Testimony

Before the Subcommittee on Emerging Threats and

Capabilities, Committee on Armed Services, U.S.

Senate

United States General Accounting Office

GAO

For Release on Delivery

Expected at 2:30 p.m., EDT

Tuesday, May 15, 2001 NUCLEAR

NONPROLIFERATION

DOE's Efforts to Secure

Nuclear Material and

Employ Weapons

Scientists in Russia

Statement of Ms. Gary L. Jones

Director, Natural Resources and Environment

GAO-01-726T
Page 1 GAO-01-726T

Mr. Chairman and Members of the Committee:

We are pleased to be here today to discuss our reviews of two Department

of Energy (DOE) nonproliferation programs that address important U.S.

national security concerns—(1) improving the security of hundreds of tons

of nuclear material at various sites throughout Russia and (2) employing

weapons scientists in Russia’s 10 closed nuclear cities so that they will not

sell sensitive information to countries or terrorist groups trying to develop

weapons of mass destruction. Both programs are managed by the National

Nuclear Security Administration’s Office of Defense Nuclear

Nonproliferation. Our testimony focuses on each of these programs’

impact and future plans. Our statement is based on our February 28, 2001,

report on the Material Protection, Control, and Accounting (MPC&A)

program and our report on the Nuclear Cities Initiative (NCI) program that

is being released today.1

Mr. Chairman, the following summarizes our findings:

The security systems installed by DOE are reducing the risk of theft of

nuclear material in Russia, but hundreds of metric tons of nuclear material

still lack improved security systems. As of February 2001, DOE had

installed, at a cost of about $601 million, completed or partially completed

systems protecting, among other things, 192 metric tons of the 603 metric

tons of nuclear material identified at risk of theft. These systems, while not

as stringent as those installed in the United States, are designed to prevent

individuals or small groups of criminals from stealing nuclear material.

Russian officials’ concerns about divulging national security information

continue to impede DOE’s efforts to install systems for several hundred

metric tons of nuclear material at sensitive Russian sites. The program’s

continued progress depends on DOE’s ability to gain access to these

sensitive sites and reach agreement with Russia on reducing the number of

sites and buildings where nuclear material is located and security systems

are needed. DOE agreed with our recommendation to develop options for

completing the program on the basis of the progress made in gaining

access to these sites and agreement on the closure of buildings and sites.

Furthermore, while DOE currently does not have a means to monitor the

security systems it is installing to ensure that they are operating properly

 1

Nuclear Nonproliferation: Security of Russia’s Nuclear Material Improving: Further

Enhancements Needed. (GAO-01-312, Feb. 28, 2001) and Nuclear Nonproliferation: DOE’s

Efforts to Assist Weapons Scientists in Russia’s Nuclear Cities Face Challenges

(GAO-01-429, May 3, 2001).
Page 2 GAO-01-726T

on a continuing basis, the Department has agreed to implement our

recommendation to develop such a system in cooperation with Russia.

DOE estimates that the MPC&A program will be completed in 2020 at a

cost of about $2.2 billion.

Regarding DOE’s Nuclear Cities Initiative, we found that during its first

 2 years of operation, the program had limited success. The Department

estimates that the program employs about 370 people, including many

weapons scientists who are primarily working on a part-time basis through

research projects sponsored by the U.S. national laboratories. According

to Russian officials, most of the scientists receiving program funds

continue to work on Russia’s weapons of mass destruction and are also

receiving a salary paid for by the Russian government. About one-half of

the program’s projects focus on such activities as the delivery of medical

equipment and school exchange programs and are not designed to create

jobs for weapons scientists. With regard to funding, we found that a

disproportionate amount of the NCI program’s funding has been spent in

the United States. About 70 percent, or about $11.2 million, of the

$15.9 million that DOE spent through December 2000 was spent in the

United States—primarily at its national laboratories—for such items as

overhead, labor, equipment, and travel. The remaining 30 percent was

spent for projects and activities in Russia. DOE, in response to direction

provided by the Congress in a conference report on appropriations for

fiscal year 2001, stated that its goal is to spend 51 percent of its program

funds in Russia this fiscal year. DOE will have to more effectively monitor

and control the program’s spending to meet this goal. We also found that

DOE’s NCI program lacks a plan for the future. DOE agreed with our

recommendations to develop a plan that addresses the program’s future

costs and a time frame with quantifiable performance measures to

determine how effectively the program is meeting its goals and whether it

should be expanded. DOE has two programs—NCI and the Initiatives for

Proliferation Prevention (IPP)—operating in Russia’s nuclear cities. We

believe that DOE needs to address a fundamental question—does it need

two programs with a shared underlying goal—employing Russian weapons

scientists—and, in some cases, implementing the same kinds of projects?

