transferred management and operation of 

the gaseous diffusion plants from DOE to the United States Enrichment Corporation, it 

also required NRC to promulgate standards for the plants and to assess the plants 

through a certification of compliance in lieu of licensing. The plants were held to the same 

requirements for material control and accounting of special nuclear material, including 

reporting to NMMSS, as licensees. 

35According to NMMSS officials, while it is possible for facilities to exchange obligated 

material for like obligated material, there have only been two such exchanges.

Exchanges Typically 

Involved Commercial 

Nuclear Facilities, and 

Numbers of Exchanges 

Have Decreased in 

Recent Years 
Page 16 GAO-16-713 Nuclear Material

• The majority (92 percent) of the obligations exchanged involved 

obligations from either Australia or Canada. Five percent were

obligations from Argentina, Brazil, Chile, China, EURATOM, or Japan, 

and 3 percent involved material with layered obligations—that is, 

obligations to multiple countries.

The number of obligation exchanges peaked in 2007 with 107 exchanges 

and has generally declined since then, with steady declines since 2011.

Figure 3 shows the number of obligation exchanges conducted in the 

United States from October 1, 2003, through November 30, 2015.

Figure 3: Number of Obligation Exchanges from October 1, 2003, through November 30, 2015

According to officials from Centrus Energy Corp. (formerly USEC), the 

company that conducted the most obligation exchanges from 2003 to 

2015—the peak in 2007 resulted from increased demand that year for 

LEU. The officials noted that the demand for LEU fluctuates and can be 

cyclical, as most nuclear power plants operate on an 18-month cycle and 

must be shut down at regular intervals to replace spent fuel rods with new 

ones. The officials attributed the decline in obligation exchanges to 

decreased demand for LEU and to the May 2013 closure of the Paducah 
Page 17 GAO-16-713 Nuclear Material

Gaseous Diffusion Plant, which meant that less unobligated LEU was 

available.

According to NRC licensees, exchanges were generally conducted to 

meet commercial customer demand for material with obligations from 

certain countries and to avoid the need to physically transport uranium. In 

contrast, DOE contractors told us they conducted a number of obligation 

exchanges primarily to accommodate the closure of the vault where the 

material was being stored.

According to NRC licensees, obligation exchanges were conducted 

primarily to meet their customers’ demand for uranium with specific 

obligations. These customers were utility companies that may have had 

contracts that specified the delivery schedule and obligation requirements 

for LEU years in advance of delivery of material. NRC licensees told us 

that sometimes, as a result of these contracts, facilities needed to deliver 

uranium with specific obligations before they had physically obtained 

uranium with the required obligations, so they conducted obligation 

exchanges with other facilities to obtain and provide the material on the 

required schedule. Customers wanted either unobligated LEU or LEU 

with obligations from certain countries to help simplify their nuclear 

material accounting. For example, representatives from one facility stated 

that their customers prefer to obtain unobligated LEU to avoid having to 

maintain separate inventories of obligated and unobligated material, as 

each obligation type needs to be tracked separately in NMMSS. By 

having unobligated material, or limiting the number of different 

obligations, facilities were able to minimize the number of tracking steps.

According to some NRC licensees, conducting obligation exchanges also 

allowed them to obtain the obligations their customers wanted without 

physically transporting uranium from another NRC-licensed facility. They 

stated that obligation exchanges allowed them to avoid the high 

transportation costs and safety risks associated with physically shipping 

nuclear material. Overall, NRC licensees told us that obligation 

exchanges are a customary and normal business practice in the nuclear 

fuel industry. Representatives from one NRC licensee told us that the 

facility “could not operate” without conducting obligation exchanges and 

that it is an essential industry-wide practice.

