Inspection Report 

Material Control and Accountability at 

Los Alamos National Laboratory 

DOE/IG-0774 September 2007 

U.S. Department of Energy 

Office of Inspector General 

Office of Inspections and Special Inquiries 
Department of Energy 

Washington, DC 20585 

September 7,2007 

MEMORANDUM FOR 

FROM: 

Insp~ct& General 

SUBJECT: INFORMATION: Inspection Report on "Material Control and 

Accountability at Los Alamos National Laboratory" 

BACKGROUND 

The Department of Energy's Los Alamos National Laboratory (LANL) has a national security 

mission that includes responsibility for the science, engineering and technology related to certain 

radioactive materials supporting the Nation's nuclear weapons program. These include materials 

such as plutonium, enriched uranium and depleted uranium. 

LANL maintains inventories of Categories I, 11,111, and IV accountable nuclear material. 

Categories I and I1 materials are those that would be most attractive to an adversary intent on 

theft or diversion. Categories 111 and N materials are those that would be less attractive, because 

they contain smaller quantities of plutonium, uranium or other materials. 

The capability to prevent, deter or detect the theft or diversion of nuclear material is critical. As 

such, control and accountability of this material is provided through a Material Control and 

Accountability (MC&A) Program. The objective of our inspection was to determine if LANL's 

MC&A Program was providing timely and accurate information regarding the inventory, transfers, 

characteristics and location of accountable nuclear materials at the Laboratory. 

RESULTS OF INSPECTION 

We concluded that, in general, the Laboratory's MC&A Program provided timely and accurate 

information concerning its inventory of accountable nuclear material. However, we identified 

certain opportunities for improving controls over the nuclear material inventory. For example: 

Several inventories conducted by LAhTL were not completed in a timely manner due to 

problems with performing verification measurements within specified time fiames. 

Similar findings were reported during 2003 and 2005 external Safeguards and Security 

Surveys of LANL. 

A storage vault that contained over 1 1,000 individual lots of accountable nuclear material 

had not undergone a 100 percent inventory in over a decade. LANL used weighted 

sampling to conduct its inventories, which was consistent with its approved MC&A Plan. 

@ Printed with soy ~nk on recycled paper 
While the use of properly structured weighted sampling is a recognized technique, the 

reality is that some lots may not have been physically verified in many years. We noted 

that the lack of a 100 percent inventory was identified as a concern during a contractor 

"due diligence inspection" when the LANL management contract transitioned fiom the 

University of California to Los Alamos National Security, LLC, in June 2006. 

The formulation, assignment and labeling of lot identification numbers could be 

improved to enhance controls over and accuracy in accounting for nuclear material. 

Eight custodians were both the shipping and receiving agent in the same transaction, 

which violated a Department requirement for separation of duties. 

Contrary to LANL7s MC&A Plan, in several instances lots containing multiple items of 

accountable nuclear material (anywhere from 3 to 157 items) were annotated in the 

Laboratory's MC&A accounting system as single items. 

We made several recommendations designed to enhance the security of LANL's management of 

accountable nuclear materials. 

MANAGEMENT REACTION 

In responding to a draft of this report, management agreed with our recommendations and 

identified corrective actions taken, initiated, or planned to address them. Management's 

comments are provided in their entirety in Appendix C of the report. We consider management's 

comments to be responsive to our recommendations. 

Attachment 

cc: Deputy Secretary 

Administrator, National Nuclear Security Administration 

Chief of Staff 

Chief Health, Safety and Security Officer 

Manager, Los Alamos Site Office 

Director, Policy and Internal Controls Management (NA-66) 

Director, Office of Internal Review (CF- 1.2) 

Audit Liaison, Los Alamos Site Office 
MATERIAL CONTROL AND ACCOUNTABILITY 

AT LOS ALAMOS NATIONAL LABORATORY 

TABLE OF 

CONTENTS 

OVERVIEW 

introduction and Objective ...................................................... 

Otxervations and Conclusions ............................................. 

DETAILS OF FINDINGS 

MC&A Program Performance ................................................ 

MC&A Controls Inside the MAA .................................. 

MC&A Con.trols Outside the MAA ............................... 

INSPECTOR COMMENTS ............... 

APPENDICES 

A . Scope and Methodology ................................................... 

B . Accuracy of MC&A lnfot-mation ....................................... 

C . Management ~ml-lments .................................................. 
Overview 

INTRODUCTION The Department of Energy's (DOE'S) Los Alamos National 

AND OBJECTIVE Laboratory (LANL) is a multidisciplinary research institution 

engaged in strategic science on behalf of national security. This 

includes the responsibility for the science, engineering, and 

technology of plutonium and other radioactive materials in support 

of the Nation's nuclear weapons stockpile program. These 

materials may constitute accountable nuclear material, which is a 

collective tenn that includes all materials so designated by the 

Secretary of Energy in quantities that require special control. 

Examples of these materials include plutonium, enriched uranium, 

and depleted uranium. 