We recommended that DOE determine if these two programs should be

consolidated into one effort to achieve potential cost savings and other

efficiencies. DOE agreed to review both the IPP and NCI programs with a

view toward consolidation.

In 1995, DOE established the MPC&A program to install improved security

systems for nuclear material at civilian nuclear sites, naval fuel sites, and

nuclear weapons laboratories in Russia. Terrorists and countries seeking

Background
Page 3 GAO-01-726T

nuclear weapons could use as little as 25 kilograms of uranium or

8 kilograms of plutonium to build a nuclear weapon. With the dissolution

of the Soviet Union, DOE estimates that Russia inherited 603 metric tons

of highly enriched uranium and plutonium in forms highly attractive to

theft. As of February 2001, DOE had identified 252 buildings at 40 sites

that require nuclear security systems. In addition to installing security

systems, DOE is providing sites with long-term operational assistance

through equipment warranties, operating procedure development, and

training. DOE also has projects under way to help Russia’s Ministry of

Atomic Energy (MINATOM) and nuclear regulatory authority develop (1) a

total inventory of nuclear material, (2) regulations to ensure the effective

operation and maintenance of the systems, and (3) inspection and

enforcement systems to ensure that sites comply with regulations. In

addition, DOE is supporting security improvements for trains and trucks

that transport nuclear material between and within sites and for nuclear

material security training centers.

DOE’s Nuclear Cities Initiative focuses on weapons scientists in the 10

closed nuclear cities that form the core of Russia’s nuclear weapons

complex. Many of these cities are located in geographically remote

locations and were so secret that they did not appear on any publicly

available maps until 1992. These cities remain high security areas and

access to them is limited. MINATOM manages the nuclear facilities that

are located within the cities and estimates that about 760,000 people live

there, including approximately 122,000 residents who are employed in key

nuclear enterprises. The Russian government has announced its intention

to reduce the size of its nuclear weapons complex, and a critical

component of this effort includes finding new employment opportunities

for weapons scientists, engineers, technicians, and support staff who will

lose their jobs from the downsizing of the complex. Russian officials have

identified a need to create 30,000 to 50,000 jobs in the 10 closed nuclear

cities over the next several years. DOE has tasked the national

laboratories to play a major role in the program, which works in

conjunction with another DOE program—the Initiatives for Proliferation

Prevention—that also seeks to employ weapons scientists in several

countries, including Russia.
Page 4 GAO-01-726T

DOE has installed completed or partially completed security systems in

115 buildings holding about 192 metric tons, or about 32 percent, of the

603 metric tons of weapons-useable nuclear material at risk of theft in

Russia. DOE installed completed systems in 81 buildings protecting about

86 metric tons (or about 14 percent) of nuclear material. DOE has also

installed partially completed systems known as rapid upgrades in 34

additional buildings protecting 106 metric tons, or 18 percent of the

nuclear material. Rapid upgrades consist of such things as bricking up

windows in storage buildings; installing strengthened doors, locks, and

nuclear container seals; and establishing controlled access areas around

the nuclear material. Completed systems include such components as

electronic sensors, motion detectors, closed circuit surveillance cameras,

central alarm stations to monitor the cameras and alarms, and

computerized material- accounting systems. By installing rapid upgrades,

DOE helps Russian sites establish basic control over their nuclear material

while U.S. project teams finish installing the security systems.

DOE’s reviews of installed systems and our visits to nine nuclear sites in

Russia indicate that most of the security systems are currently reducing

the risk of theft. DOE has established a panel of experts known as the

Technical Survey Team that examines project documents and meets with

project teams to determine if the installed systems meet departmental

guidelines for effectively reducing the risk of nuclear theft in Russia. From

January 1999 through September 2000, the Technical Survey Team

reviewed projects for 30 of the 40 sites in Russia. They found that systems

at 22 of the sites were reducing the risk of theft by increasing the ability of

the Russian sites to detect, delay, and respond to an attempted theft or

otherwise strengthen control over their nuclear material. For six of the

sites they reviewed, little or no risk reduction occurred because the

systems were not installed in accordance with the guidelines, the teams

did not have sufficient access to the buildings to install systems, or the

systems were installed around material presenting a low risk of

proliferation. For two of the other sites, it was too soon to tell if the

systems reduced risk. DOE is taking steps to correct these problems.