Most Exchanges Were 

Conducted to Meet 

Commercial Customer 

Demand for Uranium with 

Specific Obligations and to 

Avoid Physically 

Transporting Material 

Obligation Exchanges 

Conducted by NRC Licensees
Page 18 GAO-16-713 Nuclear Material

In addition, we found that certain NRC licensees conducted obligation 

exchanges for national security purposes—that is, to obtain unobligated 

LEU for tritium production. Specifically, of the 802 obligation exchanges 

conducted by NRC licensees, 3 were conducted by licensees that 

supplied nuclear fuel to TVA, which produces tritium for NNSA. In 2014 

and 2015, on behalf of TVA, three NRC-licensed facilities each conducted 

an obligation exchange to preserve unobligated LEU for tritium production 

at TVA’s Watts Bar 1 commercial nuclear power reactor. According to 

DOE officials, such obligation exchanges help extend the date when the 

United States will run out of unobligated LEU for tritium production. 

According to DOE officials, these obligation exchanges are necessary 

because the United States no longer has a domestic source of 

unobligated LEU for tritium production. TVA and DOE officials stated that 

additional exchanges for national security are anticipated in the future—

perhaps one or two each year.36

DOE contractors and on-site agency officials told us they conducted 14 

obligation exchanges primarily to accommodate the closure of the vault 

where the material was being stored. Specifically, 13 of the 14 obligation 

exchanges were conducted to transfer obligations to accommodate DOE 

closure of a vault in a building at the Y-12 National Security Complex, 

which was scheduled for modernization. As part of the effort to empty the 

vault, contractors transferred the obligations on this material to other 

facilities, allowing them to relocate the now unobligated material from the 

vault. The other exchange was conducted to transfer obligated plutonium 

to a facility under IAEA safeguards at the Savannah River Site, according 

to DOE contractors.

 36DOE is required to submit a biennial plan to Congress that includes a description of 

“swap and barter agreements” needed to meet national security requirements. National 

Defense Authorization Act for Fiscal Year 2016, Pub. L. No. 114-92, § 3131 129 Stat. 726, 

1202 (2015). “Swap” is another term for obligation exchange. Since NMMSS is not 

designed to track the purpose of an obligation exchange, according to NNSA and TVA 

officials, NNSA will work with TVA to ensure that information pertaining to the number of 

obligation exchanges for national security is included either in future TVA Obligation 

Preservation Action Plans or NNSA planning documents. 

Obligation Exchanges 

Conducted by DOE 

Contractors
Page 19 GAO-16-713 Nuclear Material

DOE and NRC have three procedures designed to ensure accurate 

tracking and reporting of transaction data in NMMSS, including data on 

obligation exchanges. However, conditions exist that may affect agencies’ 

abilities to use NMMSS to demonstrate compliance with nuclear 

cooperation agreements in the future and monitor unobligated inventories 

effectively. 

DOE and NRC have three procedures designed to ensure the accurate 

tracking and reporting of transaction data in NMMSS.37 These procedures 

apply to all transaction data in NMMSS, including data on obligation 

exchanges. The procedures are validation, reconciliation, and export 

records comparison. 

 37DOE also promotes the accurate tracking and reporting of transaction data by providing 

training and guidance to DOE contractors and NRC licensees on how to use NMMSS. In 

terms of training, DOE and NRC offer an annual NMMSS users’ conference that includes 

informational presentations on such topics as obligation accounting and obligation 

exchanges. Also, NMMSS program officials provide multiday trainings several times a 

year, including separate trainings for DOE contractors and NRC licensees that are tailored 

to meet their specific needs. In terms of guidance, there are two sets of guidance for 

NMMSS users. NRC produces guidance for its licensees, and DOE produces guidance for 

its contractors. In addition, the NMMSS program produces a quarterly newsletter for all 

NMMSS users, which contains guidance on changes to nuclear material accounting policy 

and procedures. 

DOE and NRC Have 

Procedures for 

Accurate Tracking 

and Reporting of 

Obligation 

Exchanges, but 

Conditions Exist That 

May Affect Agencies’ 

Abilities to Use 

NMMSS to 

Demonstrate 

Compliance With 

Nuclear Cooperation 

Agreements 

DOE and NRC Have 

Procedures for Accurate 

Tracking and Reporting of 

Obligation Exchanges
Page 20 GAO-16-713 Nuclear Material

• Validation. NMMSS completes automated validation checks for the 

completeness and accuracy of data on nuclear material transactions. 