LANL's activities require the maintenance of inventories of 

Categories I, 11, 111, and IV accountable nuclear material. Categories 

I and 11 are the most attractive to an adversary intent on theft or 

diversion and generally include weapon components such as pits, as 

well as other pure products and high-grade materials containing 

significant quantities of plutonium and uranium. At LANL, these 

categories of material are maintained in Material Balance Areas 

located within LANL's Material Access Area (MAA). 

Categories 111 and IV materials are considered less attractive to an 

adversary because they contain smaller quantities of plutonium, 

uranium, and other materials. While the MAA does contain some 

Categories 111 and 1V materials, these categories of accountable 

nuclear material are generally maintained in Material Balance 

Areas located throughout the Laboratory's Limited Security and 

Property Protection Areas. 

LANL maintains approxiinately 19,400 lots of accountable nuclear 

material within the MAA and approximately 7,500 lots at other 

locations throughout the Laboratory. The capability to deter, 

detect, and assist in the prevention of theft or diversion of this 

material is critical. As such, LANL maintains a graded safeguards 

program under a Material Control and Accountability (MC&A) 

Program. This Program was established under the requirements of 

DOE Order 470.4, "Safeguards and Security Program," and DOE 

Manual 470.4-6, "Nuclear Material Control and Accountability," 

and is operating under LANL's recently approved MC&A Plan. 

The objective of this inspection was to determine if LANL's 

MC&A Program was providing timely and accurate information 

regarding the inventory, transfers, characteristics, and location of 

accountable nuclear materials at the Laboratory. 

Page 1 Material Control and Accountability 

at Los Alamos National Laboratory 
OBSERVATIONS 

CONCLUSIONS 

AND We concluded that in many respects LANL's MC&A Program 

provided timely and accurate information concerning the 

inventory, transfers, characteristics, and location of accountable 

nuclear material at the Laboratory. However, we identified certain 

opportunities for inlproving controls over accountable nuclear 

material maintained both inside and outside the MAA. 

Within the MAA. we sampled 66 accountable nuclear material 

lots, including Categories I and I1 materials, and 30 associated 

tamper indicating devices. We found all lots of accountable 

nuclear material to be consistetlt with the characteristics and 

locations identified in the Laboratory's official MC&A accounting 

system. We also found that the limited number of transfers of 

accountable nuclear material within the MAA was appropriately 

documented. We observed Laboratory MC&A personnel 

conducting semi-annual inventory activities, and the personnel 

appeared to be conforming with prescribed inventory procedures. 

However, during our review we identified the following cotlcerns 

that we believe warrant management attention: 

Six of six inventories conducted by LANL in the MAA since 

December 2005 were not con~pleted in a timely manner due to 

problems with performing verification measurements within 

specified time frames. We noted that similar findings were 

identified and reported during 2003 and 2005 Los Alamos Site 

Office Safeguards and Security Surveys; 

The storage vault in the MAA, which contained over 1 1,000 

individual lots of accountable nuclear material, had not 

undergone a 100 percent inventory for a number of years, 

perhaps 13 years or more. Consistent with its MC&A Plan, 

LANL used weighted sampling to conduct its inventories. 

However, we are concerned that, by relying on weighted 

sampling and never conducting a 100 percent inventory, LANL 

crcated the potential for some lots not to have had their 

presence physically verified in over a decade. We noted that a 

100 percent inventory was not even conducted when the LANL 

management contract transitioned from the University of 

California to Los Alamos National Security, LLC, in 

June 2006; and, 

The formulation, assignment, and labeling of lot identification 

nutnbers could be improved to enhance controls over and 

accuracy in accoutlting for nuclear material. For example, lot 

identification numbers were not always formulated in 

Page 2 Observations and Conclusions 
accordance with applicable instructions, and different lots were 

assigned the same identification number, which could lead to 

confusion. 

Outside the MAA, we observed operations and inventory 

procedures in several Categories 111 and IV Material Balance 

Areas. We also sampled 814 Categories 111 and IV lots of 

accountable nuclear material in 7 separate Material Balance Areas. 

We found MC&A activities that were not consistent with DOE 

and/or LANL MC&A requirements. Specifically: 

Eight custodians shipped accountable nuclear material from 

one Material Balance Area to another where they were the 

receiving custodian. Thus, they were both the shipping and 

receiving agent in the same transaction-this violated a DOE 

requirement for separation of duties; 

I11 several instances, lots containing multiple items of 

accountable nuclear material were annotated in the 

Laboratory's official MC&A accounting system as single 

items, contrary to the accounting structure identified in 

LANL's MC&A Plan. We noted that these lots actually 

contained anywhere from 3 to 157 discrete accountable items; 

and, 

A Material Balance Area custodian did not appropriately 

document the creation of a new lot of accountable nuclear 

material within the time frame required by LANL's MC&A 

Plan. Under the circumstances, the nuclear material could have 

been diverted without any record showing that it had ever 

existed. 