At the nine sites we visited in Russia where DOE had installed systems, we

observed, among other things,

• storage vaults equipped with strengthened doors, locks, video surveillance

systems, and alarms that can detect and delay thieves as they attempt to

steal nuclear material;

• nuclear material containers equipped with computerized bar codes and

tamper-resistant seals that allow site personnel to perform quick

DOE Has Reduced the

Risk of Theft for

About 32 Percent of

the Nuclear Material

in Russia, but

Hundreds of Metric

Tons of Material

Remain Unprotected
Page 5 GAO-01-726T

inventories of the material and determine whether the containers were

tampered with; and

• nuclear material portal monitors that scan people and vehicles entering

and leaving facilities to ensure that they have not taken nuclear material

from storage locations.

While DOE has made progress in installing systems, DOE’s project teams

do not have access to 104 of the 252 buildings requiring improved security

systems. These buildings, located mostly at Russian nuclear weapons

laboratories, contain hundreds of metric tons of nuclear material.

MINATOM is reluctant to grant access to these buildings because of

Russian national security concerns and Russian laws on the protection of

state secrets. DOE officials told us they need access to these buildings to

confirm the type of material to be protected, design systems that provide

adequate protection for the material, ensure that the systems are installed

properly, and ensure that the sites operate the systems properly. DOE

recently reached a draft agreement with MINATOM to provide program

personnel with greater access to sensitive MINATOM sites. According to

DOE officials, even with the agreement, some of the more sensitive

MINATOM sites will remain inaccessible to program personnel but the

agreement, when concluded, will allow the program to further expand its

work.

Just installing security systems will not ensure the long-term success of

the MPC&A program. DOE’s Technical Survey Team and our observations

provide only a snapshot of how effectively the installed systems are

reducing the risk of nuclear material theft in Russia. DOE has not

established a means to systematically measure the effectiveness of the

security systems that it has installed at Russian nuclear sites. However,

DOE is currently collecting information from individual sites that would

be useful in measuring the new systems’ effectiveness. For example, DOE

project teams visit sites and observe systems that have been installed, and

at certain sites, DOE has contracts with the Russians to collect

information on the functioning of equipment. In addition, before installing

security systems, DOE and Russian site officials conduct vulnerability

assessments, which assess the probability of the existing nuclear security

systems at the sites to prevent nuclear material theft. In commenting on a

draft of our report, DOE agreed with our recommendation to develop a

system to monitor, on a long-term basis, the security systems at nuclear

sites in Russia to ensure that they continue to detect, delay, and respond

to attempts to steal nuclear material.
Page 6 GAO-01-726T

From fiscal year 1993 through February 2001, DOE spent about

$601 million on the MPC&A program in Russia. DOE spent about

$376 million, or 63 percent of the $601 million, on installing security

systems at Russia’s civilian sites, nuclear weapons laboratories, the

Russian navy’s nuclear fuel sites, and the Russian navy’s nuclear weapons

sites. DOE spent the remainder of the $601 million on, among other things,

operational assistance and program management.

According to DOE, it will complete the MPC&A program in 2020 at a total

cost of $2.2 billion. However, DOE officials told us that the cost estimate

and time frame for completing the program are uncertain because DOE

faces challenges in implementing the program. For example, DOE does not

know how much assistance it will need to provide Russian sites with to

operate and maintain the security systems. Some sites where DOE is

installing systems are in better financial condition and have a greater

potential to generate revenue than other sites and therefore are more

likely to have the resources to maintain the security systems. Other sites

will need more DOE assistance to maintain the systems. Furthermore,

because of a lack of access to many nuclear sites, DOE is not certain about

how many buildings will require security systems or when it will be able to

start and complete the installation of these systems. DOE is also working

with Russia to consolidate nuclear material into fewer buildings and

convert the highly enriched uranium in these buildings into forms that

cannot be used in nuclear weapons. While this effort could reduce the

program’s costs by reducing the number of sites and buildings needing

systems, MINATOM has not yet identified which buildings and sites it

plans to close. Our report (GAO-01-312) recommends that DOE include in

its strategic plan, currently under development, (1) an estimate of how

much assistance is required to sustain operations at each site on the basis

of an analysis of the costs and the sites’ ability to cover these costs and

(2) options for completing the program on the basis of the progress made

in gaining access to sensitive sites and the closure of buildings and sites.

