United States General Accounting Office

GAO Report to Congressional Committees

February 1997 WEAPONS OF MASS

DESTRUCTION

DOD Reporting on

Cooperative Threat

Reduction Assistance

Has Improved

GAO/NSIAD-97-84

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-276146 

February 27, 1997

The Honorable Strom Thurmond

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Floyd Spence

Chairman

The Honorable Ronald Dellums

Ranking Minority Member

Committee on National Security

House of Representatives

Section 1206 of the National Defense Authorization Act for Fiscal Year

1996 requires the Department of Defense (DOD) to report annually on

Cooperative Threat Reduction (CTR) assistance provided to the newly

independent states (NIS).1

 According to the legislation, DOD’s report is to

include (1) a list of CTR assistance that has been provided, (2) a description

of the current location and condition of the material and equipment

provided, (3) a determination of whether the assistance has been used for

the purposes intended, and (4) a description of CTR audit and examination

activities to be carried out during the next fiscal year. DOD submitted its

annual report for the year 1995 on December 31, 1996—nearly a year after

its due date.2

The legislation also requires that we provide Congress an assessment of

DOD’s report within 30 days of the date that DOD issues its report.

Accordingly, we reviewed DOD’s report to determine whether it

(1) contained current and complete data on CTR assistance deliveries,

including their location and condition; (2) presented the best available

sources of information to show what assistance was accounted for and

how it was used; (3) provided an overall determination of assistance use;

and (4) listed planned audit and examination activities for the coming

1

The NIS states of Belarus, Kazakstan, Russia, and Ukraine inherited the former Soviet Union’s

weapons of mass destruction.

2

The legislation specifies that DOD report on CTR assistance deliveries no later than January 31 of

each year until the program ends.

Page 1 GAO/NSIAD-97-84 Weapons of Mass Destruction
B-276146 

year. We also followed DOD’s implementation of the recommendation we

had previously made for DOD to improve its annual reports.3

Background In 1991, Congress authorized DOD to provide assistance to NIS. As of

February 1997, the CTR program has obligated over $1 billion to help the

states of Belarus, Kazakstan, Russia, and Ukraine (1) destroy their

weapons of mass destruction, (2) safely store and transport the weapons

in connection with their destruction, and (3) reduce the risk of weapons

proliferation. CTR assistance deliveries include materials, equipment, and

training. Specifically, the types of equipment being provided vary widely

and include railcar conversion kits, computers, various cutting tools used

for the destruction of nuclear delivery vehicles, fissile material containers,

cranes, and manuals. DOD officials plan to discuss CTR assistance deliveries

made during 1996 in their forthcoming annual report.4

In May 1995, DOD issued its first annual report on CTR assistance.5 In our

assessment of that report, we identified several DOD deficiencies in

meeting the legislative requirements, and we recommended several

corrective actions to DOD.

6

 Specifically, we recommended that DOD reports

(1) contain current and complete data on CTR deliveries, (2) integrate

available sources of information on CTR assistance to show how it is used,

(3) link such information to the determination that assistance is being

used for the purposes intended, and (4) detail planned audit and

examination activities for the coming year.

Results in Brief DOD’s recent report is an improvement over its May 1995 report and

provides an overview of how DOD accounted for CTR-provided assistance

through December 1995. Unlike its predecessor, this report

• contains comprehensive listings of equipment deliveries, including the

location, dollar value, and delivery dates of the items provided, and

comments on the condition of the assistance;

3

Weapons of Mass Destruction: DOD Reporting on Cooperative Threat Reduction Assistance Can Be

Improved (GAO/NSIAD-95-191, Sept. 29, 1995).

4

As required by the legislation, DOD was to have submitted its next report accounting for CTR

assistance by January 31, 1997. DOD officials hope to issue this report in March.

5

Although DOD’s first report on accounting for CTR assistance was dated January 5, 1995, it was not

issued until May 1995.

6

Weapons of Mass Destruction (GAO/NSIAD-95-191, Sept. 29, 1995).

Page 2 GAO/NSIAD-97-84 Weapons of Mass Destruction
B-276146 

• integrates a variety of information sources in accounting for CTR

assistance;

• makes a determination on whether the assistance has been appropriately

used; and

• lists future audit and examination activities.

CTR Assistance

Deliveries

Compared with the information in DOD’s May 1995 report, the

December 1996 DOD report includes more current and comprehensive data

on CTR equipment deliveries. As of December 1995, DOD had delivered over

$165 million worth of CTR equipment to the recipient countries. Program

officials stated that due to improvements in their computer database, they

can more readily track assistance deliveries. As required, the report also

contains information on the serviceability— that is, the condition—of the

CTR-provided assistance. In those instances where equipment was

inoperable or not being used, the report indicated what measures were

being undertaken to correct the problems.

Sources of

Information

DOD has improved its means of collecting and reporting information on

CTR-provided assistance. DOD tracks CTR assistance through several means,

including the use of audit and examination teams, observations by

contractor logistics support teams and project managers, information

collected from other government agencies, and intelligence sources.

Audit and Examination

Teams

By the end of 1995, audit and examination teams had conducted 12 audits

and examinations among the four recipient countries. The teams audited a

variety of CTR-provided assistance, including rail car conversion kits,

strategic nuclear arms elimination equipment, and environmental

restoration equipment. With one exception, the audit teams found that the

recipients were using the equipment for the purposes intended. Personnel

from DOD’s On-Site Inspection Agency, who lead the audit and examination

teams,7

 have developed flexible procedures for conducting the audits.