There are two kinds of validation checks: (1) edit checks, which verify 

that the data are complete and properly formatted, and (2) 

compatibility checks, which verify that the shipper and receiver submit 

identical information about the obligation exchange. There are 550 

separate types of edit checks and 74 types of compatibility checks.

Validation checks control for data entry mistakes and omissions. Any 

errors identified through these checks can be corrected by NMMSS 

officials in consultation with authorized personnel at DOE sites and 

NRC-licensed facilities. 

• Reconciliation. Reconciliation is the process of comparing NMMSS 

nuclear material inventory data with other records. Reconciliation 

occurs at two levels: at the facility level and at the country level. At the 

facility level, NMMSS officials compare facilities’ reported physical 

inventory records—including their obligation balances—with the data 

in NMMSS and either confirm that these records are in agreement or 

alert facilities to make adjustments, if necessary.38 A DOE order and 

NRC regulations require U.S. facilities to reconcile their nuclear 

material inventories—including their foreign obligation balances—at 

least once annually. DOE contractors must report their inventories to 

NMMSS by September 30 of each year and reconcile any 

discrepancies with NMMSS.39 NRC licensees must report their 

inventories to NMMSS at least annually, depending on the type of 

material held, and reconcile any discrepancies with NMMSS. At the 

country level, NMMSS officials annually compare the inventory data 

with the records of foreign partners, including obligation balances. 

According to DOE officials, this inventory reconciliation process is 

conducted in accordance with the terms of certain administrative 

arrangements. Like reconciliation at the facility level, the officials told 

us that this process confirms whether NMMSS records are in 

 38According to DOE officials, if a facility’s records are in disagreement with data in 

NMMSS, once the source of the disagreement has been identified the facility may submit 

an additional transaction form to NMMSS to “correct” its records. For example, if a facility 

reported the receipt of material to the NMMSS before the shipper facility had reported the 

same shipment, it may be necessary to submit an additional transaction form to NMMSS 

to correct and harmonize their respective nuclear material accounting records. 

39According to DOE documents, NMMSS finalizes September accounting records after all 

DOE contractor inventories are reconciled no later than November 15th. 
Page 21 GAO-16-713 Nuclear Material

agreement with other records and alerts officials to follow up, if 

necessary.

• Export records comparison. A function in NMMSS compares 

foreign partners’ export records with NMMSS data. Foreign partners 

provide advance notification, as well as a confirmation of shipment, to 

the U.S. government when shipping nuclear material to the United 

States. NMMSS then compares these communications, as well as 

foreign partners’ export records obtained through IAEA, with data in 

NMMSS. Until January 2012, the communications were stored in 

documents, but since then, they have been recorded electronically in 

NMMSS. 

We tested elements of these procedures and analyzed certain NMMSS 

data and found the data to be generally accurate with little evidence of 

inaccuracies or other problems with NMMSS data on obligation 

exchanges.40 For instance, we tested several elements of the records of 

compatibility and edit checks for all 817 obligation exchanges to verify 

that the shipper and receiver submitted identical information to NMMSS 

for each obligation exchange. We found that nearly all information 

submitted by the shipper and receiver—such as material type, element 

weight, and obligation country code—was identical for each of the 

obligation exchanges conducted from October 1, 2003 through November 

30, 2015.

However, we found two issues in NMMSS obligation exchange data. We 

discussed these issues with DOE and NRC officials, who indicated that 

they planned to take steps to address one of the identified issues and 

explained that that other issue had already been addressed.