DOE concurred with this recommendation.

During its first 2 years, NCI has had limited success in meeting the

program’s principal objectives—creating jobs for weapons scientists and

helping to downsize Russia’s weapons complex. According to DOE, the

program is employing about 370 people, including many weapons

scientists who are working primarily on a part-time basis through research

projects sponsored by the U.S. national laboratories. About 40 percent of

the work was generated through the Open Computing Center in the closed

city of Sarov. The center’s director told us that the part-time employees

DOE Faces

Challenges in

Adhering to MPC&A

Program’s Cost

Projections and Time

Frames

DOE’s Nuclear Cities

Initiative Projects

Have Had Limited

Impact
Page 7 GAO-01-726T

are also working at the weapons design institute in Sarov on weaponsrelated activities and are receiving salaries from the institute. The center

has had some success in attracting business investment, and DOE officials

estimated that, with successful marketing to commercial businesses, the

center would be able to employ 500 people by 2005.

Although some jobs have been created, about one-half of the 26 NCI

projects are not designed to create jobs for weapons scientists. Instead,

these projects focus on, among other things, such activities as the delivery

of medical equipment and school exchange programs. DOE officials told

us that these community development projects are needed to make the

nuclear cities more attractive to business investment. However, Russian

officials have criticized the projects because they do not create jobs for

weapons scientists, which they believe is the primary goal of NCI and the

1998 agreement between the United States and Russia. Furthermore, none

of the industry officials we spoke with said that they would be more likely

to invest in the nuclear cities because of municipal and social

improvements in the nuclear cities.

Eight of the program’s projects are designed to develop sustainable

commercial ventures, but only one of these has successfully created jobs.

Numerous factors have contributed to the limited success of the NCI

projects. Some projects have been canceled or delayed because of the lack

of Russian support and cooperation. Other reasons for these projects’ lack

of success include poor economic conditions in Russia, the remote

location and restricted status of the nuclear cities, and the lack of an

entrepreneurial culture among weapons scientists. Furthermore, DOE and

national laboratory officials have told us that the Department’s project

selection process has been inconsistent and “ad hoc.” According to the

program director, projects were approved for funding without a

comprehensive review process in order to implement the program quickly

and engage the Russians. In January 2001, DOE issued new program

guidance that includes more detail on project selection and approval. For

example, the new guidance will give preference to those projects with the

strongest prospects for early commercial success and those in which the

start-up costs are shared with other U.S. government agencies, Russian

partners, and/or private entities. While the guidance, if effectively

implemented, will address the problems with DOE’s inadequate projectselection process, it remains unclear to us why DOE took over 2 years to

develop these procedures when similar procedures already existed under

the IPP program.
Page 8 GAO-01-726T

Despite the numerous problems we found with the NCI projects, the

program has made some strides. For example, according to DOE officials,

one of the most successful projects involves the conversion of weapons

assembly buildings at the Avangard weapons facility in Sarov into

production space for commercial ventures, including the proposed

establishment of a kidney dialysis manufacturing facility. The program has

helped facilitate the relationship between a Western business and the

Russian weapons institute, and DOE has allocated about $1.5 million to

support this effort.

Interestingly, Mr. Chairman, the most successful commercial effort we

observed in the nuclear cities involved a major U.S. computer firm that

employs former weapons scientists in Sarov. This effort, which began

about 7 years ago, has been undertaken without U.S. government

assistance and now employs about 100 scientists. When we visited the

software operation in September 2000, we were told that the employees

work full-time and that their salaries are up to three times what they had

been paid at the weapons institute.

From fiscal year 1999 through December 2000, the expenditures for NCI

totaled about $15.9 million. Of that amount, about $11.2 million (or

70 percent) was spent in the United States, and about $4.7 million (or

30 percent) was spent for projects and activities in Russia. The U.S.

national laboratories’ costs to implement the program represented the

bulk of the funds spent in the United States and included such items as

overhead, labor, equipment, and travel. In fact, 75 percent of the funds

spent by the laboratories were for overhead and labor costs. DOE officials

told us that laboratory expenditures, although significant, were part of

startup costs for NCI. They noted that the program has taken longer to

start up because of the economic problems facing Russia and the barriers

involved in trying to start new businesses and related activities in the

nuclear cities. DOE officials told us that they were concerned about the

amount of funds spent by the laboratories to administer the program—

particularly the overhead costs—and have taken steps to reduce these

costs such as by managing some projects directly from headquarters.