In addition, across multiple Categories III and IV Material Balance 

Areas, we had several concerns based on instances of noncompliance with applicable MC&A procedures for the recording of 

infornlation in the Laboratory's official MC&A accounting system 

and the labeling of lots. A detailed discussion of the issues can be 

found in Appendix 6. 

Page 3 Observations and Conclusions 
Details of Findings 

MC&A PROGRAM We concluded that LANL's MC&A Program could be iinproved 

PERFORMANCE with regard to the provision of timely and accurate information 

concerning the inventory, transfers, characteristics, and location of 

accountable nuclear materials. We identified opportunities for 

improvement in controls over accoilntable nuclear material 

maintained both inside and outside the MAA. 

MC&A Controls 

Inside the MAA 

Within the MAA, we sainpled 66 accoilntable nuclear material 

lots, including Categories I and I1 materials, and 30 associated 

tamper indicating devices. We found all lots of accountable 

nuclear material to be consistent with the characteristics and 

locations identified in LANL's Materials Accounting and 

Safeguards System (MASS), which is the Laboratory's official 

MC&A accounting system. We also found that the limited number 

of transfers of accountable nuclear material within the MAA was 

appropriately documented. In addition, while conducting our 

inspection, we observed Laboratory MC&A personnel conducting 

a semi-annual inventory, which used prescribed inventory 

procedures based on a weighted sample approach. LANL 

reviewed 430 lots and 370 tamper indicating devices in 17 Material 

Balance Areas and only identified discrepancies with two tamper 

indicating devices and one container label. 

However, duriiig our review we identified the following concerns 

that we believe warrant management attention. 

Completion of Past We found that six of six inventories coilducted by LANL in the 

Inventories MAA since December 2005 were not completed in a timely 

manner due to problems with performing verification 

nieasurements within the specified eight working days time frame. 

This is similar to findings reported during 2003 and 2005 Los 

Alamos Site Office Safeguards and Security Surveys. 

DOE MC&A policies require that nuclear material accounting 

systems be structured to ensure timely detection of errors or 

discrepancies in records associated with Category I or 11 quantities 

of accountable nuclear material. In this regard, the LANL MC&A 

Plan provides that during physical inventories a Nuclear Material 

Physical Inventory Measurement ticket will be used to identify 

accountable i tems requiring further nieasurement. These 

measurements are then to be completed within eight working days, 

with the results reported to the LANL Physical Inventory Officer. 

Page 4 Details of Findings 
Due to a series of issues, such as a contamination incident in the 

MAA storage vault, the MAA laboratory that conducts the required 

inventory verification measurements was shut down for lengthy 

periods of time during the first half of 2006. This resi~lted in four 

bi-monthly process area and two semi-annual storage area 

inventories remaining open for as long as 10 months. This had the 

potential to impact LANL's ability to ensure the timely detection 

of errors or discrepancies. The inventories were not closed until 

October 2006. 

Inventory of Storage We identified that the storage vault in the MAA, which contains 

Vault over 11,000 individual lots of accountable nuclear material, had 

not undergone a 100 percent inventory for a number of years, 

perhaps 13 years or more. Consistent with its MC&A Plan, LANL, 

used weighted sampling to conduct its inventories. However, we 

are concerned that, by relying on weighted sampling and never 

conducting a 100 percent inventory, LANL created the potential 

for some lots not to have had their presence physically verified in 

over a decade. We noted that a 100 percent inventory was not 

even conducted when the LANL management contract transitioned 

from the University of California to Los Alamos National Security, 

LLC, in June 2006. 

LANL's sampling approach identifies 110 lots plus adjacent items 

for inventory every semi-annual period, with the sample weighted to 

ensure that the most "attractive" items in storage have the greatest 

chance of being selected and "less attractive" items the least chance 

of being selected. LANL's reasoning for reliance on this statistical 

sampling method was based on the Laboratory's policy of ALARA 

(As Low As Reasonably Achievable) radiation exposure and the 

area's relatively high level of radiation. During discussions with 

assigned technicians and other MC&A-related personnel, we were 

unable to find anyone with knowledge or documentation of the last 

time the vault was completely inventoried. In contrast to LANL's 

practice, we noted that Lawrence Livermore National Laboratory 

conducted 100 percent semi-annual inventories of the accountable 

nuclear materials in its MAA. 

During contract transition, Los Alamos National Security, LLC, 

perfo~med "due diligence" inspections of laboratory facilities and 

operations to identify those conditions it believed could give rise to 

liability, loss, damage, or non-compliance with the tem~s of its 

contract. As part of this effort, Los Alamos National Security, 

LLC, noted that a 100 percent inventory of Special Nuclear 

Material had not been conducted. To meet "due diligence" 

Page 5 Details of Findings 
requirenients, Los Alamos National Security, LLC, conducted 

statistical sampling of Special Nuclear Material and plans actions 

within the next 2 years to ensure 100 percent accountability of 

items in the invcntory. Given the sensitivity of the nuclear 

material involved, we believe Los Alamos National Security, LLC, 

should place particular emphasis on assuring that all materials in 

the vault are properly accounted for at the earliest possible time. 