• First, we found that according to NMMSS data, 2 of the 817 obligation 

exchanges conducted by NRC licensees involved uranium with assay 

levels of slightly more than 5 percent, which is contrary to NRC 

guidance that obligation exchanges are restricted to uranium enriched 

 40We also conducted interviews with senior agency officials to ensure that we fully 

understood the NMMSS data.
Page 22 GAO-16-713 Nuclear Material

to 5 percent or less.41 According to DOE and NRC officials, these 

exceeded levels were isolated anomalies and may have been due to 

rounding errors in NMMSS.42 Nonetheless, as a result of our audit 

work, NMMSS officials stated that they intend to more closely monitor 

the potential exceedance of the 5 percent threshold by implementing 

a new edit check in NMMSS to identify obligation exchanges at 

licensed facilities on material with assay levels greater than 5 percent 

and flag that transaction as an error. According to NRC officials, the 

edit check will identify an error, which will prompt actions to resolve 

the transaction in NMMSS. Specifically, the licensee will have to 

consult with NMMSS program staff to determine whether the 

transaction requires additional U.S. approval before a manual 

authorization is given to override the error.

• Second, we found five obligation exchanges where the shipping 

facility and receiving facility reported different activity dates. According 

to one of NMMSS’s compatibility checks, the date must be the same 

for the shipper and receiver of an obligation exchange.43 However, 

NMMSS did not detect the mismatched data in these five obligation 

exchanges, which occurred from 2004 to 2009. According to DOE 

officials, the five obligation exchanges with mismatched dates were 

not caught in NMMSS because they predated an edit check that was 

implemented in NMMSS in March 2013. DOE officials said that, since 

the edit check was implemented 3 years ago, there have been no 

obligation exchanges with mismatched activity dates. DOE officials 

told us that this issue has been addressed. 

 41Uranium is categorized by concentration of uranium-235, expressed as a percentage 

“assay.” According to DOE and NRC officials, obligated uranium-235 is restricted to 

uranium enriched to 5 percent or less, unless higher enrichment is authorized or approved 

by the U.S. government. The obligation exchanges involved uranium with assay levels of 

5.05 and 5.13 percent. 

42DOE and NRC officials stated that when facilities report LEU to NMMSS, they must 

report information to the nearest whole gram. These two exchanges involved a small 

amount of material, such that the precise weight was under the 5 percent assay but the 

rounded weight was higher than the 5 percent threshold specified in guidance (NRC 

NUREG/BR-0006 version 7).

43NNSA, NMMSS 123 Agreement Communications Procedure, June 26, 2014.
Page 23 GAO-16-713 Nuclear Material

Two conditions exist that may affect DOE’s and NRC’s abilities to use 

NMMSS to demonstrate compliance with nuclear cooperation agreements 

and effectively monitor unobligated inventories. First, the agencies have 

not documented the conditions under which facilities may carry negative 

obligation balances. Second, the United States has a declining domestic 

inventory of unobligated LEU for national security purposes that is 

projected to last until 2038 to 2041, but NMMSS does not have a 

monitoring capability that could alert DOE when the inventory of 

unobligated LEU is particularly low. 

Nuclear cooperation agreements and the administrative arrangements 

that we reviewed do not address whether or to what extent facilities may 

carry negative obligation balances but while DOE officials told us that the 

practice is not prohibited, DOE and NRC have not documented the 

conditions under which it is allowed. Negative obligation balances occur 

when a facility conducts an obligation exchange without having enough of 

a given nuclear material in inventory—similar to writing a check for an 

amount that is not currently in one’s checking account, with the 

assumption that enough funds will be deposited in time to cover the 

cashing of the check.

44 DOE and NRC have not documented the 

conditions under which facilities are allowed to carry negative obligation 

balances. 

Some NRC licensees stated that they carried negative balances for 

extended periods—including for several months or more than a year. 

DOE officials confirmed that certain facilities have carried negative 

obligation balances for brief periods, and others have carried them for 

extended periods of time. Specifically, according to DOE officials, 17 

facilities in the United States have carried negative obligation balances 

between reconciliation dates.45 DOE officials attributed 6 of 17 instances 

to facility “business practices.” Specifically, they stated that certain 

 44Another way a negative obligation balance can occur is if a facility incorrectly assigns 

obligations—either too many or the wrong type—to a physical shipment of nuclear 

material. 