Also, the Defense Special Weapons Agency has appointed a liaison to

coordinate all audit and examination activities. The audit and examination

teams provide briefings to the CTR program office on audit results and

issue written reports summarizing the audits to the Deputy Assistant

Secretary of Defense for Threat Reduction Policy.

7

DOD technical and policy experts may also serve on audit and examination teams.

Page 3 GAO/NSIAD-97-84 Weapons of Mass Destruction
B-276146 

Logistics Support Teams

and Project Managers

DOD also collected information on how assistance is being used through

contractor logistics support teams observations. These contractor

personnel witness the transfer of CTR-provided equipment to the recipient

countries, conduct inventories of the equipment, and provide technical

assistance for installation and training to facilitate the proper use of the

equipment. For example, during 1995, logistics support teams observed 9

CTR projects in 21 locations throughout Russia. In Ukraine, teams observed

equipment provided for seven CTR projects at four different locations.

In addition, CTR project managers often travel to the recipient countries to

monitor the status of their projects and observe how CTR assistance is

being used. For example, in 1995, project managers and contract officials

visited 10 sites across the 4 recipient countries to review defense

conversion projects and 3 sites for housing projects in Belarus and

Ukraine.

Information Obtained

From Other Government

Agencies

In late 1995, DOD transferred management and oversight responsibilities

for the CTR effort involving the International Science and Technology

Center8

 to the Department of State and the nuclear material protection,

control, and accountability (MPC&A) projects to the Department of Energy.

Nonetheless, DOD obtained information on how the use of this CTR

assistance was monitored from the Departments of State and Energy and

included it in its report. Moreover, the Defense Contract Audit Agency

(DCAA)9

 audited projects at the 2 Russian institutions—Arzamas-16 and

Chelyabinsk-70—that were managing most Science and Technology

Center projects and reviewed 10 additional projects through its annual

financial audit.

DOD’s report also states that the Energy Department is developing internal

procedures for conducting audits of MPC&A projects. Because the

Department of Energy has not yet implemented these procedures, the

report cites the results of “preliminary measures,” which indicate that

MPC&A assistance provided to the four recipient countries is being used for

the purposes intended.

8

In 1992, the United States, European Community, Japan, and Russia, established the International

Science and Technology Center to provide peaceful employment opportunities to weapons scientists

and engineers, especially those experts involved with producing weapons of mass destruction.

9

U.S. officials stated that the State Department used DCAA because DOD funded the U.S. contribution

to the Center through fiscal year 1995. Through a reimbursable arrangement, State has continued to

request that DCAA perform audits.

Page 4 GAO/NSIAD-97-84 Weapons of Mass Destruction
B-276146 

Intelligence Sources In developing its report, DOD indicated that it also used intelligence

sources to help it account for CTR-provided assistance. According to these

sources, CTR assistance was not diverted during 1995. However, because

the detailed information is classified, we cannot discuss it in this report.

Determination of

Assistance Use

DOD acknowledges in the report that it did not have sufficient resources to

routinely examine all of the assistance provided since the CTR program

began deliveries in 1993. Instead, DOD stated that it based its determination

on a random sampling from a variety of sources, across the spectrum of

CTR projects. Through December 1995, DOD had provided assistance in

support of 27 CTR projects. The report cites information on 88 percent of

these projects to support its determination that assistance provided under

the CTR program had been properly accounted for and was being used for

the purposes intended.

DOD officials believe that the working relationships they have developed

with recipient countries’ officials reinforce their assessment that CTR

assistance is being used for the purposes intended. Even if significant

diversions of CTR assistance were to occur, DOD is reasonably confident

that such diversions would be readily detected, given its sources of

information.

Future Audit and

Examination

Activities

As required by the legislation, DOD’s report lists 16 planned audit and

examination activities for 1996. Although not required, DOD also lists its 

17 planned activities for 1997. These lists provide a breakdown of how

many audits and examinations DOD will conduct per month for the entire

year. Our work shows that during 1996, DOD completed all of its planned

audits and examinations.

DOD reports that its efforts to account for CTR assistance have increased in

intensity since December 1995. For example, DOD conducted more audits

and examinations in 1996 than during 1995. According to DOD officials, as

more CTR equipment is delivered, they intend to increase the use of input

from technical teams, project managers, and intelligence sources to

determine how CTR assistance is being used in the recipient countries.

Page 5 GAO/NSIAD-97-84 Weapons of Mass Destruction
B-276146 

Agency Comments DOD concurred with a draft of this report.

Scope and

Methodology

To accomplish our review objectives, we reviewed DOD’s December 1996

report accounting for CTR-provided assistance, DOD’s audit and

examination reports, and other DOD documents to determine whether DOD

had met the legislative requirements and implemented our previous

recommendation. We also reviewed DCAA audit reports and the 1995

International Science and Technology Center’s annual report. We met with

officials from the Office of the Secretary of Defense, the Defense Special

Weapons Agency, the On-Site Inspection Agency, and the State

Department. In addition, we reviewed DOD’s classified annex to its report.

Due to the limited time allowed for us to assess DOD’s report, we could not

travel to the CTR recipient countries of Belarus, Kazakstan, Russia, and

Ukraine and meet with recipient countries’ officials to corroborate

information contained in DOD’s report.

We conducted our review during January 1997 in accordance with

generally accepted government auditing standards.

We plan to send copies of this report to the Secretary of Defense and other

interested congressional committees. We will also make copies available

to others upon request.

Please contact me on (202) 512-4128 if you or your staff have any

questions concerning this report. The major contributors were 

F. James Shafer, Beth Hoffman León, and Jo Ann Geoghan.

Harold J. Johnson

Associate Director, International Relations

 and Trade Issues

(711237) Page 6 GAO/NSIAD-97-84 Weapons of Mass Destruction
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