These officials also told us that laboratory costs will be reduced and that

the laboratories’ role will diminish as commercial investors develop

business contacts in the nuclear cities as a result of the program.

The $4.7 million in expenditures for Russia included contracts with

Russian organizations to buy computers and other equipment, a small

business bank loan program, and various community development

Majority of Nuclear

Cities Program Funds

Have Been Spent in

the United States
Page 9 GAO-01-726T

projects. Furthermore, MINATOM officials made it clear to us, during our

September 2000 visit to Russia, that they were dissatisfied with the amount

of program funds that had been spent in Russia. The First Deputy Minister

of MINATOM told us that it was his understanding that DOE planned to

spend the majority of program funds in Russia and wanted to know what

happened to these funds. He said that the lack of progress in the program

increases the negative views of the program held by various Russian

government officials, who allege that the program is a way for the United

States to gain access to weapons data in Russia’s nuclear cities.

In response to direction provided by the Congress in a conference report

on DOE’s fiscal year 2001 appropriations, DOE stated that its goal is to

spend at least 51 percent of its program funds in Russia during this fiscal

year. DOE will have to more effectively monitor and control the program’s

spending to meet this goal. Regarding future program expenditures, the

Department has not developed a plan that addresses the program’s future

costs and a time frame with quantifiable performance measures to

determine how effectively the program is meeting its goals and when and

if the program should expand beyond the three nuclear cities. In 1999,

DOE officials believed that the total funding level for NCI could reach

$600 million over a 5-year period. However, the program’s director told us

that because the program had not received expected funding levels during

its first years of operation, he is uncertain about the program’s future costs

and time frames.

DOE has two programs operating in Russia’s nuclear cities—the Nuclear

Cities Initiative and the Initiatives for Proliferation Prevention—that share

a common underlying goal—to employ Russia’s weapons scientists in

nonmilitary work. We believe that DOE needs to address a fundamental

question—does it need two programs operating in Russia’s nuclear cities

with a shared goal and, in some cases, the same types of projects? The

operation of these two similar programs has led to some duplication of

effort, such as two sets of project review procedures and several similar

types of projects. Both programs provide Russia’s nuclear cities with funds

and since 1994, DOE has spent over $13 million on about 100 IPP projects

in five nuclear cities, including the three nuclear cities participating in

NCI—Sarov, Snezhinsk, and Zheleznogorsk. One U.S. national laboratory

official told us that there was not a clear distinction between the two

programs, and other laboratory officials noted that some projects have

been proposed for funding under both programs, have been shifted from

one program to another, or have received funding from both programs.

The IPP program director told us that although he did not believe that the

Duplication Has

Occurred in the

Operation of DOE’s

Two Programs in

Russia’s Nuclear

Cities
Page 10 GAO-01-726T

two programs were duplicative, there is a potential for duplication to

occur because both have a common approach for creating jobs in the

nuclear cities. Both programs reside within DOE’s Office of Defense

Nuclear Nonproliferation, National Nuclear Security Administration; have

adjoining offices; and share staff to perform budget, travel, and secretarial

functions.

Our work shows that some of the failures of NCI’s commercial

development projects might have been avoided if DOE had a common

project approval process and incorporated some of the elements of the

IPP project selection process from the onset of the NCI program.

Furthermore, most of NCI’s initial commercial development projects

would not likely have been approved under the IPP program’s more

rigorous approval process. This is because, unlike the IPP program, NCI

did not require that projects have industry partners or demonstrate

commercial viability until January 2001, when program guidance was

issued. In addition, NCI has recently (1) begun to develop a more

systematic process, as IPP already has, for obtaining the views of business

or industry experts on commercial development and (2) adopted practices

established under the IPP program regarding the funding of projects. In

commenting on a draft of our report being released today, DOE agreed to

review both programs with a view toward consolidation.

Mr. Chairman, this concludes our testimony. We would be happy to

respond to any questions that you or other Members of the Committee

may have.

Contact and Acknowledgement

For further information on this testimony, please contact Ms. Gary L.

Jones at (202) 512-3841. Individuals making key contributions to this

testimony included Gene Aloise, Charles Bolton, Ross Campbell, Joseph

Cook, Glen Levis, and Joseph O. McBride.

(360079)