45According to NNSA documents, of the 169 U.S. facilities that have obligated nuclear 

material, about 10 percent have had negative obligation balances and most of these were 

NRC-licensed facilities. Specifically, 15 were NRC-licensed facilities, and 2 were DOE 

sites.

Conditions Exist That May 

Affect Agencies’ Abilities to 

Use NMMSS to 

Demonstrate Compliance 

With Nuclear Cooperation 

Agreements and Monitor 

Unobligated Inventories 

Effectively

Agencies Have Not 

Documented the Conditions 

under Which Facilities May 

Carry Negative Obligation 

Balances 
Page 24 GAO-16-713 Nuclear Material

facilities, such as uranium enrichment and fuel fabrication plants, need to 

deliver uranium with specific obligations to customers before they have 

physically obtained such uranium. As a result, the facilities may carry 

negative obligation balances for months at a time, with the assumption 

that sufficient obligations will be received on incoming shipments of 

nuclear material and that receipt of this material will eventually cover the 

negative obligation balance. 

DOE officials attributed the negative obligation balances at 11 of the 17 

facilities to the brief time lag in reporting information to NMMSS.46

Specifically, the DOE/NRC Form 741 that officially records the obligation 

exchange must be sent by the “shipping” facility to NMMSS within 1 

business day, and the form that officially records the receipt of the 

material must be sent by the “receiving” facility to NMMSS within 10 days. 

Thus, it is possible for a facility to temporarily carry a negative obligation 

balance within this 10-day window. 

However, we found that 1 of the 11 facilities had a negative obligation 

balance that was of significantly longer than 10 days: this negative 

obligation balance of LEU lasted 18 months and spanned multiple 

reconciliation periods. Specifically, an NRC-licensed facility carried a 

negative balance of foreign obligated LEU from February 2006 to August 

2007.47 Representatives of the facility and DOE officials confirmed this 

negative obligation balance and that it lasted for about 18 months—

spanning three reconciliation periods.48 According to officials from the 

facility, to remedy its negative balance, in August 2007 the facility 

conducted an obligation exchange with another facility to obtain foreign 

obligated LEU. DOE officials told us that since 2010, there have been no 

other instances of negative obligation balances persisting at any facility 

past reconciliation. Nevertheless, since one negative obligation balance 

persisted past multiple reconciliation periods, a risk remains that facilities 

 46Of the 11 facilities DOE reported with a brief time lag, 6 had negative obligation 

balances of LEU and the remaining 5 facilities had negative obligation balances of natural 

uranium, depleted uranium, or plutonium. 

47According to representatives from this NRC licensed facility, the facility incorrectly 

assigned too many obligations to physical shipments of nuclear material. 

48DOE officials stated there were three reconciliation periods because NMMSS reconciles 

inventory records with this facility on a bi-annual basis. 
Page 25 GAO-16-713 Nuclear Material

may carry negative obligation balances for extended periods of time in the 

future. 

Under federal standards for internal control, agency management should 

design control activities to achieve objectives and respond to risk, 

including by clearly documenting internal control, and the documentation 

may appear in management directives, administrative policies, or 

operating manuals.49 While NNSA’s procedures for foreign obligation 

reporting state that both the shipping and receiving facilities should verify 

that there is sufficient inventory of the given material type to support an 

obligation exchange, they do not document the conditions under which 

carrying a negative obligation balance is allowed.50 Moreover, some NRC 

licensees told us that it is unclear whether or to what extent facilities may 

carry negative obligation balances. Representatives from one facility 

stated that it would be helpful for NMMSS officials to help clarify when the 

practice of carrying negative obligation balances is allowed and for what 

duration.