National Nuclear Security Administration Headquarters and Los 

Alamos Site Office officials suggested to us that DOE policy 

should be modified to require periodic 100 percent inventories 

when statistical sampling is used as the primary method of assuring 

accountability of accountable nuclear material. 

Lot Identification We found that the forn~ulation, assignment, and labeling of lot 

Numbers identification numbers could be improved to enhance controls over 

and accuracy in accounting for nuclear material. 

The MAA maintains Process Accountability Flow Diagrams that 

contain instructions on how to develop an identification number for a 

particular lot of accountable nuclear material. The Diagrams provide a 

methodology for generating lot identification numbers based on a 

naming convention for each process, i.e., a production activity. 

However, we determined that the instructions were not always 

followed. We noted during our inspection that the formulation of lot 

identification numbers was often based on the preference of the 

technicians who worked with the materials. For example, we were 

told one technician's lot identification numbers were based on the 

characters in a movie the technician had just seen. 

In addition, during our sampling process, we noted that side-by-side 

Material Balance Areas used numbering systems that resulted in 

some duplication of lot identification numbers. In two instances, we 

noted that lots in the different Material Balance Areas had exactly 

the same lot identification number, potentially making inventory 

verification activities difficult. Verbal confirmations from facility 

workers were required to provide assurance that these lots had been 

accounted for properly. We were told by an MC&A official that 

MASS allows items in different material accounts (i.e., Material 

Balance Areas) to have the same lot identification number. 

We also noted that the labeling of lot identification numbcrs varied 

significantly from item to item. For example, some items had their 

lot identification numbers marked on the outside of containers or 

plastic bags with a felt-tipped marker, other items had their lot 

identification numbers handwritten or typed on tags attached to the 

Page 6 Details of Findings 
items, and some items had their lot identification numbers physically 

engraved on the items. Some of these practices resulted in difficulty 

reading lot identification numbers due to handwriting 

inconsistencies, wearing away of the identification numbers due to 

handling of the items, or obliteration of the lot identification 

numbers due to mechanical processes used while working with the 

items in the process area. 

Outside the MAA, we observed operations and inventory 

procedures in several Categories 111 and IV Material Balance 

Areas. We also randomly sampled 814 Categories 111 and IV lots 

of accountable nuclear material in 7 Material Balance Areas. The 

following MC&A activities were inconsistent with DOE and/or 

LANL MC&A requirements. 

Separation of Duties We found that eight custodians shipped accountable nuclear 

material from one Material Balance Area to another where they 

were the receiving custodian. Thus, they were both the shipping 

and receiving agent in the same transaction-this violated DOE 

Manual 470.4-6, which states "a single custodian must not serve as 

both shipper and receiver for material transfers." 

During our inventory of selected items in a Material Balance Area, 

we determined that a Material Balance Area custodian had both 

shipped and then received accountable nuclear materials between 

Material Balance Areas that he administered. A subsequent query 

of MASS by MC&A officials determined that seven other 

custodians had transferred material to themselves. LANL issued 

an Internal Assessment Report that stated "Custodians may not 

ship materials from one MBA and then receive it in another MBA 

as defined in DOE M [Manual] 470.4-6 . . . ." The Internal 

Assessment Report also stated that "Each custodian was 

immediately contacted and notified of the violation." In addition, 

each custodian was requested to acknowledge hislher 

understanding of the requirement to preclude recurrence. As an 

immediate compensatory measure, LANL management requested a 

daily report that monitors accountable nuclear material transfer 

transactions to ensure the same custodian does not ship and receive 

material between Material Balance Areas helshe controls. 

Multiple Item Lots We also found that, in several instances, lots containing multiple 

items of accountable nuclear material were annotated in MASS as 

single items, contrary to the accounting structure identified in 

LANL's MC&A Plan. We determined that these lots actually 

contained anywhere from 3 to 157 discrete accountable items. 

Page 7 Details of Findings 
Under LANL's MC&A Plan, nuclear materials are to be accounted 

for by discrete item. MASS is used to maintain detailed item 

inventory records, categorized by material type, composition, 

location, and process status, and is to provide a complete audit trail 

on all accountable nuclear material from receipt through 

disposition. The practice we observed with multiple item lots was 

not consistent with the concepts of accounting by "discrete item" 

and having "detailed item inventory records" and "a complete audit 

trail." Not annotating MASS with the specific number of individual 

accountable items comprising a lot prevented LANL from knowing 

exactly how many discrete accountable items the Laboratory was 

maintaining and could have negatively impacted the control and 

accountability of nuclear materials. When we raised this issue, 

LANL management stated that it would require Material Balance 

Area custodians to use the comment field in MASS to note when a 

specific lot contains more than one discrete item. 

Timely Recording in We found that a Material Balance Area custodian did not document 

MASS the creation of a new lot of accountable nuclear material in MASS 

within the time frame required by LANL's MC&A Plan. The 

MC&A Plan states "Tinleliness goals for closing NM [Nuclear 

Material] transactions onto MASS are established on a graded 

safeguards basis as follows: Category IV NM in four hours." In 

the instance we identified, however, the lot was created on 

September 5, 2006, but was not entered into MASS ~lntil 

September 13, 2006, eight days past the required time frame. 

Although we only identified the one instance of noncompliance, 

ensuring compliance with this MC&A Plan requirement is 

essential because of the potential that undocunlented accountable 

material co~lld be diverted without any record or evidence showing 

that it had ever existed. Due to our identification of this condition, 

LANL management issued an Internal Assessnient Report 

acknowledging that an accountable item "had been generated . . . , 

but was not entered into MASS within the 4 hour time requirement 

of the MC&A Plan." The custodian responded that this was an 

oversight. The Internal Assessment Report stated that the 

custodian would be retrained 011 the requirements of applicable 

work instructions. 

Accuracy of MC&A In addition, across multiple Categories 111 and IV Material 

Information Balance Areas, we had several concerns based on instances of noncoinpliance with applicable MC&A procedures for the recording of 

Page 8 Details of Findings 
infom~ation in MASS and the labeling of lots. A detailed 

discussion of the issues can be found in Appendix B. 

RECOMMENDATIONS We reconimend that the Chief Health, Safety and Security Officer: 

1. Consider modifying DOE Manual 470.4-6 to require periodic 

100 percent inventories when statistical sampling is used as the 

primary method of assuring accountability of accountable 

nuclear material. 

We recommend that the Manager, Los Alamos Site Office, directs 

LANL MC&A management to: 

2. Ensure that bimonthly and semi-annual inventories in the 

MAA are completed in a timely manner, to include completion 

of verification measurements within specified time frames. 

3. Review the formulation, assignment, and labeling of lot 

identification numbers and implement more standardized 

methodologies that would enhance controls over and accuracy 

in accounting for nuclear material. 

4. Ensure that LANL maintains separation of duties when 

shipping and receiving accountable nuclear material between 

Material Balance Areas. 

5. Ensure that the recording of multiple item lot information in 

MASS is consistent with the concepts of accounting by 

"discrete item" and having "detailed item inventory records" 

and "a complete audit trail," as provided for under the 

accounting structure of the LANL MC&A Plan. 

6. Ensure that the creation of any new lot of accountable nuclear 

material is recorded in MASS in the time frames required. 

7. Review the issues discussed in Appendix B and take action to 

ensure that information is appropriatelylaccurately recorded in 

MASS in a timely manner, that lot identification tags are 

accurate and intact, and that container labels list all required 

information. 

Page 9 

- - 

Recommendations 
MANAGEMENT In comments on a draft of this report, the National Nuclear 

COMMENTS Security Administration (NNSA) generally agreed with the report 

and its recommendations. NIVSA identified complcted, ongoing, 

and planned actions to address recommendations 2 tliroi~gh 7. 

Regarding recommendation 1, the Office of Health, Safety and 

Security (HSS) considered niod~fying DOE Manual 470.4-6 and 

concluded that MC&A requirements should not be modified to 

require periodic 100 percent inventories. HSS summarized that 

"Although periodic 100 percent inventories are a good practice and 

many DOE facilities perfonn them, there are circumstances when 

conducting 100 percent inventories is not practical and providing a 

high level of assurance by other means is a preferable approach. 

For these situations, the marginal increase in assurance provided 

by conducting 100 percent physical inventories does not justify the 

additional costs, worker radiation exposure, operational impacts, 

and in some cases increased security risks." 

Management's comments are contained in their entirety at 

Appendix C. 

INSPECTOR 

COMMENTS 

We consider management's comments to be responsive to our 

recommendations. 

Page 10 Management and Inspector Comments 
Appendix A 

SCOPE AND We conducted our inspection fieldwork between June and 

METHODOLOGY December 2006. Los Alamos Site Office and Laboratory 

personnel were interviewed regarding LANL MC&A procedures. 

the MC&A Program, and MASS. We reviewed applicable policies 

and procedures, as well as inspection and survey reports issued by 

the Los Alamos Site Office and the Department's Office of 

Independent Oversight. We observed a number of LAMLconducted inventories at various Material Balance Areas, to 

include 3 16,424,425,428,429, and 469 and the 700 and 800 

series. We conducted a number of random samples at various 

Material Balance Areas, to include 3 10, 3 15, 3 16, 424, 469, 5 17, 

and 520 and the 700 and 800 series. We did not conduct sampling 

in LANL's vault area due to safety considerations. 

We did not review LANL's performance measurement processes as 

they relate to the MC&A Program because DOE had temporarily 

relieved Los Alamos National Security, LLC, the new management 

and operating contractor at LANL, of performance measi~rement 

requirements. The new contract was awarded on December 21, 

2005, and comnlenced on June 1, 2006. Performance measures and 

associated incentives were not put into place until October 2006. 