DOE officials told us they strongly encourage facilities to avoid carrying 

negative obligation balances but acknowledge that they have not 

documented in guidance when the practice is allowed. Specifically, DOE 

and NRC officials said that they discourage this practice through 

informational presentations that they provide to NRC licensees and DOE 

contractors at trainings and conferences. However, DOE officials told us 

that the practice of carrying negative obligation balances is not prohibited 

and that they have not documented the conditions under which carrying a 

negative obligation balance is allowed. Instead, DOE officials stated that 

their main internal control for negative obligation balances is to review 

facilities’ inventory once each year as part of the annual reconciliation 

process. Through this process, NMMSS analysts expect facilities to 

correct any negative obligation balances by the time of reconciliation. 

However, as we noted, this process did not address the negative 

obligation balance carried by one facility through several reconciliation 

cycles. According to NNSA documents, additional internal control 

 49GAO, Standards for Internal Control in the Federal Government, GAO-14-704G

(Washington, D.C.: September 2014).

50These procedures are described in an internal NNSA document for NMMSS analysts. 

See NNSA, NMMSS 123 Agreement Communications Procedure.
Page 26 GAO-16-713 Nuclear Material

procedures have been implemented in NMMSS in the past 6 years—such 

as developing new edit checks to detect incidences of negative obligation 

balances at the time of reconciliation—which NNSA officials believe will 

prevent facilities in the future from carrying negative obligation balances 

past reconciliation. However, we were unable to test these internal 

controls to verify whether there have been any additional incidences of 

facilities carrying negative obligation balances past reconciliation.51 As the 

inventory of LEU continues to decline, there is a growing risk that facilities 

carrying negative obligation balances between reconciliation periods may 

not be able to correct their negative obligation balances at year end. 

Without DOE and NRC clarifying in guidance the conditions under which 

facilities can carry negative balances, facilities may be at risk in the future 

of conducting exchanges that they ultimately cannot fulfill, putting the U.S. 

government at risk of not complying with its nuclear cooperation 

agreements. 

NMMSS does not have a capability to alert DOE when the inventory of 

unobligated LEU is low, placing facilities with negative obligation balances 

at risk of not being able to reconcile them. According to NMMSS data, 

there have been significant decreases in the inventory of unobligated 

LEU, particularly from 2014 to 2015, which DOE officials attributed in part 

to the closure of the Paducah Gaseous Diffusion Plant in 2013, when the 

United States lost its sole supplier of unobligated LEU. DOE officials 

project that the inventory of unobligated LEU will continue to decrease 

without a domestic source. DOE documents estimate that the inventory 

will run out at some point from 2038 to 2041.52

Federal standards for internal control state that management should 

establish and operate monitoring activities to monitor the internal control 

 51Specifically, we were unable to compare data across years to determine how many 

facilities had carried negative obligation balances past reconciliation because certain 

obligation data in NMMSS include revisions to the original data entered in NMMSS.

52In light of this trend, Congress has taken an interest in the future supply of unobligated 

LEU. The House Armed Services Committee report accompanying H.R. 4909, the 

National Defense Authorization Act for Fiscal Year 2017, includes a provision for GAO to 

review and assess a recent report on DOE’s enriched uranium management, including the 

ability of DOE to meet defense requirements for enriched uranium into the future and 

other matters related to domestic uranium enrichment. H.R. Rep. No. 114-537, at 393 

(2016). 

NMMSS Does Not Have a 

Capability to Alert DOE When 

the Inventory of Unobligated 

LEU Is Particularly Low 
Page 27 GAO-16-713 Nuclear Material

system and evaluate the results.53 Ongoing monitoring is to be built into 

the entity’s operations, performed continually, and responsive to change 

and may include automated tools, which can increase objectivity and 

efficiency by electronically compiling evaluations of controls and 

transactions. DOE officials acknowledged that they do not have a specific 

capability in NMMSS that could serve as an early-warning system to alert 

them when the inventory of unobligated LEU becomes low enough to put 

facilities at risk of running negative obligation balances that they may not 

be able to reconcile. They also told us that no such capability is currently 

needed because the inventory of unobligated LEU is currently sufficient to 

limit such risk. Moreover, DOE officials added that they would step in to 

cover a negative obligation balance that could not otherwise be covered 

out of a facility’s own inventory, by transferring unobligated LEU from the 

U.S. national security inventory. 