This inspection was conducted in accordance with the "Quality 

Standards for Inspections" issued by the President's Council on 

Integrity and Efficiency. 

Page 11 Scope and Methodology 
Appendix B 

Accuracy of MC&A Across multiple Categories 111 and 1V Material Balance Areas, we 

Information identified several issues involving instances of non-compliance 

with applicable MC&A procedures for the recording of 

infomiation in MASS and the labeling of lots. Specifically, we 

found that: 

While conducting a series of random samples in the Chemical 

and Metallurgy Research Facility, we noted that every lot we 

sampled that consisted of solid material dissolved in a solution 

was recorded in MASS as if the material were still in a solid 

state, i.e., grams instead of grams per liter, as presented in DOE 

guidance. Material categorization as described in the LANL 

MC&A Plan is based on the attractiveness level and quantity of 

material, so accurately identifying the nature and amount of 

material present is important. LANL uses the attractiveness 

levels prescribed by DOE guidance, where it is recognized that 

Categories 1, 11, 111, and IV materials can be in the fonn of 

solutions, specified as so many grams per liter. 

One lot identification number was listed as active in MASS 

even though the lot was destroyed nearly 12 months earlier 

during a December 2, 2005, hydrodynamic test. The Material 

Balance Area custodian said that the deletion paperwork was 

properly submitted at the time of destruction, but was lost prior 

to MASS transaction generation. The lot was finally removed 

from MASS on November 27,2006. 

Five required lot identification labels had deficiencies. Three 

labels had incorrect lot identification numbers hand printed on 

them; one label was tom in half; and one label had become 

detached from its assigned lot. In the case of the first three 

labels, pen and ink corrections were immediately made. We 

were told that the label discrepancies relating to the tom and 

detached labels were corrected after our departure. 

Three tamper indicating devices attached to accountable items 

were not recorded in MASS. Tamper indicating devices are 

~ised in conjunction with a material surveillance program to 

detect violations of container integrity. The necessary MASS 

transactions and/or other corrections were accomplished. 

The lot identification numbers for one drum and nine lots 

stored therein had their identification niu-nbers transposed in 

MASS. During our random sample, two laboratory personnel 

spent approximately 30 minutes attempting to locate a drum we 

Page 12 Accuracy of MC&A Information 
Appendix B 

had selected to be inventoried. A determination was made that 

the lot identification number must be wrong, and subsequently 

the drum was located. It was determined that the drum and all 

the lots stored therein had their lot identification numbers 

transposed during the shipping process and incorrectly 

recorded in MASS. 

The labels for two sealed drums did not list all internally stored 

lots, as required. An August 14, 2003, notice from the LANL 

Security and Safeguards Division titled "Accountability 

Requirements for Multiple-Item Containers" stated that "In all 

cases, the NM [nuclear material] custodian must ensure the 

label of the multiple-item container correctly lists all 

accountable and nonaccountable items within the container." 

We were told that content listings were later attached to the 

outside of the drums. 

Page 13 Accuracy of MC&A Information 
Appendix C 

Department of Energy 

National Nuclear Security Administration 

Wash~ngton, DC 20585 

MEMORANDLJM FOR Chr~stopher R. Sharpley 

Dep~ity Inspector General 

FROM: 

SUBJECT: 

dsociatc ~dminidator 

for Management and Admin~stration 

Comments to Draft LANL MC&A Report; 

S061S023; IDRMS No. 2006-14003 

'Phc National Nuclear Security Administration (NNSA) appreciates the 

opportunity to review thc Inspector General's (IG) draft report on material 

control and accountability at Los Alarnos National Laboratory. We 

understand that this inspect~on was to determine if the Laboratory's 

Material Control & Accounting (MC&A) program is provitling tinicly and 

accurate information regarding the inventory, transfers, character~stics, 

and location of accountable nuclear materials at the Laboratory. 

NNSA generally agrees with thc report and the rccommentlations but 

offers the following com~ncnts: 

100% inventories -- While we understand the intent of the 

rccommentlation there is no requirement for such an inventory. It 

is important to note that the Laboratory currently meets the 

requirements for conducting physical inventories. A change to 

policy must take into consideration the Icngth of time required for 

a desired 100% invcntory with confirmation or vcrificafion 

measurements and the impact that the inventory would have 

operationally. Equally important is the condit~ons withiri any vault 

(high radiation areas, requirement for respirators, annual radiation 

tlose limits). , . I inieliness of inventorics Incorporating rnilesfoncs into the 

contract adheres to the current methodology wherc cun-ent 

performance incentives arc linked to the completion of inventories 

Standardired n~ethodologies for cntianccd controls is adtiressed 

in the techn~cal comments. 

Separation of duties A rnore explicit Standing Order was 

developed and implemented and there have been no violations of 

@ P'~lleil wl:ll .,uy rik or rrr yrlid ppil,nr 

Page 14 Management Comments 
Appendix C (continued) 

the separation of duties for Material Balance Arca custodians slncc 

inception of the Standing Ordcr. 

w Consistent accounting - The Laboratory is still addrcss~ns tllis 

concern. Thc technical comments provide ~nsiglit lo the progrcss 

being made and the Laboratory's resolution of this concern. 