Nevertheless, while the U.S. national security inventory of unobligated 

LEU could be used to correct any future negative obligation balances, if 

the decline in this U.S. inventory of unobligated LEU continues, and if it is 

possible to carry a negative obligation balance beyond reconciliation,

there is a risk that, at some point in the future, a facility may conduct an 

exchange for nuclear material that it cannot fulfill—essentially bouncing a 

check. DOE officials acknowledged that the decline in the national 

security inventory of unobligated LEU may change the way senior DOE 

officials need to use NMMSS in the future and that additional monitoring 

may be needed to ensure compliance with nuclear cooperation 

agreements. Without DOE and NRC developing an early-warning 

monitoring capability in NMMSS to alert senior DOE officials when the 

inventory of unobligated LEU becomes low, DOE cannot know when 

supplies of unobligated LEU are no longer available to correct negative 

obligation balances, thereby putting the U.S. government at risk of 

noncompliance with its nuclear cooperation agreements. 

Under terms of its nuclear cooperation agreements, the United States 

must account for foreign obligated nuclear material, and NMMSS has 

been designated as the system to track and report on that material as it 

enters, leaves, and moves within the country. DOE and NRC have 

 53GAO-14-704G. 

Conclusions 
Page 28 GAO-16-713 Nuclear Material

developed procedures designed to ensure that the transaction data in 

NMMSS, including data on obligation exchanges, are accurate. With the 

exception of a few issues, which NNSA has fixed or plans to fix by 

developing new internal controls, we found that these procedures are 

working as expected and that NMMSS data on obligation exchanges 

appear to be reliable.

Certain obligation exchange practices, combined with trends in the 

inventory of unobligated LEU, may change the information DOE and NRC 

officials need and the actions required to ensure compliance with nuclear 

cooperation agreements in the future. While DOE’s procedures for foreign 

obligation reporting state that facilities should verify that there is sufficient 

inventory of the given material type to support an obligation exchange, 

neither the procedures nor other guidance document the conditions under 

which carrying a negative obligation balance is allowed. In addition, the 

United States has a declining domestic inventory of unobligated LEU, but 

NMMSS does not have an early-warning monitoring capability to alert 

DOE when this inventory is particularly low. Without such an earlywarning monitoring capability in NMMSS to alert senior DOE officials 

when the inventory of unobligated LEU is particularly low, facilities 

carrying negative balances could put the U.S. government in the position 

of potential non-compliance with its nuclear cooperation agreements.

We are making two recommendations to the Under Secretary for Nuclear 

Security, as the Administrator of the National Nuclear Security 

Administration, and the Nuclear Regulatory Commission to help ensure 

compliance with the United States’ nuclear cooperation agreements:

1. Clarify in guidance the conditions under which facilities may carry 

negative obligation balances. 

2. Develop an early-warning monitoring capability in NMMSS to alert 

senior DOE officials when the inventory of unobligated LEU is

particularly low.

We provided drafts of this report to DOE, NRC, and TVA for review and 

comment. DOE and NRC provided written comments, which are 

summarized below and reproduced in appendix I and II, respectively. TVA

did not comment on our findings and recommendations. In addition, all 

three agencies provided technical comments, which we incorporated as 

appropriate. 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 29 GAO-16-713 Nuclear Material

In their written comments, DOE and NRC did not explicitly state whether 

they concur with the recommendations. DOE and NRC described actions 

they are implementing or planning to implement to address our 

recommendations. 