Recording of data within timerrames required and, addressing 

issues discussed in Appendix B - Both topical areas have becn 

addressed and rectified by the Laboratory. 

1 have providcd technical comments for the LC's consideral~on in 

preparing the final report. Should you have any questions about th~s 

response, please contact Richard Speidel, Director, Policy and Inlemal 

Conlrols Management. 

cc. Donald Winchell, Manager, Los Alamos Site Office 

William Desmond, Chief, Defense Nuclear Sccurity 

David Boyd. Senior Procurement Executive 

Karen Boardman, Director, Service Ccntcr 

Page 15 Management Comments 
Appendix C (continued) 

Department of Energy 

Washington. DC 20585 

August 2,2007 

MEMORANDUM FOR GFEGORY H. FRIEDMAN 

INSPECTOR GENERAL ,:/, 

FROM: 

SUBJECT: ,~<mments for Draft IG Report: Aterial Control and 

/'' Accountability at Los Alamos National Laboratory 

(SO61S023) 

The Office of Health, Safety and Security (HSS) has revicwed the subject draft 

inspection report provided by the Inspector General's Officc on June 29, 2007, and 

providcs thc following comments. 

Recommendation I : 

Wc recommend that the Chief Health, Safety and Security Officer consider 

modifying Departmcnt of Energy (DOE) Manual 470.4-6, Nuclear Materials 

C'ontrol and Accountability, to require periodic100 percent inventories when 

statistical sampling is used as the primary method of assuring accountability of 

accountable nuclear material. 

Concise Response: 

HSS docs not agree that DOE M 470.4-6 should be modified to require periodic I00 

percent inventories. When 100 percent inventories can be conducted quickly, safely, 

and efficiently, they are a good practice. However, for many nuclear material 

locations in the DOE co~nplex, this is not the case. Typically barriers to conducting 

100 percent physical inventories for such locations are high radiation levels and 

inaccessibility of the materials. For such materials, DOE relies on othcr measures to 

provide a high degree of assurance in the integrity of the inventories. We feel that 

the additional assurance provided by conducting 100 percent inventorics in these 

cases docs not justify the increase in radiation exposure to workers, lost operational 

time in personnel workload while inventories are being conducted, other financial 

costs involved in conducting the inventories, increased risk in additional handling of 

nuclear materials, and, often, the increased security vulnerabilities associated with 

prov~ding easier access to the materials during inventory periods. 

Page 16 Management Comments 
Appendix C (continued) 

Instcad, we belleve the current safeguards and security policy approach of allowing 

site management, with oversight and approval from DOE site offices and program 

offices, to determine the best methodology for providing a high level of confidence 

in nuclear material inventories. The resulting methodology takes Into account all the 

specific concerns associated with the products and operations at each site and 

facility. We do not belleve these site-spec~fic methods would be improved by 

adding an unconditional requirement to conduct a 100 percent physical inventory. 

While per~odic 100 percent inventories can be an important element of the site 

protection desrgn in miany cases, we tio not believe that an uncondit~onal polley 

requirement for 100 percent ~nventories is warranted. 

Rationale: 

'I'here are a number of facilities in DOE for which 100 percent physical 

inventories are the best approach to providing a level of high level of assurance. 

There are at least three types of materials and/or locations for which 100 percent 

inventor~es may not be appropriate. They are: 

1) Materials stored in high security areas for which conduct 100 percent 

physical inventories would significantly increase radiation exposure for 

workers. The Los Alamos National Laboratory (LANL) vault cited in the draft IG 

report is an example of this type of location. There are over 1 1,000 items on 

inventory in the vault. These items sit in a variety of shelf types and drawers. Some 

rcquire lifting the items from the drawers in order to perfon11 the inventorics. A 

large number of items are located on shelves requiring access by laddcr to inventory 

thc items. Radiation readings in some parts of the vault are greater than 100 mRem 

per hour and radiation dose for workers performing inventories in this vault can be 

LIP to 25-30 mRem per hour. Inventory teams are comprised of four workers: two 

people conducting the inventories, one material handler, and one radiation control 

technreian. All personnel are required to wear a respirator while performing 

~nventory in the vault to prevent the inhalation of toxic and radioactive materials. 

Bccausc of the radration dose in the vault, personnel are limited to 2 hours of work in 

the vault per day. A rough estimate of the time to conduct current physical 

inventories for the IANL vault is between 7 and 9 hours (28 to 32 person-hours, 

based on four- person teams), and these inventories only select I 10-item locations. 

2) Materials of little financial or strategic value and for which the security 

interests are minor. The costs of conducting 100 percent inventories car1 far exceed 

the value of the materials or DOE security interests concerning them. Examples of 

rnaterials for which this can be the case are depleted uranium, enriched lithium, and 

some attractiveness level E special nuclear materials. See DOE M 470.4-6 for more 

infomiation on safeguards attractiveness levels. 