Concerning our first recommendation that DOE and NRC clarify in 

guidance the conditions under which facilities may carry negative 

obligation balances, NRC stated that it is currently reviewing its guidance 

on nuclear material reporting and will consider our recommendation when 

updating this guidance. We will continue to monitor NRC’s 

implementation of this recommendation. DOE said that it is deferring to 

NRC’s response on this recommendation. DOE also stated that NNSA 

has no authority to regulate negative balances that may occur as a result 

of commercial business practices. DOE’s response suggests that it 

believes our recommendation was limited to NRC licensees engaged in 

commercial transactions. However, we recommended both NRC and 

NNSA develop guidance to clarify when facilities with materials under 

their jurisdiction may carry negative obligation balances because the 

practice of carrying negative obligation balances at either a NRC-licensed 

facility or DOE facility could put the United States in a position of 

noncompliance with international agreements in the future if balances of 

unobligated LEU become particularly low. Developing guidance could 

mitigate this risk. 

Concerning our second recommendation that DOE and NRC develop an 

early-warning monitoring capability in NMMSS to alert senior DOE 

officials when the inventory of unobligated LEU is particularly low, DOE 

noted that it has been directed by Congress to biennially update its 

Tritium and Enriched Uranium Management Plan through 2060.

54 DOE 

stated it will address our recommendation through these updates, which 

will assess the inventory of unobligated enriched uranium for national 

security applications. We agree that updating the plan will help DOE 

monitor its inventory of unobligated LEU, and we acknowledge that for 

now, biennial updates to the plan may be sufficient to monitor the 

declining inventory of unobligated LEU. However, the inventory of 

unobligated LEU has rapidly declined in recent years—about 10 percent 

in 1 year alone—as noted in this report. As the inventory of unobligated 

LEU continues to decline, more frequent monitoring may be necessary to 

ensure that facilities do not conduct obligation exchanges for nuclear 

 5450 U.S.C. § 2538c (2016).
Page 30 GAO-16-713 Nuclear Material

material that they cannot fulfill, which could put the United States at risk of 

noncompliance with its nuclear cooperation agreements. We continue to 

believe that our recommendation for DOE to develop an early-warning 

monitoring system will help mitigate the chance of DOE officials being 

unable to address a sudden decline in the inventory unobligated LEU. In

its written response to our second recommendation, NRC stated that 

DOE has notified it that DOE will complete biennial updates to the plan 

and that NRC will support DOE as appropriate.
Page 31 GAO-16-713 Nuclear Material

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report’s date. At that time, we will send copies to the appropriate 

congressional committees, the NNSA Administrator, the Chairman of the 

Nuclear Regulatory Commission, TVA’s Board of Directors, and other 

interested parties. In addition, this report will be available at no charge on 

the GAO website at http://www.gao.gov.

If you or your staff members have questions about this report, please 

contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made key contributions to 

this report are listed in appendix III.

David C. Trimble

Director 

Natural Resources 

and Environment Team
Appendix I: Comments from the Department of 

Energy

Page 32 GAO-16-713 Nuclear Material

Appendix I: Comments from the Department 

of Energy
Appendix I: Comments from the Department of 

Energy

Page 33 GAO-16-713 Nuclear Material
Appendix II: Comments from the Nuclear 

Regulatory Commission

Page 34 GAO-16-713 Nuclear Material

Appendix II: Comments from the Nuclear 

Regulatory Commission
Page 35 GAO-16-713 Nuclear Material

David C. Trimble, (202) 512-3841 or trimbled@gao.gov

In addition to the individual named above, Nathan Anderson (Assistant 

Director), Eric Bachhuber, and Tyler Kent made key contributions to this 

report. Also contributing to this report were Alison B. Bawden, Antoinette 

Capaccio, Julia Coulter, Kaitlin Farquharson, Ellen Fried, Cindy Gilbert, 

Mitch Karpman, Amanda K. Kolling, Jeff Philips, Dan C. Royer, and 

Vasiliki Theodoropoulos.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(361648)
Page 36 GAO-16-713 Nuclear Material

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