Page 17 Management Comments 
Appendix C (continued) 

3) Static storage locations with major barriers to access. There are several 

storage locations within DOE where there are major physical barriers to accessing 

materials. Additionally, the materials are rarely moved or handled. In some cases, 

there are radiation barriers as well. Accessing the materials typically requires 

renioval of the physical barriers by use of heavy equipment such as cranes or other 

lifting and handling devices; additionally, the materials are often packaged or stored 

in such a way that accessing individual items is difficult and requires special 

handling equipment andior procedures. These materials are usually inventoried by 

verifying that the barriers have remained intact, and the integrity of the storage 

locations has not been violated. Opening even a few of these locations is difficult, 

costly, and raises safety concerns. Conducting a 100 percent physical inventory of 

these locations would be very expensive and require large amounts of operational 

resources. Additionally, renioving the physical barriers for long periods of time or at 

predictable times would increase the security risks associated with terrorists attacks 

aimed at renioving the materials. 

A high level of assurance can be provided by other meanslthe costs and impacts 

of conducting 100 percent inventories can exceed their benefits. 

Conducting physical inventories is not the sole means of achieving and maintaining 

a high level of confidence in the nuclear material inventories and detecting missing 

or misplaced items. Inventories provide one measure of assurance within the overall 

safeguards and security program. Performance of inventories is integrated with 

other elements of the safeguards and security program, namely, physical protection, 

personnel security, other material control, accountability, and surveillance measures, 

protective force, and information security to establish the security posture for a 

particular site and set of material. It is also not a single fail-safe system. Systems 

are dcsigneci to be ~nultiply redundant assuring that loss of onc element will not 

cause catastrophic failure of the entire system. Establishment of these multiple 

layers of protection measures provides a high level of confidence that special nuclear 

niaterial continues to reside in its designated location. 

Because of the costs and difficulties involved in conducting 100 percent inventories, 

DOE allows the use of other measures to provide the high degree of assurance 

rcquircd by DOE policy in its nuclear niaterial inventories. Physical barriers, access 

controls, and personnel security programs limit who has access to the matcrials and 

thereby greatly reduce the chance of unauthorized material movement. 

Administrative controls assure that inadvertent errors are not made when materials 

are moved into or out of a storage location or other areas. These controls include a 

two-person rule for handling and transferring materials, transfer checks on materials 

and containers to assure the right types and amounts of materials were shipped and 

recclved, requirements that transfers be appropriately authorized and documented, 

and separation of duties and responsibilities between materials handling and 

materials accounting functions. These measures, when combined with random 

Page 18 Management Comments 
Appendix C (continued) 

sampling during physical inventories, provide a high level assurance that the nuclear 

materials inventories are as stated. 

Use of random sanlpling for physical inventories is consistent with its use in 

Departmental financial accounting and quality assurance policies. 

The use of random sampling for physical inventorics is similar to the way auditors 

use random sampling in reviewing financial records and to the way random sampling 

is used in quality control. Financial auditors sample company rccords and revicw 

internal controls as part of their process of determining whether a company's 

financial and invcntory reports accurately (fairly) represent the company's financial 

position. The auditor's statement about the accuracy/fairness of the company's 

financial statements is based on a sample of the company's record, rather than a 

review of all of them. Similarly in quality control, sampling of output is typically 

used to determine if a production system is operating as intended. Detection of 

defectives items indicates something is wrong with the system. Use of random 

sampling for physical inventories borrows from both thesc concepts. Random 

sampling, when combined with other system elements, allows DOE to say it has a 

high degree of confidence that its inventories are as stated. It also allows DOE 

facilities to detcct systematic problems in materials control and accountability 

(MC&A) systems. 

Summary: 

Physical inventories are only one of many measures that DOE uses to provide a high 

degree of confidence in its inventories. Although periodic 100 percent inventories 

are a good practice and many DOE facilities perform them, there are circu~nstances 

whcn conducting 100 percent inventories is not practical and providing a high level 

of assurance by other means is a preferable approach. For these situations, the 

marginal increase in assurance provided by conducting 100 percent physical 

inventories does not justify the additional costs, worker radiation exposure, 

operational impacts, and in some cases increased security risks. Based on these 

considerations, our view is that MC&A requirements should not be modified to 

require periodic 100 percent inventories. Rather, DOE M 470.4-6 should continue to 

allow DOE program and site offices to approve the inventory methodologies tailored 

for their mission and facility(ies). The program and site officcs are in the best 

position to know whether the bcncfits of conducting 100 percent inventories justify 

the cost and impacts of conducting them and whether a high level of assurance in the 

inventories can be achieved by other means. 

If you havc any questions, you may contact me at (301) 903-3777, or your staff may 

contact Jim Crabtree, of my staff, at (301) 903-6008. 

cc: Richard Speidel, NA-66 

Page 19 Management Comments 
IG Report No. DOEIIG-0774 

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